APPENDIX 4E For the year ended 30 June 2020
This information should be read in conjunction with Fortescue’s Annual Report, for the year ended 30 June 2020.
Name of entity Fortescue Metals Group Ltd
ABN 57 002 594 872
Results for announcement to the market US$ million
Revenue from ordinary activities Up 29% to 12,820 Profit from ordinary activities after tax attributable to members Up 49% to 4,735 Net profit attributable to members Up 49% to 4,735
Amount Franked amount Dividends per security per security Financial year ended 30 June 2020: Interim – ordinary A$0.76 A$0.76 Final – ordinary A$1.00 A$1.00 Total dividends A$1.76 A$1.76
Previous corresponding period: Interim – ordinary and special A$0.30 A$0.30 Final – ordinary and accelerated A$0.84 A$0.84 Total dividends A$1.14 A$1.14 Ex-dividend date of final dividend 31 August 2020 Record date of final dividend 1 September 2020 Payment date of final dividend 2 October 2020
Dividend Reinvestment Plan Net tangible asset backing The Company operates a Dividend Reinvestment Plan (the Plan) which Net tangible asset backing per allows eligible shareholders to elect to invest dividends in ordinary shares ordinary shares: US$4.30 (previous which rank equally with the ordinary shares of the Company. The allocation corresponding period: US$3.44). of price for shares under the Plan will be calculated as the average of the daily volume weighted average market price of all Fortescue shares traded Previous corresponding period on the Australian Securities Exchange during the period of ten trading days The previous corresponding period is commencing on 3 September 2020. the 12 months ended 30 June 2019.
The last date for receipt of applications to participate in or to cease or vary Audit participation in the Plan is by 5:00pm (WST) on 2 September 2020. The This report is based on financial Directors have determined that no discount shall apply to the allocation price statements which have been audited. and the Plan will not be underwritten. Shares to be allocated under the Plan will be acquired on market and transferred to participants on 1 October 2020. Commentary on results A broker will be engaged to assist in this process. for the period A commentary on the results for the period is contained within the Annual A copy of the Plan Rules is available at www.fmgl.com.au/Investors Report, including the Financial Report that accompany this announcement. FY20 Annual Report
ABN 57 002 594 872
Global force | Thriving communities
Contents
01 Overview 01 02 Operating and financial review 22 03 Ore Reserves and Mineral Resources 41 04 Our approach to sustainability 50 05 Corporate Governance 55 06 Our approach to climate change 58 07 Financial Report 63 08 Remuneration Report 117 09 Corporate Directory 155 Our Purpose Global force | Thriving communities
Our Culture We are a values-based business with a strong, differentiated culture. We believe that by leveraging the unique culture of our greatest asset, our people, we will achieve our stretch targets.
Our Values
Safety Family Empowerment Frugality Stretch targets
Courage and Generating Integrity Enthusiasm determination ideas Humility 2020 Year at a glance
2.4 178.2 mt Total Recordable Injury Shipped Frequency Rate
US$ US$ 12.94/wmt 4.7bn C1 costs Net Profit After Tax
US$ A$ 4. 9 bn 1 7. 2 bn Cash on hand Total global economic contribution Overview | Operating and financial review
01 Overview
4 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Chairman's Dr Andrew Forrest AO message Mineral Resources and Ore Reserves
High capital and high yield growth – it is incredibly rare for a company, let alone one sustainability Our approach to operating in the resources sector, to occupy both spaces. The fact that Fortescue has successfully done so is thanks to the values we hold as a family globally – our character, Our approach to Corporate Governance determination, humility, innovation, enthusiasm, frugality and commitment.
From Argentina to Port Hedland, the it is very clear that artificial essential fabric of Western Australia climate change feedback is consistent: members intelligence, including autonomy, will and which is a strong contributor to of the Fortescue Family revere undoubtedly be one of the greatest the economies of our state and our the privilege of their careers and industrial revolutions in history. nation. love working with each other. It is Fortescue is leading by example this rare mix that achieves what and our Board and leadership Fortescue is committed to others dismiss as unrealistic or understands the deep challenges community and environmental too hard. Our culture engenders and opportunities, for Fortescue responsibility including contributing to local prosperity, social equality, the high performance that is now and for humanity, that these Financial Report part of Fortescue’s DNA, as we technologies bring. and carbon neutrality. We believe lead the world in our exploration, carbon neutrality must be achieved development, project execution and This year, we welcomed Dr Ya-Qin as soon as possible and we are operational capability. Zhang to our Board. Dr Zhang’s aggressively investing in practical knowledge and experience in the initiatives that reduce or eliminate In the last twelve months, we have areas of autonomy, technology and emissions, such as solar, wind and completed our journey to develop innovation will be highly valuable as hydrogen energy. a vertically integrated supply chain, we successfully navigate this time As we focus on the future, we will all the way from exploration to the of rapid technology advancement. Remuneration Report world’s steel industries. Fortescue’s Ms Sharon Warburton retired, never lose sight of where we have assets and infrastructure rival the serving through a high growth and come from and the friendships best in the world, and, along with our challenging period for Fortescue. we have built along the way. strongly innovative and collegiate We thank Sharon for her service and Fortescue continues to have strong culture, ensure that we will not only contribution. relationships, with our customers solve the new challenges the world in Asia. We work tirelessly with is throwing at us, but also become Our Board brings a diversity of our partner countries to keep a better and stronger company thought, experience and expertise standards high. From developing because of them. to the table that drives our business technologies, to the blue economy Corporate Directory to set and deliver the challenging and the transitioning energy sector, We are now entering a period in stretch targets that define us. our connections allow us to share which our world is changing at a Together, we oversee a company ideas, perspectives and knowledge pace that is unprecedented in global that directly and indirectly employs and underpin Fortescue’s history. Against this backdrop, 14,000 people, that is part of the outperformance.
