Rio Tinto Plc · LSE:RIO
Rio Tinto — Investor Day (November 2005)
48 slides from Rio Tinto's investor day presentation, Nov 7, 2005
Slide 1: Cover letter to ASX Company Announcements Office
RIO TINTO External Affairs Telephone: +61 3 9283 3366 Facsimile: +61 3 9283 3216 7 November 2005 Company Announcements Office Australian Stock Exchange Limited SYDNEY NSW 2000 Dear Sir, Attached are presentations from Rio Tinto’s annual investor seminar conducted in London and New York on Friday 4 N
Slide 2: Investor Seminars 2005
TINTO Investor Seminars 2005 London - New York - Sydney www.riotinto.com
Slide 3: Forward-Looking Statements Safe Harbor
ony Buin yy) Investor Seminar 2005 RIO Q yey ie (iin Pini me VTINTO a ane For the purposes of the Forward-Locking Statements ‘Safe Harbor provisions of the US securities laws This presentation contains statements which constitute forward-fooking statements within the meaning of the US securities law
Slide 4: Seminar agenda and speakers
Leigh Clifford Chief Executive Officer Leigh Clifford Introduction/Markets 15 mins Andrew Mackenzie —_ Industrial Minerals 30 mins Oscar Groeneveld Aluminium 30 mins Sam Walsh Iron Ore 30 mins Break 20 mins Guy Elliott Other Product Groups 30 mins Evaluation methodology Capital Management & Projects
Slide 5: Currently enjoying strong markets
Currently enjoying strong markets Copper Coking Coat 2t0 110 180 rm eit, 70 110 50 80 ot — a a 40 Molybdenum 5 Iron ore 45 Sib Zt 4 20 38 30 28 a 1995=100 350 Historically commodity prices have been cyclical Economist non-ferrous metals index {real 300 - 250 + 200 150 100 5 Ws 50 0 73 76 79 82 85 88
Slide 6: Consumption is less volatile
Consumption is less volatile mt 18 5 16 5 14 5 World copper consumption (1930 ~ 2005) US slow down (2001) Oil crisis (1974) ™, ; Recessionary environment {early 1990s) S © DS © SD » 9 ~0 D © SD © GO BE gk? of" 69” GO” gO? AY A? GB? 6B” oD? (H? D CCC CCRC ECC 7 ede sone Consumption is less volatile W
Slide 7: Stronger prices lead to industry investment
Capex, Non Ferrous 404 354 304 25 4 204 15 4 Metals, 2004 USS Billion Stronger prices lead to industry investment Capex Prices Real Non Ferrous Metal Prices 1995=160 r 200 r 180 r 160 r 140 r 120 r 100 r 80 r 80 10 78 _ Source: SRY (MICA * Prices are BUT * China and T ¥ T T r T T T T T T T 80 82 84
Slide 8: The Rio Tinto business model deals with uncertainty
+ Invest in the best orebodies ~ Cash generative through the cycle * Develop options in line with market conditions ~ Creative M+A ~ Brownfield development ~ Exploration * Project delivery * Operational excellence -~ Maximise volumes when markets are strong ~ Deliver good returns when markets are we
Slide 9: Vision: to be the undisputed sector leader in value creation
Vision: to be the undisputed sector leader in value creation » We are an innovative, disciplined developer and acquirer of value creating assets * Our corporate reputation is second to none * We have a capable and supportive team of people * Our operational performance is first class — this includes
Slide 10: Rio Tinto Industrial Minerals
Rio Tinto Industrial Minerals * Overview of Industrial Minerals * Rio Tinto tron & Titanium * Rio Tinto Minerals — Borax —Luzenac —Dampier Salt —Potasio Rio Colorado RIO TINTO Businesses with excellent development potential Product Group Earnings - by Earnings history commodity (2005 H1) Diamonds 4%
Slide 11: Good fit with other Rio Tinto businesses
& Potash @ Sait (Asia é @ RIO TINTO [E] Rio Tinto market share [2] Other Good fit with other Rio Tinto businesses + Large and long life resource bases + Industry leadership positions * High barriers to entry « High margin businesses
Slide 12: These businesses add value to Rio Tinto
These businesses add value to Rio Tinto * Value of products is increased by — higher energy costs — tighter environmental regulations * Skill sets that are unique to the mining sector * Intellectual property (e.g. brands and process technology) ¢ Provide growth opportunities Rio Tinto Iron & Titaniu
Slide 13: Chloride pigment market presents best growth opportunities
