Rio Tinto Plc · LSE:RIO
Rio Tinto — Deutsche Bank Mining Conference 2008
24 slides from Rio Tinto's conference presentation, Nov 10, 2008
Slide 1: Filed by BHP Billiton Pursuant to Rule 425
Filed by: BHP Billiton Plc and BHP Billiton Limited Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Rio Tinto plc Commission File No.: 001-10533 The following are slides comprising a presentation that was given by Alberto Calderon, Chief Commercial Officer, BHP Billiton on Nov
Slide 2: Deutsche Bank Mining Conference
Deutsche Bank Mining Conference Alberto Calderon Chief Commercial Officer 10 November 2008
Slide 3: Disclaimer
Disclaimer By reviewing/attending this presentation you agree to be bound by the following conditions. The directors of BHP Billiton Limited and BHP Billiton Plc (“BHP Billiton") accept responsibility for the information contained in this presentation. Having taken all reasonable care to ensure that
Slide 4: Disclaimer (continued)
Disclaimer (continued) No statement concerning expected cost savings, revenue benefits (and resulting incremental EBITDA) and EPS accretion in this presentation should be interpreted to mean that the future earnings per share of the enlarged BHP Billiton group for current and future financial years
Slide 5: Agenda
Agenda Diversity delivers stability and strength China and market economic update Robust pipeline of assets Update on the offer for Rio Tinto Slide 4
Slide 6: Agenda
Agenda Diversity delivers stability and strength China and market economic update Robust pipeline of assets Update on the offer for Rio Tinto Slide 5
Slide 7: Our core strategy sets us apart in our industry
Our core strategy sets us apart in our industry • Focus on world-class assets that are large, low-cost and expandable Simplicity • Focus on the extraction of upstream natural resources • Portfolio diversified by commodity, customer and geography reducing the volatility of cash flows Accountability •
Slide 8: Diversity = stability and strength
Diversity = stability and strength (a) Underlying EBIT Margin (%) 80 70 BHP Billiton 60 Petroleum Aluminium 50 Base Metals D&SP 40 SSM Iron Ore Manganese 30 Met Coal Energy Coal 20 10 0 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 (a) FY2002 to FY2005 ar
Slide 9: Strong cash flow delivering value to shareholders
Strong cash flow delivering - value to shareholders (a) Available Cash Flow Organic Growth (US$m) (US$m) 20,000 9,000 H1 H2 7,500 18,000 6,000 4,500 16,000 3,000 1,500 0 14,000 12,000 10,000 (b) ReturntoShareholders 8,000 (US$m) 6,000 9,000 7,500 4,000 6,000 4,500 2,000 3,000 1,500 0 0 Note:FY2005to
Slide 10: The portfolio effect – financial strength
The portfolio effect financial - strength Net Debt Underlying EBITDA / Interest Cover (US$m) 40,000 60 Net Debt (US$m) Underlying EBITDA interest cover 50 30,000 49.4x 43.6x 40 20,000 33.6x 30 20 10,000 10 0 0 FY2006 FY2007 FY2008 Note:Underlying EBITDA interest cover based on net interest. Slide 9
Slide 11: Agenda
Agenda Diversity delivers stability and strength China and market economic update Robust pipeline of assets Update on the offer for Rio Tinto Slide 10
Slide 12: China. Slowing, but still growing.
China. Slowing, but still growing. Gross domestic production (% growth, constant 2006 US$) • Growth deceleration to 9% in 14 3Q08 –sixth consecutive quarter of slowing growth 12 • Full year growth between 9 and 10 China 9.5% (growth would have to fall 8 below 7% in 4Q08 to Emerging and developing co
Slide 13: China macro environment
China macro environment • Inflation, margin squeeze, credit restrictions, & external slowdown have curbed growth since mid-2007 • Olympic closures and security restrictions had marginal effect • Domestic consumption, investment, and infrastructure construction growth remain at near record highs • Ma
Slide 14: Agenda
Agenda Diversity delivers stability and strength China and market economic update Robust pipeline of assets Update on the offer for Rio Tinto Slide 13
Slide 15: World class assets contribute volumes and returns through the cycle
World class assets contribute volumes and returns through the cycle Iron ore cash operating costs Copper cash operating costs (US$/dmt) (US$/t) 140 BHP Billiton WA Iron Ore Weighted Average Cost Delivered to Asia 4,000 120 3,000 2008 80 Delivered 2,000 40 2007 1,000 Delivered 0 0 0 100 200 300 400 5
Slide 16: Strength to invest through the cycle
Strength to invest through the cycle (a) % of growth CY2007-2012 • Strong balance sheet and cashflow provides (Estimated & unrisked) ability to invest across the cycle Non-Ferrous 18% • Investing in growth today does not deliver Steelmaking 45% Materials immediate volume to the market. It can delive
Slide 17: Strength to invest through the cycle – Spence a case study
Strengthtoinvestthroughthecycle– Spencea caseStudy • Having the ability to invest in commodity cycle downturns results in the ability to deliver future production in to more robust markets • The decision to invest in Spence was taken in October 2004 when the copper price was around $1.50/lb • First
Slide 18: Agenda
Agenda Diversity delivers stability and strength China and market economic update Robust pipeline of assets Update on the offer for Rio Tinto Slide 17
Slide 19: Keys to unlocking value
Keys to unlocking value 1 Optimising mineral basin positions and infrastructure – Lower cost, more efficient production – Unlocking volume through matching reserves with infrastructure 2 Enhanced platform for future growth – Deployment of scarce resources to highest value opportunities – Greater abi
Slide 20: 3.4:1 offer represents compelling value
3.4:1 offer represents compelling value Rio Tinto vs BHP Billiton historical share exchange ratio 3.6 BHP Billiton Offer 3.4 3.2 3.0 2.8 2.6 Pre approach fair value exchange ratio 2.4 2.2 Jul-2007 Sep-2007 Nov-2007 Jan-2008 Mar-2008 May-2008 Jun-2008 Aug-2008 Oct-2008 Source: Datastream (as at 4-Nov
Slide 21: Combination is about reducing risk, not increasing it
Combination is about reducing risk, not increasing it • Increased size doesnotmeanincreased complexity – simplicity of thebusinessmodel remains key • Operating as one company results in: – More diversified asset portfolio, lower risk – An enhanced portfolio of growth opportunities – Greater ability
Slide 22: Indicative timetable for the offer
Indicative timetable for the offer 2008 2009 Offer Period Event Jul Aug Sep Oct Nov Dec Jan Day 0(a) Day 60 Post Day 60 Regulatory Approvals Satisfaction of regulatory approval pre-conditions Offer Documentation (within 28 days of the Posting of offer documents for Rio Tinto plc offer pre conditions
Slide 23: Summary – Our Expectations
Summary Our – Expectations • Financial market volatility and economic uncertainty to continue in the short-term • China, India and other developing economies to continue to drive demand for commodities in the long-term • Our diversified portfolio of low cost, high quality assets places us at a compe
Slide 24: cdl
cdl bhpbilliton sourcing the future