Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2019)
98 slides from Rio Tinto's investor day presentation, Nov 1, 2019
Slide 1: Media Release: Rio Tinto well positioned to sustain strong returns
Exhibit 99.22 Media Release Rio Tinto well positioned to sustain strong returns 31 October 2019 Rio Tinto is well positioned to continue generating strong returns, building on a track record of $32 billion returned to shareholders since 2016, and the significant progress achieved in strengthening th
Slide 2: Media release continued: Pilbara, Oyu Tolgoi, Growth & Innovation
• Annualised system capacity of 360 Mtpa expected once Koodaideri phase 1 is fully commissioned, with first ore still expected late 2021. • Pilbara Blend continues to command a premium and remains the flagship product from our Pilbara system. • SP10 supports high consistency of the Pilbara Blend, wh
Slide 3: Forward-looking statements
Forward-looking statements This announcement may include forward looking statements. Such forward looking statements involve known and unknown risk, uncertainties and other factors which may cause actual production, performance or results of Rio Tinto to be materially different from any future produ
Slide 4: Contacts
Contacts media.enquiries@riotinto.com riotinto.com Follow @RioTinto on Twitter Media Relations, United Kingdom Media Relations, Australia Illtud Harri Jonathan Rose M +44 7920 503 600 T +61 3 9283 3088 M +61 447 028 913 David Outhwaite T +44 20 7781 1623 Matt Chambers M +44 7787 597 493 T +61 (0) 3
Slide 5: Investor seminar: Strength and resilience
Investor seminar Strength and resilience
Slide 6: Cautionary and supporting statements
Cautionary and supporting statements 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, including but n
Slide 7: Cautionary and supporting statements (cont.)
Cautionary and supporting statements (cont.) The Competent Persons responsible for reporting in Rio Tinto’s 2018 Annual Report the Ore Reserve and Mineral Resource estimates in this presentation were: Association1 Employer Accountability Deposits Bauxite L McAndrew AusIMM Reserve Gove, East Weipa an
Slide 8: Agenda
Agenda Time Topic Who J-S Jacques 08:00-08:25 Strength and resilience Chief executive Vivek Tulpule 08:25-08:45 Connected to our markets Head of Economics & Markets Simon Trott Maximising the value of physical flows Chief Commercial Officer Chris Salisbury 08:45-09:05 Iron Ore: optimise and flex Chi
Slide 9: J-S Jacques, Chief executive
J-S Jacques Chief executive
Slide 10: Sector-leading financial performance
Sector-leading financial performance $3.5bn2 $8bn $15bn + Sustaining capex Ordinary dividends paid 2019 interim and special dividends 42% average EBITDA margin1 $41bn $53bn 17% operating cash flows $8bn $4bn 1 average ROCE Growth capex Buy-backs + $12bn of cash divestments (2016-1H19) 135% TSR4 $9bn
Slide 11: Compelling purpose and sustainability drive
Compelling purpose and sustainability drive Running a safe, Collaborating to Pioneering responsible and enable long-term materials for profitable business economic benefits human progress 0.44 AIFR1 $6.6bn Elysis In 2018 vs 0.68 for ICMM2 23 companies paid in taxes and royalties Partnership with Alc
Slide 12: We are facing a 'New Era' of complexity
We are facing a ‘New Era’ of complexity Growing geopolitical tensions Higher societal expectations Technological disruptions 8 ©2019, Rio Tinto, All Rights Reserved
Slide 13: Three interconnected global scenario forces
This New Era is framed by three interconnected global scenario forces Positioning our business for success through value over volume Geopolitics Society Technology Partnerships ESG / Carbon abatement Mining innovation Partnering across the value chain New Rio Tinto emission targets in Q1 2020 Produc
Slide 14: Our strategy is clear and consistent
Our strategy is clear and consistent Superior cash generation World-class assets Operating and Commercial excellence Capabilities Portfolio Performance People & Partners Disciplined capital allocation Balance sheet strength Superior shareholder returns Creating growth options 10 ©2019, Rio Tinto, Al
Slide 15: Portfolio: quality, diversified assets
