Fortescue Ltd

XMUN:FVJ

Earnings Call Analysis

Earnings Call Transcript 2023-Q2

[John Andrew Forrest, executive]

Thank you very much. Well, Steve's welcome all. Certainly, it's great to be back with you and I can say that I have loved my time again. And that it might be being this company's Chief Executive. As you know, we've only had 3 cheif executives in our 20-year history. And I will be gladly handing over to Hutch and [indiscernible], for our next quarterly half-yearly annual results team. So you won't hear that much me, but all of you can contact many times, if you like. I've loved this short period being able to speak with you like this. So it was only 2 weeks ago that we presented results, which included our highest ever half year shipments of 96.9 million tonnes. I won't repeat or we discussed it, but I would like to say we are consistent. We delivered very strong results while at the same time, we challenge ourselves further to step beyond [indiscernible] beyond fossil fuel to deliver across society's highest expectations. This, of course, has made us one of the highest, if not the highest value-returning companies on the Australian Stock Exchange over 20 years. We've consistently delivered returns to our shareholders, building on the almost USD 22 billion since we started this company from scratch, 2 men and a dog and we used to argue which one was the dog. Today, we've announced a fully-franked interim dividend of $0.75, exactly in line with our guidance of between 50% and 80%. We've also maintained our position, as the world's largest iron ore produced while decarbonizing our operations profitably and becoming a global green energy, metals and products business. And this is all team, all while delivering record iron ore shipments and finishing off construction on the massive groundbreaking Iron Bridge project.

As you know, this has been a mammoth effort by our own construction teams, I'm immensely proud of and who with the successful experience of turning Iron Bridge around, executing [indiscernible] and all our other very successful projects, match fit to go into arguably the highest growth period in the company's history through consolidating our Pilbara and our African operations, and delivering major construction projects around the world for green energy. Now I have to say that with Iron Bridge in particular, like with FFI, we do the technical hard work first. We have been working furiously on green technology testing now for 3 years.

You all know that we successfully piloted at commercial scale, our Iron Bridge because its breakthrough technology never been brought on in such a large plant and certainly not in magnetite, but it worked perfectly at our commercial scale, USD 500 million pilot plant. So we are expecting great things when we start to fully commission and ramp up Iron Bridge. In Gabon, and I don't want to undercook Gabon. Gabon is a huge iron ore province -- undeveloped. And the Gabonese government didn't put us up to tender, didn't ask us to compete. They simply did what some great governments do and do their own research, their own global investigation and then they invite the company they think is the best to develop their iron ore industry, and we're deeply honored that the Gabonese government invited for us [ to ] develop the [ Billinge ] project, which will, I believe, because this is how we roll, have a very positive impact both on the Australian hematite iron ore industry; and three, the differences in minerals and metals within each other's [indiscernible] have a very positive effect on the Gabonese in or industry as well. It will dovetail into our Pilbara operations, maximizing the mineral content to our customer satisfaction and extend and optimize the mine lives and efficiency of both our Pilbara and emerging Gabon metal complexes.

And to do this, we're very far to see this. To do this, we're implementing a production plan now, a production plan that with our extreme sensitivity to community and endemic [indiscernible] studies, we believe we'll see our first iron ore shipped this year, not this decade, not next decade, this year. This is possible because we're using an existing road, and we use an existing rail line, which limits the possibility of environmental delays as these have already, of course, been approved because they're already operating. The necessary equipment, which normally has very long lead times for a new start, could be many, many years, is available to Fortescue right now. We're utilizing our residual crushing and screening plant, residual haul trucks, railcars and our own locomotives. And it's due to Fortescue's clear and unambiguous industrial leadership away from climate change that we have attracted respect from governments around the world. Together, we're now switching on the world's first green iron facility through an electrolyzer and expanding our major automation center and our green fleet Tech Hub in WA that has been responsible for breakthroughs that our company has made in zero pollution trucks and mobile equipment, including advancing train and ship engines.

Remarkably, this is the key, ladies and gentlemen, remarkably over this intense period of growth, we've actually reduced our debt -- we've improved on what was already a very strong balance sheet and continue to create great value for all our stakeholders, including our shareholders. When Fortescue does well, ladies and gentlemen, the entire Australian community does well. We consistently contribute hundreds of millions to our state and federal government coffers every month. I'll now pass to a Hutch. Hutch, how is [indiscernible] going mate?

[Mark Hutchinson, executive]

Good. Thanks, Andrew. We really are in a quite a unique inflection point for our business at the moment as we work extremely hard to bring at least 5 projects to FID this calendar year. No one has done what we are on track to do, and that's really to deliver green energy and green molecules at scale on a global basis. We totally believe that the global market is ready and waiting for our product. And actually, Andrew and I have traveled a bit over the last few weeks and including Davos. And it was really clear to us that really we're the only game in town doing multiple projects globally.

As we see the world and we kind of learn every day, really, it's we see 4 ecosystems building. The first is in the United States. And there, we have the Inflation Reduction Act, which has really kind of -- has created a serious advantage for product in America. This will be a very domestic focus market, and they will produce green energy and green hydrogen locally for that market. The second market is Europe. And this week, we saw very positive signs in Europe with a longer way of delegated act published by the European Commission. This act will create a clear definition for renewable and green hydrogen, providing the certainty that is needed for producers, manufacturers and investments to do business in the EU. We will be very much part of the EU ecosystem, and we also will supply Europe from places like Canada, Latin America, North Africa and the Middle East. The third ecosystem developing is in Asia, where Singapore, Korea and Japan will be big markets. Again, we will supply these markets from Australia and India as well as possibly Canada and Latin America. The fourth market is China, which we just can't simply afford to forget. We will be traveling to China later this year, and to better understand and engage the local markets there. So in the United States, we're very much going to focus on Texas, Arizona, California, and this is where there's an immediate need for product.

In Europe, we plan to focus initially on places like in Norway because what we're looking for is really good, affordable energy, and we see some really wonderful opportunities in Norway to get going. In Latin America, Brazil is going to be a focus. In Africa, we're looking at places Latin Namibia and Kenya. In North Africa, Morocco as a target; and the Middle East, we've made great progress in Egypt and Jordan. And of course, Australia is a big priority for us. So as you can see, we're really creating a global business here. Now just projects aside, it's also important to acknowledge that we're making great progress on technology. This week, we actually -- our research and development team had a major breakthrough on green iron and produce some in our Western Australia facility. So we're making great progress on many breakthroughs. And all of this is to aim to build a global business that will continue to deliver returns for our shareholders well into the future. And with that, I'll pass over to Andy.

