Investor Briefing 2016

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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 InformationThis presentation should be read in conjunction with the Annual Report at 30

June 2016 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 resources estimations should be read in

conjunction with Fortescue’s Ore Reserves and Mineral Resources statement

for its Hematite and Magnetite projects at 30 June 2016 as released to the

Australian Securities Exchange on 19 August 2016, and ASX releases dated

20 May 2014 and 8 January 2015 as they relate to Hematite Mineral

Resources Development Properties. Fortescue confirms in the subsequent

public report that it is not aware of any new information or data that materially

affects the information included in the relevant market announcement and, in

the case of estimates of mineral resources or ore reserves, that all material

assumptions and technical parameters underpinning the estimates in the

relevant market announcement continue to apply and have not materially

changed.

All amounts within this presentation are stated in United States Dollars

consistent with the functional currency of Fortescue Metals Group Limited,

unless otherwise stated. Tables contained within this presentation may

contain immaterial rounding differences.

Forward looking statements

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Building a world class company

Core supplier to China’s growth

Safety focus

Shipped over

760mt

First ore

in 2008

Unique culture

165-170mtProduction rate

Low cost

producerEngagement

Empowerment

Leadership

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Delivering on targets

Focus on safety, productivity and efficiency

Safety

165-170mt shipped

Productivity + efficiency

Debt repayments

Consistent dividend policy

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Sept ’16 quarter US$13.55/t – productivity and efficiency delivering cost savings

Continuous + sustainable cost improvements

Solomon operations

Blending strategy 58% Fe

Processing, wet plants + de-sands

Operational efficiencies

Fx and fuel decreases

1

2

3

4

5

US$/wmt

4844

34

27

15

0

10

20

30

40

50

60

FY12 FY13 FY14 FY15 FY16 FY17Guidance

$12 - $1312-13

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FY17 continuing to lower all in breakeven price on Platts 62% CFR basis

Breakeven price

US$/t

7

Fx:0.75

18.1

22.6

28.3

12-13

4.51.3

0.31.9

2.5

3.1

2.6

-

10

20

30

40

C1 Shipping Royalty Admin Deliveredcost to China

Moisture Dmtuadjustments

Total dmtcost

Interest Capex Breakevenprice

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Price and iron ore port stocks remaining stable

Iron ore supply in balance

Source: Bloomberg and Umetal 8

$30

$50

$70

$90

$110

$130

$150

$170

$190

$210

0

20

40

60

80

100

120

140

160

180

Ju

l-1

0

Sep

-10

No

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0

Ja

n-1

1

Ma

r-11

Ma

y-1

1

Ju

l-1

1

Sep

-11

No

v-1

1

Ja

n-1

2

Ma

r-12

Ma

y-1

2

Ju

l-1

2

Sep

-12

No

v-1

2

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

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3

Sep

-13

No

v-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Ju

l-1

4

Sep

-14

No

v-1

4

Ja

n-1

5

Ma

r-15

Ma

y-1

5

Ju

l-1

5

Sep

-15

No

v-1

5

Ja

n-1

6

Ma

r-16

Ma

y-1

6

Ju

l-1

6

Sep

-16

No

v-1

6

US

$

Mt

IO Inventory Levels (mt)

62% Fe CFR (RHS)

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China's Iron Ore Supply CFR Costs (including royalties & ocean freight)

Moving down the global cost curve

Source: Metalytics 26 May 2016

2012

2016

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Alignment of marketing and operations to deliver ongoing productivity and efficiency

Fortescue’s strategy

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Operations - Nick Cernotta

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Safety performance improves year on year

Significant improvement since FY11

14.4

9.2

7.6

6.05.1

4.33.4

0

2

4

6

8

10

12

14

16

FY11 FY12 FY13 FY14 FY15 FY16 Q1 FY17

TR

IFR

Total Recordable Injury Frequency Rate

Rolling 12 month

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Underpinned by our core values

People and cultureF

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Significant resource supports reserves and mine life

