Fuel Tax Credits
Treasury
AI summary
Treasury officials met with Fortescue representatives in February 2026 to discuss fuel tax credits (FTC) and their impact on the company's industrial decarbonisation plans. Fortescue raised concerns that FTC arrangements posed challenges to their decarbonisation business strategy and had previously flagged this issue with Treasury's Climate, Energy and Trade Insights Division. The meetings were facilitated by senior Treasury officials including the First Assistant Secretary of the Climate, Energy and Trade Insights Division and the Assistant Secretary of the Sustainable Finance Branch. The emails indicate scheduling negotiations for meetings in mid-to-late February 2026, with discussions occurring across multiple Treasury divisions.
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NOTE: Fully redacted pages have been removed FOI 4219 Document 1 From: s 47F To: s 47F ; Maloney, Matthew Subject: FW: Meeting request Fortescue | 27 Feb Date: Wednesday, 28 January 2026 4:04:29 PM Attachments: image001.png Good afternoon s 47F and Matt – Hope you are both well! I was wondering whether you could assist me in arranging below meeting with Laura. You may recall that you suggested we speak with her as well. I had reached out but have yet to hear back – but of course appreciate that people are only just returning to the office. Thank you!  Fortescue s 47F @fortescue.com www.fortescue.com  From: s 47F Sent: Friday, 23 January 2026 12:38 PM To: laura.berger-thomson@treasury.gov.au Subject: Meeting request Fortescue | 27 Feb Dear Ms Berger-Thomson, My name is s 47F ; I am s 47F Our s 47F , will be in Canberra on Friday 27th February. We were wondering whether you would be available for a meeting with s 47F and myself. We would greatly appreciate the opportunity to provide an overview of our industrial decarbonisation plans and discuss underlying policy. We have raised the challenge that the FTC poses for our decarbonisation business plan with colleagues from the Climate, Energy and Trade Insights Division in Treasury, and they suggested we also reach out to you. I hope you have availability to meet on 27 February. At this stage, we are free all day except 11:30-12:00. Alternatively, **s 47F** will also be in Canberra on 10th February, available between 14:00 and 17:00. I look forward to hearing from your office. Kind regards, s 47F Fortescue s 47F @fortescue.com www.fortescue.com  FOI 4219 Document 2 From: s 47F To: s 47F Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] Date: Tuesday, 3 February 2026 9:32:49 AM Attachments: image001.png image002.png Hi s 47F I will be in Perth that week and wonder if 11am on Wednesday 18 February could work? Otherwise I could do 1pm on Tuesday 17 February? Best wishes s 47F From: s 47F @TREASURY.GOV.AU> Sent: Tuesday, 3 February 2026 9:06 AM To: s 47F @fortescue.com> Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] OFFICIAL These are also unavailable – can we organise a virtual catch up maybe in week commencing 16th February? Thank you Kind regards s 47F Matthew Maloney – First Assistant Secretary (A/g), Climate, Energy and Trade Insights Division Penny Sirault – Assistant Secretary, Sustainable Finance Branch s 47F Assistant Secretary (A/g), Climate and Energy Policy Branch Climate, Energy and Trade Insights Division s 47F treasury.gov.au Langton Crescent, Parkes ACT 2600 Twitter | LinkedIn | Facebook The Treasury acknowledges the traditional owners of country throughout Australia, and their continuing connection to land, water and community. We pay our respects to them and their cultures and to elders both past and present. OFFICIAL From: s 47F @fortescue.com> Sent: Tuesday, 3 February 2026 8:57 AM To: s 47F @TREASURY.GOV.AU> Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] Hi s 47F That is a shame. I would be free at 1pm today or on Thursday at 3-30pm if either of those worked at all? Best wishes s 47F From: s 47F @TREASURY.GOV.AU> Sent: Tuesday, 3 February 2026 8:50 AM To: s 47F @fortescue.com>; Maloney, Matthew <matthew.maloney@treasury.gov.au>; s 47F @TREASURY.GOV.AU> Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] OFFICIAL Unfortunately they are both unavailable at 1pm Can we look to organise a VC call another time? Thank you Kind regards s 47F Matthew Maloney – First Assistant Secretary (A/g), Climate, Energy and Trade Insights Division Penny Sirault – Assistant Secretary, Sustainable Finance Branch s 47F – Assistant Secretary (A/g), Climate and Energy Policy Branch Climate, Energy and Trade Insights Division s 47F</matthew.maloney@treasury.gov.au> s 47F treasury.gov.au Langton Crescent, Parkes ACT 2600 Twitter | LinkedIn | Facebook The Treasury acknowledges the traditional owners of country throughout Australia, and their continuing connection to land, water and community. We pay our respects to them and their cultures and to elders both past and present. # OFFICIAL From: s 47F @fortescue.com> Sent: Tuesday, 3 February 2026 8:42 AM To: s 47F @TREASURY.GOV.AU>; Maloney, Matthew <matthew.maloney@treasury.gov.au>; s 47F @TREASURY.GOV.AU> Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] Hi s 47F Thank you for your note. We have a 3pm at Parliament House. Would 1pm work? Best wishes s 47F From: s 47F @TREASURY.GOV.AU> Sent: Tuesday, 3 February 2026 8:40 AM To: s 47F @fortescue.com>; Maloney, Matthew <matthew.maloney@treasury.gov.au>; s 47F @TREASURY.GOV.AU> Subject: RE: Request for Meeting Wednesday 4 February [SEC=OFFICIAL] Hi s 47F # OFFICIAL I could put something in at 2:30 if that would work</matthew.maloney@treasury.gov.au></matthew.maloney@treasury.gov.au> Thanks Kind regards s 47F Matthew Maloney – First Assistant Secretary (A/g), Climate, Energy and Trade Insights Division Penny Sirault – Assistant Secretary, Sustainable Finance Branch s 47F – Assistant Secretary (A/g), Climate and Energy Policy Branch Climate, Energy and Trade Insights Division s 47F treasury.gov.au Langton Crescent, Parkes ACT 2600 Twitter | LinkedIn | Facebook The Treasury acknowledges the traditional owners of country throughout Australia, and their continuing connection to land, water and community. We pay our respects to them and their cultures and to elders both past and present. ## OFFICIAL From: s 47F @fortescue.com> Sent: Tuesday, 3 February 2026 8:38 AM To: Maloney, Matthew <matthew.maloney@treasury.gov.au>; s 47F @TREASURY.GOV.AU> Subject: RE: Request for Meeting Wednesday 4 February Hi Matt and s 47F Just following up my email to see if you have time tomorrow. Bron and I could meet at 1-30pm or 2pm if that were convenient for you? Kind regards s 47F From: s 47F Sent: Monday, 2 February 2026 1:23 PM To: Maloney, Matthew <matthew.maloney@treasury.gov.au>; s 47F @treasury.gov.au> Subject: Request for Meeting Wednesday 4 February</matthew.maloney@treasury.gov.au></matthew.maloney@treasury.gov.au> Dear Matt and s 47F My director s 47F and I will be in Canberra for a quick visit on Wednesday following last week's media on fuel tax credits. I wonder if you would have time to meet with us. Around 2pm would be great but let me know if other times would work better. Thank you in advance. Kind regards  Please Note: The information contained in this e-mail message and any attached files may be confidential information and may also be the subject of legal professional privilege. If you are not the intended recipient, any use, disclosure or copying of this e-mail is unauthorised. If you have received this