Fortescue Metals GroupBalancing the Supply Demand Curve

The New Force in Iron Ore

8th China International Steel & Raw Materials Conference

Qingdao, October 2008

For

per

sona

l use

onl

y

DISCLAIMER

Important NoticeThe purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("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.

Fortescue Metals Group Ltd

COMPETENT PERSONS STATEMENT

The geological information in this presentation is based on information compiled by Mr Stuart Robinson, and by Dr John Clout. Mr Robinson and Dr Clout are both fellows of The Australasian Institute of Mining and Metallurgy and are both employees of Fortescue Metals Group Ltd. Mr Robinson and Dr Clout both have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for reporting of Exploration results, Mineral Resources and Ore Reserves’. Mr Robinson and Dr Clout consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears.

For

per

sona

l use

onl

y

FMG Overview

• Long term growth in China and Asia drives FMG strategy

• FMG has major reserves and resources with very strong exploration upside

• World class production assets commencing in the bottom quartile of cost curve

• Strong off-take partners demand more FMG ore type

• We are here to help China

Multi-decade China market growth drives FMG strategy

For

per

sona

l use

onl

y

Further Promising Long-Term Growth Prospects for China

Japan and Korea provide a clear roadmap to China’s potential– China early in its growth cycleChina’s economic growth averaged over 10% per annum from 2003 to 2007– China GDP expected to increase by 10.5% in

2008– Public works spending (airport, roads, water

systems) of US$400 billion through 2010– Shanghai spending US$40 billion for 2010

World Expo

China’s growth expected to pickup again to normal levels post the olympic industrial slowdown

0

200

400

600

800

1,000

1,200

0 3 6 9 12 15 18 21 24 27 30 33

Years from base

Inde

x, b

ase

year

= 1

00

Korea base 1980 Japan base 1959 China base 1996

Industrial production index

Source: The Economist (2008).

China’s industrial development is just beginning which has significantimplications for further iron ore seaborne trade growth and increased

infrastructure spending will further translate into more iron ore demand

For

per

sona

l use

onl

y

History remains the best guide to the futureF

or p

erso

nal u

se o

nly

Combined Chinese and Indian urbanisation rates per year

0

5

10

15

20

25

30

3519

50-5

5

1955

-60

1960

-65

1965

-70

1970

-75

1975

-80

1980

-85

1985

-90

1990

-95

1995

-00

2000

-05

2005

-10f

2010

-15f

2015

-20f

2020

-25f

2025

-30f

2030

-35f

2035

-40f

2040

-45f

2045

-50f

mill

ion

peop

le

IndiaChina

Source: United Nations, McKinsey, Macquarie Research, September 2008

China and India Urbanisation

For

per

sona

l use

onl

y

Chinese Urbanisation

452467

482497

512527

542

811 805 798 792 784 777 770

425

475

525

575

625

675

725

775

825

2000 2001 2002 2003 2004 2005 2006

Urban population Rural population

\

Urbanisation Curves Chinese Population

0

10

20

30

40

50

60

70

80

90

0 2000 4000 6000 8000 10000 12000 14000 16000

China Middle Income South Korea India

% Population Urban

GDP per Capita (2000 US$)

Million People

China is the perfect example of an urbanising country where raw material demand has increased significantly due to its population shifting to cities from rural areas

Source: World Bank. Source: World Bank.For

per

sona

l use

onl

y

0

10

20

30

40

50

60

70

80Ja

n-02

Apr-0

2

Jul-0

2

Oct

-02

Jan-

03

Apr-0

3

Jul-0

3

Oct

-03

Jan-

04

Apr-0

4

Jul-0

4

Oct

-04

Jan-

05

Apr-0

5

Jul-0

5

Oct

-05

Jan-

06

Apr-0

6

Jul-0

6

Oct

-06

Jan-

07

Apr-0

7

Jul-0

7

Oct

-07

Jan-

08

Apr-0

8

Mon

thly

RO

M P

rodu

ctio

n (M

t)