Reserve portfolio supports asset base

1,518 1,4701,609

1,444

827 903791

728

0

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016

Ore

Reserv

es (

Mt)

Chichester Solomon

3,222 3,328 3,280 3,159

695 303 491 491

3,504 4,877 4,793 4,755

624

740 740 740 2,463

2,463 2,463 2,463

5,205 4,676

5,504

6,706

-

2,000

4,000

6,000

8,000

10,000

12,000

2013 2014 2015 2016

Chichester Hub Chichester Other Solomon Hub

Western Hub Nyidinghu Magnetite

Ore

Re

so

urc

e (

Mt)

Based on Fortescue’s Ore Reserves and Mineral Resources statement for its Hematite and Magnetite projects at 30 June 2016 and other applicable ASX releases as identified in the forward looking statements disclosure to this document 16

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Typical section

Chichester Hub

Vertical exaggeration = 10 timesS NKilometres

0 1

Unconsolidated gravels, silts, claysHardcapMineralised dehydrated and hydrated zonesMineralised Primary zoneMicroplaty hematite ore zoneMarra Mamba Iron Formation - unmineralised BIFRoy Hill Shale Member, Jeerinah Formation, carbonaceous shale, unmineralised

• Bedded mineralisation in the Marra

Mamba iron formation

• Typically 10-20m thick

• Bedding dips to the South at an

average angle of 4⁰

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Solomon Kings Valley iron mineralisation

CID – Channel Iron Deposit DID – Detrital Iron Deposit

Brockman Iron Formation (un-mineralised)

Brockman Iron Formation (mineralised)

Lateritised bedrock

Basal CID (clay and conglomerates)

Lower CID (dominant ochreous goethite matrix)

Upper CID (dominant hard brown goethite matrix)

Marginal CID (clay dominant material)

Oakover Formation (calcrete and silcrete)

Detrital Iron Formation (iron rich alluvium)

Recent alluvium (gravels and silts)

Section not to scale, vertical exaggeration approximately 4 times

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Typical BID Section

Solomon

• Mineralisation predominantly within

the Dales Gorge, Whaleback Shale

and Joffre Members of the

Brockman Iron Formation

• Outcropping mineralisation on the

flanks of major hills, with some

buried by alluvium along the valley

edges

Joffre

Whaleback Shale

Dales Gorge

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5 year average strip ratio increases costs ~$1/wmt on current assumptions

Strip ratios – FY17 1.1

20

Strip Ratios 5 year average

FY17 - FY21LOM

Chichester 1.5 2.3

Solomon 1.3 1.8

Combined 1.4 2.1

OPF beneficiation

Ore body modelling

Infill drilling

Mining hygiene

BlendingOptimisation

improving

strip ratios

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Fortescue’s innovation and technology strategy

Early adopters and future opportunities for strategic focus areas

8

Autonomous Drilling

Autonomous

HaulageDewatering

telemetry OPF optimisation

Early

adopter

Future

options

Solomon Cloudbreak

Dewatering

telemetry

Autonomous

Haulage

Christmas Creek

Integrated

Operations CentreAutonomous Drilling

Integrated

Operations Centre

Autonomous

Haulage

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Optimising assets

To optimise return on capital that is invested in Assets

Operating Philosophy

Maintenance Strategy

Work Management Reliability Standardisation Technology & Innovation

Shutdown Strategy Root Cause Analysis Equipment Perth Operating Centre

Contractor Engagement Shared Learnings Components Automation

Scope Bundling OEM Engagement Spares

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Cloudbreak

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Cloudbreak

Snapshot

Annual production 40mtpa

1,700

2008

2011

Approximate total workforce;

1,200 Fortescue, 500 contractors

Wet front end – improving

beneficiation

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First ore

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Blending with Firetail + wet processing, product grade 57.5%

