Rio Tinto Plc · LSE:RIO
Rio Tinto — Debt Investor Presentation (March 2013)
25 slides from Rio Tinto's debt investor presentation, Mar 15, 2013
Slide 1: Presentation to North American Fixed Income Investors
11-15 March 2013 Strategy Financial Position Outlook Appendices Presentation to North American Fixed Income Investors
Slide 2: Cautionary statement
2 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: Strategy
11-15 March 2013 Strategy Financial Position Outlook Appendices Strategy
Slide 4: A consistent strategy
4 A consistent strategy • Maximise total shareholder return • Invest in and operate large, long-life, low-cost, expandable operations • Run the business as owners • Manage our capital wisely • Improve performance from our operations Bingham Canyon ©2013, Rio Tinto, All Rights Reserved
Slide 5: Pursuing greater value
5 Pursuing greater value Refocusing the organisation − Focus, discipline, accountability − Stronger systems Improving operations − $5 billion cumulative operating cost reduction over 2013 and 2014 − Productivity improvements Delivering approved growth projects Reinforcing capital allocation discipli
Slide 6: Financial position
11-15 March 2013 Strategy Financial Position Outlook Appendices Financial position
Slide 7: 2012 highlights
7 2012 highlights • Strong underlying earnings and cash flows from operations despite challenging market conditions − Record iron ore volumes; recovery in copper grades during second half − Lower prices and price volatility across most commodities − Stronger currencies, input cost pressures especial
Slide 8: Strong operating cash flows in a year of peak capex
8 Strong operating cash flows in a year of peak capex 2012 cash flows • Strong cash flow from operations US$ billion despite challenging market and operating conditions 30 Other: ($2.2bn) Acquisitions: ($1.3bn) Buy-back ($1.5bn) • Cash inflow boosted by Chalco Increase in 25 debt $10.8bn Dividends:
Slide 9: Capital expenditure is being prioritised on the highest quality projects
9 Capital expenditure is being prioritised on the highest quality projects Approved capital expenditure • Capex programme managed within US$ billion boundaries of single A credit rating, dividend policy and other returns to 20 shareholders • Yarwun 2 completion and rapid 15 ramp-up • Oyu Tolgoi comm
Slide 10: Pilbara expansion: acceleration of first ore from expansion to 290 Mt/a
10 Pilbara expansion: acceleration of first ore from expansion to 290 Mt/a Rio Tinto Pilbara iron ore shipping capacity (100% basis) Average Annualised Mt/a 380 360 First Ore 360 340 340 First Ore 320 290 First Ore 300 280 1H 260 4Q 240 3Q 220 200 2010 2011 2012 2013 2014 2015 2016 2017 ©2013, Rio T
Slide 11: Oyu Tolgoi: progress towards first production
11 Oyu Tolgoi: progress towards first production Concentrator complex SAG-2 mill feed conveyer Regrind cyclone First copper concentrate stockpile ©2013, Rio Tinto, All Rights Reserved
Slide 12: Targeting $5 billion cumulative reduction in operating cash costs by end of 2014
12 Targeting $5 billion cumulative reduction in operating cash costs by end of 2014 Cash cost reduction target • Sustainable annual cash cost US$ billion, base = 2012 cash operating cost base decrease of $3 billion by end of 2014 4.0 − Assumes constant operating 2.0 conditions 0.0 9% − Includes over
Slide 13: Disciplined capital management
13 Disciplined capital management • Disciplined and rigorous approach Cash from operations to capital allocation and divestment proceeds • Investment programme focused on highest quality opportunities Disciplined Prudent Cash investment in balance returns to • Evaluate investment opportunities highe
Slide 14: Prudent balance sheet management
14 Prudent balance sheet management Gross debt maturity profile • Aim to maintain a single A credit at 31 December 2012 US$ billion rating 5.0 • Long term and smooth debt maturity 4.5 profile 4.0 − Weighted average maturity of 3.5 around nine years 3.0 − $7.9 billion of bonds issued in 2012 2.5 with
Slide 15: Credit rating
15 Credit rating Standard & Moody’s2 Poor’s3 Fitch4 DBRS5 Long-term A3 A- A- A Low Short-term P-2 A-2 F2 R1 Low Outlook Stable Negative Stable Stable 1. A rating is not a recommendation to buy, sell or hold securities, and may be subject to revision, suspension or withdrawal at any time by the assig
Slide 16: Outlook
11-15 March 2013 Strategy Financial Position Outlook Appendices Outlook
Slide 17: Positive momentum in China to be sustained into 2013
17 Positive momentum in China to be sustained into 2013 China indicators remain positive • Some positive short term signals 103 54 − China recovery 102 52 101 100 50 − Shallower Eurozone recession 99 98 48 − Gradual recovery in the US 97 46 • Forecasting China GDP growth to Jan 11 Jan 12 Jan 13 Mar
Slide 18: Consistent strategy, clear priorities for 2013
18 Consistent strategy, clear priorities for 2013 • Core strategy remains unchanged • Greater focus, discipline and accountability • A clear agenda for 2013 − Improving performance at existing operations − Delivering approved growth projects − Reinforcing capital allocation discipline • Pursuing gre
Slide 19: Appendices
11-15 March 2013 Strategy Financial Position Outlook Appendices Appendices
Slide 20: Rio Tinto – a world leader in mining
20 Rio Tinto – a world leader in mining Aluminium Copper Diamonds & Minerals Leading position in: Leading position in: Leading position in: • bauxite • copper • titanium dioxide & zircon • alumina • molybdenum • borates • diamonds • aluminium • Salt Energy Iron Ore Leading position in: Leading posit
Slide 21: More than 80% of assets in OECD
21 More than 80% of assets in OECD 2012 total assets (excluding non-controlling interests) by region Canada 22% Europe Mongolia 8% 4% US 7% Other Asia1 2% Africa 1 Other Asia mainly relates to assets in Singapore and 1% Indonesia Oman. Total assets for year ended 31 7% December 2012 adjusted for 3%
Slide 22: More than 60% of gross revenue in Asia-Pacific
22 More than 60% of gross revenue in Asia-Pacific Europe N America China 13% 32% 16% Japan Other Asia 16% 15% Other 8% 2012 gross sales revenue = US$56bn1 1Gross sales revenue includes the sales revenue of equity accounted units after adjusting for sales to subsidiaries. ©2013, Rio Tinto, All Rights
Slide 23: We are taking constant steps to improve the quality of the portfolio
23 We are taking constant steps to improve the quality of the portfolio Higher Leveraged Tier 1 10.00 expandability plays 9.00 8.00 7.00 6.00 Optionality 5.00 4.00 3.00 2.00 1.00 Marginal Cash Lower assets cows expandability 0.00 Higher1.00 0.00 cost 2.00 3.00 Total cost 4.00 5.00position 6.00 7.00
Slide 24: Our growth programme is across regions, products and brownfield/greenfield
24 Our growth programme is across regions, products and brownfield/greenfield Kitimat Oyu Tolgoi Utah Copper Resolution Simandou La Granja Coal Mozambique Yarwun 2 Escondida Pilbara Brownfield Greenfield ©2013, Rio Tinto, All Rights Reserved
Slide 25: Modelling earnings
25 Modelling earnings 2011 2012 Impact on 2012 full Earnings average price/ average price/ 10% change in year underlying sensitivity rate rate 2012 average earnings ($m) Copper 400c/lb 361c/lb +/-36c/lb 270 Aluminium* $2,395/t $2,018/t +/-$202/t 384 Gold $1,571/oz $1,669/oz +/-$167/oz 42 Iron ore +/