Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — BAML Global Metals, Mining and Steel Conference 2012
29 slides from Fortescue's conference presentation, May 16, 2012
Slide 1: BAML Global Metals, Mining and Steel Conference
For personal use only BAML Global Metals, Mining and Steel Conference Miami 15 May 2012
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: Fully integrated – large scale efficiency
Fully integrated – large scale efficiency Over 150mt of product shipped to date For personal use only 3
Slide 4: Fortescue – a ferocious competitor
Fortescue – a ferocious competitor For personal use only • Fastest, lowest cost project implementation • Fastest ramp up to full operations • Finds at least 10 times more ore than it consumes, each year • Near term delivery of 155 million tonnes per annum • Very large scale, modern technology infras
Slide 5: $5bn of EBITDA growth in years
$5bn of EBITDA growth in 2 years It’s all about ramp up volumes For personal use only 10,000 $7.6bn 8,000 EBITDA (US$m) 6,000 $2.6bn 4,000 2,000 0 FY12 FY13 FY14 The above chart uses broker consensus operating costs and consensus iron ore prices but with FMG’s ramp up profile 5
Slide 6: New development model = high ROE
New development model = high ROE Delivering results For personal use only Culture Fortescue’s unique culture is the key Relationships Direct relationships with contractors and suppliers Asia Leveraging Asia’s fabrication and delivery capability Speed Speed of delivery – time is money Planning Planni
Slide 7: Fortescue operations
Fortescue operations Video For personal use only 7
Slide 8: Core competency is innovation & rapid execution
Core competency is innovation & rapid execution For personal use only • A new exploration model • Fastest ramp up in the history of the Pilbara • Surface mining technology for grade control • Heaviest haul rail system in the world • Highest port out-load rates in Australia • Largest ore processing p
Slide 9: Operations team achieving consistent records
Operations team achieving consistent records For personal use only Average cargo size – 14% increase 2010 - 2012 April 2012 average cargo 185kt; April 2011 174kt; April 2010 162kt Port out-load performance Daily record 227kt (April 2012) - weekly record 1,494kt (Feb 2012) Port in-load performance Da
Slide 10: Consolidation to growth
Consolidation to growth The steep trajectory has just begun For personal use only Mining Rail Port Ore Processed (wmt) Ore Railed (wmt) Ore Shipped (wmt) 30.0 30.0 30.0 Third Party Ore Third Party Ore 25.0 25.0 25.0 Railed Shipped 20.0 20.0 20.0 15.0 15.0 15.0 10.0 10.0 10.0 5.0 5.0 5.0 0.0 0.0 0.0
Slide 11: Soon to deliver BHP level of production
Soon to deliver BHP level of production Multiple mines will deliver accelerated ramp up For personal use only 160 Solomon Brockman 140 Solomon CID BCI JV 120 Christmas Creek Million Tonnes 100 Cloudbreak 80 60 40 20 0 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 11
Slide 12: Development
For personal use only Development 12
Slide 13: Resource portfolio sets expansion platform
Resource portfolio sets expansion platform For personal use only 14,000 Annualised growth of 12,000 1.5bt 3,236 Mineral Resources (Mt) 10,000 per annum 2,465 8,000 2,013 1,032 624 624 1,230 6,000 1,230 3,070 3,070 2,860 4,000 1,715 2,224 695 695 695 695 695 2,000 2,266 2,227 2,143 2,550 2,550 0 2008
Slide 14: Fortescue development
Fortescue development Video For personal use only 14
Slide 15: Delivering 155mtpa
Delivering 155mtpa Near term growth profile set to triple production For personal use only Herb Elliott Port Port Hedland Fortescue Infrastructure Dampier Fortescue Rail Karratha Rio Tinto Rail BHP Rail 60mtpa 95mtpa Solomon Hub Chichester BCI JV Hub Tom Price 15
Slide 16: Expanded operations = risk mitigation
Expanded operations = risk mitigation For personal use only 55mtpa 155mtpa 2 mines in 1 geographic area 4 mines in 2 geographic areas 2 ore processing facilities 4 ore processing facilities 1 train unloader 3 train unloaders 1 reclaimer and 1 shiploader 3 reclaimers and shiploaders Average strip rat
