Slide 1: Site visit to iron ore operations in Western Australia
2 – 5 September 2013 Site visit to iron ore operations in Western Australia
Slide 2: Cautionary statement
1 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
Slide 3: Proven sector leadership; strategy pillars
3 Proven sector leadership • Delivering value for shareholders • Proven sector leadership in: − Integrated operational performance − Cash costs/ margin improvement − On time/ budget growth projects − Sales and marketing strategies − Utilisation of new technology − Key stakeholder engagement • Flexib
Slide 4: Safety performance; long-term Chinese iron ore demand
5 Safety performance Iron Ore all injury frequency rates 2003 – 1H 2013 Per 200,000 hours worked 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 03 04 05 06 07 08 09 10 11 12 1H'13 All injury frequency rate Lost time injury frequency rate Source: Rio Tinto ©2013, Rio Tinto, All Rights Reserved 6
Slide 5: Constraints on new iron ore supply; Pilbara performance records
7 On-going constraint to the development of new iron ore supply Announced and completed iron ore • Supply capacity continues to be production capacity (global) constrained Million tonnes − Reduced sources of project 1000 financing 800 600 − Protracted approvals processes 400 200 − Mid tier / Junior
Slide 6: Cash cost management; leading EBITDA performance
9 Strong focus on cash costs management delivers results, with more expected Pilbara cash operating unit cost* • Continued focus on (2006 = 100) controlling cash operating unit costs 200 180 • Inflationary pressures 160 persist but have eased 140 • 2012 cash cost: US$23.5/t 120 • 2013 H1 cash cost:
Slide 7: 290Mt/a and 360Mt/a infrastructure; industry cost curve
11 290Mt/a infrastructure complete and 360Mt/a infrastructure progressing well • 290 Mt/a first ore on ship 24 August • 290 Mt/a delivered ahead of schedule and on budget • 220 – 290Mt/a delivered at a capital intensity less than US$140/t (100%) • Infrastructure expansion to 360Mt/a 290Mt/a wharf co
Slide 8: Community engagement; extending competitive advantages
13 Full engagement with our community stakeholders • Full community engagement is imperative to our licence to operate • Strong Aboriginal focus − 9 of 10 Indigenous Land Use Agreements completed, covering all of our Pilbara footprint − Jobs and training for > 1500 Aboriginal employees − $2 billion
Slide 9: Projects & Development
2nd September 2013 Day 1 Day 2 Day 3 Day 4 Projects & Development Extending our competitive advantages David Joyce - Managing director, Projects & Development 2 We have demonstrated superior performance in delivering projects Western Australian construction projects performance Superior project deli
Slide 10: Completed 290Mt/a pathway; expansion approvals
3 Completed 220 to 290Mt/a pathway at a capital intensity <$140/t (100%) or $115/t (Rio Share) Added Project Date of capacity description first ore 220Mt/a Dampier port Q1 2011 to 225Mt/a debottlenecking 225Mt/a Dampier port Q1 2012 to 230Mt/a incremental 230Mt/a Programme Q3 2013 to 290Mt/a expansi
Slide 11: Early completion and ramp up to 290Mt/a
5 Early completion and ramp up to 290Mt/a adds considerable value 290Mt/a port capacity ramp up profile • All infrastructure in place-port, rail, Million tonnes power and water 300 • Accelerated infrastructure schedule 290 enabled first ore on-ship 24th August 280 • Ramp up to 290Mt/a capacity 270 c
Slide 12: Getting the 290 Mt/a expansion right: Rail and Mines
7 Getting the 290 Mt/a expansion right: Rail Electronically Controlled Pneumatic (ECP) ore car Cape Lambert Yard – trip service facility Emu Siding upgrade Cape Lambert Yard – auto wash facility ©2013, Rio Tinto, All Rights Reserved 8 Getting the 290 Mt/a expansion right: Mines Nammuldi – early work
Slide 13: 360Mt/a infrastructure progressing well
9 360Mt/a infrastructure progressing well Amount Left to • All dredging and wharf piling approved Commit completed Project Status US$B US$B • The first of the topside modules have Port Approved 3.9 1.5 been installed with the balance due Rail Approved 0.9 0.2 by November Power Approved 0.6 0.1 • Sto
Slide 14: Increased ore body knowledge supports Pilbara growth pathways
11 Increased ore body knowledge supports the full range of Pilbara growth pathways 20000 Pilbara resources, reserves and production1 • Drilling effort is staying ahead of Million 18000 tonnes production increases 16000 20,000 300 • The drilling focus is on near-mine 18,000 14000 250 opportunities to
Slide 15: Extending our competitive advantages
13 Extending our competitive advantages • Growth to 290Mt/a is being completed at a capital intensity of less than US$140/t (100% Rio Tinto) or US$115/t (Rio Tinto share) • Delivering projects ahead of schedule adds early tonnes and significant business value • To maximise shareholder value, multipl
Slide 16: Technical Marketing
