Fortescue Ltd (FMG.AX) Earnings Call Transcript & Summary

Welcome all. It's great to be back with you again. And with me today is Mark Hutchinson, Energy's CEO; and Apple Paget, acting CFO. We're joining you from Gabon in Central Africa, and it's been a really productive visit, spending time with the team, the government and a variety of stakeholders around this beautiful country. We were out at Belinga site early this week, and I continue to be amazed by the energy of the team, the potential of the project and the support we have in country. On to the results. Last month, we presented our quarterly production results, which included our second highest first-half shipments of 94.6 million tonnes. We achieved this while standing by our absolute commitment to safety and keeping costs low to drive performance and ensure we set the business up for future success. We achieved a C1 cost of less than $18 per tonne in the half. And I promise you, we remain laser-focused on maintaining our industry-leading cost position. That strong operating performance in the first half underpins the outstanding financial results we reported today, including underlying EBITDA of $5.9 billion, up 36%, and net profit after tax of $3.3 billion, up 41%. Reflecting these results, the Board today declared a fully franked interim dividend of AUD 1.08 per share, representing a 65% payout of first half net profit after tax and a return of AUD 3.3 billion to shareholders. There were many highlights during the half. We shipped out 2 billion tonnes of ore in September and achieved record shipments in December. Through the flexibility of our supply chain and use of innovation and technology, including AI, this has improved our rail capacity, which has helped to buffer against supply chain variability. You can see this in action through our recovery plan, which has positioned us to mitigate the impacts of the derailment that occurred in December. We are laying the foundations for our longer-term success through consistent progress and innovation. Our decarbonization plan continues to gain momentum with the deployment of our 240-tonne battery electric haul truck, Roadrunner, and commissioning of Australia's first electric excavator. Our Pilbara Energy Connect project is progressing well with the completion of 320 kilometers of transmission lines to connect the Solomon -- to connect Solomon to Iron Bridge and through to Port Hedland. And we've commenced on-site testing of our prototype mobile hydrogen power unit, which provides renewable energy for mining equipment in remote areas. We also have an exciting exploration pipeline with programs underway in the Pilbara as well as globally here in Gabon and South America, including Argentina, Brazil and Chile. The strong first half of FY '24 positions Fortescue well to deliver on guidance for the full year. And before handing over to Hutch, I'd love to give a big shout out to the entire Fortescue team and all our partners for their huge effort in the first half. On that note, Hutch, over to you.

Thanks very much, Dino, and welcome from Gabon. I'd also like to take the opportunity to thank the Fortescue team for an amazing result and all the efforts they've put into achieving this. It's been a big first year half year for the Energy business as well. We took 3 projects to FID. We are progressing our global project pipeline with more to come. We've doubled down on our battery systems, the manufacturing with Fortescue WAE. Our in-house electrolyzer technology was verified and will underpin our Gladstone PEM50 green hydrogen project and we launched Fortescue Capital. I think about the Energy business in four parts: Firstly, green energy, that's electrons, the molecule production; secondly, battery technology development; next, hydrogen systems; and lastly, capital. These four parts see us developing complementary capabilities across the green energy value chain. This means we can maximize efficiencies, improve innovation and competitive advantage through the whole vertical integration. We have a knowledge base, adaptability and optionality to quickly respond to shifts as well as capitalize on emerging opportunities we see. There is just no one else doing what we are doing. And as you can see from our achievements over the first half, we're making really solid progress. I'm very happy to take some questions. But first, I'd like to hand over to Apple, who will take us through the financials. Apple?

