Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — 5th Singapore Iron Ore Week Conference (April 2017)
30 slides from Fortescue's conference presentation, Apr 27, 2017
Slide 1: 5th Singapore Iron Ore Week Conference
For personal use only 5th Singapore Iron Ore Week Conference
Slide 2: Forward looking statements
Forward looking statements For personal use only Important Notice Additional Information The purpose of this presentation is to provide general information about This presentation should be read in conjunction with the Annual Report at 30 Fortescue Metals Group Limited ("Fortescue"). It is not recom
Slide 3: Building a world class company
Building a world class company Core supplier to China’s growth For personal use only Safety focus First ore Low cost Engagement Empowerment Leadership in 2008 producer Shipped over 165-170mt Production rate 800mt Unique culture 3
Slide 4: Our Vision: The safest, lowest cost, most profitable iron ore producer
Our Vision: The safest, lowest cost, most profitable iron ore producer v Fortescue i Determination The New Force in Iro! Set yourself stretch targets Enthusiasm Empowerment Generating ideas
Slide 5: Delivering on targets
Delivering on targets For personal use only Focus on safety, productivity and efficiency Safety 165-170mt shipped Productivity + efficiency Low cost global producer Debt repayments Consistent dividend policy 5
Slide 6: March Quarter FY17 Snapshot
March Quarter FY17 Snapshot For personal use only Productivity initiatives delivering sustainable cost reductions and financial results Safety C1 Cost 2.9 $13.06/wmt TRIFR On target to US$12-13 Debt repayment 39.6mt Shipped for the quarter remains priority 6
Slide 7: Continuous + sustainable cost improvements
Continuous + sustainable cost improvements For personal use only Focus on productivity and efficiency delivering cost savings US$/wmt 1 Solomon operations 60 50 48 44 2 Blending strategy 58% Fe 40 34 3 Processing, wet plants + de-sands 30 27 15 4 Operational efficiencies 20 10 $12 - $13 12-13 5 Fx a
Slide 8: Innovative shipping fleet
Innovative shipping fleet Eight ore carriers - natural extension of Fortescue’s supply chain For personal use only • Provides 12% shipping requirements • Complement port infrastructure • Maximise tonnage, improve load rates • Safe manoeuvring within the port • CDB Leasing agreement US$473m 8
Slide 9: Moving down the global cost curve
Moving down the global cost curve For personal use only China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2016 Tonnes millions Source: Metalytics – November 2016 11
Slide 10: Financial performance
For personal use only Financial performance
Slide 11: March quarter FY17 financial outcomes
March quarter FY17 financial outcomes For personal use only Operational performance delivering financial results US$1.5bn US$4.3bn Cash on hand Gross Debt US$194m 22% Capital Expenditure Net gearing Refer to attached glossary for definition of non-IFRS terms 11
Slide 12: Cost savings delivered
Cost savings delivered For personal use only US$3.7bn in operating cost savings delivered since achieving full operational capacity US$bn 4.0 0.3 0.2 3.0 1.9 2.0 4.0 3.7 0.8 1.0 0.8 - FY14 FY15 FY16 HY17 FY14 - HY17 2HY17 fcst FY14 - FY17 fcst delivered delivered savings 12
Slide 13: Debt repayments
Debt repayments For personal use only US$8.4bn of debt repaid since expansion complete improving gross gearing to 31% Refer to attached glossary for definition of non-IFRS terms 13
Slide 14: Debt maturity
Debt maturity For personal use only US$2.7bn repaid in FY17 with flexibility to continue voluntary early repayments Refer to attached glossary for definition of non-IFRS terms 14
Slide 15: Market
For personal use only Market
Slide 16: FMG values its relationship with China
FMG values its relationship with China For personal use only Four key areas of engagement 16
Slide 17: 13th Five Year Plan (2016-2020)
13th Five Year Plan (2016-2020) For personal use only RMB12.5 trillion for ~ 11,000 listed projects New power 3,000km 152,000km New urban projects rail lines Roads in rural areas +480,000 MW 80% cities Over 50 Pipelines with high civilian + speed rail airports gas storage Source: China Daily 17
Slide 18: Property and infrastructure driving steel demand
Property and infrastructure driving steel demand For personal use only Residential sales and tier 1 house prices have increased 80 35 30 60 25 40 20 15 % % 20 10 0 5 0 -20 -5 Sales (left) Prices (right) -40 -10 01-Jan-11 01-Jan-12 01-Jan-13 01-Jan-14 01-Jan-15 01-Jan-16 01-Jan-17 01-Jul-11 01-Jul-12
Slide 19: Core supplier to Asia
Core supplier to Asia For personal use only Well established 17% market share of imported iron ore to China Total 2016 global steel production 1,629mt • Low impurity 58% Fe average • Competitive value in use 541 808 • Large diverse customer base 79 • Responsive to market needs 96 105 • Proximity to
Slide 20: Steel capital stock tonnes/capita
For personal use only Steel capital stock tonnes/capita - 2 4 8 6 10 12 14 16 1950 1952 1954 1956 1958 1960 1962 1964 1966 Source: NBS, worldsteel, Macquarie, February 2017 1968 1970 USA 1972 1974 1976 1978 1980 1982 1984 1986 Japan 1988 1990 1992 1994 Steel stock tonnes per capita 1996 1998 2000 Ch
Slide 21: China's One Belt One Road
China’s One Belt One Road For personal use only Generating regional demand for steel and opportunities for Northern Australia
Slide 22: Reserves and resources
Reserves and resources For personal use only
Slide 23: Resource portfolio supports asset base
Resource portfolio supports asset base For personal use only Largest Pilbara tenement footprint 12,000 2,463 2,463 2,463 10,000 Mineral Resources dry in situ (Mt) 2,463 740 740 740 8,000 2,013 624 1,032 624 624 4,877 4,793 6,000 4,755 3,504 3,070 3,070 2,860 4,000 1,715 2,224 695 303 491 491 6,706 6
Slide 24: Firetail replacement - 2021
Firetail replacement - 2021 For personal use only Options for Firetail replacement being developed 24
Slide 25: Focussed strategy
For personal use only Focussed strategy
Slide 26: Moving down the global cost curve
Moving down the global cost curve For personal use only China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2016 Tonnes millions Source: Metalytics – November 2016 44
Slide 27: Key strategic focus
Key strategic focus For personal use only Disciplined value creation • Debt repayment and capital flexibility • Long term sustainability of iron ore • Create low cost growth options – Leverage skills and culture – Exploration and early stage development • Delivery of returns to shareholders 27
Slide 28: The new force in iron ore
The new force in iron ore For personal use only Continuous improvement Sustainable low cost World class producer assets & people Customer focus Unique culture Reliable drives performance Competitive 46
Slide 29: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting:
Slide 30: Glossary
Glossary For personal use only C1: Operating costs of mining, processing, rail Underlying EBITDA: Earnings before interest, tax, depreciation and amortisation, and port on a per tonne basis, including exploration, development and other expenses. The reconciliation of allocation of direct administrat
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