June 2026 Quarterly Production Report - Investor and Analyst Call Transcript

Company

Fortescue Ltd

Date

31 July 2026

Time

10:30am AEST

[START OF TRANSCRIPT]

Operator

Thank you for standing by and welcome to the Fortescue Limited June 2026 quarterly production report. 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 Andrew Driscoll,

Director Corporate Finance. Please go ahead.

Andrew Driscoll

Thank you, Darcy and welcome all and a big, happy Friday from Perth. I'm joined today by Dino Otranto, CEO Metals and Operations, Gus Pichot, CEO Growth and Energy, and Apple Paget, the Group CFO.

As is customary, I have the privilege of sharing a summary of the operational performance and some highlights from the quarterly report before opening the call for those who have dialled in to ask questions of the executive and members of the senior leadership team here in the office.

As you can see from our disclosures today, Fortescue's Q4 performance contributed to outstanding full-year operational results, with records tumbling across total mining, processing, rail and shipping volumes.

Most importantly, this was achieved safely, with a leading safety index, or LSI, of 172 and a critical incident frequency rate of 0.04. We exceeded our annual targets for these two metrics, which provide more balanced, forward-looking safety performance measures relative to traditional lagging measures.

In terms of some of the operating details, total iron ore shipments of 52.7 million tonnes in Q4 contributed to record shipments of 201.3 million tonnes for the full year. This includes shipments from Iron Bridge of 2.7 million tonnes in the quarter and 9 million tonnes for FY26, a

27 per cent increase on the prior year.

The cost performance was particularly strong, reflecting a relentless focus on efficiency and on productivity. The Q4 hematite unit cost was US$19.37 a tonne, up 6 per cent Q-on-Q due to higher diesel prices, which meant that the full year unit cost was US$18.74 per tonne.

FX adjusted, this is within guidance despite some pretty stiff headwinds, including elevated energy prices, of course, and general inflationary pressures. Today we provided FY27 unit cost guidance, and that's a range of US$20.50 to US$21.75 per tonne, reflecting some of those macro cost pressures, and we expect to continue to lead the industry on cost performance.

On sales and marketing, Gus will make some comments shortly. But the hematite realised price was US$89/dmt in Q4, or 84 per cent of the average Platts 61% CFR Index. There was some moderation in realisations Q-on-Q, reflecting supply and demand dynamics in those market

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MUFG Corporate Markets

A division of MUFG Pension & Market Services segments, including some normalisation of flows of some competing products. The full year realised price was US$91/dmt.

This operating performance resulted in strong cash flow generation, with closing cash at US$5.1 billion and net debt of US$0.8 billion at 30 June. That compares to net debt of US$1.6 billion at

31 March and is after capital expenditure of US$1.1 billion in the quarter.

Total capital expenditure was US$3.6 billion in FY26, and we have provided FY27 capital expenditure guidance today, with a detailed breakdown in the release.

We achieved all of this while making rapid progress on the build-out of our Pilbara green grid, commencing construction of our 690MW Turner River solar farm, and starting to commission our Green Metal project with first hot metal imminent.

Another major milestone several years in the making was the execution of a new native title agreement and co-management agreement with the PKKP people. This will give the Traditional

Owners a much greater say of how mining happens on Country, while creating new opportunities for economic participation and business development.

So that summarises the operational performance and some of the key developments. The takeaways being record shipments, strong cost control, free cash flow generation and rapid progress on decarb.

Now, as committed to last quarter, today's release also includes an update on the Pilbara operations portfolio optimisation.

I highlight this is a point in time and optimisation work is of course ongoing. Fortescue's current port outload capacity at Herb Elliot Port is approximately 205 million tonnes per annum. There's some details in the release that we can discuss in Q&A.

The company is exploring options to increase outload towards the licensed throughput capacity of 210 million tonnes per annum over the medium term.

Now, the current hematite life-of-mine plan supports supply chain capacity, that's mining, processing and rail of more than 190 million tonnes.

Iron Bridge continues to target a ramp up to its nameplate capacity of 22 million tonnes per annum. To the extent that upstream supply chain capacity exceeds port outload, we have the flexibility to optimise volumes and product mix in response to market conditions.

