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David Woodall, Director Operations, from Fortescue Metals Group Ltd has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsy
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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
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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
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