Slide 1: Cover letter to ASX Company Announcements Office
120 Collins Street Melbourne 3000 Australia Postal Address: GPO Box 384D Melbourne 3001 Australia T +61 (0) 3 9283 3333 F +61 (0) 3 9283 3707 For personal use only Company Announcements Office Australian Stock Exchange Limited SYDNEY NSW 2000 4 August 2011 Dear Sir, Attached is the Rio Tinto 2011 in
Slide 2: 2011 interim results
For personal use only 2011 interim results 4 August 2011
Slide 3: Cautionary statement
For personal use only 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. Forwar
Slide 4: Jan du Plessis, Chairman
For personal use only Jan du Plessis Chairman Bengalla
Slide 5: Tom Albanese, Chief executive
For personal use only Tom Albanese Chief executive Grande-Baie, Quebec
Slide 6: Continued improvement in safety
For personal use only Continued improvement in safety Injury frequency rates 2002–2011 H1 Per 200,000 hours worked 4 August 2011 Rio Tinto 2011 interim results 5
Slide 7: 2011 first half highlights
For personal use only 2011 first half highlights • Record first half underlying EBITDA and earnings from higher prices • Record first half cash flows from operations • Recovering from challenging first quarter weather events • Growth projects progressing well – Pilbara expansion accelerates – Rivers
Slide 8: Volatility expected to continue
For personal use only Volatility expected to continue Commodity market prices • First half prices considerably (Daily spot price index (1 January 2010=100)) higher than 2010 • Generally positive outlook for metals and minerals prices – Global growth expected to average 3.5% in 2011 – Chinese GDP to
Slide 9: Iron ore recovers from severe weather
For personal use only Iron ore recovers from severe weather • Stable and strong prices reflect Iron ore underlying result (US$bn) robust demand and weak supply growth • Significant weather disruptions in first half – Shipments lower following train derailment – Production rebounded in Q2 • Pilbara e
Slide 10: Clear pathway for Pilbara Mt/a global capacity
For personal use only Clear pathway for 454 Mt/a global capacity • Pilbara 333 Mt/a accelerated by six Car Dumpers (x2) months to H1 2015 • Headcount at site to double in 1.8 km second half Existing Cape 2.5km Lambert Port • Proven track record of delivery Tug harbour – Capital expenditure remains o
Slide 11: Targeting long-term margin transformation in Aluminium by 2014
Targeting long-term margin transformation For personal use only in Aluminium by 2014 Aluminium underlying result • Increased first half prices due to (US$bn) tight physical market • Results impacted by exchange rates and higher input costs for caustic, coke and pitch • Bauxite & Alumina affected by
Slide 12: Lower Copper grades: recovery expected in 2012
For personal use only Lower Copper grades: recovery expected in 2012 Copper underlying result • Strong pricing continues (US$bn) – Market finely balanced – Disruptions to global supply, including recent labour disputes • Lower volumes from dip in grades at all three major operations • Recovery in co
Slide 13: Advancing world class copper projects
For personal use only Advancing world class copper projects Oyu Tolgoi • Construction almost 1/3 complete • Workforce to peak this year at 14,000 • Training programs developing Resolution • $103 million newly approved • Encouraging drill results La Granja • 30,000 meter drilling programme 50% comple
Slide 14: Significant disruptions from weather events at Energy operations
Significant disruptions from weather events at For personal use only Energy operations Energy underlying result • Strong coal prices following (US$bn) significant supply disruptions • Queensland operations recovering from force majeure • Expansions in the Hunter Valley progress • Mt Pleasant decisio
Slide 15: Riversdale acquisition successfully completed
For personal use only Riversdale acquisition successfully completed • Tier one hard coking coal Car Dumpers (x2) resources in Mozambique • Benga (65% Rio Tinto, 35% Tata 1.8 km Steel) Existing Cape 2.5km Lambert Port – First exports planned end 2011 Tug harbour – Growth potential beyond 10Mt/a – 60%
Slide 16: Rapidly improving demand environment for Diamonds & Minerals
Rapidly improving demand environment for For personal use only Diamonds & Minerals Diamonds & Minerals underlying result • Strong pricing environment (US$bn) – Continued strong demand for borates and TiO2 – Improved market conditions for diamonds – TiO2 contracts steadily being replaced with shorter
Slide 17: Guy Elliott, Chief financial officer
For personal use only Guy Elliott Chief financial officer Richards Bay Minerals rehabilitation
Slide 18: Record first half earnings
For personal use only Record first half earnings Underlying earnings 2010 first half vs 2011 first half ($m) Note: Exploration and evaluation variance includes $229 million decrease in gain on undeveloped property sales (+$229 million gain in H1 2010 from sale of undeveloped coal properties) 4 Augus
Slide 19: Earnings cash cost performance driven by rising input prices and weather
Earnings cash cost performance was driven by For personal use only rising input prices and weather events Breakdown of cash cost variance • Unit cost efficiency impacted by lower volumes • Maintenance cost and volumes Other production effected by weather events and one-offs Input prices ($182m) and
