Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2004)
63 slides from Rio Tinto's investor day presentation, Nov 5, 2004
Slide 1: ASX cover letter for investor seminar presentations
RIO TINTO External Affairs Telephone: +61 3 9283 3366 Facsimile: +61 3 9283 3216 5 November 2004 Company Announcements Office Australian Stock Exchange Limited SYDNEY NSW 2000 Dear Sir, Attached are presentations from Rio Tinto’s annual investor seminar conducted in London and New York on Friday 29
Slide 2: Investor Seminars 2004
Investor Seminars 2004 London - New York - Sydney www.riotinto.com
Slide 3: Contact details
Contact details investor Relations Rio Tinto pic 6 St James’s Square London SW1Y 4LD UK Peter Cunningham Telephone: + 44 (0) 20 7753 2401 Facsimile: + 44 (0) 20 7753 2395 Email: peter.cunningham@riotinto.com Richard Brimelow Telephone: + 44 (0) 20 7753 2326 Facsimile: + 44 (0) 20 7753 2395 Email: ri
Slide 4: Cautionary Statement
RLO TINTO Investor Seminar 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. Such statements inc
Slide 5: Introduction and Strategy
RLO TINT Leigh Clifford Introduction and Strategy Presentation outline Leigh Clifford Strategy {20 mins) Preston Chiaro Energy. {40 mins) Keith Johnson Diamonds {40 mins) Guy Elliott Other product groups (25 mins) Break Leigh Clifford : ; = Key Business Processes. (50 mins) Guy Elliott Questions & A
Slide 6: Rio Tinto's Strategy - focussed on metals and minerals
Nie. Rio Tinto’s Strategy — focussed on metals and minerals * Reaffirmed by the Board « Basis for medium term actions * Increased focus on ~ Development of people — Diversity of options -~ Value of collaboration TC JINTO. Mision — to be the leading global mining company Shareholder. value Key metric
Slide 7: Mining and minerals
Mining and minerals Large, long life, low cost assets Upstream bias in value chain Sustainable development principles In existing businesses - Continuous improvement - Commercial acumen Operational excellence - Procurement and processes
Slide 8: Primary focus on organic growth
RIO JINTO. Mision — to be the leading global mining company Primary focus on organic growth Opportunistic M&A Exploration as a key source of value Seek innovative Portfolio development structures/alliances Seek opportunities in all locations Dispose of non-core assets for value Seek operational impr
Slide 9: Leadership
Leadership Developing key skills to operate successfully in all locations Human-Resources Shareholder value Confirmation of the existing strategy Focus . Basis for medium term actions Operational-excellence Portfolio. development Reaffirmed by the Board Technology. Human: Resources
Slide 10: Energy
RLO TINEO Energy Preston Chiaro 2004 Overview Global demand for energy is expected to double by 2030 Growth of all sources of energy is required Environmental issues can be addressed Rio Tinto is well positioned to meet this growing demand
Slide 11: Rising prices are evidence
- : : ro. Rising prices are evidence .... $itonine n Seabome Coal i _Environmenta The Economist = duly 2002
Slide 12: Coal-fired electricity: the future is clean
Coat-fired electricity The future is clean Coalis costly, but coming hack into favour~and cleaner The Economist = July the Economist - September. 2002 2004 Nilo Coal will continue ta be a substantial source of primary energy Global electricity generation by source 2010 2020 Ul Coal @ Gas 4 Oil Ml Nu
Slide 13: Rio Tinto's diversified energy portfolio is unique
RIO ee oe poe : 1INto. Rio Tinto’s diversified energy portfolio is unique Pro-forma earnings in current market conditions @ US Domestic Hard coking @ Australian thermal @Uranium +iNVo. An improving portfolio of quality assets Blair Athol Hail Creek ERA Rossing Hunter Valley Kennecott Eneray ) RICA H
Slide 14: Well established mines
Well established mines HVO ~13mt Mt Thorley/Warkworth ~ 11mt ® Bongaila ‘® Hanter Vatiey Gperations “A Mt Thorleyiark ‘Operations ro. Largest exporter of thermal coal from Australia Recently developed Bengalla ~6mt a Bengalia A Hunter Valley Operations ‘m Tht ThonayiWarks ‘Operations
Slide 15: The largest exporter of thermal coal from Australia
vINvo The largest exporter of thermal coal from Australia a A Bis A kestret ‘Gladstone. Sarong A Brisbane: Bnobeane e UL 4) LENA ‘Significant player in Asian seaborne market Australi Exports Imporis Source: Rio Tinto:
Slide 16: China is still in the early stages of power demand growth
i WPo China is still in the early stages of power demand growth Power/capita Share of power demand 100% Resideritial as ay Other industry: Heavy industry. China 2003 Japan 2003 China Source: BP statistios (2004). Enerpy'statistios: oh ORCD countries (IEA) 2003-2004). Rio Tinto: le. China ts well end