Thanks, Hutch, and a big hello to everyone. The team has delivered another set of clean and transparent financial results and it's a pleasure to share some of the details. Starting on the P&L. Revenue of $9.5 billion was up 21% on the first half of FY '23, driven by an increase in the realized price. This revenue, combined with strong cost management, contributed to underlying EBITDA of $5.9 billion, up 36% on the year -- year-on-year. The high EBITDA flowed through to NPAT, up 41% to USD 3.3 billion. The EBITDA margin increased to 62%, and this equates to an EBITDA margin of $73 per tonne for the Metals segment. For those following the webcast, you can see on this slide that Fortescue has continued to generate strong margins through the cycle, and the average EBITDA in the past 5 years is over $60 per tonne. Moving to cash flow. This slide demonstrates that the business continues to generate strong operating and free cash flow. Net operating cash flow increased to $4.2 billion in the half and free cash flow was up 69% to $2.7 billion. This was after capital expenditure of $1.5 billion, comprising $1.3 billion in the Metals segment and $165 million in the Energy segment. In terms of our full year CapEx guidance, this is unchanged from the quarter, $2.8 billion to $3.2 billion in Metals and $500 million in Energy with spend phased to the second half. Fortescue's balance sheet further strengthened in the period with net debt of $0.6 billion at 31 December, inclusive of the $4.7 billion of cash on hand. Approximately $2.2 billion of this cash has been allocated for the payment of the interim dividend next month. For those on the webcast, you can see Fortescue's credit metrics on this slide, debt-to-EBITDA of 0.5x and gross gearing of 22%. We are committed to maintaining strong credit metrics through the cycle. Our capital allocation framework also prioritizes returning capital to shareholders based on our dividend policy to pay out 50% to 80% of underlying NPAT. As you've heard, the fully franked interim dividend declared by the Board today of AUD 1.08 per share represents a 65% payout ratio. In closing, we have delivered a very strong set of financial results in the first half and are really well positioned heading into the second half. We're pleased to take your questions. And I'll hand over, for the Q&A part of the call, back to the operator.

[Operator Instructions] Your first question comes from Paul Young with Goldman Sachs.

First question, Dino, just on the performance out of the Pilbara in January and February. I see shipments have been a little weak. I think you -- I presume you're still recovering from the derailment in late December. Can you just talk through how shipments are tracking recently and how are you going to make up the potential shortfall of those lost tonnes?

Thanks, Paul. And you're correct. The impact in late December of the derailment has flowed on into January, which we were expecting. Good news is we've finished all the recovery works in record time. We've been able to do some proactive work. I'd also call out that during H1, we were able to debottleneck some of our rail system and add a little bit more capacity, which has helped recover the shortfall in tonnes, which -- we'll use that capacity for the remainder of the year. In addition to that, we've utilized the ability for our supply chain to shift product strategy slightly. So we're growing more of our tonnes through the Chichester system and less out of the Western Hub area. So from a supply -- input perspective, we're going well. The remaining 4.5 months are big months for us, we acknowledge that, but nothing that we haven't achieved before. So -- and we're pretty confident around making a guidance of 192 million tonnes to 197 million tonnes, Paul.

Okay, Dino. That's great. And second question is on the $6.2 billion Pilbara decarb program. I haven't really received an update for a little while. I see that your CapEx guidance of $0.3 billion to $0.5 billion, the run rate there is a little bit behind the CapEx profile that you put out there to the market back in 2022 when you approved that project. Just curious around why that's the case and how that project is tracking overall to plan.

Paul, Mark here. I'll hand over to Christiaan, he's in the boardroom in Perth, and he can answer this.

Christiaan Heyning here -- decarb in Perth. Thanks for the question, Paul. The run rate in the first half of the year is going to be exceeded in the second half of the year. As you know, decarb is ramping up so [indiscernible] in the next couple of quarters. Sorry, it was a bit of a funny noise there. Are we still online?

Yes, you are.

The ramp-up is -- the overall decarb spend for the full year is still within the guidance as given earlier in the year. In terms of your broader question of where are we compared to September '26, I think first of all, I'm really excited about all the wonderful stuff that we've been able to achieve. Dino mentioned a few. I think this should not be underestimated how important it is to have a number of zero-emission mining equipment operating on site now, which actually spills out into things like retraining operators and getting used to things like cable handling. So we are making a lot of progress there. In terms of the financials, of course, we will update the market as soon as we have a reason to do so, but up to date, we haven't really had. Prices continue to change, of course. The good news is that solar and batteries specifically are getting quite financially attractive at the moment. So there's quite a few headwinds that are compensated by tailwinds also.

