fmg fyr 200826 transcript fortescue

Company

Fortescue Ltd

Date

20 August 2026

Time

10:30am AEST

[START OF TRANSCRIPT]

Operator

Thank you for standing by and welcome to the Fortescue Ltd fiscal year 2026 full year results. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr Dino Otranto, CEO, Metals and Operations. Please go ahead.

Dino Otranto

Hello everyone, and thanks for joining us. Joining me today is Gus Pichot,

Fortescue Growth and Energy CEO and Apple Paget, CFO. We’re also joined today by Brody

Mitchell through our CEO for the quarter program. This gives emerging leaders the chance to step into the room with our leadership team, see how decisions are made and understand the business from a completely different perspective. A Malgana and Nyamal man, Brody joined

Fortescue in 2023 and is one of our health specialists. He has more than a decade of experience across healthcare, rehabilitation and corporate health. And more recently, Brody did some great work improving our pre-employment medical process to better identify and manage health risks on site. Brody, it’s great to have you with us, mate – welcome.

Brody Mitchell

Thanks Dino. Appreciate being here.

Dino Otranto

As we announced at our quarterly update a few weeks ago, we shipped a record

201.3 million tonnes for the year while cementing our position as the industry’s lowest C1 unit cost producer. We also achieved full year records across mining, ore processing and rail. Keeping our costs low is a huge focus and over the last two years alone, we’ve saved around US$750 million in C1 costs. Those savings go straight to free cash flow and come from our teams constantly looking at how we can do things better. That means moving more tonnes safely, getting more out of our equipment and being really disciplined about where we spend money.

When I look across the iron ore business more broadly, we’re in really good shape. We have a strong cost position, and we’re continuing to invest in our assets to keep them running well for the long term. Right now, for example, we’re in the middle of the biggest shutdown we’ve ever undertaken across our port operations. We’re replacing the tippler cell in Train Unloader 1 – part of our original infrastructure from 2008 as well as major components on our reclaimer and shiploader.

That work is about extending the life of our infrastructure and keeping the system performing at its best. We’re also investing in the future of the iron ore business – extending our mine lives, bringing new tonnes online and continuing to take costs out wherever we can.

There’s a lot happening, but we go into FY27 in a strong position with shipments guidance of 197 to 207 million tonnes. That includes 11 to 14 million tonnes from Iron Bridge.

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On the financials – which Apple will run through in more detail shortly – we delivered Underlying

EBITDA of US$8.6 billion, Underlying NPAT of US$3.5 billion and free cash flow of US$3.2 billion.

It’s a solid result, and again, it comes back to running the business well, keeping our costs down and generating cash. That gives us the ability to invest where it makes sense and keep delivering returns to shareholders.

It was also a big year for decarbonising our Pilbara operations with our zero-emission mining equipment rolling out across the business. We now have 18 electric excavators up and running, and they’re outperforming the diesel machines they’re replacing.

I was in China a few weeks ago and had the chance to get behind the wheel of some of our XCMG battery-electric equipment, the water cart, loader, dozer and grader. They’re great machines really smooth to drive – and we can’t wait to get them up to the Pilbara soon.

Our first battery-electric truck is in the final stages of the build and will soon be integrated with the Fortescue Zero power system. This isn’t a prototype, it will go straight into our operations, with hundreds more to follow.

We’ve also started commissioning our first in-house developed fast charger, had another two electric drills arrive on site, and deployed two battery-electric locomotive and as we electrify our operations, we need the people and skills to support it. Our new Power Up Training Centre is helping us build those skills in-house, using the same equipment our people will work with in the field.

Then there’s our Green Grid one of the largest off-grid green energy networks in the world. We now have more than 1.3 gigawatts of solar and wind operational or under construction. That includes

133 megawatts of wind at Nullagine, where the first turbines are now starting to arrive on site.

Once assembled, they will have a Hub height of 188 metres making them the tallest operating onshore wind turbines in Australia.

We’re also investing another US$680 million to expand the Green Grid and meet growing demand for green power, including from data centres. That investment will add another 200 megawatts of firmed renewable generation beyond what Fortescue needs for its own operations.

We hit another major milestone this week producing first hot metal from our Green Metal Project in the Pilbara. It’s the first time we’ve successfully operated the electric smelting furnace and is an important step towards producing green metal at commercial scale in Australia. We’ll now keep commissioning the plant in stages testing, learning and optimising as we go.

As I said earlier, we’re always looking for ways to lift productivity and get more from our assets.

We see AI as one of our biggest opportunities to create value, it will change almost every aspect of how we operate. Through the Hive, we’re bringing together data from across mining, rail, port, logistics and energy and using AI to help run the entire system more efficiently.