Chioride pigment market presents the best opportunities for growth 6,600 ornare Pigment demand so00 +| mSuiphate |---------------- by sector | __ 4,000 8 2,000 Pigment Demand (000 tonnes) 1970 1875 1980 1985 4990 1995 2008 2005 2010 2004 Capacity Pro-forma HQIT - Sulphate HQIT - UGS HRBM (100%)
Slide 14: QIT capacity expansions
2000 QIT - UGS 1500 : t000 + Expansion to 325kt (H1 05) 500 + Expansion to 375kt (H2 06) 2004 Capacity Pro-forma QIT - Sulphate BQIT - UGS HRBM (100%) + Debottlenecking (+50ktpy) 2004 Capacity Pro-forma B QIT - Sulphate @ QIT - UGS EH RBM (100%)
Slide 15: Madagascar ilmenite project progressing
2000 Madagascar/QIT iat + 475kt - 91% TiO, slag 1000 500 ¢ Start-up late 2008 2004 Capacity Pro-forma HQIT - Sulphate GB QIT - UGS & RBM (100%) Ei QMM (phase 1) Madagascar ilmenite project progressing Project approved in August, 2005 - Madagascar mine plus port (US$ 585 m) 750,000 ty ilmenite - QIT
Slide 16: Challenge of scale of smaller businesses
Challenge of scale of smaller businesses ustm Earnings by Business Units 2005 H1 Earnings (US$m)} 380 ” RIT* 72 280 200 ORT Minerais Borax 32 180 : BRT Dampier* 9 100 50 Luzenac 11 e 2001 2002 2003 2004 2005 H4 1 24 Rise in earnings of 41% in H1 2005 * Rio Tinto share Industrial Minerals Product Gro
Slide 17: RTM's products cover a broad spectrum
RTM’s products cover a broad spectrum ; B Agriculture a 5% Ceramics 119 %o 8% & Detergents Glass @ Pulp and Paper T% @ Soda Ash O Chior Alkali @ Polymers Paints and Coatings & Other 5% * From July, owned 100 per cent by Rio Tinto + Pre-feasibility nearing completion * Feasibility study in 2006 * Sol
Slide 18: Summary
Summary + Large, long life, high quality resources in good locations « Leadership position in respective markets « Potential from greater collaboration between businesses « Growth options being exercised Oscar Groeneveld Chief Executive Aluminium Product Group
Slide 19: Overview: Rio Tinto Aluminium
Overview * Strategy * 2005 Operational performance * Alumina and aluminium markets * Alumina opportunities « Aluminium opportunities Rio Tinto Aluminium FOB value chain Bauxite US$10-30/t umina US$200-500/t Aluminium US$1900/t Downstream processing Process RTA assets Mining Weipa — CAR, QAL Refining
Slide 20: Aluminium's contribution to Rio Tinto's earnings
Aluminium’s contribution to Rio Tinto’s earnings Earnings history Earnings — by commodity (2605 H1} ussm Indust Minerats D’@moncs 4% Copper / moly 37% Coal 14% 2004 2002 2003 2004 Iron Ore 30% 200581 Aluminium o% To maximise value by: Strategy Building on the outstanding resource at Weipa where rese
Slide 21: Operations and production YTD September 2005
Operations and production YTD September 2005 Bauxite and Alumina * Weipa 17% increase vs 04 * Alumina 42% increase vs 04 Me Eurallumina % Pia Comatico Alumina Refinery — Stage 1 Performance * On budget, ahead of time * Commissioning progress » Production CAR Production - 12 months to 30/09/05 1,600
Slide 22: Operations and production YTD September 2005
Operations and production YTD September 2005 Smelting * Best in class smelting performance * Smelting “creep” expansion * Business improvement Alumina market * Growth in world alumina production delayed « China dominates demand growth Chita Alumina imports (mtpa) Mt oa a4 oz 83 04 as Comatee Alumina
Slide 23: Aluminium market
Aluminium market * High cost smelters at risk in Europe and North America * China focus on domestic demand * Global demand growth underpins new capacity 1980 2004 (16 million tonnes) (27 million tonnes) orn America, a North 19% Aluminium america Production 36% other Geography: 45% China W Europe Sou
Slide 24: Alumina investments and opportunities
Alumina investments and opportunities * Investment in Weipa to 25mtpa ~ Andoom ~ Power station pill ~ Shiploader ~ Weipa community ~- Post Panamax ships « Alumina options ~ CAR2 still in queue ~ CAR “creep” poteritial ~ QAL expansion and CAR3 ~ Bauxite for alumina “Alumina growth opportunities would
Slide 25: Smelting Opportunities