Your next question comes from Rob Stein with Macquarie.

Just a quick one on capital allocation and the various projects that you've got going on at the moment, including Gabon. How should we think about the capital spend of the business over the next few years in terms of dividends? Iron ore prices are obviously exceedingly high, which is providing a windfall for you from a cash point of view. How should we think about returns back to shareholders in the context of the hydrogen pipeline and the fact that we're still not seeing many FID -- material FIDs come through?

Yes. Thanks, Rob. I'll kick it off and invite Apple and Hutch to then add any comments. Yes, from the outset, our steely fiscal discipline is absolutely critical and will be unwavering through this period of change. Dividend policy of 50% to 80% will remain unchanged. In terms of the big capital [ lift ] for the Metals group, as we've indicated before we've got a pretty healthy pipeline of projects to -- I would call them mid-capital projects to support the hematite operations out of the Pilbara, got a couple of exciting projects that we've been able to kick the can down the road in Nyidinghu, as I've mentioned before. The big one for us will be Gabon. And as I've said before, the project is at very early stage. We've got a lot of work to do. We'll be expensing, I would say, immaterial amounts in the study over the next couple of years. And then we'll make an announcement should the project proceed into the future. Just on Energy, Hutch or Apple?

Yes. So look, Rob -- thanks. And I think the important thing is here we're going to maintain our financial discipline around what we're going to do on the capital allocation side. Now that the 10% NPAT has gone away, we are very much focused on competing for the same capital. So yes, we've got some projects through the system. We have other ones in the pipeline which are looking good. And we'll come to the market when we're ready on those. Apple, anything else to add here?

No, just to confirm, Rob, that our capital allocation framework continues to prioritize return of capital to shareholders, as Dino mentioned, 50% to 80% and also a commitment to maintaining our strong balance sheet.

And maybe just a quick follow-up on the hydrogen pipeline, Hutch. Are we seeing any further FIDs in the not-too-distant future?

Thanks. We have a great pipeline actually over the next few years. We're accelerating a couple of very important projects, one in Norway and one in Brazil. I think the next cab off the rank is going to be Norway. We have firm -- power, it's hydropower from Statkraft. We have the sites. We have a grant from the European Commission. So that one is looking really good, and I think you'll see that one come next. But again, we're taking our time to make sure that we have the right financial discipline around all our projects before we announce them. So that will be next.

Your next question comes from Manav Shah with Morgan Stanley.

Rahul Anand here from Morgan Stanley. Look, I've got two on iron ore, perhaps starting with the Pilbara first. In your presentation today, and I think you did mention that to Paul's question as well, you've mentioned rail capacity uplift and debottlenecking. Could you perhaps remind us after this exercise where do you sit in terms of rail capacity, port capacity? And is this going to feed into perhaps a bit more going forward into next year? That's the first one. I'll come back with a second.

Yes. Good question, Rahul. I was expecting this one to come up. So I'm not going to indicate future capacity just at this stage, but we're probably 1 million or 2 million tonnes up on the improvements that we've been able to make in the first half. We balance that with our ongoing investment in our assets, sustaining capital and ensuring this asset runs for another 20 to 30 years, which is our projection. Just reminding everyone that the bottleneck actually goes into shipping once Iron Bridge wraps up. So the rail bottleneck will stay there until we get that crossover point. So from a modeling perspective, I'd look at -- the target we've put out there is the hematite production out the Pilbara, plus the upside we get in magnetite going to our total license limit of 210 million tonnes.

Got it. Okay. And then, I guess, considering you are in Gabon at the moment, it's fair to ask one on that one. Yes a couple of things there. Obviously, firstly, government interactions, what's the level of support you're seeing? But more importantly, last year, you talked about how you can blend Pilbara or/and Gabon altogether in the blast furnace and you get the best of both worlds. So you've obviously done a shipment or some shipments out of Gabon. What has the customer feedback been so far? And especially, have you done any sort of work on the combination of the ores?