e-mail by error please notify the sender immediately by reply e-mail and delete all copies of this transmission together with any attachments. Please Note: The information contained in this e-mail message and any attached files may be confidential information and may also be the subject of legal professional privilege. If you are not the intended recipient, any use, disclosure or copying of this e-mail is unauthorised. If you have received this e-mail by error please notify the sender immediately by reply e-mail and delete all copies of this transmission together with any attachments. Please Note: The information contained in this e-mail message and any attached files may be confidential information and may also be the subject of legal professional privilege. If you are not the intended recipient, any use, disclosure or copying of this e-mail is unauthorised. If you have received this e-mail by error please notify the sender immediately by reply e-mail and delete all copies of this transmission together with any attachments. FOI 4219 Document 4  # CLIMATE ENERGY FINANCE ## Disclaimer This analysis was conducted by Climate Energy Finance https://climateenergyfinance.org/ For any questions related to this analysis, please contact Climate Energy Finance at: **Tim Buckley** 5 climateenergyfinance.org 47F **Matt Pollard** 5 climateenergyfinance.org 47F © Climate Energy Finance 2025. All material in this work is copyright Climate Energy Finance except where a third party source is indicated. CEF copyright material is licensed under the Creative Commons Attribution 3.0 Australia License. You are free to copy, communicate and adapt the material with attribution to CEF and the authors. ## Important information This is for information and educational purposes only. CEF does not provide tax, legal, investment or accounting advice. This report is not intended to provide, and should not be relied on for, tax, legal, investment or accounting advice. Nothing in this report is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. CEF is not responsible for any investment decision made by you. You are responsible for your own investment research and investment decisions. This report is not meant as a general guide to investing, nor as a source of any specific investment recommendation. Unless attributed to others, any opinions expressed are our current opinions only. Certain information presented may have been provided by third parties. CEF believes that such third-party information is reliable, and has checked public records to verify it wherever possible, but does not guarantee its accuracy, timeliness or completeness; and it is subject to change without notice. Table 1. Estimated Impact to Iron Ore Unit Costs and Margins from FTC Scheme Reform | FY25 / 2025 - Equity Basis | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | C1 Cost (US$/wmt) | 17.3 | 24.3 | 18.0 | | Avg Realised Price (US$/dmt) | 89.3 | 89.4 | 84.8 | | Pilbara Equity Production (Mt) | 246 | 280 | 201 | | Diesel Consumption (ML) | 636 | 834 | 681 | | Diesel Intensity | 2.56 | 2.98 | 3.39 | | Diesel Price w/ FTCS ($/L) | 0.86 | 0.86 | 0.86 | | Diesel Price w/o FTCS ($/L) | 1.37 | 1.37 | 1.37 | | Diesel Cost w/ FTCS (US$/wmt) | 1.45 | 1.67 | 1.90 | | Diesel Cost w/o FTCS (US$/wmt) | 2.30 | 2.65 | 3.01 | | Increase in C1 Cost (US$/wmt) | 0.85 | 0.98 | 1.11 | | Increase in Unit Cost | 4.9% | 4.0% | 6.2% | | Gross Profit Margin w/ FTCS | 81% | 73% | 79% | | Gross Profit Margin w/o FTCS | 80% | 72% | 77% | | Basis Point Decrease | 95 | 110 | 131 | | FY24 / 2024 - Equity Basis | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | C1 Cost (US$/wmt) | 15.8 | 23.0 | 18.2 | | Avg Realised Price (US$/dmt) | 110.2 | 107.7 | 103.0 | | Equity