Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2003)
59 slides from Rio Tinto's investor day presentation, Nov 21, 2003
Slide 1: ASX cover letter: Rio Tinto investor seminar
RIO TINTO External Affairs Telephone: +61 3 9283 3366 Facsimile: +61 3 9283 3216 21 November 2003 Company Announcements Office Australian Stock Exchange Limited SYDNEY NSW 2000 Dear Sir, Attached are presentations from Rio Tinto’s annual investor seminar conducted in London and New York on Thursday
Slide 2: Investor Seminar and Cautionary Statement
RIO TINTO investor Seminar Leigh Clifford November 2003 Cautionary Statement For the purposes of the Forward-Looking Statements Safe Harbor provisions of the US securities laws This: presentation: contains: statements: which: constitute forward-looking statements within the meaning of the US securit
Slide 3: Agenda - London, New York & Sydney
Agenda - London 2.00 2.05. Leigh Clifford Welcome 2.05 2.10 Paul Skinner Introduction 2.10 245 Sam Waish Aluminium 245 3.20 Oscar Groeneveld Copper 3.20 3.50. David Klingner Expleration Break 410 — 430. Guy Elliott Business performance 430 ~ 5.00 Leigh Clifford Strategy §.00 — 530. Leigh Clifford Qu
Slide 4: Aluminium - well positioned for growth
RIO TINTEO Aluminium Sam Waish November 2003 Ras): Poe eae minto. Aluminium — well positioned for growth Aluminium Group net earnings 96 97 98 99 00 01 02 Alumina: tight market presents growth opportunity Comalco alumina refinery on track NeWeipa project underway Continued focus on operating perform
Slide 5: Maximising shareholder value through our strategy
sinto. Maximising shareholder value through our strategy * Commitment to safety = Goal is zero injuries ~ “Aim for 50% reduction in injures each year Owning high quality assets Build on areas of established expertise Concentrate on large; long life; iow unit cost-operations. Add value through operat
Slide 6: Rio Tinto's position in the alumina market
HAG) * Ff oe - e vinro. Rio Tinto’s position in the alumina market * Rio Tinto will be long alumina with new refinery * The industry ts shifting away from integrated structure * Rio Tinto has a strong alumina sales book: ~ Managed smelters ~ Blue chip customers > Spot sales (China and Russia) qinre
Slide 7: Alumina refinery taking shape
sinro China's aluminium intensity of use (2002) Consumption per capita kg (log scale} 1000 100 Norway. Canada Greece ee Spain tik Netherlands: China ie Saudi Arabia ‘Argentina Venezuela: 5000. 10000 15000 20000 25000 30000 35000 40000 GDP per capita USS vinro Alumina refinery taking shape On time an
Slide 8: NeWeipa project scope
ainto NeWeipa project scope * Move to two mine operation at East Weipa and Andoom. * Produce one blended grade of bauxite. *« Weipa capacity expansion from 12 to 16.5Mtpa. Project completion — end 2004 in time for CAR. Capital expenditure — US$150 million: ~ Major cost is beneficiation plant-at Ando
Slide 9: Six Sigma case study
HO gg. ‘TINTO. Six Sigma case study: NZAS project cluster — increase high purity production Results * Increased production to 110,000 tonnes Return of US$4 million over full year Stable process Ability to leverage further increases Ri TINTO Summary Actively pursuing strategy Growth opportunities in
Slide 10: Copper
RLO TINTO Copper Oscar Groeneveld November: 2003 RIO . vinto Outline Copper Group net earnings $m Strategy. Market Operations Projects Portfolio
Slide 11: Strategy
vINTO Strategy Quality assets Upstream focus Operational excellence Active exploration programme hi, The hard lessons of the late 1990's Copper in 2002 US$ billion Copper price, cents/Ib 180 160 140. 120 100. 80 Copper price 4990 4992 41994: 41996 4998, 2000 2002 Source: Rio. Tinto
Slide 12: A balanced market, but a gap opening up
RIO . a vinto Smelter and refinery charges are at historical lows Cents/b 35 30 25 into A balanced market, but a gap opening up Forecast Consumption Consumption increase {million tonnes} 8 7 4960's 1970's 1980's 1990's
Slide 13: Significant investment programme nearing completion
+o Significant:investments * Escondida flexibility + Waste stripping Rig} : ter . . . tintro Significant investment programme is nearing completion US$milions 350 300. 250. 200. 450 100 50 Escondida lV" Escondida:: ‘Grasberg Palabora = Northparkes: Norte Doz ‘Rio: Tinto share.