Portfolio: quality, diversified assets Commodity Iron ore Aluminium Copper Minerals Strategic approach Optimise and flex Protect and fix Unlock growth Develop opportunities Priorities Value over Volume Production creep Fast-track options from exploration Value over Volume Product quality Customer /
Slide 16: Portfolio: creating options through exploration
Portfolio: creating options through exploration Projects located mainly in lower risk jurisdictions 2019 exploration expenditure 2019 exploration expenditure by commodity by project stage 5% 5% 7% 3% Copper Target Generation Diamonds Target Testing 27% 27% Nickel Project of Merit 65% 55% Other (1) O
Slide 17: Performance: safety, operational and commercial excellence
Performance: safety, operational and commercial excellence drive superior margins and returns Zero fatalities our priority Relentless focus on operational excellence Commercial insights boost profits A safe and well run business Addressing the challenges: strong recovery Actively managing trade-off
Slide 18: People: building capability to drive performance
People: building capability to drive performance Centres of Excellence enabling decision making - Open Pit Mining - Processing - Underground Mining - Energy and Climate Change Commercial hub for sales, procurement and partnerships Significant increase in employee engagement across three years of sur
Slide 19: Partners: working with others for future success
Partners: working with others for future success Path to carbon free smelting Industry standards for sustainable development Sustainable approach to meeting the Lifesaving connections for rural communities resource needs of green energy Australia’s first nationally accredited Strengthening global ca
Slide 20: A disciplined business generating strong returns over the cycle
A disciplined business generating strong returns over the cycle… Strength and resilience from: Resilient group margin and returns through the cycle 47% Quality of our assets 44% 44% 44% 42% 39% 39% Capability of our people 38% 33% 35% 34% Operational performance 25% 23% 23% Innovative partnerships 1
Slide 21: Focus on free cash flow generation
…with a focus on free cash flow generation Free cash flow through the cycle $ billion 13.7 Updated capital allocation framework New returns 9.5 10 policy 7.7 6.9 7.0 5.8 4.8 3.9 2.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F* (8.1) Free cash flow is defined as net cash generated from op
Slide 22: Vivek Tulpule: Connected to our markets
Vivek Tulpule Connected to our markets
Slide 23: Near-term uncertainties but policy is supportive
Near-term uncertainties but policy is supportive Manufacturing sentiment in contraction in all 4 major economies Chinese GDP continues to grow strongly but at a slowing pace PMI Index Real GDP (2018 $bn)1 65 20,000 60 +5.8% 55 15,000 50 +7.1% 45 10,000 40 35 5,000 30 25 0 2000 2002 2004 2006 2008 20
Slide 24: Long-term trends support further growth in commodity demand
Long-term trends support further growth in commodity demand Per capita commodity consumption1 Key takeaways Macro fundamentals remain supportive of ongoing India ASEAN China Japan demand growth in commodities Global steel consumption forecast to grow by 1%-2% 523kg 505kg Steel 64kg 121kg Chinese ste
Slide 25: Demand for iron ore well supported
Demand for iron ore well supported Obsolete scrap usage is growing in China but constrained Iron ore demand growth depends on scrap consumption and by segregation costs & EAF/BOF1 economics India’s requirement for imported Iron ore China steel scrap consumption (Mt) Contestable Iron ore demand (Mt)
Slide 26: Iron ore will remain attractive for incumbents
Iron ore will remain attractive for incumbents Steep Iron ore cost curve supports healthy margins But the industry requires greenfield projects to maintain for low cost producers production which could cost up to $200/t 2019, CFR China Value in Use Adjusted Cash Cost Industry iron ore reserves1 (Bt)
Slide 27: Aluminium market challenged by flat cost curve
