Slide 1: ASX cover letter for half year results presentation
Rio Tinto Limited 120 Collins Street Melbourne 3000 Australia Postal Address: GPO Box 384D Melbourne 3001 Australia T +61 (0) 3 9283 3333 F +61 (0) 3 9283 3707 For personal use only ASX Market Announcements Australian Securities Exchange SYDNEY NSW 2000 8 August 2013 Dear Sir, Attached is the Rio Ti
Slide 2: 2013 interim results: Pursuing greater value for shareholders
8 August 2013 Safety Strategy Performance Delivery For personal use only 2013 interim results Pursuing greater value for shareholders
Slide 3: Cautionary statement
2 Cautionary statement For personal use only 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. Forw
Slide 4: Sam Walsh, Chief executive
8 August 2013 Safety Strategy Performance Delivery For personal use only Sam Walsh Chief executive
Slide 5: Safety is a core value
4 Safety is a core value For personal use only Injury frequency rates 2003 – H1 2013 Per 200,000 hours worked 2.0 All injury 1.8 frequency rate 1.6 Lost time injury frequency rate 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 H1 Take 5 safety risk assessment at Oyu Tolg
Slide 6: Resilient interim results
5 Resilient interim results For personal use only • Underlying earnings of $4.2 billion • Strong cash flows from operations of $8.0 billion • $1.5 billion of cost reduction efforts − $977 million operating cost savings − $483 million lower exploration and evaluation spend • Record first half sales a
Slide 7: A consistent strategy with clear priorities
6 A consistent strategy with clear priorities For personal use only Invest in and operate large, long-life, Strategy low-cost, expandable operations Clear priorities for 2013 Priorities Improve Strengthen the Deliver performance balance sheet results Outcome Greater value for shareholders ©2013, Rio
Slide 8: Pursuing greater value for shareholders
7 Pursuing greater value for shareholders For personal use only Priority Focus Areas Outcomes in H1 2013 • Reduce costs • $977 million of operating cost reductions • Increase productivity • $483 million lower exploration and Improve • Reduce sustaining capex evaluation spend and working capital • Fo
Slide 9: Chris Lynch, Chief financial officer
8 August 2013 Safety Strategy Performance Delivery For personal use only Chris Lynch Chief financial officer
Slide 10: Solid underlying earnings despite weaker commodity prices
9 Solid underlying earnings despite weaker commodity prices For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 6,000 Total cost reductions of $978m post-tax 5,152 5,000 323 (246) 655 359 4,229 (353) 4,000 211 (308) (131) (149) (1,284) 3,000 2,000 1,000 0 H1 2012 Abse
Slide 11: $1.5 billion in total cost reductions
10 $1.5 billion in total cost reductions For personal use only Cost reduction programme • $977 million of operating cash cost US$ million improvement versus 2012 1000 977 − Half-way to achieving $2 billion target for full year 2013 800 − Further $1 billion target for 2014 655 600 • $483 million redu
Slide 12: Operating cost targets are being achieved
11 Operating cost targets are being achieved For personal use only Pre tax operating cash cost variance • More than 1,500 separate initiatives US$ million being implemented across the business 977 • Major headcount reductions, Other PGs & central relocations and productivity gains Aluminium • Operat
Slide 13: Lower exploration and evaluation spend
12 Lower exploration and evaluation spend For personal use only Exploration and evaluation costs • Strong project pipeline to supply US$ million (pre tax) future reserves and resources − 28 major projects ongoing 1,000 − across 10 commodities $483 − in 19 countries 750 million • On track to achieve
Slide 14: Increasing focus on cash flow
