Rio Tinto s aluminium Helping in the transition to a low-carbon economy

Rio Tinto s aluminium Helping in the transition to a low-carbon economy Arnaud Soirat, President and chief executive, Primary Metal, Aluminium Globe Conference, Vancouver B.C. 03 March 2016 **Check against delivery** Thank you. Good afternoon ladies and gentlemen. It s great to be here at the 2016 Globe Conference. This is a very exciting time for Rio Tinto in British Columbia. As you may know, we are currently ramping up to full production at our modernised Kitimat smelter, situated some 650 kilometres up the coast from here. This is however done in a tough context where, the price of aluminium, like those of most commodities remains mired near multi-year lows. Despite the current situation the long-term outlook for aluminium remains positive driven in part by aluminium s role as a solution to many of the world s sustainability challenges and its potential in a lowcarbon economy. Some of you may be surprised to hear that. You may ask how could such an energy-intensive industry possibly have a positive role to play in a thriving low-carbon economy? This is an excellent question, and if we look at the growing end-uses and application trends for aluminium, you will see that it is indeed playing a very important role in meeting some of the world s most pressing challenges, particularly with respect to carbon emissions. One of the most significant sources of carbon emissions comes from transportation activities and more specifically, from the cars and trucks that we drive every day. One of the simplest ways to decrease emissions from cars and trucks is to make them lighter and more fuel efficient or better yet, remove the combustion engine altogether and make them electric. Aluminium is a key ingredient to making these things happen and we see our product being used more and more by automakers. In fact, the transport sector will account for more than 50 per cent of expected demand growth for aluminium. Aluminium s use in vehicles is accelerating because it offers the most environmentally friendly and cost-effective way to increase performance, boost fuel economy and reduce emissions. Every 10 per cent reduction in vehicle weight improves fuel economy by 7 per cent. Page 1 of 5

I think the best example of this is America s best-selling vehicle does anyone know what it is? That is right the Ford F-150 is now all aluminium bodied. This isn t the first time that auto makers are using aluminium to reduce the weight of their cars. Indeed Audi, Mercedes Benz, and Land Rover have been doing it for years in niche high-end markets. What is significant about the Ford F-150 is that it is the first high-volume, mass market aluminium-bodied vehicle going into production anywhere in the world. Aluminium has strong intrinsic qualities: its durability, exceptionally high strength-to-weight ratio and recyclability and it is no surprise why it is becoming a material of choice for architects as well. Utilizing aluminium in buildings can go a long way in helping them qualify for green building status under the globally recognized LEED rating system. It is an excellent material that helps conserve energy it is corrosion resistant and long lasting. Another major plus from a sustainability perspective is the fact that aluminium building products generally contain anywhere from 50 to 85 per cent recycled metal. For instance, how many of you here today are carrying mobile phones with aluminium cases? I know I am. And how about your aluminium-clad laptops and tablets? I think it is fair to ask ourselves the following question: if aluminium is being used more and more what about the challenge that is created by the GHG emissions from all this additional aluminium production? Indeed, aluminium is a very energy intensive industry and where production is based on electricity generated by fossil fuels, it can also be GHG emissions intensive industry. However, not all aluminium is created equal. I am pleased to note this is an area where Rio Tinto is well positioned. 80 per cent of the electricity used by smelters is derived from carbon-free sources compared to the industry average of about 35 per cent. And 50 per cent comes from self-generated, renewable hydro power. This positions us well from a sustainable, competitive power-cost position, and addresses the increasing demand for responsible metal. Canada accounts for the lion s share of our Aluminium group s hydro-electric assets.. In Quebec, Rio Tinto has some 3,100-plus megawatts of owned hydro-power capacity. Here in BC, for example, Kitimat is exclusively powered by our wholly-owned Kemano hydro-electric plant, which has an installed capacity of 890 megawatts. In fact, it is here in Canada where, thanks to our hydro advantage and our innovative production technology, we produce aluminium with the world s lowest carbon footprint. The carbon footprint of the aluminium produced by Rio Tinto here in Canada is 4 times less than that of the industry average and as much as 8 times less than aluminium produced using electricity from coal in China. Page 2 of 5