[John Andrew Forrest, executive]

Thank you, Hutch. Good morning all, and look it's a real privilege for me to represent the finance team and step you through the key highlights of what was another period of strong earnings and cash flow generation. Starting at the top line. Revenue for the half was $7.8 billion. Our focus on cost management on productivity contributed to EBITDA of $4.4 billion at a margin of 56%. Now this represents EBITDA of $52 per dry tonne sold. And in fact, it's the eighth consecutive half year period, generating a margin north of $50 a tonne. That's a result of Fortescue's industry-leading cost position and our integrated sales and marketing strategy, and it's achieved by focusing on what we can control. We reported NPAT of $2.4 billion for the half. And for those on the webcast, you can view the reconciliation in the first -- to the first half of last year to H1 FY '23 in the waterfall on this slide. It's a clean and transparent set of numbers. You can see all the moving parts, including the impacts of price, volume and costs. And on the next slide, next slide, it's clear that the business continues to generate exceptional cash flows with free cash flow generation of $1.6 billion in the half, and that's capital investment, including growth after capital investment, including growth of $1.4 billion. The balance sheet remains really strong, with cash on hand of $4 billion, which includes reserved cash of about $1.6 billion, the payment of the interim dividend that was declared today, and a commitment of around $1 billion to FFI that's consistent with our capital allocation framework.

Now gross debt was unchanged over the period at $6 billion. You can see that we're positioned inside of our targeted investment-grade credit metrics, and we have a well-balanced debt maturity profile. And our liquidity is further supported by an undrawn revolving credit facility, an undrawn term loan. Disciplined capital allocation is a core competency, and it's really important to us. You can see from this slide on the webcast that since FY '14, and that's the first year that production exceeded 100 million tonnes. Fortescue generated $48 billion of operating cash flow. We've invested $16 billion. We've repaid $9 billion of debt and declared $23 billion of [indiscernible] dividends. That equates to almost 70% of net profit after tax over the period. So as you can hear, we've achieved outstanding operating and financial results for the first half of FY '23, and we're really well placed to again deliver on our guidance. On that note, Ashley, I'll hand back to you to facilitate the Q&A where we welcome your questions.

[Operator]

[Operator Instructions]

Your first question comes from Rahul Anand with Morgan Stanley Australia.

[Rahul Anand, analyst]

Look, the first one I wanted to ask was perhaps for Hutch. Hutch you -- you've talked about the 5 FID projects for FFI this year. Would you be able to provide perhaps a bit more color which ones coming up first? And how is that progressing? A bit more color around that portfolio of the 5 projects, perhaps, I mean, it's a broad-based question, but I guess a bit more visibility would be much appreciated. That's the first one. And then I'll come back with a second.

[Mark Hutchinson, executive]

So look, thanks for the question. Look, I think we have a number of kind of horses in the race, and that's what I want to see at this point of the year. So we have a number of projects we're working on. America is going to play a big part of this. As I mentioned, Norway, Australia is going to be a big part of that as well. And we have another few projects around the world, including Africa. So look, at the moment, I really want to run to get the horses to run and see who gets to the finishing line there. So -- but I can absolutely say we have certainty that we'll see 5 by the end of the year.

[Rahul Anand, analyst]

Okay. And any further color in terms of are these hydrogen projects? Are these sort of green ammonia? Like is there anything specific that you're targeting in these regions?

[Mark Hutchinson, executive]

So look, I think it really does depend on the markets. As you -- as I mentioned in the discussion just before, the United States is a very different market than the rest of the world. It's going to be domestic. So it's going to be probably more like a hydrogen play, just plain hydrogen and because that's what the buyers want. So Texas, there's a huge hydrogen market, they're gray and our job will be to try and replace that with green. So you will actually just produce hydrogen and replace that. Other places where we're going to export green hydrogen, you're probably going to turn those to ammonia. So for example, Gibson Island, which is in Brisbane will be an ammonia facility green hydrogen green ammonia to export.

[Rahul Anand, analyst]

Perfect. Look, the second question is around Gabon. And I think it might be, Andrew, that might be able to help on that one. I just wanted a bit of understanding. I mean, obviously, quite interesting to see that the existing infrastructure is going to allow the first shipment pretty quickly. I wanted to understand with that existing infrastructure, what type of run rates can you achieve? And then once you do get the environmental approvals, where do you envision this asset getting to in terms of size of production and product grades, et cetera, once you have all the kit and all the approvals in place?

[Andrew Driscoll, executive]

Yes. Look, excellent questions. We're getting to know the existing surface infrastructure, road and rail. We've been pretty conservative [indiscernible], let's take the initial operation to 2 million tonnes and just trial everything, learn like crazy, we don't -- we are completely comfortable with the operation being put together with [indiscernible], mate. But it will be safe. Our priority is safe. And -- we'll get into production, obviously, at a speed which you see in developments in Africa, which is breathtaking. And do that because of the -- of the ability to provide a very flexible, fast, efficient mining company with excellent infrastructure and export those skills and equipment straight into Gabon and use roads and use rail, which all exists. And of course, you'd like me to speculate, and that's fair, Rahul, on scale. Look, you just got to go and form, mate. I mean we did cloud break, it's 40 million tonnes with Christmas Creek, 50, we looked at Solomon at 60. Each one of these has overperformed, nearly 1 of 30 overperformed. And we have -- the ability, we believe, if we wanted to probably tell show down at around 50 million tonnes and grow up from there. But look, it is speculation rule. We think we've got a minimum of 1.5 billion tonnes of high-grade close to surface ore. It could be much, much larger than that, but it is a huge iron ore province, which has totally taken the world by surprise.

It's the last one remaining undeveloped. It's due to the Gabonese government selection as opposed to fighting it out the court or this or that, which colleagues have done with the speckled history of other African projects. This has been immensely clean and efficient. It comes from, of course, decades of understanding the deposit, but no development being encouraged, whereas with partake, we were chosen to develop the project and develop it quickly environmentally sound deep respect for endemic species. That's exactly what we're doing.

[Operator]

Your next question comes from Hayden Bairstow with Macquarie.

[Hayden Bairstow, analyst]

Just a couple for me. The first one, just on the capital allocation, Andrew, on the dividend. I mean your part ratio is back down to 65, you do talk about $1 billion of unallocated capital and FFO. I mean, is this effectively a precursor or these 5 projects coming and there'll be a much bigger capital commitment in FY '24? And just -- and where should we think about that part ratio given you're moving into starting to spend some real money?

