Rio Tinto Plc · LSE:RIO
Rio Tinto — Non-Deal Roadshow (August 2017)
28 slides from Rio Tinto's roadshow presentation, Aug 9, 2017
Slide 1: Notice to ASX: Iron Ore – investor roadshow
Notice to ASX Iron Ore – investor roadshow For personal use only 9 August 2017 The attached presentation will be given by Chris Salisbury, chief executive, Iron Ore, at investor briefings in North America from 9-11 August 2017. The presentation slides will also be available at www.riotinto.com/prese
Slide 2: Iron Ore - delivering optimal value
For personal use only Iron Ore - delivering optimal value Investor roadshow – August 2017 Chris Salisbury, chief executive, Iron Ore
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 contains
Slide 4: Supporting statements
Supporting statements For personal use only Mineral Resources and Ore Reserves The Pilbara Mineral Resource and Ore Reserve estimates which appear on slide 14 are reported on a 100% basis. These Mineral Resource and Ore Reserve estimates, together with the ownership percentages for each joint ventur
Slide 5: Rio Tinto value proposition
Rio Tinto 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 $2 billion cost savings delivered six Delivering >2% CAGR1 CuEq growth 40-60%
Slide 6: World-class assets at the core of our business
World-class assets at the core of our business For personal use only Iron Ore Bauxite Aluminium Copper Main Oyu Tolgoi, Pilbara Bauxite Canadian smelters businesses Escondida Low-cost, world-class assets Large, low-cost bauxite Large, long-life, low-cost Competitive Integrated infrastructure assets
Slide 7: Focusing on value over volume
Focusing on value over volume For personal use only Revenue Price impact of incremental tonnes Protecting quality Capex Maximising free Sustaining cash flow through the cycle Replacement Operating cost Growth Unit cost Impact on cost base 6 | © Rio Tinto 2017
Slide 8: Delivering optimal value from one of the world’s best businesses
Delivering optimal value from one of the world’s best businesses For personal use only Strong foundation Mine to market productivity Value over volume – Exclusive use of assets, fully integrated system, – Resource development sequencing to optimise – Maximise cash flow from existing asset base consi
Slide 9: Safety effort targeting fatality elimination and injury prevention
Safety effort targeting fatality elimination and injury prevention For personal use only Iron Ore All Injury Frequency Rate Per 200,000 hours worked Focus on fatality and injury elimination 0.80 Fatality and critical incident learnings 0.70 12 month rolling AIFR Embed critical risk management progra
Slide 10: Low-quality ores driving iron ore supply and inventories
Low-quality ores driving iron ore supply and inventories For personal use only Iron ore supply growth Percentage Lower-quality iron ore supplied into the contestable market has 120% doubled since 2010 (now ~400Mtpa) Fe >65% 80% Fe 60% - 65% Lower-quality products account for 29Mt (80%) of the 36Mt F
Slide 11: China steel demand remains strong, driving steel inventories lower
China steel demand remains strong, driving steel inventories lower For personal use only China’s Property and Machinery Sector Growth Robust end-use steel demand Percentage (% YoY Ytd) – Developers remain confident and have accelerated new starts to >10% YoY in 2017 20 – Sharp rebound in machinery s
Slide 12: Steel production: China prioritising productivity
Steel production: China prioritising productivity For personal use only Underpinned by healthy industry liquidity and mill profitability, China mill cash margins China’s steel production has been running close to historical highs: $ per tonne 150 – Mills incentivised to simultaneously rationalise/el
Slide 13: Our product portfolio is well-placed
Our product portfolio is well-placed, translating into strong H1 2017 achieved FOB prices of $67.8/dmt… For personal use only Shipments by product and market H1 2017 Product Strengths Percentage Pilbara Blend – The most traded iron ore product globally 3% Fines – Base load sinter blend in Asian mark
Slide 14: Including the industry benchmark Pilbara Blend
…including the industry benchmark Pilbara Blend For personal use only Blending reduces product variability Product quality variance from mean Customers value the consistency and liquidity of the Pilbara Blend Fe Alumina Silica Phosphorus – Easier to manage blast furnace mix – Technical expertise pro
Slide 15: We have substantial resources sustaining future production
