HY17 Results Presentation

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. 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

2

Building a world class company

Core supplier to China’s growth

Safety focus

Shipped over

800mt

First ore

in 2008

Unique culture

165-170mtProduction rate

Low cost

producerEngagement

Empowerment

Leadership

3

4

Delivering on targets

Focus on safety, productivity and efficiency

Safety

165-170mt shipped

Productivity + efficiency

Low cost global producer

Debt repayments

Consistent dividend policy

5

6

Safety performance

Continuing to improve the safety of all our employees and contractors

12-13

14.4

9.2

7.6

6.0 5.1

4.3

3.2

0

5

10

15

FY11 FY12 FY13 FY14 FY15 FY16 HY17

12 month rolling TRIFR

HY 17 snapshot

Productivity initiatives delivering sustainable cost reductions and financial results

US$2.6bnUnderlying

EBITDA

US$1.2bn

NPAT

Refer to attached glossary for definition of non-IFRS terms

86.1mtShipped

US$4.0bn Net debt

C1 Cost

$13.06/wmt

20% reduction

A$0.20 Interim dividend

38% payout

7

Focus on 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

8

Innovative shipping fleet

Eight ore carriers - natural extension of Fortescue’s supply chain

• Provides 12% shipping requirements

• Complement port infrastructure

• Maximise tonnage, improve load rates

• Safe manoeuvring within the port

• CDB Leasing agreement US$473m

9

Construction and manufacturing projects support iron ore inventory levels

Iron ore supply in balance

Source: Bloomberg and Umetal 10

$30

$50

$70

$90

$110

$130

$150

$170

$190

$210

0

20

40

60

80

100

120

140

160

180

Jul-1

0

Se

p-1

0

Nov-1

0

Jan

-11

Ma

r-11

Ma

y-1

1

Jul-1

1

Se

p-1

1

Nov-1

1

Jan

-12

Ma

r-12

Ma

y-1

2

Jul-1

2

Se

p-1

2

Nov-1

2

Jan

-13

Ma

r-13

Ma

y-1

3

Jul-1

3

Se

p-1

3

Nov-1

3

Jan

-14

Ma

r-14

Ma

y-1

4

Jul-1

4

Se

p-1

4

Nov-1

4

Jan

-15

Ma

r-15

Ma

y-1

5

Jul-1

5

Se

p-1

5

Nov-1

5

Jan

-16

Ma

r-16

Ma

y-1

6

Jul-1

6

Se

p-1

6

Nov-1

6

Jan

-17

US

$

Mt

IO Inventory Levels (mt)

62% Fe CFR (RHS)

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

Moving down the global cost curve

Source: Metalytics – November 2016

2012

2016

11

Tonnes millions

Financial performance

13

Focused on delivering shareholder value

Financial drivers

SHAREHOLDER RETURNS AND VALUE

Debt repayments and capital management

Price + cost improvements + capital management

HY17 financial outcomes

Operational performance delivering financial results

US$1.7bn

14

Debt repaid

Refer to attached glossary for definition of non-IFRS terms

US$1.2bnCash on hand

US$1.5bnFree cashflows

US$0.39Earnings per share

282%

30%

Net gearing

52% in six months

4.50

5.00

5.50

6.00

6.50

7.00

Feb-17Jan-17Dec-16Nov-16Oct-16Sep-16Aug-16

Underlying EBITDA

103% increase through cost improvement and higher prices

15Refer to attached glossary for definition of non-IFRS terms

1,301

2,645

78

312

1,016 93 32 1

-

1,000

2,000

3,000

HY16 Volume Cost Price Royalty Fx Other HY17

Underlying EBITDA (US$m)US$

39%

59%

0%

20%

40%

60%

HY16 HY17

Underlying EBITDA Margin

Improvements driven by continued cost performance and higher prices

HY17 Earnings

16Refer to attached glossary for definition of non-IFRS terms

34% 283%

3,344

4,492

-

2,000

4,000

6,000

HY16 HY17

US$m Revenue

103%

1,301

2,645

-

1,000

2,000

3,000

HY16 HY17

US$m Underlying EBITDA

319

1,222

-

500

1,000

1,500

HY16 HY17

US$m NPAT

US$3.7bn in operating cost savings delivered since achieving full operational capacity