In our rail network, it’s improving scheduling and control in real time and in processing, it’s helping us adjust plant settings based on the ore body we’re processing that day. We’re also using AI to plan our major projects testing different construction scenarios in minutes to identify the most efficient approach, reduce costs and avoid expensive changes once work begins, and on our

Green Grid, we’re using AI to forecast the weather, so we can better plan when to store energy and when to use it.

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Decarbonising our operations is about much more than just buying electric equipment. It’s about bringing the whole ecosystem together trucks, chargers, batteries and green energy and making it all work as one system. AI is key to making that happen. Autonomy changed how we operated and helped drive down our costs. We see AI doing the same right across the business making

Fortescue simpler, faster and more productive.

Finally, I want to touch on the work we're doing with communities across the Pilbara. This year, our Billion Opportunities Program awarded more than A$1 billion to Aboriginal businesses, taking the total to more than A$7.6 billion since 2011.

We also strengthened our partnership with the PKKP people through new Native Title agreements built around co-management. Put simply, that gives Traditional Custodians a stronger voice in protecting heritage and a greater share in the economic benefits created on Country.

Our VTEC program also marks 20 years, with more than 1,600 training and employment opportunities delivered since it began, and what we’ve learnt through these programs in the

Pilbara is now helping shape how we work with communities in other parts of the world, and with that, I’ll hand over to Gus to take you through growth and energy.

Gus Pichot

Thanks Dino, it’s great to be speaking with you all. Our iron ore business gives us strong foundations from which we can grow and diversify Fortescue for the future.

Our team is exploring global growth opportunities in a disciplined and commercially focused way looking across the board at metals, critical minerals, energy and technology growth starts with customers understanding what they want today, what they will need tomorrow and where

Fortescue can deliver the best value. That is what drives our decision making.

I spoke to you all a couple of weeks ago about our industry’s ongoing engagement with China

Mineral Resources Group. While there are no further updates I want to say once again, we hope to see a return to normal market conditions as soon as possible. We continue to engage with

CMRG through respectful, patient and good faith negotiations, grounded in fair and proper market practices. That is what is best for China, for Australia, our long-term partners, steel mill customers and the iron ore industry as a whole.

Exploration has been a big part of Fortescue. It's how this Company started and it is still central to our growth. In the Pilbara, our teams are continuing work at Mindy South and Wyloo, assessing near-mine opportunities around our existing operations.

During the year, we also updated our life of mine plan to include Blacksmith. We've grown the mineral resource there from 243 million tonnes to 615 million tonnes, more than two and a half times what it was when we acquired it and unlocking significant value. That means our teams acquired Red Hawk for only a US$0.22 a tonne of iron ore.

Outside of Australia, we have now drilled more than 230,000 metres at our Belinga Iron Ore project in Gabon, giving us greater understanding of the potential for this site. Beyond iron ore, copper is core to our long-term strategy with demand being driven by forces reshaping our global economy, electrification, AI, industrial capacity, and energy security.

This year we acquired the Cañariaco project in Peru a large-scale copper deposit that looks incredibly promising. We expect to start drilling by the end of next year. The Cañariaco deposit

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Canada and Australia.

The same forces driving copper demand are also supercharging demand for electrons. The world has entered a period of rapid electricity growth. The International Energy Agency calls it the ‘Age of Electricity’ and expects demand to grow significantly every year to 2030 – that’s 50 per cent faster than the previous decade. That growth is being driven by electrification, green fuels, AI and data centres.

Data centre electricity demand alone is expected to more than double by 2030. Renewables will supply a large share of this new demand. Globally, governments and communities are asking data centres to bring new green power, not more fossil fuels. Fortescue is well placed to meet the demand.

We are fundamentally an infrastructure company. We have spent the past few years building and refining our ability to design, construct, and operate large renewable energy systems. We are proving this model in the Pilbara where we are rapidly building one of the world's largest off grid green energy systems and nobody in Australia is building more solar than us right now.

Our teams have gone from installing 3,500 solar panels a day a few months ago to now rolling out

6,000 a day. This will only get faster again when we bring in our automation technology. We're not doing this alone. We've created a global alliance of technology partners to help us deliver. The

Pilbara gives us a place to build, test and prove the Green Grid model.

Our technology and operating experience give us a pathway to replicate it globally. Across the world, we have identified locations and opportunities with strong renewable resources. We’re looking at how to commercialise those resources, whether that’s green hydrogen, green fuels or data centres. We are assessing opportunities based on our customers’ needs and market conditions and when they are ready to progress, we’ll have more updates.

