Rio Tinto Plc · LSE:RIO
Rio Tinto — Rio Tinto Coal Australia — Investor Presentation (June 2006)
22 slides from Rio Tinto's investor presentation, June 2006
Slide 1: Rio Tinto Coal Australia
Rio Tinto Coal Australia Grant Thorne Managing Director Financial community site visit – June 2006 RTCA presentation outline Safety RTCA overview Thermal and coking coal markets Operations Rail and port logistics Questions & answers 2 Financial community site visit – June 2006 1
Slide 2: RTCA safety performance; Rio Tinto Coal Australia (RTCA)
RTCA safety performance 2.00 Lost Time Injury Frequency Rate 1.60 LTI per 200,000 hours worked 1.20 0.80 12 month rolling average 0.40 0.00 '03 '04 '05 '06ytd M J J A S O N D J F M A 3 Financial community site visit – June 2006 Rio Tinto Coal Australia (RTCA) • In December 2003 Pacific Coal was rena
Slide 3: RTCA is a significant contributor to Rio Tinto
Energy product group Rio Tinto Energy America ERA Rössing RTCA Coal & Allied 5 Financial community site visit – June 2006 RTCA is a significant contributor to Rio Tinto RTCA earnings history Earnings - by commodity (2005) US$m 600 Copper, gold, moly 38% 500 Aluminium 400 7% 300 Other 1% 200 Diamonds
Slide 4: Environment and community
Rio Tinto’s Australian coal assets 7 Financial community site visit – June 2006 Environment and community • All sites have ISO140001 accredited environmental management systems • Continued management of water and land, and focus on achieving energy use targets • Ongoing engagement with near neighbou
Slide 5: Thermal coal market
Thermal coal market RTCA has a strong market position • One of the largest exporters of thermal coal from Australia • Producer of high quality bituminous thermal coal (high energy and low sulphur content) • Market regions include north Asia, south east Asia, central America and Europe • Domestic coa
Slide 6: RTCA market share in Australia
RTCA market share in Australia Australian thermal coal exports - 2005 35% 30% 25% 20% 15% 10% 5% 0% Xstrata RTCA BHPB Anglo Idemitsu Excel Coal 11 Financial community site visit – June 2006 In 2005 thermal coal market was characterised by demand growth in most regions and China’s redirection of expo
Slide 7: Thermal coal exports; China's coal production and exports
Thermal coal exports Million tonnes • Indonesia has taken over 140 from Australia as the biggest 120 supplier of thermal coal to the 100 export market 80 60 • Australia and Indonesia face 40 infrastructure challenges in 20 the short term 0 1995 2005 • China exports currently being Australia South Af
Slide 8: Japan is a key market for RTCA's thermal coal
Japan is a key market for RTCA’s thermal coal RTCA’s 2005 thermal coal exports Japan 68% Other Asia 24% Europe 5% Other 3% Total 2005 thermal coal exports = 32.06mt 15 Financial community site visit – June 2006 New South Wales thermal coal prices – FOB Newcastle $65.00 $60.00 $55.00 US$/tonne $50.00
Slide 9: RTCA's pricing basis; Outlook for thermal coal
Rio Tinto Coal Australia’s pricing basis • Long term supply contracts are core to RTCA’s business • Spot sales will be decided based on market opportunities • RTCA accepts a mix of term and market price exposure across its sale portfolio • Rio Tinto is a co-founder and shareholder of globalCOAL whic
Slide 10: Coking coal market
Coking coal market A small but growing coking coal business Metallurgical coal production 2005 Million tonnes 50 40 30 20 10 0 BHP- Elk Anglo Xstrata Rio Tinto Billiton Valley 20 Financial community site visit – June 2006 10
Slide 11: Coking coal sales by market
Coking coal sales by market RTCA’s 2005 coking coal sales* Korea 15% Japan 47% India 8% Taiwan 7% China 5% Total = 12.5mt Europe 12% Other 6% * Includes semi soft and hard coking coal 21 Financial community site visit – June 2006 Hail Creek – quality assets bring opportunities to expand Managed hard
Slide 12: Outlook for coking coal
Outlook for coking coal • Demand for hard coking coal will remain strong, driven by consistent strong demand for steel and steel products • Demand for high quality low volatile hard coking coals, such as Hail Creek, will remain strong – Premium coking coals produce high quality, high strength cokes.