This is something for all Canadians to be proud of. That provides me with a timely transition to my third theme the crucial issue of sustainable development, which is increasingly top of mind with customers, consumers, governments and society at large. People want to know that the products they consume are sourced responsibly with a minimum impact on the environment from mining and refining to transformation, packaging, application and, ultimately, disposal, preferably by recycling. These increased expectations from stakeholders means we will all have to work harder to earn the position of being a trusted partner and to maintain our social license to operate. At Rio Tinto, we take pride in being part of the solution when it comes to sustainable development and climate change. Rio Tinto was one of the first mining and metals companies to take a position on climate change in the 90s and to advocate for market-based mechanisms. In recent years, our Aluminium product group has significantly reduced emissions. Since 2008, we have reduced our global emissions by 45 per cent. We have achieved such a significant reduction through energy efficiency improvements and divesting more carbon intensive businesses. Here in Canada we have been taking action on climate change since the 1990s, with considerable success. And during the recent COP21 conference, Rio Tinto joined over 600 companies and investors in signing the Paris Pledge for Action on Climate Change. We at Rio Tinto support a price on carbon and the use of market-based mechanisms as the most efficient way to encourage emissions reductions, and drive investment in innovation. Carbon pricing mechanisms in Canada need to be coordinated across jurisdictions and must take into account impacts on competitiveness of our industries as we transition to a low carbon economy. At the end of the day, we all want to drive innovation while continuously striving to lower our carbon footprint. Going forward, we welcome the opportunity to work with Canada s new federal government and to continue our collaborations with provincial and territorial governments, in order to be part of the solution on climate change. To that end, we are also committed to partnering with customers, suppliers and other industry players. An example of this commitment is the Aluminium Stewardship Initiative, or ASI. ASI is a collaborative forum that has brought together members of the aluminium industry with a broad range of stakeholders, including NGOs, to develop the world s first Responsible Aluminium Standard, which will be used to assess our metal s environmental and social performance at every stage of the aluminium value chain. This is precisely the sort of pro-active industry-wide initiative we should all be supporting. We are proud to be a founding member of ASI. With one of the lightest carbon footprints per tonne, Rio Tinto s Aluminium group already is wellpositioned to take advantage of the increasing demand from customers for cleaner, more sustainable Page 3 of 5

products all of which, by the way, attract a premium. Last year, we introduced a unique low CO 2 label, called RenewAl becoming the first aluminium producer to launch such a product. This is a good example where, lowering our carbon footprint, creates new business opportunities. Of course sustainable development is not only about climate change. When it comes to the social pillar of sustainable development, Rio Tinto takes its license to operate very seriously. In fact, the successful delivery of our Kitimat expansion project owes much to lessons learned over the years about collaborating with key stakeholders and contributing to the sustainable development and prosperity of the communities where we operate and in particular with Indigenous communities with whom we look to work in partnership, based on the principles of mutual respect and trust. We recognize and respect Indigenous people s historical connection with the land. We pride ourselves in truth and transparency of the ongoing relationships with our Indigenous partners, and We support education as the way to build the leadership capabilities of Indigenous youth in communities where we operate. At Kitimat, we will be proudly operating in accordance with the landmark Haisla Nation-Rio Tinto Legacy Agreement. Ratified in 2010, it provides a blueprint for us to work together over the next 30 years to maximise the opportunities and benefits of our transformed aluminium operations in Kitimat and the Haisla Nation. During construction of the new plant, Haisla Nation members were well involved and represented in the workforce. Our transformed Kitimat facility, which represents a total investment of almost five billion dollars, is an excellent example of a world-class initiative that embodies all three pillars of sustainability. At full capacity, which we expect to reach just weeks from now, it will be one of the most energy-efficient and cost-competitive smelters in the world, producing some of the cleanest, most responsible aluminium. Finally, this brief video showcases some highlights of the project, and will help you appreciate the significance of our operations here in beautiful British Columbia. When I look at that video and every time I fly into Kitimat or, for that matter, Vancouver I am awestruck by the natural beauty of this land. I am also reminded of the enormous responsibility we all share to preserve and protect our planet for our children, our grand-children and generations beyond. In closing, I wish to reiterate Rio Tinto s unrelenting commitment to sustainable development. Our operations give us the opportunity to bring long-lasting positive change to the communities, regions and countries where we work, and we take pride in the fact that our aluminium is transformed into end products that contribute to higher living standards and a lower carbon footprint for people the world over. Thank you. Page 4 of 5

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