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100-TE-DC-0036_13
Global forceThriving communities
Goldman Sachs Asia Materials Virtual Tour
Ian Wells, CFO21 May 2020
Important NoticeThe purpose of this presentation is to provide general information about Fortescue Metals GroupLtd ("Fortescue"). It is not recommended that any person makes any investment decision in relationto Fortescue based on this presentation. This presentation contains certain statements which mayconstitute "forward-looking statements". Such statements are only predictions and are subject toinherent risks and uncertainties which could cause actual values, results, performanceor 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 materialcontained in this presentation will be achieved or prove to be correct. Except for statutory liabilitywhich cannot be excluded, each of Fortescue, its officers, employees and advisers expresslydisclaims any responsibility for the accuracy or completeness of the material contained in thispresentation and excludes all liability whatsoever (including in negligence) for any loss or damagewhich may be suffered by any person as a consequence of any information in this presentation orany error or omission therefrom.
Fortescue accepts no responsibility to update any person regarding any inaccuracy, omission orchange in information in this presentation or any other information made available to a person norany obligation to furnish the person with any further information.
Additional InformationThis presentation should be read in conjunction with the Annual Report at 30 June 2019 togetherwith any announcements made by Fortescue in accordance with its continuous disclosureobligations arising under the Corporations Act 2001 and ASX Listing Rules.
Any references to reserve and resources estimations should be read in conjunction withFortescue’s Ore Reserves and Mineral Resources statements released to the Australian SecuritiesExchange on 2 April 2019 for its Magnetite projects and on 23 August 2019 for its Haematiteprojects. Fortescue confirms in the subsequent public report that it is not aware of any newinformation or data that materially affects the information included in the relevant marketannouncement and, in the case of estimates of mineral resources or ore reserves, that all materialassumptions and technical parameters underpinning the estimates in the relevant marketannouncement continue to apply and have not materially changed.
All amounts within this presentation are stated in United States Dollars consistent with thefunctional currency of Fortescue Metals Group Ltd, unless otherwise stated. Tables containedwithin this presentation may contain immaterial rounding differences.
Disclaimer
Forward LookingStatements
2
A world class company
Wholly owned, fully integrated supply chain
Core supplier to China
Shipped>1.3 billion tonnes 170 - 175mtpa
Shipping rate
Industry leading cost position
3
COVID-19 response Prioritise the health of our people, maintain jobs, sustain our business and protect our communities
Temporary extension of operational roster
Temperature testing and health screening
Additional bus and air charter services
Flexible working arrangements, non-essential site and office teams
Village licensed areas closed
1,300 care packages to Aboriginal communities
4
11%
2.5 TRIFR
Improvement compared to 30 June 2019
Reducing fatality risk profile
Total Recordable Injury Frequency Rate on a 12 month rolling basis
Safety and unique culture
5
March quarter 2020 highlightsTRIFR 2.511% improvement from 2.8 in FY19
42.3mt shipped
Growth projectsKey milestones achieved
US$73/dmt
US$13.27/wmt
US$0.1billion
Average price received 82% of 62% Fe Index
10% higher than Q3 FY19 C1 costs 2% lower than Q3 FY19
Net cash
6
Integrated mine to market infrastructure
7
Robust demand in China
Fortescue is a core supplier of iron ore to China
China’s steel production increased to 319mt in 4M CY20
Steel inventories drawn down as economic activity recovers
China’s steel production increased 1.3% YoY in four months to 30 April 2020
60
65
70
75
80
85
90
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18
China's Crude Steel Production (mt)
2018 2019 2020Source: NBS8
Enhanced product mix delivers value Realising the benefits of West Pilbara Fines
Fortescue’s product mix %
10
8
427
33
9 months to March 2020
West Pilbara Fines Kings Fines Fortescue Blend
Fortescue Lump Super Special Fines
48
45
4
38
9 months to March 2019
West Pilbara Fines Kings Fines Fortescue Blend
Fortescue Lump Super Special Fines9
Iron ore prices resilientSustained demand and supply disruptions support the iron ore market
10
Strong demand for Fortescue’s products
Realisation of 84% of the Platts 62% Index, 9M to 31 March 2020
Draw down of iron ore stocks at Chinese ports 20
40
60
80
100
120
140
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20
Iron Ore Prices (CFR China), US$/dmt
SSF (Portside) FB (Portside)Platts 62% IODEX Platts 65% IODEX
Source: Platts
Price and margins
11
17 24 33 27 24 17 21 57 53 0
20
40
60
80
100
1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20
US$/dmt
Underlying EBITDA margin Avg Underlying EBITDA 62 Platts CFR Index
Fortescue realised price Avg Fortescue realised price
Strong underlying EBITDA margins through all market cycles
As at 31 December 2019, Fortescue has generated NPAT of US$17bn and allocated US$9bn of capital to debt repayment and US$6bn to dividends1
(2,000)
3,000
8,000
13,000
18,000
US$m
Cumulative Allocation of NPAT: FY05-HY20
Net debt repayments Dividends NPAT
0
1000
2000
3000
4000
FY14 FY15 FY16 FY17 FY18 FY19 HY20
US$m
Capital allocation to debt and dividends
Net debt repayment Dividends Share buy back
Capital allocation
121 Excludes US$1.6bn dividend paid 6 April 2020
12
13
Credit metricsTarget investment and credit metrics
Target 30 – 40 % (Gross debt)
Target 1-2x (Gross debt)
600
750
500
750
-
600
CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27
Debt maturities profile (US$m) (excluding leases)
Syndicated Term Loan Senior Unsecured Notes
62%49% 38%
21% 24% 16% 5%
69%56%
45%31% 29% 27% 24%
FY12 FY15 FY16 FY17 FY18 FY19 1H20
Gearing %
Net gearing Gross gearing
2.9 1.6 0.6 1.0 0.3
0.1
3.8
2.1
0.9 1.2
0.7 0.5
FY15 FY16 FY17 FY18 FY19 1H20
Debt to EBITDA (x)
Net debt to EBITDA Gross debt to EBITDA
Investing in growth
Disciplined allocation to core business, innovation and growthInvesting in growth
300-400
1,200 - 1,300
400-500
FY20 FY21 FY22
Iron Bridge Magnetite (US$m)
50
FY20 FY21 FY22
Pilbara Energy Connect (US$m)
1,200–1,300550-650
500-600
FY20 FY21 FY22
Eliwana Mine and Rail (US$m)
350-400
250-300
14
Eliwana project US$1.275 billion capital investment, Progressing on schedule and budget
First steel erection of 30mtpa dry OPF
Stage 1 earthworks on 143km railway completed
Construction peak mid-2020
Aerodrome and village completed, first charter June 2020
15
Iron Bridge Magnetite Project US$2.6 billion investment delivering enhanced returns to shareholders and JV partners
22 mpta, 67% Fe productFirst ore on ship mid-2022
Detailed engineering passed halfway mark
First blast at OPF siteAllowing earthworks to commence
16
Site construction will commence second half of CY20
Pilbara Transmission project 275km of high voltage transmission lines
Pilbara Generation project 150MW gas, 150MW solar PV
Chichester Solar Gas HybridLarge scale battery storage Displacing around 100 million litres of diesel at Chichester Hub
Energy infrastructure US$8001 million investment providing 25–30 per cent of stationary energy requirements from solar
1 Fortescue US$700m PEC and Alinta Energy’s Chichester Solar Gas Hybrid investment 17
FY20 Guidance
Shipments
Capital investment
C1 cost / wmt
175-177mt
$2.0-2.2 billion
$12.75-$13.25US
US
18
19