Strong production growth 2004-06

Growth rate slowedsharply 2007-08

Growth rate in Chinese iron ore production slowed sharply in 2007-08

Source: Morgan Stanley

For

per

sona

l use

onl

y

est

Source: Tex Report; FMG

Infrastructure constraints limits Australia, leads to falling market share

China requires Australia to recover Market Share

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Year

Chinese Imports by Source

AustBrazilIndiaS.AfricaOthers

For

per

sona

l use

onl

y

Proven Track Record in Project ManagementTo Reality

Fortescue Mine Site - 2008

From Concept

Fortescue Mine Site - 2006

Fortescue Rail Site - 2008Fortescue Rail Site - 2007

Fortescue Herb Elliot Port - 2008Fortescue Port Site - 2007

FMG built its major

infrastructure faster than any other mining company has

ever done before

For

per

sona

l use

onl

y

State-of-the-art Mining operations

Excavator in actionOverburden

trucks

Ore trucks

Surface miner in action

OVERBURDEN

ORE BODY

ORE BODY

Target - Lowest cost, highest efficiency in the Pilbara

For

per

sona

l use

onl

y

Cloudbreak time lapse of construction4 June 2007 to 18 July 2008

For

per

sona

l use

onl

y

State-of-the-art Rail operations

Target - Lowest cost transport in the Pilbara

Rail

• Clean sheet design captures best of existing technology and takes it to the next step:

– Bigger carrying capacity

– Electronic braking system

– Aerodynamics

• 40 tonne axle loads

• Low centre of gravity, long wheel base, means capable of higher speeds

• Shorter distance means shorter cycle times

• Designed with reduced maintenance costs in mind

For

per

sona

l use

onl

y

State-of-the-art Port operations

Target - Lowest cost transport in the Pilbara

Port

• Significant expansion area

• Highly automated

• Extensive use of conveyors

• Largest shiploaders in Australia

For

per

sona

l use

onl

y

Port time lapse of construction8 May 2007 to 15 May 2008

For

per

sona

l use

onl

y

The growth engines of Asia need the Pilbara

• No iron ore major has the expansion leverage of Fortescue

• Australia is the most competitive supplier to Asia

Lowest Sovereign Risk

Best Location

For

per

sona

l use

onl

y

Cumulative Production Capability - Dry Mt

US$

/dry

ton

ne in

rea

l ter

ms

90

80

70

60

50

40

30

20

10

0

0 100 200 300 400 500 600 700 800 900

Port LoadingRoyaltyTransportMaintenanceSuppliesElectricityFuelLabour

Kum

ba I

ron

Ore

non

-Agg

lom

erat

ed

CSN

non

-Agg

lom

erat

ed

CVR

D n

on-A

gglo

mer

ated

Fort

escu

e M

etal

s no

n-Agg

lom

erat

ed

Rio

Tin

to n

on-A

gglo

mer

ated

BHP

Bill

iton

non-

Agg

lom

erat

ed

SNIM

non

-Agg

lom

erat

ed

CVG

Fer

rom

iner

a no

n-Agg

lom

erat

ed

NM

DC n

on-A

gglo

mer

ated

CVRD

Pel

lets

Clev

elan

d-Clif

fs P

elle

ts

Rio

Tin

to P

elle

ts

LKAB

Pelle

ts

US

Stee

l Pel

lets

Arc

elor

Mitt

al P

elle

ts

Analysts prediction for relative operating costs – Seaborne trade

Iron Ore Cash Costs for 2009 - Saleable Mine and Pellet by Company

For

per

sona

l use

onl

y

• The largest bedrock hosted iron ore discovery in Australia

• Over 1.6billion tonnes of reserves defined

• New exploration (Chichester only) 1.8 Bt – target only

• Total reserves, resources and targets (Chichester only) under current drilling 4.26 Bt

Project pipeline underpinned by geology

Note:- Total resources are exclusive of total reserves- Data derived or calculated from best available company, technical and government public report Note: Targets are hypothetical estimates and may not be achieved