Providing visibility, as part of our FY27 market guidance disclosed today, total shipments of 197 to 207 million tonnes. We've guided for Iron Bridge shipments in a range of 11 million to 14 million tonnes. Further, we've stated that Iron Bridge is anticipated to achieve an annualised production rate of over 16 million tonnes during FY28.

Finally, on Iron Bridge, after considering the revised ramp-up schedule and a range of production scenarios in the carrying value assessment as at 30 June, Fortescue expects to recognise an impairment charge of approximately US$525 million after tax in its FY26 financial results. Importantly, this charge is non-cash and it will be excluded from underlying net profit after tax, which is of course, the basis for Fortescue's dividend policy.

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I'm sure there'll be some questions but before we go to Q&A, I'll hand over to Gus Pichot to make some comments regarding our engagement with China Mineral Resources Group. Over to you, Gus.

Gus Pichot

Thank you, Andy, and good morning to everyone. I just want to briefly address the recent developments related to China Mineral Resources Group. It is the latest example of trade friction affecting the iron ore industry, undermining the stable supply of iron ore for China.

We hope to see a return to normal market conditions as soon as possible. It would be the best outcome for long-term partners, our steel mill customers and the iron ore industry. For decades,

Australian companies have supplied China reliably, competitive and in good faith.

That trade has supported Australian jobs, Australian businesses and essential public services. It has also provided China with a secure and reliable supply of iron ore that helped drive its extraordinary industrial growth.

This week, we heard just how important this partnership still is, as we welcomed Chinese industrial leaders to Perth and the Pilbara for the Boao Forum for Asia. We continue to engage with CMRG through respectful, patient and good-faith negotiations, grounded in fair and proper market prices.

This Company was founded on fair market practices, and we believe it should continue that way. Back to you, Andy.

Andrew Driscoll

Thank you, Gus. Darcy, can we please go to the Q&A part of the call?

Operator

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Kate McCutcheon with Bank of America. Please go ahead.

Kate McCutcheon

(Bank of America) Hey, good morning and happy Friday. On the port outload, so the top end of your guidance assumes you get to your permit limit. What is needed to sustainably get to that 210 million tonnes and how do we think about the timing? What exactly does medium-term mean? Because if I look at consensus, the street has you doing 210 million tonnes. So just anything you can say around the timing, any capex, what's needed to get there?

Dino Otranto

Yes, thanks, Kate. Dino here. I'll lead off and then hand over to our Director of

Integrated Operations, Katie Charuga, who joins me here in Perth today. So, our licence limit is

210 million tonnes and we've guided today a top end of 207 million tonnes. We always try to keep the range. As true Fortescue spirit, we do not want to cap ourselves in the 12 months.

However, to talk to the mid-term capability that we see and also address your capital question,

I'll hand over to Katie.

Katie Charuga

Thanks, Dino. Good morning, everyone. Yes, look, as Dino and Andy have said, between really in the next three years, we'll be undertaking a period of planned lifecycle maintenance at our port operations.

That's really for the new assets such as the tippler cells, which is part of our train unloading circuit, as well as some reclaimer and ship loader components. This lifecycle maintenance is

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MUFG Corporate Markets

A division of MUFG Pension & Market Services largely on our original and early infrastructure, and some of which have been in operations since

2008.

So our annual shutdown hours will increase over those few years, really in line with Fortescue's disciplined approach to our operational excellence and plant reliability to really protect the long-term reliability and performance of our port infrastructure.

Beyond that, we're always looking at ways that we can optimise and as Andy said, exploring those pathways to 210 million tonnes. This includes things like technology, AI advancements, productivity initiatives, as well as some small capital investments in things like surge bins and chute upgrades and with that lifecycle maintenance that I've just discussed to ensure that ongoing reliability of our port infrastructure for us to get to the 210 million tonnes.

Kate McCutcheon

Okay, so medium term, I guess. Then just on the cost with the stepping up versus midpoint year on year, if you think about a waterfall bridge from last year to '27, we have some benefits from the decarb and then some inflation buckets. Can you talk to what that waterfall would look like?

Apple Paget

Yes, thanks Kate. Look, before I address that directly, I just want to be very clear that cost discipline is fundamental to Fortescue. We remain relentlessly focused on what we can control, continuously challenging our operating costs and also opportunities to improve productivity and efficiency across the entire supply chain, as Katie mentioned, right?

