Rio Tinto Plc · LSE:RIO
Rio Tinto — Corporate Update (June 2008)
60 slides from Rio Tinto's corporate update, Jun 16, 2008
Slide 1: ASX cover letter for site visit presentations
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 16 June 2008 Dear Sir, Attached are presentations given o
Slide 2: Tom Albanese, CEO - Australian Site Visit
For personal use only Tom Albanese, CEO Australian Site Visit Sunday, 15 June 2008
Slide 3: Forward looking statement
For personal use only This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and comprises the slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions Forward looking statement This p
Slide 4: Market outlook and growth positioning
For personal use only • Economic fundamentals continue to support an attractive market outlook and the doubling of demand for key products • the economic outlook of developing economies remains robust • long–run prices are supported by economic fundamentals • Rio Tinto is well positioned to capitali
Slide 5: Global seaborne iron ore, copper and aluminium demand growth
For personal use only Global seaborne iron ore Global copper Global aluminium Mt Mt Mt Growth equivalent to Growth equivalent to Growth equivalent to ~5x Rio Tinto Pilbara* ~12x Escondida** ~31x Rio Tinto Alcan Saguenay smelters*** 66 1624 38 1421 33 54 1136 44 26 35 844 19 2007 2012 2017 2022 2007
Slide 6: Chinese Consumer Price Indices
For personal use only Chinese Consumer Price Indices Index (January 2006 = 100) 120 • ‘Headline’ inflation is being driven by food and energy… 115 • …while ‘core’ inflation, which Food provides a strong guide for consumer monetary policy, remains 110 price index ‘Headline’ subdued price index • A le
Slide 7: Commodity prices and financial trading
! For personal use only • Some commentators have recently attributed high prices for many commodities to “financial trading” • For key Rio Tinto products there is little evidence supporting this view: • Stocks for many key Rio Tinto commodities are low – copper stocks in 2007 were less than a third
Slide 8: Growth rate comparison
" For personal use only Growth rate comparison* CAGR per cent 8.6% 5.2% 4.2% Real global GDP growth 2008- Metals and mining demand Rio Tinto production growth 2015 2008-2015* 2008-2015 * Metals and mining demand growth based on market demand projections for seaborne iron ore, seaborne coking coal, a
Slide 9: 2007 pro forma underlying earnings
" # " For personal use only 2007 pro forma underlying earnings* Per cent Total 2007 pro forma product group underlying earnings* of $9.2 billion • Sector leadership in Aluminium, Diamonds & Iron Ore and Copper Minerals, 5% Energy, 5% • Strong industry position, high asset quality and low cost Copper
Slide 10: Production volume index by commodity
" $ For personal use only Rio Tinto production volume index by commodity 200 Excluded projects: 1. Sulawesi nickel 2. Eagle nickel 3. PRC potash 175 Base metals 4. Madagascar CAGR 8.4% Ilmenite I & II 8.6% CAGR Energy CAGR 11.6% 150 Iron Ore CAGR 9.4% 125 Aluminium CAGR 7.6% 100 2008 2009 2010 2011
Slide 11: Rio Tinto's growth pipeline
% $ ! # For personal use only $ Rio Tinto’s growth pipeline Average time to Project stage first production Rio Tinto examples Concept 7+ years Regina potash; Crowsnest coking coal Order of Winchester South; Maules Creek, 5–7 years magnitude Lakeview Nickel; Mongolia coking coal; La Granja; Simandou;
Slide 12: Exploration and project locations map
$ " For personal use only Regina Crowsnest Mongolia Lakeview Jadar Kamchatka Copper Cliff Tunceli Bunder El Arco Landazuri Essequibo Murindo Orissa Morales / Cajibio Curua Gabon Camilaca Amargosa Canning Mozambique Taca Taca Codelco JV B13 Limpopo Iron Ore Copper Bauxite Ilmenite Potash Coking Coal
Slide 13: Major operations map
