Slide 1: FY20 Full Year Results
FY20 Full Year Results 24 August 2020 1
Slide 2: Important Notice
Important Notice Forward 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 Looking to Fortescue based on this presentation. This presentation contains cert
Slide 3: World class company
World class Global force | Thriving communities company Long term Balance sheet sustainability strength Target 30 to 40% Wholly Industry owned, fully leading integrated cost Vision supply chain position and Values Secure and reliable supplier Growth and of iron ore Enhanced development returns to sh
Slide 4: Integrated mine to market infrastructure
Integrated mine to market infrastructure Delivering sustained operational efficiencies 4
Slide 5: Safety and unique culture
Safety and unique culture 2.4 TRIFR Total Recordable Injury Frequency Rate 14% improvement Compared to FY19 96% participation Safety Excellence and Culture Survey 5
Slide 6: Response to COVID-19
Response to Prioritise the health of our people, maintain jobs, COVID-19 sustain our business and protect communities Temporary extension Additional bus and of operational roster air charter services as needed Temperature and Non-essential site and health testing and office-based teams rapid screeni
Slide 7: FY20 production highlights
FY20 14% improvement in TRIFR to 2.4 production highlights US 178.2 mt shipped $12.94 /wmt C1 cost includes 6% on FY19 US$0.22/wmt COVID-19 impact US $79 Average /dmt 84% Average revenue realisation 21% on FY19 4% on FY19 7
Slide 8: FY20 Financial highlights
FY20 Financial highlights US $8.4bn 65% Underlying EBITDA Underlying EBITDA margin US $4.7bn 40% NPAT Return on equity US $1.54 A $1.76 Earnings per share Dividend per share (A$2.29) Payout ratio of 77% 8
Slide 9: FY20 Financial highlights
FY20 Financial US US highlights $6.4bn $4.4bn Net operating cashflow Free cashflow US $4.9bn US $0.3bn Cash on hand Net debt 2% <0.1x Net gearing Net debt / EBITA (28% gross gearing) (0.6x gross debt / EBITDA) 9
Slide 10: Dividend policy
Dividend policy Shareholder returns Payout ratio of 50 to 80 per cent of full year net profit after tax A $1.00 per share Fully franked final dividend A $1.76 per share FY20 total dividends, 77% payout ratio US $3.7billion (A$5.4 billion) Value of FY20 dividend 10
Slide 11: Revenue and earnings
Revenue and earnings Annual record in revenue and earnings Revenue (US$m) Underlying EBITDA NPAT 12,820 8,375 4,735 9,965 8,447 6,047 3,187 7,090 6,887 4,744 2,093 3,194 3,182 985 878 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 11
Slide 12: Underlying EBITDA
Underlying EBITDA Year on year increase reflects price, enhanced product mix and higher volumes Underlying EBITDA (US$m) Underlying EBITDA margin (%) 65 61 56 45 46 FY20 FY16 FY17 FY18 FY19 FY20 12
Slide 13: Price and margins
Price and Strong EBITDA margins through all market cycles margins Prices and EBITDA margin (US$/dmt) Underlying EBITDA Platts 62% CFR Index Average Underlying EBITDA Fortescue realised price Average Fortescue realised price 100 90 80 70 60 50 52 40 30 39 30 20 21 20 10 0 FY16 FY17 FY18 FY19 FY20 13
Slide 14: Return on capital
Quality of earnings reflected in FY20 Return on return on equity of 40% capital Return on equity (%) Return on capital employed1 (%) 40 37 31 29 23 20 12 11 9 10 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 1 Return on capital employed is calculated as earnings before interest and tax divided b
Slide 15: Sustainable low cost producer
Sustainable low cost producer Innovation and productivity contributes to industry leading cost position C1 cost (US$/wmt) 15.43 12.82 13.11 12.94 12.36 FY16 FY17 FY18 FY19 FY20 15
Slide 16: Cash generation
Cash generation Strong operating performance, disciplined investment and free cash flow Net cash from operations (US$m) Capital expenditure Free cash flow 6,415 4,256 4,373 4,449 3,539 3,528 2,446 1,966 2,086 1,601 897 1,045 717 704 360 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY1
Slide 17: Capital expenditure
Capital expenditure Investing in the business and growth FY20 Capital expenditure (US$m) FY21 Capital expenditure guidance (US$m) 1,000 690 771 US US$1,966m US US$3,000 – $3,400m 1,900 – 2,300 140 116 389 Sustaining capital Development capital Sustaining and development capital Major projects Explor
Slide 18: Investing in growth
Investing in growth Executing on product, growth and decarbonisation strategy Eliwana Mine and Rail Project (US$m) Iron Bridge Magnetite Project Pilbara Energy Connect 1,050 - 1,250 619 600 - 650 300 - 400 250 - 350 500 - 700 243 124 50 - 100 50 - 100 17 FY19 FY20 FY21 FY20 FY21 FY22 FY23 FY20 FY21