Slide 14: Escondida and Grasberg
kid . vinto Escondida i Escondida Base Development Projects a Fiscal Period TINTO Grasberg — one of the best orebodies in the world * Rio Tinto interest * Prospectivily of leases + Joint venture arrangements
Slide 15: Grasberg joint venture arrangements
nO a ‘ro, Grasberg joint venture arrangements * 1995 agreement with FCX + Investment in FCX shares Output . »..Funding for.production ‘Metal strip. expansion * Exploration funding ($100 million) + Metal strip determines JV Output production share * Post 2021 RT share is 40% of all production TINTO G
Slide 16: Grasberg - October mudslide
into Grasberg — October mudslide * Tragic accident * Slip material moved * Gradual ramp up of production * No change to long term mine plan 4inve Grasberg — underground development
Slide 17: Kennecott - improvement, but a way to go
Kennecott — improvement, but a way to go New labour agreement Manning reductions Productivity improvements Post retirement healthcare costs APEX / 6 sigma Rig} + tee + . tinto Significant labour savings have been achieved Employees 800 BB January 2002 9 = September 2003 600 400 Smelter: Concentrator
Slide 18: Refinery productivity improvements
To Refinery productivity improvements, but more expected Lbs Cathode/Man-hour {Includes Precious Metals Piant} vito. Kennecott — improvement, but a way to go * Post retirement healthcare costs « APEX/6 sigma
Slide 19: Kennecott - near term improvement in mineralogy
o . a to Kennecott — near term improvement in mineralogy « Concentrate grade and throughput + By product grades 4997 4998 4999 2000 2004 2002 Q mnths 2003 Gold grade LOM grade ‘inve Kennecott — the future * Future options * Open pit life extension « Underground development
Slide 20: Projects: Resolution
o . ro Projects * Resolution o Huge orebody o Long lead time » Rio Tinto 55% o 1,400m depth o Potential block cave TINTO Realising value from the portfolio Alumbrera and Peak sold Somincor participant agreement reached Fortaleza closure Full value for asset sales
Slide 21: Summary
Io vinto Summary * Good market outlook « High quality assets * Strong position to exploit future discoveries
Slide 22: Exploration
RLO TINTEO Exploration David tingner: November 2003 RI : : rinro A Clear objective “To create value by providing ore resources to Rio Tinto’ «Diamonds: Hamersley tron
Slide 23: The key to success: Prioritise
sinvo The key to success: Prioritise, Prioritise, Prioritise Criteria * Attractiveness of the prize to Rio Tinto * Likelihood of success * Cost of making a definitive test siuvo. Geographical organisation L / oS Santiago } : 2: Melbourne. é ¥ Region HQ & Project Generation © Andastrial Minerals
Slide 24: Relationships with partners
vINTO Relationships with partners « Access to specific attractive opportunities * Access to local experience, knowledge and expertise + Means of divesting discoveries not meeting Rio Tinto objectives Not a mechanism tor managing risk [Es ND, Spread of commodities, spread of risks Total Spend Greenti
Slide 25: Rio Tinto's spend compared to the industry
vINro. Rio Tinto's spend compared to the industry Rio Tinto Indust +tfy A good track record of bringing discoveries to operation M Rossing
Slide 26: Exploration projects and Resolution Copper
~~ azon 2 ‘Sampala Nickel & Marcona Copper. . uxite 5 xu a e Xai Xai limenite Altar Copper sire. Resolution Copper Deposit and Magma Mine GO Pentawente ss large; deep, high-grade, porphyry copper deposit...