Blending + beneficiation

New pit

limit

Strip ratio

2.3

Production inventory at cut off grade of 54%+ + =26

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Solomon

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Solomon

Snapshot

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2 x OPF’s

27mtpa Firetail – dry plant

46mtpa Kings – wet plant 73mtpa

1,570

2013

Firetail

Approximate workforce

840 Fortescue, 730 contractors

Commenced operations in 2013

Fortescue’s youngest mine

Bedded/detrital product with high Fe

and phos blended with low phos from Chichesters

Kings CID Fines, a low alumina

channel iron product; and

Western Fines, a bedded/detrital productKings

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World class autonomous haulage operation

First to deploy CAT autonomous technology on a commercial scale

> 200 Assets

Autonomously moved

240mt

2013First AHS Truck

54 Autonomous trucks

Safety and

productivity

29

Interacting on one system

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Autonomous haulage

AHS are 20 per cent more productive than regular fleet of trucks of the same type

• Fully integrated

• Overburden and ore

• Blended stockpiles

• Primary crusher feed

• Flexibility

• Older trucks converted to

autonomy

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Haul truck performance

AHS are 20 per cent more productive than regular fleet of trucks of the same type

Fleet productivity

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0

500

1,000

1,500

2,000

2,500

3,000

Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

Manned truck AHS truck

T.K

mE

FH

/calh

r

T.KmEFH, tonnes per kilometer effective flat haul

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Autonomous drilling

• First autonomous drill to be operating in

December 2016

• Forecasting 23% improvement

- 9% increased operating time

- 14% increased productivity

• Safety improvement

32

Leveraging proven technology

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Christmas Creek

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Christmas Creek

Snapshot

Average annual production;

2 x Ore Processing Facilities60mtpa

1,830

2010

Approximate total workforce

1,170 Fortescue, 660 contractors

CC1 commenced 2010

CC2 commenced 2012

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OPF initiatives

Blended stockpiles; cyclone efficiency

scavenger cyclone recovery

Wet plant density and volume control

Secondary and tertiary cycloning

Belt filter optimisation

Debottlenecking

• Chutes, gearboxes

• Conveyor modifications

Wet Yield to 90%

Plant throughput 3,400 to 5,000tph

Reduce mining costs

Reducing cut-off grades

Lowering strip ratios

Improving rail & shipping

performance

Lower costs

Maximising asset output

Silica upgrade -78%

Alumina upgrade -77%

Iron upgrade +103%

Moisture to 7.5%

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Christmas Creek Operations Centre

Initiatives

• All mining, maintenance and fixed plant

operations control

• Engineering, planning and quality

resource support

• Remote crusher rock breakers

• Autonomous drilling

• Centralised Integrated Control Centre for

all site based operations

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Overview and outcomes

Christmas Creek plant automation

Increasing plant run-time Minimise Operator Interface

Improving upgrades and yields

Maximising throughput

Optimise train weight and load times

Reduce operator intervention

1

Wet Plant Automation2

Dry Plant Automation3

Train Load Out4

Constraint Control and whole

of plant sequence5

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Rail

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Rail

Shaping our great railway for long-term success

39

620km

470

36kt/train

Longer

Approximate total workforce

380 FMG, 90 contractors

2 loco, 250 ore cars trains

3kms with average cycle time 22hrs

80km/hr speeds

42t axle loads

Faster

Heavier

Track connecting four mine sites

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Virtual train control centre

First company in WA to control a railway from outside the region of operation

40

• Virtual control system, no per way signals or transponders

• Communications based system with fibre optic backbone

• In cab signalling and positive enforcement

• Benefits include:

– Increased safety

– Reduced cycle times, higher capacity

– Platform for future productivity

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• Wheel and brake shoe measurement at

optimal speed

• Measuring on train 2,000 wheels and

2,000 brake shoes in 3 minutes

• Measuring on train 55,000 wheels and

55,000 brake shoes a day

• Benefits include:

– High speed, lower cycle time

– Better management of wheels and track

– Reduced opex and capex

Condition monitoring management system

A postage stamp of space connects the wheel to the track

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• Tendering on cruise control

