Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — CLSA Conference 2015
28 slides from Fortescue's conference presentation, Sep 16, 2015
Slide 1: CLSA, September 2015
For personal use only CLSA, September 2015
Slide 2: Important Notice Additional Information
For personal use only Important Notice Additional Information The purpose of this presentation is to provide general information about This presentation should be read in conjunction with the Annual Financial Fortescue Metals Group Limited ("Fortescue"). It is not recommended that Report at 30 June
Slide 3: Building a world class company
Building a world class company Core supplier to China’s growth For personal use only 3
Slide 4: Building a world class company
Building a world class company Core supplier to China’s growth For personal use only Founded First ore Low cost in 2003 in 2008 producer Shipped over 165mt 550mt Production rate Unique culture 4
Slide 5: For personal use only
For personal use only
Slide 6: The safest, lowest cost, most profitable iron ore producer
at O J R V/ I S I @ The safest, lowest cost, Fortescue most profitable iron ore producer Our Values | Safety Family oxAVIOy, . ty Frugality Empowerment A x ¢ 3 an 9 . oo Integrity Dy) Fortescue © Enthusiasm Generating ideas Determination Set yourself stretch targets
Slide 7: Safety is at the heart of Fortescue's values
Safety is at the heart of Fortescue’s values My brothers’ / sisters’ keeper For personal use only • Safety Priorities 1 Look after yourself 2 Look after your mates • Engagement active participation • Empowerment to make decisions • Encouragement to speak up • Leadership strong and visible 7
Slide 8: Operating and Financial Performance
For personal use only Operating and Financial Performance
Slide 9: FY15 Performance
FY15 Performance For personal use only Cost savings of $1.8bn (FY12-FY15 ) + $1.4bn (FY16) 165 mtpa US$2.4bn Run rate maintained cash on hand C1 $18/wmt US$2bn FY16 Guidance Operating cashflow Dividends Paid Interim: A$0.03/share US$39/dmt Final: A$0.02/share Breakeven price 9
Slide 10: Key C1 cost drivers
Key C1 cost drivers For personal use only Tier 1 asset base, efficiency and productivity C1 US$/wmt 1 Solomon operations 60 50 48 44 2 Blending strategy 58% Fe 40 34 3 Processing, wet plants + de-sands 30 27 20 18 4 Operational efficiencies 10 5 Fx and fuel decreases 0 FY2012 FY2013 FY2014 FY2015 FY
Slide 11: Chichester hub orebody optimisation
Chichester hub orebody optimisation For personal use only Blending with Firetail + wet processing, average product grade 58% Strip ratio reduced from 5.4 to 2.3 New pit limit Production inventory cut off grade +57.5% +55% +54% 11
Slide 12: Breakeven index price
Breakeven index price For personal use only Continuing to reduce breakeven price on 62% Platts equivalent basis US$ 50 USD:AUD of 0.77 5 39 40 3 2 31 30 4 2 0.5 25 5 20 18 10 - C1 Shipping Royalty Admin Delivered Interest Sustaining Total wmt Moisture Price Breakeven cost to capex cost adjustments p
Slide 13: Debt maturity profile
Debt maturity profile For personal use only No repayments due until June 2019 with flexibility for early repayments Extended Runway $2.4bn cash on hand at 30 June 2015 13
Slide 14: Market
For personal use only Market
Slide 15: Core supplier to Asia
Core supplier to Asia For personal use only Well established 18% market share of imported iron ore to China • Low impurity 58% Fe average • High value in use • Large diverse customer base • Reliable consistent delivery • Proximity to high growth region 15
Slide 16: China's long term growth remains strong
China’s long term growth remains strong For personal use only 300 million people to urbanise by 2030 • Steel stock-in-use 1/3 USA • Steel demand above 800mtpa • Competitive and rising steel exports: One Belt One Road over 1 billion tonnes • Short term growth stabilising • Real estate market recovery
Slide 17: Steel consumption to build economy
Steel consumption to build economy Above 800mtpa – driven by policy decisions For personal use only Source: Wood Mackenzie 17
Slide 18: Iron ore supply in balance…sentiment driving price
Iron ore supply in balance…sentiment driving price For personal use only Port stocks continuing to decline, currently at 80mt 50 $220 IO Inventory days coverage (days) $200 62% Fe CFR (RHS) 40 $180 $160 Days Coverage 30 $140 $120 20 $100 $80 10 $60 0 $40 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Sep
Slide 19: Futures Trading
Futures Trading For personal use only Setting price below supply-demand balance Source: Bloomberg 21
Slide 20: Reserves and resources
For personal use only Reserves and resources
Slide 21: Resource portfolio supports asset base
Resource portfolio supports asset base For personal use only Largest Pilbara tenement footprint 12,000 2,463 2,463 Mineral Resources dry in situ (Mt) 10,000 2,463 740 740 8,000 2,013 624 1,032 624 624 6,000 4,877 4,793 3,504 3,070 3,070 2,860 4,000 2,224 1,715 695 303 491 695 695 5,504 695 695 695 5
Slide 22: Supporting our local community
For personal use only Supporting our local community
Slide 23: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara For personal use only Creating opportunities through training, employment and business opportunity 23
Slide 24: Focused strategy
For personal use only Focused strategy
Slide 25: Moving down the global cost curve
Moving down the global cost curve For personal use only China's 2015 Iron Ore Supply CFR Costs (including royalties & ocean freight) 150 China Domestic Concentrate Australia Brazil India South Africa Other 100 US$/dry tonne 50 Other Australia DSO Fortescue Rio Tinto Vale Pilbara BHPB 0 0 100 200 300
Slide 26: The new force in iron ore
The new force in iron ore For personal use only Unique culture drives performance Low cost World class producer assets + people Reliable 165mt Efficient Production rate Delivery 26
Slide 27: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting:
Slide 28: Glossary
Glossary For personal use only C1: Operating costs of mining, processing, rail and port. The reconciliation of C1 to the amounts disclosed in the financial Reconciliation of Underlying 30 June 2015 30 June 2014 statements prepared under the Australian EBITDA to IFRS measures US$m US$m accounting sta