Rio Tinto Plc · LSE:RIO
Rio Tinto — Non-Deal Roadshow (October 2018)
27 slides from Rio Tinto's roadshow presentation, Oct 3, 2018
Slide 1: Notice to ASX: Copper – investor roadshow
Notice to ASX For personal use only Copper – investor roadshow 2 October 2018 The attached presentation will be given by Arnaud Soirat, chief executive – Copper and Diamonds at investor briefings this week. The presentation slides will also be available at www.riotinto.com/presentations. Page 1 of 2
Slide 2: Contacts
For personal use only Contacts media.enquiries@riotinto.com riotinto.com Follow @RioTinto on Twitter Media Relations, United Kingdom Media Relations, Australia Illtud Harri Jonathan Rose T +44 20 7781 1152 T +61 3 9283 3088 M +44 7920 503 600 M +61 447 028 913 David Outhwaite T +44 20 7781 1623 M +4
Slide 3: Copper & Diamonds
For personal use only Copper & Diamonds Arnaud Soirat Chief executive, Copper & Diamonds October 2018
Slide 4: Cautionary statements
2 Cautionary statements For personal use only 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, includ
Slide 5: Safety and health come first
3 Safety and health come first For personal use only Fatality at Rio Tinto Fer et Titane in April 2018 Continuing history of improvement in AIFR Fatal assault on a security contractor at Richards Bay Rio Tinto ICMM (23 companies) Minerals in July 2018 2.78 Fatality at Paraburdoo Iron Ore mine in Aug
Slide 6: Building a sector-leading copper portfolio
4 Building a sector-leading copper portfolio For personal use only Portfolio Performance Growth • Simplified and focussed portfolio • Mine to market approach is delivering • Projects at OT and Kennecott on-track • High quality Reserve & Resource base • Productivity gains at Kennecott and OT • Produc
Slide 7: A global presence with high-quality growth options
5 A global presence with high-quality growth options For personal use only Diavik, Canada Oyu Tolgoi, Mongolia (Diamonds) • RT Share: 33.5%11 • 11 • RT Share: 60% • Partners: TRQ, GoM • Partner: Dominion Diamond Mines ULC Kennecott, US • RT Share: 100% Grasberg, Indonesia • RT Share: 40%2 • Partner:
Slide 8: Rio Tinto well placed to benefit from copper's attractive long-term fundamentals
Rio Tinto well placed to benefit from 6 For personal use only copper’s attractive long-term fundamentals Copper supply/demand (million tonnes) Market remains finely balanced despite healthy mine performance since 2Q17, underscoring solid demand Surplus Deficit 25 Rio Tinto copper growth to be delive
Slide 9: The future for copper: grade decline / expensive projects
7 The future for copper: grade decline / expensive projects For personal use only Avg copper mine ore grades by processing route, % Cu in ore 1.1% 1.1% 1.0% 1.0% 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% 0.6% Mill Feed Grade (wt. avg, ore milled) 0.6% Heap Leach Feed Grade (wt. avg, ore leached) 0.5% 0.5% Ore G
Slide 10: Performance: productivity roadmap
8 Performance: productivity roadmap For personal use only Partnering Best Practice Data & Technology Automation with Suppliers Effective equipment utilisation Payload optimisation and maintenance optimisation Light-weighting of truck beds Shorter haul times Increase mining rates Mining Integrated op
Slide 11: Strong growth and expansion pipeline
9 Strong growth and expansion pipeline For personal use only Supply surplus Supply deficit 2018 2020 2021 2025-2030 Kennecott South push back underpins margin and volume increase Additional pushback and underground options study Oyu Tolgoi HNL1 development to first production Substantial increase in
Slide 12: Kennecott: mine life extension on-track
10 Kennecott: mine life extension on-track For personal use only Focus on improving productivity and optimising performance Accounts for almost 11% of the US annual copper production Studies on track to extend the life of mine beyond 2030 Return to higher grades expected from 20211 1. Based on the a
Slide 13: Kennecott: growth and productivity across the value stream
11 Kennecott: growth and productivity across the value For personal use only stream Mining Concentrator improvements Smelter and refinery Functional / other • Molybdenum plant optimisation • Modernisation programme • Procurement value delivery • South Pushback optimisation • Pyrite deportment to imp
Slide 14: Oyu Tolgoi: a leading Tier copper project
