Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2018)
21 slides from Rio Tinto's investor day presentation, Nov 2, 2018
Slide 1: Alf Barrios, Chief executive, Aluminium, October 2018
Alf Barrios Aluminium Chief executive, Aluminium October 2018
Slide 2: Cautionary statements
Cautionary statements ©2018, Rio Tinto, All Rights Reserved 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 do
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: Strong global growth in aluminium
Strong global growth in aluminium Primary aluminium production and stocks Weeks of consumption Aluminium demand growth ~3.2% p.a. next 5 years Increased intensity of use in autos in N. America China expected to be broadly balanced in aluminium in medium to long-term And largely self-sufficient in al
Slide 5: We continue to widen the gap over our competitors
We continue to widen the gap over our competitors ©2018, Rio Tinto, All Rights Reserved Upstream EBITDA margins (per cent) Margin gap: portfolio quality and performance delivery EBITDA margin increase to 38%* Rio Tinto *Rio Tinto Market Analysis which includes adjustments to externally reported EBIT
Slide 6: We maintain our low-cost position despite commodity headwinds
We maintain our low-cost position despite commodity headwinds ©2018, Rio Tinto, All Rights Reserved Source: CRU, IHS and Rio Tinto Market Analysis. Aluminium costs include hot metal and cold metal costs net of market and product premiums. Commodity price increases calculated between 1 January 2016 a
Slide 7: China shows determination to curb overcapacity and reduce pollution
China shows determination to curb overcapacity and reduce pollution Smelting 3.8 Mtpa of illegal capacity removed in 2017 and 2018 (~9% of total) Further 0.8 Mt capacity cuts from environmental winter policy (2017-18) Captive Power Plant policy: targets closure of illegal plants built after March 20
Slide 8: Productivity continues to deliver cash
Productivity continues to deliver cash ©2018, Rio Tinto, All Rights Reserved Best Practice Partnering with Suppliers Data & Technology Automation Aluminium to deliver additional free cash flow of ~$0.5 billion per year from 2021 Automated anode change Autonomous metal / anode transport Bauxite Alumi
Slide 9: Increasing production in bauxite and alumina
Increasing production in bauxite and alumina ©2018, Rio Tinto, All Rights Reserved Bauxite production Million tonnes Bauxite: Maximising value from existing operations Production track record: Weipa 5% p.a. / Gove 11% p.a . Optimising grade allocation to maximise customer ViU Alumina: maximising use
Slide 10: Bauxite: asset performance drives productivity
Bauxite: asset performance drives productivity ©2018, Rio Tinto, All Rights Reserved Gove Weipa Debottlenecking the value chain through data analytics (constraint identification / elimination) Processing system rates increases for minimal capital expenditure at Gove and Weipa Increased HME productiv
Slide 11: Smelters creeping at 1% per annum, double industry average
Smelters creeping at 1% per annum, double industry average ©2018, Rio Tinto, All Rights Reserved Long history of cutting-edge smelter productivity Industry-leading technology, expertise and innovation Creep innovation the engine of technology productivity Low capital intensity, high-return investmen
Slide 12: Technology, process intelligence and expertise underpin our competitive advantage
Technology, process intelligence and expertise underpin our competitive advantage ©2018, Rio Tinto, All Rights Reserved Industry-leading technology AP Technology APxe low energy consumption Spent potlining valorisation Elysis – inert anode technology (in development) Skills & expertise Technology an
Slide 13: Data analytics, automation and integrated operations drive the next wave of productivity
Data analytics, automation and integrated operations drive the next wave of productivity ©2018, Rio Tinto, All Rights Reserved Data analytics Anode traceability Anode spike predictive detection Asset health monitoring Integrated Operations Real-time process optimisation & integration Hydropower Cont
Slide 14: Enhancing margins through VAP
Enhancing margins through VAP ©2018, Rio Tinto, All Rights Reserved Value added product (VAP) enhances margins VAP 58% of portfolio Additional revenue $222 per tonne1 Further scope to grow margins through commercial excellence Customer partnerships: North American automotive light-weighting Market d
Slide 15: Amrun ramping up in 2019
Amrun ramping up in 2019 ©2018, Rio Tinto, All Rights Reserved Tier 1 investment with low market risks 23 Mt total capacity: replaces East Weipa (13 Mt), captures China market growth (10 Mt) First quartile cost curve position, low technical risks First shipment in Q4 2018 with full ramp-up in 2019 R
Slide 16: In summary: strong demand outlook, value delivery through productivity and growth options
In summary: strong demand outlook, value delivery through productivity and growth options ©2018, Rio Tinto, All Rights Reserved Strong demand outlook China supply-side turning point World-class first quartile assets Near-term growth from productivity and commercial Growth options in bauxite and alum
Slide 17: Appendix
Appendix
Slide 18: US tariff impact on primary metal
Section 232 impact ©2018, Rio Tinto, All Rights Reserved US total primary metal consumption (Mt) Tariff providing some support to restarts: 0.6 Mt of capacity restarts announced1 Of which ~0.5 Mt restarted or in progress Additional 0.26 Mt idle, could potentially restart2 New capacity unlikely US pr
Slide 19: Relevance of Alunorte curtailment, Rusal sanctions and alumina legacy contracts
Relevance of Alunorte curtailment, Rusal sanctions and alumina legacy contracts ©2018, Rio Tinto, All Rights Reserved Total 2017 Alumina market 133 Mt, of which 60 Mt outside China China: net importer 2.9Mt in 2017, net exporter estimate 0.2Mt in 2018 Alunorte: 2017 production: 6.38 Mt (~11% of ex-C
Slide 20: Modelling Aluminium EBITDA
Modelling Aluminium EBITDA ©2018, Rio Tinto, All Rights Reserved H1 raw material prices are purchase prices. Due to contractual and inventory time lags, a change in the value of a raw material index will not lead to an EBITDA impact before 3 to 6 months, depending on the raw material and on the spec
Slide 21: Impact of legacy contracts and tariffs in H1 results
Impact of legacy contracts and tariffs in H1 18 results ©2018, Rio Tinto, All Rights Reserved 1. Includes the negative impact of lower realised prices from the legacy alumina contracts. 2. Higher realised price incorporates higher LME, higher mid-west premium and increased VAP premium. 3. Adjusted t