Importantly for us technology is what connects all of this. That is why we are one of the biggest investors in research and development in Australia turning innovative technologies into operational solutions. Our Fortescue Zero teams are key to that, taking tech from the track to our trucks.

As technical partners to Jaguar TCS in the Formula E, we not only win championships, like we did on the weekend, we test technology to the extreme and transfer that knowledge to our decarbonisation portfolio.

Our first Fortescue Zero power system inside a Liebherr T 264 truck will soon be joining our operations. Our Nabrawind self-erecting technology will make construction of our wind turbines faster and cheaper. Elysia our battery intelligence software will be deployed across our electric fleet and battery storage systems and we’re selling it to third-party customers like Jaguar Land

Rover.

Finally, Fortescue also continues to invest in technology that will drive down the cost of green energy and help to deliver our own green metals projects. We develop it, test it, prove it, deploy it and when the technology has a wider commercial market, we will also take it beyond Fortescue and sell it.

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Apple Paget

Thank you, Gus and hello to everyone who has joined us. The business delivered excellent financial results in FY26, including high margins, strong free cash flow, a robust balance sheet and the consistent application of our dividend policy.

Starting with the income statement, revenue increased by nine per cent to US$17 billion, reflecting both an increase in realised price and iron ore sales.

We remained focused on cost discipline. The Hematite C1 unit cost of US$18.74/t, four per cent higher than FY25, despite elevated energy prices and ongoing inflationary pressures.

Together, this supported a nine per cent increase in Underlying EBITDA to US$8.6 billion, at a margin of 51 per cent.

Underlying NPAT increased by three per cent to US$3.5 billion. Statutory NPAT of US$2.9 billion was impacted by the non-cash impairment charge relating to Iron Bridge and a compensation claim expense, consistent with the disclosures last month in our June Quarterly Production

Report.

Turning to the year-on-year EBITDA reconciliation, the largest positive driver for the Metals segment was price, followed by volumes. This was partly offset by higher operating costs, R&D and admin expenses. The Energy segment EBITDA position improved by US$319 million.

Moving to cash flows, this slide shows that the business maintained its track record of strong cash flows, generating US$6.8 billion of operating cash flow and US$3.2 billion of free cash flow, up 25 per cent on FY25.

This was after investing US$3.6 billion in capital expenditure during the year, including US$2.1 billion in sustaining and hub development capital and US$848 million in decarbonisation.

Sustaining and hub development capital was around one-fifth lower than FY25, while we continued to accelerate investment in decarbonising our operations.

Looking ahead, FY27 guidance implies a modest increase in sustaining and hub development capital. This includes incremental investment in maintenance in our port infrastructure and initial investment in Blacksmith, consistent with the optimised life-of-mine plan and an increase in capital expenditure for our decarbonisation program.

Turning to the balance sheet, we continued to optimise our debt capital structure during FY26.

This included the successful syndication of our landmark RMB14.2 billion term loan facility and prudent liability management. These initiatives further diversified our funding sources, reduced our weighted average cost of debt and extended our weighted average debt maturity.

We finished the year with a strong and flexible balance sheet, with US$5.1 billion of cash, gross debt of US$5.9 billion and net debt of just US$0.9 billion.

This means gross debt to EBITDA was 0.7 times and gross gearing was 23 per cent, both comfortably within our through the cycle thresholds of less than 2 times debt to EBITDA and 40 per cent gearing. This balance sheet strength provides us with the capacity to invest while continuing to deliver returns to shareholders.

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Consistent with our dividend policy, the Board today declared a fully franked dividend of A$0.46 per share, taking the full year dividend to A$1.08 per share. This represents a payout ratio of 65 per cent and marks the eighth consecutive year in which Fortescue has declared a payout ratio of 65 per cent or more.

On that note, I'll hand back to the operator to facilitate the Q&A session, where we welcome your questions.

Operator

Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up the handset to ask your question. Please limit yourself to two questions, but you may re-enter the queue for additional questions. Our first question for today will come from Rahul Anand with Morgan Stanley. Please go ahead.

Rahul Anand (Morgan Stanley): Hi, good morning, team. Thanks for the call. Appreciate your time. Perhaps we start with the Iron Bridge cost base. Obviously, you guided for the full year in terms of your costs at the start of the year, but you did have a production reduction by about two million tonnes later in the year. I note your costs came in line with guidance, which is good, and obviously you're ramping up the project.

But what I wanted to touch upon or understand better is, what proportion of these costs can you make variable going forward? I note Dino's comment last time to my question that they're working on or you're working on making a larger part of the cost variable. Obviously, currently in the ramp up, I don't think any of them were, given, despite the volume cut, the costs were in line with guide.