Fortescue Metals Group Ltd Annual Report FY20 5 Overview | Operating and financial review
The success of our company is Fire Fund, our belief that “we all have Fortescue management, led by Chief in delivering enhanced returns to to look out for each other” has never Executive Officer Elizabeth Gaines, our shareholders. We are in this been stronger. Deputy Chief Executive Officer Julie privileged position thanks to the Shuttleworth, Chief Operating Officer Fortescue Family. It’s through the We are also expanding the existing Greg Lilleyman and Chief Financial outstanding performance, hard work of Minderoo Foundation and its Officer Ian Wells, have delivered work and dedication of everyone at efforts to: an outstanding year, all the more Fortescue that Minderoo Foundation • Fight cancer, particularly outstanding given the leadership has been funded, largely through childhood cancer, through required to successfully adapt our the dividends it has received from research collaboration; operations in response to COVID-19. Fortescue, to support a wide range of • Maximise early childhood Fortescue has an extremely philanthropic initiatives in Australia development from conception to and across the world for the benefit the age of five; hard-working culture of family, of all Australians. inclusiveness, energy, commitment, • Restore ocean health by determination and trust and it is this This year, Nicola and I announced eliminating plastic waste and culture that continues to drive our an additional personal donation eradicating overfishing; success. So therefore, I deeply thank of A$520 million to Minderoo • Build strong communities through our team, everyone who joined the Foundation, bringing our total arts, culture and community company this year, through to those donations to the Foundation’s causes, programs; who have been with us from the both here and abroad, to over A$2 • Bring meaningful accountability outset. To you all, be assured we are billion. During FY20, we continued and governance to frontier still, to this very day, pioneers together, to accumulate Fortescue shares technologies; just as we were when we started this and the majority of the Foundation’s • Eliminate modern slavery and company only 17 years ago. support goes to the critical issues human rights abuses, particularly The new frontiers and steep that challenge our fellow Australians. against children; Uniquely, we take pride in targeting challenges we faced then, are just as • Create parity with and for the most intractable problems – the great today. But with the strength of Indigenous Australians including the Fortescue Family with us, we share ones that require immense teamwork early childhood programs and between government, business, civil the belief that if we can imagine a pathways to training, employment better future, we can achieve it. society and philanthropy. and business ownership; As Minderoo responded to COVID-19 • Provide PhD and postdoctoral with the procurement of desperately scholarships to the brightest needed medical supplies and researchers from around the world established the Minderoo Foundation and attract them to live and work in Australia.
Protecting Australia from COVID-19 In an unprecedented collaboration between business and philanthropy, Fortescue and Minderoo worked together to procure scarce personal protective equipment (PPE) for our frontline carers, nurses and doctors, helping to protect Australia from this awful disease.
Minderoo made available A$30m Minderoo made available an additional to this cause, and Fortescue’s deep A$220m of its balance sheet to this relationships across Asia were key in exercise without the protections of building the Australian stockpile of normal legal documentation. Together critical PPE to manage the ongoing with Fortescue, 11 large laboratories pandemic. were installed across Australia to quadruple Australia’s testing capability In an initiative described by for COVID-19 and general viral Government as a ‘nation saving measurement. This initiative, typically event’, the team also imported PCR a two year exercise, was ordered, testing equipment at a time when executed and commissioned within the these machines were in acutely month of April. short supply around the world. We were successful in sourcing critical We thank the Australian Government and scarce reagents for COVID-19 and deeply appreciate their trust DNA/RNA testing to ensure that in us for setting us this important when outbreaks occurred, they could mission when Australia needed it be identified and controlled in the most, and are humbled and grateful 6 Fortescue Metals Group Ltd Annual ReportAustralian FY20 community. for the opportunity to serve our fellow Australians. and financial review | OperatingOverview
Mineral Resources and Ore Reserves
sustainability Our approach to
Minderoo Our approach to Corporate Governance Fire Fund climate change Australia’s recent bushfire season had a devastating effect on people and their communities, including local
businesses and wildlife.
Minderoo Foundation’s Fire Fund Program, we are engaging with grassroots projects that provide committed A$70 million to rebuild global partners to invest resources practical support to those whose Financial Report communities, revitalise local that buffer our economies, societies, lives were devastated by the bushfire economies and develop a long-term and environments, both built and crisis. This includes delivering and globally relevant blueprint for natural, to the ever-growing impacts temporary housing, enabling wildfire and disaster resilience. Fire of climate change-induced natural volunteers to help with post-fire Fund’s objective is to transform disasters. rebuilds, enabling citizen scientists Australia to be the global leader in fire to track ecological recovery and and flood resilience by 2025. This includes new artificial partnering on a large-scale study intelligence techniques that rapidly to improve how best to rehabilitate Working with more than 40 other detect and respond to fires and wildfire-affected wildlife. Remuneration Report organisations we are leveraging floods, new management methods emerging science and technology. that protect the environment, water The Fortescue team also stepped Working with these companies security and land, and programs to up to support those impacted by and Fortescue, we are accelerating lift resilience within communities, the bushfires, donating A$90,000 innovation that leads to the including mental health. to the Red Cross Disaster Relief development of new approaches to and Recovery Fund. Minderoo mitigate bushfires, floods and other While we are doing everything we Foundation proudly matched this disasters. can to make sure a catastrophe of donation 2:1 to raise a total of this magnitude does not happen A$250,000. Corporate Directory There is an urgent need to base again, our communities need national systemic interventions that lift ongoing support to rebuild now. Working together, we can rebuild disaster resilience on local knowledge. Minderoo Foundation Fire Fund is fire-ravaged communities in Through Minderoo Foundation’s working with local organisations and Australia and make them more Wildfire and Disaster Resilience alongside relevant experts on crucial resilient for the future.
Fortescue Metals Group Ltd Annual Report FY20 7 Overview | Operating and financial review
Chief Executive Elizabeth Gaines Officer'smessage
In FY20, the Fortescue team delivered a year of records while working together through the unprecedented disruption caused by the COVID-19 pandemic.
Safety and unique culture basis, which is a testament to the functions ensures we can capitalise We are a values-based business ongoing commitment of everyone on market dynamics and respond to and our unwavering focus on safety, at Fortescue to keeping their mates the needs of our customers. family, empowerment and stretch and themselves safe. In 2019, we established FMG Trading targets underpins everything we Operational excellence Shanghai to support our customers do. Our Values are integral to our through direct supply from regional Our outstanding operating success and continue to be as fresh Chinese ports, providing them performance in FY19 was sustained and relevant today as they were with an option to purchase smaller in FY20 with mining, processing, rail when Fortescue was established. volumes in renminbi. and shipping combining to deliver Once again, Fortescue’s unique record shipments of 178.2 million Fortescue, together with our industry culture has shone through and I tonne (mt) for the year, six per cent peers, was in a privileged position to am incredibly proud of our entire higher than FY19 and exceeding the continue to operate during the peak team who, in true Fortescue spirit, top end of guidance of 177mt. of COVID-19 restrictions. There was have adapted to the significant no impact on our shipping schedule We maintained our industry leading changes we have asked of them as to China, demonstrating to our cost position with full year C1 costs we proactively implemented and customers that we are a reliable and of US$12.94/wet metric tonne (wmt) expanded a range of measures to secure supplier of iron ore. (inclusive of US$0.22/wmt of direct contain the spread of COVID-19. COVID-19 costs), one per cent lower Notably, the iron ore price held up We began dealing with the impact than FY19, reflecting our team’s strongly through this period, with of COVID-19 long before the first continued focus on productivity and ongoing demand for iron ore case was identified in Australia innovation initiatives. evidenced by record production of given the impact on our China- crude steel in China, which reached In June, we celebrated the opening based colleagues. As the pandemic 499mt for the six months to June of the Fortescue Hive, our expanded hit our shores, we introduced 2020. We anticipate continued integrated operations centre in measures such as extended recovery in China's economic activity our Perth office. The purpose-built operational rosters, working from and remain confident in the Chinese facility is home to our planning, home, additional charter flights, Government’s commitment to operations and mine control teams, changes to our village facilities, and urbanisation, which will continue together with port, rail, shipping and temperature and health screening to underpin long-term demand for marketing teams to deliver improved to keep our people and the broader iron ore. safety, reliability, efficiency and community safe. commercial outcomes. As home to three of the four largest iron ore producers in the world, Critically, the team have worked Customers and market hard to maintain their focus Western Australia is well positioned on the task at hand. Our Total Fortescue’s integrated supply chain to support China’s ongoing growth Recordable Injury Frequency Rate is unique in our industry and co- and development, which in turn will (TRIFR)improved this financial locating our planning, operations, support WA and Australia’s economic year to 2.4 on a rolling 12 month shipping and marketing business recovery post-COVID-19.
