Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2018)
25 slides from Rio Tinto's investor day presentation, Nov 2, 2018
Slide 1: Copper & Diamonds
Copper & Diamonds Arnaud Soirat Chief executive, Copper & Diamonds October 2018
Slide 2: Cautionary statements
Cautionary statements This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”). By accessing/attending this presentation you acknowledge that you have read and understood the following statement. Forward-looking statements This document, including but not limited to a
Slide 3: Safety and health come first
Safety and health come first Eliminating fatalities through the Critical Risk Management programme which continues to be embedded, including controls for critical health risks Preventing catastrophic events through our focus on process safety and the identification and management of controls for maj
Slide 4: Core strengths: Building a sector-leading copper portfolio
©2018, Rio Tinto, All Rights Reserved Core strengths Building a sector-leading copper portfolio Simplified and focussed portfolio High quality Reserve & Resource base Technical synergies with diamonds Mine to market approach is delivering Productivity gains at Kennecott and OT Continued focus on cos
Slide 5: A global presence with high-quality growth options
©2018, Rio Tinto, All Rights Reserved A global presence with high-quality growth options Oyu Tolgoi, Mongolia RT Share: 33.5%11 11 Partners: TRQ, GoM Grasberg, Indonesia RT Share: 40%2 Partner: Freeport Operation Evaluation project Exploration programme Commercial hub Argyle, Australia (Diamonds) RT
Slide 6: Rio Tinto well placed to benefit from copper's attractive long-term fundamentals
©2018, Rio Tinto, All Rights Reserved Rio Tinto well placed to benefit from copper’s attractive long-term fundamentals Market remains finely balanced despite healthy mine performance since 2Q17, underscoring solid demand Rio Tinto copper growth to be delivered into a period that requires development
Slide 7: The future for copper: grade decline / expensive projects
©2018, Rio Tinto, All Rights Reserved The future for copper: grade decline / expensive projects Source: CRU, Wood Mackenzie, company data 1. Based on current trend attributed to depletion of existing reserve base. Required growth1: 1.6Mt of annual production will be lost as mines close between now a
Slide 8: Performance: productivity roadmap
Performance: productivity roadmap Best Practice Partnering with Suppliers Data & Technology Automation Effective equipment utilisation and maintenance optimisation Ore grade distribution Payload optimisation Mining Increase concentrator throughput Improved feed characterisation Mine planning optimis
Slide 9: Strong growth and expansion pipeline
Strong growth and expansion pipeline Supply surplus Supply deficit 2018 2020 2021 2025-2030 Kennecott South push back underpins margin and volume increase Additional pushback and underground options study Oyu Tolgoi HNL1 development to first production Substantial increase in copper production Escon
Slide 10: Kennecott: mine life extension on-track
©2018, Rio Tinto, All Rights Reserved Kennecott: mine life extension on-track Focus on improving productivity and optimising performance Accounts for almost 11% of the US annual copper production Studies on track to extend the life of mine beyond 2030 Return to higher grades expected from 20211 1. B
Slide 11: Kennecott: growth and productivity across the value stream
Mining South Pushback optimisation South Pushback Slice 2 PFS Drainage Gallery Ore FS Concentrator improvements Molybdenum plant optimisation Pyrite deportment to improve concentrate quality South Pushback throughput readiness Smelter and refinery Modernisation programme Third party concentrate stra
Slide 12: Oyu Tolgoi: a leading Tier 1 copper project
©2018, Rio Tinto, All Rights Reserved One of the world’s highest quality copper developments Average underground grades of 1.66%Cu and 0.35g/t Au1 $5.3 billion development capex projected Underground project on budget and schedule First drawbell production expected mid 2020 Productivity improvement
Slide 13: Oyu Tolgoi: growth and productivity across the value stream
Oyu Tolgoi: growth and productivity across the value stream Maximize open pit productivity to bring forward head grade prior to commencing UG: Mine plan optimisation Mine truck and shovel productivity improvement UG Project on time to deliver mid 2020: UG innovation programme UG mine and open pit sc
Slide 14: Grasberg: in transition
Grasberg: in transition * The transaction and the Inalum/FCX transaction (which are inter-conditional) are each subject to a number of conditions precedent being satisfied, including the receipt of regulatory approvals. Rio Tinto has signed a binding agreement to sell its entire interest in the Gras
Slide 15: Escondida: strong partnership with long-term optionality
Strong cash flow underpins dividends No significant capex is required in the short term 2018 production increase supported by three concentrators Processing capacity exceed 153.7 Mt per annum2 Sustainable water strategy – transition to full desal by 20303 4 Partnership approach strengthens the busin
Slide 16: Resolution: potential Tier 1 asset
©2018, Rio Tinto, All Rights Reserved Resolution: potential Tier 1 asset One of the largest undeveloped copper deposits in the world Large, high-grade resources (1.787bt @1.54 percent Cu1) Pre-feasibility study progressing – targeting 2022 completion Permitting on track Options for development accel
Slide 17: Future optionality for the Copper business
Future optionality for the Copper business Continued focus on copper exploration, primarily in the Americas ~60 per cent of Rio Tinto exploration spend is focussed on copper 16 copper exploration programmes New technologies and innovation Source: Rio Tinto second quarter operations review
Slide 18: Core strengths: Building a sector-leading copper portfolio
©2018, Rio Tinto, All Rights Reserved Core strengths Building a sector-leading copper portfolio Simplified and focussed portfolio High quality Reserve & Resource base Technical synergies with diamonds Mine to market approach is delivering Productivity gains at Kennecott and OT Continued focus on cos
Slide 19: Appendix slides
RioTinto Appendix slides bp ®
Slide 20: Mine output steady, inventories shrinking
Mine output steady, inventories shrinking Disruptions to mine output have been below average so far in 2018. Labour negotiations at mine sites have been resolved without industrial action, 80% of planned contract renewals now settled. Disruption rates and causes (% mine supply) Source: Bloomberg, CR
Slide 21: Copper price: trade tensions drive sell-off
Copper price: trade tensions drive sell-off Copper vs CNY: both weakening on growth concerns Concerns over trade tensions between China and the US drove the 2018 mid-year selloff in copper prices The first tranche of US tariffs on $50bn of Chinese imports will have little impact on copper demand. Ch
Slide 22: China's waste import ban disrupting global trade flows
China’s waste import ban disrupting global trade flows From mid-2017, Chinese authorities began restricting imports of low-quality copper scrap ahead of a full ban in 2019. On Aug 23, China placed a 25% tariff on copper scrap imports from the USA (~20% of total imports). In 2018 China’s copper scrap
Slide 23: Copper & Diamonds H1 2018 highlights
Copper & Diamonds H1 2018 highlights Free cash flow positive in H1 2018 (inclusive of dividends received from Escondida) despite a $225m increase in capex as activity ramped up at the Oyu Tolgoi Underground Project 2018 share of production guidance: 510-610kt for mined copper 225-265kt for refined c
Slide 24: Copper & Diamonds: higher prices and volumes driving increased EBITDA
Copper & Diamonds: higher prices and volumes driving increased EBITDA ©2018, Rio Tinto, All Rights Reserved Underlying EBITDA H1 2017 vs H1 2018 $ million Copper & Diamonds underlying EBITDA of $1,360 million benefitted from stronger copper production and higher prices in H1 2018 Copper & Diamonds g
Slide 25: South Pushback
South Pushback Provides a platform for growth and supports a decade of high-quality cash flow Phased development optimises life of mine plan and preserves optionality for future pushbacks Next Pushback Study Next Pushback study underway - options for future mine life extension Underground Options Un