Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Presentation (January 2008)
29 slides from Rio Tinto's investor presentation, Jan 18, 2008
Slide 1: ASX cover letter for media tour 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 18 January 2008 Dear Sir, Attached are presentations from
Slide 2: Iron ore: Pilbara media visit, with cautionary statement
For personal use only Iron ore Pilbara media visit 15 - 18 January 2008 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 t
Slide 3: Four key Chinese development themes
For personal use only Vivek Tulpule Rio Tinto Chief Economist 18 January 2008 Rio Tinto Pilbara media visit - January 2008 3 Four key Chinese development themes 1. Rapid growth 2. Decoupling 3. Commodity intensive growth 4. Increasing domestic resource production costs • Supporting a case for strong
Slide 4: Theme: Rapid growth - Chinese economy accelerated in 2007
Theme 1 – Rapid growth For personal use only Rio Tinto Pilbara media visit - January 2008 5 Overview of Chinese economy - growth accelerated in 2007… y-o-y % changes 2006 2007 Q1 2007Q2 2007Q3 Real GDP,% 11.1 11.1 11.9 11.5 Industrial Production,% 16.2 17.5 18.3 18.2 Real Fixed Asset Investment,% 15
Slide 5: Consensus for 2008: rapid GDP growth and industrialisation
Consensus for 2008 - rapid GDP growth (10.5%) and industrialisation even as external demand For personal use only slows and the government strives to cool activity 2008 growth Selected forecasts GDP Ind. Prod. CPI Goldman Sachs Asia 10.3 14.5 4.5 Oxford Economics 11.4 16.6 3.2 Bank of China (HK) 10.
Slide 6: Domestic demand remains the main contributor to GDP
Domestic demand remains the main contributor to GDP For personal use only Breakdown of Chinese GDP - 2006 Government Net Trade Spending 6% 14% Investment 44% Consumption 36% China has a diverse export base with about 20 per cent of its exports going to the US Source: Global Insight Rio Tinto Pilbara
Slide 7: Direct trade effects from a US slowdown expected to be small
Direct trade effects from a US slowdown are expected to be small For personal use only 2 1 0 US Demand US Imports Chinese Exports Chinese Imports Chinese GDP -1 Is offset by a Results in a 0.3 -2 fall in imports per cent fall % Change Leads to in Chinese GDP -3 a 1.5 per cent fall in Chinese exports
Slide 8: Chinese copper tube exposure to exports
Chinese copper tube is most exposed to exports but even in that case the domestic market For personal use only dominates and US influence is relatively small • Around one-third of exports were to the US, accounting for only about 5% of total Chinese copper tube production in 2007 Chinese Copper Tube
Slide 9: Theme: Commodity intensive growth
Theme 3 – Commodity intensive growth For personal use only Rio Tinto Pilbara media visit - January 2008 15 Rapid industrialisation and urbanisation have made China the largest consumer of a number of commodities 50 % Chinese Demand as Share of Global Consumption 1st 40 Global ranking in 2006 1st 1st
Slide 10: Chinese construction driven by urbanisation and floor space
Chinese construction is driven by ongoing urbanisation and rising urban per capita floor space For personal use only 45% Urbanization rate Urban per capita floor space 30 40% 35% 25 Residential m 2/per capita 30% 20 Non-residential 25% 15 20% 15% 10 10% 5 5% 0% 0 1996 1997 1998 1999 2000 2001 2002 2
Slide 11: Key targets for China's economic and social development
Some key targets for China’s economic and social development For personal use only – The 11th Five-Year Plan Cumulative Indicator in five years Growth in Urbanization (%) [43% in 2005] 4 Forecast Transfer of rural labor (10 000 persons) 4500 Forecast Reducing energy consumption 20 Mandated per unit
Slide 12: Chinese currency likely to strengthen further
Chinese currency is likely to strengthen further – increasing key long term commodity prices For personal use only 100.0 'Fair Value' real exchange rates as a function of per capita income 90.0 Based on simple estimated relationship using pooled data for 50 countries, 4 time periods, pooled data. 'F
Slide 13: China dependent on imported bauxite and alumina
China is now dependent on imported bauxite and alumina For personal use only 12,000 H1 2007 ktonnes 8,000 57% of Chinese 4,000 smelters’ alumina needs met by imports in H1 2007 0 Alumina content of bauxite Alumina imports Alumina need imports Source: CNIA, Chinese Custom statistics, Rio Tinto Rio Ti
Slide 14: Exports unattractive for marginal Chinese smelters
Exports do not appear attractive for marginal Chinese smelters at current LME prices For personal use only Marginal Chinese costs vs current LME prices c/lb 140 120 Export tax 100 80 Alumina costs at current alumina price 60 40 20 Conversion costs 0 Marginal Chinese costs Current LME price Source: C
Slide 15: Exploration in Rio Tinto - Finding The Hidden Giants
