Rio Tinto Plc · LSE:RIO
Rio Tinto — H1 2010 Earnings Presentation
26 slides from Rio Tinto's earnings presentation, Aug 5, 2010
Slide 1: 2010 interim results
2010 interim results 5 August 2010 Shiploader, Cape Lambert
Slide 2: Cautionary statement
Cautionary statement 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. Forward-looking statements T
Slide 3: Jan du Plessis, Chairman
Jan du Plessis Chairman Chute du Diable dam, Saguenay
Slide 4: Tom Albanese, Chief executive officer
Tom Albanese Chief executive officer Bingham Canyon
Slide 5: Continued improvement in safety
Continued improvement in safety 5 August 2010 Rio Tinto 2010 interim results 5
Slide 6: First half 2010 highlights
First half 2010 highlights • Record underlying earnings from higher prices and volumes • Strong cash flows reduced net debt to $12 billion • Operations producing close to capacity • Capital expenditure set to rebound in second half following $3 billion of project approvals in 2010 • Growth projects
Slide 7: EBITDA growth in a volatile period
EBITDA growth in a volatile period Note: Change in price relative to 31 December 2007 Lighter shading denotes profit on disposal of undeveloped exploration properties 5 August 2010 Rio Tinto 2010 interim results 7
Slide 8: Prices and volumes drive iron ore earnings
Prices and volumes drive iron ore earnings 2010 first half highlights • Move to quarterly pricing amidst strong market environment • Pilbara operating close to nameplate capacity of 220mtpa • First production from Mesa A in Q1, Brockman 4 and Western Turner Syncline in July • IOC pellet production a
Slide 9: Exceptional growth path in iron ore
Exceptional growth path in iron ore • Long term outlook remains strong • Focus on regulatory approvals for WA production joint venture • Incremental capacity increases on track in the Pilbara • $1 billion approved for Pilbara 330mtpa expansion early works • Expansion of IOC underway; further options
Slide 10: Aluminium transformation continues
Aluminium transformation continues 2010 first half highlights • Further recovery in pricing • EBITDA breakeven of $1,530/t • Abnormally low rainfall in Saguenay to reduce H2 EBITDA by approx $100 million • Power outage at Laterrière – operating at 50% capacity – final tests for restart underway • Se
Slide 11: New growth projects announced for Copper
New growth projects announced for Copper 2010 first half highlights • Prices slip back from prior half but provide major boost from 2009 first half • Mined copper production impacted by lower grades at Kennecott Utah Copper and Grasberg • Earnings boosted by higher moly prices and volumes • Approval
Slide 12: Energy impacted by lower prices
Energy impacted by lower prices 2010 first half highlights • Continued strength in seaborne market for Australian coal • Australian thermal coal and ERA production impacted by bad weather • Increased coking coal production following equipment investment and operational improvements • First productio
Slide 13: Diamonds & Minerals markets continue to recover
Diamonds & Minerals markets continue to recover 2010 first half highlights • Recovery in prices and volumes • Late cycle commodity strength in first half • Strong growth in Chinese demand for diamonds • Continued progress in Madagascar • Diavik underground commenced production in March • Argyle deve
Slide 14: Guy Elliott, Chief financial officer
Guy Elliott Chief financial officer Hail Creek
Slide 15: Price and volume drive earnings, offsetting cost pressure
Price and volume drive earnings, offsetting cost pressure Note: Exploration and evaluation variance includes $568 million net decrease in gain on undeveloped property sales (+$229 million gain in H1 2010 from sale of undeveloped coal properties compared with $797 million gain in H1 2009 from sale of
Slide 16: Outstanding cash flow generation
Outstanding cash flow generation 5 August 2010 Rio Tinto 2010 interim results 16
Slide 17: Further repayment of debt in first half
Further repayment of debt in first half Gearing defined as ratio of net debt to net debt plus total equity 5 August 2010 Rio Tinto 2010 interim results 17
Slide 18: A consistent approach to uses of cash flow
A consistent approach to uses of cash flow • Investment in value adding growth is top priority • Stable investment conditions a pre-requisite • Single A rating target provides flexibility in a volatile world • Current rating of BBB+ (positive outlook) / Baa1 (stable) • Interim dividend of US45 cents
Slide 19: Prioritising investment in value adding growth
Prioritising investment in value adding growth • Many options available • Capex expected to rebound in second half • $3 billion of project investment approved in first half • 2010 capex of up to $6 billion • 2011 capex of approximately $9 billion subject to stable investment conditions • Potential f
Slide 20: Tom Albanese, Chief Executive Officer
Tom Albanese Chief Executive Officer Diavik Diamond Mine
Slide 21: Persistent economic imbalances may lead to medium term volatility
Persistent economic imbalances may lead to medium term volatility GDP growth forecasts 2009 2010 2011 US -2.4 3.3 2.9 Eurozone -4.1 1.0 1.3 Japan -5.2 2.4 1.8 China 9.1 10.5 9.6 India 5.7 9.4 8.4 Other Asia 1.7 6.4 5.5 Brazil -0.2 7.1 4.2 Middle East 2.4 4.5 4.9 World (PPP -0.6 4.6 4.3 weighted) Sou
Slide 22: Long term trends support significant growth momentum in Rio Tinto's markets
Long term trends support significant growth momentum in Rio Tinto’s markets Source: Global Insight 5 August 2010 Rio Tinto 2010 interim results 22
Slide 23: Rio Tinto's global project pipeline provides options to invest
Rio Tinto’s global project pipeline provides options to invest Key Mines and mining projects Smelters, refineries, power facilities and processing plants remote from mine Countries where Rio Tinto operates Aluminium Copper / nickel Diamonds Energy Iron ore Minerals 5 August 2010 Rio Tinto 2010 inter
Slide 24: $13 billion of capital investment expected over the next 18 months
$13 billion of capital investment expected over the next 18 months Simandou signing ceremony Oyu Tolgoi construction in progress Cape Lambert Kitimat modernisation 5 August 2010 Rio Tinto 2010 interim results 24
Slide 25: Focused on value adding growth
Focused on value adding growth • Outstanding first half earnings, EBITDA and operating cash flow • Net debt reduced to $12 billion • Operating at close to capacity • Key projects completed on time and on budget • Second wave of transformation at Aluminium underway • Strong balance sheet allows $13 F
Slide 26: 2010 interim results
2010 interim results 5 August 2010 Shiploader, Cape Lambert