So you're getting a little bit ahead of yourself, Rahul. The shipment was -- I wouldn't read too much into that. That was -- it was very, very early days and the concept was to prove the logistics process and also to demonstrate to our stakeholders here, which leads us into the first question, how serious are as a partner and can we get this done. This ore body has been around since the 1960s and no one's been able to get any ore out, and we did it in about 6 months. However, we won't be ramping up that particular supply chain through the road network here. We're going to -- we've actually already de-tuned that -- we gave guidance of 2 million tonnes, but that will be low tonnes, in the thousands rather than millions of tonnes going forward. Our focus is on the exploration activities now and the logistics study. In terms of the government interaction, it's been overwhelmingly positive here. We met a few times actually with the President and senior ministers here. And so the words directly out of the President's mouth was, "This is a green light." And we're leaving here with a set of shared values as a country and as an organization. The potential here -- and I say, the potential here is pretty overwhelming. And as we spoke last time, if you can get the tonnage out of Gabon with our existing highest-grade product out of Iron Bridge and our baseload of 190 million tonne plus out of hematite operations. It does really cater for the short-term market as well as what we believe is a really exciting future around green iron opening up towards the latter part of this decade.

Your next question comes from Lyndon Fagan with JPMorgan.

Look, there was a Reuters article about Fortescue experiencing custom clearance delays in China. I'm just wondering if you're able to discuss what those issues were.

Lyndon, look, at a high level, nothing really to see here. We deal with quarantine issues all the time at all of our ports. It's quite topical. And in this particular case, a couple of cargoes went through the process. Look, and the reality is we're not having any problems and we continue to flow.

No worries. And -- okay, I guess the next one is -- and apologies if I missed the discussion. With Fortescue Energy, there does appear to be a slowdown in deployment of projects, if I'm reading that correctly. Is there any kind of pivot here in strategy to perhaps go a bit more slowly? I'm just trying to sort of read the tea leaves a bit. And I mean, we've got -- we had 70 projects in the pipeline and 15 million tonnes of hydrogen by 2030. I guess, we haven't really been seeing much in the way of project approvals. It'd just be good to sort of flesh that one out.

Thanks, Lyndon. So look, just to put it into perspective, nobody has ever done these projects before. So they're hard, right? But we are 100% committed to showing the world there's an alternative to fossil fuel. And so we've got 3 projects in FID. We have a great pipeline of projects behind it. So the way we're thinking about these is these kind of prime the pump. We're going to learn a ton from the early projects as we go into execution about -- not just about the technology, but also in dealing with these globally. We have 2 projects we're fast tracking, one in Brazil and one in Norway, and there's a really good pipeline behind this scale actually. So really, what we're looking is projects we can do around the world, which is scalable. Now the market is developing. It's dynamic. It changes every day. We learn every day. So -- and there's plenty of discussion around the world about where green hydrogen is at particularly with government support. But look, that's not stopping us at all. Nothing has changed. We still have very ambitious plans over the next few years to develop this. So it's progressing well.

Your next question comes from [ Guangshuo ] Zhang with Guotai Junan Futures.

In the half year report, you've mentioned that the ore mined decreased and strip ratio went up, and such change reflect life cycle of operations at Chichester and Western Hub, So my question is, does it mean will continue for mining volume to slightly lower and strip ratio to go higher in the coming years, for example, in financial year '25? Or maybe just elaborate more on the life cycles of these operations and where we are in the current stage of this life cycle?

Sure. Great question. And the benefit of Fortescue's portfolio is we've got quite a lot of options. So we are -- the first comment I'd make is we're progressing with our exploration activities aggressively to fill the long-term pipeline of resources and then the conversion to reserves. In terms of the strip ratio comment, we have indicated in the past that you'll see an uplift in the next few years as our travel distances, particularly around the Western Hub and Chichester, get a little bit higher. That's pretty normal as we work through our mine plan. But yes, our focus right now is our brownfields exploration. So our near-mine exploration has yielded some successes and we expect that to come in. Just to note, the Hall Hub project, which is one of the smaller new mines in our pipeline, is about to kick off in addition to the Flying Fish announcement we made at Western Hub not too long ago. Good question. Thanks.

