Fortescue Ltd

hello everyone and thanks for joining us joining me today is gus pichot fortescue energy and growth chief executive and apple pageant cfo we also have a special guest today through our ceo for a day program which gives aspiring leaders the chance to work alongside the leadership team and learn about the business i'm thrilled to welcome to the call a true fortescue legend sitting here right next to me cam lloyd our heritage superintendent cam is a proud Waduri Yamaji, man who joined Fortescue back in 2011 as a heritage field officer. Over the years, he's taken on a range of roles and today he leads a talented team delivering positive heritage outcomes across the business. Cam, we're very proud to have you here, mate. Welcome.

Thanks, Dino, and good morning, everyone online. I'm very proud to be here. Excited to be a part of this initiative and being involved in the amazing opportunity of joining today's call. Very much looking forward to hearing everyone online's insights into our four-year results. Thanks, Cam.

I want to kick things off with what I think is the real headline this year, our operations have never been stronger. As we announced at our quarterly update a few weeks ago, we shipped a record 198.4 million tonnes for the year while cementing our position as the industry's lowest cost producer. Four-year performance records were also achieved for mining or processing and rail, demonstrating reliability across the supply chain and the team's ongoing focus on productivity. Just as importantly, safety continued to underpin everything we do. In FY25, we achieved a TRIF of 1.3 and a critical injury frequency rate of 0.02, both outstanding industry-leading results. But we know safety is more than just injury and incident rates. This year, we introduced our own leading safety index, a balanced forward-looking measure that harnesses data science to help teams focus their effort where it matters most. These results are a credit to our teams across every part of the business. And with strong operational and safety foundation, we are well positioned for FY26 with shipment guidance, of 195 to 205 million tonnes, including 10 to 12 million tonnes from Ironbridge. On the financials, which Apple will run through in more detail shortly, we delivered an underlying EBITDA of $7.9 billion, NPAT of $3.4 billion, and free cash flow of $2.6 billion, a strong result that underscores the resilience of our business. Other milestones for the year included the acquisition of Redhawk Mining, which will incorporate the backsmith iron ore project into our life of mine plan. This is a quality asset that strengthens our long-term production profile and adds optionality for the future. Decarbonisation remained a priority. We commissioned a 100 megawatt solar farm at North Star Junction and began construction on a further 190 megawatt of solar capacity. We rolled out additional electric excavators, deployed our first electric drill, and shipped the first battery electric power system from Fortescue Zero. At the same time, we continued to ramp up Ironbridge, advanced our work at Flying Fish and progressed our Green Metals project. Our success depends not just on what we produce, but the relationships we build. Earlier this year, I joined the Australian Prime Minister's visit to China, an invaluable opportunity to connect iron ore suppliers and steel mills with heads of state of both countries. Fortescue is a core supplier of iron ore to China and our products are competitive and highly valued in the market today. The conversations reinforce the growing interest in green iron and Fortescue is well placed to work alongside our partners to bring it to life. The depth of our relationships in China was reflected in our recent RMB loan, a landmark first for an Australian corporate, enhancing our capital strategy by tapping into competitive Asian markets. With that, I'll hand over to Gus for an update on energy and growth. Over to you, Gus.