Slide 19: Robust balance sheet
Robust balance sheet Credit metrics below targeted range, with a balanced maturity profile Gearing (%) Debt maturity profile, excluding leases and RCF1 (US$m) 45% Target 30 to 40% (gross) 38% Syndicated Term Loan 31% 29% 27% 28% 24% Senior Unsecured Notes 21% 16% 750 750 2% FY16 FY17 FY18 FY19 FY20
Slide 20: Delivering dividends
Fully franked dividend of A$1.76 per share, Delivering representing a 77% payout of FY20 NPAT dividends Dividends declared (A$/share) and payout ratio (%) 78% 77% 2.00 80% 1.76 62% 1.50 60% 52% 1.14 38% 36% 1.00 40% 21% 21% 0.50 17% 16% 0.45 20% 0.20 0.23 0.15 0.07 0.08 0.10 0.05 0% FY11 FY12 FY13 F
Slide 21: Capital allocation
Capital allocation Transitioned from deleveraging to capital returns Cumulative allocation of NPAT (US$m) US $19.4bn Net debt repayments Share buy-back Dividends NPAT NPAT 20,000 17,500 15,000 US $9.1bn 12,500 10,000 Net debt repayment 7,500 5,000 2,500 US $9.5bn 0 (2,500) Dividends 21
Slide 22: Integrated operations
Integrated operations 22
Slide 23: Forefront of innovation
Forefront of innovation Delivering safety, productivity and efficiency benefits Operational excellence Data and analysis Renewable energy Optimising value from Driving informed Maximising our asset base decision making opportunities Current Current Current • Autonomous haulage • Fortescue Hive • Sol
Slide 24: Value chain
Value chain a = i 4 Shippin, and recovery a port °- loading "= °— =—_s—_2 2222 7.2.2 : Modelling, j Blending and . . planning and ® Processing stockpiling Ue | Marketing ching port development sales J Fortescue Exploration and discovery
Slide 25: Fortescue Hive
Fortescue Hive Expanded Integrated Operations Centre Purpose-built facility Planning, operations and mine control teams, together with port, rail, shipping and marketing teams 24/7 operations centre Improved safety, reliability, efficiency and commercial outcomes Future use of technology Artificial
Slide 26: Operational development projects
Autonomous haulage Operational >49 million km safely travelled development projects 170 trucks in operation 30% increase in productivity Wet High Intensity Magnetic Separators (WHIMS) Maximise production rates Enhance the value of our ore Completed by the end of 2020 Extension of relocatable conveyo
Slide 27: Integrated operations and marketing
Integrated operations and marketing Marketing strategy to maximise value Direct customer engagement driving deep market insights Reliable supplier and optimised product mix that meets customers’ needs Aligning delivery with customers’ requirements and opening new channels 27
Slide 28: Strong demand for iron ore in China supported by increased imports
Strong demand for iron ore in China supported by increased imports Sustained growth in China’s crude steel production China monthly crude steel output (mt) China monthly iron ore imports (mt) 100 120 95 110 90 85 100 80 90 75 70 80 65 70 60 60 55 50 50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 29: Iron ore stocks remain low
Iron ore stocks remain low Low inventory trend through the supply chain as demand outpaces supply China port stocks by origin (mt) 170 150 130 110 90 70 50 Australia Brazil Other Source: Mysteel 29
Slide 30: Iron ore price
Fortescue’s average realised price of US$79/dmt Iron ore in FY20 increased by 21 per cent on the prior year price Iron ore prices, CFR China (US$/dmt) 140 130 120 110 100 90 80 70 60 50 40 30 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Platts Platts 62% CFR 62% IODEX Index FB Blend Fortescue (p
Slide 31: Enhanced product mix
Increased volumes of higher value Enhanced West Pilbara Fines and Fortescue Blend products product mix FY20 Product mix FY19 Product mix 1% 1% 10% 5% 5% 33% 37% 37% 43% 43% 41% 7% 5% 5% 9% 9% 9% West Pilbara Fines Fortescue Blend Kings Fines Fortescue Lump Super Special Fines Other 31
Slide 32: Growth and development
SS OSs ‘ << * 4c) Fortescue Growthand development 32
Slide 33: Eliwana Mine and Rail Project
Eliwana Mine and Rail Project 30 mtpa First ore on train scheduled for December 2020 60.1% Fe Underpinning production of West Pilbara Fines US$45 per tonne Industry leading capital intensity >50% Installation of structural steel at OPF 33
Slide 34: Eliwana progress
Eliwana progress On schedule for first ore on train in December 2020 Ore processing facility site Eliwana rail bridge installation 34
Slide 35: Iron Bridge Magnetite project
Iron Bridge Magnetite project 22 mtpa Production, with first ore on ship in mid-CY22 67% Fe High grade, low impurity concentrate product US$2.6bn Stage 2 investment, low capital intensity >60% Bulk earthworks complete 35
