Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 2007 AMEC National Mining Congress
41 slides from Fortescue's conference presentation, Jun 8, 2007
Slide 1: The New Force in Iron Ore
Fortescue Metals Group Ltd THE NEW FORCE IN IRON ORE T ra in U nl o a d er Fortescue Port Footprint – 5km Port Footprint – 5km THE NEW FORCE IN IRON ORE 2007AMEC 2007 AMECNational NationalMining MiningCongress Congress 8 June Perth, 2007 8 June 2007
Slide 2: Disclaimer
Fortescue Metals Group Ltd DISCLAIMER 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
Slide 3: 2007 AMEC National Mining Congress
Fortescue Metals Group Ltd THE NEW FORCE IN IRON ORE 2007 AMEC National Mining Congress Perth, 8 June 2007
Slide 4: China Requires that Australia Recover Market Share
China Requires that Australia Recover Market Share Chinese Imports by Source 80% 70% 60% Aust 50% Brazil 40% India S.Africa 30% Others 20% 10% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Tex Report
Slide 5: China needs the Pilbara
China needs the Pilbara • Australia is the most competitive supplier to Asia Australian Ore US$56.90 • Three companies globally set price and South African Ore US$65.20 dominate the seaborne market Brazilian Ore US$72.10 • Fortescue plans to be the 4th major seaborne Indian Ore US$64.60 supplier Sou
Slide 6: Massive Pilbara holdings and why China needs FMG
Massive Pilbara holdings and why China needs FMG Fortescue’s 40,000 sq kilometres tenements far exceed others The Pilbara contributes about 20% of The Pilbara contributes about 40% of BHP Billiton’s Market Cap Rio Tinto’s Market Cap
Slide 7: Unparalleled Assets – Reserves & Resources
Unparalleled Assets – Reserves & Resources • One of the largest bedrock hosted iron ore discoveries in Australia • Ore reserves of 1.053 Bt, over 2.3bn in reserve resource envelope – very active program to establish upside. HI reserve Robe resource HI resource 2500 Robe reserve 2000 BHPB reserve 2.2
Slide 8: Unparalleled Assets – Competitive Cost
Unparalleled Assets – Competitive Cost 60 Australian mines 50 Brazilian mines US cents/dmtu FMG mine 40 30 20 10 0 0 200 400 600 800 1000 Cumulative Production (mn wmt) (1) Site Operating Costs are those costs used to determine free cashflow and include raw material costs and conversion costs. Sourc
Slide 9: Unparalleled Assets – Simple Mining Methods
Unparalleled Assets – Simple Mining Methods allow visual cut off for pit geologists • Superior grade control techniques • Selective mining capability – Straight forward grade prediction from model and mapping – Textures and grades clearly visible after cutting
Slide 10: Latest Project Highlights
Latest Project Highlights • Project completion forecast well within allocated funding. • First Ore On Ship (FOOS) expected mid May 2008. • Port dredging ahead of schedule, marine structure piling advanced.
Slide 11: Unparalleled Port Assets
Unparalleled Port Assets Port Hedland, Western Australia’s iron ore coast Critical Path Contract Dredging Completed 11 May 2007
Slide 12: Unparalleled Port Assets
Unparalleled Port Assets Looking inland towards Cloud Break Looking seaward over BHP’s port
Slide 13: Latest Project Highlights, port and rail equipment
Latest Project Highlights, port and rail equipment t a c k s le e p er s s t a c k s re te s nv e y o r Conc C o t a ck s t ee l s Rail s
Slide 14: Close-up of Fortescue's wharf construction
Close-up of Fortescue’s wharf construction with BHPB Ship turning in the background
Slide 15: BHPB ship enjoying Fortescue's dredged turning circle
BHPB ship enjoying Fortescue’s dredged turning circle (like we will enjoy theirs)
Slide 16: Train Unloader on Schedule
Train Unloader on Schedule
Slide 17: Rail Corridor
Rail Corridor Total Rail Line Cleared (260 kms) Rail earthworks on four separate construction fronts and all bridges underway
Slide 18: East Turner River Bridge Concrete Piers
East Turner River Bridge Concrete Piers
Slide 19: Locos on the way
Oud Locos on the way
Slide 20: Permanent Camp – Cloud Break Mine
Permanent Camp 2 – Cloud Break Mine
Slide 21: Train loading Vault preparation at mine
Train loading Vault preparation at mine Fortescue Port Footprint – 5km THE NEW FORCE IN IRON ORE 2007 AMEC National Mining Congress Perth, 8 June 2007
Slide 22: Train Loading Vault at mine showing scale
Train Loading Vault at mine showing scale Fortescue Port Footprint – 5km THE NEW FORCE IN IRON ORE 2007 AMEC National Mining Congress Perth, 8 June 2007
Slide 23: First crusher going to Site
First crusher of 8 going to Site
Slide 24: Mainframe of second crusher
Mainframe of second crusher
Slide 25: First of vibrating screens on way to Site