How should we think about the variable component going forward for Iron Bridge? That's the first one. Thanks.

Apple Paget

Thanks, Rahul. I'll answer that. There is a higher fixed cost compared to our hematite operations. Right now, especially during ramp up, we're looking probably around a 70 per cent fixed and a 30 per cent variable, and going forward, we're continuing to optimise this and reduce this where possible.

Rahul Anand

Got it, okay. That's very clear. Thanks, Apple. Let's perhaps move on to the green steel plant, which is my second question. I just wanted to understand if you have any targets, you've set inside in terms of how big you want to build this plant, what the economics look like, and the cost base as well. Are there particular line items like the energy cost, et cetera, that are key critical moving factors in terms of determining the economics? Anything that you can basically help us understand the economics better would be much appreciated.

Dino Otranto

Thanks, Rahul. This isn't an experimental PR exercise. We are serious about doing this. There are two lenses we look through, how big this is going to get. One is the technology pathway out of Pilbara-based iron ore, which this week marked a massive step forward for us. The second, and it's always been as important, is the economics of the energy network to then create either the electron to reduce the iron oxide or which this plant demonstrates, is the hydrogen reduction path. Hydrogen is very much still front and centre of our aspiration.

To create the economic conditions for the hydrogen, you need a massive glut of electrons, as we talked about internally. That's why I point to how this connects with our industrial vision in the

Pilbara of a massive network of electricity, which then feeds the iron ore business, feeds third- party sales of electrons, but also for us, more importantly, creates the downstream industries like

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Operator

Your next question will come from Paul Young with Goldman Sachs. Please go ahead.

Paul Young (Goldman Sachs): Morning, Dino, Gus, Apple. Hope you're all well. First question is on the negotiations with CMRG. At the moment, I know you made some broad-brush remarks there, they're dragging on a little bit, and they're obviously pretty tough negotiations. I just wanted to know, can you share anything, any colour, on, during the negotiations, is there any impact on your sales volumes, inventory build reports or working capital, et cetera, during this period?

Gus Pichot

Hello, Paul, Gus here. I will take that one as I'm leading that side of CMRG, as I told you last time. Again, the current inventory levels are well within normal range. Yes, we are going through the negotiation process. As you know, this is an example of trade friction that is affecting the iron ore industry. Conversations are ongoing, and I will disclose when things get further on.

Paul Young

Okay. Thanks, Gus. Then, Dino, maybe a question for you on the mine plan, and obviously, we’ve got the new product strategy unfolding over the next couple of years, and just want to dig into Blacksmith again, a good news story here around capital-light project and replacing Firetail in the next couple of years. I noticed that you've released your first reserve there and also there's been an increase, I note, in Christmas Creek and also Eliwana.

But just on Blacksmith, I see you've completed the feasibility study in June, and I think it's for up to 30 million tonne a year. Can you share any colour around first production there and actually the capital for this project?

Dino Otranto

Probably not as much colour, Paul, as you want, but we are extremely satisfied with the acquisition. It's good to get some information out about the [Ore Reserve] declaration.

I’ve got Bejoy Cyriac next to me, who's the Director of Technical Services for us. He can give a bit more colour on capital intensity, where it fits in the mine plan and volumes, and why it's so important for us in terms of our cost position.

Bejoy Cyriac

Thanks, Dino. Paul, as you mentioned, this adds significant value to our portfolio, and it's a key enabler to maintain our product strategy. Fortescue has a history of spending capital very efficiently, and we will take the same discipline to Blacksmith as well. In that spirit, at this stage, we are looking at Blacksmith by end of this decade. As you mentioned there, this has helped us to enable our product strategy, reduce our strip ratio and move our major hubs, which is Mindy South and Nyidinghu, into the next decade.

Operator

Your next question will come from Kate McCutcheon with Bank of America. Please go ahead.

Kate McCutcheon (Bank of America): Hi, good morning, Dino and Apple. Just on the capex piece, can you remind me where we're at with the grey fleet replacement, how much is left to go there? In that capex guidance, how much of that US$2.3 billion to US$2.7 billion sustaining and hub development is for that grey fleet replacement?

Apple Paget

Thanks, Kate. The grey fleet replacement falls well and truly within the sustaining and hub development, as you mentioned. It is lumpy. We're going through fleet replacement cycle, and it's very much locked in with our plan around our decarbonisation as well, which, the

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A division of MUFG Pension & Market Services incremental part goes into the decarbonisation bucket. It is lumpy, but we're looking at probably around the height of it now to the next year or so, that's going through the sustaining and hub development. We just don't go into that granular detail now.