8 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview Balance sheet strength Our US$4.0 billion investment in employment and business development the world class Eliwana Mine and opportunities for Aboriginal people. Our financial results for the year Rail and Iron Bridge Magnetite As of 30 June 2020, Aboriginal demonstrate the continued ability of projects, once complete, will position people represented 10 per cent of our our operations to generate strong Fortescue as the only major iron ore Australian workforce and 14 per cent cash flows through the successful company with a breadth of product of our Pilbara based employees.
execution of our integrated operations offering to meet all market segments and marketing strategy. By leveraging Our strong and inclusive culture is at from its Australian operations. This the capability in our value chain, the heart of our approach to diversity, is a key differentiator for Fortescue, we delivered record shipments, and increasing female representation Mineral Resources and Ore Reserves ensuring we continue to deliver sustained low cost performance across Fortescue is a key priority. Our growth in earnings and cash flow and and strong operating margins, female employment rate increased in enhanced returns to our shareholders contributing to a record net profit FY20 with females holding 19 per cent through all market cycles. after tax of US$4.7 billion. of total roles and 26 per cent of senior Delivering returns to leadership roles. Cash on hand at 30 June 2020 was US$4.9 billion, while net debt was shareholders In FY20, Fortescue made a total global US$0.3 billion, compared with net As government looks to the business economic contribution of A$17.2 billion, sustainability Our approach to debt at 30 June 2019 of US$2.1 billion. community to drive Australia’s including A$4.3 billion in government Total capital expenditure for FY20 economic recovery post COVID-19, tax and royalty payments. was US$2.0 billion. Fortescue is investing in growth Investing in the future projects, supporting job creation The Fortescue family through investment and delivering
We are a values-based business, From this position of balance sheet strong returns to our shareholders. strength, we are investing in the future committed to our strategic goals of growth of our business. The Fortescue For FY20, we have declared A$1.76 ensuring balance sheet strength and in dividends to shareholders, flexibility, investing in the long-term
family is expanding as we deliver on Our approach to Corporate Governance these important projects and we are representing a payout ratio of sustainability of our core business while committed to ensuring that new team 77 per cent of net profit after tax pursuing growth and development truly members embrace our values consistent with our dividend policy options and delivering enhanced and all aspects of our culture. to pay out 50 to 80 per cent of net returns to our shareholders. profit after tax. We are focused on early stage On behalf of the Core Leadership exploration of commodities that Everyone at Fortescue is proud Team, I would like to thank the entire support decarbonisation and the that our dividends support the Fortescue family for their contributions electrification of the transport sector, work of the Minderoo Foundation, this year. Guided by our Values, the Fortescue team’s commitment to and continue to assess copper, gold and Andrew and Nicola Forrest’s climate change and lithium opportunities throughout philanthropy. meeting key safety, production and Australia, South America and Europe. cost targets and their willingness to Global force I Thriving positively respond to the COVID-19 Due to COVID-19, a number of these communities exploration activities were suspended measures is at the heart of our success. during FY20, particularly in South Fortescue was founded on the As we continue to challenge the status
America, and we continue to support belief that our communities should quo to deliver operational excellence, our team members impacted by benefit from our success. Today, we our unique and differentiated culture the pandemic, with the intention to are a global force, committed to will be fundamental to the achievement resume exploration activities once it empowering thriving communities. of our stretch targets, as well as our Financial Report is safe to do so. We continue to deliver training, future goals.
Ambitious climate change target
In June 2020, we announced an industry leading emissions reduction Remuneration Report goal to achieve net zero operational emissions by 2040.
This goal is core to our Climate Change emissions reduction commitment, Connect program and our ongoing Strategy and is underpinned by a together with our goal to achieve net work to decarbonise our mobile fleet pathway to decarbonisation, including zero operational emissions by 2040, through the next phase of hydrogen the reduction of Scope 1 and 2 positions Fortescue as a leader and battery electric energy solutions. emissions from Existing Operations by in addressing the global climate 26 per cent from 2020 levels, by 2030. change challenge. We work in one of the most innovative industries in the world,
Existing Operations include all our Corporate Directory current and future iron ore operations Our success will be founded on and by continuing to harness the in the Pilbara, excluding the Iron Bridge practical initiatives that will allow technology and capability of our Magnetite Project. us to deliver on our targets in an people, we are confident we can economically sustainable manner, achieve this ambitious climate We have a proud history of setting including the Chichester Solar Gas change target. stretch targets and our 2030 Hybrid Project, the Pilbara Energy
Fortescue Metals Group Ltd Annual Report FY20 9 Overview | Operating and financial review
10 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Our Board overview
Fortescue has a talented and diverse Board committed to Mineral Resources and Ore Reserves enhancing and protecting the interests of shareholders and other stakeholders and fulfilling a strong governance role.
sustainability Our approach to
oprt oenneOur approach to Corporate Governance
Dr Andrew Forrest AO Mark Barnaba AM Elizabeth Gaines Chairman Lead Independent Director/ Chief Executive Officer/ Deputy Chair Managing Director climate change
Financial Report
Lord Sebastian Coe CH, KBE Jennifer Morris OAM Dr Jean Baderschneider Non-Executive Director Non-Executive Director Non-Executive Director Remuneration Report Corporate Directory Penny Bingham-Hall Dr Cao Zhiqiang Dr Ya-Qin Zhang Non-Executive Director Non-Executive Director Non-Executive Director
Fortescue Metals Group Ltd Annual Report FY20 11 Overview | Operating and financial review
The appointment and reappointment of directors is intended to maintain and enhance the overall quality of the Board through a composition which reflects a diversity of skills, ethnicity, experience, gender and age.
