The Fortescue Story David Woodall, Director Operations

March 2013

Culture Fortescue’s unique culture is the key

Relationships Direct relationships with sub contractors and local suppliers

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

A differentiated model Delivering results

Consistent Record Breaking Delivery From concept To reality

Port    

Rail  

Mining    

Herb  Ellio1    Port  

Fortescue    Railway    

Cloudbreak  Minesite  

2006

2007

2008

2008

2006 2008

FACT: Fortescue built its infrastructure faster than any other Australian mining company FACT: Fortescue ramped up production faster than any other mining company

Christmas  Creek  Minesite      

Solomon  Minesite      

2010

2011

2011

2013 Mining    

Mining    

Clear  strategy  

•  Deliver  155Mtpa  

•  Reduce  debt  

•  Incremental  growth  

•  Costs  and  efficiency  

Company Overview

Highlights Half Year FY2013

•  Record production results with 35.7mt shipped

•  Key expansion milestones delivered •  Kings development resumed

•  Continuing safety improvement TRIFR decreasing 17%

•  US$5.0bn refinancing completed

•  Significant progress in asset sale process

Financial Summary Half Year FY2013 •  Revenue of US$3.3bn and EBITDA of US$1.1bn

•  Net profit after tax of US$478m

•  Tax US$263m and royalties US$194m paid

•  Refinancing US$5.0bn  

Cash savings Half Year FY2013 •  Delivering on operating cost savings of $300m in FY2013

•  Sustainable savings + $200m per annum

•  4% cash cost reduction in Q2 v Q1 through ramp up

•  Continued focus on cash management through expansion phase

Market

Long term confidence in China Lower growth rates but still strong in absolute volumes

•  Strong underlying economy >7% GDP growth •  New leaders committed to growth •  Urbanisation & infrastructure driving steel

demand

•  Targeted infrastructure stimulus packages

•  Short term steel market volatility

China steel intensity below global averages

Source: ANZ Research

Steel Intensity & GDP 1850-2012 (smoothed)

History shows price volatility Strong rebounds follow price drops

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

$200.00

Jul-1

0 A

ug-1

0 Se

p-10

O

ct-1

0 N

ov-1

0 D

ec-1

0 Ja

n-11

Fe

b-11

M

ar-1

1 A

pr-1

1 M

ay-1

1 Ju

n-11

Ju

l-11

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Apr

-12

May

-12

Jun-

12

Jul-1

2 A

ug-1

2 Se

p-12

O

ct-1

2 N

ov-1

2 D

ec-1

2 Ja

n-13

Iron Ore Price (62% Fe CFR – Platts IODEX China)

Operations Vision

Operations taking us to new levels FY2013 is a year of incredible ramp up

210mt shipped since 2008

Christmas Creek 2 100mtpa

run rate December 2012

run rate April 2013

115mtpa Firetail April 2013 20mtpa

155mtpa December 2013

ramp up

Moving down the global cost curve Targeting bottom quartile

Firetail & Kings to reset the cost base

Delivering the Operations Vision

Key Learning From the Project Delivery 1.  Audacious stretch targets 2.  One company focus on targets 3.  Vendor and supplier engagement 4.  Absolute delegation and responsibility 5.  When things go wrong new solutions must be found. (Cost and schedule

don’t change) 6.  Contractor peer to peer forums 7.  Customised contracting strategy 8.  Second tier contractors 9.  All in the family approach to contractors 10.  Chairman motivation to construction crews

Leveraging on FMG Culture - Innovation

1. People

2. Technology

3.  Infrastructure

Innovative and Engaged People

•  A focus on the delivery of stretch targets at the appropriate level of the Organisation.

•  Vendor and supplier engagement.

•  Absolute delegation and responsibility to deliver both Company and Individual performance targets.

•  When things go wrong new solutions must be found.

•  A Learning Organisation though peer to peer and external forums

•  Chairman and Executive leadership and motivation to succeed though the engagement of our People.

Have a Crack Mate Because at Fortescue, you can!

2700 ideas across the business

•  $14m year one savings

•  $125m NPV next 5

•  New Communication Based Train Control System - ITCS o  Virtual signals (no physical trackside signals) o  On board display for the driver o  Braking enforcement on trains, track machines, & hi-rails o  Controlled from Perth office

ITCS will provide higher capacity and improved safety

Rail New communications system

Rail

•  New Digital Communication System- TETRA o  Digital radio for Port, Rail, and Mines

TETRA will provide better coverage, better efficiency, and more features for voice communications

•  New Monitoring Systems: o  POSS (still in trial)

  Remote point machine and level crossing monitoring o  FibreWatch

  Remote fibre optic testing

Part of condition based maintenance

Surface Mining Automated Pick Inspection System •  Fully Automatic Measurement of Pick Wear

•  Easy to Use System and Procedures

•  Fast Measurement between Truck Changes

•  Optimized for Iron Ore Applications

•  Easy to Interpret Wear Results

•  Provide Additional Aids for Pick Change Crews

•  Easy Maintenance and Service Friendly Design

•  Reduced Downtimes, Pick and Tool-Holder Consumption

Surface Mining Automated Pick Inspection System – System Overview

•  Laser / Camera based Sensor

•  Optical Measurement of Pick Geometry

Sign up to alerts online

www.fmgl.com.au