Aluminium market challenged by flat cost curve Rio Tinto’s Canadian smelters are in the bottom decile Global demand for primary aluminium forecast Aluminium Cost Curve, ($/t, 2019) to grow by 2.0% - 2.5% CAGR (2018-30) Aluminium demand growth supported largely by transport and utilities sectors. Tra
Slide 28: Electrification: exploring opportunities and markets
Electrification: exploring opportunities and markets Higher Electric Vehicle (EV) penetration to support demand Nickel EV demand Consensus range (Mn units) Batteries evolve towards higher energy density nickel rich chemistries 60 Long lead times, high capital costs, complexities of HPAL2 are key cha
Slide 29: Simon Trott: Maximising the value of physical flows
Simon Trott Maximising the value of physical flows
Slide 30: We ensure our business is optimising value
We ensure our business is optimising value Driving end to end optimisation Providing market insights Processing & refinement Deepen understanding of our value chain and monetise Logistics & delivery information flows Building commercial excellence Mining & extraction Ensure we sell every tonne we pr
Slide 31: Close to our global customers and suppliers
Close to our global customers and suppliers 19% of sales to North America in 2018 66% of sales to Asia in 2018 Commercial organisation $7.6bn in sales1, ~90% sourced within North America $26.6bn in sales1 Sales & Marketing 1 $3.4bn in supplier spend1 $7.7bn in supplier spend in Asia Pacific1 • ~$40b
Slide 32: Pilbara Blend: largest, most liquid and consistent product
Our Pilbara Blend is the single largest, most liquid and consistent product Baseload for China mills Quality consistency Superior value for Pilbara Blend Fines (PBF) Our Pilbara Blend (PB) is a key input to customers We maintain Pilbara Blend quality by blending …thus delivering higher value to our
Slide 33: Diversified portfolio of products optimises end-to-end value
Our diversified portfolio of products optimises end-to-end value Diversified portfolio of products1 Continuously optimising end-to-end value We market our high liquidity Pilbara Blend, plus a suite of products to meet the From pit to furnace: we link our customers to our assets and ensure we maximis
Slide 34: Customers are at the centre of our commercial activities
Customers are at the centre of our commercial activities Technical engagements with customers to understand changes in their operations and inform our product offerings Joint Work Programme with Asian mills to improve Strengthen our customers’ lump rescreening and increase their partnerships lump us
Slide 35: Maximising value from our aluminium product portfolio
Maximising value from our aluminium product portfolio Bauxite: Developing new markets Alumina: Globally traded book Aluminium: VAP sales We create demand for our products through technical Provides ability to balance Atlantic needs and To generate additional margin, regional optimisation engagements
Slide 36: Tailoring assets and products in TiO2 and copper
Tailoring assets and product suite to market dynamics in TiO2 and copper TiO2: market leader with unrivalled product offering Copper: Positioning our assets to outperform in the market We flex volumes, grades and products to meet the needs of the market Unique position to leverage longs and shorts i
Slide 37: Maximising the value of our physical flows
We are maximising the value of our physical flows Harnessing our vast network of information & insights across markets, supply chain and procurement Driving commercial insight across the business to continuously optimise end-to-end value Maximising the value of our physical flows by increasing optio
Slide 38: Chris Salisbury: Iron Ore: optimise and flex
Chris Salisbury Iron Ore: optimise and flex
Slide 39: World-class system delivering outstanding returns
World-class system delivering outstanding returns Rio Tinto Iron Ore EBITDA and ROCE performance World-class assets and significant resource base % 2 100 120 80 $ Price per tonne / / ROCE Highly-valued product suite 1 60 60 40 Exclusive fully-integrated system creates flexibility 20 0 0 3 EBITDA EBI
Slide 40: Solid mine performance