For personal use only Exploration in Rio Tinto – Finding The Hidden Giants Pilbara Media Visit 18 January 2008 Eric Finlayson Head of Exploration Cautionary statement This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and comprises the slides for a presentation
Slide 16: An excellent track record of exploration
An excellent track record of exploration For personal use only Rio Tinto discoveries since 1990 Diavik diamonds Eagle nickel Las Cruces copper Kazan soda ash Resolution copper Simandou iron ore La Granja copper Sulawesi nickel Rio Grande borates Murowa diamonds Kintyre uranium Century zinc Chapudi c
Slide 17: Outstanding brownfield opportunities
Outstanding brownfield opportunities For personal use only IOC iron ore Bingham Canyon copper Freeport copper ERA uranium Gove bauxite Corumbá iron ore Escondida copper Rössing uranium Pilbara iron ore Source: Rio Tinto January 2008 Rio Tinto Media Presentation 5 Bauxite – Gove Orbit Bauxite target
Slide 18: Copper - Bingham Canyon Orbit
Copper – Bingham Canyon Orbit For personal use only West Mountain Middle Canyon Bingham Pit Butterfield Canyon 0.7% Cu shell 1119-1390m: 271m @ 0.95% Cu A-Bed Skarn host 0.15% Mo shell Gold at surface Copper at surface Induced polarisation anomaly 0 km 2 Source: Rio Tinto January 2008 Rio Tinto Medi
Slide 19: A superior land holding
A superior land holding For personal use only Rio Tinto tenement BHPB tenement Port Hedland Rio Tinto minesite Cape Lambert BHPB minesite Dampier Railway N 0 km 100 Source: Oct 2007 Mines department tenure and company releases January 2008 Rio Tinto Media Presentation 9 An outstanding resource posit
Slide 20: Ongoing exploration success
Ongoing exploration success For personal use only Rio Tinto tenement BHPB tenement Port Hedland Significant new deposits Cape Lambert Rio Tinto minesite Dampier BHPB minesite Railway N 0 km 100 Source: Oct 2007 Mines department tenure and company releases January 2008 Rio Tinto Media Presentation 11
Slide 21: Iron ore: Pilbara media visit, cautionary statement
For personal use only Iron ore Pilbara media visit 15 - 18 January 2008 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 t
Slide 22: Rio Tinto is an exceptional growth business
For personal use only Tom Albanese Chief Executive 18 January 2008 Rio Tinto Pilbara media visit - January 2008 3 Rio Tinto is an exceptional growth business • Aim to maximise potential of portfolio of world class assets and satisfy global demand through our own options • Highly capable management t
Slide 23: Strong demand will favour Rio Tinto's key commodities
Strong demand arising from economic and demographic development will favour Rio Tinto’s key commodities For personal use only Consumption of metals increases in line with increasing income 2007 population distribution Expenditure per capita US$ (2007 terms) 30% World average income per capita 60 200
Slide 24: China's share of demand for commodities has increased significantly
China’s share of demand for commodities has increased significantly in recent years and is For personal use only predicted to continue rising China’s share of market demand 60 50 % of total world demand 40 30 20 10 0 1990 2000 2007 2012 Copper Aluminium Imported iron ore Source: CRU quarterly report
Slide 25: Mining is close to 10% of the FTSE
Mining represents close to 10% of the FTSE and is now the 3rd largest sector For personal use only 1997 2007 Telecoms Oil & Gas 5.2% 16.8% Other Other 60.4% 46.3% Banks 15.9% Banks 14.3% Pharmaceuticals 9.1% Oil & Gas 8.4% Mining Mining 9.5% 1.0% Telecoms Pharmaceuticals 7.0% 6.1% Mining = £12bn Min
Slide 26: Rio Tinto ahead of BHP Billiton on key strategic metrics
Rio Tinto is ahead of BHP Billiton in these sectors on key strategic metrics For personal use only Rio Tinto ahead BHP Billiton ahead Current Position (Rio Tinto v BHPB) Growth Position (Rio Tinto v BHPB) Reserves and Cost Positiona Industry Rankingb Projectsa,c Resourcesd,e Higher Lower position Gr
Slide 27: Investment in capacity paying off with 2007 production records
Investment to expand capacity in recent years is paying off with 2007 production records For personal use only Iron ore production – 100% basis (mt) Copper production* (kt) 320 1200 280 1000 240 200 800 160 600 120 400 80 40 200 0 0 2004 2005 2006 2007 2008F 2009F 2010F 2004 2005 2006 2007 2008F 200
Slide 28: Higher growth prospects in iron ore, aluminium and copper
Importantly, Rio Tinto has higher growth prospects in iron ore, aluminium and copper For personal use only Rio Tinto BHP Billiton Conceptual Projectsf Iron ore volume growth to 2015a,b Aluminiume volume growth to 2015a,c Copper volume growth to 2015a,d Million tonnes; 100% basis Million tonnes; Attr
Slide 29: Rio Tinto - delivering value and exceptional growth
Rio Tinto – delivering value and exceptional growth For personal use only • Rio Tinto achieved new production records in key commodities in 2007 • China continues to be strong and is becoming increasingly decoupled from the US economy • Forward prices are stronger for iron ore and aluminium than oil