Thanks, Dino. It's great to be speaking with you all. The standard results improved performance and operation excellence Dino has highlighted shows why we must keep driving ourselves forward, changing and evolving in a humble way. First, your strong track record gives us a rock solid foundation to grow from and our mission to decarbonize is paying dividends already. We are finding ways to sustain and reinforce the future of our existing iron ore assets through decarbonization, new technologies, and green iron. But we are also looking at what is next to keep adding value to our shareholders. Our team is exploring global growth opportunities in a disciplined and commercially focused way, looking at metals, critical minerals, energy, and technology. Right now, our focus is investing in research and development. ForestQ has learned a lot over the past years about the technologies that are needed to move the energy transition along. We're not just innovating and developing the technology to help ourselves decarbonize. We are creating solutions others may want as well. We are doing that now with Alicia, ForestQ battery intelligence software, which will be used to monitor and improve performance of our battery electric truck spawn sites. We'll soon look to do the same with our autonomous solution, which we are right now testing on site in the Pilbara. We're also investing in technology that will drive down the cost of green hydrogen, launch a green iron industry, and deliver our own green metal projects. Our plan at Christmas Creek is progressing. The green metal project is under construction, and when completed, we will use green hydrogen to produce high-durity green iron. We are delivering this now to show it's possible now. We're also looking to what's next for green iron and how we can scale it to meet the demand from China and our customers. We need green electrons and green molecules right now in our own operations. And as the market grows, others will need them too in the future. That is why we are maintaining our assets and keeping a pipeline of future green energy projects globally. Technology is improving at rapid speed. Costs will come down and the market will come. We are pushing to make that happen quickly, but we are also realistic and disciplined. When the market is ready and when the economics stack up, we will provide updates and progress on our projects in a commercial-focused way. The same disciplined approach is being taken on our exploration efforts. We are exploring for iron ore and critical minerals across Australia, Latin America, Kazakhstan, Canada, and, of course, Gabon, where we continue studies into the Belinga iron ore projects. Finally, I want to highlight how, at Forest Hughes, sustainability is at the heart of everything we do, from our climate and decarbonization goals to how we care for our people and communities. This past year, Our total economic contribution was $25.9 billion, including $4.2 billion in taxes and royalties. A key part of this contribution is through our Billion Opportunities Program, which has awarded more than $6.6 billion in contracts to First Nation businesses since 2011. This focus extends to building a diverse and inclusive workforce. First Nation people now make up to 14%, our Billboard team, supported by initiatives like our Leadership Empowerment for Aboriginal People program. And we've continued to see improvement in gender diversity, with women holding 37% of senior leadership roles. But now let's go to Apple to dive deeper into our financial results.

Thanks, Gus, and a big hello to everyone. It is a privilege to present a summary of our financials, and we're pleased to have again reported a clean set of accounts. Revenue of $15.5 billion was down 15% on FY24, as the increase in shipments was more than offset by a decrease in the Platts index price. Our ongoing focus on efficiency and innovation resulted in outstanding cost performance, which flowed through to EBITDA of $7.9 billion, with a margin of 51%. The metals segment EBITDA was $48 a tonne, or 56%, as the business continued to generate strong margins through the cycle. We reported a net profit after tax of $3.4 billion and earnings per share of $1.10. For those following the webcast, this next slide is the year-on-year reconciliation of EBITDA and NPAT, with the waterfall showing all the moving parts. The key movement of EBITDA was revenue, reflecting lower prices, while NPAT was impacted by the high depreciation expense. a result of higher capex, as well as an increase in exploration, development and other expenses, with details in the notes to the financials. Looking ahead, we expect a modest increase in depreciation expense in FY26, representing the lagged impact of the increase in capex. Moving now to cash flows, the slide demonstrates Fortescue's track record of generating strong operating cash flow and free cash flow while continuing to invest. Net operating cash flow in FY25 was $6.5 billion, while free cash flow was $2.6 billion. This is after CAPEX, which increased to $3.9 billion in the year. This includes $2.6 billion of sustaining and hub development capital, and as a reminder, this also includes fleet deposits and $405 million in decarbonisation, with the details on this slide. Looking ahead, Guidance for FY26 capital program implies a modest decrease in sustaining and hub capital and a step up in decarbonisation capital with the program firmly in execution mode. Investment is occurring across renewable and energy generation, transmission and electrification infrastructure and mobile fleet. As discussed in our quarterly release last month, the balance sheet is in pristine condition. Cash on hand at 30 June was $4.3 billion noting this is inclusive of about $1.2 billion allocated for payment of the final dividend next month, while gross debt was $5.4 billion. Turning to this slide, gross debt to EBITDA is 0.7 times and gross gearing is 21%, both well inside our stated thresholds of less than two times debt to EBITDA and 40% gearing through the cycle. Post the balance date, the team successfully syndicated a landmark RMB $14.2 billion term loan facility, the first of its kind by an Australian corporate. This reflects the depth of Fortescue's long-standing relationships in China and diversifies our funding sources, while achieving Fortescue's lowest ever cost of debt at 3.8%. The proceeds are, for general corporate purposes, and it enhances our liquidity position and supports our investment in decarbonisation, and I can assure you that we will continue to proactively manage our debt capital structure. Our capital allocation framework continues to prioritise a strong balance sheet, together with capital returns to shareholders and disciplined investment in growth. As you've heard, Fortescue's board today declared a fully franked dividend of 60 Aussie cents per share, taking the full dividend to... Australian $1.10 representing a payout ratio of 65%. This represents the seventh consecutive year where Fortescue has declared a payout ratio of 65% or more. Total dividends paid or declared in Fortescue's history now stands at over 45 billion Australian dollars. And on that note, I'll hand back to the operator to facilitate the Q&A session where we welcome your questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Please limit yourself to two questions per person. If you wish to ask further questions, please rejoin the queue. Your first question comes from Lyndon Fagan with JP Morgan.

