Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Corporate Update (November 2009)
34 slides from Fortescue's corporate update, Nov 26, 2009
Slide 1: Analyst Site Visit
Analyst Site Visit 25-26 November 2009 Fortescue Metals Group DISCLAIMER - 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
Slide 2: Overview: Last quarterly key points
Overview Last quarterly – key points • Record quarterly shipments of 9.526 million tonnes • Larger more efficient Surface Miner introduced • Efficiencies increasing with continued cost focus • Strong cash position of US$704 million • Second processing plant commitment optimises Chichester Hub
Slide 3: Low cost operation - >42Mt shipped
Low cost operation - >42Mt shipped Innovation: fast, reliable ramp up 50,000 45,000 FMG Cloudbreak Annual Production (kt) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 RIO Hope Downs RIO IOC (pellets and concentrate) RIO Robe River
Slide 4: Summary – 40Mtpa run rate and growing
Summary – 40Mtpa run rate and growing • 18 months of highly efficient ramp up • On track for 55Mtpa run rate early 2011 • 95Mtpa from Chichester Hub advancing • Solomon Hub under fast track planning, initial target 60Mtpa then expanding • Strong balance sheet Technical innovation drives success • A
Slide 5: Chichester Hub
Chichester and Solomon ore bodies Investigator Firetail Chichester Serenity Solomon East Hub Solomon Cloudbreak Hub Christmas Creek Chichester Hub 1
Slide 6: Chichester – forging on to 95Mtpa
Port Hedland Chichester – forging on to Bedded Iron 95Mtpa Deposits Channel Iron Deposits Solomon Hub Chichester Hub Chichester Hub – current status Optimising Cloudbreak operations • Record quarterly shipments of 9.526 million tonnes • Efficiencies increasing with continued cost focus – US$26.60/to
Slide 7: Predictable ramp up growth – 42Mtpa
Predictable ramp up growth – 42Mtpa Q3FY10 target 42 mtpa Current 38 mtpa Chichester optimisation (short term) to 55mtpa 50 km rail spur Haul 16 Rail 39 RoM tonnes Christmas Creek Cloudbreak dry Port 55 wet de-sand de-sand plant plant Product tonnes 34 8 19 Construct second plant at Christmas Creek
Slide 8: Christmas Creek operations
Christmas Creek operations • Competition between Christmas Creek and Cloudbreak drives lowest cost basis across both operations. • EOI issued for big picture mining contract • Rates based with incremental haulage pricing mechanisms to allow for flexibility of operations. • Our strategy is to have Ch
Slide 9: Chichester hub – growth pathway to 95mtpa
Chichester hub – growth pathway to 95mtpa Expansion 55 to 95 mtpa Ramp up 35 to 55 mtpa • Expansion of port and mainline rail infrastructure Start up to 35 mtpa • Cost and efficiency focus • Construction of second plant at Christmas Creek • Fleet expansion, introduction of SM4200s • Further ramp up
Slide 10: Innovation: Surface mining operations
Innovation: Surface mining operations then Innovation: Surface mining operations now
Slide 11: Innovation: overburden removal
Innovation: overburden removal Development of leading solutions to dramatically reduce cost Innovation: Pilbara’s largest ore processing plant
Slide 12: Train load out – highly efficient
OPF average daily production – rising Tonnes per day Train load out – highly efficient • Surge capacity 360,000 tonnes • 2 bins x 400 tonne capacity • Feed rate to bin 14,000 tonnes per hour • Load rate 12,000 tonnes per hour • Capability 9 – 10 trains/day
Slide 13: Christmas Creek on the move
Christmas Creek on the move October 2009 Christmas Creek operations • Currently producing 6Mtpa from Eyre pit • Wholly established as a small operation to supplement Cloudbreak with low Alumina, higher Phos blend • Cloudbreak no longer requires this feed so the operation now has to compete on $ for
Slide 14: Solomon Hub: Christmas Creek operations
Christmas Creek operations • Approval received to expand operation to build 16Mtpa ore processing facility at Christmas Creek; • Competition between Christmas Creek and Cloudbreak drives lowest cost basis across both; • Our strategy is to have – Christmas Creek as a contract operation to benchmark a
Slide 15: Solomon: the only multiple ore type hub
Port Dampier Hedland Solomon: the only multiple ore type hub Solomon Hub Chichester Hub Tom Price Bedded Iron Deposits Channel Iron Paraburdoo Newman Deposits Solomon The next generation • Targeting 4 billion tonnes of resource; • Firetail and other Brockman targets should deliver >300Mt of product;
Slide 16: Solomon – tier one mining hub
Solomon – tier one mining hub Mining Centre Bedded Iron Channel Iron Resource / Production Deposits Deposits Reserve (Mt) Current/ Target (Mtpa) Fortescue Chichester Hub 2,227 38 / 95 Solomon Hub 1,366 2,223 - / 60 /100 Rio Tinto Tom Price 1,030 Paraburdoo / Channar 359 Brockman 2 / 4 985 114 Marand
Slide 17: Solomon expansion Capex / Opex
Solomon World class iron ore production hub – targeted volumes Solomon expansion Capex / Opex Decision to mine in 2010 / 2011 • Additional target product stream of up to 60mtpa to Port Hedland • Targeted to grow to 110mtpa on further expansions • Further expansion planned beyond 60mtpa at (new) Pilb
Slide 18: Infrastructure