That focus supported by our unique culture of innovation and empowerment is what has sustained our industry-leading cost position through the cycle, and this remains a key focus of mine. Over the last two years alone, we have saved US$750 million relating to C1, translating directly into free cash flow.

These are permanent recurring cost reductions. They're not deferrals, right? But in terms of your waterfall, look, we have an increase in FY27 C1 unit cost guidance. It really reflects three principal drivers. Firstly, we are seeing inflationary pressures across the cost base particularly in labour, contractors and key consumables across the industry/ There are also flow-on impacts from the ongoing conflict in the Middle East, including higher diesel prices and increased costs for explosive inputs such as ammonium nitrate, which are sensitive to global energy fees, bulk and freight costs.

Secondly, there is a timing impact from opening inventory. Some of the tonnes sold in the beginning of FY27 will carry production costs incurred in the latter part of FY26 when input costs were higher. Those costs are recognised in C1 when the product is sold, as C1 is a cost of sales measure rather than production. I think everybody knows that.

Finally, FX. Our FY27 guidance is based on an assumed exchange rate of around AUD:USD 0.70 compared to the average rate experienced in FY26 of AUD:USD $0.679. Just as a reminder, Kate, the sensitivities of C1 for every US one cent movement in FX, impacts C1 unit costs by approximately US$0.16/wmt.

Operator

Thank you. Your next question comes from James Redfern with RBC. Please go ahead.

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James Redfern

(RBC) Good morning, Dino and team, James here. I was going to ask about the port capacity and the C1 cost, but you've covered that. So maybe switching to sustaining capex, please. The guidance for FY27 is for between US$2.3 to US$2.7 billion, up from US$2.0 to

US$2.3 billion in FY26. So just maybe if you could please make some comments regarding the increase in sustaining capex for FY27. Thank you.

Apple Paget

Yes, thank you so much. I'll just build on what Katie was saying. Look, the increase in sustaining and hub development capex reflects the next phase of investment required to deliver the updated life-of-mine plan announced last year, including integration of Blacksmith into our operating portfolio. It does also include items, as Katie said, around planned works across our port infrastructure as outlined in the quarterly.

James Redfern

Okay. Great. Thank you very much. That was all for me.

Operator

Thank you. Our next question comes from Rahul Anand with Morgan Stanley. Please go ahead.

Rahul Anand

(Morgan Stanley) Hi, team. Good morning. Thank you for the call. First one is on

Iron Bridge. Just wanted to check that and test that a bit more, if I may, and perhaps it's for Dino and the rest of the team alongside.

So obviously, there's a bit of a delay. Your previous guidance was for the second half of FY27 to be at 16 to 20 million tonnes. We're now at 16 million tonnes in FY28. You've already pointed out that the nameplate is unchanged.

You have also talked about mid-term costs today being a bit higher at the asset. So just want to maybe come back to Iron Bridge and kind of understand, number one, why are the costs higher mid-term? If you will get to nameplate, like, what are some of the factors that are driving it?

When do you envision to get to that nameplate?

Are you comfortable providing that guidance today if the port constraint didn't exist? Because obviously you're making a choice between hematite and magnetite, I understand that. But when could you get there? Thanks.

Dino Otranto

Thanks, Rahul. We also got Graham Howard, the Director of Mining Operations on the line today, who has been instrumental in commissioning Iron Bridge, who will have the most up-to-date information.

But as you point out, it is a complex issue and this is why we took a good three months to land on the messaging around our portfolio optimisation. What's great about the portfolio is we have many options. Although we took a hit today on the valuation of the Iron Bridge CGU, as an overall business I hope you guys all realise that from a value accretion perspective, I think it is a positive announcement.

Because coupled with an updated timeline of Iron Bridge ramp-up, we're more than making up the tonnes of hematite, which has a larger margin. So I'm really pleased that the circuit can accommodate that.

Just on the cost guidance, it was some years ago that we announced the mid-US$40/wmt life- of-mine number. So if you adjust that for inflation over the years, it's not too far off guidance now

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MUFG Corporate Markets

A division of MUFG Pension & Market Services that we know a little bit more about the asset. With that, I'll hand over to Graham to add a bit more.

