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Tim Langmead - Fortescue Metals Group - Maintaining the Pilbara as the best address for iron ore project development globally

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Tim Langmead delivered the presentation at the 2014 Mining the Pilbara Conference. …

Tim Langmead delivered the presentation at the 2014 Mining the Pilbara Conference.

The 2014 Mining the Pilbara Conference explored current projects and regulatory updates in the Pilbara region.

For more information about the event, please visit: http://www.informa.com.au/pilbaramining14

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  • 1. 8th Annual Mining the Pilbara Conference Tim Langmead, Director External Relations 1
  • 2. Disclaimer Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Limited ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. 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. Additional Information This presentation should be read in conjunction with the 2013 Annual Report for the year ended 30 June 2013, the half year financial report at 31 December 2013 together with any announcements made by Fortescue in accordance with its continuous disclosure obligations arising under the Corporations Act 2001. Any references to reserve and resource estimations should be read in conjunction with Fortescue’s 2013 Annual Report which is available on the Fortescue website. Fortescue confirms that it is not aware of any new information or data that materially affects the mineral resources and ore reserves statement included in the 2013 Annual Report. All amounts within this presentation are stated in United States Dollars consistent with the Functional Currency of Fortescue Metals Group Limited. Tables contained within this presentation may contain immaterial rounding differences. 22
  • 3. Building a world class company Working with communities and pastoralists • Founded 2003 • First ore 2008 • 155mtpa production rate • 10,000 jobs • $2 billion in company tax and State royalties (FY15 forecast) 3
  • 4. 4
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  • 6. Sustainably delivering 155mtpa Costs March 2014 155mtpa  Infrastructure complete  Ramped up across mines and processing facilities 100mt shipped in CY2013 $US3.1bn debt reduction World’s fourth largest seaborne exporter 6 efficiency focus CY201330%
  • 7. 0 5 10 15 20 25 30 35 40 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 46.43 52.56 46.04 49.44 50.48 43.61 36.01 33.17 32.99 34.88 30.00 35.00 40.00 45.00 50.00 55.00 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 0 5 10 15 20 25 30 35 40 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 0 5 10 15 20 25 30 35 40 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Vision to be the safest, lowest cost iron ore producer Increased production at lower cost Ore mined (wmt) Ore processed (wmt) Milliontonnes MilliontonnesMilliontonnes C1 (US$/wmt)Ore shipped (wmt) Milliontonnes7
  • 8. Targeting bottom quartile Moving down the global cost curve Source: Metalytics Cumulative Mt (wet, as delivered) US$/drytonne 200 150 100 50 0 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 Domestic Chinese Ore Australia Brazil India South Africa Other Fortescue China Iron Ore Supply CFR Costs – May 2014 (including royalties & freight) 8
  • 9. • > 500 employees living in the Pilbara • $860 million spent with Pilbara-based companies in FY13 • $740 million flowing into the Pilbara community in FY13 Our commitment to the Pilbara Investing in our Communities Unlocking the potential of WA’s North West 9
  • 10. • VTECs established in South Hedland and Roebourne • 1200 Aboriginal employees • $1.55 billion in contracts awarded to Aboriginal businesses A hand up not a hand out Committed to Aboriginal people 10
  • 11. Thermal coal capital spend per tonne of new capacity Canary in the Coal Mine 73 106 61 176 0 40 80 120 160 200 2007 2012 Rest of World Australia Source: Minerals Councilof Australia, Opportunity at Risk, 2012 US$/t 17
  • 12. Australia’s Shrinking Coal Market Share Indonesia, 27.4 Russia, 1.6 South Africa, 4.9 Columbia, 20.8 United States, 1.6 Indonesia, 17.0 Australia, 15.7 Columbia, 2.8 South Africa, -0.6 United States, 13.7 2013-15 supply growth by country 2015-18 supply growth by country Source: Citi Research Australia, 29.3 Production swamped by Indonesia and U.S. producers 18
  • 13. How can we maintain a competitive advantage in a competitive world? We have to earn our place in the world: – as workers – as companies – as a nation The future of the Pilbara 20 Maintaining the Pilbara as the best address for iron ore project development globally
  • 14. Proudly supporting: Sign up to alerts online: www.fmgl.com.au