Infrastructure Quality that leads industry Port Hedland FMG runs off world’s best infrastructure: World’s leading Bedded Iron Deposits port and rail, Channel Iron linking two hubs Deposits Solomon Hub Chichester Hub
Slide 19: Proven skills in construction and operations
Proven skills in construction and operations From concept To reality Herb Elliott Port Port 2006 2008 Fortescue Rail Railway 2007 2008 Cloudbreak Mine Minesite 2006 2008 FACT: Fortescue built its infrastructure faster than any other mining company FACT: Fortescue ramped up production faster than any
Slide 20: Rail Site Rapid development
Rail Site Rapid development February 2008 Rail Milestones • Trains started running on 5 April 2008; • 1,650 trains delivering over 42Mt to date; • Driver only operations – 240 car trains; • Train control in Perth 1,600km away; • 4 x 240 car train sets (55Mtpa); and • Cycle time <20 hours. 300km of t
Slide 21: State of the art rail operations
State of the art rail operations Target - Lowest cost transport in the Pilbara Rail • Clean sheet design takes existing technology to the next step: – Bigger carrying capacity – Electronic braking system – Aerodynamics • 40 tonne axle loads • Low centre of gravity, long wheel base, means capable of
Slide 22: Higher axle loads
Higher axle loads Deliver great productivity and lower running costs Axle loads (t) Trains/day to achieve 55Mtpa* Fortescue (2010) 40 Fortescue (2010) 4.6 Fortescue 38 Fortescue 4.9 BHP 37.5 BHP 5.0 Rio 35.7 Rio 5.3 Vale 31.5 Vale 6.2 China 28 China 7.2 South Africa 28 South Africa 7.2 India 23 Indi
Slide 23: Worldwide recognition – Herb Elliott Port
Worldwide recognition International rail journal • World’s No.1 industry journal • Put Fortescue on the cover • Noted Fortescue’s ingenuity in constructing and operating the world’s heaviest haul railway • Key design objectives to challenge the dominance of industry heavy weights Herb Elliott Port T
Slide 24: From rail to port – the train unloader
From rail to port – the train unloader • 2 x Cell Rotary Dumper • Train unloaded 1 x rake • 2 x cars every 90 seconds • 2.6 hours/train • 11,000 tonnes per hour Two berth operation at Herb Elliott Port Target - Lowest cost transport in the Pilbara Port • Significant expansion area • Highly automated
Slide 25: Two berth operation at Herb Elliott Port
Two berth operation at Herb Elliott Port Ship 2: high Ship 1: in the water, nearly waiting for loaded and loading low in the water Ship loading rates - accelerating Tonnes per hour (GLR)
Slide 26: Port infrastructure: 55, 95, 155Mtpa
2 Berths 1 Shiploader 2 Stackers 1 Reclaimer 1 Train Unloader Current port infrastructure Capacity (mtpa) 55 95 155 Berths 2 3 5 Shiploaders 1 2 3 Capacity (mtpa) 55 95 155 Stackers 2 2 4 Reclaimers 1 2 3 Capacity (mtpa) 55 95 155 Train Unloaders 1 2 3 Port infrastructure: 55, 95, 155Mtpa 5th berth
Slide 27: FMG Ores
FMG Ores Asia’s highest growth steel making product
Slide 28: Rocket Fines
Rocket Fines Why is it so competitive: • Competitive with Brazil and other • Durable Australian fines - less sensitive to over melting - 64.6 per cent Fe calcined compared to CID fines • Low in contaminants • Flexible - 4.4% SiO2, 1.9% Al2O3 and 0.054% P - can be used in large quantity of customer b
Slide 29: Strong product acceptance
Strong product acceptance • High calcined iron • Mills can use up to 50%, vs15% • Low in contaminants max for MAC, 35% Pilbara Blend • Coarse size with low ultrafines • Less sensitive to over-melting • Very fast sintering speed/high compared to Yandi production rate (“Fires like a • Stable uniform s
Slide 30: Very high percentage use per customer
Very high percentage use per customer Rocket Fines Usage at Customer Steel Mills 30% 25% % of Fortes cue Custom ers 20% 15% 10% 5% 0% 0-10 10-20 20-30 30-40 40-50 50 - 80 >80 % Rocket Fines Used in Customer Sinter Blend (Ore Basis) Most mills using Rocket Fines at 30-45% of their sinter blend with 5
Slide 31: Fortescue has a dominant Pilbara land position
Fortescue has a dominant Pilbara land position FMG: 71,400 km2 Rio: 11,000 km2 (Robe 4,200 km2) BHP: 6,500 km2 61 Exploration 6.3 billion tonnes in 5 years • Christmas Creek drilling commenced May 2004; • Cloudbreak commenced November 2004; • Solomon drilling commenced June 2007. • Reserves now1.6 b
Slide 32: Project pipeline underpinned by geology
Project pipeline underpinned by geology • The largest bedrock hosted iron ore discovery in Australia • New exploration Chichester 3500 Robe resource Robe reserve HI reserve 3000 FMG resource HI resource 2500 million tonnes FMG reserve BHPB reserve 2000 Hancock BHPB resource Others 1500 1000 500 0 AQ
Slide 33: Expansion risk considerations
Expansion risk considerations Risk Mitigant • Proven management expertise and capability across all Execution areas to implement expansion • Massive JORC resource base of 6 billion tonnes Resource • Underpin planned production for in the order of 30 years and beyond with further exploration • Low te
Slide 34: www.fmgl.com.au
Australia’s own emerging resource major Sign up to alerts online: www.fmgl.com.au
Fortescue Metals Group — Corporate Update (November 2009) on 6ix