Growing the business David Joyce Managing director Expansion Projects

Transcription

1 Growing the business David Joyce Managing director Expansion Projects AJM Global Iron Ore & Steel Forecast Cape Lambert port, Western Australia

2 Cautionary statement This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited ( Rio Tinto ) and consisting of the slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions. Forward-Looking Statements This presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Rio Tinto s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Rio Tinto s products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Rio Tinto s present and future business strategies and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems,,political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this presentation. Except as required by applicable regulations or by law, Rio Tinto does not undertake any obligation to publicly update or revise any forward- looking statements, whether as a result of new information or future events. Nothing in this presentation should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will necessarily match or exceed its historical published earnings per share. 2

3 Population growth and urbanisation to drive steel demand for coming decades World urban population growth (Billion people) Building height categories (Steel intensity, floors kg/m 2 ) 250 Floors < 100 F 150 < 50 F 0.5 < 32 F 50 < 18 F The world is set to urbanise 0.8 < 12 F close to another 3 billion -50 < 8F people by the middle 0.5 Steel intensity (low-end) Steel intensity (high-end) of the century Urban Pop. 0.4 China India Other Asia Africa RoW 2050 Urban Pop. Steel intensity of different power technologies (tonnes of steel/mw) Hydro Gas-fired Nuclear Coalfired Wind Solar Source: UN, McKinsey, Rio Tinto 3

4 The China steel story has a long way left to run, with India and others to follow Steel intensity and GDP * (Kg/capita crude steel production) Number of years of steel production above 500 kg/capita 1,400 China exceeded 500 kg/capita level 1,200 of crude steel production 1,000 for first time in China (actual) Korea Japan China (forecast) Germany USA US 30 years Japan 44 years (continuing) Germany 45 years (continuing) Korea 27 years (continuing) 200 India ,000 20,000 30,000 40,000 GDP per capita (PPP basis, $2005) Note: Stylistic representation Source: Correlates of War, Maddison, Global Insight, Rio Tinto China 0 years 4

5 Challenges of bringing on new supply Announced and completed iron ore production capacity (global) (million tonnes) Announced for Completed by Q Certain Probable Possible Rio Tinto Other Announced for Completed by Q Source: UNCTAD, Rio Tinto analysis In the next 7 years 2018, global supply additions need to be at the rate of at least 100 Mt each year: 500 Mt to satisfy expected demand growth 200 Mt to replace expected high cost supply exits We expect to add at least 25% of required supply in that period We have a proven project expansion delivery model Announcements from others do not necessarily translate to supply capacity We will maintain a low and advantageous first quartile cost position and product portfolio 5

6 Pilbara operations: an integrated network of mines, rail, ports and associated infrastructure 14 mines 1,500km of rail 3 port terminals 9 berths 3 power stations Associated infrastructure 6

7 Global iron ore growth options without equal Pilbara expansion projects in scope, on time and on budget 5 Mt this quarter will increase Pilbara capacity to 230 Mt/a 283 Mt/a expansion fully approved 353 Mt/a accelerated to 1H 2015, subject to Board approval 2069 mine plan and strong near-term resources and reserves Drilling >600,000m 000m a year for the next 4 years IOC concentrate expansion currently being commissioned Solid progress at Simandou Cape Lambert expansion 7

8 Our Pilbara operations our immediate future NB: Current perspective subject to change 8

9 Pilbara resource and reserves growth and drilling effort staying ahead of production growth Resource, reserves and production 1 (Million tonnes) Exploration targets 2 (Million tonnes) 20, , ,000 18, ,000 20,000 16, ,000 14, , Exploration targets t (+/- 50%) , , Planned resource development drilling 6, (metres) 4,000, 50 1,000,000 2, Resource: Inferred Indicated Measured Reserves: 0 Probable Production Proven 3 Studies / Plan MLE Tenements Geotech Hd Hydro 1 Resource and Reserves in dry tonnes, reported on a 100% basis and Resources exclusive of Reserves. Details of the Mineral Resources Resource and Ore Reserves from 2001 to 2010 are found in the Rio Tinto Annual Reports 2 Note: The range of Exploration targets are based on some drill-holes, surface mapping and geophysical surveys. It is displayed as a range as the potential quantity is conceptual in nature as there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the generation of a Mineral Resource. 3 Mine Lease Evaluation 9

10 Cape Lambert: the best Pilbara port expansion 14 months Jetty abutment complete; dredging complete for phase A and 70% complete for phase B; 34% of 300 piles installed 1 st 53 Mt/a 2 nd 50 Mt/a Existing Cape Lambert Port Car dumpers CD1 car dumper (x2) replacement (20 Mt/a) 1.8 km 1.8 km 2.5 km Tug harbour Each berth 400 m A second 50 Mt/a expansion would require less capital than first 53 Mt/a 400m wharf extension 60% less dredging g Stockyard replication CD1 car dumper replacement a third expansion of 20 Mt/a 10