Solid mine performance Annualised tonnes produced in Q3 2019 Total Material Moved Indexed to 2019 YTD Sales Product Split (RT Share) (number of weeks) 2018 Actual (Mt) 1.15 5 360 80 4 1.06 60 3 1.0 0.98 2 40 # weeks # 1 20 0 0 320 330 340 350 360 370 380 390 400 Q1 Q2 Q3 PBF PBL HIY RVF RVL SP10 Mtp
Slide 41: Productivity focus to maximise financial results
Productivity focus to maximise financial results from assets Haul Truck Effective Utilisation Excavator Mean Time Between Failure Fixed Plant Conveyor Unscheduled Loss (Indexed to 2018 Actuals) (Hrs Indexed to 2018 Actuals) (Mt Indexed to 2018 Actuals) 1.18 1.10 1.08 1.06 1.06 1.02 1.01 1.0 1.0 1.0
Slide 42: Rail improvements to drive capacity and flexibility
Rail improvements to drive capacity and flexibility Annualised Railed Tonnes Run Rate (Mt)1 Annualised Tonnes Railed in Q3 2019 TSR3 Average Cycle Time Impact (number of weeks)2 Indexed to December 20182 345 5 360 338 1.0 0.99 0.83 328 4 0.68 3 302 2 # weeks # 1 0 Q1 Q2 Q3 310 320 330 340 350 360 37
Slide 43: Data Analytics: taking productivity to the next level
Data Analytics - taking productivity to the next level Predicting Rail Maintenance Specialist, multi-disciplined team formed including data scientists RTIO Leverages data collected from AutoHaulTM and other technology throughout the rail network Using artificial intelligence and Random Forests to op
Slide 44: Sustain low cost through productivity and technology
Sustain low cost through productivity and technology Pilbara cash unit cost 2020 Cost Direction: Labour costs and Market tightening for some skill segments 20.2 maintenance Increased maintenance hours 19.5 Increase of ~12% due to longer haul distances 14-15 Mine work index Further development of bro
Slide 45: Long-term asset with strong replacement pipeline
Long-term asset with strong replacement pipeline Low-cost, value-accretive capital options Multiple mine replacement options leveraging established hubs 110 80 Koodaideri 50 Mesa B, C, H West Angelas C, D 20 -10 2019 Approved Project Unapproved Project Capital intensity t capacity $ /Capital install
Slide 46: System Outlook and Guidance
System Outlook and Guidance System Outlook System demonstrating 360 Mtpa run-rate short term 360 Mtpa capacity achieved when Koodaideri Phase One is fully commissioned1 2019 Guidance Shipments: 320 - 330 Mt (100% basis) Unit costs: $14 - 15 /t 2020 Guidance Up to 5% increase on shipments from 2019 g
Slide 47: Strategy to deliver returns through the cycle
Strategy to deliver returns through the cycle Continued outstanding financial performance through superior EBITDA margin Mines - operational improvements delivering results Focus on delivering sustainable operational excellence Productivity and technology to offset headwinds Resources and developmen
Slide 48: Stephen McIntosh: At the frontier of mining technology
Stephen McIntosh At the frontier of mining technology
Slide 49: Technology at our core
Technology at our core Sustaining our leading Deploying emerging World class talent cost positions technologies Delivering real Proven track record Tackling critical growth options in project study industry challenges through exploration and execution 45 ©2019, Rio Tinto, All Rights Reserved
Slide 50: Leading mining industry innovation
Leading mining industry innovation R&D / Pilot Phase Deployment start date Deployment 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Pilbara remote operations centre Autonomous trucks MAS1 / RTVis2 TM Autonomous drills Automation AutoHaulTM Tailings Press Filter tech AP45 Aluminium Smelter tech A
Slide 51: Beyond automation
Beyond automation Value chain integration Digitally enabled operations Open Data TrueView Real-time operational insights Environment* Frontline decision support Seamless integration with third party tech Precision in decision making Paperless Edison maintainer AI simplifying the Digital workflow, kn
Slide 52: Data analytics and AI lowers cost and drives productivity
Data analytics and AI lowers cost and drives productivity Copper head grade prediction Reducing materials handling down time Forecasting ship arrivals Real-time chemistry increasing Cu recovery ~40% reduction in materials handling down time Enable the reduction of demurrage costs Global replication