0

500

1000

1500

2000

2500

3000

Chi

ches

ter R

ange

Sol

omon

Pro

ject

Yan

di

Bun

garo

o C

k

Are

a C

Yan

dico

ogin

a

Wes

t Ang

elas

Roy

Hill

Broc

kman

4

Mar

ando

o re

gion

Mt W

hale

back

Hope

Dow

ns

AQA

wes

tern

CID

Nam

mul

di /

Broc

kman

2

Tom

Pric

e

Mes

a A

OB

29/3

0

Mes

a J

Jim

bleb

ar (W

4)

OB

18

Eas

tern

Ran

ges

MIS

Wel

d R

ange

Cha

nnar

OB

25/2

3

Para

burd

oo

mill

ion

tonn

es

For

per

sona

l use

onl

y

FMG Pilbara Holdings Dwarfs OthersFMG – 52,000 sq. km, Rio – 11,000 sq. km, (Robe 5,000 sq.km) BHP – 6,500 sq. km

For

per

sona

l use

onl

y

Fortescue’s first commercial shipments arrive in China –May/June 2008

For

per

sona

l use

onl

y

Fortescue’s first commercial shipments arrive in China –May/June 2008

For

per

sona

l use

onl

y

Product Acceptance

Actual shipments as at end September 2008:

– 8.7mt shipped, 53 ships to 27 customers

– Cargo value to date more than US$661m

– Fe and SiO2 on target, Higher calcined Fe

– Customers are reporting very strong results from FMG ores in their blast furnace blend

– Several Chinese steel mills wish to use more than 30% FMG Rocket fines in their blend

THANK YOU TO ALL OUR CUSTOMERS

For

per

sona

l use

onl

y

Industrial Test Results from FMG Major Customers so far …

Project Yield %

Sinter Speed mm/min

Productivity t/m2.h

Fuel kg/t

Tumble Index %

Return Balance

Base Blend 68.84 19.34 1.232 72.80 67.47 0.92

Replacing 22% MAC Fines

65.89 20.77 1.304 70.62 65.07 1.03

Replacing 19% Brazilian fines

65.09 21.88 1.339 72.20 66.93 1.04

Rocket Fines Replacing Brazilian Fines & MAC Fines in the Sinter Blend

“…The blending of Rocket Fines is conducive to increasing both sinter speed and productivity. Rocket fines can comfortably make up more than 15% of total sinter blend. Increase of Rocket fines percentage in the sinter blend is likely with more technical work…”

- WISCO General Iron Plant

For

per

sona

l use

onl

y

Brazilian Fines

Domestic Concentrate

Others Canadian Concentrate

Indian Fines

Iron Scale

FMG Rocket Fines

Other Fines

MGI Fines

Total

20 14 20 5 3 4 22 2 10 100

Sinter Blend

Industrial Test Results from FMG Major Customers so far …

Daily Production t Tumble Index % 5-10mm % -5mm %

10728 76.89 24.64 4.69

Major Indicators

“…Daily production is increased by more than 50 tonnes on three 105m² sinter machines with steady tumble index, powder material (screening index) decreased by 0.2%...”

- Laiwu Steel

For

per

sona

l use

onl

y

Why are FMG Fines so good?

• High calcined iron

• Low contaminants

• Coarse size with low ultrafines

• Very fast sintering speed/high production rate (“Fires like a rocket!”)

• Mills can use it up to 50% of a blend, versus 15% maximum for MAC, 35% Pilbara Blend

• Less sensitive to over-melting compared to Yandi

• Stable uniform sintering characteristics

Conclusions: High Value In Use for steelmillsPositive customer feed-back not surprisingTenacious product