The primary driver for the Board in site visits and annual site tours to The Company actively promotes seeking new directors is skills and operations ethical and responsible decision experience which are relevant to the • Visits to meet with key making through its Values and Code of needs of the Board in discharging its customers that strengthen their Conduct and Integrity that embodies responsibilities to shareholders. All understanding of the Company’s these Values. new Board members benefit from a key markets comprehensive induction process The Board and each of its Committees • Regular formal and informal have established a process to that supports their understanding of opportunities for the directors to Fortescue’s business. evaluate their performance annually. meet with management and staff. The process is based on a formal Fortescue’s policy is to assess all The Board has established questionnaire covering a range of potential Board candidates without Committees to assist in the performance topics. The process is regard to race, gender, age, physical execution of its duties and to ensure managed by the Company Secretary ability, sexuality, nationality, religious that important and complex issues under the direction of the Lead beliefs, or any other factor not are given appropriate consideration. Independent Director. The most recent relevant to their competence and The primary Committees of the review was undertaken in June 2020. performance. Board are the Remuneration and The results and recommendations There is also a range of support People Committee, the Audit and from the evaluation of the Board and given to Board members which Risk Management Committee, the Committees are reported to the full enables them to stay strongly Nomination Committee and the Board for further consideration and connected to Fortescue, its culture Finance Committee. action, where required. and Values. Each Committee has a non-executive At the date of this report, the Board These include: Chair and operates under its own has seven non-executive directors Charter which has been approved by and one executive director, being • Opportunities for significant the Board. contribution to the annual strategy the Chief Executive Officer, Elizabeth setting process conducted with Directors are expected to act Gaines. The Board believes that an executive and senior management independently and ethically appropriate mix of non-executive and executive directors is beneficial to its • Regular briefings from executive and comply with all relevant and senior management regarding requirements of the Corporations role and provides strong operational all major business areas, tailored Act 2001, ASX Listing Rules and the and financial insights to support the Company’s Constitution. business.
12 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
He is Global Patron of the Centre for Global Head of the Natural Resources Dr Andrew Forrest AO Humanitarian Dialogue, recipient of Group). He has previously chaired the the Australian Sports Medal and the State Theatre Company of Western Chairman Australian Centenary Medal, and Vice- Australia, the West Coast Eagles (an Appointed Chairman in July 2003; Patron of the SAS Resources Fund. Australian Rules Football League Assumed role of Chief Executive team) and several large publicly listed
He was a Councillor of the Global Officer in 2005; Resumed non- (ASX) companies within the mining Citizen Commission, charged by executive responsibilities in July 2011. and infrastructure sectors. the UN to modernise the Universal Dr Forrest is Australia’s most active Declaration of Human Rights He is also a member of the Board (and Mineral Resources and Ore Reserves philanthropist and one of the most presented to the UN Secretary General Chairman of the Audit Committee) effective business leaders of his in April 2016. Dr Forrest was appointed of the Reserve Bank of Australia generation. by the Prime Minister and Cabinet and was the inaugural Chairman of of Australia to Chair the Review of the University of Western Australia As Fortescue’s Founder and
Indigenous Training and Employment Business School Board from 2002 Chairman, he has led the Company Programmes, to end Indigenous to 2020 and now holds the title of from inception to its Top 10 status on disparity through employment with (inaugural) Emeritus Board Member, the Australian Stock Exchange, during its recommendations being slowly also serving as an Adjunct Professor sustainability Our approach to which time Fortescue invested more implemented. in Finance. than US$27 billion in the resources sector. He was Western Australia’s 2017 Mr Barnaba also chairs GLX (a Australian of the Year for his specialist technology company that In 2001, Dr Forrest co-founded the outstanding contribution to the develops software based marketplace
Minderoo Foundation with his wife community. In 2018, Dr Forrest solutions for commodity markets) Nicola, which has supported over was inducted into the Australian and the Hospital Benefit Fund (HBF) 300 initiatives across Australia and Prospectors & Miners’ Hall of Fame Investment Committee, is a member of internationally in pursuit of a range and was the inaugural winner of the the Senior Advisory Board of Appian Our approach to Corporate Governance of causes. In April 2020, the Forrests EY Global Entrepreneur of the Year Capital (a London based pure-play announced one of Australia’s largest Social Impact Award. mining private-equity fund), is a private philanthropic donations of member of the Board of the Centre for A$520 million, and have continued Committee memberships: Independent Studies and is a senior giving, with their total philanthropic Finance Committee (Chair), fellow at EY (Oceania). donations now exceeding A$2 billion. Nomination Committee Mr Barnaba holds a Bachelor of Dr Forrest recently completed a PhD Commerce (First Class Honours and in Marine Ecology and is passionate Mark Barnaba AM CitWA University Medal) from the University climate change about ocean conservation. Prior to of Western Australia, an MBA from that he was awarded an honorary Lead Independent Director/ Harvard Business School (High doctorate by the University of Western Deputy Chair Distinction; Baker Scholar) and an Australia, is an Adjunct Professor of Honorary Doctor of Commerce from Deputy Chair since November 2017; the Central South University in China the University of Western Australia. Lead Independent Director since and a lifetime Fellow of the Australian He has lived in Australia, the United November 2014; Non-Executive Institute of Mining and Metallurgy. States, Italy, the United Kingdom and Director since February 2010. In 2019, he was announced as an IUCN South Africa. Mr Barnaba is a career investment Financial Report Patron of Nature and is a member of Committee memberships: banker, having focused the United Nations (UN) Environment Audit and Risk Management predominantly in the natural Programme Scientific Advisory Committee (Chair), Nomination resources sector. Committee on the Assessment on Committee, Remuneration and Marine Litter and Microplastics. Mr Barnaba spent most of his career People Committee (Member), Finance He is Co-Chairman of the Senior with companies he founded, led and Committee (Member) Business Leaders’ Forum, the then sold - GEM Consulting and leading formal dialogue for China Azure Capital (both independent Remuneration Report and Australia’s most senior business corporate advisory firms which leaders. provide financial, corporate and strategic advice to companies, In 2017, Dr Forrest was appointed governments and institutions in an Officer of the Order of Australia the Asia Pacific region), McKinsey (AO) for distinguished service to the & Company (both in Australia and mining sector, to the development overseas) and in several senior of employment and business executive roles at Macquarie Group opportunities, as a supporter of (one being the Chairman and sustainable foreign investment, and to Corporate Directory philanthropy.