Thanks very much. I'm just wondering if we can talk a bit about the medium term CapEx profile. The $6.2 billion on DCARB, that number hasn't been updated for some time. I'm wondering if it still stands. And then I guess on top of that, we need to add CapEx for the 800 odd units of fleet. So it looks like we stayed around $4 billion for the foreseeable future. I'm just wondering if that is broadly correct. Thanks.

Thanks, Lyndon. Yeah, 6.2 is the number. It needs to be profitable. And you're right, the increment to go green on top of the asset replacement, as we've previously mentioned. Apple, any additional comments on the midterm?

Yeah, Lyndon, you're absolutely right. And FY26 guidance, of 3.6 to 4.3 is consistent with the prior year. And looking at the years ahead, we are in a period of elevated capital spend, as we've already mentioned in the past, as we go through a period of fleet replacement and execute our de-carb strategy.

Thanks. And I guess I'm wondering if you can give an update on the potential OPEX savings on the back of that spend. I mean, I think it used to be you were quoting it as NPV positives. But given, I guess, the inflationary pressures on CapEx, is that still the case? And maybe if you could articulate the potential benefits a bit more, that would be helpful.

Yeah, thanks. Look, we're well and truly on track to save the forecast diesel. You can take a pick on diesel pricing in your forecast to work your cash implications. I wouldn't be too concerned about the inflationary pressures. I think that's been largely offset by the reduction in cost we're seeing as technology advances through solar, wind and battery energy. We announced a pretty significant deal with BYD a few months ago on battery energy storage, which really is demonstrable of an ongoing pricing challenge. reduction in technology, largely driven by the investment super cycle in China.

Your next question comes from Lachlan Shaw with UBS.

Yeah, good morning, team. Thanks very much for your time. Just wanted to maybe come back to the DCAR spend for 26. Can you just give us a little more colour on what's in that bucket, please. You've obviously got the 190 megawatt solar farm coming. Is there more sort of solar and wind and batteries to kick in there? What's in that bucket for 26, please?

Yeah, thanks, Lockie. So our DCARB spend is a ramp-up based on our DCARB outlook, and it's $900 to $1.2 billion. It relates to, you know, So from green power to green mobility, which will also increase over the next few years.

Okay, got it. And just to follow on there, so could we expect, I mean, you've guided sort of the 6.2 in real terms. Is 900 to 1.2 kind of roughly where we'll be in terms of DCAR for the next few years in the medium term? I'll come back with my second after this.

Yeah, look, this is well within the $6.2 billion envelope, and that represents the incremental ongoing green, as Dino mentioned. We will expect to see that it is lumpy, as with all capex spent, and there'll be likely a small elevation in this over the next few years.

The only note I'd add to that, Lachlan, is, yeah, as we're seeing almost quarterly changes in cost profiles coming out of China, That's when Apple says lumpy, that's what I'd say. But overall, within that 2030 guidance and year by year now, it's getting shorter and shorter runway. So it should give your model a little bit more clarity.

Yeah, great. Thank you. And then just the second question, a little broader just on the energy strategy, so to speak. I note that you've still got the pipeline of green hydrogen, green ammonia, etc., But to just pick up on your point that, you know, we're coming into FY26, real zero, FY30 targets, you know, the clock's ticking. Is it fair to think that the energy focus, you know, in the next sort of five years is solely going to be on decarbonising the broader business and then picking up those other projects next decade? Thank you.

Let me kick that off with, I guess, the decarbs. It's real zero for our terrestrial Pilbara operations, which has been the announcement. We are now moving into the execution of that over the next three or four years. It's a significant brownfield project impacting every part of our life. My mission is to execute that work, but I'll let Gus comment on the broader energy strategy.

Thank you, Dino. Yes, again, it's going back to the broader strategy of decarbonizing not only forestry but having very big amount of electrons to make possible the decarbonization and the access to cheap energy. So we will continue to do so, like I said earlier, on a more commercially viable and very disciplined way. Yes, it's ambitious, but as far as you would do things that way, we are going to push in a very humble way to try to make them happen.

