Investor Seminar. Cautionary statement. Delivering greater value for shareholders

Transcription

1 3 December 213 Sydney, Australia Investor Seminar Delivering greater value for shareholders Cautionary statement 2 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 forwardlooking 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 2-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. 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 Agenda 3 Introduction, outlook and strategy Capital allocation and performance Copper Aluminium Sam Walsh Chris Lynch Jean-Sébastien Jacques Jacynthe Côté Break Iron Ore Wrap up Andrew Harding Sam Walsh Q & A 3 December 213 Sydney, Australia Emergency procedure Chifley Tower security

3 3 December 213 Sydney, Australia Sam Walsh Chief executive Delivering greater value for shareholders 6 Lower operating costs $1.8bn Exploration & evaluation $.8bn Deliver approved projects Pilbara 29 Oyu Tolgoi phase 1 Kestrel Argyle underground AP6 Increase production Pilbara records Thermal coal Q3 record Cu recovery Lower capex Divest non-core assets $3.3bn announced or completed this year

4 Safety culture critical to operating effectively 7 All injury frequency rates 23 Oct 213 Per 2, hours worked H1 Oct 13 Take 5 safety risk assessment at Dampier Our businesses are well placed to meet global demand growth 8 GDP growth Year on year per cent increase China GDP Trillion RMB (real 25) 15 1 US China Europe 9, 8, 7, +44 Trn RMB 6, 5 5, 4, +29 Trn RMB 3, 2, 1, Source: Global Insight Source: NBS, Rio Tinto estimates

5 A consistent strategy with clear priorities 9 Strategy Invest in and operate long-life, low-cost, expandable operations Clear priorities for 213 Priorities Improve performance Strengthen the balance sheet Deliver results Outcome Greater value for shareholders A diverse portfolio of sector leading businesses 1 Product group Delivering greater value for shareholders by: Iron ore Maintaining position as lowest-cost large-volume producer Copper Shaping a tier one low cost asset portfolio Aluminium Continuing the transformation to improve our portfolio of businesses Energy Improving the cost position of our Energy businesses Diamonds & Minerals Operating demand-led operations in attractive markets

6 3 December 213 Sydney, Australia Chris Lynch Chief financial officer Strong performance on operating cash costs 12 Pre tax operating cash cost variance 213 October year to date, US$ million On track to achieve $2 billion target for full year 213 Further savings targeted for 214 1,826 Other PGs & central Iron Ore Copper Aluminium Global headcount net reduction of ~3,8 since 3 June 212 More than 1,5 separate initiatives being implemented across the business Energy Sharing practices across the Group to leverage cost reduction efforts Cost Reductions Efficiency Improvements Grade Strip Ratios Operational Readiness/ Ramp up Market driven volume reductions One-offs & other Total Cash Cost Impact

7 Targeted reductions in exploration and evaluation spend 13 Exploration and evaluation costs US$ million (pre tax) 1,5 1,25 1, $812 million Oct-12 YoY saving Oct-13 Iron ore evaluation Aluminium evaluation D&M evaluation Copper evaluation Energy evaluation Central exploration Year to date spend around 5% lower than 212 Strong project pipeline to supply future reserves and resources 28 major projects ongoing across 1 commodities in 19 countries Already exceeded 213 target of $75 million reduction in full year exploration and evaluation spend Reduced spend to be sustained in 214 and beyond Delivering strong growth and lower capital expenditure 14 Expected capital expenditure profile* US$ billion >2% <14 >2% <11 >2% ~8 Iron ore growth pathway optimised at a lower capital intensity $2 billion reduction in sustaining capital across the Group Five major projects completed so far in 213 Growth in the most attractive commodities Sequencing the best projects to optimise capex 212A 213F 214F 215F Sustaining Pilbara sustaining Pilbara growth Other growth * Forecast capex is subject to variation in future exchange rates

8 Capital allocation priorities 15 From: Growth and 1 2 Cash returns to 3 Balance sheet sustaining capex shareholders To: Essential 1 Progressive 2 3 Iterative cycle of: sustaining capex dividends Further cash returns to shareholders Compelling growth Debt reduction Progressing non-core asset disposals 16 $3.3 billion of divestments announced or completed this year $2.3 billion of cash proceeds received, including Northparkes $1 billion expected to complete in 214 (Clermont) Capturing value now from assets that no longer fit our strategy >2 divestments worth a total of $16.9 billion completed since 28 Focus on value realisation Clockwise from top left: Clermont, Eagle, Sebree, Palabora and Northparkes

