Credit Suisse AIC Conference 2017 Forward looking statements - PowerPoint PPT Presentation

Credit Suisse AIC Conference 2017

Forward looking statements 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 recommended that June 2016 together with any announcements made by Fortescue in any person makes any investment decision in relation to Fortescue based accordance with its continuous disclosure obligations arising under the on this presentation. This presentation contains certain statements which may Corporations Act 2001. constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual Any references to reserve and resources estimations should be read in values, results, performance or achievements to differ materially from those conjunction with Fortescue’s Ore Reserves and Mineral Resources statement expressed, implied or projected in any forward-looking statements. for its Hematite and Magnetite projects at 30 June 2016 as released to the Australian Securities Exchange on 19 August 2016. Fortescue confirms in the No representation or warranty, express or implied, is made by Fortescue that subsequent public report that it is not aware of any new information or data the material contained in this presentation will be achieved or prove to be that materially affects the information included in the relevant market correct. Except for statutory liability which cannot be excluded, each of announcement and, in the case of estimates of mineral resources or ore Fortescue, its officers, employees and advisers expressly disclaims any reserves, that all material assumptions and technical parameters responsibility for the accuracy or completeness of the material contained in underpinning the estimates in the relevant market announcement continue to this presentation and excludes all liability whatsoever (including in apply and have not materially changed. 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 All amounts within this presentation are stated in United States Dollars omission therefrom. consistent with the functional currency of Fortescue Metals Group Limited, unless otherwise stated. Tables contained within this presentation may Fortescue accepts no responsibility to update any person regarding any contain immaterial rounding differences. 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. 2

Building a world class company Core supplier to China’s growth Safety focus First ore Low cost Engagement in 2008 producer Empowerment Leadership 165-170mt Shipped over Production rate 800mt Unique culture 3

Delivering on targets Focus on safety, productivity and efficiency  Safety TRIFR reduced 33%  165-170mt shipped  Productivity + efficiency  Low cost global producer  Debt repayments  Consistent dividend policy 4

• PLACEHOLDER – NEW CORPORATE VIDEO 5

HY 17 snapshot Productivity initiatives delivering sustainable cost reductions and financial results US$2.6bn 86.1mt US$4.0bn Underlying Shipped Net debt EBITDA C1 Cost US$4.5bn A$0.20 $13.06 /wmt Interim dividend Revenue 38% payout 20% reduction 36% Refer to attached glossary for definition of non-IFRS terms 7

Continuous + sustainable cost improvements Focus on productivity and efficiency delivering cost savings US$/wmt Solomon operations 1 60 48 50 44 Blending strategy 58% Fe 2 40 34 Processing , wet plants + de-sands 3 27 30 15 Operational efficiencies 20 4 10 $12 - $13 12-13 Fx and fuel decreases 5 0 FY12 FY13 FY14 FY15 FY16 FY17 Guidance 7

Moving down the global cost curve China's Iron Ore Supply CFR Costs (including royalties & ocean freight) 2012 2016 Tonnes millions Source: Metalytics – November 2016 11

Financial performance

HY17 financial outcomes Operational performance delivering financial results US$1.7bn US$1.5bn US$1.2bn Free cashflows Debt repaid Cash on hand US$1.2bn US$0.39 30% Earnings per share Net gearing NPAT 282% Refer to attached glossary for definition of non-IFRS terms 10

Debt maturity proforma at 31 March 2017 US$2.7bn repaid in FY17 with flexibility to continue voluntary early repayments 5,000 4,500 4,000 3,500 3,000 US$m 2,500 2,000 $1.0bn 1,500 term loan 1,000 2,160 repayment 1,000 976 500 478 0 0 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 Term Loan Senior Unsecured Notes Senior Secured Notes Debt Repayments Refer to attached glossary for definition of non-IFRS terms 11

Capital expenditure Free cash prioritised to debt with cash funding of ore carriers US$m FY17 Guidance 800 90 40 • Sustaining capex US$2 /wmt 600 270 • Development of Firetail replacement 400 40 48 31 • Ore carriers 85% cash funded via CDB 200 340 225 • D&A US$7.10 /wmt - FY16 FY17 Guidance Sustaining capital Exploration Ore carriers Development Tugs 12

Market

Core supplier to Asia Well established 17% market share of imported iron ore to China Total 2016 global steel production 1,629mt Low impurity 58% Fe average • • Competitive value in use 541 808 • Large diverse customer base 79 Responsive to market needs • 96 105 Proximity to high growth region • China Japan India United States Rest of the World 14 Source: World Steel Association Crude Steel Production 2015

Developing and emerging Asia Asian economies generating two thirds of global growth Source: IMF World Economic Database Oct 2016

Source: NBS, worldsteel, Macquarie, February 2017 Continued growth in steel consumption throughout China, ASEAN and India Steel stock tonnes per capita Steel capital stock tonnes/capita 10 12 14 16 - 2 4 6 8 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 USA 1970 1972 1974 1976 1978 1980 1982 Japan 1984 1986 1988 1990 1992 1994 1996 China 1998 2000 2002 2004 2006 2008 2010 2012 ASEAN 2014 2016 2018f 2020f 2022f 2024f 2026f 2028f India 2030f 2032f 2034f 2036f 2038f 2040f 2042f 2044f 2046f 2048f 2050f 16

Source: Bloomberg and Umetal Construction and manufacturing projects support iron ore inventory levels Iron ore inventory levels Mt 100 120 140 160 180 20 40 60 80 0 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 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 Jan-15 Mar-15 May-15 Jul-15 62% Fe CFR (RHS) IO Inventory Levels (mt) Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 $30 $50 $70 $90 $110 $130 $150 $170 $190 $210 US$ 10

87% realisation in HY17 after timing adjustments Price realisations consistent $100 $20 $40 $60 $80 $0 7/29/2014 8/29/2014 9/29/2014 10/29/2014 Platts 62 CFR 11/29/2014 12/29/2014 1/29/2015 2/28/2015 3/31/2015 4/30/2015 5/31/2015 6/30/2015 7/31/2015 MBIO58 [P] CFR 8/31/2015 9/30/2015 10/31/2015 11/30/2015 12/31/2015 1/31/2016 2/29/2016 3/31/2016 4/30/2016 62% v 58% [P] price realisation (RHS) 5/31/2016 6/30/2016 7/31/2016 8/31/2016 9/30/2016 10/31/2016 11/30/2016 12/31/2016 1/31/2017 2/28/2017 75% 80% 85% 90% 95% 100% 18

Supporting our community

Building strong communities Creating opportunities through training, employment and business development 20 40

Championing diversity Diversity is fundamental to driving innovation and business success 21

Focussed strategy

Key strategic focus Disciplined value creation  Debt repayment and capital flexibility  Long term sustainability of iron ore  Create low cost growth options - Leverage skills and culture - Exploration and early stage development  Returns to shareholders 23

The new force in iron ore Continuous improvement Sustainable World class low cost assets & people producer Customer focus Unique culture Reliable drives performance Competitive 46

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