Slide 53: Industry-leading exploration technology delivering results
Industry-leading exploration technology delivering results Sophisticated proprietary tools & techniques “Greenrocks” Geochronology & Fertility Automated Mineralogy Predictive Analytics New models Rapid application of new technologies Winu FalConTM Drones Hyperspectral Imaging Data in the field Disco
Slide 54: World-class execution function
World-class execution function Digital design and innovative construction led to multiple awards for Amrun Winner: The Australian Construction Achievement Awards Winner: The Civil Contractors Federation national award Winner: IACCM innovation & excellence award Winner: ICE Brunel Award – excellence
Slide 55: Making mining fleets more productive
Making mining fleets more productive What is the mobile The benefits Status of work surge loader? An integrated, mobile hopper First of its kind being built bin and loading chute 50% by supplier MMD increase in productivity of (commissioning Oct 2019) digger* expected as a result Accepts ore/waste d
Slide 56: Optimising orebodies and adding new revenue streams
Optimising orebodies and adding new revenue streams Recovering borates from our tailings Potential to add a new lithium revenue stream Lowest cost refinery ore feed, including recovery of tailings Optimising methods to generate battery-grade lithium carbonate from waste streams 7% uplift in recovery
Slide 57: Using technology to tackle critical industry challenges
Using technology to tackle critical industry challenges Tailings – Dry-stacking: Water management: Work with industry to research and develop new tailings solutions Increase capability to enhance water use and reduce waste Source: Epiroc Solar: Wind: Hybrid & electric equipment: ElysisTM Deploy exis
Slide 58: Leading the next frontier in mining
Leading the next frontier in mining Unlocking tonnes Fighting inflation Creating options Reducing capital Tackling critical intensity industry challenges 54 ©2019, Rio Tinto, All Rights Reserved
Slide 59: Oyu Tolgoi
Arnaud Soirat and Stephen McIntosh Oyu Tolgoi
Slide 60: Oyu Tolgoi, a key investment for Rio Tinto
Oyu Tolgoi, a key investment for Rio Tinto World-class ore body, set to become one of the world’s largest copper/gold mines Outstanding achievements in safety and production Open pit operations and mine plans continue to be optimised, delivering over $1bn free cash flow since 2013 Ten years since In
Slide 61: Operating in an evolving landscape
Operating in an evolving landscape Population Sovereign Risk Economy Largely dependent Increased urbanisation Political uncertainty on Oyu Tolgoi Complexities Young, educated Mongolia can demonstrate Diversify base – population; employment successful delivery of large Oyu Tolgoi local procurement, a
Slide 62: Construction progress
Construction progress Shaft 2 construction complete Boosted productivity Updating mine design Hoist systems being commissioned Record month in September 2019 Building an asset that will live 50 years + Game changer for underground development Lateral development progress of 1,385 Continuing to evalu
Slide 63: Shaft construction complete
Shaft 2 construction complete Animation shows infrastructure that has been completed (Shaft 2, Conveyor to surface) as well as elements currently under construction (Primary Crusher 1). 59 ©2019, Rio Tinto, All Rights Reserved
Slide 64: Construction progress
Construction progress Shaft 2 construction complete Boosted productivity Updating mine design Hoist systems being commissioned Record month in September 2019 Building an asset that will live 50 years + Game changer for underground development Lateral development progress of 1,385 Continuing to evalu
Slide 65: Looking forward
Looking forward Shaft 2 construction complete – going through commissioning phase Now focusing on key underground supporting infrastructure: - Primary crusher 1 - Conveyor to surface - Shafts 3 and 4 Complete the mine design in H1 2020 Complete Definitive Estimate in H2 2020 61 ©2019, Rio Tinto, All
Slide 66: Jakob Stausholm: Our investment proposition
Jakob Stausholm Our investment proposition
Slide 67: Why invest in Rio Tinto?