So our next question comes from Rob Stein with Macquarie.

Hi, Dana, excellent team. Just play-out ratio of 65%. noting previous years it's been around 65% to 70% and even higher. With the elevated capex across the next few years, we can expect 65% to 70% payouts to represent a sort of fly watermark as you invest more into the business. Or were you overly surprised by the RMB debt that you could draw in the rate there and does that allow more financial flexibility?

Look, stability in our... in our dividend payout ratio is really critical in our view for what our shareholders value, which is why you've seen that number largely unchanged. Our ratio is between 50% and 80%. That's a decision the board will take. Our job is to make sure that the balance sheet is in as good a position as it can be to continue that run rate. So things like the RMB loan, You know, bringing in Redhawk into our life of mine plan, the cost work we're doing, you know, ramping up Ironbridge, they're all levers that we look at as controllable items. But I'll leave the commentary for the dividend policy to the board at the time.

And Rob, just to add to Dino, you know, we have entered into future elevated capex requirements purposefully. with strong cash position to draw from to support the future growth and capex as evidenced by credit metrics.

Perfect. Well, maybe just taking one of those points around Redhawk. Can you confirm, post-Redhawk and with the work that you're doing, when the next hub opens? capex and replacement from a timing point of view is due and by that I'm referring to all handling plants and train loadouts. When are we expecting that large chunk to occur now and what milestones can we look at from a permitting and approvals point of view that are leading up to that?

We're just as excited as you are Rob about bringing blacksmith in. It's a little bit early for us to really understand the full implications but we've been in there now a few months and getting pretty excited and clearly the best value driver for us is the deferral of major hub capital like Mindy. We've pushed out Nitinu now beyond the next 10 years. I think we guided for that before. So our job is to make sure that we pull the trigger on Mindy only when we need to. And unfortunately, I have to wait a little bit longer.

Your next question comes from Baden Moore with CLSA.

Good morning, everyone. So just going back to your DCARB spend again, if I look at emissions, Scope 1 increased again this year by 12%. and you've called out ramp up of Ironbridge. Should we be expecting that to ramp again in FY26? And so then on the spend rate that you've given us to 2030, when do you think that emission rate would start to decrease or is that the wrong way to think about it?

Yeah, peak emissions for us is 27, 28. So you start seeing your material decrease. And really that's driven by, we're starting to see the solar and BESS have an impact. It's, like you said, offset by Ironbridge ramping up in terms of net total emissions. Then as the major truck fleet comes in, they're the big consumers of diesel. And like I said, we anticipate them rolling out 27, 28 into 29 to get down.

Thank you.

Your next question comes from David Feng with CICC.

Well, hi. Good morning, Dino and team. Thanks for taking my question. My first question is regarding your R&D syndicated loan. So given the attractive interest rate, just what would it make sense for you to replace more of your US dollar senior notes with these lower cost R&B loans or would there be any considerations preventing you from doing so, like is there any extra cost or restrictions related to the use of these R&B loans?

Thanks, David. It's Apple here. Look, there are no restrictions in terms of this term loan is for general corporate purposes. And we expect this to form part of the general pool of capital that we have. And we'll look at everything from procurement opportunities in China sourcing RMB to our capital program, which it de-risks, to optimizing our debt capital structure.

Thanks, Apple, for the call. And my second question is related to your cap expert down for FY205. We can see that the actual DCARB capex is lower than your original $700 to $900 million guidance. While the sustaining and HUB development capex is higher than original, probably due to the fleet deposits. So I just wonder if the fleet deposits here are sort of a reclassification from DCARB to sustaining And if so, what would be the rationale or methodology here?

There are a few questions in there, David, but the fleet deposits of $457 million is in sustaining capex category. The decarbs spend of $405 million or so is just lumpy in nature, right? There's going to be phasing of spend, especially around technology and the nascent nature of it and improvement of that. So we're going to see this being phased to FY26 as expected.

Your next question comes from Glynne Lockock with Barron Jelly.

Morning, Dino and Apple. The first question is just on the RMB loan if I can. If you take into account cross swaps into either US or Aussie does that actually push the rate much higher up towards closer to $6 do you think? Just trying to understand the full cost of the RMB loan or am I missing something when you translate it back into the currencies you need?