• Application of throttle and brake

• Operator remains on the Train

• Implementation of 18 to 24 months

• Benefits include:

– Reduced cycle times

– Improved fuel consumption

– Reduced wear and tear

Driver assist technology

Increase in safety, productivity and efficiency

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Port

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Herb Elliot Port

Part of the worlds largest bulk port by annual throughput

3 reclaimers, 3 shiploaders

and 5 berths load vessels at a

combined rate

44

390Approximate total workforce

250 Fortescue, 140 contractors

Australia’s most efficient bulk Port

36,000tph3 train loops, 3 TUL’s

and 3 stackers unload

at a combined rate

36,000tph

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Shiploader automation

Automation project to improve efficiencies

• Radar System detects ore levels in

hatch and informs operator to position

shiploader

• Benefits include

– Improved anti-collision

protection– Stage 1: Operator Assistance and diminish

positioning error

– Stage 2: Remote operation

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Shiploader operator assistance

Phased approach

46

2. Loading assistance

1. Anti Collision

3. Remote Control

4. Hatch Automation

5. Ship Automation10

0%

au

tom

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Bas

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Current

Developments

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• Radar System detect reclaimer

position in the stockpile

• Benefits include

– Live cutting area measurement

• Slew Speed Control

• Reduction of Over Torques

• Improved Mass Flow

– Distance / depth measurements

• Improved Face Up Procedure

– Edge height detection

• Improved Turn Around

Reclaimer Radar systemF

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Shipping – Mark Davidson

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Shipping market remains weak but showing signs of having bottomed

Market update

Baltic Capesize Index Route C5 49

$0.00

$4.00

$8.00

$12.00

$16.00

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Port Hedland to Qingdao

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Consolidation in ship building and ship owning markets

Fleet development

Simpson Spence Young: Bulk Carrier Net Fleet Changes 50

0

100

200

300

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD

Capesize Fleet Development

Delivered Scrapped

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Target efficient vessels with large deadweight and low draft

Performance update

51

45%

52%

54%

56%56%

55%

48%

46%

44%44%

FY13 FY14 FY15 FY16 YTD FY17

Vessel Segment Distribution

>200k DWT Capesize

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Target of zero demurrage days

Sustained improvement of turnaround time

52

6.39

4.62

2.49

1.31

0.21 -0.36

FY12 FY13 FY14 FY15 FY16 YTD FY17

Demurrage Days Per Vessel

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Very Large Ore Carriers (VLOC) update

Investment in ships to deliver operational benefits

• 8 VLOCs being constructed at two

shipyards in China

• Efficient loading at Port Hedland

– 261,000 deadweight tonne

– 327m in length, 57m beam

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First vessel delivers to Fortescue end November

• 8 VLOCs 21M tonnes p.a. or 12% of

total volume

• Contracted at bottom of market - low

cost shipping option

• Provide exposure to the wider shipping

industry

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Market – David Liu

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Four key areas of engagement

Fortescue values relationship with China

Four key areas of engagement

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13th Five Year Plan

Generating domestic demand for steel for the next five years

152,000km Roads in rural

areas

58Source: China Daily

3,000kmNew urban rail lines

Over 50 civilian

airports

High speed

rail network

to cover 80%

of cities

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Steel demand – driven by policy decisions

Steel consumption to build economy

Source: Wood Mackenzie 59

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Generating regional demand for steel and opportunities for Northern Australia

China’s One Belt One RoadF

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Iron ore market in balance

• Steel demand driven by property and

infrastructure sectors in China

• Demand for Fortescue ore remains strong

• Iron ore market in balance with low cost

seaborne ore displacing domestic

• Price realisations have been under

pressure but expected to improve

61

Market demand for Fortescue ore remains strong

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Well established 18% market share of imported iron ore to China

