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World Mining Congress speech

28 June 2023

Address to World Mining Congress Fortescue Chief Executive Officer, Fiona Hick

*E&OE check against delivery*

Good morning

I would like to begin by acknowledging the Traditional Custodians of the land on which we are meeting today, the Turrbal and Yuggera people, and pay my respects to their Elders past, present and emerging.

 I extend that also to acknowledge the First Nations people in all communities in Australia and globally.

I’d also like to recognise other distinguished guests in attendance today and thank the World Mining Congress for hosting this event, particularly for the first time in Australia.

This is appropriate, as Australia tops the list of the world’s leading mining jurisdictions, as a major supplier of a wide range of minerals, energy and mining services to the global market.

Today  we’re talking about how mining creates value for society. 

I’d like to spend some time on how we might think about value, and how the company I have recently joined – Fortescue - is building value into the long term.

Fortescue was founded 20 years ago, in 2003.

And It was created after a gap was identified in the marketplace.

The gap was in iron ore supply needed to feed China’s steel industry and in turn, to support the development of China and Asia more broadly.

Now, twenty years on, we are the world’s fourth largest iron ore producer with a market capitalisation of over 60 billion Australian dollars.

Recently we have found another gap in the market - and that’s the opportunity to supply green metals and green energy to support economic development in a more sustainable world.

Just as our relationship with China and China’s steel industry has helped deliver value – both societal and economic – over the last two decades, it is this new opportunity, presented by the energy transition, that we believe will deliver value in years to come.

I joined at a time of inflection. Not only for this business, but I believe for the mining sector more broadly.

When we talk about creating value for society, in this room, we know that the resources the mining industry delivers are critical to our daily life.

But, as others have equally recognised this morning, there is more at stake now in terms of our collective licence to operate from an environmental and social perspective.

As a result, creating value for society can no longer be viewed only through a traditional lens – that of value earned from the commodities we supply, what we give back to the communities in which we operate, and what returns we make for shareholders.

We must also create value into the long term, by ensuring greater sustainability of our operations today, operations locally, and on a global scale, such as by reducing our carbon footprint.

At Fortescue, we’ve made the decision to draw on 20 years of experience in large scale infrastructure, in operations, in automation, to deliver some solutions that we need to operate more sustainably.

In doing this, we will draw from the collective experiences and strengths of our people – the innovative thinking and undeniable work ethic that our team prides itself on – that has delivered success to date.

We have set an ambitious goal to achieve real zero emissions by 2030 across our iron ore operations.

We are diversifying our product mix and our geographical footprint to include higher-grade iron ore and international operations to supply the demand of the future.

And we have developed a green energy arm, Fortescue Future Industries, which is working to decarbonise our operations, and in time, to share that technology with the world.

It is through actions like this that will deliver on that new interpretation of value, into the long term.

Our Australian operations include mining hubs in Western Australia, connected to our world class Port infrastructure via hundreds of kilometres of the fastest heavy haul railway in the world.

At our headquarters in Perth, Western Australia, is our integrated operations centre. And this brings together our entire supply chain from mine through to customer. It delivers enhanced safety, productivity, efficiency, and commercial benefits, and it’s also going to underpin our future use of technology, including automation and artificial intelligence.

Through this type of innovation and regularly challenging the status quo, we have maintained our extremely strong balance sheet and over time have driven costs down from over 50 dollars a tonne where they were twenty years ago, to a current industry leading cost position.

This track record of operational excellence and disciplined capital allocation has generated considerable value for shareholders and more broadly for communities.

As Fortescue’s fourth CEO, I intend build on this foundation to realise the opportunity ahead for green metals, green energy, and greener ways of operating.

Today I am going to focus on three opportunities, some practical examples, which demonstrate how we intend to create that long term value I’m talking about.

The first of these is the Iron Bridge magnetite project.

In a global market we have levels of alumina and sulphur in iron ore generally increasing, this project creates a 67% iron concentrate with low alumina, low phosphorus and low sulphur levels. So this is a key differentiator.

Last month we achieved first production, next month we will mark first ore on ship.

Importantly, the plant delivered to specification – so better than 67% iron grade, low impurity product - within the first week of processing.

Industry experts will tell you that's a pretty phenomenal achievement with many magnetite projects globally taking months or even years to reach grade, with some never reaching target grade.

The introduction of this product demonstrates value-added processing and long term value creation.

We expect it’s going to be highly sought after by steel mills for several reasons, including the productivity benefits that it provides relative to the benchmark 62% product.

It is also well documented that a high grade product like this is beneficial for producing green iron and green steel.

Green iron and green steel presents a huge opportunity for the iron ore industry and we are working hard to ensure we are at the forefront of technologies being developed in this regard.

Iron Bridge will be key to developing and achieving our green steel goals and we are already seeing strong demand from the market for this product.

As well as the global significance of a new product from Australia’s Pilbara region, what is also fundamentally important is the broader community benefits created not only by this project, but our projects more broadly.

A total of 3.6 billion Australian dollars in goods and services has been sourced within Western Australia, for this project and its operations.

Since 2019, over 3,000 jobs have been created and another 900 jobs are coming online as we move into the operations phase.

Key to this has been our engagement with the Traditional Custodians – the Nyamal people.

From the outset, we have been focused on practical initiatives that drive economic and employment opportunities for First Nations Australians.

As an example, earlier this month, we announced a partnership with Nyamal Holdings to provide mining equipment for the Drilling and Blasting program at Iron Bridge.

This is an $18 million contract over several years and builds on the $330 million in contracts already awarded to Nyamal businesses since 2019.

It’s long-term contracts like this that support the growth of First Nations businesses, which in turn provide ongoing economic benefits to communities, individuals and families.  