But you're right, absolutely right, our FY27 guidance, US$2.3 billion to US$2.7 billion includes the grey fleet replacement.

Kate McCutcheon

Okay. Then, I think previously, in the cost guidance, we'd mentioned you'd expect about US$100 million of benefit from decarb, all else being equal. Is that still the assumption for the guidance cost?

Apple Paget

Yes, that is. We mentioned around the green metal project, that was US$100 million, of course taking into account the expanded tech pathways. Thank you.

Andrew Driscoll

Sorry, Kate, it's Andy here. Just to clarify that's on the capital part, but yes, no change to anticipating about US$100 million of operating cost savings this year as a result of decarb progress.

Kate McCutcheon

Yes, that's the one. Thanks, Andy.

Operator

Your next question will come from James Redfern with RBC Capital Markets. Please go ahead.

James Redfern (RBC Capital Markets): Good morning, Dino, Gus, Apple and Andy. I just want to dig into the comments you made about the planned maintenance at Port Hedland, currently underway on one of the three ship loaders. Just want to understand a bit more about that maintenance in terms of how long - is Fortescue operating on two out of three ship loaders currently, and how long will that maintenance take? Thank you. That's my first one.

Dino Otranto

Thanks for picking that up. We're in a multi-year replacement cycle of some of our critical infrastructure down at the port. However, we have factored that into our guidance and we're very comfortable that we can maintain that sweet spot of north of 200 million tonnes throughout that period, as is evidenced by the shutdown that's going on at the moment.

Apple Paget

Just to add to that, this falls within our sustaining and hub development and represents one of the increases that we see year on year around the port infrastructure as well as

Blacksmith.

James Redfern

Okay, thank you. I'll leave that one there. Then, the second question just relates to Fortescue's ambitions with regards to copper. Noting that Fortescue completed the acquisition of Alta Copper earlier this year, I just want to understand, has Fortescue got any internal targets, if you like, for copper production in the future? Not from Alta Copper per se, but just as a

Company, is there a target for how much copper Fortescue would like to be producing in, say, five years' time from now? Thank you.

Gus Pichot

Thank you for the question. Yes, we completed Alta Copper this year. Copper, it’s on the front foot of our strategy, as you just mentioned, Alta Copper, and we discussed last call about drilling next year, and that's our main focus. But we also have the midterm goal of different projects that we’re exploring in Argentina, Kazakhstan and Canada. So, yes, we are full ahead with copper, and hopefully in the midterm, we'll have some good news.

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Operator

Your next question will come from Lyndon Fagan with J.P. Morgan. Please go ahead.

Lyndon Fagan (J.P. Morgan): Good morning, everyone. Thanks for the call. First one's just on Iron

Bridge. I guess we’ve been battling on for three years to make another cash loss this year, by the look of it. At what point do you start considering a curtailment of this operation, given it would alleviate the port and would actually stem some cash losses?

Dino Otranto

Nice try, Lyndon. We're going to keep ramping this up, mate. We believe in the asset. We believe it's a differentiator in terms of our products. We’re not concerned about the port bottleneck that you potentially highlight. We have many options in de-bottlenecking hematite further if that's a scenario we want to take place. But for the next year or so now, it's full steam ahead, getting this asset up. We've deployed a lot of capital into it.

It's a personal ambition of a lot of people here to get this thing now cranking up to full capacity, and that's what we're going to do, and we'll make cash on it on the way through.

Lyndon Fagan

Okay. Hopefully we see that coming through. The other one's just a bit of housekeeping. The admin costs are up at US$579 million, up almost US$150 million year over year. Is there any one-offs in that, or are we dragging that right?

Apple Paget

Thanks, Lyndon. The admin expenditure should be assessed in aggregate with R&D expense. Together, they were almost flat year on year, actually slightly down, Lyndon. There have been some impacts on admin resulting from a refinement of our classification of R&D expenditure. On a segment basis, the scope of activity in metals has increased, while the reduction in Energy activity has meant that Metals has a greater allocation of corporate and shared services. But looking ahead, we are focused on maintaining these costs in real terms.

Operator

Your next question will come from Lachlan Shaw with UBS. Please go ahead.

Lachlan Shaw (UBS): Morning, Dino, Apple, Andy and team. Thanks very much for your time and the questions. Two from me. Can I start with FY27 capex guidance? Obviously, it's a pretty fair step up from FY26 and a pretty wide range at this point, US$1 billion. I'm just wondering, in a scenario potentially of further weakness in the iron ore price and or realisations, what flex do you have in the capital program in terms of timing, phasing, scope to potentially delay or defer? Or would you instead look at perhaps trying to tap the strong balance sheet to keep that program of works ongoing? I'll come back with my second question.