“Why invest in Rio Tinto?” Our Assets Our Approach Our Performance Long life Sustainability (ESG) Last 3 Years1 ROCE2 Competitive Operational Excellence $25 billion earnings3 18% Expandable + Value over volume = $23 billion free cash flow 17% Sustainable Capital discipline $26 billion4 dividends 18%
Slide 68: Why invest in Rio Tinto?
“Why invest in Rio Tinto?” Our Assets Our Approach Our Performance Long life Sustainability (ESG) Last 3 Years1 ROCE2 Competitive Operational Excellence $25 billion earnings3 18% Expandable + Value over volume = $23 billion free cash flow 17% Sustainable Capital discipline $26 billion4 dividends 18%
Slide 69: Long life: large resource base and modest depletion
Long life: large resource base and modest depletion 40% 60% of assets in processing > of assets in mining > no depletion modest depletion Very significant Bulk products Mineral resources in addition 1 2 2 2018 Production Ore Reserves Resources to reserves Mt Mt Mt Pilbara Iron Ore (100%) 338 3,427 2
Slide 70: Outstanding competitive position: assets in lower half of cost curve
Outstanding competitive position: > 80% of our assets1 in lower half of the cost curve 2019 Iron ore value in use curve (CFR China, US$/dmt) Pilbara Iron Ore 90 Lower half of the cost curve 60 Borates In well-structured markets 30 TiO2 0 With a strong market position 0% 14% 28% 42% 56% 70% 85% 99% B
Slide 71: Expandable: technical knowledge and asset base create opportunities
Expandable: our technical knowledge combined with our asset base creates opportunities throughout the pipeline Spend over the last 3 years1 in $ billion Spending Trend: 0.7 0.7 7.3 6.7 Greenfield Exploration Product Groups Development Sustaining & Evaluation Exploration & Evaluation Capital Capital
Slide 72: Sustainable: assets well placed in a carbon-constrained world
Sustainable: assets are well placed in a carbon-constrained world No extraction of fossil fuels Total own greenhouse gas emissions 71% of electricity from renewable 34 sources 32 Own emissions down 18% in the 32 last five years 31 -18% Renew own emission targets in Q1 2020 28 Working with our custom
Slide 73: Our strong balance sheet creates resilience and optionality
Our strong balance sheet creates resilience and optionality Reduces cyclicality of cash flows Net debt $ billion Enables counter-cyclical behaviour 15 14.1 13 Creates optionality 12.9 11.3 11 10.0 9.3 9.3 9 8.0 9.6 7 7.6 5.2 5.6 5 3.8 4.9 3 1 -0.3 -1 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19
Slide 74: Why invest in Rio Tinto?