2nd September 2013 Day 1 Day 2 Day 3 Day 4 Technical Marketing Extending our competitive advantages Warwick Smith - Managing director – Sales & Marketing Darren Matthews – General manager – Technical Marketing 2 The ability to continuously maximise value • A deep understanding of markets and the ste
Slide 17: Iron ores differentiated by quality and cost to customer
3 Iron ores are differentiated by quality and cost to customer Quality Logistics Physical Properties Freight Rates Chemical Properties Market Metallurgical Ship Size Properties Mill Location and Product Variability Inbound Logistics • Iron ore products are not homogenous and are differentiated by th
Slide 18: Iron ore quality and customer value
5 Iron ores are differentiated by quality and cost to customer • Iron content of the iron ore should be as high as possible • All contaminants influence the total cost of steel production and should be as low as possible. − Major gangue contaminants such as alumina and silica are removed as slag in
Slide 19: Customer valuation factors; alignment of business planning
7 Customers value iron ores differently after considering the following factors • Geographical − Delivered costs and availability of fuels and fluxes Technical − Seasonal preferences − Availability, cost and quality of alternative ores supply Geographical − By products value or disposal costs • Comm
Slide 20: Pilbara products aligned to resource base and customer needs
9 Our Pilbara products are aligned to our resource base and customer needs Product Strengths Pilbara Blend • The most traded iron ore product globally Fines • Base load sinter blend in Asian markets Pilbara Blend Fines Pilbara Blend • Avoids the costs of sintering which will 61.5% Fe, 8.5% H2O Lump
Slide 21: Working with customers to optimise product offering
11 We continually work with our customers, research providers and universities to optimise our product offering • Focused on maintaining long term relationships • Improved blast furnace operating practices • Improved product understanding • Slag chemistry fundamentals • New product evaluations • Sin
Slide 22: Pilbara mine operations
1 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
Slide 23: Pilbara mine network
3 Pilbara mine network ©2013, Rio Tinto, All Rights Reserved 4 Fully integrated operations ©2013, Rio Tinto, All Rights Reserved
Slide 24: Pilbara iron ore mines, ports and product quality
5 Mine schematic - Multiple improvement options ©2013, Rio Tinto, All Rights Reserved 6 Pilbara iron ore: mines, ports and typical quality of product Ore group Banded Iron Formation derived Iron Deposits Channel Iron Deposits Paraburdoo Mt Tom West Hope Mines (inc. Channar Brockman 2 Brockman 4 Hope
Slide 25: Mine portfolio performing above design; Mine of the Future
7 Mine portfolio consistently performing above design Total Material Moved and Saleable Ore • Consistent record performances Production (Mt) • Material moved in Q2 increased as a 250 70 result of higher production and pre- 60 stripping at Marandoo, HD4 and 200 Nammuldi as part of the 290 ramp up 50
Slide 26: Costs managed; mine production on track for 290Mt/a
9 …. and costs continue to be robustly managed • Contractor cost savings ~ $7.5m YTD − Reduction in contractor use − Use of non original equipment manufacturer suppliers • Maintenance cost savings and avoidance of ~$23m YTD − Component life extension − Challenging our maintenance tactics to conditio
Slide 27: Visits to two premier mine operations
11 Visits to two premier mine operations Hope Downs Yandicoogina Newest site Large scale very low cost operation Centralised services function First fully automated truck mine Wet plant design enhancement Continued low capital intensity expansions Joint Venture operation Rio Tinto CEO Safety Award 2
Slide 28: Hope Downs
3rd September 2013 Day 1 Day 2 Day 3 Day 4 Hope Downs 4 Extending our competitive advantages John Dumbill - General manager, Greater Hope Downs 2 Safety guidelines Please observe the following rules during your visit: • Follow the advice of your host; visitors are to be escorted at all times • Wear
Slide 29: Greater Hope Downs development stages; Hope Downs 4
3 Greater Hope Downs development stages Hope Downs 1 • Initial development; 22 Mt/a Dry – Hope Downs North − ‘Dry plant’ − Stockyard (660 kt) live capacity − Completed in Q1 2008 • Expansion; 22 Mt/a to 30 Mt/a Dry – Hope Downs South − Modified crushing & screening circuit − Completed in Q1 2009 Hop
Slide 30: Autonomous truck fleet deployment; key learnings
5 Deployment of the autonomous truck fleet • In early stages of deployment with “go-live” scheduled for early 2014 • AHS will deliver planned total material movement with three less trucks, a 14% productivity improvement. • Expected significant improvement in − Tyre life − Fuel usage − Maintenance c
Slide 31: Sustainable cost reductions