We have substantial resources sustaining future production… For personal use only Pilbara resources, reserves1 and production Million tonnes (LHS, dry; RHS, wet) Large Mineral Resources support system optionality and sustain premium Pilbara Blend 25,000 375.0 Ore Reserves maintained in line with dep
Slide 16: A fully integrated asset network
…..and a fully integrated asset network For personal use only 11,000 Workforce 15 Mines 1,700km Rail 4 Port terminals 3 Power stations 370 Haul trucks 51 Production drills 190 Locomotives 15 | © Rio Tinto 2017
Slide 17: Iron Ore: continues to sustain our low-cost advantage
Iron Ore: continues to sustain our low-cost advantage For personal use only Pilbara cash unit cost Pre-tax operating cash cost improvements US$ per tonne Reduction vs. 2012 US$m $1.5bn 156 315 371 22.9 20.4 16.2 14.3 13.8 359 323 H1 H2 H1 H2 H1 H2 H1 H2 H1 2013 2014 2015 2016 H1 2017 2013 2013 2014
Slide 18: Replicating best practice drives greater value
Replicating best practice drives greater value…… For personal use only Haul Truck Effective Utilisation Plant Effective Utilisation Time %, indexed, Jun YTD, site comparison Time %, indexed, Jun YTD, site comparison 15% 1.15 20% 1.20 1.03 1.00 1.00 J F M A M J 2015 2016 2017 IO Ave. IO Best Perf. Co
Slide 19: As does productivity and technology
…as does productivity and technology For personal use only Train dumping cycle time Haul truck payload (1) Indexed to 2015 monthly average Indexed to 2015 average -54% +4% 1.04 variability High Low -26% 1.00 variability Avg 1.01 0.95 1.00 0.93 2015 2016 2017 Ytd 2015 2016 2017 H1 Improving cycle tim
Slide 20: AutoHaul already delivering benefit
AutoHaul® already delivering benefit For personal use only Significant progress made in 1H 2017: of rail kilometres 1 now in of production tonnes1 32% Autonomous mode (with drivers on-board) 80% now AutoHaul®- enhanced Early benefits are being realised… … and on-track to achieve full network capacit
Slide 21: Installed infrastructure offers high-value optionality
Installed infrastructure offers high-value optionality For personal use only Optimising system capacity Mt/a Production optionality Mine capacity can be delivered through productivity Mines Silvergrass and low capital brownfields pathway and productivity Rail capacity can be delivered through produc
Slide 22: Silvergrass on track to deliver world-class investment returns
Silvergrass on track to deliver world-class investment returns For personal use only Silvergrass first production on-track for Q4 2017 ~21Mt/a at US$29/t Mine sustains Autonomous Haul trucks IRR >100%1 capital intensity (CI) Pilbara Blend quality now operating Conveyor being installed 1IRR calculate
Slide 23: High-quality, low-cost options available to offset depletion
High-quality, low-cost options available to offset depletion For personal use only Pilbara mine development options Low cost option leveraging existing infrastructure US$/t Installed capital intensity – Yandi Billiard South Capital Intensity <$10/t; IRR 120 Bubble size indicates capacity >100%1 Brow
Slide 24: Sustaining best value production
Sustaining best value production For personal use only Capital expenditure US$bn (RT share) Silvergrass - majority of growth spend in 2017 1.5 ~$100m approved replacement mine capital over next three years, e.g. – ~$64m Yandicoogina Oxbow 1.0 ~$1bn unapproved replacement mine capital over next three
Slide 25: Unlocking productivity through strong engagement
Unlocking productivity through strong engagement For personal use only Safety remains fundamental priority Strengthening workforce engagement – Recognising great contributions from our people – Enabling our inclusive and diverse culture Enhancing our business through transformation – Technology enab
Slide 26: Highly-valued partners and sustainable local and regional investment
Highly-valued partners and sustainable local and regional investment remain a priority For personal use only Figures for all Rio Tinto product groups based in Western Australia 25 | © Rio Tinto 2017 Rio Tinto data 2016, currency AUD
Slide 27: Delivering optimal value from one of the world’s best businesses
Delivering optimal value from one of the world’s best businesses For personal use only Quality people and partners Exclusively operated integrated asset, significant resource base, highly-valued product suite Strong cash flows through the cycle Focus on raising mine to market productivity Multiple o
Slide 28: Iron Ore - delivering optimal value
For personal use only Iron Ore - delivering optimal value Investor roadshow – August 2017 Chris Salisbury, chief executive, Iron Ore