Smelting Opportunities * Greenfield smelter projects — Proven technology — Capital project management — Operational performance — Alumina supply + Energy remains the ‘orebody’ * Looking worldwide for opportunities - Some at “advanced” exploration stage ~ Hydro and gas are the front runners “Aluminiu
Slide 26: Summary
Summary * World class Weipa resource provides platform for growth * Building alumina capability and opportunities for growth * “Exploring” for growth in smelting * Business improvement is making a difference * Our aspiration is to grow our business upstream RIO TINTO y Sam Walsh Chief Executive Rio
Slide 27: Rio Tinto Iron Ore focus areas
Rio Tinto Iron Ore is focused on four key areas: + Capitalising on strong market conditions + Operational excellence + Growing the business + Resources R Ie ) IR TINTO | Seaborne iron ore market share* * Top three iron ore producers Rio Tinto 23% supply more than 70% of seaborne market Other 28% + R
Slide 28: Strong performance in H1
Strong performance in H1 05 Earnings history Earnings - by commodity (2005 H1) Diamonds 4% US$m Iadustrial Minerals 5% 800 Copper / maly 37% 760 660 500 400 300 Linn 260 100 0 Aluminium 2004 2002 2003 2004 Ht Os 30% 9% | RIO a TINTS Outlook i is for continued strong growth in seaborne demand led by
Slide 29: Chinese residential construction and iron ore prices
Chinese residential construction driven by continued urbanisation and rising per capita floor space 60% Urbanisation rate Urban per capita floor space 50% & a o 40% be & 30% q 20% + s> gb s s & & & s Ss ss Source: Asian Demographics, Minisiry of Construction RIO TINTO Rise in iron ore prices since 2
Slide 30: RTIO delivering value through improving logistics
* Total production from Hamersiey, Rabe ar IOC + Maximising vessel sizes * Tighter controls on vessel arrivals RTIO iron ore production* @ Hamersley §t Robe ft IOC Port expansions: Suding joiat verdtarees RTIO delivering value through improving logistics + Looking to replicate this enterprise in sou
Slide 31: RTIO expansion on time and on budget
RTIO expansion ~ on time and on budget (handout only} fe Comgretion of feasibly, works approved 2004 2005 2006 2007 EY Compiation of axtra capacity Dampier (+40Mtpa -> 146Mipa) Dampier (+24Mtpa -> 140Mtpa} aert | ane | ates antl tet | are | ates Gte2 | tes | tes fam ate2 | Gers Yandi ~ Stage 1 (+4Mi
Slide 32: Dampier port expansion to 116mtpa
Mt Dampier port expansion to 116mtpa + Project remains on time and on budget + September 2005 - first shipment of fines ore Wy from new shiploader Vy SONG Dampier port expansion to 140mtpa * Seamiess transition from phase one of expansion to phase two PINT Yandicoogina — a strong performer Initially
Slide 33: Hope Downs joint venture
RIO TINTO neat 2 - ME 892204: Paraburdoo 'CRast. Bas f Anigalae ee nore Week Angel ¢ Nanidicnepina Hope al . @ 50:50 joint venture with Hancock Prospecting Use of existing Pilbara iron managed port, rail and power infrastructure Feasibility study is progressing, due for completion end of year Strong
Slide 34: Potential Part A and global operations
Potential Part A , |. Hedland rail line N oe ¥ . 3 emailed. * §0:50 joint venture with t \ Hancock Prospecting : el \ * Use of existing Pilbara Iron managed port, rail arid power infrastructure * Constrained scope feasibility study is progressing, due for completion end of year + Strong customer int
Slide 35: RTIO global operations and projects
RTIO global operations and projects * Corumba {Brazil} —High grade resource, primarily lump ore —2mtpa complete and staged expansion to 15mtpa envisaged — Facilitating development of regional stee! centre * Simandou (Guinea) —Large high grade resource in West Africa — Pre-feasibility study in 2005-6
Slide 36: Summary
Summary * World class assets and a substantial resource base + Long history of mutually beneficial relationships in China and Japan * Current expansion well underway — underpinned by long term sales contracts + Commitment to next phase of iron ore expansion + Pilbara [ron offers unrivalled flexibili
