Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Presentation (March 2013)
17 slides from Rio Tinto's investor presentation, Mar 4, 2013
Slide 1: ASX cover letter for analyst presentation
Rio Tinto Limited 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 ASX Market Announcements Office Australian Securities Exchange Exchange Centre 20 Bridge Street SYDNEY NSW 2000 4 Marc
Slide 2: Economic Outlook and Commodity Prices
For personal use only Economic Outlook and Commodity Prices Vivek Tulpulé Head of Economics and Markets 4 March 2013
Slide 3: Cautionary statement
2 Cautionary statement For personal use only 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. Forw
Slide 4: Macroeconomic influence on commodity prices will continue through 2013
3 Macroeconomic influence on commodity prices will continue through 2013 For personal use only China cyclical momentum and reform process OECD financial fragility Loose monetary conditions - Quantitative Easing and potential unwinding Cost escalation and supply cycles
Slide 5: Mixed performance in OECD
4 Mixed performance in OECD For personal use only European bond yield fall highlighting the reduced risk Modest US recovery while Eurozone and Japan still of Eurozone breakup weak 8.0 65 Ten year bond Above 50 = Expansion 7.5 yields 60 7.0 55 6.5 50 6.0 45 5.5 40 US Eurozone Japan 5.0 35 4.5 Spain I
Slide 6: Expectations for a strong first half in China and moderation in the second half
5 Expectations for a strong first half in China and moderation in the second half For personal use only A sharp increase in bank credit and banker’s Inflation is benign but residential housing costs are a acceptances is supporting current pick up leading indicator of a pick-up in CPI 2,000 108 Total
Slide 7: Aluminium capacity additions and stocks continue to weigh on market
6 Aluminium capacity additions and stocks continue to weigh on market For personal use only Outside of China financing deals will continue to tie Strong growth in China alumina imports has been due up metal away from the physical market to concerns over availability of imported bauxite 3500 Greater
Slide 8: Copper short term small surplus, but longer term supply response required
7 Copper short term small surplus, but longer term supply response required in an increasingly challenged industry For personal use only LME stocks have been rising, particularly in Europe Expectations of near term supply growth, but still a as warehouse owners attract material to earn rent need for
Slide 9: Long run demand fundamentals are strong for TiO2
8 Long run demand fundamentals are strong for TiO2 For personal use only Pigment consumption per capita 1995-2011 Pigment production accounts for 90% of TiO2 use Approximate population in 2020 shown
Slide 10: Structural supply constraints remain a long term challenge for coals
9 Structural supply constraints remain a long term challenge for coals For personal use only Chinese and Indian imports - price opportunism and Alternative to blast furnace technology unlikely at long structural supply deficits run HCC prices below $200/t based on consensus prices Mt Thermal HCC $/t
Slide 11: Iron ore supply continues to be exposed to downside shocks
10 Iron ore supply continues to be exposed to downside shocks For personal use only Iron ore forward curve in backwardation Indian exports continue to be constrained. We expect a return to market, at much lower levels US$/dmt. FOB WA, real 2013 Annualised (Mt) 200 40.0% 200 Forward Curve (1 Mar 2013
Slide 12: Steep iron ore cost curve provides scope for price fly-ups
11 Steep iron ore cost curve provides scope for price fly-ups For personal use only 2012 Industry cost curve ($/wmt CFR) 250 $/wmt CFR 200 FMG Pilbara Vale BHP Pilbara RTIO assets 150 100 IOC RT Pilbara 50 0 0 500 1,000 1,500 2,000 2,500 Cumulative Mtpa capacity Source: Rio Tinto Note: Includes ship
Slide 13: Global peaks: finished steel per capita intensities
12 Global peaks: finished steel per capita intensities ASEAN, Brazil, India and Africa unlikely to peak <2040 For personal use only Kg per person 1700 United Arab Emirates • Small open export 1600 orientated 1500 Qatar economies 1400 1300 • Europe 1200 South Korea Singapore • RoW 1100 Forecast • Chi
Slide 14: Detailed China bottom-up demand analysis – example for machinery sector
13 Detailed China bottom-up demand analysis – example for machinery sector For personal use only Agriculture Class Construction Class Mining Class Tractors 25-49 HP 20-30t Compact 31-50t <15t tractors 51-100t 50-69 HP Excavator Mining 15-30t vehicle Utility tractors >30t 20-30 70-120 HP 31-50t >120
Slide 15: Appendix
For personal use only Appendix
Slide 16: Stylised overview of Chinese commodity demand modelling framework
15 Stylised overview of Chinese commodity demand modelling framework For personal use only City level • Population Top down and bottom up forecasts • GDP approach leads to • Consumer and Industry consistent stories across National level trends commodities demand macro forecasts Volume factors Intens
Slide 17: Example of breakdown used to determine commodity intensity
16 Example of breakdown used to determine commodity intensity For personal use only Commodity Cu Al Fe Axle ▪ Axle housing Cockpit ▪ Control unit Engine ▪ Oil block ▪ Oil filter housing ▪ AC tubes ▪ AC condenser ▪ Motor components Hydraulics ▪ Pump housing ▪ Interface s