Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Shareholder Meeting (November 2014)
62 slides from Fortescue's shareholder meeting presentation, Nov 12, 2014
Slide 1: Annual General Meeting
Annual General Meeting For personal use only 12 November 2014
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This prese
Slide 3: Building a world class company
Building a world class company Reliable and competitive supplier to Asia For personal use only • First ore 2008 • Over 415mt shipped to date • 155mtpa++ production rate • Low cost producer • Unique culture 3
Slide 4: For personal use only
For personal use only 4
Slide 5: For personal use only
FOr personemese only; He ie an and bss 4
Slide 6: The safest, lowest cost, most profitable iron ore producer
ec O J R \/ I S I @ The safest, lowest cost, Fortescue most profitable iron ore producer Our Values N Safety Family AVE O . ¥ ey Frugality , = 3a} Empowerment , ow So . a ~ @ Integrity 2) Fortescue Enthusiasm Qyo, 3)? Generating ideas Determination Set yourself stretch targets
Slide 7: Safety is at the heart of Fortescue's family values
Safety is at the heart of Fortescue’s family 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
Slide 8: Annual performance
Annual performance Record operational performance delivers NPAT of US$2.7bn and EBITDA* of US$5.6bn For personal use only Volume 54% Costs 23% 140.0 50 US$/wmt 105.0 40 mt 70.0 30 35.0 - 20 FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 Earnings EBITDA 58% NPAT 57% Debt repaid US$3.6bn 6.0 14.0 U
Slide 9: Operating performance
Operating performance Cost and efficiency focus For personal use only 14.4mt Oct $US3.6bn 7% Sept Qtr debt reduction 172 mtpa Annualised run rate October production 14.4mt Sweating the assets US$2.0bn Costs $29/t cash on hand in October 2014 9
Slide 10: Costs reduction journey
Costs reduction journey Focus on efficiencies and costs improvements For personal use only 100 9 80 14 60 21 6 6 $54 all in cost per wmt 5 4 18 $45 CFR delivered cost 40 13 to customers 48 C1 – mining, processing, 34 32 rail and port costs 20 June 12 June 14 Sept 14 C1 cost Shipping, royalties and o
Slide 11: Moving down the global cost curve
Moving down the global cost curve Targeting bottom quartile For personal use only China Iron Ore Supply CFR Costs (including royalties and freight) 200 Domestic Chinese Ore Australia Brazil India 150 South Africa Other US$/dry tonne 100 50 Fortescue 0 0 100 200 300 400 500 600 700 800 900 1,000 1,10
Slide 12: US$3.6bn debt re-paid since November 2013
US$3.6bn debt re-paid since November 2013 Flexibility with no repayments until April 2017 For personal use only 5,000 4,900 Pre-payable at Fortescue's option 4,500 4,000 3,500 3,000 US$m Pre-payable at 2,500 Fortescue's option in April 2017 2,000 Pre-payable at 1,500 Fortescue's option Pre-payable a
Slide 13: Resource and reserve
For personal use only Resource and reserve
Slide 14: Mine lives based on current reserves
Mine lives based on current reserves Fortescue mine lives compare favourably For personal use only Reserve and Resource Tonnages bn (dry) Ore Reserve Life (Years) 25 25 20 20 15 15 10 10 5 5 0 0 Fortescue BHPBIO RTIO Fortescue BHPBIO RTIO Reserves M&I Resources Total Resources Based on last 12 month
Slide 15: Development
For personal use only Development
Slide 16: AP5 and Iron Bridge Projects
AP5 and Iron Bridge Projects On time and on budget for March 2015 For personal use only 16
Slide 17: Fortescue River Gas Pipeline
Fortescue River Gas Pipeline Stage 1 to Solomon Hub For personal use only 270km gas pipeline 17
Slide 18: At mine processing projects
At mine processing projects Solomon DID plant and Chichester’s Wet High Intensity Magnetic Separation (WHIMS) For personal use only • Additional 5mtpa DID from September 2015 • WHIMS offers low cost production with reduced water use 18
Slide 19: Autonomous Haulage Solution (AHS)
Autonomous Haulage Solution (AHS) Trials commenced FY13 For personal use only 20 trucks operating at Kings 27mt Ore hauled to date Improving 10-20% operational efficiencies safety 19
Slide 20: Market
For personal use only Market
Slide 21: China's growth remains strong