[John Andrew Forrest, executive]

Look, Hayden, you've been around it a long while, mate. You know that a 65% payout ratio would have just been breathtaking on a few years ago that is a very high NPAT payout ratio relative to what we've seen. Now, of course, mining companies around the world after making disastrous investments in takeovers and the like have pulled in their horns and they're followed [indiscernible] by saying, actually, we need to be really disciplined and we need to stop being so agonist to say that shareholders can't manage money better than we can. And we broke the mold as you know, Hayden, with providing capital growth and income, which, as you know from the analytics rule of the past, you could have either one or the other. And we broke that mold, Hayden. That 65%, I think it's really strong. Yes, it makes sure that we've got huge amount of headroom, but I'm having no shareholder complain that 65 is not generous.

[Hayden Bairstow, analyst]

Okay. Great. And the second one, just on, I guess, the FFI projects in the Pilgrim and is the ones I guess you guys can control because you're running within the iron ore business. I mean, where -- what are we seeing on the ground and the next set of 12 months. Is it largely around the solar farm at Solomon? Or is there sort of other projects that we'll actually see physical construction as part of that sort of [indiscernible] plan this year?

[John Andrew Forrest, executive]

Well, I know Hutch will answer a broader question about your specifically, but you do mention projects in Pilbara. Iron Bridge is satisfactory completing. We've had excellent performance from all our projects. We're adding 600 million tonnes of iron ore a year and only using 200 million tonnes. I mean our Pilbara operations have never looked stronger nor more exciting.

And that's a perfect environment, but Hutch to have to cover and match that excellent construction and operating performance. We hereby publicly challenging to do so. And Hutch give us a run down.

[Mark Hutchinson, executive]

Bring it on.

[John Andrew Forrest, executive]

Bring it on.

[Mark Hutchinson, executive]

So really focused on the [indiscernible] for the Pilbara. Really, that is the #1 priority for the company. We came out and told the market will spend $6.2 billion on fully decarbonizing this company, and we're off to the races. And that's going to -- if solar is going to be wind, we're going to be feeding renewable resources down the veins of our transmission lines in the Pilbara and a lot of focus in on trucks, trains and making sure everything else is pollution free.

I'm going to throw to Christiaan Heyning, who hits the [indiscernible]. So Christian, do you have any other comments?

[Christiaan Heyning, executive]

Thank you, Hutch, Christian here. Just building on what Hutch was saying, we continue to build out our renewable assets already mostly solar at the moment. It was already part of the plan and we're accelerating that. At the same time, we're gearing up for significant additional investments in the build bar for additional green energy infrastructure, but we haven't taken FID on those yet, but we will expect to do so in the next 12 months or so.

And of course, then there is the trucks, which will bring the first prototype truck to our operations this financial year. Battery Electric hold truck, which will start productive use in the mines again in the next 6 months, which will give us invaluable insights to develop the production version of that truck, which will then bring in big numbers later this decade.

[Operator]

Your next question comes from Kaan Peker with Royal Bank of Canada.

[Kaan Peker, analyst]

Two questions from me. Just firstly, on Iron Bridge. Can you give an update on that given that concentrates expected to be shipped at 2Q. And also assuming that we have sort of an 18-month ramp-up, it sounds roughly like 10 million tonnes should be expected in FY '24. We'll circle back with the second question.

[John Andrew Forrest, executive]

Yes. Thank you. [indiscernible], did you hear that question fully. So Warren Harris is our Chief construct deliver recover of Iron Bridge, and while I'd love to speak to this project because I'm in love with it. I'm going to ask Warren to answer that, Kaan.

[Warren Harris, executive]

Okay. Thanks, Andrew. So overage is well progressed. We've had an extremely strong construction performance over the quarter, extremely safe as well. We're well into our commissioning phase of the project. That's going extremely well so far, and we are on track to get first production out in March here.

[Kaan Peker, analyst]

Just maybe on the Gladstone electrolyzer factory. Pluf Power's CEO cited poor economics as a part of the key reason for withdrawing from the project. Since we don't have any metrics, I think most people take this at face value. But would it not be easier to dispel some of those concerns we've given you some project estimates.

[John Andrew Forrest, executive]

So let me handle it. I think with the Gladstone, our view is there's great economics in this. We are on track to have the facility ready in March and then our first electrolyzer is this year. So our belief is different than Plug, we still have a great relationship with Plug there. We are very much part of our journey on for green hydrogen. And we're going to do -- make our own electrode ourselves. We think there's a massive market globally, not just here in Australia, other parts of the world. So you'll see us do other facilities in due course in America and maybe some other places as well.

[Mark Hutchinson, executive]

Yes. And look, I'd like to build on that. We have a great relationship with Andy over to Plug Power. We're growing our own technology here furiously as non-wire a technology company like Volume a manufacturing company. But for green technology, I don't think we have a peer in the world. Maybe one, which should be in Colorado, which is the United States green energy facility, but we've contracted with them as their key partner, so we're capturing that technology as well. So it is unsurprising that we say, well, we can improve on these electrolyzers and improve on their performance.

And Andy, we think your electrodes is great. We're not knocking them. We just would like to do our own and still have as Plug Power as a deliverer to our business of electrolyzers because we just need so many and so much. So I know Andy made that throwaway line, and that he can get economics, which is better elsewhere. That's a thorough way line, which I wouldn't have thought any analyst worth their salt would have swallowed. But look, if you're looking for a reason to make a bigger Pilbara out of a rounding error, which is all that is, are rounding error in a small project, then you can jump on over it. But it just showed the EQ of a net. Andy made a throwaway line to -- which was basically saying that what is going to go their own way, but there's still going to be great friends, which is exactly what's happening.

[Operator]

Your next question comes from Lyndon Fagan with JPMorgan.

[Lyndon Fagan, analyst]

The first one is just on the green iron. You mentioned there was a breakthrough within the last month. So I'm wondering if you're able to give us a bit more detail on that?

[John Andrew Forrest, executive]

So I'll hand over to my good friend, Christiaan Heyning.