7 Sustainable cost reductions Centralised services for flights and accommodation saving of ~$3M* • Most cost effective flight for the sector • Direct employee cost saving (travel, accommodation, site allowances etc.) • Less site accommodation required Village contract saving of ~$5M* • Savings ident
Slide 32: Yandicoogina region
3rd September 2013 Day 1 Day 2 Day 3 Day 4 Yandicoogina region Extending our competitive advantages Alex Bates - General manager, Yandicoogina region 2 Safety guidelines Please observe the following rules during your visit: • Follow the advice of your host; visitors are to be escorted at all times •
Slide 33: Yandicoogina overview; low capital intensity expansion
3 Yandicoogina – Overview Junction Central Junction South East Dry Plant – 24 Mt/a Dry Plant – 16 Mt/a • Primary Jaw Crusher • Primary sizer • Scalping screens • Secondary sizer • Secondary cone crusher • Overland conveyor • Tertiary cone crushers • Product screening Loop • Overland conveyor • 4 x ~
Slide 34: Productivity improvements at Yandicoogina
5 Productivity improvements – Yandicoogina YANDI Dry Plant Dry plant increased tonnes: (tonnes per operating hour/ saleable ore product) • Identified in 2008, process control 3,900 26 improvements and new equipment at a 3,800 25 3,700 24 cost of approximately $150k TPOH 3,600 Mt/a 23 3,500 3,400 22
Slide 35: Cost initiatives; competitive advantages
7 Cost initiatives Contractor cost reduction – ~$2m YTD • Reduce the costs associated with major contractors (labour hire, catering contractors and airline carriers) • Ongoing improvements in shutdown management to reduce contractor requirements Mining cost reduction initiatives – ~$1m YTD • Install
Slide 36: Pilbara port operations
1 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
Slide 37: Safety guidelines; fully integrated operations
3 Safety guidelines Please observe the following rules during your visit: • Follow the advice of your host; visitors are to be escorted at all times • Wear safety glasses at all times while outside and hard hats when advised • Wear seat belts when provided • No smoking inside buildings or vehicles •
Slide 38: Port schematic; single owner, single user ports
5 Port schematic - Multiple improvement options Source: Online Data Source: SAP, Offline Data Source: PDS ©2013, Rio Tinto, All Rights Reserved 6 Single owner, single user and each port readily expandable Current port capacity is 237 Mt/a: • Parker Point: 102 Mt/a • East Intercourse Island: 50 Mt/a
Slide 39: Product flow and logistics; port debottlenecking
7 Product flow and logistics at the ports Ore group Banded Iron Formation derived Iron Deposits Channel Iron Deposits Paraburdoo Mt Tom West Hope Mines (inc. Channar Brockman 2 Brockman 4 Hope Downs 4 Marandoo Nammuldi Angelas Yandicoogina Mesa Mesa Price / WTS Downs 1 Eastern AJ Range) B B B MM MM
Slide 40: Cost savings initiatives; operational readiness
9 Cost savings initiatives are ensuring increased cash flow for the business • Contractor cost savings of ~$8m year to date have been realised by ensuring the right skills are used for each job • Changes to bulking methods, allowing the sharing of resources across the Ports ~$4.5m • Bringing shut wa
Slide 41: Extending our competitive advantages
11 Extending our competitive advantages • Single owner, single user and each port readily expandable and unconstrained • Many hundreds of productivity and cost improvement opportunities across 3 port operations • Seamless integration of growth and operational infrastructure, enabling value to be del
Slide 42: Pilbara rail operations
4th September 2013 Day 1 Day 2 Day 3 Day 4 Pilbara rail operations Extending our competitive advantages Clayton Walker - Managing director, Pilbara Supply Chain 2 Safety guidelines Please observe the following rules during your visit: • Follow the advice of your host; visitors are to be escorted at
Slide 43: Fully integrated rail operations
3 Fully integrated operations ©2013, Rio Tinto, All Rights Reserved 4 Single owner, single user and proximity to present and future resources and operations • 39 Pooled fleet and 6 Robe Valley trains operate on 1,500km of rail (42 and 6 by end of October) • 173 locomotives and 9,800 wagons in fleet
Slide 44: Rail expansions for 290Mt/a; productivity focus
5 Significant rail expansions readily enable 290Mt/a system performance Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 CD5C full rate Marandoo 290Mt Phase II Hope Downs 4 First railings 42 consists in service Juna Downs upgrade 35 42 consists in Emu – Cape Lambert Emu upgrade service Track Duplication 35 3
Slide 45: Sustainable cost improvement; AutoHaul
7 … and sustainable cost improvement Rail has made significant reductions in cost position through the following Ambitious Fuel Efficiency Programme is focus areas: reaping results: • Fuel efficiency initiatives ~$2m YTD More than 15 Initiatives including: • Off-lining locos • Contractor savings ~$3