" For personal use only Diavik IOC Bingham Canyon Freeport ERA Gove Corumba Escondida Rössing Pilbara Bowen Basin Diamonds Iron Ore Copper Bauxite Uranium Coking Coal Source: Rio Tinto 15 June 2008 Australian Site Visit 12
Slide 14: Cost of discovery versus acquisition cost
& '( For personal use only Year Transaction Value $ billions Iron ore 2007 Amapa/Minas Rio 10.05 Copper Other 2007 Tenke Fungurume 5.70 2008 Esperanza/Tesoro 4.37 2007 Pebble East 2.85 2008 Tampakan 1.19 2008 Anglo Potash 1.14 Our cost of discovery is a fraction $4.4bn of current acquisition cost $9
Slide 15: Country risk exposure
) For personal use only Country risk exposure Production volume index; 2008 = 100* Rio Tinto BHP Billiton 178 22% Higher-risk countries** 130 100 20% 100 4% 24% 78% Lower-risk countries** 96% 80% 76% 2008 2015 2008 2015 * Indices are based on previously presented production forecasts and consensus l
Slide 16: Experience in developing markets and competencies
For personal use only Experience in developing markets Rio Tinto competencies • While our portfolio currently has a low • Leadership position in social and exposure to country risks, Rio Tinto environmental responsibility: has experience with successful • Safety investments in developing markets • E
Slide 17: Tom Albanese, CEO - Australian Site Visit
For personal use only Tom Albanese, CEO Australian Site Visit Sunday, 15 June 2008
Slide 18: Financial community site visit - June 2008
For personal use only Rio Tinto Alcan Financial community site visit 15 - 20 June 2008
Slide 19: Cautionary statement
Cautionary statement This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and comprises the slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions. For personal use only Forward lo
Slide 20: Dick Evans, Chief Executive
For personal use only Dick Evans Chief Executive Rio Tinto Alcan 15 June 2008 Financial community site visit (15 - 20 June 2008) 3
Slide 21: Positive outlook on industry fundamentals
For personal use only Positive outlook on industry fundamentals Most favourably positioned in a highly attractive industry Rio Tinto Alcan’s triple advantage - bauxite, power and technology Quality growth Rio Tinto Alcan in Australia 15 June 2008 Financial community site visit (15 - 20 June 2008) 4
Slide 22: Aluminium demand continues apace, driven by China
Aluminium demand continues apace, driven largely by China For personal use only Primary aluminium consumption kt 70,000 7.0% 60,000 50,000 3.1% 40,000 14.7% 30,000 8.9% 20,000 World 10,000 China1 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 1 China’s expected compound annu
Slide 23: Aluminium inventories remain historically low
Aluminium inventories remain historically low Inventories as Weeks of Shipments For personal use only 5000 21 4500 LME 3-mos Unwrought WW Inventory Ratio 18 4000 Weeks Shipments . 2007$/tonne . 15 3500 Mar-08 3000 5.77wks 12 2500 9 2000 6 1500 1000 3 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 0
Slide 24: Forward markets recognise structural changes
Forward markets continue to recognise profound structural changes For personal use only Aluminium 5-year forward curve USD/tonne 3300 04 June 2008 3100 2900 2700 +1,100 31 Dec. 2007 2500 March 2008 2300 analyst consensus 29 Dec. 2006 2100 30 Dec. 2005 1900 31 Dec, 2004 1700 1500 2005 2006 2007 2008
Slide 25: Industry cost structure pressured
Industry cost structure pressured… Bauxite, Alumina and Coke Price Indices For personal use only 260 Green and Calcined Coke (Gulf Coast) 220 Bauxite (China) Alumina (Spot) 180 Jan. 2007 = 100 140 100 60 2007 2008 Electricity-Related Price Indices Energy-Related Price Indices 260 260 Mid-C (Day ahea
Slide 26: China cost curve continues to steepen