9 Greater returns for shareholders 17 Free cash flows are improving Reducing costs Increasing volumes Cash proceeds from divestments Lowering capex Annual capex expected to reduce by >2% in each of the next three years ( ) Strengthening the balance sheet Focus over the next 12 months on debt reduction Increasing the progressive dividend 211: +34% 212: +15% 3 December 213 Sydney, Australia Jean-Sébastien Jacques Chief executive, Copper

10 Strategy set to create substantial and sustainable value for shareholders 19 Bingham Canyon Copper industry fundamentals are strong but with short-term volatility Solid progress made in 213 to reposition the copper group Long term value creation roadmap to deliver substantial and sustainable value for shareholders Clear set of priorities for 214 Oyu Tolgoi Strong long term fundamentals driven by supply gap and increasing demand 2 Primary mill grades Percentage (industry average) Mine supply / demand balance Million tonnes per annum Highly Probable Projects Base case production capability Primary demand Short term volatility -25% +8Mtpa to meet demand Supply drivers Declining ore grades at existing mines Higher costs (opex & capex) for new mines Greater depth Increasing ore hardness Rising labour costs Increasing utility costs (electricity, water) New supply in difficult jurisdictions Demand drivers China and other emerging markets (India, South East Asia) Non-traditional energy sources Energy efficiency and safety requirements Source: Wood Mackenzie Q3 213

11 Solid progress on re-positioning the copper business in Safety All injury frequency rate (AIFR) Average 212: %.33 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Q3 213 Reduced headcount and increased production Number of employees Thousand tonnes Average % Strong safety drive AIFR improvements $1.8 billion of divestments achieved Bingham Canyon wall side recovery ahead of schedule with haul road completed Oyu Tolgoi operating at nameplate capacity. Underground paused whilst discussions with Government of Mongolia continue Productivity 13% increase in production with 25% decrease in headcount (212 vs 213) 6 4 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Q3 213 Employees Mined Copper (kt) (RHS) 6 2 Strong focus on cost management and productivity improvements 22 Operating costs* Indexed (212) 1% 5% Total material moved per employee* Thousand tonnes Thousand tonnes % Operating costs Volume (Cu kt) (RHS) +5% Replace high cost operations with low cost operations Asset portfolio management $1.8 billion of divestments achieved Productivity improvements Mine plan optimisation Aggressive cost reduction programme continues Delivered approximately $35 million of cost improvements YTD October 213 On track to deliver further savings in 214 Lean and global support functions model Reduction in service and support costs in excess of $5 million to October end * Managed operations

12 Long term value creation roadmap underpinned by four key assets + two projects Copper cost curve (c/lb) Average position for Rio Tinto Copper st Quartile 2nd Quartile 3rd Quartile 4th Quartile Lower cost base Productivity Disposals Prioritised Growth Today Long term kt Four key operating assets Two greenfield projects Kennecott Oyu Tolgoi Escondida Grasberg La Granja Resolution Source: Wood Mackenzie Q4 213 (212 and 229 cost curve; 212 Rio Tinto Copper position); Rio Tinto (indicative Rio Tinto Copper medium and long term cost positions) Kennecott recovery well underway with a focus on improving long term cost position 24 Value drivers 1. Bingham Canyon recovery advancing Concentrator close to full capacity New heavy haul road completed and opened Removal of slide material largely completed by the end of 215 Heavy haul road completed ahead of schedule KUC cost curve position st Quartile Long term 2nd Quartile 3rd Quartile Today 4th Quartile kt 2. Focus on cash generation Productivity improvements Cost reductions Disciplined and prioritised capital allocation process MAP paused 3. Extension of life of mine: Cornerstone:15% of the stripping complete to date Underground development strategy under review North Rim Skarn paused