Dino Otranto

Thanks, great question. You're going to hear the same thing from Apple and Gus.

We make decisions based on the health of our balance sheet at any point in time in the cycle, whatever the market condition is. We always preserve good optionality in how we deploy capital.

We own a lot of the overhead and control, which is why we have such good capital intensity, so it also then gives us the option, should we need to hold things or bring things forward, we can.

Lachlan Shaw

Great, thank you. Then, second question, a little bit of a higher-level one, just in terms of the ROCE chart in the deck. I'm just wondering when you look across the options in the portfolio around capital investments, which projects across sustaining and hub, Belinga, Green

Grid, Pilbara energy, green iron, which ones do you think have the potential to make the strongest contribution to lifting and or keeping ROCE at an attractive level for shareholders? Thanks.

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Dino Otranto

It is a really good question. The way I see it is, a number of those options that you talk to are not independent. They actually talk to an industrial ecosystem that benefits each other.

You get energy, feeds iron ore, feeds the green metal, as I already talked about.

But I'd say that the one that unlocks it is getting the electron. That's why the majority of our effort is building the high-voltage distribution networks, the solar, the wind, the acquisition that we made around wind technology in Nabrawind, the supply chains we've worked on for the last few years on battery installations, means that we are in this enviable position where the deployment of capital, how fast we can bring these electrons to market, is unique. I know Gus is chomping at the bit to then take what we've done and apply it. Gus, anything else?

Gus Pichot

Dino, just to reinforce what you're saying, to understand it and taking it outside of just a mining company, this is the big pivot, strategic decision that we've taken a couple of years ago, and now we're trying to look at those opportunities, like Dino said, how to optimise that electron, I said it before, the ecosystem that we build in the Pilbara and how we're looking at each

P&L. Since I took this job the last year, as you've seen, it was to just bring the disciplined way into a clear P&L positive where optimising the electron would be the best way to go to market in whatever shape or form we decide.

We believe, again, without going into trends of data centres or green ammonia, what it was is that we are ready with the electron, because with the experience of the operation teams to optimise capex and to allocate the capital properly towards a good result in the future for the Company.

Operator

Your next question will come from David Feng with CICC. Please go ahead.

David Feng (CICC): Hi, good morning. Thanks for taking my question. I just have a follow-up question on your AI applications. I noticed that, in your annual report, you have spoken quite positively about AI as the next major productivity opportunity after autonomy. Like you mentioned, there are 15 AI projects delivered with the target ROI over three years.

Besides the example you mentioned, doing weather forecasts for your green energy operations, could we have one or two more examples where AI is already delivering measurable operational benefits, and how material you think the opportunity could become across mining, processing and energy over the next few years? Thanks.

Dino Otranto

A lot in that, David. If you go back through a few calls, I did speak quite specifically on the volume increment that we got in our rail network by the deployment of AI and agents in our logistics and scheduling operation. We've actually increased that scope and now deploy the same technology across the entire supply chain back to the mine.

The decarb program itself, when we talk about US$2 to US$4 a C1 impact, which we’ve been public on, on the removal of diesel, again, I link to how software and AI enables not only a hardware purchase but the integration of the network. So, for us, it is about how do we improve our cost position but also how do we bring more volume into the market through our supply chain.

Operator

Your next question will come from Adithya Mohan with Standard Chartered Bank. Go ahead.

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Adithya Mohan (Standard Chartered Bank): Hi, everyone. Congratulations on a great set of results. My question is regarding the CMRG negotiations that is going on. Do we expect any knock- on effect or disruptions to volumes on shipment level this quarter? Thanks.

Gus Pichot

Hello, Adithya. As I said, I can't predict the future. We are still in, as I said before, negotiations. We just expect a fair trade result, and that's what we are aiming at. Meetings have been quite positive. The current inventory levels are well within normal range. That's what I can say up to now.

Operator

Your next question will come from Baden Moore with CITIC CLSA. Please go ahead.

Baden Moore (CITIC CLSA): Morning, thanks for taking the question. On the Green Grid, I was wondering if there was any feedback you could share on how you're going marketing on offtake for the new capacity that you said you were looking to add where the data centre demand is difficult to capture? Is there any progress there, and how are you thinking about that project in terms of the commercial outlook at this point?