Particularly in China, ensuring cost curve continues to increase and steepen For personal use only Rio Tinto Alcan capacity weighted average Cash cost, 2007 USD/tonne Chinese weighted average 3000 2750 Average Spot price 2007 US$2638/t 2500 2007 with 2007 with consensus long RMB:USD run RMB:USD rate
Slide 27: Supply side risks remain
For personal use only Supply side risks remain • Electricity shortages due to structural challenges and weather events • Increased environmental and community sensitivities • Increased competition for energy in the few remaining “structurally long energy” regions • Rapidly escalating capital costs,
Slide 28: Positive outlook on industry fundamentals
For personal use only Positive outlook on industry fundamentals Most favourably positioned in a highly attractive industry Rio Tinto Alcan’s triple advantage - bauxite, power and technology Quality growth Rio Tinto Alcan in Australia 15 June 2008 Financial community site visit (15 - 20 June 2008) 11
Slide 29: Most favourably positioned in a highly attractive industry
Most favourably positioned in a highly attractive industry For personal use only • Scale, strength and balance across the upstream aluminium value chain • Modern, low cost operations • High quality, extensive bauxite assets • Unrivalled power position in self owned, clean energy • Technological lead
Slide 30: Key earnings sensitivities
For personal use only Reminder of key earnings sensitivities 2007 average Effect on Rio Tinto Alcan full year price/exchange Sensitivity underlying earnings ($m) rate Aluminium 120c/lb +/-10c/lb 620 Canadian dollar 93USc +/-10c 150 Australian dollar 84USc +/-10c 165 Euro 137USc +/-10c 50 Additional
Slide 31: Integration is progressing well
Integration is progressing well Oct 2007 Feb 2008 Jan 2010 For personal use only Preparation Planning Implementation Delivered 2010 2010 30/6 31/12 30/6 31/12 Report outs • Post-tax synergies in 2010 $600 M Æ $940 M Æ $1,100M1 • On track with H1 2008 target of total $170 million in period synergy be
Slide 32: Positive outlook on industry fundamentals
For personal use only Positive outlook on industry fundamentals Most favourably positioned in a highly attractive industry Rio Tinto Alcan’s triple advantage - bauxite, power and technology Quality growth Rio Tinto Alcan in Australia 15 June 2008 Financial community site visit (15 - 20 June 2008) 15
Slide 33: A leading position in bauxite
For personal use only A leading position in Bauxite Resources Bauxite Billion tonnes Reserves 3 2.507 2.200 1.950 2 1.813 1.387 1.349 1.060 1 0.835 0.525 0.103 0 Rio Tinto Alcan1 UC Rusal Vale Chalco Alcoa2 1 Rio Tinto Alcan reserves and resources have been determined in accordance with the Australa
Slide 34: 94% of power secured on long-term basis
94% of power secured on long-term basis including 64% hydro For personal use only Sustainable, low cost energy supply Secured energy sources Rio Tinto Alcan 2007 smelter energy sources Short & medium- term contracts (6%) Gas/coal thermal (25%) Self Long-term generated Contracts (48%) Hydro (46%) Nuc
Slide 35: Clean, secure power base not easily replicable
For personal use only Clean, secure power base not easily replicable • Extremely scarce set of assets and PASSES DANGEREUSES water rights Quebec RESERVOIR STORAGE CAPACITY 5 200 HM3 1941 LAC MANOUANE 1941 RESERVOIR • Current hydro-electric STORAGE 2 700 HM3 CAPACITY developments in Quebec highlight
Slide 36: Technology as a key driver of growth
Technology as a key driver of growth and operational excellence For personal use only AP-50 A three-pronged technology strategy: Leading through operational excellence Cell Heat Recovery Maintain and enhance proprietary AP technology leadership Develop new breakthrough technologies Drained Cat
Slide 37: Cell technology leadership through proprietary AP series