Slide 17: The seaborne coal market has become more volatile
RIG: s 1INTO The seaborne coal market has become more volatile US$fonne 70 60 90 40 30 20 10 rINTO. Coal & Allied has a flexible contract position 100% +z 80% 60% 40% 20% 0% Q105 Q205 Q305 Q405 Q106 Q206 0306 0406 (Priced (1) Priced (2) [Not allocated
Slide 18: Many high quality growth options
,inro Many high quality growth options Maximise potential of existing operations ® Bongaila ‘® Hanter Vatiey Gperations A Mat ThoreyMtarkwort ‘Operations ro. Many high quality growth options Mt Pleasant High quality, low strip ratio Adjacent to Bengalla EIS 10mt for 21 years 6. ble Piegeant a Bengal
Slide 19: Replacement for Blair Athol and longer term options
Rio Tinto Slanngss Blair: ‘Aol s Glatiston Brisbane: Bnobeane e Clermont Replacement for Blair Athol Higher quality but higher cost Proposal in 2005 vito Many high quality growth option ‘Brisbane. Bnovane e Longer term options Lake Elphinstone Winchester South Valeria
Slide 20: Kennecott is largest producer in the Powder River Basin
0, Kennecott is largest producer in the Powder River Basin US coal supply regions rIN0. Coal to become more competitive in the US market US energy demand growth to track GDP Coal and gas to gain market share over hydro/nuclear/other Higher and more volatile gas prices favour coal Large reserves, low
Slide 21: Gas prices have increased and become more volatile
viNio Gas prices have increased and become more volatile siMet Annual average delivered price of coal q io US power plants ook No oR an oN 94 95 96 OF 98 99 00 O01 02 O03 04 Coal — Natural Gas Data includes coal produced from all US coal producing regions, and includes freight costs TCE Si > 7 rvint
Slide 22: The US market is less volatile than the Asian market
RIO: ainto [be US market is less volatile than the Asian market KEC's contract position 2005 2006 2007 2008 a Committed priced 5 Committed indexed WG +NVo Uranium prices have strengthened recently Nukem spot US$/ib 20 Monthly average uranium prices 18 16 14 12 2009 Uncommitted
Slide 23: The strong N$ affects the economics of Rossing
vinro The strong N$ affects the economics of Rossing Nukem spot SS/ib 21 Nukem spot Spot uranium prices NGitb 130 19 17 15 13 11 ) Mo Quality assets bring options to expand ‘Million tonnes: 14 Managed hard coking coal production 12 Hail Creek 55mt % 41999 2000. 2004 2002: 2003
Slide 24: The management of climate change issues is important
RIO : : oS 1INtO The management of climate change issues is important Presents the Group with risks and opportunities Group wide targets to reduce: = Energy consumption per unit of prodution by 5% ~ Greenhouse gas emissions per unit-of production by 4% Undertake R&D on carbon emission technologies C
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Slide 26: Rio Tinto Diamonds
RIO TINTO Rio Tinto Diamonds Keith Johnson 2004 The diamond market is not fundamentally different from the markets for other minerals * Demand for diamonds tracks GDP closely * There are no significant producer inventories * Prices not inconsistent with producer cost structure
Slide 27: Diamond market characteristics and margin curve
but tt does have some important characteristics Diamonds are hard {to find =~ 9 mines contribute 80% of production Supply and demand closely balanced = Little growth in production from existing operations ~ No significant greenfield developments The margin curve is steeper than most other commoditie
Slide 28: Diamond prices have outperformed
Diamond prices have outperformed Real Price index (1960=100) Diamonds 19601965. 1970 «1975 «1980. «1985 «1990-1995 2000 monds plies oun 3 5. AS diamond: Dict, producing: a RL VIN10 Diamonds are luxury goods Demand not as discretionary as for other luxury goods Marketing important to stimulate demand
Slide 29: The diamond market is strong
RIC : . 4INTO The diamond market is strong Diavik rough Diavik polished Supplier of rough diamonds to wholesale market Each source of production kept separate Focus on Sustainable Development and product stewardship Supply customers who can add the most value Work with customers to maximise their va
Slide 30: Diavik has delivered strong financial results in its first twelve months
Diavik has delivered strong financial results in its first twelve months* EBITDA margin of 80% Revenue. Depreciation Tavation Netaarnings: *o This: chart shows tho: aggragated financial resus for the sacond half of: 2003 and the fast halt of 2004 “RIG Tinto share.
