Rio Tinto Plc · LSE:RIO
Rio Tinto — Bank of America Merrill Lynch 2017 Global Metals, Mining & Steel Conference
18 slides from Rio Tinto's conference presentation, May 16, 2017
Slide 1: Notice to ASX
Notice to ASX Bank of America Merrill Lynch – 2017 Global Metals & Mining conference For personal use only 16 May 2017 Rio Tinto chief executive J-S Jacques is presenting at the Bank of America Merrill Lynch Global Metals, Mining & Steel conference in Barcelona today. The presentation is attached an
Slide 2: Delivering superior returns
For personal use only Delivering superior returns J-S Jacques, chief executive 2017 Global Metals & Mining Conference Bank of America Merrill Lynch, 16 May 2017
Slide 3: Cautionary statements
Cautionary statements For personal use only 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 document, includin
Slide 4: Supporting statements
Supporting statements For personal use only Ore Reserves (slide 14) Silvergrass Ore Reserve grade. Proved and Probable Ore Reserves for Silvergrass (178Mt at 61.3% Fe) were released to the market in the 2016 Rio Tinto Annual Report on 2 March 2017 and can be found on p 225 of that report. The Compet
Slide 5: Our value proposition
Our value proposition… For personal use only Capital discipline and Team and performance Long-term strategy Cash focus shareholder returns culture World-class assets Value over volume Strong balance sheet Safety first Delivering >2% CAGR1 CuEq growth $2 billion cost savings over 2016/17 40-60% retur
Slide 6: … is already delivering superior returns
… is already delivering superior returns For personal use only Resilient cash generation – Group EBITDA of $13.5 billion, EBITDA margin of 38% Strongest balance sheet in sector – Net debt of $9.6 billion – Net debt / EBITDA 0.7x Highest cash returns to shareholders – Declared $3.6 billion of s
Slide 7: Supportive Chinese macro indicators
Supportive Chinese macro indicators Housing inventories Sales and Starts For personal use only Tier 1 Tier 2 YoY, ytd Floor Space Under Construction 70 30 Floor Space Started Tier 3 – Housing inventories remain at lower levels 60 20 50 – Growth in starts and area under construction Months of supply
Slide 8: Industry has destroyed value through over-capitalisation
Industry has destroyed value through over-capitalisation For personal use only Return on capital employed Pre-Super Super cycle Post-Super cycle cycle 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Diversified average (1) Source: Company repor
Slide 9: We are maintaining a disciplined and consistent strategy
We are maintaining a disciplined and consistent strategy For personal use only Superior cash generation World-class assets Operating excellence Capabilities Portfolio Performance People & Partners Disciplined capital allocation Balance sheet strength Superior shareholder returns Compelling growth 8
Slide 10: World-class portfolio
World-class portfolio For personal use only Iron Ore Bauxite Aluminium Copper Main Oyu Tolgoi, Pilbara Weipa, Gove, CBG Canadian smelters businesses Escondida Low-cost, world-class assets Large, low-cost bauxite Large, long-life, low-cost Competitive Integrated infrastructure assets First quartile s
Slide 11: Safety and operating responsibly are key priorities
Safety and operating responsibly are key priorities For personal use only A history of continual improvement in safety AIFR per 200,000 hours worked 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 '14 '15 '16 10 | © Rio Tinto 2017
Slide 12: Operating excellence is focused on cash
Operating excellence is focused on cash For personal use only Reducing costs Releasing working capital Recycling capital(1) (Cash cost improvements $bn) (Trade days) (Asset disposals $bn) 1.6 2.5 1.3 1.3 1.5 7.8 53 7.7 45 1.8 35 3.3 22 2.2 2013 2014 2015 2016 Total Dec-13 Dec-14 Dec-15 Dec-16 2013 2
Slide 13: Strongest balance sheet in the sector
Strongest balance sheet in the sector For personal use only Leverage1 and net debt at 31 December 2016 Net debt to EBITDA 2.1x 1.5x 1.4x 1.2x 0.7x Rio Tinto Peer 1 Peer 2 Peer 3 Peer 4 Net debt 9.6 20.1 8.5 15.5 25.1 ($bn) 1 Company stated net debt at 31 December 2016, CY 2016 EBITDA figures are use
Slide 14: We returned 28% of cash generated to shareholders
1 We returned 28% of cash generated to shareholders For personal use only Most disciplined and balanced allocation of capital in 2016 28% 12% 0% 0% 3% Rio Tinto Peer 1 Peer 2 Peer 3 Peer 4 Sustaining capex Growth capex Balance sheet Shareholder returns 1 Cash generated = net cash generated from oper
Slide 15: High-return growth projects
High-return growth projects For personal use only Silvergrass Amrun Oyu Tolgoi High-grade, low phosphorus iron ore Creating seaborne bauxite market, Largest and highest quality copper enhancing value of Pilbara Blend high-grade and expandable development in the world >100% IRR >20% IRR >20% IRR $0.5
Slide 16: Delivering $5 billion of free cash flow from productivity
Delivering $5 billion of free cash flow from productivity… For personal use only Load & Haul e.g ~15% Retiring 20% of mobile >800 trucks with 55-75% EU improvement in truck EU equipment capital base >200 dig units with 30-50% EU Or Processing e.g ~15% increase in Moving 25% more material ~50 process
Slide 17: …by further optimising our performance
…by further optimising our performance For personal use only Replication of best Partnering with our practice suppliers Integrating our supply Enhancing marketing chains capability Applying technology and Partnering with our Increasing automation data suppliers 16 | © Rio Tinto 2017
Slide 18: Delivering superior returns
Delivering superior returns For personal use only Portfolio of world-class assets Resilient cash generation Strongest balance sheet in sector Highest cash returns to shareholders Sector-leading free cash flow growth 17 | © Rio Tinto 2017
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