Cell technology leadership through proprietary AP series For personal use only Full economic cost leadership with emphasis on energy conservation and environment Operating cost Energy efficiency Smelter using AP technology USD/tonne DC MWh/tonne 3,000 42% of 1st 20 quartile 2,500 capacity uses AP te
Slide 38: Positive outlook on industry fundamentals
For personal use only Positive outlook on industry fundamentals Most favourably positioned in a highly attractive industry Rio Tinto Alcan’s triple advantage - bauxite, power and technology Quality growth Rio Tinto Alcan in Australia 15 June 2008 Financial community site visit (15 - 20 June 2008) 21
Slide 39: Australian growth projects
For personal use only Australian growth projects Weipa Gove Yarwun Bauxite production Alumina production Alumina production Millions tonnes per annum Millions tonnes per annum Millions tonnes per annum 4 4 30 3 3 2 2 20 1 1 10 0 0 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 • Options
Slide 40: Quebec: leveraging an aluminium hub
For personal use only Quebec: leveraging an aluminium hub Arvida AP-50 Alma 2 Aluminium production (millions of tonnes per annum) Aluminium production (millions of tonnes per annum) 0.20 0.4 0.15 0.3 0.10 0.2 0.05 0.1 0 0.00 2011 2012 2013-2015 2015+ 2010 2011 2012 2013 2014 2015 • 60ktpa pilot plan
Slide 41: Kitimat: a unique power position
For personal use only Kitimat: a unique power position • Replacement of existing 277ktpa capacity 50yr old • Self-owned hydro electric power from the Kemano Soderburg smelter with 400ktpa capacity pre-bake generating station. When complete, the smelter will utilising latest version of RTA’s AP serie
Slide 42: Greenfield smelters
For personal use only Greenfield smelters Sohar, Oman Sarawak, Malaysia Aluminium production (millions of tonnes per annum) 0.50 0.40 0.30 0.20 0.10 0.00 2011 2012 2013 2014 2015 • 360ktpa capacity smelter of which RTA owns 20%. • Two AP36 Potlines with total capacity of 720ktpa. • Largest single po
Slide 43: Extensive and balanced alumina volume growth
Extensive and balanced alumina volume growth For personal use only Alumina production Million tonnes per annum 20 Yarwun III Ma’aden Guinea 18 QAL Other 16 Yarwun II Guinea CAGR 14 Gove Alumar + 9.0% Gove 12 Yarwun 10 QAL 8 6 4 2 0 2008 2009 2010 2011 2012 2013 2014 2015 Source: Rio Tinto Alcan. Arr
Slide 44: Impressive pipeline of aluminium growth
For personal use only Impressive pipeline of aluminium growth Forecast aluminium production (millions of tonnes) Aluminium production Million tonnes per annum Alma II Iceland 8 Sarawak AP50 Phase 1 Edea Kitimat Coega 7 Rest of World Sohar II Europe 6 Ma’aden CAGR Australia / NZ Sohar 7.2% Canada 5 4
Slide 45: Positive outlook on industry fundamentals
For personal use only Positive outlook on industry fundamentals Most favourably positioned in a highly attractive industry Rio Tinto Alcan’s triple advantage - bauxite, power and technology Quality growth Rio Tinto Alcan in Australia 15 June 2008 Financial community site visit (15 - 20 June 2008) 28
Slide 46: Substantial proportion of Rio Tinto Alcan in Australia
Substantial proportion of Rio Tinto Alcan in For personal use only Australia 2007 pro forma Gove – 1.9 Mt Weipa – 18.2 Mt % of RTA Gove – 4.7 Mt Bauxite1 22.9 Mt 72% 1 Alumina 6.3 Mt 80%3 Aluminium1 776kt 19% QAL2 – 3.1 Mt Yarwun – 1.3 Mt Boyne – 330 kt Tomago – 268 kt Bauxite mine Bell Bay – 178 kt
Slide 47: Financial community site visit - June 2008
For personal use only Rio Tinto Alcan Financial community site visit 15 - 20 June 2008
Slide 48: Cautionary statement
Cautionary statement This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and comprises the slides for a presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions. For personal use only Forward lo
Slide 49: Xiaoling Liu, President Primary Metal Pacific