11 Port: current progress for 283 Mt/a expansion Dolphin #1 Feb 2012 Car Dumper Tunnel Wharf Works 11

12 Rail: current progress for 283 Mt/a expansion Sleeper laying Tunkawanna anna Creek bridge Cut 9 looking south 12

13 Mines: current progress for 283 Mt/a expansion Brockman 4 phase II and West Turner Syncline: Early a.m. concrete pour for crusher base ROM drainage construction Primary crusher base & ROM wall start 13

14 Making expansions easier by standardisation and replication of designs Standardising the processing plant Belt re-oriented to suit topography Standard design Standardisation has played a key role in our Pilbara expansions Standardised design elements across all projects Designs re-used across projects with minor modifications due to topography or ore characteristics Hope Downs 4 Marandoo 14

15 Locking in contractors to improve contractor continuity and efficiency Previous approach RTIOEP Owners Team EPCM Programme approach RTIOEP Owners Team EPCM A B C D E F G A B C D E F G Coastal West East Other 15

16 Focused cost management is a key factor to strong financial performance Pilbara cash operating unit cost* (2006 = 100) FY 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H AUD cost USD cost We continue to maintain control of AUD cash operating unit costs H unit costs were elevated due to weather impacts H unit costs were aligned with 2010 levels due to increased production in H Increased operational readiness costs, particularly manning Range of key cost mitigation initiatives implemented *Includes all operating costs, excluding royalties or freight costs; adjusted for impacts of Australian CPI but includes Pilbara inflation 16

17 IOC has a strong pipeline of high grade growth options to meet market demand IOC concentrate capacity (Mt/a) Current Concentrate expansion project New mine (CEP) studiesfurther options High grade concentrate stockpiles Sept Iles, Quebec CEP phase 1 to 22 Mt/a on track for delivery in Q and phase 2 to Mt/a in 2013 CEP phase 3 will take concentrate production to 26 Mt/a Consistently high quality products with the lowest phosphorus in the industry High grade resource base in excess of 2 billion tonnes 1, with an extensive 2012 drill programme Line of sight on options for expansion to 50 Mt/a through sequential mine developments 1 Note: Meas = 39.3 %Fe, Ind = 38.2 %Fe, Inf = 37.8 %Fe Source: Rio Tinto Annual Report

18 Strong co-operation with our partners is enabling solid progress to be made at Simandou Largest integrated mining project in Africa, supported by in-country management team Secured tenure and full support of Government of Guinea and Chalco Committed US$3 billion 1 to date, with over US$2 billion allocated to mine-related expenditure Stage gate process for approvals and development Geotechnical drilling at the port is underway Early works contracts being issued and significant rail work tenders released 1 Includes US$700 million settlement payment 18

19 Mine of the Future TM advanced leadership in next generation technologies for mining operations Smart Explosives Truck Autonomous Drilling Operations Centre provide real time, co-ordinated decision-making Conformance to plan improved markedly since implementation 50% improvement in schedule reliability 30% productivity improvement at the car dumper Autonomous Haulage Autonomous Trains Automation provides greater efficiency, lower production costs and improved health and safety e.g. drill and blast 150 autonomous trucks in the Pilbara by 2015 AutoHaul TM automated train programme scheduled for completion by

20 The leading Iron Ore business Fully integrated production platform and diversified sales and marketing strategy Focus on managing Pilbara costs and improving productivity in an environment of strong inflation and a high Australian dollar Pilbara 283 Mt/a expansions remain in scope, on A$ budget and on time, with options for phased expansion Industry-leading advantages in port options, quality and location of mineral resources, and innovation and technology 20

21 CP Consent Statements The information in this report that relates to the Pilbara Mineral Resources and Exploration Targets is based on information compiled by John Phillips whois a member of the Australian Institute of Mining and Metallurgy. John Phillips is a full-time employee of Rio Tinto Iron Ore and has experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined d in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. John Phillips consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. The information in this report that relates to IOC Mineral Resources is based on information compiled by Tim Leriche who is a member of Member, Canadian Institute of Mining and Metallurgy (CIMM). Tim Leriche is a full-time employee of IOC and has experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Tim Leriche consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. The information presented here contains details of a range of Exploration Targets that are based on some drill-holes, surface mapping and geophysical surveys. It is displayed as a range as the potential quantity is conceptual in nature as there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the generation of a Mineral Resource. The information in this report that relates to Pilbara Ore Reserves is based on information compiled by Leon Fouche who is a member of the Australian Institute of Mining and Metallurgy. Leon Fouche is a full-time employee of Rio Tinto Iron Ore and has experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Leon Fouche consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. 21

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