Rio Tinto Plc · LSE:RIO
Rio Tinto — Non-Deal Roadshow (October 2018)
25 slides from Rio Tinto's roadshow presentation, October 2018
Slide 1: Copper & Diamonds
Copper & Diamonds Arnaud Soirat Chief executive, Copper & Diamonds October 2018
Slide 2: Cautionary statements
2 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
Slide 3: Safety and health come first
3 Safety and health come first Fatality at Rio Tinto Fer et Titane in April 2018 Continuing history of improvement in AIFR Fatal assault on a security contractor at Richards Bay Rio Tinto ICMM (23 companies) Minerals in July 2018 2.78 Fatality at Paraburdoo Iron Ore mine in August 2018 All injury fr
Slide 4: Building a sector-leading copper portfolio
4 Building a sector-leading copper portfolio Portfolio Performance Growth • Simplified and focussed portfolio • Mine to market approach is delivering • Projects at OT and Kennecott on-track • High quality Reserve & Resource base • Productivity gains at Kennecott and OT • Production increase at Escon
Slide 5: A global presence with high-quality growth options
5 A global presence with high-quality growth options Diavik, Canada Oyu Tolgoi, Mongolia (Diamonds) • RT Share: 33.5%11 • 11 • RT Share: 60% • Partners: TRQ, GoM • Partner: Dominion Diamond Mines ULC Kennecott, US • RT Share: 100% Grasberg, Indonesia • RT Share: 40%2 • Partner: Freeport Resolution,
Slide 6: Rio Tinto well placed to benefit from copper's attractive long-term fundamentals
Rio Tinto well placed to benefit from 6 copper’s attractive long-term fundamentals Copper supply/demand (million tonnes) Market remains finely balanced despite healthy mine performance since 2Q17, underscoring solid demand Surplus Deficit 25 Rio Tinto copper growth to be delivered into a period that
Slide 7: The future for copper: grade decline / expensive projects
7 The future for copper: grade decline / expensive projects Avg copper mine ore grades by processing route, % Cu in ore 1.1% 1.1% 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% 0.6% Mill Feed Grade (wt. avg, ore milled) 0.6% Heap Leach Feed Grade (wt. avg, ore leached) 0.5% 0.5% Ore Grade 0.4% 0.4% 1992 19
Slide 8: Performance: productivity roadmap
8 Performance: productivity roadmap Partnering Best Practice Data & Technology Automation with Suppliers Effective equipment utilisation Payload optimisation and maintenance optimisation Light-weighting of truck beds Shorter haul times Increase mining rates Mining Integrated operations Increase conc
Slide 9: Strong growth and expansion pipeline
9 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 Esc
Slide 10: Kennecott: mine life extension on-track
10 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. Based on the actual production sched
Slide 11: Kennecott: growth and productivity across the value stream
11 Kennecott: growth and productivity across the value stream Mining Concentrator improvements Smelter and refinery Functional / other • Molybdenum plant optimisation • Modernisation programme • Procurement value delivery • South Pushback optimisation • Pyrite deportment to improve • Third party con
Slide 12: Oyu Tolgoi: a leading Tier 1 copper project
12 Oyu Tolgoi: a leading Tier 1 copper project 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 imp
Slide 13: Oyu Tolgoi: growth and productivity across the value stream
13 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 op
Slide 14: Grasberg: in transition
14 Grasberg: in transition Rio Tinto has signed a binding agreement to sell its entire interest in the Grasberg mine to PT Indonesia Asahan Aluminium (Persero) (Inalum), Indonesia’s state mining company, for $3.5 billion Completion expected in first half of 2019* * The transaction and the Inalum/FCX
Slide 15: Escondida: strong partnership with long-term optionality
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 271kt 1 Processing capacity exceed 153.7 Mt per annum2 Total 2017 Attributable Sustainable wat
Slide 16: Resolution: potential Tier 1 asset
16 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 acceleration are under review 1. The Min
Slide 17: Future optionality for the Copper business
17 Future optionality for the Copper business Continued focus on copper exploration, primarily in the Americas 16 copper exploration programmes ~60 per cent of Rio Tinto exploration spend is New technologies and innovation focussed on copper Source: Rio Tinto second quarter operations review ©2018,
Slide 18: Building a sector-leading copper portfolio
18 Building a sector-leading copper portfolio Portfolio Performance Growth • Simplified and focussed portfolio • Mine to market approach is delivering • Projects at OT and Kennecott on-track • High quality Reserve & Resource base • Productivity gains at Kennecott and OT • Production increase at Esco
Slide 19: Appendix slides
RioTinto Appendix slides
Slide 20: Mine output steady, inventories shrinking
20 Mine output steady, inventories shrinking Disruption rates and causes (% mine supply) China’s copper inventory 1100 9% 9% Bonded warehouses + SHFE inventory 8% 8% 1000 7% 7% 900 6% Long-term avg 6% 800 5% 5% 4% 4% 700 3% 3% 600 2% 2% 1% 1% 500 0% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 20
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 7,500 6.20 the US drove the 2018 mid-year selloff in copper prices 7,250 6.30 7,000 6.40 • The first tranche of US tariffs on $50bn of Chinese 6,750 6.50 impo
Slide 22: China's waste import ban disrupting global trade flows
22 China’s waste import ban disrupting global trade flows China scrap monthly imports (kt gross weight) 400 30% • From mid-2017, Chinese authorities began 300 restricting imports of low-quality copper scrap 10% ahead of a full ban in 2019. 200 100 -10% • On Aug 23, China placed a 25% tariff on coppe
Slide 23: Copper & Diamonds H1 2018 highlights
23 Copper & Diamonds H1 2018 highlights H1 2018 H1 2017 Change Mined copper prod’n (Rio share) - kt 296.1 208.9 +42% Free cash flow positive in H1 2018 (inclusive of dividends received from Escondida) despite Refined copper prod’n (Rio share) - kt 117.9 77.1 +53% a $225m increase in capex as activit
Slide 24: Copper & Diamonds: higher prices and volumes driving increased EBITDA
Copper & Diamonds: higher prices and volumes driving 24 increased EBITDA Underlying EBITDA H1 2017 vs H1 2018 $ million 1,500 191 29 1,360 202 1,250 291 1,016 1,000 (48) (30) 771 (11) (14) (21) 750 500 250 0 H1 2017 Price Exchange Energy Inflation Flexed Volumes & Cash costs Exploration & H1 2017 on
Slide 25: Kennecott: growth options progressing
25 Kennecott: growth options progressing 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 fu