“Why invest in Rio Tinto?” Our Assets Our Approach Our Performance Long life Sustainability (ESG) Last 3 Years1 ROCE2 Competitive Operational Excellence $25 billion earnings3 18% Expandable + Value over volume = $23 billion free cash flow 17% Sustainable Capital discipline $26 billion4 dividends 18%
Slide 75: Well-established sustainability (ESG) approach
Well-established sustainability (ESG) approach Relationships and governance Effective risk management Closure, the long-term view Safety always our first priority Community relations Transparency: - Climate change report - Taxes paid - Contract disclosure - Tailings disclosure Three levels of assura
Slide 76: Operational excellence: productivity is a key lever
Operational excellence: productivity is a key lever 1 Mine to Market M2M free cash flow target of $1.0-1.5 billion run-rate from $ billion 1.0-1.5 2021, dependent on: Market conditions in Iron Ore Raw material prices in Aluminium reverting to levels at the beginning of the programme 0.4 2018 run rat
Slide 77: Value over volume
Value over volume Value over volume Day-to-day commercial considerations by commodity Production growth (Cu Eq) Investment decisions entirely driven by value Last 3 years 2016 2019 2023 1 Compound Annual Growth Rate (CAGR) from 2H2016 to 1H2019 73 ©2019, Rio Tinto, All Rights Reserved
Slide 78: Disciplined allocation of capital
Disciplined allocation of capital Essential 1 sustaining capex Further cash returns to Compelling Ordinary shareholders growth 2 dividends Iterative 3 cycle of Debt management 74 ©2019, Rio Tinto, All Rights Reserved
Slide 79: Controlled ramp-up of investments
Controlled ramp-up of investments Sustaining capex of around Capital expenditure profile $2.5 billion per year $ billion ~7.0 Iron Ore sustaining capex of ~6.5 ~6.5 $1.0-1.5 billion per year 5.4 ~5.5 Pilbara replacement capital Depreciation includes Koodaideri and Robe River 4.5 mine developments fr
Slide 80: Counter-cyclical: divested assets while disciplined on capital spend
Counter-cyclical: divested assets while disciplined on capital spend Divested assets in strong Cash proceeds from divestments commodity markets (pre-tax) 12.3 $ billion 8.6 18 assets divested since 2016 Raised $12.3 billion in pre-tax cash flow All post-tax divestment proceeds have been returned to
Slide 81: Why invest in Rio Tinto?
“Why invest in Rio Tinto?” Our Assets Our Approach Our Performance Long life Sustainability (ESG) Last 3 Years1 ROCE2 Competitive Operational Excellence $25 billion earnings3 18% Expandable + Value over volume = $23 billion free cash flow 17% Sustainable Capital discipline $26 billion4 dividends 18%
Slide 82: Our performance: industry-leading profitability
Our performance: industry-leading profitability… Average ROCE 2009 to 2019 of 16% Return on invested capital*, post tax Average ROCE 2001 to 2008 of 22% Only one year of single digit ROCE in two decades 23% 24% 22% 18% 15% 17% 15% 12% 13% 10% 8% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1H20
Slide 83: ...that drive strong cash flows
…that drive strong cash flows… Cash flow in $ billion Capital allocation framework in action 20.0 18.3 15.1 New returns 15 13.7 14.3 13.9 policy 11.8 9.4 9.4 9.5 10 9.2 8.5 7.7 6.9 7 5.8 4.8 3.9 2.1 Free cashflow at spot prices and consensus volumes (8.1) 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 84: ...based on a well defined pay-out policy
…based on a well defined pay-out policy Our pay-out ratio has consistently exceeded the policy Returns policy widely accepted 160% 140% Pay-out ratio policy de-risks the company 120% 100% 80% 60% Policy of 40-60% of underlying earnings through the cycle 40% 20% 0% 2016 2017 2018 H1 19 Last 3 years O
Slide 85: Why invest in Rio Tinto?