For

per

sona

l use

onl

y

Exploration - 4.1 Billion tonnes in 4 years

• Christmas Creek drilling commenced May 2004; Cloudbreak,

November 2004, Solomon Drilling commenced June 2007

• In-ground resource of 4.1 billion tonnes

• Reserves now 1.65 billion tonnes

• Discovery cost under 2 cents per tonne

• The next 3 billion tonnes is targeted

For

per

sona

l use

onl

y

Western CID

Southern PilbaraEastern Pilbara

FMG Chichester project

Project Pipeline development areas will create a large iron ore export operation

For

per

sona

l use

onl

y

Hamersley Group Stratigraphy– Regional

Macroband Lateral Continuity

75km50km

190km

170km

~ 50 m

Brockman 2 Hamersley Iron

reference section

Tom Price

Type outcrop – Wittenoom Gorge

BHPB

reference section

Mt Whaleback

4W Gorge Ophthalmia Range

verti

cal s

caleFor

per

sona

l use

onl

y

Pilbara resources and targets which underpin the project pipeline

Area CurrentResources*

Current Targets

FurtherPotential

Total Upside

Chichester Range 2.45 1.8 1 5.25

Solomon 1.7 2 2 5.7

Jeerinah Anticline 1 1.5 2.5

Western CID 1 1 2

Southern Pilbara 0.5 0.5 1

Eastern Pilbara 0.5 1 1.5

Magnetite 2 >1 >3

Total 4.15 8.8 8 20.95

All figures are billions of tonnes of iron ore

Note: Targets and further potential are hypothetical estimates and may not be achieved

* Indicated and inferred categories

For

per

sona

l use

onl

y

From ConceptFortescue Mine Site - 2007 Fortescue Mine Site - 2008

To Reality

Fortescue has Australia’s leading mining and infrastructure operations team

For

per

sona

l use

onl

y

Pilbara’s longest corporate airfield

For

per

sona

l use

onl

y

Surface miners hard at workF

or p

erso

nal u

se o

nly

Trucks loading fastF

or p

erso

nal u

se o

nly

World’s largest radial stacker at workF

or p

erso

nal u

se o

nly

Mine: 24/7F

or p

erso

nal u

se o

nly

Integrated Crushing & Screening PlantF

or p

erso

nal u

se o

nly

Train Loader in operation

For

per

sona

l use

onl

y

From Concept

Fortescue Rail Site - 2007

To RealityFortescue Rail Site - 2008

Fortescue has a proven rail operations team

For

per

sona

l use

onl

y

Rolling stock (particularly wagons) have exceeded expectations

For

per

sona

l use

onl

y

Train unloader from Rail to Port -fully operational

For

per

sona

l use

onl

y

From Concept

Fortescue Port Site - 2006

To RealityFortescue Herb Elliott Port - 2008

Port and loading systems

For

per

sona

l use

onl

y

A massive footprint - inbuilt expansion capacity

For

per

sona

l use

onl

y

Stacker & Reclaimer - fully operationalF

or p

erso

nal u

se o

nly

Port: 24/7

For

per

sona

l use

onl

y

160 mtpa expansion map

Newman

Dampier

Port Hedland

50Kms

Point Samson

Tongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt Nicholas

Christmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud Break

Mt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt Lewin

Glacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier Valley

Fig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig Tree

White KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite Knight

FlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomon

Flying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwana

Glacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier ValleyGlacier Valley

Tongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkTongololo CrkMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt NicholasMt Nicholas

Mt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt LewinMt Lewin

Christmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekChristmas CreekCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud BreakCloud Break

Fig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig TreeFig Tree

White KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite KnightWhite Knight

FlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersFlindersSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomonSolomon

Flying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishFlying FishEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwanaEliwana

FMG TenementsOre Processing Plant

FMG Rail Extension

LEGEND

Other RailFMG Rail

FMG Kennedy Rail

For

per

sona

l use

onl

y

160+ Mtpa Anderson Point

5 x Cape size 3 x Rail Loop3 x Train Unloader160+ Mtpa stock yard expandable to 200+mtpa

For

per

sona

l use

onl

y

Australia-China Iron Ore Trade

• Australia is the most reliable, lowest sovereign risk, highest value-in-use supplier of critical raw materials to the growth markets of Asia, especially China.

• FMG is the best ‘win/win’ supply option for the Chinese Steel Industry

For

per

sona

l use

onl

y

FMG wishes to express our sincere support for the Chinese Steel Industry in these difficult times. We believe we will successfully work through this together.

For

per

sona

l use

onl

y

For regular email alerts register online at www.fmgl.com.au

For

per

sona

l use

onl

y