Fortescue Metals Group Ltd Annual Report FY20 13 Overview | Operating and financial review
Elizabeth Gaines Lord Sebastian Coe CH, KBE Dr Jean Baderschneider Chief Executive Non-Executive Director Non-Executive Director Officer/Managing Director Non-Executive Director since Non-Executive Director since Chief Executive Officer since February 2018. January 2015. February 2018 and Executive Director since February 2017; Former Lord Coe is currently a senior A highly regarded leader in both Non-Executive Director from advisor with Morgan Stanley & Co business and civil society, February 2013 to February 2017. International plc and a Dr Baderschneider brings 35 years’ Non-Executive Director of the Vitality of extensive international experience A highly experienced business leader Group of health and life insurance in procurement, strategic sourcing with extensive international experience companies. In 2017, he became and supply chain management along as a Chief Executive Officer and Chancellor of Loughborough with a deep understanding of group executive, Ms Gaines has a University having previously served high-risk operations and locations proven track record in financial and as Pro Chancellor of the University. and complex partnerships. operational leadership across a number of industries, including Based in the United Kingdom, Lord Dr Baderschneider retired from resources, construction and Coe is the Non-Executive Chairman ExxonMobil in 2013 where she infrastructure, financial services of CSM Sport and Entertainment, was Vice-President of Global and travel and hospitality. within the Chime Communications Procurement. During her 30 year group. He was elected President of career, she was responsible for After joining Fortescue as a Non- World Athletics in 2015 where he operations all over the world, Executive Director in February 2013, is driving significant governance including Africa, South America, the Ms Gaines was appointed Chief reforms through the organisation and Middle East and Asia. Financial Officer and Executive Director its 214 Member Federations around in February 2017. She is a former the world. He is currently serving his A past member of the Board of Chief Executive Officer of Helloworld second term as President. Directors of the Institute for Supply Limited and Heytesbury Pty Limited Management and the Executive and has also held the position of Chief Lord Coe previously served as Board of the National Minority Financial Officer at Stella Group and Chairman of the British Olympic Supplier Development Council, Entertainment Rights plc. Association and was Chairman Dr Baderschneider also served of the Organising Committee for on the boards of the Center of Ms Gaines was ranked second on the London 2012 Olympic Games Advanced Purchasing Studies and the 2019 Fortune Magazine and Paralympic Games. He was a the Procurement Council of both the Businessperson of the Year list, and member of the British athletics team Conference Board and the Corporate in 2020 the Chamber of Minerals and at the 1980 and 1984 Olympic Games Executive Board. Energy of Western Australia awarded where he won two gold and two her the ‘Women in Resources silver medals, as well as breaking 12 In February 2011, she was the Champion’ at their annual Women world records. Presidential appointee to the US in Resources Awards. Department of Commerce’s National In 1992, Lord Coe became a Member Advisory Council of Minority She has significant exposure to the of Parliament and during his political Business Enterprises. She holds a impact of the growth in Asian career served as a Government Whip Masters Degree from the University economies, particularly China, on and then Private Secretary to William of Michigan and a PhD from Cornell the Australian business environment Hague, Leader of the Opposition and University. and economy as well as a deep Leader of the Conservative Party. He understanding of all aspects of was appointed to the House of Lords Dr Baderschneider is the recipient of financial and commercial management in 2000. Cornell’s Jerome Alpern Award and at a senior executive level in both the Nomi Network’s Corporate Social listed and private companies. Committee memberships: Responsibility Award. Nomination Committee (Chair) Ms Gaines holds a Bachelor of Committee memberships: Commerce and Masters of Applied Audit and Risk Management Finance and, in 2019, was awarded an Committee Honorary Doctorate of Commerce by Curtin University. She is a member of Chartered Accountants Australia and New Zealand, the Australian Institute Cameron Wilson of Company Directors and Chief Executive Women. Company Secretary
Ms Gaines has previously held Non- Mr Wilson was appointed Company Secretary in February 2018, bringing over Executive Director roles with NEXTDC 20 years’ mining industry experience across the gold, nickel, coal and mineral Limited, Mantra Group Limited, Nine sands sectors. Entertainment Co. Holdings Limited. and ImpediMed Limited. Mr Wilson holds a Bachelor of Laws from the University of Western Australia and is a Graduate of the Australian Institute of Company Directors.
14 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
of the Financial Services Institute of Dr Zhang has served on the Board of Dr Cao Zhiqiang Australasia and a member of Chief Directors of Chinasoft International Ltd Executive Women and Corporate (HKEX: 354) and AsiaInfo Technologies Non-Executive Director Women Directors. Ltd (HKEX: 1675). He serves on the Board of Stewardship for the Future of Mobility Non-Executive Director since Other current directorships (ASX January 2018 (nominated director of the Davos World Economic Forum listed entities): from Hunan Valin Iron and Steel and Chairman of the Apollo Alliance, the Group Company Ltd). BlueScope Steel Limited (Non- largest open platform for autonomous driving in the world. Dr Zhang received Executive Director); Dexus Property Mineral Resources and Ore Reserves Dr Cao is currently the Chairman Group (Non-Executive Director). his Bachelor’s and Master’s degree in of Hunan Valin Iron and Steel Group Electrical Engineering from the University Company Ltd and brings extensive Committee memberships: of Science and Technology of China, experience in technology and steel Audit and Risk Management and a PhD in Electrical Engineering from mill management, along with a Committee (Member), Remuneration George Washington University. deep background in international and People Committee (Member) and cooperation. Finance Committee (Member)
Dr Cao joined Valin Xiangtan Steel Jennifer Morris OAM sustainability Our approach to in 1997 and has worked in a variety Non-Executive Director of roles, including Director of the Dr Ya-Qin Zhang Research and Development Centre, Non-Executive Director Non-Executive Director since November before being appointed Chief 2016. Non-Executive Director since Executive Officer. He holds a PhD Ms Morris is currently the National in Science and is a senior engineer August 2019. Director of Strategy for Cannings Purple, research fellow. Dr Ya-Qin Zhang is a renowned one of Australia’s leading
scientist, technologist and business fully integrated strategic Our approach to Corporate Governance executive. He is the founder and communications consultancies. Prior Penny Bingham-Hall Chairman of Blue Entropy LLC, a to joining Cannings Purple, Ms Morris Non-Executive Director Seattle-based technology consulting was a consulting partner at Deloitte, and firm. He joined Tsinghua University as more recently the CEO of Walk Free, the Non-Executive Director since the Chair Professor of AI Science in Minderoo Foundation’s global initiative November 2016. 2020, starting the Tsinghua Institute against slavery. She is currently a Non- for AI Industry Research (AIR). Dr Executive Director of the Australian Ms Bingham-Hall has over 30 years’ Zhang was President of Baidu Inc. Sports Commission. experience in senior executive and
(NASDAQ: BIDU) from September climate change non-executive roles in large ASX 2014 to October 2019, a leading Ms Morris has key experience in listed companies. She is a Non- Chinese multinational technology advising government entities and Executive Director of Macquarie company specialising in Internet- corporations on strategy development, Specialised Asset Management, related services, mobility, artificial governance controls, complex Taronga Conservation Society intelligence and cloud computing. large-scale business transformation,