Slide 31: Diavik is achieving its potential
‘inte Diavik is achieving its potential avik production (000 carats) 2500 2000 4500 1000 Q103 Q203 Q303 9403 Q104 Q204 Q3 04 400% Diavik production Options for the development of Diavik 2016 —Liavik orginal plan
Slide 32: Options for the development of Diavik
400% 2009. 2003 2004 2005, 2006 200%. 2008 WATS4 open pit .@ A418 open pit’ @ A1545 underground { hand South pipes): ments at Diavik: Tt Bre still to: Exploration decline A154S A154N
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Slide 34: Rio Tinto has a good track record of finding diamonds
Rio Tinto has a good track record of finding diamonds, and a good portfolio of opportunities Murowa project — small but with expansion potential (78 per cent Rio Tinto) Reserve of 18.7 million tonnes Initial capital of $10 million Plant capacity of 200 000 tonnes per year Diamond quality similar to
Slide 35: Diamonds - now a major product for Rio Tinto
1 NYo Diamonds — now a major product for Rio Tinto Diavik Murowa Critical mass in diamonds High quality assets Expansion options Promising exploration programme
Slide 36: Operations Review
RIO TIN EO Guy Elliott Operations Review (NY, fron ore - investing for a dramatic lift in volumes from late 2005 Markets remain strong Pilbara investment programme on track Pilbara Iron starting to deliver gains 1OC labour negotiations complete
Slide 37: New contracts underpin $1.3 billion investment programme
, NPo New contracts underpin $1.3 billion investment programme RTO iron ore production® Committed projects * Port expansion $685m * Yandicoogina mine — $200m « Rail duplication $200m * Power $45m « West Angelas $105m. * Other $35m Pot New commitment ‘expansion: ‘2. Hamersley mi Robe BOC * Locos and
Slide 38: Copper - momentum from strong markets and new projects
), Copper - momentum from strong markets and new projecis * Grasberg production recovery on track * Strong outlook for Escondida * KUC outlook
Slide 39: A stronger portfolio of high quality assets
into A stronger portfolio of high quality assets Escondida Freeport JV Utah Copper Palabora Northparkes Cortez Divestments Cortez Hills in ieasoiy Escondida Sulphide Leach aludy) Eagle Nickel Escondida Norte Northparkes Lift 2 Resolution Exploration success New projects Kennecoit outlook * Improveme
Slide 40: Industrial Minerals - starting to benefit from end market improvement
Industrial Minerals — starting to benefit from end market improvement a Industrial Minerals Group het earnings * Some pick up in end use markets * High quality assets delivering despite tough markets * New projects in Ti0, (Madagascar / UGS) and potash (PRC) nro Madagascar is the best undeveloped 11
Slide 41: Potash project in Argentina has potential
Potash project in Argentina has potential Large resource Good location for large Brazilian market Recent infrastructure improvement Key issue is technology Option agreement limits financial risk rINVO Potasio Rio Colorado project (Handout only) MENDOZA j ae ae ee BUENOS AIRES: ‘Behia Bianca New Seal
Slide 42: Aluminium - a significant lift in alumina volumes
Aluminium — a significant lift in alumina volumes with CAR complete Aluminium: Group. netearnings CAR commissioning proceeding well NeWeipa on track Solid operational performance at all plants Studying CAR 2 te ce LANA 9 2004 volumes affected by Grasberg Index (1990 = 400)" 280: 240. 220 200 180. 46
Slide 43: Strong near term volume growth from existing operations
NO, Strong near term volume growth from existing operations... Index:(1990 =:460)*: 260 Monty. Diavik: Proforma Underlying production growths based-on top nine products valued at-constant prk and projects under construction Index (1990 = 400)" 280: 240 220 200 180. 460 140 420: 100: Proforma
Slide 44: Current projects and development studies
Rio Tinto NO, Current projects (handout only) Est, ‘Expected, Gap: cost annual, Location Product US$: production. Construction projects Resently: Completed ‘as Hall: Creek Marowa: peng Palabora underground South ‘Africa: Copper. 24 500t declining to # Northpar 2 ‘Austoais: ‘Copper 45-000 tpg: ‘Alumi
Slide 45: Consistent track record of project generation
AINto Consistent track record of project generation Sbillion 2.5 2 1998 2000-200! Plan capital expenditure nig 2tfong Cash generation underpinning reinvestment and INEO Capital returns | Cash inflow of $23bn" Capital spend A : & exploration Net M&A Buybacks / dividends *“inciides a $1 billion increa