Slide 27: Simandou iron ore - Guinea
aif, Simandou tron ore - Guinea Simandou Mining Concession Boundaty: | RITE Exploration Licences. Gey yy i Inferred Mineral Resources HAIN HN
Slide 28: Pilbara high-grade hematite discovery
+i?) Wellthandalthaluna High-Grade Hematite Discovery RIG: 5 Tinto Pilbara lron Ore HE Robe tron tenement JUIN: Harnersiey iron tenement RTE -Tenemant Caliwingina CiD Target Creek Matia Mamba Target High-grade Hamatile Target ° ‘© Mina/daposit me) Pannawonica’ Yandicoagina Newman Brockman No.2 Chann
Slide 29: Diamond kimberlite targets
LEGEND g Diemand Play Baws # Kimibartiies ins BOS sito Brodeur - Tuwawi Kimberlite Dike: <: > <large kimberlite with significant coarse diamond conte
Slide 30: Anantapur Diamond Project
inve Anantapur Diamond Project, Why India? Seven good reasons! We Shee Great Mogul Regent Darya-E-Noor 41640. 47h Century. 475.cb 43° Century? 807 ct A40-ct 109 ct : « Hope Akbar Shah 47" Century? Sancy, 720 412 ct 44" Century? 55 ct
Slide 31: India diamonds programme
RIG. oe nro. india Diamonds Programme Panna Alluvials aris to A0ct Permits total 25,000km= Applications aver 49,000 km? Early stage reconnaissance in North: India Currentfocus is: Anantapur Permits in Andhra: Pradesh — Kimbenite Grilling in:progress Expenditure to date ~US$8.75M Dharwar: Craton Zid)
Slide 32: Diamonds from kimberlite in Andhra Pradesh
ACC Rio Tinto Exploration Ltd Diamonds from kimberlite discovered by Rio Tinto in Andhra Pradesh
Slide 33: Turkey - copper and gold prospects
Turkey — copper and gold prospecis a LEE Tunceli District Exploration Alliance with Anatolia Minerals Search for Copper/goid porphyries Discovered Copier goid deposit (WGM estimate of 4.2Moz at 2.9 git for Anatolia, March 2003) KID: TINTS. r E y
Slide 34: Farellones programme and Altar
> Farellones Programme Summary ® i Melaara ; cK : La Serena, Legend Drill targets: Prospects for follow-tip 2003-2004 Prospects Visited and rejected 2601- 2003, ‘Third party claims or free areas A N KIO: into” ALTAR, San Juan Province, Argentina 42m @ 0.6% Cu, 0.16 git Au 60m @ 0.8% Cu a 1G0m (20: 4
Slide 35: Altar and La Sampala nickel prospect
rote. ALTAR, San Juan Province, Argentina Geologic Evolution i 98m @ 1%Cu + 0 12g/t Au 42m @ 0:60%Cu + 0.16g/t Au 4000m.a.5.2. East Development of oxidation profile and Cc supergene enrichment blanket rINTO La Sampala Nickel Prospect — Sulawesi, Indonesia La Sampaia North RTE CoW Application ‘ _ in
Slide 36: La Sampala benchmarked with Goro
rinto. La Sampala benchmarked with Goro La Sampala - (100% Rio Tinto) « Indonesia + Geological resource potential ~ 320Mt @ 1.43%Ni (3%Mg) Goro ~ {85% Inco New Caledonia Geological resource potential ~ 266Mt @ 1.58%Ni (22%Ma) ‘Presentation generate, Desctiption diz projet Dacersbre 2002 Eagle, USA
Slide 37: Mid-Continent Nickel and Eagle deposit
Rife Mid-Continent Nickel JEGEMIS Aetrunsiains po Rualenliiaha Ricks os 7 Sedimenis Ge Matic Ciatimpbimais |) iy By A Parc Pese Basan sy De a 7, ay yD Wii & KEM Proweack : es _ 7 Lo | y He ve Wy a ‘ Uy | Wy rinto Eagle Nickel-Copper Deposit — Drill Holes LEGEND Rh Nice Sulfide Baril Hi Baga: Hieatli
Slide 38: Competitive Advantage