Graham Howard

Thank you, Dino, and thanks for the question, Rahul. As Dino stated, yes, a lot of our costs were at a point in time. Now we've learnt a lot more around this facility. Most of our costs sit in our maintenance and our operations with Iron Bridge. It is a very unique process flow.

I'd just like to touch on a couple of things if I could, Rahul, just to give a little bit more colour through the last quarter. We've had some significant uplift in performance across our air classification circuit, which has been fantastic. We're now at 85 per cent of design. We're also seeing some really good moisture levels out of our concentrate handling facility and that's really linked to our process optimisation across our entire supply chain. It allows us to really build and destroy those stockpiles at port and increase flow, at very low capital, our throughput through our port facilities.

You asked about nameplate. Look, our focus is 22 million tonnes as soon as possible. We've guided the market this quarter and we'll continue to update as our process flow improves over our next quarters. Thanks, mate.

Rahul Anand

Got it. Thank you, Dino. Thank you, Graham. Look, I'll ask a second one, which will be a follow-up to this, I guess, and take it into perhaps pricing. But before I go there, I mean I understand the margin equation on hematite, but obviously, Iron Bridge is a largely fixed-cost business as well, and that's, I think, what the concern is, to have that running, and obviously, it's a better product.

But on the pricing side, in terms of revenue realisations, just noting that there was – price realisation came in at about 97 per cent for Iron Bridge and 84 per cent for hematite, obviously

CMRG is ongoing in the back. But is there any product grade differentials at all or anything you'd like to highlight in terms of revenue realisation side that you're comfortable talking about and how we should think about that going forward?

Dino Otranto

Thanks, Rahul. I just want to call out maybe your assumption on the fixed cost ratio. I know industry would expect that, but we will respond and make some of those sticky costs variable to ensure margins are protected. On the market realisations, I've got Ben Kuchel here, Director of Sales Marketing to make some commentary.

Ben Kuchel

Thanks for the question. Like I think, first of all, let me just reiterate that obviously our product pricing moves around all the time. It's important that our product pricing ensures that our products remain competitive and ultimately offer good value and appropriate value to our customers.

That's true of Iron Bridge product, it's also true of our hematite products. If I just pick up the Iron

Bridge aspect first, Q4 saw elevated concentrate inventories across the global supply chain, which certainly depressed pricing, specifically for concentrates.

That was partly offset by continued strength in high grade sinter fines demand. So we need to also reflect that ultimately Iron Bridge pricing is a function of multiple factors. In relation to the hematite realisation, I mentioned the need to stay competitive and obviously there was continued competition, as there always is, in Q4.

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Discounts did adjust throughout the quarter to ensure that our products were appropriately priced, given changing market dynamics. Coke prices, for example, pushed up through the quarter, which certainly impacted the competitiveness of lower grades. I think the other factor here that's worthwhile acknowledging is that depending on the month of timing of sale, you will get some shifts in realisation versus an arithmetic average.

Operator

Thank you. Once again, if you wish to ask a question please press star one on your telephone. Your next question comes from Paul Young with Goldman Sachs. Please go ahead.

Paul Young

(Goldman Sachs) Yes, morning Dino and team, I hope you're all well. Can I dig into the negotiations, what you can comment on with between with CMRG at the moment? I think we broadly understand to somewhat the dynamics happening at the moment and the backdrop in iron ore at the moment.

The market is particularly weak. But we've seen some of the other players in the market agree to sort of agency fees on top of value-in-use discounts. We've also seen CMRG really go after volumes that are handled by offshore traders. So the question I have is, how do you actually avoid super special fines being particularly targeted and actually, how do you avoid actually attracting agency fees for the next 12 months?

Gus Pichot

Paul, yes, you mentioned a lot of dynamics in front of us, yes, and that we are going through at the moment. As I mentioned when I opened, on the first basis, before discussing about strategies of how to mitigate the negotiation for our best, I think we just – I reinforce that we want just a fair market practice.

That's a big statement that we want to just put through. Regarding the different negotiations and how other companies have done or how they negotiate, we're going to try the best that we can to just, like Dino mentioned and Ben, we're going to just do the best that it takes to just place our product with the best margin possible and that's what we're going through at the moment. Ben, do you want to add anything else?

Ben Kuchel

Thanks, Gus. I probably wouldn't add very much more than that. You know, we will continue to focus on delivering the appropriate value for our products across multiple sales channels.

