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Peter Meurs, Director of Development
17th Annual Global Iron Ore and
Steel Forecast Conference
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Disclaimer
Important Notice
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 to Fortescue based on this presentation.
This presentation contains certain statements which may constitute "forward-looking statements". Such statements are only
predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements
to differ materially from those expressed, implied or projected in any forward-looking statements.
No representation or warranty, express or implied, is made by Fortescue that the material contained in this presentation will
be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of Fortescue, its officers, employees
and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation
and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as
a consequence of any information in this presentation or any error or omission therefrom. Fortescue accepts no responsibility
to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information
made available to a person nor any obligation to furnish the person with any further information.
Additional Information
This presentation should be read in conjunction with the Annual Financial Report as at 30 June 2012, the half year financial
statements together with any announcements made by Fortescue in accordance with its continuous disclosure obligations
arising under the Corporations Act 2001.
Any references to reserve and resource estimations should be read in conjunction with Fortescue’s 2013 Annual Report which is
available on the Fortescue website. Fortescue confirms that it is not aware of any new information or data that materially affects the
mineral resources and ore reserves statement included in the 2013 Annual Report.
All amounts within this presentation are stated in United States Dollars consistent with the Functional Currency of the
Fortescue Metals Group Limited. Tables contained within this presentation may contain immaterial rounding differences.
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The Story Begins…2003
An Original Vision The Pilbara is iron ore rich...
China will need more iron ore to develop
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• First ore 2008
• 100mt
expansion 2011-2013
• Over 320mt shipped to end
of Feb 2014
• Ramping up to
155mtpa in
2014
Building a world class company
Our first decade – setting audacious goals
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Delivering results
A differentiated model
China Leveraging China’s growth and manufacturing capability
Speed Speed of delivery - time is money
Planning Planning for scale today and efficiency into the future
Relationships Direct relationships with sub contractors and
local suppliers
Culture Fortescue’s unique culture is the key
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Mini Miners Calendar Colouring Competition
Safety is at the heart of Fortescue’s family values
Our Highest Priority is Safety
• Increased engagement with all
employees and contractors
• Stepped up visible leadership
• Driving a step change in safety
• Reinforcement of our
Life Saving Choices
• External review of safety
leadership and performance
• Empowerment for everyone to
work safely and look after their mates
“my brother’s keeper”
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Solomon in January 2011 – a bit to do…
Building world class assets
… to get to this in 2013
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Towards 155mtpa
We got there…
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Continued growth in all operational areas
At the end of our first decade of building
Ore mined (wmt) Ore processed (wmt)
Ore shipped (wmt)
Millio
n t
on
nes
Millio
n t
on
nes
M
illio
n t
on
nes
C1 (US$/wmt)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
0
5
10
15
20
25
30
35
40
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
0
5
10
15
20
25
30
35
40
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Third party ore
52.56
46.04
49.44 50.48
43.61
36.01
33.17 32.99
30.00
35.00
40.00
45.00
50.00
55.00
Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14
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C1 trending lower as steady state operations commence
Breakeven cash price in low US$70/t, 62% CFR basis
Q3 – Q4 increase in C1 through ramp up of Kings and wet season
Sustained operating cost reduction
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0
10
20
30
40
50
60
Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14(est)
Q4 FY14(est)
FY12 FY13 FY14 (est)
Strip Ratio C1 Cash Cost (US$/wmt shipped)
C1 cash cost (US$/wmt shipped) Strip ratio (RHS)
Estimate for Q3 and Q4
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CAPEX declines rapidly as production climbs
New decade – new era
0
20
40
60
80
100
120
140
160
180
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
FY10 FY11 FY12 FY13 FY14 (est) FY15 (est)
Tonnes shipped millions
Total spend US$ billions
Operating spend Capital spend Tonnes shipped (RHS)
2014 and 2015 estimates
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• Record revenue US$5.9bn 77%
• EBITDA of US$3.2bn 184%
• NPAT US$1.7bn 260%
• Debt paid/called US$3.1bn – interest savings of US$300m
• Dividend A$0.10 fully franked
Highlights 1H14 Record financial results
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China GDP growth 7.5% in 2014
• Steel demand growth ~8% 2013
• Imported iron ore +10%
to 820mt
• +200m people to urbanise by 2020
Strong underlying economy
“China is still a developing country…
development remains the key to solving
all our country’s problems… We must
keep development as the central task and
maintain a proper economic growth rate.”
