Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (May 2007)
31 slides from Rio Tinto's investor day presentation, May 2007
Slide 1: Rio Tinto Financial community seminar
Rio Tinto Financial community seminar May 2007 1 Cautionary statement For the purposes of the Forward-Looking Statements Safe Harbor provisions of the US securities laws This presentation contains statements which constitute forward-looking statements within the meaning of the US securities laws. Su
Slide 2: Guy Elliott, Chief Financial Officer; Presentation Outline
Guy Elliott Chief Financial Officer 3 Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing Rio Tinto Uranium Interests Summary / Other Rio Tinto items Preston / Guy 4 2
Slide 3: Preston Chiaro, Chief Executive Energy; Presentation Outline
Preston Chiaro Chief Executive Energy 5 Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing Rio Tinto Uranium Interests Summary / Other Rio Tinto items Preston / Guy 6
Slide 4: The Energy Group is a significant contributor to Rio Tinto
The Energy Group is a significant contributor to Rio Tinto Revenue - by commodity Earnings - by commodity Industrial Diamonds Other 5% Minerals 3% 3% Diamonds 3% Copper 21% Energy Industrial Minerals 10% 11% Gold 2% Copper, Gold & Moly 45% Aluminium 14% Energy Iron Ore 17% 29% Iron Ore Aluminium 27%
Slide 5: A major new business opportunity
Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing Rio Tinto Uranium Interests Summary / Other Rio Tinto items Preston / Guy 9 A major new business opportunity 5
Slide 6: The climate change science debate is over; time to develop solutions
The climate change science “debate” is over; it is time to develop solutions 11 Positioned to profit from climate change developments • Rio Tinto supports global efforts to address climate change • The energy future will be carbon constrained • Business opportunities will be found in coal gasificati
Slide 7: Life cycle assessment power generation emissions
Life cycle assessment power generation emissions 1.2 Coal fired power GGE (t CO2-e / MWh) Gas Renewables Nuclear CCS 1.0 0.8 0.6 0.4 0.2 0.0 ro ar S g d ed ic -C C yd -C C tin le in lta C C O nc uc C H W is IG o as as va Ex N ov s G G Ad as ot al al m Ph ur ur io at at B N N 13 Source: CISS, 2002 Hy
Slide 8: Gasification facilitates production of low carbon energy
Gasification facilitates the production of low carbon energy by allowing for cost-effective management of CO2 Carson Hydrogen Power Project 15 Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Ur
Slide 9: The uranium fuel cycle is long and complex
The uranium fuel cycle is long and complex Using reprocessed mixed Enrichment of U235 content oxide (MOX) fuel from 0.7% to 3–4% by gaseous diffusion or centrifuge Reprocessed fuel Access, Fuel Power Reprocessing Exploration & Mining Conversion Enrichment Fabrication Generation & Storage Development
Slide 10: Is nuclear power poised for a renaissance?
Is nuclear power poised for a renaissance? • Energy demand • Security of energy supply • Safety • Climate change 19 Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing
Slide 11: Few major players in the uranium industry
Few major players in the uranium industry Uranium supply est. 2006 (tonnes U3O8) Top 10 by country (2006) Top 7 by company (2006) Canada 11,612 Cameco 9,479 Australia 8,936 Rio Tinto 8,321 Kazakhstan 6,169 Top 6 share = Niger 3,674 80% KazAtomProm 5,813 Top 7 Russia 3,856 share = 83% Namibia 3,620 A
Slide 12: Secondary supplies are expected to decline, requiring mined supply to increase
Secondary supplies are expected to decline, requiring mined supply to increase 85 Uranium supply, 000 tonnes 78 71 – Russian HEU WNA reference agreement to expire in Demand case 66 2013 though may displace mined uranium from Russian market Mined uranium 75 52 67 requirement 40 – U.S. DoE material wi
Slide 13: The market is likely to be tight to 2012 and beyond
The market is likely to be tight to 2012 and potentially beyond Uranium demand vs. Reference Case Supply (tonnes U3O8) 120,000 W NA High W NA Reference 100,000 80,000 Non-W estern mines 60,000 New W estern mines 40,000 W estern existing mines 20,000 Secondary 0 material 2007 2009 2011 2013 2015 2017
Slide 14: Uranium sales contracting
Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing Rio Tinto Uranium Interests Summary / Other Rio Tinto items Preston / Guy 27 Uranium sales contracting • Rio Tinto U
Slide 15: Uranium contracting has changed in a very short time
Uranium contracting has changed in a very short time Contracting pre-2006 Contracting post-2006 Fixed prices Market related pricing Ceilings/ no floors Change in No ceilings/ competitive floors market Base escalated with some conditions market price referencing Some base escalated pricing Lagged pri
Slide 16: Rio Tinto has a long track record of uranium supply
Presentation Outline Introduction Guy Elliott Overview Rio Tinto Energy Preston Chiaro Hydrogen Energy Uranium and the Fuel Cycle Uranium Market Rio Tinto Uranium: Sales and Marketing Rio Tinto Uranium Interests Summary / Other Rio Tinto items Preston / Guy 31 Rio Tinto has a long track record of ur