Australia, Supply Nation and the Prior to joining Baidu, he was a key the embedding of environment, social Crescent Foundation. She is also executive of Microsoft Corporation for and governance related policies and Chair of the NSW Freight and 16 years, including Corporate Vice the understanding of high-performance Logistics Council. President for Mobile and Embedded environments. Financial Report Ms Bingham-Hall has worked in the Products, Managing Director of A former member of the Australian construction, infrastructure, mining Microsoft Research Asia and Chairman Women’s Hockey Team, Ms Morris won and property industries across of Microsoft China. Olympic gold medals at the Atlanta 1996 Australia and the Asian region. She Dr Zhang has made significant and Sydney 2000 Olympic Games. In has a particular interest in contributions to digital media, AI, 1997, she was awarded a Medal of the environmental sustainability, autonomous driving and cloud Order of Australia (OAM). workplace safety and Indigenous computing industries, with over 60 Ms Morris is a member of the Australian employment. Remuneration Report granted US patents, 500 Institute of Company Directors, a Prior to becoming a company peer-reviewed publications, Fellow of Leadership WA and a member director, Ms Bingham-Hall was and numerous contributions to of the Vice Chancellor’s List, Curtin Executive General Manager, Strategy international standards. Dr Zhang was University. She holds a Bachelor of Arts at Leighton Holdings (now CIMIC) inducted into the American Academy (Psychology and Journalism) received - Australia’s largest construction, of Arts and Sciences (AAAS) in with Distinction and has completed mining services and property group. 2019 and the Australian Academy of Finance for Executives at INSEAD. As part of the leadership team at Technology and Engineering (ATSE) as the only foreign fellow in 2017, and Committee memberships:
Leighton she had responsibilities Corporate Directory across the group’s Australian and became a Fellow of the Institute of Remuneration and People Committee Asian operations. Electrical and Electronics Engineers (Chair), Audit and Risk Management (IEEE) in 1997 at the age of 31, making Committee (Member) Ms Bingham-Hall has a Bachelor of him the youngest scientist winning Arts degree in Industrial Design, is a this honour in the 100+ year history of Fellow of the Australian Institute of the organisation. Company Directors, a Senior Fellow Fortescue Metals Group Ltd Annual Report FY20 15 Overview | Operating and financial review
Core Leadership
Team L to R: CEO Elizabeth Gaines, Deputy CEO Julie Shuttleworth, COO Greg Lilleyman, CFO Ian Wells.
Elizabeth Gaines Greg Lilleyman Chief Executive Officer Chief Operating Officer
Ms Gaines commenced as Chief Mr Lilleyman commenced as Chief Executive Officer in February 2018. Operating Officer in February 2018, after joining Fortescue as Director A highly experienced business Operations in January 2017. leader with extensive international experience as a Chief Executive With three decades of extensive Officer and group executive, international experience in the mining Ms Gaines has a proven track sector, across multiple commodities in record in financial and operational large scale project development and leadership across a number of construction, operational and business industries including resources, leadership, joint venture management construction and infrastructure, and technology deployment, financial services and travel Mr Lilleyman brings significant business and hospitality. credentials and over 20 years' iron ore market knowledge to Fortescue’s Core After joining Fortescue as a Leadership Team. Non-Executive Director in February 2013, Ms Gaines was appointed Mr Lilleyman holds a degree in Chief Financial Officer and Executive Construction Engineering from Curtin Director in February 2017. She is a University and has completed the former Chief Executive Officer of Vincent Fairfax Fellowship in Ethical Helloworld Limited and Heytesbury Leadership at the University of Pty Limited and has also held the Melbourne, as well as the prestigious position of Chief Financial Officer Wharton Business School’s Advanced at Stella Group and Entertainment Management Program. Rights plc. He is a member of the Australian Ms Gaines holds a Bachelor of Institute of Mining and Metallurgy, Commerce and Masters of Applied the Australian Institute of Company Finance and, in 2019, was awarded an Directors and a Fellow of the Australian Honorary Doctorate of Commerce by Institute of Management. Mr Lilleyman Curtin University. She is a member of has recently been appointed to the Chartered Accountants Australia and Board of the University of Western New Zealand, the Australian Institute Australia Business School. of Company Directors and Chief Executive Women.
16 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Mineral Resources and Ore Reserves
sustainability Our approach to
Ian Wells Julie Shuttleworth Chief Financial Officer Deputy Chief Executive Officer
Mr Wells commenced as Chief Financial Ms Shuttleworth commenced as Deputy Our approach to Corporate Governance Officer in February 2018 having responsibility Chief Executive Officer in February 2018. for the Fortescue Group capital management strategy, core finance functions Having joined Fortescue in 2013, Ms including reporting, tax and treasury, Shuttleworth has held General Manager together with Group procurement and roles at both Fortescue’s Cloudbreak and logistics, and technology and autonomy. Solomon mines. Mr Wells is a Director of a number of Ms Shuttleworth holds a double major Fortescue’s subsidiaries and is a member in Extractive Metallurgy and Chemistry and alternate chair of the Iron Bridge Joint from Murdoch University and has 26 climate change Venture Committee. years’ experience in the mining industry Since joining Fortescue in 2010, he has in Australia, China, Tanzania and South held multiple senior executive roles in the America, including 19 years in gold/ Group Finance Leadership team, including copper working for Newcrest Mining, Group Manager Corporate Finance, Sino Mining and Barrick Gold, and leading Fortescue’s capital management seven years’ iron ore experience with strategy, Group Manager planning and Fortescue. Financial Report analysis and he also held the position of Ms Shuttleworth is a Fellow and Company Secretary. Chartered Professional of the Australian Mr Wells’ prior experience includes Institute of Mining and Metallurgy, a financing Fortescue’s major iron ore Graduate Member of the Australian project development leading multi-billion Institute of Company Directors, a dollar capital raising and refinancing Member of Chief Executive Women, a transactions in domestic and international Member of the Institution of Engineers capital markets. Australia and on the International
Committee of the Society of Mining Remuneration Report With more than 25 years’ experience as a Metallurgy and Exploration. She has senior executive in leading ASX listed and attended Harvard Business School private companies in the mining, energy and INSEAD Business School, holds infrastructure and healthcare industries, diplomas in Financial Markets and Mr Wells’ prior positions include Chief Management, and sponsors the Julie Financial Officer of Singapore Power Shuttleworth Prize in Mineral Processing subsidiary Jemena Limited and Acting at Murdoch University. Chief Financial Officer of Alinta Limited. Corporate Directory Mr Wells holds a Bachelor of Business in Accounting, is a Fellow of CPA Australia, a Certified Finance and Treasury Professional and a Graduate of the Australian Institute of Company Directors. Mr Wells is Chairman of The Salvation Army’s WA Corporate & Philanthropic Council. Fortescue Metals Group Ltd Annual Report FY20 17 Overview | Operating and financial review
Executive team
Fortescue’s Executive team is accountable for the safety of its people, upholding the Company’s Values, and acting with integrity and honesty.