Production (Mt) | 244 | 278 | 190 | | Diesel Consumption (ML) | 599 | 828 | 631 | | Diesel Intensity | 2.46 | 2.98 | 3.32 | | Diesel Price w/ FTCS ($/L) | 1.04 | 1.04 | 1.04 | | Diesel Price w/o FTCS ($/L) | 1.45 | 1.45 | 1.45 | | Diesel Cost w/ FTCS (US$/wmt) | 1.66 | 2.01 | 2.24 | | Diesel Cost w/o FTCS (US$/wmt) | 2.31 | 2.60 | 3.13 | | Increase in C1 Cost (US$/wmt) | 0.85 | 0.79 | 0.88 | | Increase in Unit Cost | 4.1% | 3.4% | 4.8% | | Gross Profit Margin w/ FTCS | 86% | 79% | 82% | | Gross Profit Margin w/o FTCS | 85% | 78% | 81% | | Basis Point Decrease | 59 | 73 | 86 | | Assumptions | Rate | | --- | --- | | Diesel (TJ/ML) | 38.6 | | Diesel (ML/Mt-CO2-e) | 360 | ## Notes Price is US$/dmt FOB. For wmt reported figures, assumed 8% moisture content. Rio Tinto cash cost is not reported as C1 cash cost, figure is unit cost reported over CY / Guidance. Rio Tinto average realised price is calculated on half yearly results figures to align with prices of Fortescue and BHP in concurrent periods. Rio Tinto equity production and diesel consumption is over CY periods. This analysis calculates economics of CY production using FY market prices to improve comparison with Fortescue and BHP. Fortescue production and diesel is on 100% basis given dominance of hematite production relative to Iron Bridge. This allows unit economic calculations to be simplified. Table 2. Impact of Removal of FTC Income for Iron Ore Segmental Earnings | FY24 - USD | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | Revenues Iron Ore | 27,952 | 31,855 | 18,129 | | Expenses Iron Ore | 9,039 | 12,866 | 6,729 | | Underlying EBITDA Iron Ore | 18,913 | 18,989 | 11,400 | | NPAT (Consolidated Group) | 7,897 | 10,749 | 5,664 | | ROCE | 83% | 60% | 31% | | Est. Diesel Consumption | 599 | 828 | 631 | | Est. FTCS Revenues | 191 | 264 | 201 | | FTC Revenues After Tax | 134 | 185 | 141 | | New EBITDA | 18,722 | 18,725 | 11,199 | | New Consolidated Group NPAT | 7,763 | 10,564 | 5,523 | | FY25 - USD | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | Revenues Iron Ore | 22,919 | 26,651 | 15,460 | | Expenses Iron Ore | 8,523 | 12,540 | 6,821 | | Underlying EBITDA Iron Ore | 14,396 | 14,111 | 8,639 | | NPAT (Consolidated Group) | 9,019 | 10,272 | 3,366 | | ROCE | 64% | 42% | 19% | | Est. Diesel Consumption | 636 | 834 | 681 | | Est. FTCS Revenues | 209 | 274 | 224 | | FTC Revenues After Tax | 147 | 192 | 157 | | New EBITDA | 14,187 | 13,837 | 8,415 | | New Consolidated Group NPAT | 8,872 | 10,080 | 3,209 | | Chart Data - FY25 - USD | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | Revenues Iron Ore | 22,919 | 26,651 | 15,460 | | Expenses Iron Ore | -8,523 | -12,540 | -6,821 | | Underlying EBITDA Iron Ore | 14,396 | 14,111 | 8,639 | | Removal of FTC Income | -209 | -274 | -224 | | New EBITDA | 14,187 | 13,837 | 8,415 | Figures. Impact of Removal of FTC Scheme Income to Iron Ore Segmental Earnings (EBITDA) BHP (US$m) ■ Increase ■ Decrease ■ Total  Rio Tinto (US$m) ■ Increase ■ Decrease ■ Total  Fortescue (US$m) ■ Increase ■ Decrease ■ Total  Table 3. Comparison of Gross Margins of C1 Unit Costs to Realised Unit Prices | FY24/2024 Margin Comparison | Margin (no subsidy) | Margin Gain (with FTC subsidy) | Total Margin | | --- | --- | --- | --- | | BHP | 85.0% | 0.6% | 85.6% | | Fortescue | 81.4% | 0.9% | 82.3% | | Rio Tinto | 77.9% | 0.7% | 78.6% | | Vale | 80% | | 80% | | Anglo American | 61% | 0% | 61% | | FY25/2025 Margin Comparison | Margin (no subsidy) | Margin Gain (with FTC subsidy) | Total Margin | | --- | --- | --- | --- | | BHP | 79.7% | 1.0% | 80.6% | | Fortescue | 77.5% | 1.3% | 78.8% | | Rio Tinto | 71.7% | 1.1% | 72.8% | | Vale | 79% | 0% | 79% | | Anglo American | 61% | 0% | 61% |  Figure 1. Comparison of Gross Margins of C1 Unit Costs to Realised Unit Prices Table 4. Return on Capital Employed for Iron Ore Segments | ROCE | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | FY21 | 89% | 100% | 66% | | FY22 | 91% | 62% | 36% | | FY23 | 67% | 64% | 27% | | FY24 | 83% | 50% | 31% | | FY25 | 64% | 38% | 19% | Note Rio Tinto ROCE is reported on a CY basis. 