Paul Young

Okay, thanks Ben, thanks Gus. Then can I, a question for Apple on the unit costs again and maybe revisit that. Apple, I think that the unit cost guidance implies around a 10 per cent increase in Aussie dollar terms year-on-year.

You stepped through the uncontrollable cost components of that, diesel, currency, I guess market inflation with respect to labour, et cetera. But are there any controllable costs that are increasing year on year? For example, strip ratios, haul distances, anything that's actually controllable that related?

Apple Paget

No, they're fairly constant. What you said just then is, and my three sort of drivers in the waterfalls are the main items.

Operator

Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Fintan Collins with UBS. Please go ahead.

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Fintan Collins

(UBS) Thanks guys. One area that's become increasingly important to global investors is this intersection between resource development, heritage management and long- term social licence.

You've recently announced the PKKP co-management approach and are also working through the implications of the Yindjibarndi compensation ruling. More broadly, has Fortescue's experience over recent years changed the way you approach heritage protection and Traditional

Owner engagement and do you see stronger Indigenous partnerships becoming a competitive advantage in securing future project approvals and resource development opportunities? Thank you.

Dino Otranto

Great, great question. I don't think – I mean the headline would be, I don't think it's an area we see us needing to take a step forward in our competitive advantage. I think it is absolutely core to our existence from day one that we've had a very, very open, collaborative relationship with all First Nations that we work with. We have a multifaceted approach, including value development through commercial opportunities in our Billion Opportunities program. We're just about to tick over A$7 billion in commercial opportunities. That's massive, certainly leading the industry in that area. Our Aboriginal employment statistics are nearly 15 per cent of our total workforce, which again is significant compared to the Aboriginal representation of around 2 to 3 per cent across the population.

We have many, many different areas of leadership development. What we've just announced with PKKP – and it's certainly not the precedent, it's now the way we do business, co- management is the way of the future. What we do is we share the long-term vision of our operations now with proponents, and we share in the future strategy at a macro level, and then that then filters down through the tactical transactional approvals regimes, but we certainly feel that when we walk hand in hand to the government versus a tactical and more adversarial approach that has, unfortunately, been somewhat of the norm in the industry, we have much, much better outcomes.

Fintan Collins

Thank you. It's good to hear. Then, just from an accounting perspective, just on the Yindjibarndi compensation payment and the associated exceptional, had Fortescue previously provisioned for and component of this liability or should investors think about the vast majority of that flowing through as a new charge in the FY results? Thank you.

Apple Paget

Yes, thank you. There were no previous provisions for it, but this will come through the FY26 financial report.

Operator

Thank you. Your next question comes from John Tumazos with John Tumazos Very

Independent Research. Please go ahead.

John Tumazos

(John Tumazos Very Independent Research) Hello, this is John. Good morning to you. Has the West Pilbara Fines as planned decline, please describe the evolution of other products to fill that niche in the product portfolio.

Dino Otranto

Thanks, John. Great to hear from you again. I'll hand over to Ben, who can talk about the product strategy at large, but just a reminder that we have announced that our product mix has changed in response to the market and also our overall value proposition, and we have been slowly removing and reducing the volumes of WPF for a while now. But Ben, if you want to talk about Fortune Fines.

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Ben Kuchel

Yes, happy to do so. Thank you, Dino. Thanks for the question, John. As Dino mentioned, the transition from West Pilbara Fines was flagged previously and the last West

Pilbara Fines shipment, in the near term, certainly, shipped in FY26. Moving forward, we're introducing a new product, what we're calling Fortune Fines. Shipments have started this quarter, so for the first quarter of FY27, and those volumes will be approximately 12 million tonnes in the coming year.

This is a great opportunity for us to target a new segment in the market, or a segment in the market which we feel will see good demand for the type of product as Fortune Fines.

Operator

Thank you, your next question comes from David Feng with CICC. Please go ahead.

David Feng

(CICC) Hi. Good morning, team. Thanks for the call. I just have a question on Alta

Copper. Could we have any update on the recent progress of the project in Peru and what would be our priorities in FY27? Also, we know that Peru just completed their general election, so shall we expect any positive changes on the whole business environment, especially regarding your project development in Peru?