LEGENO We Poricetite Hise Mineeiizatbon © Bizeeirinated Sai Maewiane Ue coherent zone of semi-massive and massive nickel-copper mineralization. 2. ¢ TINTO Competitive Advantage Strong commitment Clear objectives Rigorous risk assessment Dedicated experienced people Large accessible databases
Slide 39: Investor Seminar - Guy Elliott
RIO TINTO Investor Seminar Guy Elliott November 2003 RIO. : TINTO Overview * Product group updates * Currency movements « Financial position
Slide 40: Iron Ore and Freight
riko iron Ore iron Ore Group net earnings $m. 96 97 98 99 00 01 02 + Ongoing market tightness * Hamersley capacity * Volume and cost trade offs TINTO Freight * Tight market * Rapid increase in spot freight rates * Ship availability
Slide 41: Iron Ore Company of Canada and Energy
RAG TINTO |ron Ore Company. of Canada » Slow progress * Focus on stabilising the business * Labour negotiation in 2004 Rs): . 3 i TINTO. Energy — action being taken to improve performance Energy Group net earnings $m: 96 97 98 99 00 01. 02 * Tough Asian market * Some improvement in US * Focus on cos
Slide 42: Industrial Minerals and Diamonds - Diavik
en ‘ e vino — industrial Minerals Industrial Minerals Group: $m: net earnings 96 97° 98 99. 00 OF « Short-term performance dependent on OECD. + Small but growing exposure to China * 110, and Salt oversupplied vivre Diamonds - Diavik Diamonds net earnings 96 97 98 99 00 01. 02 Diamond prices higher t
Slide 43: Diavik - an asset of the highest quality
_mio Diavik — an asset of the highest quality PINTO Ng Western diamond mines — estimated revenue per tonne USS Diavik pipes — oh Orapa Argylecs oo Menetias: Misery oo As154aN: Panda: Jwaneng =! A-418: Koala tne Diavik — an asset of the highest quality N Western diamond mines -. estimated revenue per
Slide 44: Natural hedge and pension funding
Rio Tinto He, Natural hedge — prices and exchange rates USS TWI, 902160 The Economist NEM index, 95=700 130 USS TW Metals prices 90 91 92 93 94 95 96 97 98 99 00 01 02 03 Inve Corporate items — Pension funding Net pension surpluses and deficits as a percentage of liabilities % ican 30 otal liabiliti
Slide 45: Net debt, interest cover and cash flow
ne. Net debt, interest cover & gearing US$m fe Net debt seemee Net debt / total capital (%) 7,000 semen’ Interest cover (times) 6,000 5,000 4,000 3,000 2,000 4,000 Q 93. 94 95 96 97 98 99 00 01. 02 H103 Net debt interest cover and Gearing ratios areas ‘atthe period ending 37 Decembsr. except for 200
Slide 46: Applications of cashflow and capital expenditure
fit, Applications of cashflow — 1998 to 2002 Diamonds Buy Backs Ind Mins Aluminium | Dividends Energy Copper Iron ore Exploration vhtre Capital expenditure by product group CAR Escondida Norte Hi infrastructure Hismeit 2000 2001 lronore El Energy Elindustrial Minerals fi Copper @ Aluminium @ Diamond
Slide 47: Summary
Comalco alumina refinery: é Enhance returns and margins Hail Creek Bring options to expand E se f He RIO TINTO Summary * Well positioned to exploit opportunities « US dollar * Strong cashflow continues to underpin investments
Slide 48: Investor Seminar - Leigh Clifford
RIO TINTO investor Seminar Leigh Clifford November 2003 Presentation outline Strategic direction Value growth Operational performance Conclusion
Slide 49: Strategic continuity
B8,, Strategic continuity A pure mining company A high quality asset portfolio Operational excellence An opportunistic approach to growth = Malue focus — Quality of opportunity: - Disciplined investment process An unequivocal management focus on long term value creation into Earnings underpinned by