Slide 20: Outstanding cash flow generation
For personal use only Outstanding cash flow generation 2011 first half cash flows Half yearly operating cash flows ($bn) ($bn) Other: $0.5bn Interest: $0.3bn Dividends from EAUs Increase in net debt Cash flows from and other Tax: $3.7bn consolidated operations inflows: $5.3bn Dividends: $1.2bn Buyba
Slide 21: Capital expenditure ramping up
For personal use only Capital expenditure ramping up •Ramp up in major project growth capex expected to continue •Increasing levels of capital investment over the medium term Simfer payment •Major projects progressing well •Some spend delays due to weather interruptions in first half •Increasing pro
Slide 22: Capital cost estimates revised for strengthening of Australian dollar
Capital cost estimates revised for strengthening For personal use only of Australian dollar Pilbara infrastructure to 283Mt/a Yarwun 2 (Control budget A$bn) (Control budget A$bn) 4 August 2011 Rio Tinto 2011 interim results 21
Slide 23: Industry supply response remains challenged
For personal use only Industry supply response remains challenged 2011 Lead time outlook • Equipment lead times are increasing Equipment type 0 1 2 3 (years) • Resource nationalism will slow Grinding mills investment in growth Draglines Barges • Project financing challenged in Locomotives current vo
Slide 24: Balancing growth with capital returns
For personal use only Balancing growth with capital returns • More than $10 billion of high quality investments in first half Cash from operations • Capital expenditure ramping up • Regained single A credit rating • Capital return programme increased by $2 billion to $7 billion to be completed by en
Slide 25: Tom Albanese, Chief executive
For personal use only Tom Albanese Chief executive Oyu Tolgoi construction site
Slide 26: Shift in metals consumption towards the developing world continues
Shift in metals consumption towards the For personal use only developing world continues GDP per capita by region Building height categories RMB thousand Floors, steel intensity (kg/m2) < 100 F Steel intensity (high-end) Steel intensity (low-end) < 50 F < 32 F < 18 F < 12 F <8F Average 5-40 40-50 50
Slide 27: $26 billion of major capital projects underway
For personal use only $26 billion of major capital projects underway Project timeline(1) % Complete $ Capex(2) Production $91m +5mtpa $284m +5mtpa $763m +5.3mtpa $2.1bn 15mtpa(4) $7.3bn (3) +53mtpa $1.1bn 15mtpa(4) $166m(5) Access high grade ore $6bn +100ktpd ore $340m 30mlb Ph1, 60mlb Ph2 (capacity
Slide 28: High quality tier one projects currently in advanced study
High quality tier one projects For personal use only currently in advanced study Indicative Indicative first Indicative Project Product capex(1) production production(1) Nammuldi (Pilbara 283) Iron ore $ 2013 NA Pilbara 333 Iron ore $$ 2015 +50mtpa IOCC Phase 3 Iron ore $ 2013 +2.7mtpa Simandou Ir
Slide 29: A deep portfolio of strong earlier stage projects
A deep portfolio of strong earlier stage projects For personal use only provide options for further quality growth • Pilbara 433mtpa Iron Ore • Orissa • IOCC expansions • Resolution • KUC North Rim Skarn Copper • La Granja • Northparkes expansion • Escondida options • AP60 Phase 2 • Armargosa (bauxi
Slide 30: Our investment in technology and exploration gives us competitive edge
Our investment in technology and exploration For personal use only gives us competitive edge Exploration drill rig Iron Ore Operations Centre, Perth Mine planning Driverless trucks, Pilbara 4 August 2011 Rio Tinto 2011 interim results 29
Slide 31: Record results – global expansion options grow
For personal use only Record results – global expansion options grow • Record first half earnings, EBITDA and operating cash flow • Strong demand outlook with continued volatility, strong currencies and higher input prices • $10 billion of high quality investment in first half • World class growth p
Slide 32: 2011 interim results
For personal use only 2011 interim results 4 August 2011
Slide 33: Breakdown of price variance
For personal use only Breakdown of price variance Earnings impact from price $9,496 million ($m) Traded Non-traded 4 August 2011 Rio Tinto 2011 interim results 32
Slide 34: Breakdown of volume variance
For personal use only Breakdown of volume variance Earnings impact from volumes $782 million ($m) 4 August 2011 Rio Tinto 2011 interim results 33
Slide 35: Reconciliation of underlying to net earnings
For personal use only Reconciliation of underlying to net earnings $m 2010 Underlying earnings 7,781 Net impairment charges (147) Exchange differences and gains on derivatives 63 Other (110) Net earnings 7,587 4 August 2011 Rio Tinto 2011 interim results 34
Slide 36: Modelling earnings
For personal use only Modelling earnings Impact on full year 2010 average underlying earnings Earnings sensitivity price/rate ($m) Copper 426c/lb +/-43c/lb 324 Aluminium $2,551/t +/-$255/t 737 Gold $1,447/oz +/-$145/oz 64 Molybdenum $18/lb +/-$1.8/lb 54 Iron ore +/-10% 1,710 Coal* +/-10% 318 A$ 103
Slide 37: Net debt: definition change from 2011
Net debt: definition change from 2011 • The Group’s net debt definition has been modified, such that it is now stated net of For personal use only adjustments for funding arrangements relating to certain Equity Accounted Units (EAUs) and consolidated operations. • This avoids including borrowing lia