“Why invest in Rio Tinto?” Our Assets Our Approach Our Performance Long life Sustainability (ESG) Last 3 Years1 ROCE2 Competitive Operational Excellence $25 billion earnings3 18% Expandable + Value over volume = $23 billion free cash flow 17% Sustainable Capital discipline $26 billion4 dividends 18%
Slide 86: J-S Jacques, Chief executive
J-S Jacques Chief executive
Slide 87: Appendices
Appendices 31 October 2019 London
Slide 88: World-class iron ore assets: fully integrated network
World-class iron ore assets - fully integrated and agile network CAPE LAMBERT A & B HAMERSLEY IRON (100%) UNDEVELOPED PROJECT (100%) PARKER POINT Point Samson 16 > 150 Dampier Wickham EAST INTERCOURSE ISLAND ROBE RIVER MINING JV (53%) Karratha Roebourne Mines Autonomous haul trucks HOPE DOWNS JV (50
Slide 89: Benefits to Mongolia already significant
Benefits to Mongolia already significant and will continue for generations World-class $9.5bn Direct economic safety performance spent to date in Mongolia contribution 88% $2.4bn International water recycling rate in taxes and royalties reputation 212,000 15,000 93% Industry saplings planted employe
Slide 90: Construction progress at Oyu Tolgoi
Construction progress at Oyu Tolgoi Above ground infrastructure Shafts & below ground Lateral development productivity completed infrastructure completed Mine dry building Load commissioning of Jaw Crusher Lateral mine footprint development Mine dry and control centre Shaft 2 complete, commissioning
Slide 91: Investment agreements allowed financing for Oyu Tolgoi Underground
Investment agreements allowed financing for Oyu Tolgoi Underground UDP signed and Underground construction Open pit mine constructed and production commenced construction project finance recommenced & ongoing suspended secured 2009 2011 2013 2015 2016 2018 TODAY Investment Agreement Amended & Restat
Slide 92: Group level financial guidance
Group level financial guidance FY2019 FY2020 FY2021 FY2022 CAPEX Total Group $5.5bn ~$7.0bn ~$6.5bn ~$6.5bn Sustaining Capex ~$2.5bn ~$2.5bn ~$2.5bn ~$2.5bn Group Pilbara Sustaining $1.0bn $1.0-$1.5bn $1.0-$1.5bn $1.0-$1.5bn Capex Productivity $0.5bn $1.0 - $1.5bn1 Effective tax rate 30% Returns Tot
Slide 93: Group level financial guidance: production and costs
Group level financial guidance 2019 production guidance1 2019 costs 2020 guidance Iron Ore Shipments 320 – 330mt (100% basis) $14-15/wmt (FOB)2 Up to 5% increase on shipments from 2019 guidance, subject to market conditions. C&D C1 unit costs 110-120 c/llb Mined Copper 550 – 600kt Refined Copper 220
Slide 94: Modelling EBITDA
Modelling EBITDA Underlying EBITDA sensitivity ($m) impact on FY 2019 underlying EBITDA H1 2019 average price / rate of 10% price/rate change Copper 280c/lb 281 Aluminium $1,826/t 462 Gold $1,307/oz 61 Iron ore (62% Fe FOB) $84.9/dmt 1,862 A$ 0.71US$ 550 C$ 0.75US$ 345 Oil (Brent) $66/bbl 68 Note: T
Slide 95: Modelling aluminium costs
Modelling aluminium costs ($/t) Impact a $100/t change in each of the input costs below will Canadian* smelting unit cash** cost sensitivity have on our H1 2019 Canadian smelting unit cash cost of $1,406/t Alumina (FOB) 191 Green petroleum coke (FOB) 34 Calcined petroleum coke (FOB) 30 Coal tar pitc
Slide 96: Group Income Statement
Group Income Statement Rio Tinto Group Oyu Tolgoi and Turquoise Hill(1) Proforma Rio Tinto Group (excluding OT and TRQ)(2) Jun-19 Dec-18 Jun-19 Dec-18 Jun-19 Dec-18 YTD YTD YTD YTD YTD YTD Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Consolidated sales revenue 20,722 40,52
Slide 97: Group Balance Sheet
Group Balance Sheet Rio Tinto Group Oyu Tolgoi and Turquoise Hill(1) Proforma Rio Tinto Group (excluding OT and TRQ) Jun-19 Dec-18 Jun-19 Dec-18 Jun-19 Dec-18 YTD YTD YTD YTD YTD YTD Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Non-current assets 69,887 70,047 8,848 10,375
Slide 98: Group Cash Flow Statement
Group Cash Flow Statement Rio Tinto Group Oyu Tolgoi and Turquoise Hill(1) Proforma Rio Tinto Group (excluding OT and TRQ)(2) Jun-19 Dec-18 Jun-19 Dec-18 Jun-19 Dec-18 YTD YTD YTD YTD YTD YTD Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Actual ($m) Cash flows from operations 9,429 16,