Slide 46: Rail of the Future; competitive advantages
9 Continued testing of the Rail of the Future • Without conventional expansion of track and rolling stock assets, are we capable of: − Achieving 1,500,000 safe and efficient tonnes railed every day This involves: Rail of the Future ore cars • Idea generation (first phase completed in 2012) • Underta
Slide 47: Operations Centre
1 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
Slide 48: Safety at the Operations Centre; integrated operations
3 Safety while visiting the Operations Centre • Two levels of alarm − Beep Beep – prepare to evacuate − Whoop Whoop – follow your guide to muster point • In the event of an emergency, please stay with your host and follow their instructions • The control room is an operating site, with people listen
Slide 49: System wide real time information
5 System wide, real time information allows clear visibility of capabilities, issues and rapid responses • Nerve centre of Pilbara operations • Operational improvements evident through increased production efficiencies and records • Will continue to unlock value across our network by remaining respo
Slide 50: Rapid response to system issues; bottleneck insight
7 Close proximity of teams allows rapid response to system issues Unplanned wharf Cape Lambert belt replacement at Cape Lambert and • No railed tonnes were lost wet weather during the unplanned wharf belt replacement at Cape Lambert and wet weather affecting the coastal region during June • Port sto
Slide 51: Reducing and avoiding costs
9 …and assists in reducing and avoiding costs • Improving the condition and Real time condition data sent life of our asset components to the Operations Centre • Analyse real time equipment data to highlight potential issues before they escalate to failures • Manage such issues as part of scheduled
Slide 52: Extending our competitive advantages
11 Extending our competitive advantages • The nerve centre of the Pilbara integrated network, seamlessly bringing it all together • Full end to end visibility means the entire system is optimised • Comprehensive insight into system bottlenecks, improvement efforts and reduction and avoidance of cost
Slide 53: Sales & Marketing
5th September Day 1 Day 2 Day 3 Day 4 Sales & Marketing Extending our competitive advantages Warwick Smith - Managing director, Sales & Marketing 2 The ability to continuously maximise value • A deep understanding of markets and the steel Industry knowledge industry • Aligning our resource base with
Slide 54: Recent developments in iron ore and steel prices
3 Recent developments in iron ore and steel prices Iron Ore Spot prices China steel prices and forwards $/dmt, CFR China RMB/t 160 4400 4200 150 4000 140 3800 130 3600 120 3400 110 3200 100 3000 Dec-12 Mar-13 Jun-13 Sep-13 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Rebar spot prices (Shanghai) Platts 62% Re
Slide 55: Iron ore stock levels; China and short-term growth
5 While iron ore stock levels are lower YoY • Iron ore ports stocks remain well below this time last year • Iron ore stock levels at mills are also at low levels compared to consumption requirements Chinese iron ore stockpiles at port Chinese mill iron ore stocks (Mt) and share (Mt) of total require
Slide 56: Long-term Chinese demand; domestic production cost curve
7 Long-term fundamentals for Chinese iron ore demand remain strong Chinese steel production and iron ore Machinery and transportation increases as requirements proportion of Chinese steel demand Million tonnes % 1200 1600 100% 90% 1400 1000 80% Iron ore requirement (Mt) 1200 Steel and Scrap (Mt) 70%
Slide 57: Aligning resource offering and customer base
9 Aligning our resource offering and our customer base July 2012 – June 2013 July 2012 – June 2013 actual shipments by market (Pilbara and IOC) percentage of products by market (Pilbara and IOC) 100% Japan 22% 90% 80% 70% 60% 50% Korea, 40% Taiwan China 12% 62% 30% 20% Atlantic 10% 4% 0% China Japan
Slide 58: Electronic tender spot sales channel
11 RTIO’s electronic tender spot sales channel – scalable and secure • Simultaneously invites more than 90 pre-qualified buyers to bid on a spot shipment • Seamlessly contracts with highest bidder • “Sealed” bids and defined processes ensures impartiality E-tender smart phone app E-tender internet “
Slide 59: Evolving capabilities to maximise revenue
13 The capabilities required to maximise revenue continue to evolve • In 2007 we established Rio Tinto Iron Ore Asia in Singapore as the operational headquarters for sales and marketing in the Asia pacific region • Since 2007 the iron ore industry presence in Singapore has grown and Singapore is rap
Slide 60: Rio Tinto plc contact details
Rio Tinto plc Rio Tinto Limited 2 Eastbourne Terrace 120 Collins Street London W2 6LG Melbourne, Victoria 3000 United Kingdom Australia T +44 (0)20 7781 2000 T +61 (0)3 9283 3333 riotinto.com