Slide 46: Key Business Processes
RLO TINO Leigh Clifford Key Business Processes Development Asset Management Logistics. ‘Operation: Processing Mining Operations ‘Operations: Procurement
Slide 47: Trends of the last decade are likely to continue
1INtO Trends of the last decade are likely to continue * Greater collaboration * Development of common systems * Human resources
Slide 48: Business improvement
RLO TINTO Guy Elliott Business improvement Oo The way Rio Tinto is run — key business processes Development Asset Management Operation Processing Mining ‘ ‘Operations Operations:
Slide 49: Information technology in Rio Tinto is evolving
rio Information technology in Rio Tinto is evolving JINIO | towards a more global model Standardisation of global infrastructure and collaborative toolsets Information integration Rio. Tinto Procurement — leading edge technology and » business processes Continuous improvement & collaboration Group S
Slide 50: What Rio Tinto Procurement delivers
What Rio Tinto Procurement delivers Specialist skills and technology Partner of the business units Minimisation of transaction costs Maximisation of value to the business Ocean freight is important to Rio Tinto = ‘Totalcost-of ownership to end user: It represents a high proportion of delivered cost,
Slide 51: Successful freight management is dependent on...
ALIN, 'o Successful freight management is dependent on... Close co-operation with sales Scope and scale Purchasing leverage Capable people Strong isk management processes EQ Uy: Innovative freight solutions Gentralise freight risk management Global coverage Economies of skill Managing market volatil
Slide 52: Summary
RIC JINLO. Summary. Value creation through collaboration and new capabilities Rigorous evaluation of all expenditure Progressive change model Future opportunities
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Slide 54: Development
RLO TINO Leigh Clifford Development Asset Management Logistics. ‘Operation: Processing Mining Operations ‘Operations: Procurement
Slide 55: Significant value is created during the study phase
NYo Significant value is created during the study phase... Value ee OF order OF | feasbilty magnitude Start S rnreamsrniaracnsnsstenermaseameesronecestesoeseamesenesnnenzanseenanasenarmasmesenesnene. tt Completion Time {othe scope for affecting project value reduces as a study progresses Ability 40
Slide 56: We look hard to identify opportunities
Nro. We look hard to identify opportunities... - Hail Creek Asset extensions : i Pilbara iron ore Mayle Diavik Clermont 7 Blair Athol Eagle Dashkasan Technical innovation Simandou Cortez Hills Potasio Rio Colorado o Assets under construction are only the tip of the iceberg Under construction 10 majo
Slide 57: All projects must satisfy rigorous analysis
No... But all projects must satisfy rigorous analysis « Value creation measured by NPV « Investment Committee / board approval « Analysis and management of risk a) 7 " B ro. Rio Tinto can manage country risk Murowa (2004) Escondida (1900) Rossing (1976) Palabora (1966) Grasberg (1996) Dates show tir
Slide 58: Rio Tinto
Rio Tinto 1982 - successful testing in a 60t OBM converter 1990 — small scale plant in Germany 1993 — 100ktpa pilot plant in Western Australia 2005 - first metal from 8OQOkt per year Kwinana plant
Slide 59: The Resolution Copper Project
The Resolution Copper Project Resolution Project Phoenix Superior”
Slide 60: Shaft construction and permitting
Shaft construction Assessment of rock stresses/pressures Minimisation of surface impact of mining Environmental impact assessment Permitting Resolution of land, water, waste disposal Largely a linear process, limited scope for acceleration ILO vito Summary Strategy remains unchanged Rio Tinto’s busi
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Slide 62: Extract from Rio Tinto's 2004 Half Year Report
EXTRACT FROM RIO TINTO’S 2004 HALF YEAR REPORT International financial reporting standards The Group will be preparing its financial statements for the 2005 half year and subsequent reporting periods in accordance with international Financial Reporting Standards (‘IFRS’). Work continues to determine
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