Core supplier to Asia

• Low impurity 58% Fe average

• High value in use

• Large diverse customer base

• Reliable consistent delivery

• Proximity to high growth region

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Chinese government stimulus and credit expansion pillar of economic support

Property and infrastructure driving steel demand

Home sales and prices have increased in 2016

63

-10

0

10

20

30

40

-40

-20

0

20

40

60

80

01-S

ep

-10

01-M

ar-

11

01-S

ep

-11

01-M

ar-

12

01-S

ep

-12

01-M

ar-

13

01-S

ep

-13

01-M

ar-

14

01-S

ep

-14

01-M

ar-

15

01-S

ep

-15

01-M

ar-

16

01-S

ep

-16

% c

han

ge y

-o-y

% c

ha

ng

e y

-o-y

Sales (left) Prices (right)

Based on a three month moving average. Source: China NBS, Bloomberg

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Iron ore demand robust

• Seaborne supply slowed over

2015-2016

• Steel fundamentals and iron ore

price has seen high cost supply

return

• Domestic mine utilisation in

China has increased

• Supply additions in 2017/18

will be offset by exit of higher cost

seaborne and China domestic

China iron ore imports

64

Chinese 2016 imports forecast to exceed 1.0 billion tonnes

40

50

60

70

80

90

100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Millio

n w

mt

2011 2012 2013 2014 2015 2016

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Fortescue Realised 88% in June 2016 quarter and 82.5% in September 2016 quarter

Resulting in lower price realisation in Sept 2016 quarter

65

75%

80%

85%

90%

95%

100%

$0

$20

$40

$60

$80

$100

29/0

7/2

014

29/0

8/2

014

29/0

9/2

014

29/1

0/2

014

29/1

1/2

014

29/1

2/2

014

29/0

1/2

015

28/0

2/2

015

31/0

3/2

015

30/0

4/2

015

31/0

5/2

015

30/0

6/2

015

31/0

7/2

015

31/0

8/2

015

30/0

9/2

015

31/1

0/2

015

30/1

1/2

015

31/1

2/2

015

31/0

1/2

016

29/0

2/2

016

31/0

3/2

016

30/0

4/2

016

31/0

5/2

016

30/0

6/2

016

31/0

7/2

016

31/0

8/2

016

30/0

9/2

016

31/1

0/2

016

Platts 62 CFR MBIO58 [P] CFR 62% v 58% [P] price realisation (RHS)

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Finance

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September quarterly

Operational performance delivering financial results and cashflows

67

Prioritise cash

for debt

repayment

Refer to attached glossary for definition of non-IFRS terms

US$4.2bnNet debt

33% gearing

C1 Cost

$13.55/wmt

US$700mDebt repaid

Sustaining

CapexUS$2/t 0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Sept cash Liquidity

Base liquidity

Available

for debt

repayment

US

$ b

n

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Momentum continuing towards FY17 guidance

Quarterly C1 cost performance

44

3432.08

28.48

25.90

22.16

16.90 15.80

14.79 14.31 13.55

0

5

10

15

20

25

30

35

40

45

FY

13

FY

14

Ju

l-14

Au

g-1

4

Sep

-14

Q1

15

Oc

t-14

No

v-1

4

De

c-1

4

Q2

15

Ja

n-1

5

Feb

-15

Mar-

15

Q3

15

Ap

r-15

May

-15

Ju

n-1

5

Q4

15

Ju

l-15

Au

g-1

5

Sep

-15

Q1

16

Oc

t-15

No

v-1

5

De

c-1

5

Q2

16

Ja

n-1

6

Feb

-16

Mar-

16

Q3

16

Ap

r-16

May

-16

Ju

n-1

6

Q4

16

Ju

l-16

Au

g-1

6

Sep

-16

Q1

17

US$/wmt

$12-13/wmtFY17 guidance

68

For

per

sona

l use

onl

y

Continued realisation from efficiency and productivity improvements

Path to US$12-13/wmt for FY17

Productivity and efficiency initiatives including:US$

/wmt

Mining

• Equipment productivity

• Haul route, pit design, mining hygiene, in-pit waste

dumping

• Insourcing of mining operations at Christmas Creek

• Autonomy

~ 1.70

OPF and

beneficiation

• Continued improvements in upgrades and yield

• Shutdown strategy and effectiveness

• Enhanced plant reliability/maintenance practices

• Automated OPF controls (remote operation)

