Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Macquarie Australia Conference 2019
31 slides from Fortescue's conference presentation, Apr 30, 2019
Slide 1: Macquarie Australia Conference
For personal use only Macquarie Australia Conference 30 April 2019 Together we are Fortescue
Slide 2: Forward looking statements
Forward looking statements For personal use only Disclaimer Important Notice Additional Information The purpose of this presentation is to provide general information about Fortescue This presentation should be read in conjunction with the Annual Report at Metals Group Limited ("Fortescue"). It is n
Slide 3: A world class company
A world class company For personal use only >1.1 billion ~170mtpa tonnes shipped Production rate Core supplier Low cost to China producer 3
Slide 4: For personal use only
For personal use only 4
Slide 5: Fortescue's Values
Fortescue’s Values For personal use only Our Vision: The safest, lowest cost, most profitable mining company. 5
Slide 6: HY19 highlights
HY19 highlights For personal use only US$1.6bn A$0.30/share NPAT Underlying US$644m dividends EBITDA US$13.11/wmt West Pilbara 82.7mt Fines shipped C1 cost Shipments commenced 6
Slide 7: March quarter highlights
March quarter highlights For personal use only TRIFR 3.6 US$71/dmt 38.3mt shipped 10% improvement average price received including 3.8mt of West over the prior quarter 47% Pilbara Fines Iron Bridge C1 cost Cash on hand US$13.51/wmt Magnetite Project US$1.1bn US$2.6bn Stage 2 approved 7
Slide 8: Integrated operations and marketing
For personal use only Integrated operations and marketing 8
Slide 9: Strong demand for Fortescue products in China and other regions
Strong demand for Fortescue products in China and other regions For personal use only March Quarter China steel production increased by 9.9% yoy* • Proximity to high growth region • Responsive to market needs • Diverse customer base • Half year sales outside China 10 per cent • Maiden shipments to n
Slide 10: Chinese steel mill profits driving iron ore price spreads
Chinese steel mill profits driving iron ore price spreads For personal use only 250 90 225 85 80 China steel 200 80 Steel Product Margin (US$/t) margins moderating 175 % of profitable mills 75 150 Focus moved to 125 10570 input costs 100 65 75 75 60 Increasing demand 50 for lower Fe products 55 25 0
Slide 11: Iron Ore price
Iron Ore price Average price increased to US$71/dmt driven by higher realisation For personal use only and iron ore supply $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 FB - Mysteel (Port) SS - Mysteel (port) 65% CFR Platts Platts 62% IODEX
Slide 12: Integrated operations and marketing
Integrated operations and marketing For personal use only Direct customer Collaborative engagement operations and driving deep market marketing insights to capitalise on market opportunities Co-location of key Margin decision makers optimisation enabling rapid response through product to market tren
Slide 13: Optimise product mix
Optimise product mix For personal use only Product mix optimisation delivers real value: Tonnes shipped Q3 Product Q2 Product Q1 Product Q3 average realised price millions, (wmt) FY19 mix % FY19 mix % FY19 mix % increased 47% v Q2FY19: West Pilbara Fines 3.8 10% 0.4 1% - - Kings Fines 3.4 9% 3.2 8%
Slide 14: Growth and Development
For personal use only Growth and Development 14
Slide 15: Significant Pilbara footprint for long life production
Significant Pilbara footprint for long life production For personal use only 15
Slide 16: Eliwana mine and rail project
Eliwana mine and rail project For personal use only On target for delivery on time and budget Majority of major equipment tendered US$1.275bn and in line with budget capital investment Detailed design well progressed using 30mtpa dry OPF in-house integrated team 143km rail 200 person fly camp mobili
Slide 17: Iron Bridge Magnetite Project
Iron Bridge Magnetite Project For personal use only US$2.6bn investment in Stage 2 underpinned by Fortescue’s track record in development and operations 22 mtpa* Globally competitive Growth in earnings 67% Fe, low impurity low capital intensity delivers enhanced premium product and operating cost re
Slide 18: Ability to deliver majority of product over 60% Fe
Ability to deliver majority of product over 60% Fe For personal use only Continues to increase Fortescue’s average grade • Competitively positioned across all product segments • Flexibility to optimise margins through iron ore market cycles • Highest grade Australian product with global scale in mag
Slide 19: Innovation
For personal use only Innovation 19
Slide 20: Track record of embracing innovation
Track record of embracing innovation For personal use only Approach to Financing exploration and Unlocking the marketing Chichesters strategy Integrated, World first AHS on Remote Operations commercial scale Centre Port, Rail and 26 million km safely Mine Control travelled by AHS 20
Slide 21: Fortescue ore carriers
Fortescue ore carriers For personal use only Eight ore carriers now operational Designed to Completed over 100 voyages optimise efficient port infrastructure 27mt of iron ore to China to date 14% Fortescue’s annual volume 21
Slide 22: Future of Mobility Centre
Future of Mobility Centre For personal use only Explore opportunities for the application of autonomous mobility technology in an urban environment Research and Software, Autonomous Partnership development hardware light vehicle trial with centre and various forms Christmas Creek community Karratha
Slide 23: Innovation in every aspect of our business
Innovation in every aspect of our business For personal use only Beyond technology and equipment Safety culture Communities Empowering people benefit from our to take control growth and development Aboriginal Diversity Engagement Practical initiatives Jobs, employment and business development 23
Slide 24: Training at the heart of what we do
Training at the heart of what we do For personal use only Empowering our people to be successful VTEC Trade Up Training for a Pathway to an guaranteed job apprenticeship AHS training Successful Over 3,000 people retraining trained in autonomy Career transition and opportunities 24
Slide 25: Sustainable cost improvements
Sustainable cost improvements For personal use only C1 US$/wmt 48 44 Structural improvements Solomon + blending + processing 34 27 Productivity and efficiency Utilisation, recoveries, maintenance 15 13 12 13 Innovation and technology Autonomy, conveyor, ore carriers, data analysis FY12 FY13 FY14 FY1
Slide 26: Looking to the future
Looking to the future For personal use only Product Eliwana and strategy Iron Bridge Integrated operations Latest technology and marketing strategy including autonomy New energy Exploration Renewable energy, Global opportunities reduced emissions and to support demand increased connectivity 26
Slide 27: World class exploration
World class exploration For personal use only Opportunities that will be driven by market demand Paterson NSW Portugal and Rudall ~2,000km2 tenure 21 tenement applications projects, WA South Australia ~6,000 km2 Early stage target Prospective lithium generation copper-gold ~10,000km2 tenure Ecuador
Slide 28: Energy strategy
Energy strategy For personal use only Renewable energy Gas opportunities options including leveraging the solar Fortescue River Gas Pipeline Innovation and Partnership with automation CSIRO to develop reducing mobile and commercialise fleet requirements hydrogen 28
Slide 29: FY19 Guidance
FY19 Guidance For personal use only Shipments C1 cost US$13-13.50/wmt 165-170mt Including 8-10mt WPF Capital spend Dividend policy US$1.2bn 50-80% pay-out of NPAT 29
Slide 30: Key strategic focus
Key strategic focus For personal use only Balance sheet Long term strength sustainability Growth and Returns to development shareholders options 30
Slide 31: Fortescue The New Force in Iron Ore
For personal use only @: Fortescue The New Force in Iron Ore www.fmgl.com.au Ww FortescueNews
Fortescue Metals Group — Macquarie Australia Conference 2019 on 6ix