Gus Pichot

David, thank you very much for your question. Yes, our team was present on the assumption of the new president, but we've been working very hard the last couple of months since we acquired the Cañariaco project. It's looking extremely promising, but moving very quickly, and we are focusing on our technical reviews, and we expect, fingers crossed, that we will start drilling by the end of next year. We've been engaging with communities there, as you know, that was one of the issues when we took over, and I think it's going in the right direction.

So again, fingers crossed, with the new wave in government in Peru, it’s looking promising.

David Feng

Good. That’s great to hear. It would also be great if we can have a little bit more updates on your exploration initiatives in Argentina and Kazakhstan. Thank you.

Gus Pichot

We've been working very hard in Argentina and Kazakhstan on copper. We are drilling in San Juan province in detail. Also, in Kazakhstan, we're doing drilling as well. We will communicate when things progress in both Kazakhstan and Argentina, because they are key to our copper strategy.

Operator

Thank you. Your next question comes from Glyn Lawcock with Barrenjoey. Please go ahead.

Glyn Lawcock

(Barrenjoey) Good morning, Dino and team. I just wanted to explore the sustaining capital number a little bit more. I know you said, next phase of development,

Blacksmith, work across tipplers, stackers, reclaimers. I suspect that’s probably going to on go for a couple of years.

That, plus your decarbonisation continues to step up. So, should we think about what you're spending now is maybe going to be consistently this high for a little while, and does that money that we're spending on all the refits, refurbs at the port, will we need additional capital, you think, to get to that 210 Mtpa, or that's all, it's minimal capital, it's just going to be debottlenecking? That's my first question. Thanks.

Apple Paget

Thanks, Glyn. We do only guide one year out, as you know, and you’ve absolutely nailed it in terms of the few items of the year-on-year increase. The other thing that I do want to

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MUFG Corporate Markets

A division of MUFG Pension & Market Services call out is FX. Obviously, with a step up in FX, that also increases it. But look, it's going to be lumpy. You're going to have gives and takes. But in terms of the overall port infrastructure, I think

Katie's just mentioned exactly that, it’s going to provide everything. Anything incremental will be done in a very capital-light way.

Glyn Lawcock

Thanks. Then, my second question, maybe for you, Dino, obviously, your neighbour's suffering a little bit, again, once they had CMRG, now they've got the unions. Are you still managing to keep your workforce quite un-unionised and you're sailing through this at the moment?

Dino Otranto

We feel for what's happening with BHP, and the industry landscape has shifted dramatically, and we are certainly not immune to any of the same issues. We do what we can, and we've always maintained a very, very strong relationship, a direct relationship, with our employees. We have very, very low turnover compared to our peers, and particularly for being in the Pilbara. So, we are very confident that our culture will get us through this. Certainly a period of focus for the unions in getting back into the Pilbara.

Operator

Thank you. Your next question comes from Adithya Mohan with Standard Chartered

Bank. Please go ahead.

Adithya Mohan

(Standard Chartered Bank) Hi everyone. Good morning. As I understand, the discussions with CMRG are ongoing, right? In case the disruptions persist, may we check on the risk of inventory buildup, and if so, are we able to redirect volumes to alternative markets, please?

Ben Kuchel

I'm happy to take that question. I think it's well recognised that China's a major market for our products, but we've always been present in other markets globally, but particularly in Asia. We continue to work with customers across established markets and new markets, exploring additional demand wherever that presents, and that will no doubt continue well into the future, both near term and longer term. Southeast Asia, of course, remains a major growth region, and India is a significant market in time. In both areas, likely there will be an ongoing area of interest to Fortescue.

Adithya Mohan

All right. Thank you.

Operator

Thank you. Your next question comes from Lyndon Fagan with J.P. Morgan. Please go ahead.

Lyndon Fagan

(J.P. Morgan) Thanks very much. The first one I had was, just on the Iron Bridge price, this doesn't seem to be getting the value-in-use premium that we discussed at the site visit several years ago. Would you say this is the kind of new norm going forward or is there something constraining that price which is temporary?

Dino Otranto

What we discussed, Lyndon, a few years ago was creating options. At that time, the general market sentiment was to produce a higher grade. We entered that market with Iron

Bridge. The majority of our portfolio, I think, does cater for a scenario which is actually playing out now, where steel mill margins are somewhat suppressed, our product therefore is in good demand. Hence, I hope people see on the call today that although we took the impairment on

Iron Bridge, we’re more than making that up with more valuable tonnes to the market, which we probably see now is going to be the new norm.

