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Roy HillFrom a Vision to Reality
Global Iron Ore & Steel Forecast Conference
8 March 2016
Barry Fitzgerald
Chief Executive Officer
Roy Hill Holdings Pty Ltd
Project location
Roy Hill overview
>2.3bt of +50% Fe iron ore comprised of >1.2bt of +55% FE iron ore
Open cut mine Multiple pits
55 Mtpa wet processing plant
344km heavy haul railwayTwo berth wharf, single ship loader
25+ Year Mine Life
First shipment exported
10 December 2015
Roy Hill – a project of national significance…
> 50,000 direct construction workers engaged & > 37.9 million hours worked during construction phase
Just under 2,000 permanent jobs when fully operational
Combined Project & Operations spend to Australian suppliers >$7.0 billion
(As at 31 December 2015)
Full production export revenue approx. US$3b/annum @ US$55t
Estimated A$17B in taxes and royalties over the project life
Project commissioning
Handover of Mine, Port & Rail operations from Samsung C&T to Roy Hill achieved on
1 February 2016
Planning, people and systems complete and in place for safe, efficient, cost
effective & rapid ramp up to 55Mtpa
Operations
6
Owner/Operator & Contractor mining underway for more than two years
Mining in four pits
Delta 1, Delta 2, Delta 3 & Zulu
>29Mt ore stockpiled on ROMs
>25Mt of broken stock available for mining
> I million tonnes processed & stockpiled
>350,000 tonnes exported to date
Operations
7
Acceleration of mining equipment deliveries in place for ramp up of production
Current focus on building product stockpiles at the Mine and Port
Integration of Demand Chain model into Mine, Port & Rail Operations via Remote Operations
Centre progressing well
Margin Focused Business
Cost focus has been a priority from Project inception
Constrained by 55Mtpa port allocation in Port Hedland
Focus on sustained, low cost production of iron ore that is consistent in quality & grade
Applying innovative thinking to drive business improvement & cost
optimisation
Productivity driven by the Remote Operations Centre (ROC)
9
Co-locates operations, marketing and corporate services to enable true enterprise
resource planning
Integrates production, maintenance and supply to drive asset reliability
Provides the focus to where improvement and optimisation will create the largest
improvement to business value
Building a culture of innovation to drive productivity
Encourage and empower our people to find better and smarter ways of doing things
Combine cross industry methods, technology and the experience of our people to create
innovative solutions
Encourage genuine collaboration, to share knowledge and experience to foster
innovative thinking
Collaborate with contractors & suppliers to drive & capture innovation & productivity
improvements
People driving performance
Our people positioning the business for ongoing market conditions
Performance based culture driven by 100 Day Plan Model to set outcomes and measure performance
Business focus on developing & implementing non-remuneration based retention & attraction initiatives for staff
Recruitment profile shaped to attract and retain practical minded, goal oriented and results focused people who share our values
Focus on driving simplicity of operations across the business
One mine, one processing plant, one railway, one port operation
Why improve & innovate?
Production constrained by 55Mtpa port allocation, so improvement & innovation key
driver of margin focused business
Innovative thinking drives business and productivity improvements and cost
optimisation
Iron Ore price means that cost focus is critical to business sustainability
Improvement & Innovation – The Imperative
Cost curve flattening. Competitors reducing costs. Roy Hill needs to stay in lowest quartile
Bleak outlook for iron ore price Constant messaging to the workforce for the need to increase productivities and reduce costs
Roy Hill is well positioned in the market
Source: CRU
Third party analysis puts us in lower quartile in regards to cost
Our rigorous cost focus will ensure we are a supplier through
all cycles
Almost 90% of our product already sold under long term
contracts
0
20
40
60
80
100
120
140
160
180
0 25 50 75 100
Co
sts
($
/t)
Cumulative production (%)
0 25 50 75 100
Co
sts
($
/t)
Cumulative production (%)
Roy Hill
Source: CRU Iron ore cost Model, 2015
Iron ore business costs, 2014 $US/tonne, CFR China
High Quality Product
Source: Roy Hill
Large, high quality ore body with high grade, low phosphorous lump and fines
products
Chemical quality is consistent with other high quality seaborne traded ore
Directly substitutable for other major Pilbara lump and fine ores
Maintaining International Competitiveness
15
Industry must remain focussed on regulatory
improvements, productivity, efficiency
and
sustainable cost reductions
Governments and regulators must listen and act
to assist in maintaining Australia’s competitiveness
But we recognise the challenges are enduring …
The industry should take steps to induce
the government to remove some of the
very serious disabilities by which the
industry is hampered…
Chamber of Mines (1905)
In summary
17
Operations ramping up
Current focus on building product stockpiles at the Mine and Port
Productivity & cost focus key drivers of our margin focused business
People, innovation & technology driving optimisation
Well positioned in the market with majority of product sold on long term contracts
Governments and regulators must listen and act to reduce the regulatory burden
The list is long and the cost significant
18
THANK YOU