So Lynn Apple here, I'll share my thoughts around this. We are not imposing or executing any fx swaps in place the rate will stay at 3.8 and why this is attractive to us is because we have r b denominated revenue which provides a natural hedge for us okay so you paid you're just paying it the interest rates out of your your r b revenue from domestic sales okay got it thank you and then maybe just one dina just on the market itself i mean

what do you put the current market down to? You know, the price is obviously continuing to surprise everyone to the upside. Just your thoughts on that and maybe anything you're hearing on steel cuts again. I mean, I know crude production is down over 2% year to date, but pig iron, which is more important for iron ore, is flat. So just what you're hearing and seeing on the ground, thanks.

Thanks, Glenn. Look, I think if we took a position on any of the intricacies of how the market and iron ore is playing out in the steel mills. There are many data points that say that the counter cycle would be at any point in time. But as I said, a year ago and six months ago and three months ago, every time I'm in China, I'm unbelievably impressed by the continued growth of that economy. And now Most recently, this huge dam project on the west of China that's been announced to spur growth for the next 10 or 20 years, three times as big as the Three Gorges. I mean, these are mega, mega infrastructure builds that are going to take a lot of steel. And we've seen the EV car sector just explode, again, taking a lot of steel. My view is that the maturation of the diversified economy in China is a good thing. Will you get some supply or demand-side reform? Yes, that's natural, particularly as some of these blast furnaces get retired for EAF production. I think you will continue to see that. But largely, we anticipate a relatively flat and consistent market, which will give you the price support that we've seen over the last year.

So our next question comes from Chen Jiang with Bank of America.

Good morning, Dino and team. Thanks for taking my question. At the start of the call, you mentioned there is optionality of the RedHawk integration into FMG's life of mine plan. I'm just wondering what kind of optionality FMG has planned over the medium and long term from production and grade perspective, and especially your future product mix. Thanks.

Now thanks for the question. If you look at a map and you see where I think in our pack we've put Black Hawk on, Blacksmith on there now. And the proximity to our current operations is quite clear. So the cost to bring that operation in, we'd probably look at using processing plants that we already have, for instance. So that's the type of thing we're looking at in our life of mine. In terms of the grade, It is publicly available what the Redhawk deposits look like. We haven't properly drilled that out ourselves. That's really where we see the upside to our life of mine plan is how that deposit fits with grade. The upside on the infrastructure, rail and processing, if we wanted to do a rail or conveyor out there, gives us the flexibility. And we're working through that at the moment.

Sure, I understand. So just to follow up, you have the current infrastructure or existing infrastructure for that project to integrate into FMG's other operations?

Yes. Not on the Redhawk side, but if you look at the map, you can have a look at how close our existing operations go. And if you compare that to the location of Mindy South or Nittanyu, which is a long, long, long way away, The other factor which is really enticing for us is the pre-approved heritage nature of Redhawk. That is a significant upside.

Your next question comes from Anthony Barrick with Platts.

Yeah, G'day. I'm just wondering, I just noticed, obviously, on your results, you had a lower realised haemocyte price, which is probably understandable, and also the lower price of magenside. But just perhaps in the context and the question around, you know, just the falling grades in the Pilbara more generally, obviously, your peers... In the Pilbara, their iron ore BHP have lowered their grade spec to customers. Just wondering whether you might have seen or you might expect to see this general trend as impacting prices, iron ore prices at all, or whether it's because there's not as much high-quality iron ore available versus a lot of low-spec iron ore getting into supplies, whether they're widening price premiums between high-grade and low at all.

Yeah, look, all real valid question. And I think your mob released a new anchor for the 62 down to 61, right? So that's indicative of a general trend. And I've publicly said, look, all bodies naturally degrade, deplete in size. And also, as we've just discussed about Mindy and Nithinu and Redhawk, they become further and further away. introduce more cost. So it's natural that you see an overall deterioration. What has happened though in the industry is the processing technology has caught up and we're doing the same thing. So it was good for us to invest in green metals technology, which is largely a beneficiation of iron ore from lower grade sources. And that's where we see the future investment in the Pilgrim.

So how does that fit into the first service supply chain in the steel supply chain? Do you think steel makers who are being forced to comply with lower emissions will focus more on high-grade ore or just buy the deeply concentrated, deeply discounted, lower quality ore and blend it with high-grade stuff to maintain their cost efficiency? I think that's the key question.