13 Increasing focus on cash flow For personal use only H1 2013 cash flows • Strong cash flow from operations US$ billion reflecting cost reductions despite 12 weaker commodity prices Interest paid and Other ($0.7bn) • $1.9 billion of divestments 10 Increase in net debt $2.9bn Dividends: ($1.7bn) ann
Slide 15: Capital expenditure is being prioritised on highest quality projects
14 Capital expenditure is being prioritised on the highest quality projects For personal use only Expected capital expenditure profile • Capex peaked in 2012 US$ billion • 2013 full year capex expected to be 20 20% below 2012 • Four major projects completed so far 15 this year • Capital is only avai
Slide 16: Prudent balance sheet management
15 Prudent balance sheet management For personal use only Gross debt maturity profile at 30 June 2013 • Long term and smooth debt maturity US$ billion profile 4 − Weighted average maturity of around eight years − Weighted average cost of debt of 3 4% − $3.0 billion of short-dated bonds 2 issued in t
Slide 17: Pursuing greater value for shareholders
16 Pursuing greater value for shareholders For personal use only • Focused on strengthening the Cash from operations balance sheet and divestment proceeds • Discipline in capital allocation • Prioritisation of projects Disciplined Prudent Cash investment in highest value balance sheet returns to sha
Slide 18: Sam Walsh, Chief executive
8 August 2013 Safety Strategy Performance Delivery For personal use only Sam Walsh Chief executive
Slide 19: Recovery at Bingham Canyon ahead of initial expectations
18 Recovery at Bingham Canyon ahead of initial expectations For personal use only • Concentrator throughput operating close to full capacity • Removal of slide material will be largely complete by the end of 2015 • Medium term production expected to be constrained First ore delivered to mill followi
Slide 20: Commenced concentrate shipments at Oyu Tolgoi
19 Commenced concentrate shipments at Oyu Tolgoi For personal use only • First shipment is a major milestone • Ramp-up of open pit production is making good progress • Oyu Tolgoi concentrator consistently operating at over 80% of capacity • Expect to reach full capacity in the Shipment of first conc
Slide 21: Pilbara iron ore 290Mt/a expansion approaching completion
20 Pilbara iron ore 290Mt/a expansion is approaching completion For personal use only • Expansion programme on budget and on time for accelerated ramp-up • 55Mt/a shiploader now installed at Cape Lambert • Rail capacity infrastructure complete • Major coastal infrastructure for Shiploader in place 2
Slide 22: Pursuing greater value for shareholders
21 Pursuing greater value for shareholders For personal use only • Reduce costs Improve • Increase productivity • Reduce sustaining capex and working capital • Enhance discipline in capital allocation Strengthen • Reduce net debt over time • Enhance systems and controls • Complete approved projects
Slide 23: 2013 interim results: Pursuing greater value for shareholders
8 August 2013 Safety Strategy Performance Delivery For personal use only 2013 interim results Pursuing greater value for shareholders
Slide 24: Reconciliation of underlying to net earnings
23 Reconciliation of underlying to net earnings For personal use only Underlying earnings H1 2013 to net earnings H1 2013 US$ million (post tax) 6,000 5,000 4,229 114 4,000 (119) 3,000 (1,854) 2,000 1,720 (340) (310) 1,000 0 Underlying Impairment Impacts of Exchange diffs & Utah Copper - Other Net e
Slide 25: Underlying earnings impacted by lower commodity prices
24 Underlying earnings impacted by lower commodity prices For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 6,000 Thermal 5,152 Iron ore Met coal Copper Coal Aluminium Ind mins Other 5,000 (65) (104) (94) (108) 4,000 (208) (195) (1,284) 3,000 (510) 2,000 1,000 0 H1
Slide 26: Growth in iron ore and recovery in aluminium