2025 ROCE is for 1H2025. Figure. Return on Capital Employed for Iron Ore Segments  Table 5. Rio Tinto Avg Realised Prices by Financial Year | Financial Years | FY24 | | | FY25 | | FY26 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 6M Periods | 1H23 | 2H23 | 1H24 | 2H24 | 1H25 | 2H25 | 1H26 | | Pitbars FO8 $/wmt | 68.7 | 105.7 | 97.3 | 81.6 | 82.5 | 83.1 | | | Pitbars FO8 $/dmt | 197.3 | 109.5 | 105.8 | 89.0 | 89.7 | 90.3 | | Table 6. Rio Tinto Iron Ore Segmental Financial Results | | 1H25 | 2H24 | 1H24 | 2H23 | 1H23 | FY24 | FY26 | | --- | --- | --- | --- | --- | --- | --- | --- | | Revenues Iron Ore | 12,918 | 14,133 | 15,205 | 16,649 | 18,659 | 31,858 | 26,651 | | Underlying EBITDA Iron Ore | 6,659 | 7,442 | 8,807 | 10,182 | 9,792 | 18,999 | 14,111 | | NPAT (Consolidated Group) | 4,528 | 5,744 | 5,808 | 4,941 | 5,117 | 10,749 | 10,272 | | ROCE | 38% | 45% | 55% | 65.00% | 63% | 60% | 42% | | FY24 Avg | 107.65 | | --- | --- | | FY25 Avg | 89.4 | Source Rio Tinto Annual Results and Half Year Results Table 7. Vale Financial Year Margin Estimates | | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 | 4Q24 | 1Q25 | 2Q25 | FY24 | FY25 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | C1 cash cost (US$/t) | 21.9 | 20.8 | 23.5 | 24.9 | 20.6 | 18.8 | 21.0 | 22.2 | 22.8 | 20.7 | | Iron Ore Fines (US$/wmt FOB) | 98.2 | 118.3 | 100.7 | 98.2 | 90.6 | 93.0 | 90.8 | 85.1 | 103.9 | 89.9 | | Iron Ore Fines (US$/dmt FOB) | 106.7 | 128.6 | 109.5 | 106.7 | 98.5 | 101.1 | 98.7 | 92.5 | 112.9 | 97.7 | | FY24 Margin | 80% | | --- | --- | | FY25 Margin | 79% | Source Vale company accounts Notes Cash cost is for all iron ore production of Vale, inclusive of fines and pellets. However, fines dominate production volumes, so revenues are reported as realised prices for fines. Table 8. Australian Petroleum Statistics - Diesel Oil Import Value and Volume Data | Month | A$m | ML | $/L | | --- | --- | --- | --- | | Jul-23 | 2,711 | 2,868 | 0.95 | | Aug-23 | 3,199 | 2,826 | 1.13 | | Sep-23 | 3,111 | 2,603 | 1.20 | | Oct-23 | 3,082 | 2,603 | 1.18 | | Nov-23 | 2,482 | 2,324 | 1.07 | | Dec-23 | 2,474 | 2,521 | 0.98 | | Jan-24 | 2,492 | 2,573 | 0.97 | | Feb-24 | 2,384 | 2,302 | 1.04 | | Mar-24 | 2,210 | 2,153 | 1.03 | | Apr-24 | 2,501 | 2,473 | 1.01 | | May-24 | 2,681 | 2,790 | 0.96 | | Jun-24 | 2,472 | 2,639 | 0.94 | | Jul-24 | 2,714 | 2,925 | 0.93 | | Aug-24 | 2,098 | 2,311 | 0.91 | | Sep-24 | 1,983 | 2,437 | 0.81 | | Oct-24 | 2,121 | 2,568 | 0.83 | | Nov-24 | 2,131 | 2,520 | 0.85 | | Dec-24 | 2,504 | 2,854 | 0.88 | | Jan-25 | 2,498 | 2,650 | 0.94 | | Feb-25 | 1,709 | 1,847 | 0.93 | | Mar-25 | 2,187 | 2,513 | 0.87 | | Apr-25 | 1,900 | 2,317 | 0.82 | | May-25 | 2,076 | 2,562 | 0.81 | | Jun-25 | 2,026 | 2,528 | 0.80 | | FY24 | 1.04 | | --- | --- | | FY25 | 0.86 | Source https://www.energy.gov.au/publications/australian-petroleum-statistics-2025 FOI 4219 Document 5  # PILBARA WESTERN AUSTRALIA  ANTICIPATED INFRASTRUCTURE - >1GW - -1GW - 4-6 GWh storage - >620km high voltage transmission - Green Metal Project TRANSMISSION LINES - Operational - Under development  Dampier - Karratha - Roebourne Blacksmith - Solomon Solomon WESTERN HUB - Eliwana Cloudbreak - Tom Price Nyding - Chichester Hub - Christmas Creek NYIDINGHU MINDY SOUTH Newman FORTESCUE | 2 # TAKING ACTION NOW ## Heavy Machinery and Equipment being delivered - Cabled excavators and drills in operation - Two 