Fortescue Metals Group For personal use only - … Metals Group ... Further Promising Long-Term...
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1 Fortescue Metals Group Metal Bulletin's Australian Iron Ore Conference 25 November 2008 25 November 2008 The New Force in Iron Ore 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. Fortescue Metals Group Ltd 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 information. COMPETENT PERSONS STATEMENT The geological information in this presentation is based on information compiled by Mr Stuart Robinson, and by Dr John Clout. Mr Robinson and Dr Clout are both fellows of The Australasian Institute of Mining and Metallurgy and are both employees of Fortescue Metals Group Ltd. Mr Robinson and Dr Clout both have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for reporting of Exploration results, Mineral Resources and Ore Reserves’. Mr Robinson and Dr Clout consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears. For personal use only
Transcript of Fortescue Metals Group For personal use only - … Metals Group ... Further Promising Long-Term...
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Fortescue Metals Group
Metal Bulletin's Australian Iron Ore Conference
25 November 200825 November 2008
The New Force in Iron Ore
DISCLAIMER
Important NoticeThe 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.
Fortescue Metals Group Ltd
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 willbe 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 informationinformation.
COMPETENT PERSONS STATEMENT
The geological information in this presentation is based on information compiled by Mr Stuart Robinson, and by Dr John Clout.Mr Robinson and Dr Clout are both fellows of The Australasian Institute of Mining and Metallurgy and are both employees of Fortescue Metals Group Ltd. Mr Robinson and Dr Clout both have sufficient experience relevant to the style of mineralisationand type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for reporting of Exploration results, Mineral Resources and Ore Reserves’. Mr Robinson and Dr Clout consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears.
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Combined Chinese and Indian urbanisation rates per year35
China and India Urbanisation
5
10
15
20
25
30
mill
ion
peop
le
IndiaChina
0
1950
-55
1955
-60
1960
-65
1965
-70
1970
-75
1975
-80
1980
-85
1985
-90
1990
-95
1995
-00
2000
-05
2005
-10f
2010
-15f
2015
-20f
2020
-25f
2025
-30f
2030
-35f
2035
-40f
2040
-45f
2045
-50f
Source: United Nations, McKinsey, Macquarie Research, September 2008
History remains the best guide to the future
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70
80
90
Mt)
Growth rate slowedin 2007-08
Chinese Iron Ore Demand
30
40
50
60
Mon
thly
RO
M P
rodu
ctio
n (M
Strong production growth 2004-06
Source: Morgan Stanley
0
10
20
Jan-
02
May
-02
Sep
-02
Jan-
03
May
-03
Sep
-03
Jan-
04
May
-04
Sep
-04
Jan-
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May
-05
Sep
-05
Jan-
06
May
-06
Sep
-06
Jan-
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May
-07
Sep
-07
Jan-
08
May
-08
Sep
-08
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Further Promising Long-Term Growth Prospects for China
Japan and Korea provide a clear roadmap to China’s potential– China early in its growth cycle
China’s economic growth averaged over 10% per annum from 2003 to 2007
1,000
1,200
Industrial production index
10% per annum from 2003 to 2007– China GDP expected to increase by 10.5% in
2008– Public works spending (airport, roads, water
systems) of US$400 billion through 2010– Shanghai spending US$40 billion for 2010
World Expo
China’s growth expected to pickup again to normal levels post the olympic industrial slowdown
0
200
400
600
800
0 3 6 9 12 15 18 21 24 27 30 33
Inde
x, b
ase
year
= 1
00
0 3 6 9 12 15 18 21 24 27 30 33
Years from base
Korea base 1980 Japan base 1959 China base 1996
Source: The Economist (2008).