Premier Li Keqiang
National People’s Congress
Beijing, 5 March 2014
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New coastal steel capacity moving away from domestic iron ore
Demand for seaborne supply
Iron Ore Reserves
New/proposed steel capacity
Seaborne iron ore
Seaborne iron ore imports (Ex. Australia, Brazil etc.) Source: ANZ Research
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Leverage existing assets for low cost growth
Resource portfolio sets expansion platform M
ine
ral R
es
ou
rce
s (
Mt)
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2,266 2,227 2,143 2,550 2,550
3,379 3,222
695 695 695
695 695
695 695 1,715
2,224 2,860
3,070 3,070
3,247 3,504
624 624
624 624 1,032
2,013
2,463 2,463
-
1,230 1,230
2,465 3,236
5,205 5,205
-
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013 2014
Chichester Hub Chichester Other Solomon Hub Western Hub Nyidinghu Magnetite
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Exploration and development
• Fortescue has the largest
tenement portfolio in the Pilbara
• Near mine exploration
continuing
• Long term resources
discovered
• Many future development options
Over 85,000km2 of tenements in the Pilbara
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Product Strategy
• Focused on maximising resource recovery
• Optimising revenue by an integrated product
Revised product strategy at 155mtpa - average grade 58%
Fortescue Blend
70mtpa
Kings CID
40mtpa
Rocket 10mtpa
Super Special Fines
30mtpa
Bonnie
Fines
6mtpa
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Fourth berth commissioned with fifth berth underway
AP1
AP2
AP5
AP3
AP4
Port – flexible design for future growth
• Maximising
throughput capacity Herb Elliott Port
• Wharf structure designed to support
shiploader and extension
of existing conveyors
• Reclamation works onshore adjacent to
existing stockyard
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AP5 Schedule of works
Q1 2014
• Dredging underway
Q2 2014
• Marine Structures construction
Q3 2014
• Materials Handling installation
Q4 2014
• Berth E&I installation
Q1 2015
• Marine Structures complete
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Fortescue River Gas Pipeline
Dampier
Karratha
Solomon Hub
Fortescue River Gas Pipeline - Stage 1
Chichester Hub
Pannawonica North Star
Costs reduction with options for expansion
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• Diversified diesel-natural
gas-LNG energy model
• Long term cost reductions
• Reliable energy supply
in the Pilbara
• Reduced carbon emissions
• Policy and market reform needed to deliver appropriate
solutions for Domestic Gas supply
Needs policy and market reform
A new energy model
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1. Incremental production from
optimising existing assets
2. Continue debt reduction ~40%
gearing
3. Moving to investment grade metrics
4. Dividend payout ratio to 30-40% once
gearing achieved
5. Continued exploration of our extensive
Pilbara tenements
6. Early work to secure strategic
options in high value opportunities
Increasing shareholder returns
Beyond 155mtpa
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• Strong JV
partners
• North Star
Phase 1
underway
• Proving new
concepts
• Options to
proceed with
full scale plant
Magnetite
Iron Bridge - 100km south of Port Hedland
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13%
~ 500
~ 450
US$1.5bn+
Direct Aboriginal
employees
Aboriginal people in
Fortescue workforce
Aboriginal people
employed by contractors
Contracts to Aboriginal
companies and JV’s
Jobs and opportunities replacing welfare
Making a difference
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• Strong financial results
• Expansion to 155mtpa
• Debt reduction underway
• Increasing dividends
• Flexible incremental growth
• Unique culture drives performance
10 years strong
Delivering on targets
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