Cost savings delivered

17

0.8

0.8

1.9

0.2

3.7

0.3

4.0

-

1.0

2.0

3.0

4.0

FY14 FY15 FY16 HY17 FY14 - HY17delivered

2HY17 fcst FY14 - FY17 fcstdelivered savings

US$bn

Operational performance continuing to increase shareholder value

Returns to shareholders

282% 53% 567% HY16 to HY17

18

10.3

39.3

-

15

30

45

HY16 HY17

US cents

Earnings per share

32.4

49.7

-

20

40

60

HY16 HY17

US cents

Free cash flows per share

3

12

20

-

5

10

15

20

HY16 Final FY16 HY17

AUD cents

Dividends per share

Cash and Balance sheet

Growing operating cash flows support returns to shareholders and investment

Cash flows

69%

Refer to attached glossary for definition of non-IFRS terms

53%

1,097

1,857

-

500

1,000

1,500

2,000

HY16 HY17

US$m Net cash from operations

88

312

-

500

1,000

1,500

2,000

HY16 HY17

US$m Capital expenditure

255%

1,009

1,545

-

500

1,000

1,500

2,000

HY16 HY17

US$m Free cash flows

20

Cash levels supporting additional debt repayments and dividends

Cash movements

Refer to attached glossary for definition of non-IFRS terms 21

0.3

1.7

0.3

1.9

1.61.2

-

1.0

2.0

3.0

4.0

Jun 16 cash Operating Capex Debt repayment Dividends Dec 16 cash

US$bn

US$7.5bn of net debt repaid since expansion complete improving gross gearing to 36%

Debt repayments

Refer to attached glossary for definition of non-IFRS terms

12,691

9,557 9,569

6,771

5,156

10,533

7,159 7,188

5,188

3,996

-

20

40

60

80

-

4,000

8,000

12,000

16,000

FY13 FY14 FY15 FY16 1HY17

Debt Net debt Gross gearing (RHS) Net gearing (RHS)

US$m %

22

US$1.7bn repaid in FY17 with flexibility to continue voluntary early repayments

Debt maturity

Refer to attached glossary for definition of non-IFRS terms

1,976

0

478

2,160

0

1,000

2,000

3,000

4,000

5,000

CY2017 CY2018 CY2019 CY2020 CY2021 CY2022

US

$m

Senior Secured Credit Facility Senior Unsecured Notes Senior Secured Notes

23

Free cash prioritised to debt with cash funding of ore carriers

Capital expenditure

• Sustaining capex US$2/wmt

• Development of Firetail replacement

• Ore carriers 85% cash funded via CDB

• D&A US$7.10/wmt

FY17 Guidance

24

225

340

31

40

48

270

40

90

-

200

400

600

800

FY16 FY17 Guidance

US$m

Sustaining capital Exploration Ore carriers Development Tugs

Market

Fortescue values its relationship with China

Four key areas of engagement

Source: IMF World Economic Database Oct 2016

IMF projected GDP growth for 2017

Chinese economic momentum

27

Asian economies generating two thirds of global growth

Developing and emerging Asia

Source: IMF World Economic Database Oct 2016

13th Five Year Plan (2016-2020)

RMB12.5 trillion for ~ 11,000 listed projects

152,000km Roads in rural

areas

Source: China Daily

3,000kmNew urban

rail lines

Over 50 civilian

airports

80% cities

with high

speed rail

New power

projects

+480,000 MW

Pipelines

+

gas storage 29

Residential sales and tier 1 house prices have increased

Property and infrastructure driving steel demand

30Based on a three month moving average. Source: China NBS, Bloomberg

-10

-5

0

5

10

15

20

25

30

35

-40

-20

0

20

40

60

80

01-J

an

-11

01-J

ul-

11

01-J

an

-12

01-J

ul-

12

01-J

an

-13

01-J

ul-

13

01-J

an

-14

01-J

ul-

14

01-J

an

-15

01-J

ul-

15

01-J

an

-16

01-J

ul-

16

01-J

an

-17

%

Sales (left) Prices (right)