Dino Otranto

We haven't, to be completely honest, had to market it that aggressively. There is a lot of applications in the Pilbara which use obscenely high cost per megawatt power. There's a lot of examples where you have liquefied natural gas tankers driving 1,000 kilometres to then spin turbines, which is almost insane if you were to rebuild it again with the solar, wind and battery technology and the intensity and cost structure we can deploy for. So, that's an option.

Our other options are, as you said, data centre applications. Alongside the power infrastructure that we feel very confident in ability to build the speed-to-market requirements, there is the fibre and connectivity that is also right at our doorstep in the Pilbara. That's quite a unique position that we find ourselves in, and we're learning every day. We're learning about what it takes to build data centres and what customers require.

I would say that, federally and at a state government level, there's also good support we're getting to look at how this industry can reshape the value proposition for Australia. We're actively participating in that.

But I come back to, the only reason why we're able to have some of those conversations now is, for the last four years, we've been building a network that is value accretive for our base business.

As it happened, we've built the asset and now there is demand for behind-the-metre, off-grid systems, not in anyone's backyard, through deployment of 4,000 to 5,000 solar panels a day, which we're all doing internally. It is a monumental piece of infrastructure that we've built.

Baden Moore

One follow-on, I was just wondering if there's, the demand there, what point do we expect that to become more concrete for us in terms of level of offtake in capacity? When do you start signing those customers up? When should we look for that?

Dino Otranto

We haven't guided anything at this stage. I won't add any further colour to what I've already talked to.

Operator

Your next question will come from Adrian Rosso with The West Australian. Please go ahead.

Adrian Rosso (The West Australian): Hi guys. Thanks for taking questions. Mine's also on CMRG.

I was just curious, because there's a lot of speculation going around at the moment that the

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A division of MUFG Pension & Market Services government might look into creating a framework to give the likes of yourselves, BHP and Rio exemption from anti-trust, collusive negotiation power. Would that be something that you might be interested in exploring, basically negotiating as a block with CMRG?

Gus Pichot

Hello Adrian. Thank you for the question. At the moment, we're just focusing on

CMRG. We are in not early stages of the discussions, because we started a couple of months ago, as I told you, so at the moment, the only option that we're seeking is discussing with them directly.

Adrian Rosso

Okay. Thank you.

Operator

The next question will come from Mark Wembridge with AFR. Please go ahead.

Mark Wembridge (AFR): Morning, guys, thanks for taking my question. Just noted that Fortescue has called in MinterEllison to investigate claims of inappropriate behaviour by an executive. I don't really want to get into the details of that, but I'm just curious as to know why Fortescue hasn't temporarily stood down that executive while the claims are being investigated? Is that not best practice in these situations?

Gus Pichot

Well, thank you for the question. Yes, Fortescue has taken extensive external legal and governance advice and considers that the current arrangements are appropriate while the independent investigations are on the way. So again, I'm sure Dino can add to me and the whole team here. I think Jackie is on the line for HR. Our top priority is our people and sexual harassment and unlawful discrimination and any behaviour that makes people feel unsafe has no place here in our leadership.

Mark Wembridge

Sorry, just to follow up, does it not concern you though, that this might be construed as Fortescue taking a side in this situation by not at least temporarily standing down the executive and allowing the time for MinterEllison to make their investigation?

Gus Pichot

Well, again, as I just mentioned, and going back to our priorities, our people, that we have taken extensive external legal and governance advice to make the decisions we're making.

So, we're quite confident we're following the proper process.

Mark Wembridge

Thank you.

Operator

Our next question is a follow-up from Paul Young with Goldman Sachs. Please go ahead.

Paul Young

Yeah, thanks, and hi again. Can we talk about the green truck program a little bit more? I see, Dino, you're deploying in FY27. I see also in the annual report, you're saying that

Flying Fish's target is the first loaded haul green operation, and that'll happen in FY27. I think you're targeting FY30-31 for full deployment. Can you remind me, within the US$6.2 billion, what is actually allocated to the green kit and what that profile might look like over the next couple of years, assuming things are successful?

Dino Otranto

Thanks, Paul. It will be successful, to reflect on your last jibe there. I look at the

US$6.2 billion as roughly in thirds. You've got thirds for generation, third for distribution and charging infrastructure, and then a third for all the kit. We've already started to take delivery of some of the kit, but you're right in calling out that the next two years will be the peak of delivery of the full contingent of nearly 700 pieces of equipment.

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A division of MUFG Pension & Market Services

Paul Young

Okay. All right. Thank you. Then can I switch over to Gabon? I mean, it's early days, but that said, you're doing a lot of drilling and you're submitting the EIS, I think, end of the year and then it goes into the EIA process with the government and you're doing your studies clearly on the project at the same time in parallel. Can you step through potential, Dino or Gus, the potential timing of the environmental assessment by the government of Gabon and also the timing of your studies.