[Christiaan Heyning, executive]

Thanks, Lyndon. Christian here. Yes, as you know, most of our emissions are actually in the downstream scope 3 when our iron ore is used to make steel. Traditionally, that's done in blast furnaces, which create a lot of CO2. In order to make sure that the world is on a better trajectory, we need to find a better way of making steel out of our iron ore. So with that in mind, Fortescue has already started a few years ago a technology development to come up with a reduction process that allows us to make steel without producing any CO2. That has been started from the ground up a fundamental research and the breakthrough that we have achieved this month is that we've now produced sizable volumes of green metallics out of our own iron ore without producing [indiscernible] in our production facility in Western Australia, which is extremely encouraging to go from a few grams to still significantly larger than that. Back to you, Andrew.

[Lyndon Fagan, analyst]

So what is the flow shade of that if I can just press a little more?

[John Andrew Forrest, executive]

Look, Matt, I could tell you, but then I'd have to kill you. It -- kind -- but let me just say that to give include all our competitors out there, uses a membrane, and they're going to have to come and talk to us if they want to borrow the membrane.

[Lyndon Fagan, analyst]

I did have another one. Andrew, on the last call, you mentioned the replacement hub for Cloudbreak wasn't necessarily mine I'm wondering if you can maybe just elaborate a bit more about whether it's still FID in FY '25 that we need this thing and what it may be, what sort of extension of perhaps the Western hub could be a replacement for Cloudbreak?

[John Andrew Forrest, executive]

Typically excellent question. Mate, you're damn right. We're pushing letting you back into the 2030s out of the 2020s. And that is because we have had a great deal of exploration success. We're consolidating around our existing operations. We're consolidating in our near operations. Meaning [indiscernible] will be a huge project 1 day. But as it's not as it's not required given the exploration success we've had on that this got your head [indiscernible], but the young lad who's only been with me for half his life of [ 17 ] years, is doing a really good job. And if he doesn't miss niobium and rare deposits, you might even get a raise. But -- so yes, look, I'd say this, we have really consolidated [indiscernible]. We've grown our resources there -- we're not in a hurry to be letting new because it will be a very large project. And we have the resources to easily push that back into the 2030s.

[Operator]

Your next question comes from Paul Young with Goldman Sachs.

[Paul Young, analyst]

Mark And Andy, a few questions on your project pipeline. A lot going on even in the last 2 weeks since you did your last call. Maybe a question, first of all, for Mark on FFI. Thanks for providing that list of 5 countries, Mark, that might sort of form the 5 projects that go to FID at the end of the year. The fact that you've actually outline those 5 countries means that I guess those projects are pretty advanced as far as scope is concerned. So wondering if you can provide some information as far as collective hydrogen production at those 5 projects are targeting also broadly speaking, all rough numbers around collective CapEx for those 5 projects, please?

[Mark Hutchinson, executive]

Look, I'd say that's a little bit too early for that because I said we have a few projects in the race. And as we bring this to FID, this will become a lot clearer to you. And I think we -- we want to make sure we tell you the information that is correct and rather than speculate where it's going to go.

[John Andrew Forrest, executive]

Yes. Can I just maybe add why because there have been a couple of commentators saying Hutch has been a little vague. He did outline the 5 countries, but I can say there are projects within each country, which are competing to go FID. If he specifically named them, then the other projects are going to down tours. So that's what we're seeking to avoid. We want all projects working really hard. People love to compete within a family environment. And that's the only reason why we're not specifically naming projects. And by the way, if we did now projects right now and then shows another one, you'd say, well, you misled us perhaps, but -- and that wouldn't be deliberate. So because we've got really, really solid competing projects in those countries. That's the only reason why Hutch isn't naming them.

[Mark Hutchinson, executive]

Yes. And Sorry, just a -- that we have -- they are the first to come to FID. We do have others in the pipeline behind that. So it's a matter of getting the right focus in the organization, getting the teams focused on getting -- we want to make hydrogen as quickly as we can. Yes.

[Paul Young, analyst]

And just maybe -- so that tells me that -- or does that indicate there's a bit of variance amongst production -- potential production by project and also CapEx by projects?

[Mark Hutchinson, executive]

Absolutely.

[Paul Young, analyst]

Okay. Maybe the next question, back on to Gabon, Andrew. This deposit has been around for many decades. I know it's big and large, but Gabon is probably the most protected pristine countries in Africa. It's French. [indiscernible] probably the only company that has actually been successful in developing a project in Gabon and developing in Africa is not easy. That's the reason why all the other projects that you have been referring to have taken so much time to develop. So what -- I guess the question I have for you is that it doesn't Gabon just add a lot of jurisdiction environmental risk to your portfolio?

[John Andrew Forrest, executive]

Look, everything you've said is true. It's a beautiful country. From a foundation perspective from an ecological perspective, we are looking at significant opportunities to invest in the preservation of rain forest and jungle on scale, on scale. That's on the foundation side because we do love that country. We pride ourselves at Fortescue that you can tell where we have mined but only because the country is a little richer and not because we have left an indelible sky anywhere or made a knock to any species, which can't be immediately replicated, i.e., they're very endemic.

And that's the track record. I don't think it was a bad thing. I'm [indiscernible], which the President of Gabon was attracted to and his first words were, I'd really expect you to build but protect my country. And I've said I will do both, sir. So we have a very good relationship with what is a very stable government, a popular presence, a popular government, and not the only ecologists when we get in the room there on the Gabon side, they've got a highly educated ministry, particularly on the conservation and environmental side, with very strong views. And we respect those views because they're right. And they've seen what we've done in the Pilbara. They know that we're extremely sensitive to the environment. They know that we've committed our company to leading the industrial world away from pollution, which will eventually destroy us. And there's no country, I'd say, more delicately poised to gain climate change apart from, say, the low-lying countries in the Asia Pacific but who are very sensitive to ecological destruction from climate change than Gabon. So we will be extremely sensitive in how we develop and ensure that anything we do has the [indiscernible] to be fully replicated and fully replaced. And Paul, thank you for that observation.

[Operator]

Your next question comes from Robert Stein with CLSA.

[Robert Stein, analyst]

Just for a question on Gabon to start with. How are you thinking about the market impact of additional volumes, and this is the scaled up facility, the 50 million tonnes I'm talking about. Do you view it as an option if global steel picks up again? Or it still peak is this supply coming in at a lot potentially impacting long-run prices over?

[John Andrew Forrest, executive]

Look, we're not beating our chest about this being a threat to the Pilbara or any such thing with its scale. We're simply saying that between Gabon and the Pilbara, you've got very different ores, which react very differently in the blast furnace. But you put them together, you start getting the best of both worlds.