First of 11 vibrating screens on way to Site
Slide 26: Ore preparation facilities at Cloud Break
Ore preparation facilities at Cloud Break • Mine bulk earthworks for ore preparation facility, airport and access roads advanced • Caterpillar, Terex and Wirtgen selected as principal mine fleet suppliers
Slide 27: Port Hedland Port Operations
Port Hedland Port Operations
Slide 28: Straightforward Construction
Straightforward Construction Construction Risk TODAY EXTREME • Multiple sites facilitate parallel construction • Contract risk spread – no single Ship contract >10% of total capex HIGH Commission Construction • Ample power and gas supply Tender Process • Well proven technical construction risk / Eng
Slide 29: Facility Capacity - Summary
Facility Capacity - Summary UNIT FACILITY CAPACITY NUMBER ANNUAL FACILITY EQUIPMENT (tpy) OFF CAPACITY Mine output Crushing & Screening 50,700,000 1 50,700,000 Railway Trains (200) 12,410,800 4 49,643,200 Unloading Dumper 49,971,686 1 49,971,686 Stacking Stackers 30,834,381 2 61,668,763 Reclaiming R
Slide 30: Forecast to Complete Within Allocated Funds
Forecast to Complete Within Allocated Funds 3,500 Cost Over-run & Back-up Reserve F.O.O.S. Millions 15/05/2008 (AUD) Infrastructure Contingency 3,000 Mining & Working Capital Infrastructure Costs Actual / Forecast 2,500 2,000 1,500 1,000 500 0 Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- F
Slide 31: Business Partnering Opportunities for FMG and Chinese Suppliers
Business Partnering Opportunities for FMG and Chinese Suppliers FMG’s 45 Mtpa project has created • US$300m of manufacturing export business for Chinese companies • One of the largest single export contract for Rail Wagons • Mining industry’s largest bulk material handling equipment order from China
Slide 32: Technology Transfer to China
Technology Transfer to China • World’s heaviest haul rail wagons at 40 tonne axle loads. Designed by China Southern Rolling Stock (CSR) with guidance from FMG industry experience • China’s current heavy haul railroad, Datong – Qinhuangdao coal line has 25 tonne axle load • This FMG knowledge transfe
Slide 33: Marketing – Sold out
Marketing – Sold out • All first phase 45Mtpa contracted for minimum of 10 years • Approximately 50Mtpa contracted for “Fortescue Expansion” tonnage • All “top 10” Chinese Mills have agreements • The focus has been on agreements directly with mills who have approval to expand and already receive sup
Slide 34: FMG and Baosteel offtake
FMG and • Off-take agreement – up to 20 mtpa for 10 years. • T45 – sold out – 100% contracted, with 5mtpa to Baosteel. • Underwrites future expansion beyond T45. • Major product endorsement for other global steel mills. • Technical program to optimise Fortescue ore for market. • Preferentially advan
Slide 35: FMG and Baosteel magnetite JV
FMG and • Memorandum of Understanding to develop magnetite JV: 1. Exploration and resource definition – target > 1 billion tonnes. 2. Feasibility studies. 3. Agreement to proceed to mine. • Baosteel to fund 1 and 2 for 50% equity interest. • Baosteel needs product in 2009. • Massive resource targets
Slide 36: Fortescue Port Footprint – 5km
Fortescue Port Footprint – 5km THE NEW FORCE IN IRON ORE 2007 AMEC National Mining Congress Perth, 8 June 2007
Slide 37: Expansion planning advanced
Expansion planing advanced The Port T ra in U The most time critical nl o 110 d a er 180 Mpta Mpt 45 Mpta construction a ahead of schedule 180 110 45Mt Train Mtpa Mtp pa Unloader a The Port – The most time critical construction ahead of schedule 200Mtpa 100Mtpa 55Mtpa Development advanced The Port –
Slide 38: Offtake Growth target: >100mtpa
Offtake Growth target: >100mtpa CLOUD B REA K TEXTURE X / CC CHRISTM A S CREEK M T LEEUWIN WHITE KNIGHT FLINDERS SOLOM ON 180 160 140 120 Target 100 MTPA 80 60 40 20 0
Slide 39: Expansion planned – Stage 1 – 45 mtpa
Expansion planned – initial construction design Stage 1 – 45 mtpa First Ore On Ship May 2008 – 1 Berth – 1 Ship loader – 1 Lay-by berth – 2.5mt stockpile – Single rail loop – 1 x 2 car train unloader 1Km
Slide 40: Expansion planned – Stage 2 – 100 Mtpa+
Expansion planned – initial construction design Stage 2 – 100 Mtpa+ – 3 Berths – 2 Shiploaders – 10 mt stockpile – Double rail loop – 2 x 2 car train unloader 1Km
Slide 41: Conclusion
Conclusion • Huge reserve portfolio – initial mine plan +20 years • Products extensively trialed and 100% under contract • Open access port and rail infrastructure construction advanced • Operation underway mid May 2008 • Government and project partners fully committed • Expansion plans > 100 Mtpa a
Fortescue Metals Group — 2007 AMEC National Mining Congress on 6ix