China’s growth remains strong Long term fundamentals remain positive For personal use only • China’s urbanisation continues • Pro-business structural reform • China’s GDP 2014 target remains ~ 7.5% with low inflation 21
Slide 22: Demand for seaborne supply
Demand for seaborne supply New coastal capacity moving away from domestic iron ore For personal use only Iron Ore Reserves New/proposed steel capacity Seaborne iron ore Seaborne iron ore imports (Ex. Australia, Brazil etc.) 22 Source: ANZ Research
Slide 23: Supporting our local community
Supporting our local community For personal use only
Slide 24: Building our economy
Building our economy Unlocking the potential of WA’s North West For personal use only 15,000 employed AU$800m* wages p.a. AU$2.1bn taxes and royalties p.a. AU$490m localised spend FY14 24 * applies to full time employee wages only
Slide 25: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara Creating opportunities through training, employment and business opportunity For personal use only 1,100 Aboriginal employees Aboriginal people in 12% Fortescue workforce Contracts to Aboriginal $1.7bn companies and JV’s VTEC Roebourne, Training Centres Sou
Slide 26: The Fortescue Journey
The Fortescue Journey For personal use only
Slide 27: The New Force in Iron Ore
The New Force in Iron Ore … For personal use only • Low cost producer 155mtpa++ • Fast, capital efficient delivery • World class hardware and “software” • Unique culture drives performance • Never, Ever Give Up 27
Slide 28: Business of Meeting
For personal use only Business of Meeting
Slide 29: Agenda Item – Financial Reports
Agenda Item 1 – Financial Reports For personal use only To receive and consider the financial report, the reports of the Directors and the auditors of the Company and its controlled entities for the year ended 30 June 2014. Further information: Mr Stephen Pearce, Fortescue’s CFO and Mr Nick Henry fr
Slide 30: Resolution – Adoption of Remuneration Report
Resolution 1 – Adoption of Remuneration Report For personal use only Resolution: To consider and, if thought fit, to pass, with or without amendment, the following resolution as an advisory resolution: “That the Remuneration Report for the Company and its controlled entities for the year ended 30 Ju
Slide 31: Resolution – Re-election of Mr Andrew Forrest
Resolution 2 – Re-election of Mr Andrew Forrest For personal use only Resolution: To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That Mr Andrew Forrest be re-elected as a Director of the Company.” Proxy results: FOR AGAINST O
Slide 32: Resolution – Re-election of Mr Owen Hegarty
Resolution 3 – Re-election of Mr Owen Hegarty For personal use only Resolution: To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That Mr Owen Hegarty be re-elected as a Director of the Company.” Proxy results: FOR AGAINST OPEN
Slide 33: Resolution – Re-election of Dr Geoff Raby
Resolution 4 – Re-election of Dr Geoff Raby For personal use only Resolution: To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That Dr Geoff Raby be re-elected as a Director of the Company.” Proxy results: FOR AGAINST OPEN TO C
Slide 34: Resolution – Refresh approval of proportional takeover provisions
Resolution 5 – Refresh approval of proportional takeover provisions For personal use only Resolution: To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution: “That approval of the proportional takeover provisions previously received at t
Slide 35: Chairman's Address
For personal use only Chairman’s Address
Slide 36: Forrest Research Foundation
For personal use only FORREST RESEARCH FOUNDATION
Slide 37: Supporting Western Australian Universities
Supporting Western Australian Universities For personal use only • $65 million scholarships and postdoctoral fellowships • First Forrest Scholars to be announced in mid 2015 • Attract talent with the potential to change the world 37
Slide 38: Early Childhood Development
Early Childhood Development For personal use only Early Childhood Development
Slide 39: Early Childhood Development – time to act
Early Childhood Development – time to act For personal use only • Children who aren’t ‘school ready’ are less likely catch up • $7 return for every $1 invested in the early years • Changing the national approach to early childhood From conception to birth brain size growth is infinite • from Birth t
