Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — Diggers and Dealers 2010
38 slides from Fortescue's conference presentation, Aug 3, 2010
Slide 1: Fortescue welcomes you to the 2010 Diggers and Dealers
For personal use only Fortescue welcomes you to the 2010 Diggers and Dealers 3 August 2010
Slide 2: Disclaimer
For personal use only Di l i Disclaimer Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that anyy person p makes any y investment decision in relation to Fortescue based on this presentation. Th
Slide 3: Contents
For personal use only Contents 1. Summaryy 2. Operational Update 3. Marketing 4 Financial 4. Fi i lSSnapshot h 5 Three Production Hubs 5. – Two Ports
Slide 4: Summary
For personal use only Summary • Consistent annual run rate of >40mtpa • Christmas Creek expansion p advancing g strongly gy • Average CFR shipping price of US$130/t for Q410 • Solomon S l resource iincreases tto 2 2.9bn 9b ttonnes • Solid liquidity >US$1.25 billion cash on hand PURE IRON ORE PLAY –
Slide 5: Integrated Business – over 70Mt shipped
Integrated g Business – over 70Mt shipped pp For personal use only Ownership p of infrastructure is the key y
Slide 6: Proven skills in operations – ramp up records
Proven skills in operations p – ramp p up p records For personal use only 50,000 45,000 FMG Cloudbreak 40,000 Annual Production (kt) 35,000 30,000 25,000 20,000 15 000 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
Slide 7: Iron ore for generations: dominant Pilbara land position
Iron ore for generations Fortescue has a dominant For personal use only Pilbara land position FMG: 71,400km2 Rio: 11,000km2 (Robe 4,200km2) BHP: 6,500km2
Slide 8: Innovation at Work
For personal use only Innovation at Work • New exploration p model applied pp • Surface miners optimise grade control • Automated overburden removal systems • Largest ore processing plant in the Pilbara • Fastest heaviest haul rail system • Port out out-load load rates highest in Australia • Energis
Slide 9: Innovation: Surface Miner
Innovation For personal use only 4200 S Surface f Mi Miner
Slide 10: Innovation: Automated overburden removal system
Innovation Automated For personal use only o erb rden overburden y removal system – in operation mid September
Slide 11: Innovation: Largest Ore Processing Facility in the Pilbara
Innovation For personal use only The llargestt O Th Ore Processing P i F Facility(OPF) ilit (OPF) in the Pilbara
Slide 12: Innovation: Fastest heaviest haul rail
Innovation Fastest heaviest haul rail For personal use only Guinness Book of Records
Slide 13: Innovation: Australia's largest shiploader
Innovation Australia’s largest shiploader For personal use only Herb Elliott Port – Over 70Mt Shipped
Slide 14: Operational update – Port
For personal use only O Operational ti l update d t – Port P t Ore Shipped pp 12 10 Million 8 Tonnes 6 4 2 0 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 FMG Ore 3rd Party Ore
Slide 15: Operational update – June Qtr 2010
For personal use only O Operational ti l update d t – June J Qtr Qt 2010 Mining • Ore production at a combined rate of >45Mtpa in the 4Q10 • Rescaling of mobile equipment to lift productivity Processing • Processing g at Cloudbreak at rate of 42Mtpa p • New oversize crusher to commission in August R
Slide 16: Production forecast
Production forecast For personal use only • Production and shipments to be maintained at rate ~40Mtpa until the Christmas Creek OPF is commissioned • Completing new plant March quarter 2011 • Ramp up to 55Mtpa run rate for June quarter 2011 • Wet commissioning of Christmas Creek OPF scheduled to com
Slide 17: FY2010 Production costs
For personal use only FY2010 Production costs Cash costs per FY10 Q1FY10 Q2FY10 Q3FY10 Q4FY10 tonne US$/t Average Mining and processing 21.24 22.04 24.37 27.20 23.81 Rail and port 5.36 5.39 5.06 5.05 5.21 Total Direct Costs 26.20 27.43 29.43 32.25 29.02 Increase in cost per tonne due to: • Small S l
Slide 18: Marketing
For personal use only Marketing • June quarter average price US$130/dry tonne CFR • First period under new index pricing regime • Forecast September quarter prices in-excess of US$100/dry tonne
Slide 19: Fortescue Forging Ahead - video
For personal use only Fortescue Forging Ahead - video
Slide 20: Fortescue would not have been here with the MRRT
Fortescue would not have been For personal use only here with the MRRT • Tilts the playing field in favour of Big 3 • Key issues for mid-tier and small caps − Massive taxation protection for multi-nationals − Bias against infrastructure that benefits the wider id community it − No interest deductibi
Slide 21: Fortescue has increased Australia's market share
Fortescue has increased Australia’s market share Rocket Fines has high (>64%) calcined Fe once For personal use only crystal t l water t isi removed ddduring i sintering i t i 70.0 Calcined Grades 69.0 68.0 67.0 66.0 <2.6% Fe difference 65.0 ern 64.0 % Fe e an - Southe 63.0 MG - Rockett Fines 62.0 F
Slide 22: Making Australia more competitive