Slide 37: Overview: Copper, Energy, Diamonds
Overview * Copper, Energy, Diamonds * Project evaluation methodology * Cash flow priorities * Projects Kennecott Utah Copper + Capitalising on strong moly market + Further evaluation of development options Grasberg + Lower grades iri 2006 (Cu) and 2007 (Au) Escondida + Completion of Escondida Norte
Slide 38: Rio Tinto Coal Australia
Rio Tinto Coal Australia * Hail Creek expansion on track + Significant future potential infrastructure issues + Port and rail constraints + US railroad capacity Markets + Improving US coal markets, sulphur credits Rossing * Strong uranium market + Decision on life extension Diavik + Operations going
Slide 39: Approach to evaluating capital projects
Cents 1b Cy Approach to evaluating capital projects — Methodology unchanged, measured approach — Best estimate of risk adjusted DCF — Long run price balances upside and downside risk — Focus on long run cost drivers and major underlying demand trends Copper price has followed marginal cost down Copp
Slide 40: Project evaluation prices evolve over time
Project evaluation prices evolve over time « Large database of actual and potential mining projects « Evaluation prices kept under constant review « Some commodity price forecasts revised upwards since 2003 - demand outlook, China — structural cost pressures Cash flow priorities Invest in value addi
Slide 41: Strong progressive dividend history
ine Strong progressive dividend history 2500 5 + 200 2000 + 20% rebasing + 150 1500 4 + 100 DiC 1000 5 RIZ ple dividend + 50 500 £ 1975-400 (Ihs) Rio Tinto dividend US$ 1996=100 (rhs) Oooo ttt 8 1985 1990 1995 2000 fe RIO gm TINTO Conceptual projects Advanced studies Committed projects Bamorstey min
Slide 42: An evolving list of opportunities
An evolving list of opportunities Conceptual projects Advanced studies Committed projects Simandou iron Corumba iron to 1Smtpa Plibara expansion options Sari Gunay gotd Resolution copper Further KUC extensions / underground developments Eagle nickel La Sampata nickel CAR Itt alumina UGS capacity add
Slide 43: Projects committed in 2005
Index (1990-100 + Strong historical and near term growth 280 240 220 200 180 160 140 120 100 Projects committed in 2005 Recently committed projects Yandi expansion ($530 Hamersley Brownfield ($290: Pitbara Iron port ($690m) Hamersley infrastructure ($143m)} KUC East 4 pushback ($470m} Cortez Hills (
Slide 44: Vision: to be the undisputed sector leader in value creation
Leigh Clifford Chief Executive Officer Vision: to be the undisputed sector leader in value creation + We are an innovative, disciplined developer and acquirer of value creating assets * Our corporate reputation is second to none * We have a capable and supportive team of people * Our operational per
Slide 45: Long track-record of business improvement
Rio Tinto has a long track-record of business improvement 1996 + Post DLC focus reduced costs by $1 billion + Product Group structure encourages best practice transfer * Increased co-ordination between business units ~ Group procurement ~ Rio Tinto Shipping « Transfer of best practice between busine
Slide 46: Strong leadership team in place
Asset Management Processing Mining Operations Operations Strong leadership team in place « Keith Johnson leading the initiative * Senior team of managing directors ¢ 70 staff working on the project
Slide 47: Initially focused on five business units
Initially focused on five business units + Pilot schemes in business units - Kennecott Copper ( ~ Kennecott Energy ( ~ Borax (HME) ( ( - Coal Australia - RT Aluminium Operational improvements will cut across the work streams Mining Processing Marketing Asset Management Standardise core processes to
Slide 48: IPT - Summary and overall conclusion
IPT - Summary » Early stages of a new group wide business improvement programme * Focus is on performance improvement leading to value enhancement — margins, capital and volume » Ensuring first class operational performance Overall conclusion * Capitalising on current strong markets — Maximising pro