13 Following Oyu Tolgoi s first shipment to customers, priority is now to maximise value 25 Value drivers 1. Maximise value from open pit operations Concentrator at nameplate capacity Manage outbound logistics Celebration of first concentrate shipment 213 copper concentrate production* Thousand tonnes (1% basis) 2. Unlock value from underground development pending: Resolution of remaining shareholder issues Agreement of a comprehensive funding plan including project finance Receipt of required permits Completion of a feasibility study approved by all stakeholders Establish sustainable licence to operate Community development Vocational training Local supplier program Q1 213 Q2 213 Q3 213 Q4 213 Source: Turquoise Hill Resources guidance Escondida and Grasberg investments drive long term value for Rio Tinto 26 Escondida Investments to sustain production levels & increase life of mine Organic Growth 1 Project ($1.2bn) Oxide Leach Area Project ($.2bn) Escondida Desalination Plant ($1bn) Significant influence in decision making process Grasberg Investment in the transition to a major underground operation 4% of production from 222 Grasberg project funding for 212 to 216 ($.9bn) Actively engaged with Freeport on social and environmental issues Note: All investments are Rio Tinto s share

14 La Granja project is one of the largest undeveloped greenfield copper projects in Latin America 27 Conceptual staged development plan Ability to time expansions to suit market conditions Starter Mine Concentrator I Leach II Concentrator II Leach III Example pathways Cu(kt) Value drivers 1. Unlock value from world s seventh largest undeveloped copper resource Inferred resource of 3.6 billion tonnes at.51% copper Anticipated mine life of 4 years Average peak production over 5 ktpa 2. Phased & structured development pathway Limited initial footprint to leach operation Several development pathway options Pre-feasibility on Phase 1 completed in Establish sustainable licence to operate Focus is on securing social consensus throughout resettlement period, mitigating key project risks Resolution project is the world s third largest undeveloped copper resource 28 Resolution cost curve position st Quartile Long term 2nd Quartile 3rd Quartile 4th Quartile Value drivers 1. Unlock value from low cost Resolution project High quality resource 1.7 billion tonnes at 1.52% copper with significant molybdenum content Anticipated mine life of more than 4 years Average peak production over 64 ktpa 2. Starter mine, phased development with optionality Phased production options to optimal production rate of 12kt/day Focus on lower capital and lower operating risk starter case Project permitting (NEPA) has commenced Robust social licence to operate locally and regionally kt

15 Five key priorities for Production profile Rio Tinto share Thousand tonnes of copper/ Thousand ounces of gold A 212A 213F 214F 215F Copper Gold Production data excludes Palabora from July 213 & excludes Northparkes from January Continue to drive safety agenda 2. Embed and sustain productivity gains and cost savings 3. Maximise value from operating assets: Maximise value from open pit operations at Oyu Tolgoi and manage outbound logistics Continue recovery at KUC and manage smelter maintenance shut down 4. Agree pathway forward at Oyu Tolgoi 5. Continue phased and structured investment at La Granja and Resolution to maintain optionality: Conclude pre-feasibility at La Granja Progress permitting at Resolution Strategy set to create substantial and sustainable value for Rio Tinto shareholders 3 Copper industry has strong long-term fundamentals with short-term volatility Create long term value by focusing on asset strategy Progress already made in 213 towards executing the strategy Solid safety improvements Disposals of $1.8 billion Disciplined and prioritised capital expenditures Material productivity improvement and cost savings Clear road map to become a first quartile producer

16 3 December 213 Sydney, Australia Jacynthe Côté Chief executive, Rio Tinto Alcan 32 Transforming Rio Tinto Alcan through reducing cost, improving productivity and strengthening the portfolio Improve Delivered more than $45 million of cost savings to end of October 213 Strengthen Reshaping the portfolio towards strongest margin businesses Closed or curtailed 6kt of aluminium since 29 and, with the suspension of Gove, will remove 2.6Mt of alumina capacity Sold a further 13 non-core plants over the last five years Deliver Completed Yarwun 2 and AP6 projects Focused on completing Kitimat expansion project by end of 214 No significant new investment in alumina or aluminium for the foreseeable future given challenging market conditions