Danny Goeman Peter Huston Don Hyma Director Sales and Marketing Director Corporate Development, Director Projects Legal and Strategy
Tim Langmead Linda O’Farrell Fernando Pereira Director Community, Environment Director Fortescue People Director Pilbara Operations and Government
Alison Terry Rob Watson Director Sustainability and Director Health and Safety Corporate Affairs and Joint Company Secretary
18 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Pilbara Growth in Western Australia, Operations and Asset Management Danny Goeman as well as Chief Technical Officer teams. for Mitsui & Co. He has extensive Director Sales and Marketing experience in managing large, Mr Pereira has more than 19 years’ experience in the mining industry, Mr Goeman was appointed Director complex capital projects, particularly spanning various commodities and Sales and Marketing in August 2018. those implemented under joint ventures and involving multiple operations in Australia and South Mr Goeman has more than 25 years stakeholders. America. He has expertise in senior of experience in management, sales management, mining and mineral and marketing, strategy development engineering, supply chain optimisation Mineral Resources and Ore Reserves and overseeing mechanical, structural and high level commercial Tim Langmead negotiations, including more than and expansion projects. 20 years with the Rio Tinto group of Director Community, Environment Mr Pereira holds a Bachelor in Mining companies. and Government and Mineral Processing Engineering
Mr Goeman has a wealth of Mr Langmead joined Fortescue as and Specialisation in Business experience in leading commercial Group Manager Corporate Affairs in Management. transactions in different geographies, January 2013 and from January 2014 sustainability Our approach to including Australia, Asia, Europe served as Director External Relations and Africa, and has experience in before being appointed to his current Alison Terry a range of commodities including role. diamonds, iron ore, coal and potash. Director Sustainability and Corporate Previously, Mr Langmead held Affairs and Joint Company Secretary
Mr Goeman has a Master's degree in senior corporate affairs roles in the Business Administration. Australian business units of global oil Ms Terry joined Fortescue in 2014 as and gas companies. Mr Langmead Group Manager Corporate Affairs and serves as Joint Company Secretary, served in senior staff roles for Our approach to Corporate Governance Peter Huston Ministers in the Howard-Anderson having been appointed to the role in February 2017. Director Corporate Development, and Howard-Vaile governments and commenced his career as an Legal and Strategy With significant experience in agribusiness journalist. Mr Huston joined Fortescue in 2005 corporate affairs, legal, company and has over 20 years’ experience in secretarial and general management, Ms Terry has previously held senior legal and corporate advisory roles. Linda O’Farrell Prior to joining Fortescue, executive and Board roles across a number of sectors including Mr Huston spent 12 years as a Director Fortescue People Partner of the law firm now known automotive, telecommunications and climate change as Norton Rose Fulbright. He then Ms O’Farrell joined Fortescue in superannuation. Ms Terry holds a spent over a decade in Activist October 2013 as Group Manager Bachelor of Economics and Bachelor Private Equity as an Executive Fortescue People, joining the of Laws (Honours) and a Graduate Director at Troika Securities Limited. Executive team in December 2014. Diploma of Business (Accounting).
Mr Huston is admitted as a Solicitor Having held a number of executive She is a member of Chief Executive and Barrister of the Supreme Court human resources roles in major Women, a Graduate of the Australian of Western Australia, the Federal and Australian resource companies, Institute of Company Directors and Financial Report High Court of Australia and has a Ms O’Farrell brings deep experience a Director of the Black Swan State Bachelor of Jurisprudence, Bachelor in strategic people management, Theatre Company of Western Australia. of Laws (with Honours), Bachelor of diversity and Aboriginal employment. Commerce and a Master of Laws. Ms O’Farrell holds a Bachelor of Economics (Honours in Industrial Rob Watson Relations) from the University Director Health and Safety Don Hyma of Western Australia. She is a Director at the Australian Institute Mr Watson was appointed Director
Director Projects Remuneration Report of Management Western Australia, Health and Safety in July 2020 after Mr Hyma joined Fortescue in early the Australian Resources and joining Fortescue in 2011. Prior to this, 2019 as Project Director Iron Bridge Energy Group (AMMA) and Lifeline Mr Watson spent 15 years in a number before moving into the role of Australia. of senior corporate health and safety Director Projects in October 2019. roles in large mining companies. He has over 25 years of progressive Mr Watson’s career in health and capital project experience in the Fernando Pereira safety spans over 25 years in a number resources sector in Canada, Chile, of industries and commodities. New Caledonia and Australia. Director Pilbara Operations
Mr Watson holds a Master's in Corporate Directory Prior to joining Fortescue, Mr Mr Pereira was appointed Director Occupational Health and Safety. Hyma held senior management Pilbara Operations in June 2019, positions with Rio Tinto, including having started his career at Vice President Projects Iron Ore Fortescue in 2010 and has previously in Canada and General Manager led the Company’s Port and Rail
Fortescue Metals Group Ltd Annual Report FY20 19 Overview | Operating and financial review
About Fortescue
A proud West Australian company, Fortescue Metals Group Ltd (Fortescue) is a global leader in the iron ore industry, recognised for its culture, innovation and industry-leading development of world class infrastructure and mining assets in the Pilbara, Western Australia.