Slide 13: Operations: Hail Creek
Operations Hail Creek • 5.9mt of hard coking coal produced in 2005, up 0.8mt (16%) on 2004 production • Majority of sales destined for Japan [Picture to be inserted] • Weak sales in Q1 2006, but operations are performing well • Operation underpinned by substantial reserves (184mt) and resources (224
Slide 14: Hail Creek expansion to 8mtpa; Blair Athol
Hail Creek expansion to 8mtpa • Production capacity will increase from 6mtpa to 8mtpa by August 2006 • Capital investment of US$223m [Picture to be inserted] • Revised scope will deliver a processing plant capable of 12mtpa • Well positioned for expansion beyond 8mtpa, in line with market demand and
Slide 15: Clermont – Successor to Blair Athol; Kestrel
Clermont – Successor to Blair Athol • JV participants: Rio Tinto 50.1%, Mitsubishi 34.9%, J-Power 15% • Clermont’s entry into the thermal coal market to coincide with operations at Blair Athol winding down in 2010 • Final feasibility studies will determine the configuration and the method of constru
Slide 16: Kestrel; Tarong
100 Series Kestrel 300 Series 200 Series 400 Series 500 Series 31 Financial community site visit – June 2006 Tarong • Domestic thermal coal producer (6.5mt in 2005) • Sole supplier to Tarong Energy [Picture to be inserted] Corporation (TEC), neighbouring power station • Agreement reached with TEC to
Slide 17: Bengalla; Hunter Valley Operations
Bengalla • 40% Rio Tinto ownership, with marketing of Bengalla product managed independently • Variable mine production from [Picture to be inserted] quarter to quarter due to short dragline paths • Seeking development approval to increase ROM capacity from 8.7mtpa to 10.7mtpa 33 Financial community
Slide 18: Mount Thorley / Warkworth; Mount Pleasant
Mount Thorley / Warkworth • Successful integration of Mount Thorley and Warkworth operations • Thermal and semi soft coking coal [Picture to be inserted] producer • Significant reserves and resources • Workplace agreements expire end of 2006 35 Financial community site visit – June 2006 Mount Pleasa
Slide 19: Site unit cash costs; Long life assets provide optionality
Site unit cash costs - indexed Blair Athol Tarong 4 4 3 3 2 2 1 1 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Hunter Valley Operations Kestrel 4 4 3 3 2 2 1 1 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 37 Financial community site visit – June 2006 Long life assets provide valuab
Slide 20: Business improvement initiatives; Rail and port logistics
Business improvement initiatives remain core to the business • RTCA Business Improvement programme underway – Well resourced by internal support teams – Employee involvement – Delivering improvements to the business • RTCA participating in Rio Tinto’s Improving Performance Together programme – Focus
Slide 21: Queensland infrastructure; Hunter Valley coal chain
Queensland infrastructure Dalrymple Bay Coal Terminal • Queue management system introduced in April 2005 • Expansion of DBCT underway from current 55mt capacity - A$1.1 billion – Phase 1 to 68mt – Phase 2 to 80mt – Phase 3 to 85mt • Additional port capacity expected from late 2007 Port of Gladstone
Slide 22: RTCA summary
RTCA summary • The quest for safety excellence remains a key priority • Long life reserves and resources, with options for growth • Operations - Continued emphasis on business improvement initiatives - Involvement in Rio Tinto’s global IPT initiative • Continued focus on cost management - Tyres, fue
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