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You've got lots of steel mills in the game. The whole reason why we're having this pressure with

CMRG is because of the margin squeeze on mills. Again, our product is well suited for that market, and should the situation change, where the premiums go higher for Iron Bridge, then we have an option to look at ramping that up and curtailing a bit of hematite.

Lyndon Fagan

Thanks, Dino. The other one I had was on data centres. I don't think we've been talking about it today, so I'm wondering what's going on with the whole data centre thing. Have you had anyone else in helicopters looking at the Pilbara, wanting to build them? What's going on with your power plans to support that initiative, which seems to be getting a lot of market discussion but we're not really talking about it as much today, so just thought I'd check in.

Dino Otranto

Thanks, Lyndon. Obviously, a lot of scuttlebutt around data centres in Australia and globally, it's going around. What we have announced is the further investment in our green energy grid. We're proud of the fact that we think we can build them faster and cheaper than anyone else. That's evidenced through decarbonisation investments that we've done. We see that model then being applied to jurisdictions that Gus will lead around the world.

Whether or not the end customer is a data centre or PPA-style agreement or energy into a steel, a green metal mill or an ammonia plant, again, all of that hinges on getting that cost of green electrons down. We feel very confident that the Pilbara is a good first start for that, where you've got great sun, wind, you've got Fortescue who has its internal EPCM capability, we've got thousands of folks that we can deploy to expand our buildup. There are proponents flying around on helicopters and planes and everything in Australia at the moment that are extremely interested in that capability.

Operator

Thank you. Your next question comes from Paul Young with Goldman Sachs. Please go ahead.

Paul Young

Hi again, Dino. Thanks for the follow-up. Can you talk a little bit about the agreement with the PKKP and what that might mean for the reserves and mine plan, life-of-mine at Eliwana, and the dynamics with Wyloo North and the need for that project, just the Western

Hub and what the significance is?

Dino Otranto

You're probably one step ahead of it at this stage. Our focus is getting Blacksmith into the portfolio for the mid-term. That unconstrains the strip ratios we spoke about in the last call and also backs our unit cost position for the mid-term. That's all our focus. We're working on a number of partners in that space.

What then PKKP, the co-management agreement, does focus on is the Eliwana region and working together to make sure Eliwana over the long term continues to have healthy volumes.

That will then naturally flow through into potential further hub development capital, which I think is what you're really interested in, in the mid-term. But I wouldn't get too excited on any material changes. Blacksmith is the key value unlock that we have.

Paul Young

That's clear. Then, a question for Apple on the decarb spend. You haven't disclosed exactly what FY26 decarb spend was, I don't think, but it was probably the lower end of your guidance for FY26, and it looks like guidance I don't think has changed for FY27, it's still US$0.9 billion to US$1.3 billion. I presume part of the US$700 million of additional spend on that solar plant’s included, for that third party’s included in that guidance. What's happening within that

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MUFG Corporate Markets

A division of MUFG Pension & Market Services program? Does this all mean that FY28, FY29 is the peak year of spend and the green trucks, electric trucks, I should say, are more FY28, FY29?

Apple Paget

Thanks, Paul. There's a lot in there, but the green grid is not in decarb that we announced a few months ago, it's in other projects. We have ranged up in FY27 to US$1.3 billion, and as we've said for FY26, we are in the lower end of the range, and all the details will be coming up in the next few weeks. But as a reminder, in terms of spend, at December 2025, we had incurred approximately US$1.2 billion of the US$6.2 billion envelope. You can do the maths.

Remaining spend averages around US$1 billion a year, but of course, this spend will be lumpy, and you'll see the full breakdown of the capex next month.

Operator

Thank you. There are no further questions at this time. I'll now hand back to Mr

Driscoll for closing remarks.

Andrew Driscoll

Thanks Darcy and thank you all for joining the call. As you've heard, really, really outstanding full year operational performance, record shipments, exceptional cost control, capital discipline and strong free cash flow generation. Thanks for your time today. We look forward to speaking again in less than three weeks, 20 August, the release of our full year financial results.

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