You've got to balance the energy transition of our steel mills. You've got DRI, which is largely the hydrogen-based route with high-grade. We're competing with that here locally to create it out of lower to mid-grade. So I think it's a dynamic that's going to play out over the next 10 years. Certainly our customers are indicating they want a greener product, and right now that is through a much, much higher grade, which we've said only 3% to 5% of the world's reserves actually meet that specification. So there needs to be a big technological breakthrough, similar to what we're investing in the Pilbara and our green iron plant.

Your next question comes from Marion Ray with the Energy.

Oh, hi. Good morning. Thanks for taking my question. Mine is more around regulatory risk factors. And perhaps it's not so much a significant risk factor for BorderSKU because you're more aligned with state and federal agendas. But given the EPBC moves on that, I'm just wanting to gauge in what way is development for you being restricted by the current environmental law regime? And is it maybe some general observations too? Is it energy projects for you or others in your perception being held back more than say housing mining approvals?

Look, I think in generally and really applaud the federal and the state government here in West Australia for dealing with this head-on. We've seen a real significant shift, very encouraged by Minister Watt and the new EBPC consultation process that's going on. I fed back into that personally, which is a great turnaround. And all I can say there is I think the government now understands how important it is to have a simpler regulatory framework that allows projects with a clear environmental benefit to proceed and ensuring that we also protect the environment at the same time. There's absolutely no difference of opinion in there for most mining companies that I speak to. We want to protect the environment, we want to develop these projects and let's get on with it. And I think we don't want to pass an opportunity by where A customer is telling us we want greener products. Australia has the best sun, wind intensity on the planet. And our legacy is in the minerals we have in the ground. So why not combine the two?

So what does good look like for you then? And is this maybe a step that is a protection for setting in place that kind of green premium that people have been talking about for a long time?

I'm not sure of the question. I think what good looks like from a regulatory perspective is simplicity, certainty, open consultation. When you inevitably will run into conflicts and roadblocks, we need to have transparent dialogue with common objectives and the government step in when decisions need to be taken.

Your next question comes from Lachlan Shaw with UBS.

Thanks, Dino, Apple and team, for taking my follow-up. I just wanted to ask on portfolio. So you've got a slide there highlighting interests, exploration, critical minerals, rare earths, base metals, et cetera. You've got a strong balance sheet, pretty solid cash generation. I mean, what's the thinking and the conversations about, for example, when you think about the optionality aspect organically around exploration, but also potentially inorganically at the moment?

I'll let Gus chip in, who heads up the growth and exploration side. But I might pre-empt that with, look, the reality is we have a fundamentally strong cash-generating iron ore business that we need to do everything we can to protect. And the strengthening of our relationships with our key customers making that relationship with China impenetrable. That then creates opportunities for us. We see value in decarbonising our iron ore business and then moving downstream into green metal. On the exploration side, we have a number of key options. Gus, did you want to maybe discuss some of those?

Yeah, thank you, Dino. Yes, as you said, On the diversified of critical minerals, we're working very hard in Latin America and part of Canada as well, and Kazakhstan. And again, we are in the exploration phase, and we will update if new things happen. But again, we are strongly pushing into the organic growth as well on the diversified portfolio, as you mentioned.

Your next question comes from Lyndon Fagan with JP Morgan.

Thanks for taking the follow-up. Dino, what's your vision on green iron look like? Is it ultimately converting the majority of iron ore into some sort of downstream product? And I'm wondering if you could give a rundown of what's sort of the latest progress on the various initiatives that you've got. Thanks.

For me, the vision is quite clear. You've got a customer that wants a greener product. In Australia, we're blessed with a lot of iron ore. We're blessed with a lot of free sun and the wind. In the Pilbara, we have infrastructure that carries 40% waste to our customers. Why not take advantage of that? So any opportunity we can to beneficiate and make a higher-grade product helps everybody, right? It helps the fact that you unconstrained the Pilbara Port, for instance. You know, our portfolio of 200 million tonnes is constrained by the fact that we are exporting 40% largely silica waste in that, right? So if we can remove that in a green way for Australia... And why aren't we doing that? We need to invest in common electrical infrastructure. Let's keep driving the cost of these electrons down. As soon as we do that, we make the product that will reduce that iron ore into a metal. And I think that that is an amazing opportunity. Again, we should not pass up. We're seeing aggressive moves by Saudi Arabia to get into this space. And I think we have a unique opportunity now that will pass us by to get on with it. And I think largely my vision is once you turn all that into green metal, all of a sudden you're unconstrained your rail and shipping facilities. So why not then as a net increase the amount of green metal that you supply to the market? That's the long-term vision. And thanks.