So I think we're going to create a very, very interesting, real and virtual product, and one which ensures the duration -- maximizes the mine life, the efficiency and the performance of both countries' hematite industries. So look, we where we take a highly complementary attitude between the Australian and the Gabonese iron ore industry and make sure that they will -- they not only dovetail in together, but enhance the futures in both countries.

[Robert Stein, analyst]

So are you potentially lowering cutoff grades to extend the resource life in the Pilbara by blending either synthetically or physically the Gabonese or -- is that a potential thing that you're looking at?

[Andrew Driscoll, executive]

Look, we could, but we don't have to, Robert, because we're finding so much iron ore, mate. So that option isn't available to us. Now we're going to maintain grades in the Pilbara, it's going to engine it in Gabon, these metallurgical characteristics of our [indiscernible] ores, which are immensely attractive. They fire like a rocket, they convert very quickly to iron, some of the fastest of any ores in the world, which, of course, reduces operating costs in the blast furnace. You add to that higher grade from Gabon, you've got a magic mix.

[Operator]

Our next question comes from David Coates with Bell Potter Securities.

[David Coates, analyst]

Just following on some other questions on Gabon and the development pipeline. Just wondering if at some point, we'll see -- so I guess, the equivalent of something along the lines of a feasibility study release.

So we've got visibility on metrics like OpEx and production rates, fiscal terms. And as you've sort of just been describing how it dovetails in the [indiscernible] Pilbara operations?

[Andrew Driscoll, executive]

Yes. Look, remember, we got invited to develop Gabon, a few seconds ago. And we've been working furiously ever since. We may have known of the ore body and looked at it closely for about 4 years, but the decision by the government to choose decisively us to develop it, has only just come down the pike.

So we -- I don't want to speculate what is optimal. I want to look at the iron ore industry, the iron ore price. We do not want to hurt the Australian Pilbara operations of either BHP, Rio Tinto or ourselves.

We're not about beating our chest and being the biggest in the world, what we're always looking for Fortescue to be the highest profit per tonne. And be a very meaningful player important to all our host customer countries.

So I'm still yet to do with my team, still yet to do all those analytics, all that strategic research, to make sure we enhance the global iron ore industry, we enhance the global steel industry, we don't cause damage anywhere.

[David Coates, analyst]

Okay. And just the follow-up with the plan to commence production this year, you mentioned the use of residual plant. Does that mean you guys are -- you should consider sort of haul trucks and locos and processing equipment to the [indiscernible] to sort of facilitate that rapid startup?

[Andrew Driscoll, executive]

Yes, it does, David. And if you want to ride, maybe it will be a great voyage.

[Operator]

Your next question comes from Glyn Lawcock with Barrenjoey.

[Glyn Lawcock, analyst]

Andrew, just on the 5 green projects for FFI, can you just maybe help me understand your thinking around the funding? Has that changed at all as you move forward with these projects?

[Andrew Driscoll, executive]

Yes, I can say that everything is changing, but everything stayed to [ sell in ]. I'm going to say how everything is staying the same. And then Hutch is going to talk to you about change. What's going to stay the same is the binary [ otherwise ] protection of our balance sheet. Hutch, over to you.

[Mark Hutchinson, executive]

Yes. So look, I think what you have to understand are these projects. Let's start with the offtake. The offtake is going to be Germany. It's going to be Singapore. It's going to be Japan, Korea.

So from a bankability perspective, our belief is these projects will be very bankable. So we will look at these in a traditional project finance manner, where we'll bring in nonrecourse project finance for these projects against a very bankable offtake. So that's [ in train ].

And then on the equity side, we have the option to do it ourselves or bring in partners. And there's an enormous amount of capital out there waiting for us to come with projects. I think the big advantage we have is we have a pipeline of projects, several others around the world have a project to do.

We've talked to many investors, including some of the sovereigns, and the fact we have a pipeline of project is extremely interesting to them. So -- look, that's the way we'll finance them. We will build these. We will operate them, and we'll be very smart about the way we finance them.

[Andrew Driscoll, executive]

Yes. We share a bit of equity on the way through. We share a bit of equity on the way through. So we'll certainly keep you posted. And in the instant there's anything looking like a decision made, I'm going to let you know. But the world finance is changing dramatically. There's never been a huge green hydrogen industry or green energy industry.

There's never been the government incentives. There's never been an IRA. These all making massive impacts and adjusting dramatically the entire nonrecourse project finance ecosystem as it relates to not destroying the planet.

[Mark Hutchinson, executive]

Yes. Just -- sorry, Andrew. If I could just add on this, I mean, I think we've been talking to a number of investors. And the signals from the governments around the world is really clear here. Really clear. If you're an investor looking to where do I put my money, the world's governments are saying, green hydrogen.

[Unknown Executive]

I can't [indiscernible] revenue.

[Mark Hutchinson, executive]

Yes.

[Unknown Executive]

I mean, remember, it's a miracle molecule, in which you can make so much off from.

[Glyn Lawcock, analyst]

Okay. So Andrew, is that -- so therefore, a potential FMG equity stake into one of these FFI projects this year is it a distinct possibility in your mind?

[Andrew Driscoll, executive]

Well, Glyn, I mean, if we don't have the equity stake, Hutch is fired. So let's just put that straight out there. Yes, but does it mean we'll add in further capital? Yes, mate, I don't know. I don't know. Do we have heaps of capital to add in? Yes.

Does it mean we will? No. That decision has got to be made. We're going to put our capital up against the enthusiastic equity capital we have seen not only from [ Davos ], but around the world, but particularly the U.S. capital markets.

We have -- we get the regular statements from bankers and fund managers that they have trillions of dollars available and no f******* projects going. And when we have a pipeline of 100-plus projects, and as technology changes to match projects, we choose them. Markets change to match projects, we choose them. Then we're going to come back to you with financing details.

But Glyn, I'm not saying we're going to repeat the Fortis miracle where we project financed everything and wind up with 100% of all our projects. I'm not as young and rash as I was, mate. So I think we will dilute in those projects. I'm not sure.

But will we have a substantial equity stake because of the massive value add, which our technology, our projects, our risk over the last several years, putting up with all the crap from analysts and public relations people saying that we don't know what we're doing, we're nuts. And now they've all gone very quiet. So we will have a reward for that, and that's called carried equity.

[Operator]

Our next question comes from Lachlan Shaw with UBS.

[Lachlan Shaw, analyst]

Andrew, just 2 questions. So firstly, just on the iron ore market. What are you guys seeing in China at the moment in terms of anticipated steel demand this year?