Since Fortescue was established by Our supply chain extends to our In 2019, we established FMG Trading our Founder and Chairman innovative tug fleet and the eight Shanghai (FMG Trading), a wholly Dr Andrew Forrest AO in 2003, we purpose-built 260,000 tonne owned Chinese sales entity, to have discovered and developed capacity Fortescue Ore Carriers, support our customers through major iron ore deposits, constructed which have been designed to the direct supply of iron ore from some of the most globally significant complement the efficiency of regional Chinese ports, providing mines and have grown to be one our port and maximise the safety them with an option to purchase of the world’s largest producers of and productivity of Fortescue’s smaller volumes in renminbi. iron ore. operations. Fortescue was founded on the Delivering consistent operational The Fortescue Hive, our expanded belief that our communities should excellence, our integrated mining, Integrated Operations Centre, benefit from our success. Today, we rail, shipping and marketing teams brings together our entire supply are a global force, committed to work together to export 175 to 180 chain to deliver significant empowering thriving communities, million tonnes of iron ore annually safety, productivity, efficiency as we deliver training, employment (mtpa) and our commitment to and commercial benefits and and business development technology and innovation ensures will underpin our future use of opportunities for Aboriginal people. we remain one of the world’s lowest technology, including artificial cost iron ore producers. intelligence and robotics. As a large consumer of energy, we have committed to an industry- Fortescue’s wholly owned and fully Through our world class exploration leading carbon emissions target integrated operations in the Pilbara capability together with our of net zero operational emissions include the Chichester and Solomon business development and projects by 2040. To achieve this, we are mining hubs and we are developing focus, we are driving future investing in practical initiatives the Western Hub, home to the growth, targeting the early stage such as the development of wind new Eliwana mine. The Iron Bridge exploration of commodities that and solar energy, as well as gas Magnetite Project, an industry- support decarbonisation and the and battery storage hybrid projects leader in cost and energy efficiency, electrification of the transport sector. to displace our current thermal will be one of the highest-grade generation. We are also investigating magnetite projects in the world. We are undertaking exploration the next phase of hydrogen and activities in New South Wales battery electric vehicle mobility. Our mining hubs are connected to and South Australia, as well as the five berth Herb Elliott Port and in Ecuador and Argentina, and Fortescue is a values-based the Judith Street Harbour towage preliminary exploration activities on business, committed to our strategic infrastructure in Port Hedland via tenements that are in application goals of ensuring balance sheet 620 kilometres (km) of the fastest, in Colombia, Peru, Portugal and strength and flexibility, investing in heavy haul railway in the world, Kazakhstan, prospective for copper, the long-term sustainability of our with an additional 143km under gold and lithium. core business while pursuing growth development to support Eliwana. and development options and Our longstanding relationships with delivering enhanced returns to our customers in China have grown shareholders. from our first commercial shipment of iron ore in 2008. Today, we are a core supplier of seaborne iron ore to China and have expanded into markets including Japan and South Korea.
20 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Value chain
Innovation in process and design has been a key component of Fortescue’s strategy in challenging industry standards to more efficiently and effectively Mineral Resources and Ore Reserves deliver its product suite from mine to market.
Exploration
and discovery Challenging geological thinking to identify
valuable deposits sustainability Our approach to
Modelling, planning and development
Extraction and recovery Innovative use of
technology suitable to Our approach to Corporate Governance Fortescue’s deposits
Processing Ore processing facility design and wet processing optimise output
Mine to port
Heavy haul rail climate change at 42t axle load
Blending and stockpiling Port design facilitates blending and stockpiling of product suite
Ship loading Financial Report 3 shiploaders and 5 berths maximise outload capacity and utilisation
Marketing Helping customers achieve best value in use
Shipping and towage Remuneration Report Delivery to Fortescue’s international customers’ specifications 8 Fortescue Ore Carriers Towage fleet provides safe and reliable towage services China port sales FMG Trading Shanghai Co. Ltd
(FMG Trading) Corporate Directory
Rehabilitation Mine closure and decommissioning
Fortescue Metals Group Ltd Annual Report FY20 21 Overview | Operating and financial review
US$ US$ 178.2 mt 12.94/wmt 4. 9 bn Shipped C1 costs Cash on hand
US$ US$ US$ 12.8bn 5.1 bn 0.3 bn Revenue Gross debt Net debt
02 Operating and financial review
22 Fortescue Metals Group Ltd Annual Report FY20 and financial review | OperatingOverview
Overview of operations
As one of the world’s largest producers of iron ore, Fortescue’s wholly owned Mineral Resources and Ore Reserves and integrated operations in the Pilbara include the Chichester and Solomon mining hubs and the Western Hub, which is currently under development. Our mining infrastructure is connected to the five berth Herb Elliott Port and
Judith Street Harbour towage facility in Port Hedland via the fastest, heavy haul railway in the world. sustainability Our approach to
Chichester Hub Solomon Hub Hedland Operations Our Chichester Hub in the The Solomon Hub in the Hamersley Fortescue wholly owns and operates Chichester Ranges, comprising the Ranges is located 60km north of our purpose designed rail and port Cloudbreak and Christmas Creek Tom Price and 120km to the west of facilities, constructed to deliver iron mines, has an annual production our Chichester Hub. It comprises the ore from our mines to Port Hedland for capacity of approximately 100mtpa Firetail and Kings Valley mines which shipment to our customers. Covering from three Ore Processing Facilities together have a production capacity 620km of track, with the additional Our approach to Corporate Governance (OPFs). of 75mtpa. 143km under construction for Eliwana, our railway is the fastest, heavy haul Consistent and sustained output Solomon represents a valuable line in the world. delivered from the OPFs has allowed source of production by blending us to optimise our product strategy higher iron grade, low cost The efficient design and layout, optimal through enhanced blending and Firetail ore with low phosphorous berthing configuration and ongoing beneficiation, increasing iron Chichester ore to create Fortescue innovation to increase productivity upgrades and reducing impurities. Blend. The current operation will makes Fortescue’s Herb Elliott Port the This has contributed to lower mining expand to include the Queens Valley most efficient bulk port operation in climate change cut-off grades, as we optimise ore mining area to maintain production Australia. The port has five operating bodies with sustainably lower strip of the Kings Fines product. berths and our current infrastructure ratios. is capable of safely and efficiently Western Hub exporting in excess of 180mtpa. The Christmas Creek OPF infrastructure is being upgraded Fortescue is developing the Western The Judith Street Harbour towage to include a Wet High Intensity Hub, which includes significant infrastructure and our fleet of tugs Magnetic Separator (WHIMS) plant amounts of high iron content bedded provide safe and reliable towage to further maximise production rates iron ore and will be home to the services that maximise the efficiency Financial Report and enhance the value of our ore. Eliwana mine. Located 140km to of our operations, while offering The WHIMS construction will be the west of Solomon and due to be competitive third party towage services completed by the end of 2020. completed in December 2020, the within the port. Eliwana project includes 143km of Cloudbreak utilises relocatable rail and a 30mpta dry OPF. conveyors which can be moved, lengthened or shortened once an Eliwana will contribute to Fortescue’s area is mined. The conveyors now core iron ore business as it cover 10km, extended from the underpins the ramp up of our Remuneration Report initial 5km length due to the success 60.1% Fe West Pilbara Fines product. and efficiency of this innovative The operation will maintain our infrastructure. low cost status, providing greater flexibility to capitalise on market dynamics. Corporate Directory
Fortescue Metals Group Ltd Annual Report FY20 23 Overview | Operating and financial review