China’s industrial development is just beginning which has significant implications for further iron ore seaborne trade growth and increased
infrastructure spending will further translate into more iron ore demand
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Infrastructure constraints limits Australia, leads to falling market share
China requires Australia to recover Market Share
70.00%
80.00%
Chinese Imports by Source
30.00%
40.00%
50.00%
60.00%
AustBrazilIndiaS.AfricaOthers
est
Source: Tex Report; FMG
0.00%
10.00%
20.00%
Year
The growth engines of Asia need the Pilbara
• No iron ore major has the expansion leverage of Fortescue
• Australia is the most competitive supplier to Asia
Lowest Sovereign Risk
Best Location
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FMG Pilbara Holdings Dwarfs OthersFMG – 52,000 sq. km, Rio – 11,000 sq. km, (Robe 5,000 sq.km) BHP – 6,500 sq. km
• The largest bedrock hosted iron ore discovery in Australia
• Over 1.6billion tonnes of reserves defined
• New exploration (Chichester only) 1.8 Bt – target only
Project pipeline underpinned by geology
• Total reserves, resources and targets (Chichester only) under current drilling 4.26 Bt
1000
1500
2000
2500
3000
mill
ion
tonn
es
Note:- Total resources are exclusive of total reserves- Data derived or calculated from best available company, technical and government public report Note: Targets are hypothetical estimates and may not be achieved
0
500
Chi
ches
ter R
ange
Sol
omon
Pro
ject
Yan
di
Bun
garo
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k
Are
a C
Yan
dico
ogin
a
Wes
t Ang
elas
Roy
Hill
Bro
ckm
an 4
Mar
ando
o re
gion
Mt W
hale
back
Hop
e D
owns
AQ
A w
este
rn C
ID
Nam
mul
di /
Bro
ckm
an 2
Tom
Pric
e
Mes
a A
OB
29/3
0
Mes
a J
Jim
bleb
ar (W
4)
OB
18
Eas
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Ran
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MIS
Wel
d R
ange
Cha
nnar
OB
25/2
3
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Hamersley Group Stratigraphy – Regional
Macroband Lateral Continuity
Brockman 2 Hamersley Iron
reference section
Type outcrop – Wittenoom Gorge
BHPB
reference section
Mt Whaleback
Tom Price
~ 50 m
4W Gorge Ophthalmia Range
verti
cal s
cale
Fortescue Facts
Company started in July 2003
Invested over US$3 5bnInvested over US$3.5bn
Integrated Mine, Rail & Port completed mid 2008
Exported over 11.6mt @ US$895m
Total employees >1,500
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Proven Track Record in Project ManagementTo Reality
Fortescue Mine Site - 2008
From Concept
Fortescue Mine Site - 2006
Fortescue Rail Site - 2008Fortescue Rail Site - 2007FMG built its
major infrastructure faster than any other mining company has
ever done before
Fortescue Herb Elliot Port - 2008Fortescue Port Site - 2007
State-of-the-art Mining operationsTarget - Lowest cost, highest efficiency in the Pilbara
Excavator in actionOverburden
trucks
Surface miner in action
OVERBURDEN
Ore trucks
ORE BODY
ORE BODY
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State-of-the-art Rail operations
Target - Lowest cost transport in the Pilbara
Rail
• Clean sheet design captures best of existing technology and takes it to the next step:
– Bigger carrying capacity
– Electronic braking system
– Aerodynamics
• 40 tonne axle loads• 40 tonne axle loads
• Low centre of gravity, long wheel base, means capable of higher speeds
• Shorter distance means shorter cycle times
• Designed with reduced maintenance costs in mind
State-of-the-art Port operations
Target - Lowest cost transport in the Pilbara
Port
• Significant expansion area
• Highly automated
• Extensive use of conveyors
• Largest shiploaders in Australia
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Expansion Map
Dampier
Port Hedland
Point Samson
FMG TenementsLEGEND
Ch i t C kCh i t C kCh i t C kCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud Break
Glacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier Valley
White KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite Knight
FlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomon
Glacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier Valley
Ch i t C kCh i t C kCh i t C kCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite Knight
FlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomon
FMG TenementsOre Processing Plant
FMG Rail ExtensionOther RailFMG Rail
FMG Kennedy Rail
Newman50Kms
Tongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt Nicholas
Christmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas Creek
Mt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig Tree
Flying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwana
Tongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt Nicholas
Mt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt Lewin
Christmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig Tree
Flying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwana
Exploration - 4.1 Billion tonnes in 4 years
• Christmas Creek drilling commenced May 2004; Cloudbreak,
November 2004, Solomon Drilling commenced June 2007
• In-ground resource of 4.1 billion tonnes
• Reserves now 1.65 billion tonnes
Discovery cost under 2 cents per tonne• Discovery cost under 2 cents per tonne
• The next 3 billion tonnes is targetedFor
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Surface miners hard at work
Project Pipeline development areas will create a large iron ore export operation
Western CIDFMG Chichester project
Southern PilbaraEastern PilbaraF
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A massive footprint - inbuilt expansion capacity
160+ Mtpa Anderson Point
5 x Cape size 3 x Rail Loop3 x Train Unloader160+ Mtpa stock yard expandable to 200+mtpa
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