[Andrew Driscoll, executive]

Okay. Look, I'm right across this, but I've got an expert here. And Vivienne, I'd be delighted if you could answer that question. How are you seeing the iron ore market, and particularly the appetite for our products within the iron ore market?

[Vivienne Tieu, executive]

So we're seeing certainly a pickup in demand post the Chinese New Year break. So particularly in the construction and real estate sectors, we're seeing some positive activity in that base. Fuel margins are still low. So we are seeing really good demand for low-grade products and, in particular, for the Fortescue products.

And we see that across the inventory in our supply chain as well. So all in all, really positive in terms of the sign we're seeing. And we expect that to continue. The government has been quite vocal in terms of their support for the construction and real estate sectors. So we should see -- we expect to see that translate to real sales demand later on in the year.

[Lachlan Shaw, analyst]

Understood. And then just a second question. So obviously, just back to Gabon and given the development here and the rapid deceleration there, what -- does this mean anything for the Sinosteel bid West JV? Is that perhaps less of a priority for the business going forward?

[Andrew Driscoll, executive]

Great question. No, it's not less of a priority. Look, we're still evaluating that project on its merits. I must admit when you're so close to victory with Iron Bridge, and you want to really see what the commercial scale benefits are once we enter ramp up and complete ramp up, that I'm delighted that we'll be able to bring across that real-time expertise and knowledge into the process flow sheet of that project.

So I think it's fair to say we're excited about that project, but I want to apply not forecast economics and not forecast engineering assumptions, but actual [indiscernible] very large operation then called Ironbridge, and we'll input all that knowledge into it. So I just want to make that clear, Lachlan. We're in an enviable position, unique in the world, to develop mega site projects and that Sino project, it will certainly be one.

[Operator]

Your next question comes from Adrian Prendergast with Morgans Financial.

[Adrian Prendergast, analyst]

Just 2 questions for me. First, back on Gabon and -- sorry for another one, it's just an interesting project. But you can certainly see the potential scale of it.

But just noting how far it is from the Trans-Gabon railway and [indiscernible]. Just -- yes, I understand it's too early for feasibility type talk. But -- yes, stepping back in a big way, just conceptually, would the idea on the bigger build be to also build your own infrastructure or form some sort of agreement to build as far as that open access route?

[Andrew Driscoll, executive]

No. Look, like Lachlan -- like all these questions, they're showing a lot of vision, they're showing a lot of foresight in the information you're looking for. So Adrian, I'm very happy to take these take these questions. I'll be completely honest with you and say to you that -- just give me 1 second.

Adrian, sorry, mate. I just had to clear my throat. So let me just be absolutely clear. In terms of locality to existing infrastructure, it's really close, right? We have a road nearby which the government wants us to use that goes to a railway line which the government wants us to use.

Will that infrastructure sustain a Pilbara project we're used to building? Not a snowflake's chance in hell. So will we do a pipeline? We've got -- showing real form in pipelines through Iron Bridge. Will we use a rail line? We built and operate the most efficient, fastest, heaviest bulky railway lines in the world.

I mean, these are reasons why we were chosen, Adrian. Now we're putting the technical solutions up against each other. And we're going to work this out. Our pipeline is fantastic if you produce a slurry. What does that do for say lump iron, which means you crush it. So do you use a lump premium? Possibly. Is that set off against the operating cost efficiencies and speed of the pipeline? Possibly.

So Adrian, good question. And this is the delightful environment which always [indiscernible] in which this world of opportunity between green energy and green resources gives us. But then the instant after that, it's a world of challenges.

And we will continue to tiptoe through the minefield of optimizing how we meet those challenges to produce for you, our stakeholders, the best possible result.

[Adrian Prendergast, analyst]

That's very helpful. And just 1 more back on the Pilbara. Yes, it's good news to hear that through exploration success. Nyidinghu won't have to be dealt until 2030. And just thinking of it from the CapEx profile around the Pilbara iron ore business then, should we essentially wipe out any associated infrastructure spend? Or with the exploration success, will that bring with it some need for additional infrastructure? So we still keep some CapEx in there?

[Andrew Driscoll, executive]

No. Look, Adrian, it's a great question. look, unfortunately, you can't get anything for free. So you keep some CapEx in there but take out your really big CapEx.

[Operator]

Your next question comes from Peter Ker with the Australian Financial Review.

[Unknown Analyst]

Mark Hutchison, it sounds like a very big year for FFI coming up. Can you please help clear up, on a global basis, is FFI's head count going to rise or fall this year?

And could you also help that question in terms of Australian headcount? Do you expect that to rise or fall this year?

[Mark Hutchinson, executive]

Look, I've been in the job for 6 months...

[Andrew Driscoll, executive]

And loving it.

[Mark Hutchinson, executive]

And loving it. He reminds me every day. And look, we have a dynamic business here. So what we'll do is as we kind of focus in on projects, the head count is going to ebb and flow just like the business as normal. So will head count increase over time? Absolutely, as we build out projects around the world because we're going to need a lot of people to build projects in all the places I've mentioned.

And that includes Australia. So it will be business as normal. We will ebb and flow as we need resources. And I think this year will be a big year for us in many ways.

[Andrew Driscoll, executive]

Yes. And look, if I could add to that, Peter, we didn't go from 2 people to 20,000 people in a straight line, mate. And it's such a nonsense to call out when we consolidate to when we grow. This is the typical pattern of Fortescue. We grow steady to ship, consolidate, grow again. Now we -- that's just what we do every day we come to work, mate.

[Unknown Analyst]

Okay. And Andrew, just in politics, we've seen the [ greens ] here in Australia in the last 24 hours say that they will potentially block the safeguards mechanism legislation, unless there is a ban on new coal and gas mines in Australia.

Could I get your view on that? I mean, do you think that is a good idea worth holding up the safeguard mechanism for it? Or do you think it's more a case of not -- we shouldn't let the perfect stand in the way of good?

[Andrew Driscoll, executive]

Peter, thank you for that excellent smack-in-the-middle-of-a-land-mine-field question. So I'm just being brought up to speed, and I'm looking at the [indiscernible] green risk setting back [indiscernible] policy 10 years.

Look, all I'd say is that -- I can answer it this way. There's a huge bulk of frozen methane carbon dioxide organic matter, 2.5x the size of Australia, which is frozen for now. But big infrastructure has started to fall into that where it's been built on it.