14.5MWh battery electric locomotives built by Progress Rail delivered to the Pilbara - XCMG Watercart, Wheel Dozer, Wheel Loader prototypes to be delivered in 2026 - First battery electric haul trucks in the Pilbara in 2026 - 6MW charger on-site 2026    # TAKING ACTION NOW ## Green Power and Infrastructure - 100MW solar farm commissioned in 2025 - 190MW solar farm under construction - >300,000 panels installed - 460km transmission network has been built to date (out of 629km total) - 2x battery energy storage systems (BESS) to be commissioned in 2026 (100MWh, 250MWh) - Nullagine Wind Project – 17 turbines, 133MW – construction commenced  # Christmas Creek Green Iron Plant | 1500tpa Charting the pathway from demonstration to commercial through cost and financial competitiveness FORTESCUE | 5 # Diesel Use ## Report by Australian Academy of Technological Sciences & Engineering - Diesel contributes ~17% of Australia's total carbon emissions - Annual imports of ~29B litres of diesel highlight Australia's reliance on international markets and reduced domestic refining capacity. - Current policy settings support diesel use by subsidising fossil fuel consumption - Results in delays to critical investment and adoption of cleaner technologies  FORTESCUE | 6 # Fuel Tax Refunds - 2025/26 - Fuel tax rate – 52.6 cents per litre since 2 February 2026 - Total fuel taxes - $25 billion - Total refunds - $10 billion - Total refunds to mining industry - $4.5 billion - Disincentivising decarbonisation: - one ACCU = $30-$40 vs FTCs of $194 per tonne of diesel CO2-e FORTESCUE | 7 # Proposed Reform ## TURN DISINCENTIVE TO INCENTIVE ### Climate Energy Finance - Cap and reinvest - Fuel tax refunds capped at $50 million per company per year - Companies can get more than $50 million back from the government where they invest in cheaper, cleaner more efficient energy in Australia - Budget neutral clean energy investment - Would not affect farmers, fishers or small miners - Converts investment headwind into a tailwind FORTESCUE | 8 # Top 15 claimants of DFTC in FY24 ## Analysis by Clean Energy Finance | 2023-24 Equity Basis | | | | | | | --- | --- | --- | --- | --- | --- | | Entity | Primary Commodity | Diesel Use (ML) | FTCs Paid ($m) | Effective TTI ($m) | YoY vs FY23 | | BHP | Iron Ore / Coal | 1,278 | 627 | 577 | 31% | | Rio Tinto* | Iron Ore | 849 | 416 | 366 | 20% | | Fortescue | Iron Ore | 631 | 309 | 259 | 20% | | Hancock Prospecting | Iron Ore | 262 | 128 | 78 | 21% | | Mineral Resources | Iron Ore | 219 | 107 | 57 | 102% | | Glencore | Coal | 742 | 364 | 314 | 36% | | Mitsubishi Development | Coal | 293 | 144 | 94 | 22% | | Peabody Energy | Coal | 193 | 95 | 45 | 22% | | Whitehaven Coal | Coal | 201 | 99 | 49 | 71% | | Yancoal | Coal | 309 | 151 | 101 | 27% | | Anglo American | Coal | 185 | 90 | 40 | 20% | | Stanmore Resources | Coal | 186 | 91 | 41 | 45% | | QCoal Group | Coal | 131 | 64 | 14 | - | | Pacific National | Coal and Commodity Freight | 284 | 139 | 89 | 14% | | Aurizon | Coal and Commodity Freight | 228 | 112 | 62 | 34% | | Total | | 5,991 | 2,938 | 2,188 | 43% | *Rio Tinto figures are reported on calendar year energy and emissions data, applied to financial year FTC rates. Note: FY24 effective FTC rate of 49 cents per litre. Clean Energy Finance Transition Tax Incentive: Reforming Fuel Tax Credits into a Decarbonisation Tailwind Aug 25 p28 FORTESCUE | 9 Key Arguments Against Change 1 Fuel Taxes are Road Taxes - No effective link between fuel taxes and road funding since 1992 (PBO Fuel Taxation in Australia) - 2023/24 - fuel excise - $25b less $9.6b FTCs = net fuel taxes $16.4b - all levels government spent $44 billion on roads, - total road related revenue $36 billion (Australian Infrastructure