%

Well established 17% market share of imported iron ore to China

Core supplier to Asia

• Low impurity 58% Fe average

• Competitive value in use

• Large diverse customer base

• Responsive to market needs

• Proximity to high growth region

Source: World Steel Association Crude Steel Production 2015 31

808

10596

79

541

Total 2016 global steel production 1,629mt

China Japan India United States Rest of the World

32

Continued growth in steel consumption throughout China, ASEAN and India

Steel stock tonnes per capita

Source: NBS, worldsteel, Macquarie, February 2017

-

2

4

6

8

10

12

14

16

195

0

195

2

195

4

195

6

195

8

196

0

196

2

196

4

196

6

196

8

197

0

197

2

197

4

197

6

197

8

198

0

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8f

202

0f

202

2f

202

4f

202

6f

202

8f

203

0f

203

2f

203

4f

203

6f

203

8f

204

0f

204

2f

204

4f

204

6f

204

8f

205

0f

Ste

el

cap

ital

sto

ck t

on

nes/c

ap

ita

USA Japan China ASEAN India

33

China iron ore supply

417

155248

399

2013: 1,219mt

Australia Brazil Other China

640

215

170

232

2016: 1,257mt

Australia Brazil Other China

Source: National Bureau of Statistics, PRC

Chinese ore replaced with lower cost seaborne supply – mainly Australian

Generating regional demand for steel and opportunities for Northern Australia

China’s One Belt One Road

87% realisation in HY17 after timing adjustments

Price realisations consistent

35

75%

80%

85%

90%

95%

100%

$0

$20

$40

$60

$80

$100

29

/07

/20

14

29

/08

/20

14

29

/09

/20

14

29

/10

/20

14

29

/11

/20

14

29

/12

/20

14

29

/01

/20

15

28

/02

/20

15

31

/03

/20

15

30

/04

/20

15

31

/05

/20

15

30

/06

/20

15

31

/07

/20

15

31

/08

/20

15

30

/09

/20

15

31

/10

/20

15

30

/11

/20

15

31

/12

/20

15

31

/01

/20

16

29

/02

/20

16

31

/03

/20

16

30

/04

/20

16

31

/05

/20

16

30

/06

/20

16

31

/07

/20

16

31

/08

/20

16

30

/09

/20

16

31

/10

/20

16

30

/11

/20

16

31

/12

/20

16

31

/01

/20

17

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

Reserves and resources

Largest Pilbara tenement footprint

Resource portfolio supports asset baseM

inera

l R

eso

urc

es d

ry i

n s

itu

(M

t)

37

2,266 2,227 2,143 2,550 2,550

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

695 695 695

695 695

695 303 491 491

1,715 2,224

2,860

3,070 3,070

3,504

4,877 4,793 4,755

624 624

624

740 740 740

1,032

2,013

2,463

2,463 2,463 2,463

-

1,230 1,230

2,465

3,237

5,205 4,676

5,504

6,706

-

2,000

4,000

6,000

8,000

10,000

12,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Chichester Hub Chichester Other Solomon Hub Western Hub Nyidinghu Magnetite

38

Options for Firetail replacement being developed

Firetail replacement - 2021

Supporting our community

40

Creating opportunities through training, employment and business development

Building strong communities

40

Diversity is fundamental to driving innovation and business success

Championing diversity

41

42

• Mining provides income and jobs for remote communities

• Empowering people through

opportunity, not welfare

• Developing pride through self

sufficiency and achievement

• Helping to identify and preserve

indigenous culture

Ensure our communities benefit from growth and success of Fortescue

Business activity key to community development

Focussed strategy

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

Moving down the global cost curve

Source: Metalytics – November 2016 44

2012

2016

Tonnes millions

Strategic delivery

Culture, continuous improvement, speed and flexibility

Consistent 165-170mtpa

Lowering costs to US$12-13/wmt

Maximising resource value

Capital management

Consistent dividend policy

45

The new force in iron ore

Continuous improvement

46

Customer focus

Reliable

Competitive

Sustainable

low cost

producer

World classassets & people

Unique culturedrives performance

www.fmgl.com.au@FortescueNews

Proudly supporting:

48

Glossary

C1: Operating costs of mining, processing, rail

and port on a per tonne basis, including

allocation of direct administration charges

and production overheads.

Debt coverage ratio: Debt / Underlying EBITDA.

dmt: Dry metric tonnes.

Free cash flow: Net cash inflows from operations less capital

expenditure.

FY: Full year.

HY: Half year.

Interest coverage ratio: Underlying EBITDA / Interest

mtpa: million tonnes per annum.

Net debt: Borrowings and finance lease liabilities

less cash and cash equivalents

NPAT: Net profit after tax.

Underlying EBITDA: Earnings before interest, tax, depreciation and amortisation,

exploration, development and other expenses. The reconciliation of

Underlying EBITDA to the financial metrics disclosed in the financial

statements prepared under Australian accounting standards is

presented below:

Reconciliation of Underlying EBITDA to IFRS measures:

VLOC: Very large ore carrier.

wmt: wet metric tonnes.

US$m

31 December

2016

31 December

2015

Profit before income tax 1,732 428

Finance income (8) (200)

Finance expenses 256 340

Depreciation amortisation 622 627

Exploration, development and other 43 106

Underlying EBITDA 2,645 1,301