And there are big holes appearing in it as the Arctic, which is warming quicker than anywhere else in the planet, starts to warm. And if that frozen tundra let's go, then you might have several degrees Celsius increase or as a Russian scientist told me, a sharp 10 degrees Celsius increase in temperature.

That's going to change oceanic and atmospheric flows all over the world. So I just say this, people who do not understand the grave risk of climate change should not be in any position of influence. And if they exploit those who are trying to work against climate change, then history will judge them very, very badly.

We are on a climate edge here, Peter. And I want every legislator, not just in the greens, not just in labor, not just in liberal country, every legislator in the world to bring themselves up to speed with the science. If they don't believe the science, then they can just f*** off, right?

They should be nowhere near having any responsibility whatsoever. But every legislator in the world should bring themselves up to spend on the science and act accordingly. We need to be ambitious this company. This company, [indiscernible], is leading by example, and I'm urging governments all over the world wherever I go -- it's like I hit the road in the middle of COVID for effective years of my time to educate governments that we are facing a real and present danger and there are solutions. They do not have to wipe out our planet.

[Operator]

Your next question comes from Melanie Burton with Wisconsin Thompson.

[Unknown Analyst]

I'm wondering if you could give us any detail on how talks are going with Chinese [indiscernible] group. Have you guys made any deals? Are they looking at volume and brand type as well? Any color on how those negotiations are going would be great.

[Andrew Driscoll, executive]

Look, excellent question, Melanie. I'm going to ask -- Vivienne, you've asked to come. Let's have Vivienne give you the color.

[Vivienne Tieu, executive]

I know it. Firstly, I'll just reiterate. Our approach is built some respectful and constructive engagement with all participants in the industry, customers as well as groups like [indiscernible] group. We don't comment on commercially sensitive and confidential negotiations.

So I'll just leave it as we'll continue to engage directly with all stakeholders, and that approach underpins our marketing strategy and how we get the value of the Fortescue's doses products in line with market fundamentals.

[Operator]

Your next question comes from Sue Lannon with ABC News.

[Unknown Analyst]

Look, I just wanted to ask you about the pending [indiscernible] compensation -- native title compensation case. Have you done any initial assessment on what it could cost you if you lose or if you're prepared to settle, whether you're going to defend the case or whether you're going to settle?

[Andrew Driscoll, executive]

[indiscernible].

[Unknown Executive]

So the question here is [indiscernible]. I think the matter before the call is we certainly can't comment at all on [indiscernible] this stage. And...

[Andrew Driscoll, executive]

So I'd just say that I'm -- that we treated all claimers, all our traditional custodians fairly and equally. And where we're after [indiscernible] like with the receipts of the government, we're going to say we don't think that's fair on everyone else.

And so with the prospect indigenous people who I grew up with, who I still call auntie and uncle, we will resist doing anything out of the ordinary. And that's as far as I possibly can comment. So when a case is before the courts, but we operate through the lens of fairness all the time and, when asked, to be unfair [indiscernible].

[Unknown Analyst]

Okay. If I could just follow up. I mean, you often use the term native title welfare, I just don't know what you mean by that because the [indiscernible] won their case twice, first in the original federal court, then in the full court. You were refused [indiscernible] to appeal.

So it's actually the law that you need to negotiate compensation and all the other big miners, even [indiscernible], heart have royalty agreements with the traditional owners. So why is it that Fortescue has not yet come to agreement -- an agreement?

[Andrew Driscoll, executive]

Okay. So thank you. I don't recall -- I have to look around at my colleagues if I've ever used the term native title welfare. And of course, we acted strictly according to the law and go far, far over and above that. Our full billion dollars of jobs and training, education and contracts is way above anything in the lawsuit.

And I believe in real practical action to end the savage disparity, which has grown and grown over the period that I have been alive -- and I know why it has. I know why you get [indiscernible] disasters, I know why so, it's because people are without work and cash welfare without work has obvious typical predictable results with communities all over the world.

Don't think it's confined to our wonderful population, it's not. And while we insist on not providing the education, the opportunities, while we consist on not making the choice of drugs and alcohol, the easiest choice than the result will continue to be predictable, Sue.

So for the people who I love and for the people who I grew up with and savvy for the people whose funerals I regularly go to, I'll be going to one shortly, who didn't have cash welfare, who did work, who took huge pride in her family, and has outlived all her kids.

And that is because she escaped this era of cash for nothing. And I believe like [indiscernible] and others that you have responsibility with opportunity. And I always do that. And so we have -- we integrate as a company -- I don't have to integrate, I'm already there, with our indigenous brothers and sisters because that's how we see them.

And we treat them all fairly and we give them the most opportunity we possibly can within our philosophy that we're not going to exacerbate, Sue, opportunity without responsibility, which has caused the deep social harms which we're witnessing today.

[Unknown Executive]

If I could just add on to end of that you don't mind something also not to forget is that we have 7 other native title agreements with other native title parties that seem to be working fine.

[Andrew Driscoll, executive]

Which work perfectly. And that's the exact fairness. Warren, thanks for pointing that out. I think, Sue, may have known that, but just in case, Sue, we've got 7 other major agreements, all within that same community. I mean they have family members across each one, you probably know that, Sue.

And they cross fertilize like crazy, and we're just not going to have one single out because it might suit our commercial interest. This is something I am deeply passionate about, Sue. Ending the indigenous disparity is not done with cash. And so let me truck you down to [indiscernible] Springs, if you want any proof.

[Operator]

Your next question comes from Nick Evans with The Australian.

[Nick Evans, analyst]

Andrew, just noting in your preamble views, like briefly about some -- your time as Chief Executive, almost as in the past tense. Am I sort of misreading what you were saying it? Or are you about to step back as an Executive Chairman back to your previous role as a nonexecutive?

[Andrew Driscoll, executive]

Nick, a great question, mate. And you're overdue to [indiscernible] me beer. I'd say, Nick, that it's -- that with Hutch coming on board, doing a superb job, Vivienne, [ Hick ] just shows a steady ease that this company's culture and values has been getting around as a tourist, just getting to the [indiscernible].

We have really 2 great Chief Executives, Nick, coming in. I will stay Executive Chairman through as long as it takes to guide to navigate this company through this massive transition period. And then once that settles, then -- and I feel sure that we've met or that the 3 of us have met all the leadership challenges we need to, then that will be 2, again, Nick. And I'll step back to being nonexecutive.