and Transport Yearbook 2025) - Hon John Anderson MP, Deputy Prime Minister and Minister for Transport and Regional Services 1 May 1999: ... the Federal Government does not consider diesel fuel excise to be a road user charge. Fuel taxes and the revenue they generate have no correlation to the amount of funds provided whether to the states or nationally for roads. Fuel excise today is a source of general revenue just like income and other taxes. Fuel Tax Inquiry Report March 2002 pp 86-87 - Henry Tax Review The existing structure of fuel tax, annual registration and other road-related taxes is designed primarily to raise revenue. Australia's Future Tax System: Report to the Treasurer - Part 2, Volume 2, page 376 FORTESCUE | 10 # Key Arguments Against Change ## 2 Don't tax business inputs - A principle that is not observed due to cost - The 2002 Fuel Tax Inquiry found extending fuel tax credits to all business would have cost an extra $4.5 billion - Therefore all businesses driving vehicles <4.5t on public roads pay full fuel tax without any refund - Under Fuel Tax Act 2006 only off-road users and heavy vehicles >4.5t on public roads are eligible for refunds - By choosing who is eligible the Act chooses which users to subsidise over others. FORTESCUE | 11 12 # Key Arguments Against Change ## 3 Environment has no place in a taxing statute - Fuel Tax Act 2006 included provisions to help drive clean energy and emissions reduction, as highlighted in the second reading speech by then Minister for Revenue and Assistant Treasurer Peter Dutton: - fuel tax credit not available for on-road vehicles unless they met environmental criteria - large fuel users, receiving more than $3 million per year in fuel tax credits, required to join Greenhouse Challenge Plus Programme (ended 2009 when ETS introduced) - Cleaner fuel grants – the Minister was able to reduce fuel tax credits to fund cleaner fuel grants (s43-10(1) – (2)) (removed 2015) - Provisions Capping FTCs at $50m per company and requiring balance to be spent on decarbonisation would be consistent with earlier inclusion of environmental considerations  FORTESCUE | 13 # FAQs ## Who pays what for diesel? - Miners are paying less than $1 per litre for diesel after tax refund - Australian drivers are paying an average of $1.81/L including 52.6 cpL fuel tax ## What percentage of mine operating costs is diesel? - About US$2/$A3 per tonne or 10% of C1 operating costs* - DFTC removal would add US$1/$1.50/t or 5-6% - Decarbonisation removes these costs * C1/unit costs published by each company # Removal of FTCs has limited impact on iron ore gross margins ## Comparison of Gross Margins of C1 Unit Costs to Realised Unit Prices for Iron Ore Miners, FY25 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%  BHP  Fortescue ■ Margin (no FTC)  Rio Tinto ■ Margin Gain (with FTC)  Vale  Anglo American FORTESCUE | 14 O Table 1. Estimated Impact to Iron Ore Unit Costs and Margins from FTC Scheme Reform | FY25 / 2025 - Equity Basis | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | C1 Cost (US$/wmt) | 17.3 | 24.3 | 18.0 | | Avg Realised Price (US$/dmt) | 89.3 | 99.4 | 84.8 | | Pilbara Equity Production (Mt) | 246 | 280 | 201 | | Diesel Consumption (ML) | 636 | 834 | 681 | | Diesel Intensity | 2.56 | 2.08 | 3.39 | | Diesel Price w/ FTCS ($/L) | 0.86 | 0.86 | 0.86 | | Diesel Price w/o FTCS ($/L) | 1.37 | 1.37 | 1.37 | | Diesel Cost w/ FTCS (US$/wmt) | 1.45 | 1.67 | 1.99 | | Diesel Cost w/o FTCS (US$/wmt) | 2.30 | 2.65 | 3.01 | | Increase in C1 Cost (US$/wmt) | 0.85 | 0.98 | 1.11 | | Increase in Unit Cost | 4.9% | 4.0% | 6.2% | | Gross Profit Margin w/ FTCS | 81% | 73% | 79% | | Gross Profit Margin w/o FTCS | 80% | 72% | 77% | | Basis Point Decrease | 95 | 110 | 131 | | FY24 / 2024 - Equity Basis | BHP | Rio Tinto | Fortescue | | --- | --- | --- | --- | | C1 Cost (US$/wmt) | 15.8 | 23.0 | 18.2 | | Avg Realised Price (US$/dmt) | 119.2 | 107.7 | 103.0 | | Equity Production (Mt) | 244 | 278 | 190 | | Diesel Consumption (ML) | 599 | 828 | 631 | | Diesel Intensity | 2.46 | 2.98 | 3.32 | | Diesel Price w/ FTCS ($/L) | 1.04 | 1.04 | 1.04 | | Diesel Price w/o FTCS ($/L) | 1.45 | 1.45 | 1.45 | | Diesel Cost w/ FTCS (US$/wmt) | 1.66 | 2.01 | 2.24 | | Diesel Cost w/o FTCS (US$/wmt) | 2.31 | 2.80 | 3.13 | | Increase in C1 Cost (US$/wmt) | 0.65 | 0.79 | 0.88 | | Increase in Unit Cost | 4.1% | 3.4% | 4.8% | | Gross Profit Margin w/ FTCS | 86% | 79% | 82% | | Gross Profit Margin w/o FTCS | 85% | 78% | 81% | | Basis Point Decrease | 59 | 73 | 86 | | Assumptions | Rate | | --- | --- | | Diesel (T2/ML) | 38.6 | | Diesel (ML/Mt-CO2-e) | 369 | Notes Price is US$/dmt FOB. For wmt reported figures, assumed 8% moisture content. Rio Tinto cash cost is not reported as C1 cash cost, figure is unit cost reported over CY / Guidance. Rio Tinto average realised price is calculated on half yearly results figures to align with prices of Fortescue and BHP in concurrent periods. Rio Tinto equity production and diesel consumption is over CY periods. This analysis calculates economics of CY production using FY market prices to improve comparison with Fortescue and BHP. Fortescue production and diesel is on 100% basis given dominance of hematite production relative to Iron Bridge. This allows unit economic calculations to be simplified. CEF Analysis FORTESCUE | 15 # FTCs vs Profits | Company | Diesel* | FTCs* | Reported C1 Costs Iron Ore** | Total Revenue | Total Profit | | --- | --- | --- | --- | --- | --- | | BHP | 1,278mL (inc coal) | A$627m (inc coal) | US$17.29/t | US$51 billion | US$9 b | | Rio Tinto | 849mL | A$416m | US$23/t | US$53.7 billion | US$11.6 b | | Fortescue | 631mL | A$309m | US$17.99 (hematite) | US$15.54 billion | US$3.4b | | Vale (Brazil) | - | - | US$21.8/t | US$38.1 billion | US$6.2b | *CEF Transition Tax Incentive Report 2025: Analysis for FY23/24 p28 **Includes $US$2/t for diesel BHP Financial Results FY25 Rio Tinto Annual Report 2024 – reports unit costs Fortescue Annual Report 2025 Vale Annual Report 2024 FORTESCUE | 16 # Decarbonisation creating Jobs - Decarbonisation is driving investment and jobs - Decarbonising Fortescue's Pilbara iron ore operations: - 2022 Board investment of US$6.2 billion - Total peak workforce for decarb program = 1,500 – 1,800 FORTESCUE | 17 FORTESCUE | 18 # Key Points - The proposed change will only affect around 20 of the biggest companies in the mining industry. - Not a single farmer, truckie or tradie will be impacted. - These big mining companies will still be eligible for $50 million in tax refunds. - But to get more than $50 million back from the government, they'll have to invest in cheaper, cleaner more efficient energy. - At a time when Australian drivers are paying $15 billion in fuel taxes, it's entirely reasonable that these taxpayers have questions about why mining companies are getting billions of fuel taxes refunded back to them. FORTESCUE | 19 # Key Points - When these tax refunds were set up, the aim was to help farmers, but over time big mining companies have gotten the vast majority of the funds. - This is a modest change that helps put a bit more fairness back in the system and return it to the original purpose – helping farmers. - By requiring that some of these refunds are spent on clean energy initiatives, we’ll ensure more money stays in Australia – funding Australian projects, with Australian-made energy and Australian workers. - That way, we can prevent funds from ending up in overseas investments.