But do you see a return on... at the current capital intensities that you may be seeing?

Yeah, look, there has to be. And I would anchor that with, look, iron ore and mining is an impressive business, right? However, let's just say, hypothetically, you're able to turn that green metal, make that green metal with a slightly lower grade than we're even shipping out now. So think about the commercial benefit, not only for your green metal plant, but all of the iron ore operations in Australia. If you add the two together, I think you're in a very unique proposition.

Our next question comes from Rob Stein with Macquarie.

Thanks for the follow-up opportunity. Just with the lingar and the high grades that are expected there and noting that you're still drilling and there's potentially a target resource, I think, from your disclosure, this coming financial year, can you sort of give a view on how that would make and compete for capital with green iron and depleting grades in the Pilbara and how you might look to blends and the like to continue, at least at a group level, staying constant or growing from an iron production point of view?

I think if the question is around the whole metals portfolio, what Gabon gives us is a unique option. We have Ironbridge, which is a higher grade product. We have, as you said, our aspirations for green metal. They're really good, unique options that we have, which can cater for any direction that the market should take. That's been our strategy. In respect... guess of how that flows into our core business it largely remains unchanged and if we can create these options we don't think that there'll be a shortage of capital available in whatever arrangement we need it to be whether or not we bring in partners or alike into the future so we're not really thinking about the capital constraint as yet the work is to create the economic option.

And sorry, just to follow up to that, if you think about the logical sort of hub size or mine size being somewhere around the 40, 60 million tonne mark, for Balinga. What sort of depletion are you looking at globally for that to be sequenced with, noting we've obviously got Simadu growth coming, each of the majors have their own sort of creep scenarios that they're looking at. From a timing point of view, when could we expect to see Gabon first ore? And I don't mean the sort of trial mine, the first ore from the large investment.

I might just get Gus to then comment on the exploration project and what commitments we have on the study.

Thank you, Dean. Again, it's early stages to give a timeline. Again, the results today continue to confirm that the project is... a potential for significant scale and high-grade, but I couldn't at the moment give you a precise timeline of when.

Your next question comes from Gwynne Lawcock with Bear and Joey.

Oh, Dino, thanks again. So, Dino, last month you trimmed costs in CapEx and FMG Energy, and particularly on the cost side, you went from net $700 to net $400. Is that about the right cadence of spend now on a go-forward basis? How should I think about that? Thanks.

Gus, do you want to handle that one?

Yes. Thank you for the question. Yes, that's a very good question. Again, as I said before, we're taking a disciplined approach to our spending, as I said. And if you see from the guidance, we reduced spending since I took over by a third already. So I would personally and the whole team would continue to assess our portfolio to make sure that we're working as efficient as possible. Again, in many of the projects, as you've seen, as I said, the market is not there. So we're not backing up. So we are doubling in. And we will continue. Of course, again, this comes back to the discipline way that I mentioned and how I'm taking care of that. Everything has the right expenditure and the right discipline.

Okay, great. And Dino, could I just ask on Ironbridge, $500 million spend in 2025 and you're guiding $650 million spend this year. So that suggests unit costs drop from $103 million to about $86 million. Is $6.50 then the right spend? I know we're only at sort of half capacity, so should we expect more dollar spend but a drop in unit costs? Like, where do you think we can get to, or is it still too early for you to get a sense where we can get costs to long-term?

Look, I mean, you hit the nail on the head. Our focus on Ironbridge is making sure we run a very cost-efficient business and ramp that up. I mean, you've got a much, much higher fixed cost base than... then I'd say it's more the linear hematite operations. So our work is to make sure we're pushing production. So I wouldn't necessarily take a linear view on the data that we have at the moment. Our view is to run and sweat the assets and minimise the expense.

Thank you. That is all the time we have questions for today. I'll now hand back to Mr. Alanchanto for closing remarks.

Look, I just want to say thank you to everyone on the call. The questions were all excellent today. Just a summary, record shipments, industry-leading costs, progress on DCARB, and continued returns for our shareholders. I also want to thank the dedication of our people, our customers, the support from our suppliers, partnerships with governments and communities, and thanks to everyone who's been part of making this another really strong year for Fortescue, and we look forward to speaking to you all soon in a couple of months for Q1. Thank you.