Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Presentation (October 2008)
19 slides from Rio Tinto's investor presentation, October 2008
Slide 1: Commodity markets
Commodity markets Vivek Tulpule October 2008
Slide 2: Forward-looking statements
This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this presentation, including,
Slide 3: Real Prices US$/t: Aluminium and Copper
Real Prices US$/t 2008 Bingham Canyon (Cu) 18,000 Start-up early 1900s Pilbara (Iron ore) 12,000 Start-up 1960s Saguenay (Al) Start-up 1920s 6,000 0 1900 1920 1940 1960 1980 2000 Aluminium Copper Source: NBER, Rothwell, Metal Statistics 1919, LME October 2008 3
Slide 4: Nominal metal prices index, 2004=100
Nominal metal prices index, 2004=100 450 400 Copper Aluminium 350 Iron ore (India spot) 288 300 272 250 200 157 150 100 50 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Source: Reuters Ecowin, Bloomberg October 2008 4
Slide 5: Metals prices
AU$:USD Metal Price Index 1990=100 1995=100 180 300 160 Metals prices 250 140 120 200 AU$ 100 150 80 60 100 40 50 20 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 October 2008 Source: Economist Metals Price Index 5
Slide 6: Nominal prices index: Oil (Brent Crude)
Nominal prices index, 2004=100 450 400 Oil (Brent Crude) 350 300 250 256 October MTD 200 150 100 50 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Source: Reuters Ecowin October 2008 6
Slide 7: Loan and M2 change, required reserve ratio and lending rate
! " Loan and M2 change required reserve ratio and lending rate year-on-year % 20 23 Loosening has commenced 19 20 18 17 17 14 16 11 15 8 14 5 Apr-07 Aug-07 Apr-08 Aug-08 Jan-07 Feb-07 Mar-07 May-07 Jun-07 Jul-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 May-08 Jun-08 Jul-08 Sep-08 Oct-08 Loan
Slide 8: US LIBOR spread (1-Month)
" # $ % & Percent 5.0 4.5 US LIBOR spread (1-Month) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jul-07 Aug-07 Oct-07 Nov-07 Apr-08 Jun-08 Jul-08 Aug-08 Oct-08 Sep-07 Dec-07 Jan-08 Feb-08 Mar-08 May-08 Sep-08 Source: Reuters Ecowin October 2008 8
Slide 9: The Chinese economy is pausing for breath
• The Chinese economy is pausing for breath - Deceleration from nearly 12% growth in 2007 to less than 10% in 2008 with the ‘Olympics effect’ likely to exaggerate any weakness in Q3 • The slowdown is due to tight credit policies in China introduced last year to address inflation. These are now being
Slide 10: Monthly trade balance
'() Billion US$ 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Montly trade balance October 2008 Source: Reuters Ecowin 10
Slide 11: Growth in Chinese industrial production
* Growth In Chinese industrial production Per cent change year-on-year Recoveries have typically been swift 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Reuters Ecowin October 2008 11
Slide 12: Source:China National Bureau of Statistics
+ October 2008 Source:China National Bureau of Statistics 12
Slide 13: Chinese regional asset investment and trade exposure
, Production Volume Index Chinese regional asset investment and trade exposure H1 2008 increase in fixed asset investment Importance of net export industry Per cent Per cent of GDP Population 43 61 69 98 61 68 18 Millions 50% 10% 45% 40% 8% 35% 30% 6% 25% 20% 4% 15% 10% 2% 5% 0% 0% xi i n n xi i n n
Slide 14: Chinese regional steel intensity
- Chinese regional steel intensity Kgs per Capita = 31 Chinese regions 1,200 1,000 Many large, less– developed interior provinces 800 600 400 More developed coastal 200 cities: Shanghai; Beijing; Tianjin 0 0 10 20 30 40 50 60 GDP (Thousands RMB Per Capita) October 2008 Source: Global Insight China R
Slide 15: Copper and aluminium import/export incentive
.+ ,/ 0 , $/tonne Copper $/tonne Aluminium * 1,200 600 incentive to import 800 400 400 200 0 0 -400 -800 -200 incentive to export -1,200 -400 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 * Takes into account cancellation of tax rebates and export tax October 20
Slide 16: The financial crisis is likely to affect funding for some new copper projects
Volume of 2015 production from new projects and expansions by breakeven price interval Cumulative Copper Production (kt) 14000 Underlying Demand Growth 12000 Required mine output to meet hypothetical 5% 10000 growth* 8000 6000 4000 2000 0 <0 0 50 100 150 200 250 300 >300 Breakeven Price (2009 c/lb)
Slide 17: Break-even pricing for Chinese aluminium smelting capacity
! 1 1 Break–even pricing for Chinese aluminium smelting capacity Chinese smelting profitability $/tonne The average Chinese • Average operating costs of Chinese smelter has negative aluminium smelting capacity above margins at current spot current Chinese spot prices $2,420 prices $2,500 • Incentive
Slide 18: 2009 Iron Ore Cost Curve (China and India only)
- 2009 Iron Ore Cost Curve (China and India only) USD/tonne CFR ! " # ! $% " # ! $% 100 200 300 mtpa October 2008 Source RT Analysis, Tex report. Freight rates from early October 2008 apply 18
Slide 19: Prices remain well above historical trend despite the downturn
• Even now prices remain well above historical trend despite the recent downturn • Case for prices to average well above historical trend in 2009 still intact • Chinese GDP growth in 2009 of 8-9%* is still fast • Marginal producers expected to curtail supply • OECD economies much less important to c