Fortescue Metals Group Ltd.

Overview Key strengths Key risks Fourth-largest iron ore producer globally with assets in the low-risk jurisdiction of Australia. Potential material funding requirements for the renewable business, Fortescue Energy coupled with, the ambitious decarbonization capital expenditure (capex) program. Low C1 cash cost profile and long reserve life complemented by well-developed rail and port infrastructure. Single commodity producer with earnings sensitive to iron ore prices and almost exclusive reliance on Chinese demand. Strong balance sheet and robust cash flow support a sizable decarbonization plan and investment in Fortescue Energy. Weakest EBITDA margins among the Big Four producers, reflecting a generally lower quality product. We project iron ore prices will trend down to US$100 per metric ton (mt) in 2024 and US$90 per

...Fortescue Metals Group Ltd.'s strong balance sheet and cash flow helps it manage the inherent volatility in iron ore prices while funding an ambitious decarbonization capex program. We project iron ore prices will trend down to US$100 per metric ton (mt) in 2024 and US$90 per mt in 2025, compared with about US$110 per mt currently. The downtrend primarily reflects a weaker Chinese demand outlook overlaid by incremental supply increases by the major producers. Nevertheless, Fortescue's increasing production could partially offset softer prices. We expect the company to increase production to an annualized run rate of about 210 million metric tons (mmt), post the 24 month ramp-up of the Iron Bridge project (which commenced first shipments in 2023), compared with present levels of about 190 mmt. This combination of increasing production and reasonably steady price levels means we expect the company to continue to deliver robust cash flows for fiscal 2024 (June year-end). Key to this expectation...

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