Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Macquarie Conference (May 2016)
24 slides from Fortescue's conference presentation, May 4, 2016
Slide 1: Macquarie Conference
For personal use only Macquarie Conference Working together. Delivering results.
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 165mt Production rate 650mt 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 4: Ww Fortescue Integrity Determination Set yourself Enthusiasm Empowerment Generating ideas Frugality
Slide 5: Strategic delivery of targets
Strategic delivery of targets For personal use only Focus on safety, productivity and efficiency and response to market 165mt achieved & maintained Cost target $13/t June 16 Sustaining capex below $2/t Net debt $5.9bn Consistent dividend policy 5
Slide 6: Operating and Financial Performance
For personal use only Operating and Financial Performance
Slide 7: Snapshot
Snapshot For personal use only Operational performance + sustainable cost reductions support financial results Controlling the controllable $14.79/wmt US$2.3bn costs + C1 Cost Debt repaid (March quarter) production FY16 Strong operating Net debt 42mt shipped US$5.9bn cashflows 1 Refer to attached gl
Slide 8: Continuous, sustainable cost improvements
Continuous, sustainable cost improvements For personal use only Through development of assets, efficiencies, productivity and cost savings US$/wmt 1 Solomon operations 60 50 48 44 2 Blending strategy 58% Fe 40 34 3 Processing, wet plants + de-sands 30 27 20 15 4 Operational efficiencies Exit FY16 at
Slide 9: Breakeven index price
Breakeven index price For personal use only US$13/wmt exit rate by June challenged by FX and oil US$/t 40 1.9 28.4 30 3.7 22.7 2.5 0.4 18.3 1.9 20 1.4 3.5 13.0 10 0 C1 Shipping Royalty Admin Delivered cost Moisture Dmtu Total dmt cost Interest Capex Breakeven to China adjustments price 9
Slide 10: Debt maturity profile
Debt maturity profile For personal use only FY16 US$2.3bn of debt repaid, reducing interest expense by US$164m p.a. 5,000 4,500 650 4,000 4,176 3,500 3,000 US$m 2,500 2,000 1,500 1,000 2,160 500 577 0 478 0 CY2016 0 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 Senior Secured Credit Facility Senior Unse
Slide 11: Market
For personal use only Market
Slide 12: Core supplier to Asia
Core supplier to Asia For personal use only Well established 17% market share of imported iron ore to China • Low impurity 58% Fe average • High value in use • Large diverse customer base • Reliable consistent delivery • Proximity to high growth region 12
Slide 13: China's share of global GDP approaching 20% by 2020
China’s share of global GDP approaching 20% by 2020 China now produces 50% of the world’s steel For personal use only Share of World’s GDP 2013 - 2020 Crude Steel Production 2015 (mt) 40 89 35 208 30 25 GDP 803 20 301 15 10 154 5 41 0 2013 2014 2015 2016 2017 2018 2019 2020 China India Rest of Asia
Slide 14: China's One Belt One Road
China’s One Belt One Road For personal use only Generating regional demand for steel
Slide 15: Steel consumption to build economy
Steel consumption to build economy Steel demand – driven by policy decisions For personal use only Source: Wood Mackenzie 15
Slide 16: Iron ore supply in balance…sentiment driving price
For personal use only Days Coverage 10 20 30 40 50 0 Jul-10 Sep-10 Nov-10 Source: Bloomberg and Umetal Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Port stocks remaining stable Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14
Slide 17: Supporting our local community
For personal use only Supporting our local community
Slide 18: Ending Aboriginal disparity in the Pilbara
Ending Aboriginal disparity in the Pilbara For personal use only Creating opportunities through training, employment and business opportunity 18
Slide 19: Focused strategy
For personal use only Focused strategy
Slide 20: 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) 2015 Source: Metalytics 25
Slide 21: Strategic delivery
Strategic delivery For personal use only Culture, continuous improvement, speed and flexibility maximise asset base Consistent 165mtpa Lowering costs to US$13/wmt Maximising cash flows Debt repayment Expect further improvements 21
Slide 22: The new force in iron ore
The new force in iron ore For personal use only Continuous improvement, reliable and efficient delivery Sustainable low cost World class producer assets & people 165mt Unique culture drives performance Production rate 22
Slide 23: For personal use only
For personal use only www.fmgl.com.au @FortescueNews Proudly supporting:
Slide 24: Glossary
Glossary For personal use only C1: Operating costs of mining, processing, rail and port. The reconciliation of C1 to the amounts disclosed in the financial statements prepared under the Australian accounting standards is provided in the Financial Report for the half year ended 31 December 2015 accom
Fortescue Metals Group — Macquarie Conference (May 2016) on 6ix