Slide 17: Rio Tinto has a substantial uranium mineralisation position
Rio Tinto has a substantial uranium mineralisation position Sissons Schultz McArthur River Cree Lake Cigar Lake Inkai Saddle Hills Muyunkum Green Mountain/ Tortkuduk Kharassan Sweetwater Imouraren Cominak Somair Cameco Rio Tinto Areva Jabiluka KazAtomProm Ranger Rössing Valhalla BHP Billiton Dominio
Slide 18: Rössing is located in the dry, coastal region of Namibia
Rössing is located in the dry, coastal region of Namibia 35 Status of operations – life extension is under way • Large scale open pit 4,000 • Low grade granitic ore (Alaskite) 3,500 3,000 • Extension approved in Dec. 2005 - (tonnes U 3O 8) $112m investment underway 2,500 2,000 • Current operations ~
Slide 19: Rössing main pit has further potential
Rössing main pit has further potential Phase 2 will Additional Existing mining extend mine life reserves still areas will be to 2017 to be developed exhausted by 2009 37 Radiometric footprint of Rössing provides options 38 19
Slide 20: Rössing has exploration prospectivity
Rössing has exploration prospectivity • Investigating the potential of two anomalies – SK anomaly, located 1.5km east of the current pit – SH anomaly, located 2.5km west of the current pit • Both close to current pit with a good chance of conversion to mineable targets 39 Rössing – advantages and ch
Slide 21: Energy Resources Australia (ERA) Ranger Mine
Energy Resources Australia (ERA) 41 ERA Ranger Mine • Ranger mine is situated on Aboriginal land, and is surrounded by, but separate from, the world heritage listed Kakadu National Park, approximately 250km east of Darwin • First drummed production in 1981 • Current life of processing extended to 20
Slide 22: Ranger operations
Ranger Magela Creek (Sept 2006) Current Pit Stockpiles Plant and infrastructure Previous pit Water evaporation pond 1 Km 43 Ranger operations 20 Ore to waste (million tonnes) • Waste removal being accelerated to allow tailings 15 storage Ore • Process plant throughput capacity of 2.4 million 10 tonn
Slide 23: Ranger 3 exploration
Recent rainfall has affected pond and open pit water levels Pit 3 December 2006 Pit 3 March 2007 45 Ranger 3 exploration Ranger 3 Drill Holes 2007 2006 S3PD698 Current Pit Shell S3P687 S3PD703 S3PD705 S3PD708 S3PD688 Inside the Road Ranger 3 Deeps Operations Facilities 0 0.25 km 46 23
Slide 24: Ranger 3 drilling intersects Pit 3 extension
Ranger 3 drilling intersects 47 Pit 3 extension – preliminary design Existing Pit Crest 48 24
Slide 25: ERA expansion opportunities – Ranger operations; Jabiluka deposit
ERA expansion opportunities – Ranger operations • In October 2005, ERA announced an increase in reserves of 11,000 tonnes from screening and processing of stockpiled material between 2014 and 2020. • A Pit 3 extension study costing A$5M is currently underway. The extension will target 6,000 tonnes U
Slide 26: ERA – advantages and challenges; Sweetwater permitted mill
ERA – advantages and challenges • 26 years of uranium mining experience in the Northern Territory • World’s second largest uranium mine • Ownership of one of the world’s largest undeveloped uranium resources • Additional on-site exploration activity currently underway - encouraging results to date •
Slide 27: Negotiations continue over Kintyre in Western Australia
Negotiations continue over Kintyre in Western Australia • Discovered in 1984 • Situated on the edge of the Great Sandy Desert in the Eastern Pilbara Region, about 1,200 km NNE of Perth •The Martu are the traditional owners in the region •The Martu support the development of Kintyre • Discussions pro
Slide 28: Potential Rio Tinto production might grow; Energy summary
Potential Rio Tinto production* might grow assuming: 25,000 • Current and new production from Production (tonnes U3O8) 20,000 Ranger and Rössing Range of potential • Potential production production 15,000 from Jabiluka, Kintyre and Sweetwater 10,000 5,000 0 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Slide 29: Creating valuable options for Rio Tinto
Guy Elliott Chief Financial Officer 57 Creating valuable options for Rio Tinto • Focus on value creating option generation • Internal and external opportunities • Asset quality is the key • Trigger can be changing external environment – Short term market opportunities – Long term price trends – Regu
Slide 30: Numerous organic growth opportunities
Numerous organic growth opportunities Alaska copper / Advanced study stage Pebble IOC pellet Conceptual and early stage Diavik plant + Hydrogen underground energy US coal Sweetwater uranium Eagle nickel Oyu Tolgoi Kennecott Orissa iron land ore Resolution Abu Dhabi Grasberg smelter Malaysian copper
Slide 31: Kennecott Land is a major development opportunity; Conclusion
Kennecott Land is a major development opportunity Kennecott Land owns 53% of all developable land in the Salt Lake valley Daybreak upgrade from 14,000 homes to 21,000 homes last week 61 Conclusion • Rio Tinto is continually creating valuable options – Near term uranium expansion – Hydrogen Energy –