I have said, mate, as you're aware that I only become executive to help the company steer its way through what is a massive transition. And I'm delighted by that. The company which emerges from it will be much a bigger, much stronger and much more contributing to society company.

And I just -- I'll stay with it for that period as an executive. But as soon as I can, I'll be stepping away from it.

[Nick Evans, analyst]

And secondly, this week, the Board will have met to sign off on the financial report. At that board meeting, did the Board approve any major cost saving measures or sort of a job loss program? And if so, how many jobs do you expect from both Fortescue and FFI ranks over the next couple of months as a result?

[Andrew Driscoll, executive]

Yes. Okay, Nick, your reporting on this has been really balanced. Thank you. Look, there has been some responsible reporting on it by one media but in particular, salacious huge numbers, biased, dramatic, trying to cause concern in the community, trying to cause fear in the community.

Nick, there's none of it. There's a range of resolutions. This is as much as I will, of course, share because it's [indiscernible] in confidence that continues the march of this company to grow steady the ship, consolidate, grow again.

And are there one-to-come job costs coming up? Absolutely not. Are we continuing to constantly improve and evolve? Absolutely, we are, Nick. But this is just business as usual.

[Operator]

Your next question comes from Peter [ Milne ] with WA Today.

[Unknown Analyst]

A question for you, Andrew. Major resource company, obviously, maintaining a social license is always a huge issue, conditional issues and violent local content and the like. And yet you've chosen yesterday to pick a fight with the biggest [indiscernible] outlet in your home state. Why did you do that? And two, are you concerned that that's going to damage Fortescue's place in community going forward?

[Andrew Driscoll, executive]

No, I think just the opposite. I mean, we're bringing in local content. I'm sure you know, Peter, that are -- that Caterpillar, which -- whose franchisee owns the West Australian has, for a long time said they're not going to be able to bring pollution-free trucks into the mining scene until the 2030s.

Now I made really clear, really clear, that if they didn't change that stance, I don't bluff, I will bring them in. And of course, there was no way they could see I could do that. So they just called my bluff. And now we've ordered 120 trucks.

We will be putting in local content. Let me underline that for you, Peter. Batteries, which we'll be installing here, which we'll be eventually manufacturing here at large scale. Like, we will -- hydrogen fuel cell drive transit [ lifestyle ]. And that's all local content, mate.

And we're not just shipping in from North America or where Caterpillar does, the whole thing. Actually going to manufacture it and maintain it here. So I think we're actually going to accelerate local content, accelerate local employment. Where this has come from, so Peter, is that, that is a direct business threat to that Caterpillar franchise.

I'm very happy to speak to the Stokes family and make sure that we keep them really busy and that they, too, can profit and enjoy distributing the trucks, which we will be partly responsible for, which is certainly our drivetrains.

There's massive business which could be available to companies like WesTrac. So what we've got to do Peter see the opportunity and not try and fight it because you're really standing in the road as the tide. Everyone loves the fact that there's a major change in technology, a major change in efficiency and community benefit. They can get less happy when it's actually happening to them if they're not changing, too.

[Operator]

Your next question comes from Simon Grogan with Business News. Apologies. Your next question comes from Danielle [indiscernible] with The West Australian.

[Unknown Analyst]

I was just hoping to ask about our operating expenses and investments. I saw the report showed operating expenses were up pretty significantly to USD 283 million, well investments still to USD 49 million. I was just wondering what the cause of that was?

And just a second question. I see Fortescue now providing further transparency on FFI's financial results in the notes to the financial statements. I was just wondering whether that is a -- that new disclosure is partly due to pressure from investors and analysts?

[Andrew Driscoll, executive]

Okay. I think you're an excellent journalist, and they're great questions. I would really think carefully about not cooperating with the -- with your particular outlet. I don't know if you're under a lot of pressure or not, but we've had some really salacious misreporting, inaccurate, trying to put fear into the West Australian community, give the West Australian community the poor impression of this company. That hasn't worked at all.

We have been barraged with support from all over our state and Perth. So I'm particularly sensitive about asking -- about answering questions from The West. We normally do not cooperate, but these are excellent questions. So Hutch, I'd like you or Andy to respond. I don't think we're under any pressure from our investors. Our investors absolutely love it.

So I think now, Danielle, we're one of the highest-performing, value-accreting companies which Australia or this state has ever seen. So we're not having any investors complaining, when they're making fortune, to me. Over to you, Andy.

[Unknown Executive]

Yes. Thanks, Andrew. Danielle, so FFI's OpEx in H1 was $283 million. That included some expenditure incurred on behalf of Fortescue related to [indiscernible]. So if we strip that out, it was a little bit below the midpoint of guidance for this year, which is OpEx of $500 million to $600 million.

So well on track and on plan with relation to that. And look, in terms of the segment reporting, absolutely not in terms of responding to investors. That's just best-in-class transparency and good corporate governance.

[Operator]

That is all the time we have for questions today. I'll now hand back to Dr. Forrest for closing remarks.

[John Andrew Forrest, executive]

I'd say to John and [indiscernible] and Nick, don't hesitate to call. We just got to keep the show pretty disciplined. Look, I am -- and just picking up, I don't intend to stand down any time soon. But I do intend to do whatever it takes to provide maximum support to the annual mark.

And I'm really delighted about this company. I just cannot see anywhere across the spectrum that it's not doing the very best it ever has from consolidating a huge position into massive commercial opportunity in the Pilbara to developing the largest undeveloped iron ore deposit. I think it will emerge in the region in the world.

To Iron Bridge, to everything which FFI is doing, the potential of that pipeline of over 100 projects and FFI, Mark, has got the unenviable responsibility of choosing at least 5, but -- minimum 5, but out of 100, that's a very difficult choice. That could lead to a green energy company, which could rival the success of the iron ore company.

So I just think the company is in superb shape, both for how it is right now and for its future prospects. In closing, I just cannot thank the team enough. I'm looking around people who have been with me forever. Some of my oldest friends and some of my newest like Vivienne, just delighted to have you kn board.

And this half gives us a very strong start to what will be a great year for Fortescue. I don't think I should be changing guidance teams to just reiterate [ 187 ] to [ 192 ] per tonne's hematite cost of around to $18. So [ 18 75 ] CapEx of [ 2.7 ] to [ 3.1 ].

But look, Fortescue May well do what it does, which is perform. And I want to thank everyone for your excellent questions. It's been a really top quality call, and really appreciate all of your interest in Fortescue. We love this company. We'd love to have you on the journey with us. Thank you.