~ 0.70

Procurement

• Vendor renegotiation – rates/consolidation/insource

• Use of non-OEM components

• China sourcing

~ 0.60

TOTAL SAVINGS ~ 3.00

1.7

0.70.6

15.43

12-13

0

2

4

6

8

10

12

14

16

18

FY16 Act Mining OPF Procurement FY17Guidance

US$/wmt

69

For

per

sona

l use

onl

y

US$3.5bn in operating cost savings delivered since achieving full operational capacity

Cost savings delivered

70

0.8

0.8

1.9

3.5

0.5

4.0

-

1.0

2.0

3.0

4.0

FY14 FY15 FY16 FY14 - FY16 delivered FY17 fcst FY14 - FY17 forecastdelivered savings

US$bn

For

per

sona

l use

onl

y

Flexibility to continue early repayments prior to first maturity in June 2019

Debt maturity

71Refer to attached glossary for definition of non-IFRS terms

2,976

0

0 478

2,160

0

1,000

2,000

3,000

4,000

5,000

6,000

CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022

US

$m

Senior Secured Credit Facility Senior Unsecured Notes Senior Secured Notes

For

per

sona

l use

onl

y

Free cash prioritised to debt with capex sustainable at current levels

Capital expenditure

304 340

-

100

200

300

400

500

FY16 FY17 Guidance

US$m Sustaining capital expenditure • Current low levels of sustaining capex

US$2/wmt

• Exploration US$40m

• Funding nearing completion

– VLOCs US$270m

– Tugs US$90m

• D&A US$7.10/wmt

FY17 Guidance

72

For

per

sona

l use

onl

y

Firetail replacement

For

per

sona

l use

onl

y

Options for replacement being developed

Firetail replacement - 2021

74

For

per

sona

l use

onl

y

Western Hub

75

• Eliwana and Flying Fish

• 740mt of resources

• Prospective areas

• Future replacement

• Potential other usersFor

per

sona

l use

onl

y

Nyidinghu

76

• 2.5bnt resource

• Iron ore central

• ~100km to Cloudbreak

• 57.4% FeFor

per

sona

l use

onl

y

Supporting our community

For

per

sona

l use

onl

y

78

Creating opportunities through training, employment and business development

Building strong communities

32

For

per

sona

l use

onl

y

Championing diversity

79

Workplace culture fundamental

For

per

sona

l use

onl

y

• Fortescue is refreshing its

approach in FY17

• Enhanced strategy builds

on the highly developed

sustainability and community

development initiatives in place

• Operational sites will develop

local CSR plans to implement

the whole of business strategy

Integrate sustainable development considerations into corporate decision making process

Corporate Social Responsibility

80

For

per

sona

l use

onl

y

Focussed strategy

For

per

sona

l use

onl

y

China's Iron Ore Supply CFR Costs (including royalties & ocean freight)

Moving down the global cost curve

Source: Metalytics 26 May 2016

2012

2016

82

For

per

sona

l use

onl

y

Strategic delivery

Culture, continuous improvement, speed and flexibility

Consistent 165-170mtpa

Lowering costs to US$12-13/wmt

Maximising resource value

Debt repayment

Ongoing improvements

83

For

per

sona

l use

onl

y

The new force in iron ore

Continuous improvement

38

Customer focus

Reliable

Competitive

Sustainable

low cost

producer

World classassets & people

Unique culturedrives performanceF

or p

erso

nal u

se o

nly

Questions

For

per

sona

l use

onl

y

Proudly supporting:

www.fmgl.com.au@FortescueNews

For

per

sona

l use

onl

y