Your next question comes from Lachlan Shaw with UBS.

Two for me. Maybe just a small one for Hutch first. I just wanted to understand the change in scope of the Phoenix Energy Hub with Nel and the $20 million payment to them. Does that reflect a change in strategy and market positioning for that project?

No, absolutely not. So this was -- we actually, remember, bought this deal off another party and they had already bought the electrolyzers. So we just -- when we were negotiating the deal, we did it in a number of stages to make sure we were happy with the equipment. But there's no change at all to that project.

Okay. Great. And my second question then is just on, I suppose, in the market. China, what you're hearing on the ground and what people are telling you. And if you can maybe elaborate a little bit, obviously, low-grade discount is pretty tight right now. How is your team seeing the outlook there?

Yes. Look, no real change from what we've indicated before. We're still -- steel production actually very sound, year-on-year increases, marginal increases, but still stronger on an exceptional base. Placing our product as -- particularly the low steel margins, as you've mentioned, haven't really been an issue with almost record realizations. I think what we're seeing particularly on the ground is diversification of, I guess, where the product is going from the traditional property base, which is still the majority of it, remains relatively healthy. But what surprised us on the upside is the automotive industry, even some of the decarb spend that's going on in China. So we see a particularly robust demand particularly for our product. And the -- this anticipation of the tsunami of scrap that hasn't really materialized. In that combination, we forecast the market to be pretty strong.

Your next question comes from John C. Tumazos with John C. Tumazos Very Independent Research.

I'm trying to understand the 2 hydrogen projects. Is the correct conversion that 1 tonne of hydrogen is 3,731 gallons and that the 2 projects, 19,000 tonnes, would be approximately 67 million gallons of hydrogen?

Sorry, I don't read -- John, it's Mark here. I'm not really following you. So the Phoenix project, we have 11,000 tonnes of hydrogen, which will be in production.

So I'm reading a website, GenH2 Discover Hydrogen. It says that 1 tonne is 3,731 gallons. And I'm trying to make an estimate like -- go ahead.

Yes. Sorry, John. I think maybe it might be equivalent probably to diesel, I'm not too sure. Without seeing the website, I can't comment. But we look at [ hydrogen ] and then also tonnes of green ammonia, if we converting it to ammonia, which you -- kind of times by 6.

Would you think of profit of $1 a gallon for manufacturing and $1 dollar a gallon from green premium is a conceivable target profit margin?

Sorry, I'm just -- it's a bit difficult to follow you, John. Because I think the way we look at the project is really obviously looking at the return from an IRR perspective. And it does depend on where the project is and whether we're doing ammonia or we're doing hydrogen. So in the United States, for example, where you get the $3 subsidy, theoretically, you have a very different kind of return profile than you do -- on doing a green ammonia project. So -- but look, I think we've given guidance that our plan is to have all our projects with our project IRR in double digits and that's certainly holding true.

Your next question comes Kaan Peker with RBC.

Two questions on iron ore. First one, just going back to what Dino said with regards to the shift in product strategy, talking about more Chichester products. Does that mean more Fortescue Blend versus less Pilbara fines? Hello? [Technical Difficulty]

Sorry, Kaan. It's Andy Driscoll here from the Perth office. We seem to have lost connection with Libreville in Gabon. Perhaps I can take up that -- hang on, they're reconnecting now. Just bear with me for 30 seconds, please. Perhaps while we're doing that, I can take that up, Kaan. So look, we're considering a short-term or temporary refinement of the product strategy. The market is conducive to that at the moment, and we have some flexibility in our supply chain that Dino has talked to, which also allows us to do that. And you're right in terms of how that product mix may shift a little in this current half. It will be pretty minor, I think, at this stage, Kaan. Yes. Dino, are you back online? Yes. I think they're back online, Kaan. if you want to go ahead with your second.