25 Growth in iron ore and recovery in aluminium For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 6,000 5,152 118 117 5,000 359 211 4,000 69 (1,284) 3,000 Other 35 Coal 20 2,000 1 2 Iron Ore Aluminium Copper Other 1 Includes Pacific Aluminium volume increases of $20
Slide 27: Offset by lower volumes in other parts of the group
26 …offset by lower volumes in other parts of the group For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 6,000 5,152 Gold Ind Mins Other 5,000 359 (9) Copper1 211 4,000 (131) (1,284) (27) Other 3,000 2,000 (46) (49) 1,000 1 Includes Palabora and Grasberg JV 0 H1 20
Slide 28: Modelling earnings
27 Modelling earnings For personal use only 2012 first half 2013 first half Impact on 2013 full Earnings average price/ average price/ 10% change in year underlying sensitivity rate rate 2013 average earnings ($m) Copper 367c/lb 343c/lb +/-34c/lb 237 Aluminium $2,081/t $1,919/t +/-$192/t 582 Gold $1
Slide 29: Iron ore: achieving record sales in H1 2013
28 Iron ore: achieving record sales in H1 2013 while delivering expansions on time and budget For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 6,000 4,990 5,000 58 118 2 26 1 4,273 4,000 (510) (43) (369) 3,000 2,000 1,000 0 H1 2012 Price FX Vols CPI Energy Other Ca
Slide 30: Copper: improved grades, and commencement of Oyu Tolgoi commercial production
29 Copper: improved grades, and commencement of Oyu Tolgoi commercial production For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 600 530 64 500 175 400 348 21 9 300 (188) (238) (5) (20) 200 100 0 H1 2012 Price FX Vols CPI Energy Other Cash Expl'n Eval'n Other H1 2
Slide 31: Rio Tinto Alcan: volume and cost improvements offset pricing pressure
30 Rio Tinto Alcan:(1) volume and cost improvements offset pricing pressure For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 250 150 95 4 123 97 (20) 50 24 (18) 43 (22) -50 (80) -150 2011 H1 2012 Price Fx Vols CPI Energy Other Cash Expl’n Eval’n Other 2012 H1 2013
Slide 32: Energy: lower prices partly offset by cost saving initiatives
31 Energy: lower prices partly offset by cost saving initiatives For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 400 320 300 200 100 23 (249) 235 - -100 (84) (52) -200 29 22 (17) (10) -300 (321) H1 2012 Extract & Price FX Vols CPI Energy Other Cash Expl'n Other H1
Slide 33: Diamonds & Minerals: increased diamond volumes
32 Diamonds & Minerals: increased diamond volumes partially offset softer metallics markets For personal use only Underlying earnings H1 2012 vs H1 2013 US$ million (post tax) 250 72 192 150 217 50 50 -50 (11) (23) (15) (55) (12) (31) -150 H1 2012 Price FX Vols CPI Energy Other Cash Expn'n Other H1
Slide 34: Other movements in underlying earnings
33 Other movements in underlying earnings For personal use only Underlying earnings impact Epl'n Eval'n Interest, FX/ Cash Epl'n 2012 Non tax & US$ million H1 2012 price Volumes CPI Energy Costs Eval'n disp Cash other H1 2013 Intersegment – – – – – (4) – – – – (4) Other operations (227) (71) 19 (10)
Slide 35: Delivering divestments to streamline the portfolio
34 Delivering divestments to streamline the portfolio For personal use only Divestments announced or completed in 2013 US$m Eagle 315 Palabora Mining Company 373 Altynalmas 235 Northparkes* 820 Other 151 Total to date 1,894 * Announced on 29 July 2013 but not yet completed. ©2013, Rio Tinto, All Rig
Slide 36: Provisional pricing
35 Provisional pricing For personal use only Open shipments Provisional pricing effect (million lbs) (US$m) 30 31 June Dec H1 H1 2013 2012 2013 2012 Escondida 218 215 (66) – Northparkes 35 33 (5) (7) Grasberg JV/Other – 1 – – 253 249 (71) (7) ©2013, Rio Tinto, All Rights Reserved
Slide 37: Earnings reconciliations
36 Earnings reconciliations For personal use only 2013 Energy Resources of Australia US$m Earnings per ERA press release (A$54m) (54) Increased depreciation of closure asset (3) Tax and unwinding of discount 1 Less: Minority interests (31.6%) 18 Other (10) Underlying earnings as reported by Rio Tint