For personal use only Xiaoling Liu President Primary Metal Pacific – Rio Tinto Alcan Financial community site visit (15 - 20 June 2008) 3
Slide 50: Strong smelting position in the region
For personal use only Strong smelting position in the region Key strengths of RTA Primary Metal in Oceania - Scale - Proximity to RTA alumina assets - Proximity to Asian markets - Strong management systems and technical expertise Financial community site visit (15 - 20 June 2008) 4
Slide 51: RTA Primary Metal Pacific operations
For personal use only RTA Primary Metal Pacific operations Product 2007 Site Production RTA share Aluminium 1.8mtpa 1.1mtpa Power 1,818MW 778MW Alcan Ningxia Market zone Boyne Smelters Sarawak Gladstone Power Station Tomago Bell Bay Existing operation Under consideration NZAS Source: Rio Tinto Alcan
Slide 52: Boyne Smelters Ltd (BSL)
For personal use only Boyne Smelters Ltd (BSL) Pro forma aluminium production (RTA share, thousand tonnes per annum) 350 325 330 331 300 250 200 150 100 50 0 2006 2007 2008F Commenced operations 1982 (Lines 1&2) and Key advantages Scale, expansion potential, 1997 (Line 3) proximity to QAL, Location
Slide 53: Gladstone Power Station (GPS)
For personal use only Gladstone Power Station (GPS) Commenced operations 1976 Location Gladstone (Queensland) Rio Tinto Alcan ownership 42.125 per cent Annual capacity 1680MW Key advantages Scale, proximity to coal suppliers Employees 260 employees Source: Rio Tinto Alcan Financial community site vi
Slide 54: Tomago Aluminium Smelter
For personal use only Tomago Aluminium Smelter Pro forma aluminium production (RTA share, thousand tonnes per annum) 300 268 265 268 250 200 150 100 50 0 2006 2007 2008F Commenced operations 1983 Key advantages Scale, proximity to Asian markets, cell technology Location Hunter Valley (NSW) Employees
Slide 55: New Zealand Aluminium Smelter (NZAS)
For personal use only New Zealand Aluminium Smelter (NZAS) Pro forma aluminium production (RTA share, thousand tonnes per annum) 300 281 269 267 250 200 150 100 50 0 2006 2007 2008F Commenced operations 1971 Key advantages Hydro power, high purity production, new long term Location Tiwai Point (NZ)
Slide 56: Bell Bay Aluminium Smelter
For personal use only Bell Bay Aluminium Smelter Pro forma aluminium production (RTA share, thousand tonnes per annum) 200 180 177 178 150 100 50 0 2006 2007 2008F Commenced operations 1955 Key advantages Hydro power, high casting value add, experienced Location Tasmania workforce Rio Tinto Alcan ow
Slide 57: Strong management systems support optimisation
Strong management systems support optimisation For personal use only X% X% X% X% X% X% X% X% X% X% X% Source: Rio Tinto Alcan Financial community site visit (15 - 20 June 2008) 11
Slide 58: Technology integral in delivering capacity creep
Technology integral in delivering capacity creep For personal use only Production capacity creep 120 104 100 6 9 10 80 000’s tonnes 19 per annum 60 35 Primary Metal Pacific operations 40 have added on average 1.6% capacity per year since 2002 compared to 0.5% to 1% for the 20 industry 25 - 2003 2004
Slide 59: Safety and environmental performance excellent
Safety and environmental performance excellent For personal use only Safety Improved safety results by more than 20% over the last 5 years Environment Since 1990, direct greenhouse gas (GHG) emissions at RTA Australian smelters have decreased by 63% per tonne of aluminium, providing best-in- cla
Slide 60: Executive summary
For personal use only Executive summary - The largest smelter business in the Oceania region - RTA share is over 1 million tonnes per annum capacity in Australia and New Zealand - History of delivery of capacity creep, based around technological and operational improvements - Focus on continuing ass