Making Australia more competitive For personal use only Proven Value in Use for Customers M t mills Most ill using i Rocket R k t Fines Fi att 30-45% 30 45% off th their i sinter i t blblend d with ith 57.3-58.3% 57 3 58 3% sinter i t F Fe. L Larger size i mills ill using i 20-35% 20 35%
Slide 23: Importing capital, not exporting our jobs
For personal use only Importing capital, not exporting our jobs Finance summary Result reflects • Strong balance sheet and strong cashflow production and p • Net Debt US$0.79 billion market • Strong profitability and EPS conditions growth • Self S lf ffunding di 55Mt 55Mtpa expansion i • Platform fo
Slide 24: Big visions by little companies need more capital not regressive taxes
Big visions by little companies need more capital not regressive taxes capital, F t Fortescue Infrastructure Fortescue Rail For personal use only Port New Pilbara Hedland Proposed Fortescue Rail Dampier Port API Joint Venture Karratha Rio Tinto Rail BHP Rail Solomon H b Hub Chichester Western Hub Hu
Slide 25: Iron ore for generations – Twin Port Strategy
Iron ore for generations – Twin Port Strategy Anketell Port For personal use only Port Hedland 200 155 Dampier The Vision: 355Mtpa from two ports 100 Solomon S l Stage 1 100 Solomon St Stage 2 60 95 Western Hub Chichester H b Hub Tom Price *T Targets t are hypothetical h th ti l in i nature t and d
Slide 26: Chichester Construction
For personal use only Chi h t C Chichester Construction t ti Expansion of the Chichester Hub at Christmas Creek is progressing well Rail • Earthworks E th k ffor the th 50kms 50k off railil complete l t • Over 15km track layed with sleepers out a further 5km • Completion set for December quarter 201
Slide 27: Iron ore for generations – Twin Port Strategy
Iron ore for generations – Twin Port Strategy Port Hedland For personal use only Port Hedland Anketell Dampier Port Supplyy Feed 200 155 Chichester and Stage 1 Solomon Hub* Hub • Chichester Hub to p target 95Mtpa g • Solomon Hub Solomon Hub Stage 1 to 60Mtpa Stage 1 Chichester target 60 60 Hub • Tot
Slide 28: Solomon Overview
Iron ore for generations Solomon Overview For personal use only
Slide 29: Solomon Overview: 2.9 billion tonnes discovered
Iron ore for generations Solomon Overview For personal use only 2.9 billion tonnes discovered; target 5 billion tonnes • Solomon stage one and stage Solomon 5 billion tonnes two resources will underpin 160Mtpa export 100 • Stage one Mtpa advanced 60Mtpa via Port Hedland Stage 1 • Stage two 1.8 Bt st
Slide 30: Solomon Stage Momentum
Iron ore for generations Solomon Stage 1 Momentum For personal use only Four years in Progress - DFS underway, completion due December quarter q • Exploration success 1.9billion tonnes andd growing; • Land Access and 20 Mtpa BID E i Environmental t l 40 Mtpa CID consents / approval well advanced;; •
Slide 31: Iron ore for generations – Twin Port Strategy
Iron ore for generations – Twin Port Strategy Port Anketell For personal use only Hedland Port Anketell A k t ll Port P t 155 Dampier 200 Supply Feed: • Solomon Stage 2 target of 100Mtpa • Western Hub target of 100Mtpa 100 • Anketell is WA Government 100 Solomon preferred site with Major St Stage 2
Slide 32: Current 1st port infrastructure
Current 1st port infrastructure For personal use only Herb Elliott Port at Port Hedland Record breaking speed of ramp up
Slide 33: Port infrastructure: 55, 95, 155Mtpa
Capacity (Mtpa) 55 95 155 Berths 2 3 5 Shiploaders 1 2 3 For personal use only Capacity (Mtpa) 55 95 155 Stackers 2 2 4 Reclaimers 1 2 3 Capacity C it (Mt (Mtpa)) 55 95 155 Train unloaders 1 2 3 Port infrastructure: 55, 55 95 95, 155Mtpa 5th berth at South West Creek awaiting approval by Port Author
Slide 34: Two ports for three hubs
Two ports for three hubs Anketell For personal use only Port – 350+ Mtpa Staged Multi-user port • 3 Foundation Companies with Government – FMG, FMG API & MCCSJ • Major Project Status • Approvals & Land access commenced • Operational p p planned for 2014
Slide 35: Proven skills in Construction – Completion Records
Iron ore for generations Proven skills in Construction – Completion p Records For personal use only From concept To reality Herb Elliott Port Port 2006 2008 Fortescue Rail Railway 2007 2008 Mine Cloudbreak Minesite 2006 2008 FACT: Fortescue built its infrastructure faster than any other mining compa
Slide 36: Expansion risk considerations
Iron ore for generations Expansion risk considerations For personal use only Risk Mitigant g • Massive JORC resource base of 6.5 billion tonnes and Resource growing • Low tech civil works and very similar to works recently Construction completed • Proven team that has presided over the faster ramp u
Slide 37: MRRT
MRRT For personal use only • The Mining Industry – stepping up to build Australia • Fortescue under the MRRT cannot fulfill its potential • MRRT Taxation Policy – moving Australia backwards
Slide 38: Sign up to alerts online
For personal use only Si up tto alerts Sign l t online li www.fmgl.com.au