This is just one example. More broadly, via our Billion Opportunities program, more than 4.5 billion dollars in contracts has been awarded to over 140 First Nations businesses since it started in 2011.

And a Vocational Training and Employment Centre, has been providing sustainable career pathways into the company for First Nations Australians for over 15 years. 

We are very, very proud to be one of Australia’s largest employers of First Nations people, which at the end of last year represented 10 per cent of our total workforce, and 15 per cent of employees at our operational sites.

And so for context, particularly for our international visitors, at Australia’s last census, Aboriginal and Torres Strait Islander people represented 3.2 per cent of Australia’s population.

I am incredibly proud that First Nations people are such a significant and valued proportion of our workforce.

In addition to the value opportunity of magnetite, is the Belinga Project in Gabon, on the west coast of central Africa.

Belinga is important in terms of value creation because every indication we have, shows the project has the potential to be significant scale and very high-grade.

We signed the Mining Convention in February this year and the response to community engagement continues to be positive.

It is also important because, this project marks first production for Fortescue outside of Australia.

Locally, value creation for communities is a focus.

Delivering local opportunities for the people of Gabon, including through already creating jobs, training, engaging local businesses is a top priority, and we are doing this right now.

In fact, we loaded ore, the first ore to train just a few days ago, and this keeps us on track to deliver the first shipment of iron ore from Gabon by the end of this year.

This is a clear demonstration of how we are actively building on our track record on project delivery and to become a diversified, global business.

The third opportunity is in decarbonisation.

We’re focussed on achieving real zero operational emissions by 2030 – approximately two decades earlier than commitments made by many companies globally.

Decarbonising our operation makes compelling business sense. We are a large fuel consumer, and fuel, particularly diesel, is a significant part of our cost base. If we run on renewable energy instead, we will lower operating costs and create opportunities for maintenance efficiencies and productivity improvements.

For our size and scale, there is no other mining company in the world that I know of that is taking the action Fortescue is to eliminate emissions.

We plan to have Fortescue’s operations running on renewable energy within the next seven years. As well as lowering our cost base we’re looking at potential for new revenue opportunities.

A decarbonisation roadmap was released in September last year and the team is now working to deliver it.

To do this, we are using a combination of known and proven new technologies: solar generation, wind generation; batteries and developing new technologies around green hydrogen and green ammonia to deliver a green mining fleet and rail operations.

We’ve established a research and development facility to advance and test the tech that we need to go green.

We are partnering with global equipment manufacturer, Liebherr, to develop and supply green mining haul trucks to integrate with the zero-emission power systems.

And last year we acquired UK-based W.A.E Technologies, which alongside Liebherr, will supply the technology and the power systems to decarbonise our fleet.

And like the other opportunities that I’ve covered, we are already making tangible progress.

We are at the exciting stage of transporting prototypes to site, to take the technology from our research and development facility in Perth to our operations.

Our battery electric haul truck that you can see on the slide, which we’ve nicknamed Roadrunner – is right now undergoing commissioning after arriving earlier this month at one of our sites, in the heat and dust of Western Australia’s Pilbara.

Later this year we will have our first green hydrogen fuel cell haul truck prototype on site for similar testing, delivered thanks to our partnership with Liebherr.

These are significant milestones and demonstrate commitment to real action to reduce carbon emissions.

This testing period is helping us better understand the prototype, how they operate, how best to maintain them, and these lessons are then being fed into our broader implementation plans.

Our goal is to have the first green haul truck operational at our sites in three years, in 2026.

We believe battery electric, green hydrogen and green ammonia will all be critical to our overall decarbonisation plan, and we are taking practical steps to apply the best solution to each different situation.

As well as Roadrunner, our green ammonia locomotive prototype is being tested right now, on our rail tracks.

On site you can feel the energy and the excitement from our people who are already providing valuable input on the technologies and how this can integrate seamlessly into operations.

It is inspiring to see the different teams come together in this phase as we translate plans into action.

A vital element of adding long term value to society is working closely with partners and collaborating with others, to achieve collective goals.

In addition to our plans for Scope 1 and 2 emissions, we are also aiming to achieve net zero Scope 3 emissions by 2040, to address emissions across the entire value chain.

And, as I touched on earlier, this particular focus on decarbonising steelmaking, given this contributes to around seven per cent of global emissions.

In the last fortnight I travelled to China, to meet with some of our customers and key stakeholders.

And there I signed a commitment with the world’s largest steel maker – China Baowu Steel Group Corporation – to work together on reducing emissions associated with iron and steel making.

The collaboration will explore lower emissions iron making technology at one of China Baowu’s operations, using Fortescue iron ore and green hydrogen.

The agreement further strengthens our longstanding partnership with Baowu and reflects our collective commitment to eliminate emissions.

As an industry, we will need to work collectively and collaboratively across the value chain to drive the changes required to lower emissions and meet global reduction targets. More broadly, partnerships and collaborations like these are pivotal to us as an industry maintaining our licence to operate – and to deliver that new kind of value creation.

The success of individual mining companies and indeed that of the whole mining industry creates value for local communities, for the national economy and creates benefits around the world.

When the mining industry is strong, there are so many direct and indirect benefits. 

In Western Australia alone, the mining industry contributed $99bn to the national economy just in the last financial year.

The sector provides significant employment opportunities, pays high wages, delivers export revenues and is critical to supporting quality of life in our regions.

It’s an industry that I am personally very proud to have been a part of, for nearly thirty years.  

In closing, as an industry, we must do what we can to deliver value over the long term. Ensuring the sustainability of our operations and our business practices from an environmental perspective, are central to that.    

We must lead our industry into a greener future and demonstrate value to society, and in doing so, ensure everyone benefits from our success for generations to come.

Thank you.