Yes. Sorry about that, everybody.

No worries. But essentially, it means possibly lower Fe grade on aggregate, but just a small difference in terms of the product.

Correct.

Okay. The second one is on Iron Bridge, maybe an update on the water requirements being sourced from the Cannington (sic) [ Canning ] Basin.

Yes, I can take that, Kaan. We're -- essentially the requirements in terms of our license. As we've indicated though in terms of the physical pipe, we've made a call to replace the first 1/3 of the current glass-reinforced plastic, 65 kilometers with steel. It's going to take about 18 months to change that out. And in the meantime, we'll continue to use the current pipeline to support commissioning and ramp up.

Next question comes from Glyn Lawcock with Barrenjoey.

I mean, Dino, just a little question on sustaining CapEx, if I could. Your guidance is $2 billion for this year plus or minus. I mean, the business is now sort of, I guess, almost 20 years old, give or take. So some of the equipment is probably getting a bit long in the tooth. How should we think about that over the coming years?

Yes. Good question. 20 years, I wouldn't necessarily say long in the tooth, some performing at record amounts so would indicate that our asset management strategy is having good success. As we've indicated before, we are entering into to a fleet replacement cycle which will see a higher than usual long-term -- higher-than-usual sustaining capital over the next 2 years. That's coupled with our green fleet timing as well. But we'll give guidance as it comes through.

And Dino, is there -- what about some of the major capital items like car dumper, ship loader? I mean, the original car dumper, original ship loaders, I guess, 20-odd years old now. Are they still good for a little bit longer?

Yes, they are. You're probably picking up on some of our peers in terms of their change ups. No, ours -- we're still working through that. But our train and loaders keep going strong. That is part of the bottleneck that I talked about around our ground network. So obviously, it's the key focus for all our engineering teams.

Your next question comes from Chris Drew with Jefferies.

Just a quick one on the balance sheet. Actually, it looks like a really -- quite a significant step-up in the receivables in the half, $350-odd million plus another $120 million or $130 million on the inventory, so a big lift in the working capital. Is that sort of -- was some of that tied to the derailment? Or what's driving that? And should we expect that to sort of reverse out in the second half helping the cash there?

I'll take that one. I think your question was around working capital. You can see that our cash balance has increased $4.3 billion to $4.7 billion. No change in net debt. Our H1 CapEx spend was $1.5 billion. So the movement, as you said, relates to working capital, predominantly increases in receivables. And that's reflecting the price movements or rising price environment. So it's basically a reflection of a very strong market.

Your next question comes from Giles Parkinson with RenewEconomy.

I've got two questions, probably both for Mark. Just a bit more about the electrolyzers that you've had approved for the Gladstone facility. I was just wondering if you can tell us a bit more about the technology and the cost output. We've seen share price of things like Bloom Energy and Plug Power, both plunge because the electrolyzers are not seen as competitive or there's concerns about sort of capital allocation and things like that. I'm just wondering if are they falling victim to -- look at -- the problems of public markets? Really, I guess, the focus is really on your technology at Gladstone.

Yes. Thanks, Giles. Look, the technology we developed for the Gladstone facility is the PEM technology, which we -- really, the team has done an amazing job over a 2-year period to develop a good PEM, strong-base technology. And the reason we always did this with, one, to make sure we had our own security supply, and also then to sell to the market, which we think would have a competitive product. So -- but look, we are in the stages now where we now need to test that technology, and that's the whole idea behind the PEM50 in Gladstone, to show the world that it works at scale. And that's really the next step in developing the competitive technology. Yes, look, others around the world having difficulty at the moment financially. I mean, I think the lack of projects going into FID is having an impact on that. There's a lot of competition. But this technology is really at its early stage. So it's got a long way to go and we want to be an important player in that.

Okay. The second question is on electrification. I was just kind of curious to see in the Rio Tinto presentation yesterday, the annual results, they didn't expect any sort of electrification of their mines to occur in any sort of scale beyond -- before 2030, yet I understand that you guys are still committed to not burning fossil fuels at all by that date. So who's right and who's wrong?