Slide 17: Port access – the key to success in the Pilbara
Port access – the key to success in the Pilbara For personal use only Fortescue 17
Slide 18: Expansion milestones – mining hubs
Expansion milestones – mining hubs For personal use only ` Chichester Hub Solomon Hub • Current OPF to 25Mtpa by end June 2012 • Sealed airstrip operational April 2012 • Mining contract finalised June Qtr • 2nd OPF by end Sept Qtr 2012 2012 • Mining ramp up to 50Mtpa by end Dec • Firetail OPF comm
Slide 19: Expansion milestones – infrastructure
Expansion milestones – infrastructure For personal use only ` Port Rail • 2nd out-load circuit and 3rd berth commissioning done • • Mainline duplication end Sept Qtr 2012 Spur line to Solomon end Dec Qtr 2012 • 2nd in-load circuit end Sept Qtr 2012 • Additional rolling stock progressive • 3rd in-l
Slide 20: 2012 and beyond – delivering on promises
2012 and beyond – delivering on promises Pure iron ore company leveraged to Asia For personal use only • Culture is our differentiator • 55mtpa production base sets the platform • Growth to 155mtpa June 2013 • Further development options through aggressive exploration • Nyidinghu + Western Hub = 355
Slide 21: Finance and the market
For personal use only Finance and the market 21
Slide 22: Financial highlights
Financial highlights Record HY12 result and strong March YTD performance For personal use only 2012 Half Year Results: • $3.4 billion record revenues and $1.5 billion underlying EBITDA • $801 million net profit of up 155% on the prior period last year 2012 Year to Date Performance (end March): • 39.
Slide 23: Repayment options embedded in maturity profile
Repayment options embedded in maturity profile Structured for flexibility For personal use only Early call periods provide optionality $3,000 Senior Unsecured Notes Senior Unsecured Notes (Call Option) Revolving Credit Facility (undrawn) $2,500 $2,040 $2,000 Preference shares $1,500 $1,500 Unsecured
Slide 24: Longer term China – the twelfth five year plan
Longer term China – the twelfth five year plan Great news for Pilbara iron ore For personal use only billion people 50,000 skyscrapers by 221 2030 - equal to ten Chinese cities will will live in China’s NY cities have 1m+ people cities by 2030 living in them – Europe has 35 today Source: McKinsey Gl
Slide 25: Shorter term China – what steel slow down?
Shorter term China – what steel slow down? For personal use only Monthly steel production Forecast annual steel production 70 Winter slow ends in 1000 March record 4.5% YOY growth 60 900 800 50 700 Million Tonnes Million Tonnes 40 600 ` 500 30 400 20 300 200 10 100 0 0 2010 2011 2012 2013 2014 2015
Slide 26: China increasingly looks to imported iron ore
China increasingly looks to imported iron ore For personal use only 1400 Seaborne IO demand Domestic IO demand 1200 Iron ore production (Mt) 1000 1027 953 800 879 600 764 719 400 200 333 357 295 271 236 0 2012 2013 2014 2015 2016 China’s imports of iron ore are forecast by 43% over next 5 years Sour
Slide 27: The swing producers are the biggest players
The swing producers are the biggest players For personal use only 200 Domestic Chinese Ore Australia Brazil India US$/dry tonne CFR equivalent 150 South Africa Other 100 50 0 0 100 200 300 400 500 600 700 800 900 1,000 Cumulative Mt (wet, as delivered) Source: Metalytics prepared March 2012 27
Slide 28: Just in case you missed it….$5bn of EBITDA growth in years
Just in case you missed it….$5bn of EBITDA growth in 2 years For personal use only 10,000 $7.6bn 8,000 EBITDA (US$m) 6,000 $2.6bn 4,000 2,000 0 FY12 FY13 FY14 The above chart uses broker consensus operating costs and consensus iron ore prices but with FMG’s ramp up profile 28
Slide 29: Fortescue - a ferocious competitor
For personal use only Fortescue - a ferocious competitor Sign up to alerts online www.fmgl.com.au
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