17 Aluminium market in modest deficit but expansions in China could reverse the trend 33 Global aluminium production balance Million tonnes A 29A 21A 211A 212A 213YTD 5 Aluminium Balance LME Price LME+Premium Source: Platts, Metal Bulletin, London Metal Exchange and CRU Aluminium cash cost curve* US$ per tonne 3 US$/t Aluminium market currently in modest deficit due to Continued strong demand Curtailments/ production disruptions Inventories expected to stay high as financial deals remain attractive LME changes could bring regional premiums down to historical levels putting more pressure on smelters % 5% 75% RoW China Price * Cost curve includes an estimate of premiums as a credit to costs Market conditions maintain pressure on prices and margins for alumina and aluminium 34 Global alumina market cash cost curve US$/t The alumina market is expected to be near balanced in 214 Currently trading at around the marginal cost of production Rio Tinto Alcan to remain slightly long in alumina % 5% 75% RoW China Price (Oct 213) Source: CRU 213 alumina cost curve data

18 Bauxite: strong Chinese demand and Indonesian supply risk continue to provide upward price pressure 35 Bauxite demand from China Million tonnes US$/t Continued strong demand due to declining Chinese domestic reserves and grades Remaining Indonesian supply risk continues to apply pressure on price Australia is the second largest bauxite exporter Rio Tinto Alcan well placed to benefit from increased demand Exports from two bauxite sites with robust expansion options at Weipa Australia Other Price (RHS) Indonesia Demand Forecast Source: Actual data from China Customs. Forecast data from CRU Improving performance through cost reductions and productivity gains 36 Group pre tax operating cash cost variance 213 October year to date, US$ million Cost Reductions Efficiency Improvements Grade Strip Ratios $45m+ Operational Readiness/ Ramp up Other PGs & central Iron Ore Market driven volume reductions Copper Aluminium Energy One-offs & other 1,826 Total Cash Cost Impact Delivered more than $45 million of cost improvements to October 213 Cost reduction initiatives focused on Improving asset and labour productivity Reducing costs of goods, services and raw materials Reducing support function costs Cash improvement initiatives delivering strong reductions in working capital and capital spend

19 Substantially lower functional costs and reduced global employee headcount 37 Functional support costs US$ million Rio Tinto Alcan total headcount Number of full time employees (thousands) A 212A 213F -21% 28% decrease in costs from support functions since % reduction in the global aluminium work force since 29 Over 4, people exited the business in the last four years 3,2 as a result of asset divestments 2,4 as a result of active headcount reduction measures 1,5 employees were added over this period during ramp up of projects Dec-9 Dec-1 Dec-11 Dec-12 Sep-13 Productivity improvements in bauxite mines 38 Weipa truck utilisation Percentage 6% 4% 2% Significant improvements in truck utilisation at Weipa: Increased truck availability through condition based maintenance Reducing turnaround times % 211A 212A 213F Bauxite labour productivity Tonnes moved one kilometre per employee days 211A 212A 213F 47% increase in labour productivity forecast since 211 through Increased production volumes Reduced employee headcount Increased truck utilisation for longer haul distances

20 Productivity improvements in alumina refineries 39 Refinery fixed cost base US$ per tonne % reduction forecast in fixed costs per tonne since 211 through Headcount reduction Maintenance cost reductions 211A 212A 213F Refinery labour productivity Thousand tonnes of alumina per full time employee Weather offset.31 17%* increase in tonnes delivered per employee since 211 through Reduction in overall headcount and contractors Volume increases 211A 212A 213F * Underlying improvements of 32% but for adverse weather impacts this year. Further productivity gains at smelters 4 Materials, services and other costs* US$ million A 46 * Excludes Pacific Aluminium smelter costs F 355 Pacific Aluminium smelter productivity Tonnes per full time employee % decrease in materials and services costs since 212 Reduction of contractors and services at smelters Procurement initiatives on pricing for goods and services 19% increase in smelting productivity since 211 Labour productivity initiatives Amperage increases 211A 212A 213F

21 Strengthening the portfolio: continuing to focus on moving to the low quartile cost assets 41 Divestments 29 Ningxia smelter China Closures and curtailments Thousand tonnes 21 Brockville specialty alumina Ghana Bauxite mine Specialty alumina plants Gardanne alumina refinery Lynemouth power station 213 Vigeland power station & refinery Sebree smelter Constellium sell-down Canada Ghana France & Germany France UK Norway US Global TBC St-Jean-de-Maurienne smelter & Castelsarrazin facility France * Indicates a partial closure Gove alumina refinery 42