We are totally right. We're going to make sure we are real zero by 2030 and we're on track to do that.

Your next question comes from Avery Chen with S&P Global Commodity Insights.

I have just one question. I'm wondering whether you expect to continue iron ore growth in Pilbara unhindered in the coming decades, given runout of African iron ore project like Simandou as well as the falling China steel demand in the longer term?

Yes. Thanks, Avery. I'll take that one. Obviously, we -- our exploration team on the back of truly amazing results, we have lots of options in the Pilbara so we continue to explore that. And every year, we look at whether or not that would justify the additional capital for our rail and shipping. That's really the next big tranche of capital that needs to be invested to get to, say, 250 tonnes out of the Pilbara.

Next question comes from Nick Evans with the Australian.

I've got a couple, but first on just the last couple of times we've asked questions about executive movements, the response has included a reference to the one Fortescue model. I just wondered whether you can give us some color on what's actually happening there and whether there's been any significant headcount reduction at Fortescue over the last year, wondering if -- give some idea what that is? And then I have a second question on Gabon.

Yes. Nick, Mark here. Look, I think over the last 6 months, particularly with Dino coming into the Metals side, we've really made a lot of progress on the one Fortescue, being one company, not two. That was always a concern that you had two businesses. We're one business, we're one Fortescue, we have the same values. And we're making a lot of progress on consolidating all the back office and the shared services. And it's been -- the way that myself and Dino are working together, having Shelly Robertson coming onboard to help us to really combine all the functions has been very, very positive. Having Apple come in to be the CFO for both of the businesses is significant as well, and she is doing a great job. But look, we haven't -- we're doing this to make sure that we operate better. We're not doing this to actually take a lot of headcount out of -- and we'll have some efficiency, which we always do, as we kind of try and do what we do better. But I'd say the one Fortescue model is working extremely well.

I'm half tempted to follow up by asking whether you'll still have 2 CEOs by this time next year, but I'll instead ask about Gabon. I just saw a report today, the new U.S. Ambassador to Gabon earlier -- or sort of overnight said that the U.S. had no intention of withdrawing its sanctions on the coup leaders. Given Dino's comments that you had met with the President, who I assume is General Brice who led the coup, is there any risk to Fortescue's plans to raise money in the U.S. because of any relationship with the with that government given the sanctions in place? And has Fortescue had the discussions with the U.S. Department of State over its operations in Gabon?

Yes. Good question, Nick. And I look forward to a long partnership with Mark Hutchinson, CEO of Energy here. Look, I think it's a little bit early yet to talk about financing arrangements. Obviously, it will be a key consideration for us if we move the project on to the next phase.

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

Just wondering, are you guys having any talks with the Australian Renewable Energy Hub, the AREH, about offtake from that project for your iron ore mines or any part of your business up there? And perhaps it's a bit of a connected question, the Energy Minister, Chris Bowen, was up in the Pilbara announcing AUD 140 million for a hydrogen hub. It sort of wasn't clear whether that was going to a particular company at all. So keen to get your reaction to that money and whether you think there's anything in it for Fortescue.

Look -- Peter, Mark here. Just on the first question actually. We're talking to many parties, including the BP, InterContinental team, and we'll continue to do so. In essence this is one ecosystem which we want to make sure gets developed in Australia. So -- and we want to make sure we also have the most efficient energy for own uses. So we'll continue to have discussions with a number of different parties. On the Chris Bowen announcement, I don't have any specific detail on that. That's not something I have visibility to at the moment.

No problem. So with the BP one, Mark, like are they close enough to be a theoretically viable supplier of either electricity or hydrogen to you guys? Or sort of is it the case that you've got so much of your own landholdings up there that you'd sort of be more capable of doing it yourself if you wanted to?

I think we always just -- Peter, at the moment, everything is a bit early stage. We always keep our options open.

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

Thank you, everyone, for the call and what an amazing half year it's been. And again, thanks to the entire Fortescue family for rallying together.