Slide 50: Many paths to increase shareholder value
RIO is unto Many paths to increase shareholder value Existing assets Shareholder Value Future assets Significant near term opportunities Now Future iron ore «Titanium dioxide *Coking coal *Borates “Alumina «Thermal coal «Diamonds “Aluminium *Copper «New products
Slide 51: Greenfield options and iron ore capacity lift
RID: ef a TINTO Greenfield options for the longer term Resolution lron ore Simandou, Orissa, Corumba Titanium dioxide Madagascar, Mozambique Thermal coal Mount Pleasant, Clermont RIG: i : s e aay 5 1iNto Dramatic production lift possible in iron ore capacity mat 250 200 150 4100. 50 2002 capacity. O
Slide 52: RTO asset development programme
RO MINTO RTO asset development programme HI infrastructure to 114mtpa Mine capacity in line with market demand Port access West Angelas to 25mtpa { Expansion potential at Cape Lambert beyond 55mitpa ainto. RTO plans in detatl (handout only) yitalion off ysis approved. Brockman:(+3Mtpa:-> 8Mipa). Eas
Slide 53: Hard coking coal - Hail Creek
aivto Hard coking coal — Hail Creek a major opportunity 5.5mtpa mine China opportunity 1 billion tonne resource Expansion potential China's share of consumption EMERGING Copper Aluminium Borates:
Slide 54: China on the steep part of the intensity curve
into. China on the steep part of the intensity curve er capita (2001 Singepore Ceoch Rep: ‘S Afdes: 20000. GDP: per capita USS. : RYO. i : HATO China market risks Banking system SOE reforms Consumer confidence Government spending
Slide 55: China opportunities and threats
China opportunities and threats — the Rio. Tinto portfolio Opportunities Threats Current Current Iron ore ‘Tbermal Coal Aluminium Near term growth locked in with existing projecis index {1990 =100)" 280 North: c epet Ashton. Underlying production growth: ad on lop ning products valugd-at constant pi
Slide 56: Strong record of operational improvement
ninfo Strong record of operational improvement $m cost savings 300 “super-savings” from the post DLC period Q7 98 99 00 Cost Savings are.quoled as postiax and minorities, and exclude: energy costs and:-cne-off lems RIG: * TINTO. Phases of business improvement . * Leadership Enabling change * Work pr
Slide 57: Work practice change at Hamersley
aivto Work practice change at Hamersiey Lost time (%) (ag) Labour peas 18 450 16 : 400 14 350 300 250 200 150 100 50 Employee productivity Total prime material moved per employee at Blair Athol index 1990 = 100 450 400 356. 300 250 90.91 92 93 94 95 96 97 98 99 00 04 02
Slide 58: Hamersley equipment productivity
sinfo Hamersley equipment productivity major equipment (pleces, teft scale) productivity: (tipiece of equip | a tight scale) 0 1980. 1994 1995. 2002 4976 1980-1991. 1995 2002 RIO: . TINTO Phases of business improvement Enabling change « Continuous improvement Process + Capital productivity rigour +
Slide 59: Business improvement levers and conclusion
. B®, Business improvement levers Equipment Technical utilisation efficiency Capital spending . — productivity Conclusion Bright medium term outlook Responding to opportunities in China Some short term challenges Strong management team