Slide 40: For personal use only
For personal use only
Slide 41: GenerationOne
GenerationOne 5,000 jobs through Vocational Training & Employment Centres For personal use only • 349 employment partners pledging more than 60,000 jobs • Over 20,000 positions filled • 75% retention rate at 26 weeks 41
Slide 42: GenerationOne
GenerationOne 5,000 jobs through Vocational Training & Employment Centres For personal use only • Department of PM&C with GenOne contracted 24 VTECs • 5,000 Indigenous Australians for guaranteed long term employment • CEO for a Day saw ten Indigenous business leaders spend a day with CEOs 42
Slide 43: Forrest Review: Creating Parity
Forrest Review Creating Parity
Slide 44: Creating Parity Review
Creating Parity Review For personal use only • Commissioned by Australian Prime Minister • First holistic strategy for Australia to end the disparity • Total of 27 recommendations were provided to the Government • Widely haled by Indigenous Australians as a break-through suite of policies • Australi
Slide 45: Creating Parity Review
Creating Parity Review For personal use only 45
Slide 46: Walk Free: The movement to end modern slavery
\ La | WALK FREE.ore THE MOVEMENT TO END MODERN SLAVERY
Slide 47: For personal use only
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Slide 48: Estimated 29.8 million people living in modern slavery
For personal use only “There are an estimated 29.8 million people living in conditions “ of modern slavery today. Source: Walk Free Global Slavery Index 2013 48
Slide 49: Walk Free Foundation: Worlds first Global Slavery Index
Walk Free Foundation Worlds first Global Slavery Index For personal use only • 2014 index includes prevalence in 167 countries and government responses Fiona David 49
Slide 50: Eight million activists in every country of the world
Eight million activists in every country of the world For personal use only
Slide 51: Walk Free Foundation: The Movement
Walk Free Foundation The Movement For personal use only • 8 million activists in 191 countries and growing • Working with partners on the ground in 10 countries – expanding to 20 Olly Buston 51
Slide 52: Tackling modern slavery in supply chains
TACKLING 4 MODERN SLAVERY IN SUPPLY CHAINS WALK FREE.orc PVC) SR THE MOVEMENT TO END MODERN SLAVERY
Slide 53: Walk Free Foundation: Global Business Authentication
Walk Free Foundation Global Business Authentication For personal use only • Working alongside businesses to implement solutions that eradicate modern slavery from their supply chains Peter Nicholls 53
Slide 54: Walk Free Foundation: Global Freedom Network
Walk Free Foundation Global Freedom Network For personal use only • Historic mobilisation of GFN logo all major faiths of the world to bring modern slavery and human trafficking to an end Antonia Stampalija 54
Slide 55: The Freedom Fund
For personal use only The Freedom Fund
Slide 56: Walk Free Foundation: The Freedom Fund
Walk Free Foundation The Freedom Fund For personal use only • The $100 million dollar Freedom Fund announced at the Clinton Global Initiative in September 2013 - has immediate pledges of $30 million from Walk Free, Legatum and Humanity United Nick Grono 56
Slide 57: Global Fund To End Slavery
For personal use only Global Fund To End Slavery
Slide 58: Walk Free Foundation: Global Fund To End Slavery
Walk Free Foundation Global Fund To End Slavery For personal use only Costed National Plans to end • An innovative slavery in every country private-public partnership to end all forms of modern slavery launching in 2015 The only way that countries ever change (unless invaded) is if they drive change
Slide 59: Retiring Directors
For personal use only Retiring Directors
Slide 60: For personal use only
For personal use only
Slide 61: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting: Proudly supporting:
Slide 62: Glossary
Glossary Definition of non-IFRS terms For personal use only NPAT = net profit after income tax Reconciliation of EBITDA to IFRS items 2014 2013 EBITDA = profit before income tax adjusted for depreciation and US$m US$m amortisation, asset write offs, exploration, development and other write-offs, net
Fortescue Metals Group — Shareholder Meeting (November 2014) on 6ix