Slide 36: Iron Bridge Magnetite project
Iron Bridge Magnetite project Integrated into Fortescue’s operations Unincorporated joint venture Construction Fortescue delivers engineering, procurement Iron Bridge Project and construction management (Unincorporated Joint Venture) 69% 31% Operations FMG Magnetite Pty Ltd Formosa Steel IB Pty Ltd
Slide 37: Stage 1: Process validation
Stage 1: Process validation Comprehensively studied since 2010 and de-risked through the operation of large scale pilot and full scale demonstration plants US$0.5 billion invested to reduce process technical risk 1mt of ore processed through full scale high pressure grinding rolls and air classifier
Slide 38: Project is progressing on schedule and budget
Project is progressing on schedule and budget Detailed engineering Bulk earthworks are over 70% complete over 60% complete Process plant bulk Project to date earthworks complete commitments of over 45% Key technical Primary project procurement approvals secured packages completed 38
Slide 39: Delivering on our product strategy
Delivering on our product strategy Iron Bridge will enhance Fortescue’s product portfolio Competitive positioning across all product segments Flexibility to optimise margins through iron ore market cycles Highest grade Australian product, with global scale production 39
Slide 40: Iron Bridge progress
Iron Bridge progress Construction on schedule Ore processing facility site Iron Bridge camp 40
Slide 41: Exploration
Exploration Pilbara Focus on iron ore and Extensive tenement footprint commodities that support decarbonisation Australia NSW 3,000km2 tenure SA 15,000km2 tenure South America Argentina 450,000ha of tenements, prospective for copper-gold Ecuador 135,000ha of tenements prospective for copper Internat
Slide 42: FY21 guidance
FY21 guidance 175 – 180mt Iron ore shipments US$13.00 – US$13.50/wmt C1 costs based on assumed exchange rate of AUD:USD 0.70 US$3.0 – US$3.4 billion Capital expenditure 42
Slide 43: Key strategic focus
Key strategic focus Underpinned by balance sheet strength Long term ✓ sustainability Growth and ✓ development Enhanced returns ✓ to shareholders 43
Slide 44: Sustainability
v Fortescue Sustainability «— s. ~* Se
Slide 45: Approach to Sustainability
Approach to Sustainability We are a global force, committed to empowering thriving communities Setting Safeguarding the Creating positive high standards environment social change ▪ Employee health and safety ▪ Climate change action and ▪ Creating employment and disclosure business opportunities for
Slide 46: Setting high standards
Setting high standards Safety, diversity and integrity 2.4 TRIFR 14% improvement from 2.8 in FY19 19% female employment rate 10% Aboriginal employment rate across Australian operations 46
Slide 47: Protecting Aboriginal heritage
Detailed processes for the Protecting Aboriginal conduct of Aboriginal cultural heritage heritage surveys, consultation, project planning, impact mitigation and negotiation Seven agreements with Native Title Groups Heritage avoidance Primary objective ~6,000 heritage sites Protected and avoided 2.7
Slide 48: Safeguarding the environment
Safeguarding the For future generations environment Zero Significant environmental incidents A$1.7 million Invested in research and conservation programs 98% Water reinjected through innovative managed aquifer recharge scheme 89% Non-mineral waste volumes recycled across all sites 48
Slide 49: Emissions reduction targets
Emissions Addressing the global climate change challenge with a sense reduction targets of urgency Net zero Operational emissions by 2040 26% reduction Scope 1 and Scope 2 emissions from 2020 levels, by 2030 Decarbonisation pathway Energy infrastructure to increase use of renewables Technology and i
Slide 50: Energy infrastructure
Energy infrastructure US$800 million investment with our business partners will deliver 25 to 30 per cent of stationary energy from solar power Chichester solar gas Pilbara Energy Connect Hydrogen hybrid project ▪ US$100 million investment by ▪ US$250 million Pilbara ▪ Reduce carbon emissions and Al
Slide 51: Creating positive social change
Building sustainable communities, Creating positive empowering Aboriginal people and social change eradicating modern slavery 14% Aboriginal employment across Pilbara operations 900 jobs to Aboriginal people via VTEC since 2006 Billion Opportunities A$2.7 billion in contracts to Aboriginal business
Slide 52: Our Purpose
Our Purpose Global force | Thriving communities Fortescue’s Values EEE HY |i
Slide 53: FortescueNews
w www.fmgl.com.au W FortescueNews