22 Delivering our key projects 43 Yarwun refinery, Australia Completing brownfield and modernisation projects to leverage low cost hydro and bauxite positions Yarwun 2 ramp up near completion and delivering reduced operating costs AP6 is complete and ramping up Kitimat modernisation on track for start up by end of 214 and will move production to the first decile South of Embley expansion option can provide long-term bauxite growth No significant investment in alumina or aluminium for foreseeable future Kitimat smelter, Canada Best bauxite reserves in the industry and an unrivalled position in renewable power 44 Bauxite Access to the largest and best quality reserves Interests in three of the four largest bauxite mines in the world Potential expansion opportunities in Australia, Guinea, Brazil and other locations Well positioned to benefit from increased bauxite demand from China and Middle East Power mix by source Percentage 6% 3% 19% Coal Hydro Power Rio Tinto Alcan generates 62% of its own power requirements (industry average of 38%) 34% of our secured energy sources from third parties are long-term power contracts and only 4% from short/ medium term contracts Nuclear Natural Gas Around 8% of our total energy usage comes from clean sources 72%

23 Rio Tinto Alcan continues transformation 45 Market environment remains challenging with the exception of bauxite Rio Tinto Alcan continues transformation through: Reducing costs and increasing productivity Strengthening the portfolio Delivering our brownfield and modernisation projects 3 December 213 Sydney, Australia Break

24 3 December 213 Sydney, Australia Andrew Harding Chief executive, Iron Ore Sector leadership continues to deliver strong returns 48 Driving efficiency though fully integrated operations Lowest cost large volume producer Continuous optimisation of capital efficient growth pathways Low capital growth projects delivered within time and budget Leading sales and marketing strategies Reaping the benefits of implementing new technology Cape Lambert screenhouse

25 Breakthrough Pilbara growth pathway provides a $3 billion saving in growth capital 49 Mine capacity potential (average annualised) Million tonnes per annum Capital intensity to reduce from mid $15s/t to $12-13/t (1% basis) Mine production capacity to increase from 29 Mt/a to more than 35 Mt/a by 217 Rapid low-cost growth to more than 33 Mt in Mt/a mine capacity growth from brownfield expansions Silvergrass and Koodaideri greenfield mines deferred Expectations for sustaining capital requirements unchanged Infrastructure development to 36 Mt/a is progressing on budget and on schedule 5 New stacker reclaimer being delivered Cape Lambert New road bridge New car dumper being delivered Cape Lambert Progress on new car dumper Cape Lambert Port and rail expansion to 36Mt/a approved June 212 Expected completion during H1 215 All wharf topside modules installed New stackers, reclaimer and dumper cells on site Rail bridge, culvert construction and rail duplication well progressed

26 Brownfield expansions and productivity improvements at less than $15/t 51 Initiatives at existing operations will see production of more than 33mt in 215 $4m capex approved to date Key activities Minor plant modifications, including additional crushing and screening Additional mobile equipment to utilise plant capacity Drilling in the Pilbara Example mines Indicative Mt/a West Angelas ~6 Yandi ~8 Brockman 2 life extension of existing plant ~8 Paraburdoo ~7 Nammuldi contract crush & screening ~9 Other ~ Opportunities to defer greenfield mine development reduces medium term capital expenditure Silvergrass ~21 Mt/a Optimisation will increase capacity and reduce capital cost Required for growth ramp-up to 36 Mt/a Share Nammuldi BWT infrastructure Investment decision deferred until third quarter 214 at the earliest Iron ore stacker Koodaideri ~3 Mt/a First production not needed before 219 No longer required for growth ramp Investment decision deferred until 216 at the earliest Would require a 18km railway line