Gus Pichot

Yes, as I said before, we have more than 200,000 metres of drilling completed. You mentioned correctly, as I said, December would be crucial for us to give you that timeline that you're asking about. We are in the same mode, expecting the same as how we go from there.

Again, we're looking at very good numbers and very prospective numbers, so we will address this probably by December on the next steps, because there's a detailed technical engineering and geotechnical environment and social studies that are going on at the moment.

I'm going to be in Gabon again next month to see how that progress is going. Our team on the ground are working really well. So I couldn't give you more colour than that. Hopefully by

December, we can expand further on more decision-making that will come after everything that I just disclosed to you.

Operator

The next question will come from Simon Johanson with The Age newspaper. Please go ahead.

Simon Johanson (The Age): Hi folks, just following up on the previous sexual harassment question. Your competitors BHP and Rio detail how many cases of sexual harassment they have annually and what was done in resolving those cases. Can you tell us exactly how many cases you've had of sexual harassment at your work sites over the past year and whether that's improving?

Dino Otranto

Thanks for the question and again, I reiterate Gus' comments we take this matter extremely seriously across the entire organisation. So, we have in our Sustainability Report issued detail so I won't get into the specific answers around harassment, assault versus dismissals or discrimination. It's all very, very transparent in our reporting, so I'd point you that way.

Simon Johanson

Okay.

Operator

The next question is a follow-up from Lachlan Shaw with UBS. Please go ahead.

Lachlan Shaw

Thanks, guys, for taking my follow-up. I just wanted to just come back to

Blacksmith for a minute. Obviously resource up, grade, pretty pleasing. The 56 per cent grade is interesting, can you just help us understand what's the dispersion in the resource of that grade and how do you think about that coming into the mine plan? Obviously, I'm guessing that'll come later, sort of well into the 15-20 years of effective mine life. Thanks.

Bejoy Cyriac

Yes, so we have integrated Blacksmith into our life of mine plan to maintain our existing product strategy and that's the whole intent of bringing in Blacksmith. And it relates to our Solomon hub and the grades that are coming from Blacksmith is aligned to that and that's why you're seeing a reduction in the cutoff and what is aligned to our product strategy. That's what feeds into our life of mine plan and we are able to work through and feed Firetail for the next 20 years.

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A division of MUFG Pension & Market Services

Operator

The next question will come from David Coates with Bell Potter Securities please go ahead.

David Coates (Bell Potter Securities): Good morning guys, congratulations on the result and thanks for the opportunity. Question on the green grid, I'm just wondering what proportion of the capex we should be amortising over iron ore production and what kind of replacement cycle or timeframe that would run over, that's my first question.

Apple Paget

I wouldn't go through towards the amortisation part, but I would look at around

US$680 million. Most of that will be spent in FY28, probably about 70 per cent of that. On either side, I'd say the remaining 30 per cent would be spent. So that should provide you some phasing, at least, around the green grid spend.

David Coates

Sure, okay, thanks, Apple and secondly, the XCMG haul trucks, what's, can you just confirm they're 240 tonnes, I believe, and if they're in operation anywhere else, or if this is going to be sort of a first, when they roll out with you guys?

Dino Otranto

So an XCMG equivalent size diesel electric truck already operates, but this will be the first offering that XCMG will make of a 240 tonne truck, fully electric, in our application.

Operator

Your next question will come from Melanie Burton with Thomson Reuters. Please go ahead.

Melanie Burton (Thomson Reuters): Hi, thank you for your time today. Just following up on the sexual harassment questions, I heard that you didn't want to go into detail, but I looked at the figures in the sustainability report. It doesn't say anything about if anyone was fired or let go.

I may have missed it in the sustainability report. It outlined the various numbers, but nothing about workers that have been let go, which is something that – if in fact any have. The reason I'm asking is because that's a number that your peers disclose. It might be a case that there's none.

Am I missing it, is it there?

Dino Otranto

Yeah, it is, it's certainly there, but I can reiterate the numbers. There were 11 dismissals, 69 alleged breaches, 29 of those related to discrimination and harassment, and again, 11 dismissals.

Melanie Burton

Thanks for that.

Operator

There are no further questions at this time. I'll now hand it back over to Mr Otranto for closing remarks. Please go ahead.

Dino Otranto

Thanks everyone, we went over time today, so there was excellent interest in what is a good set of clean results. Thanks again everyone who participated in today's call.

Operator

This does conclude our conference for today. Thank you for your participation, you may now disconnect.

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