Rio Tinto Plc · LSE:RIO
Rio Tinto — 2017 Global Metals & Mining Conference
17 slides from Rio Tinto's conference presentation, May 16, 2017
Slide 1: Delivering superior returns
Delivering superior returns J-S Jacques, chief executive 2017 Global Metals & Mining Conference Bank of America Merrill Lynch, 16 May 2017
Slide 2: Cautionary statements
Cautionary 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 not limited to a
Slide 3: Supporting statements
Supporting statements Ore Reserves (slide 14) Silvergrass Ore Reserve grade. Proved and Probable Ore Reserves for Silvergrass (178Mt at 61.3% Fe) were released to the market in the 2016 Rio Tinto Annual Report on 2 March 2017 and can be found on p 225 of that report. The Competent Person responsible
Slide 4: Our value proposition…
Our value proposition… 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 Delivering >2% CAGR1 CuEq growth $2 billion cost savings over 2016/17 40-60% returns through the cycle A
Slide 5: … is already delivering superior returns
… is already delivering superior returns Resilient cash generation – Group EBITDA of $13.5 billion, EBITDA margin of 38% Strongest balance sheet in sector – Net debt of $9.6 billion – Net debt / EBITDA 0.7x Highest cash returns to shareholders – Declared $3.6 billion of shareholder returns – C
Slide 6: Supportive Chinese macro indicators
Supportive Chinese macro indicators Housing inventories Sales and Starts Tier 1 Tier 2 YoY, ytd Floor Space Under Construction 70 30 Floor Space Started Tier 3 – Housing inventories remain at lower levels 60 20 50 – Growth in starts and area under construction Months of supply 10 40 remain elevated
Slide 7: Industry has destroyed value through over-capitalisation
Industry has destroyed value through over-capitalisation Return on capital employed Pre-Super Super cycle Post-Super cycle cycle 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Diversified average (1) Source: Company reports (1) Annual average
Slide 8: We are maintaining a disciplined and consistent strategy
We are maintaining a disciplined and consistent strategy Superior cash generation World-class assets Operating excellence Capabilities Portfolio Performance People & Partners Disciplined capital allocation Balance sheet strength Superior shareholder returns Compelling growth 8 | © Rio Tinto 2017
Slide 9: World-class portfolio
World-class portfolio Iron Ore Bauxite Aluminium Copper Main Oyu Tolgoi, Pilbara Weipa, Gove, CBG Canadian smelters businesses Escondida Low-cost, world-class assets Large, low-cost bauxite Large, long-life, low-cost Competitive Integrated infrastructure assets First quartile smelters Attractive gro
Slide 10: Safety and operating responsibly are key priorities
Safety and operating responsibly are key priorities A history of continual improvement in safety AIFR per 200,000 hours worked 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 '14 '15 '16 10 | © Rio Tinto 2017
Slide 11: Operating excellence is focused on cash
Operating excellence is focused on cash Reducing costs Releasing working capital Recycling capital(1) (Cash cost improvements $bn) (Trade days) (Asset disposals $bn) 1.6 2.5 1.3 1.3 1.5 7.8 53 7.7 45 1.8 35 3.3 22 2.2 2013 2014 2015 2016 Total Dec-13 Dec-14 Dec-15 Dec-16 2013 2014 2016 2017 Total 1
Slide 12: Strongest balance sheet in the sector
Strongest balance sheet in the sector Leverage1 and net debt at 31 December 2016 Net debt to EBITDA 2.1x 1.5x 1.4x 1.2x 0.7x Rio Tinto Peer 1 Peer 2 Peer 3 Peer 4 Net debt 9.6 20.1 8.5 15.5 25.1 ($bn) 1 Company stated net debt at 31 December 2016, CY 2016 EBITDA figures are used in calculations. Cal
Slide 13: We returned 28% of cash generated to shareholders
1 We returned 28% of cash generated to shareholders Most disciplined and balanced allocation of capital in 2016 28% 12% 0% 0% 3% Rio Tinto Peer 1 Peer 2 Peer 3 Peer 4 Sustaining capex Growth capex Balance sheet Shareholder returns 1 Cash generated = net cash generated from operating activities, sale
Slide 14: High-return growth projects
High-return growth projects Silvergrass Amrun Oyu Tolgoi High-grade, low phosphorus iron ore Creating seaborne bauxite market, Largest and highest quality copper enhancing value of Pilbara Blend high-grade and expandable development in the world >100% IRR >20% IRR >20% IRR $0.5 billion1 capex, first
Slide 15: Delivering $5 billion of free cash flow from productivity…
Delivering $5 billion of free cash flow from productivity… Load & Haul e.g ~15% Retiring 20% of mobile >800 trucks with 55-75% EU improvement in truck EU equipment capital base >200 dig units with 30-50% EU Or Processing e.g ~15% increase in Moving 25% more material ~50 processing plants with 55-95%
Slide 16: …by further optimising our performance
…by further optimising our performance Replication of best Partnering with our practice suppliers Integrating our supply Enhancing marketing chains capability Applying technology and Partnering with our Increasing automation data suppliers 16 | © Rio Tinto 2017
Slide 17: Delivering superior returns
Delivering superior returns Portfolio of world-class assets Resilient cash generation Strongest balance sheet in sector Highest cash returns to shareholders Sector-leading free cash flow growth 17 | © Rio Tinto 2017