27 Pilbara operations and 29 Mt/a ramp-up in top gear 53 Pilbara mine production Million tonnes per quarter Q1 Q2 Q3 Q4 Tonnes shipped new CLB facility Million tonnes cumulative Anticipated ramp up Actual Aug Sep Oct Nov Record nine month Pilbara mine production of 184 Mt (YoY +4%) 64 Mt record production in Q3 213 Cape Lambert B first ore on ship four months ahead of schedule 24 August Commissioning continues to deliver ahead of anticipated ramp-up Low spend, high return productivity initiatives are business as usual across fully integrated mine, rail and port system Pilbara operations achieving sustainable cost reductions Mining cost per tonne of material moved Indexed (Q3 212) Total contractor costs AUD millions 1,2 1,15 1,1 1,5 1, YTD Q3 212 YTD Q % YTD Q3 212 YTD Q3 213 Sustaining Operations Growth Operations 9% reduction in mining costs to Q3 213 Higher payload from light weight truck trays Improved mine planning; Increased truck utilisation Lower tyre and fuel consumption Reduced blasting requirements Decreased haul distances Improved maintenance tactics 14% reduction in contractor costs to Q3 213 Increased employee engagement, reduced labour hire and other contractors Negotiated decreases in contractor rates Targeted contractor selection processes Competitively testing more of our maintenance work 54

28 Driving productivity through a large number of targeted improvement initiatives 55 Port capacity Parker Point increased ship loading rates by nearly 1, tonnes per hour Car dumper work standardisation improvements in excess of 2 Mt/a and enabled faster train turnaround times Rail fleet Continued braking and train cycle improvements result from electronic controlled pneumatic brakes Ship Loader Cape Lambert Iron Ore Company of Canada: integrated mine to port production system 56 Unencumbered rail and port network wholly-owned by IOC (Rio Tinto 58.7%) CEP project adds mining fleet, ore delivery, grinding and spiral capacity and power infrastructure 213 YTD saleable production of 11.4Mt, 12% higher than 212 Operational performance to match new capacity as quickly as possible Consistently high quality products with the lowest phosphorus in the industry

29 Chinese resurgence in steel demand this year, with further steady growth ahead 57 Chinese steel demand Million tonnes per annum Crude steel demand projections Million tonnes per annum % 2.2% 7.5% 1,2 1, (e) For exported goods Replacement domestic demand New domestic demand Source: China National Bureau of Statistics, CISA, Rio Tinto Source: Rio Tinto Other developing regions should ensure a strong long-run demand for iron ore 58 Total iron ore requirements Million tonnes 3,5 Growth fundamentals 21-3 CAGR China India 3, Population ,5 Urban population , GDP per capita , , China JKT EU27 India ASEAN Middle East Other Source: Rio Tinto Population ASEAN 1. Middle East Urban population GDP per capita Source: United Nations, Global Insight, Rio Tinto 1.6

30 On-going constraint to the development of new iron ore supply 59 Announced and completed seaborne iron ore production capacity (global) Million tonnes Announced for 28-1 Completed by Q4 21 Certain Probable Possible Others completed Rio Tinto additional capacity Announced for Completed by Q3 213 New seaborne supply capacity continues to be constrained Reduced sources of project financing Protracted approvals processes Mid tier/junior projects based on inferior resources In addition to seaborne supply, Chinese domestic iron ore is increasingly difficult to access and costly to produce Source: UNCTAD, Rio Tinto analysis Rapid uptake of 214 off-take opportunities with unfulfilled demand for Rio Tinto iron ores Pilbara off-take agreements by pricing mechanism Q Actual Q Lagged Spot Monthly Pilbara Blends continue to be base load products for Asian steel industry Unprecedented demand for 214 offtake opportunities due to our reputation of providing stable quality and reliable supply Of our 214 volume: ~6% committed under long term contracts ~15% expiring long term contracts that will likely be renewed ~1% new long term contracts At least 15% of 214 production uncontracted for sale into the spot market, in support of robust and transparent indices

31 Sector leadership continues to deliver strong returns 61 Breakthrough Pilbara growth pathway provides a $3 billion saving in growth capital Proven operational performance across the integrated supply chain Lowest cost iron ore producer, continuing to reduce operating costs Delivering major projects ahead of schedule and under budget Leading sales and marketing strategies Development and utilisation of innovative, new technology Coastal infrastructure November December 213 Sydney, Australia Sam Walsh Chief executive

32 Delivering greater value for shareholders 63 Lower operating costs $1.8bn Exploration & evaluation $.8bn Deliver approved projects Pilbara 29 Oyu Tolgoi phase 1 Kestrel Argyle underground AP6 Increase production Pilbara records Thermal coal Q3 record Cu recovery Lower capex Divest non-core assets $3.3bn announced or completed this year 3 December 213 Sydney, Australia Investor Seminar Delivering greater value for shareholders