12 Oyu Tolgoi: a leading Tier 1 copper project For personal use only One of the world’s highest quality copper developments Average underground grades of 1.66%Cu and 0.35g/t Au1 $5.3 billion development capex projected Underground project on budget and schedule First drawbell production expected mid
Slide 15: Oyu Tolgoi: growth and productivity across the value stream
13 Oyu Tolgoi: growth and productivity across the value stream For personal use only Maximize open pit productivity to bring forward head grade prior to commencing UG: • Mine plan optimisation • Mine truck and shovel productivity improvement UG Project on time to deliver mid 2020: • UG innovation pr
Slide 16: Grasberg: in transition
14 Grasberg: in transition For personal use only Rio Tinto has signed a binding agreement to sell its entire interest in the Grasberg mine to PT Indonesia Asahan Aluminium (Persero) (Inalum), Indonesia’s state mining company, for $3.5 billion Completion expected in first half of 2019* * The transact
Slide 17: Escondida: strong partnership with long-term optionality
15 Escondida: strong partnership with long-term optionality For personal use only Strong cash flow underpins dividends No significant capex is required in the short term 2018 production increase supported by three concentrators 271kt 1 Processing capacity exceed 153.7 Mt per annum2 Total 2017 Attrib
Slide 18: Resolution: potential Tier asset
16 Resolution: potential Tier 1 asset For personal use only One of the largest undeveloped copper deposits in the world Large, high-grade resources (1.787bt @1.54 percent Cu1) Pre-feasibility study progressing – targeting 2022 completion Permitting on track Options for development acceleration are u
Slide 19: Future optionality for the Copper business
17 Future optionality for the Copper business For personal use only Continued focus on copper exploration, primarily in the Americas 16 copper exploration programmes ~60 per cent of Rio Tinto exploration spend is New technologies and innovation focussed on copper Source: Rio Tinto second quarter ope
Slide 20: Building a sector-leading copper portfolio
18 Building a sector-leading copper portfolio For personal use only Portfolio Performance Growth • Simplified and focussed portfolio • Mine to market approach is delivering • Projects at OT and Kennecott on-track • High quality Reserve & Resource base • Productivity gains at Kennecott and OT • Produ
Slide 21: Appendix slides
For personal use only Appendix slides
Slide 22: Mine output steady, inventories shrinking
20 Mine output steady, inventories shrinking For personal use only Disruption rates and causes (% mine supply) China’s copper inventory 1100 9% 9% Bonded warehouses + SHFE inventory 8% 8% 1000 7% 7% 900 6% Long-term avg 6% 800 5% 5% 4% 4% 700 3% 3% 600 2% 2% 1% 1% 500 0% 0% 2004 2005 2006 2007 2008
Slide 23: Copper price: trade tensions drive sell-off
Copper price: trade tensions drive sell-off For personal use only Copper vs CNY: both weakening on growth concerns • Concerns over trade tensions between China and 7,500 6.20 the US drove the 2018 mid-year selloff in copper prices 7,250 6.30 7,000 6.40 • The first tranche of US tariffs on $50bn of C
Slide 24: China's waste import ban disrupting global trade flows
22 China’s waste import ban disrupting global trade flows For personal use only China scrap monthly imports (kt gross weight) 400 30% • From mid-2017, Chinese authorities began 300 restricting imports of low-quality copper scrap 10% ahead of a full ban in 2019. 200 100 -10% • On Aug 23, China placed
Slide 25: Copper & Diamonds H1 2018 highlights
23 Copper & Diamonds H1 2018 highlights For personal use only H1 2018 H1 2017 Change Mined copper prod’n (Rio share) - kt 296.1 208.9 +42% Free cash flow positive in H1 2018 (inclusive of dividends received from Escondida) despite Refined copper prod’n (Rio share) - kt 117.9 77.1 +53% a $225m increa
Slide 26: Copper & Diamonds: higher prices and volumes driving increased EBITDA
Copper & Diamonds: higher prices and volumes driving 24 For personal use only increased EBITDA Underlying EBITDA H1 2017 vs H1 2018 $ million 1,500 191 29 1,360 202 1,250 291 1,016 1,000 (48) (30) 771 (11) (14) (21) 750 500 250 0 H1 2017 Price Exchange Energy Inflation Flexed Volumes & Cash costs Ex
Slide 27: Kennecott: growth options progressing
25 Kennecott: growth options progressing For personal use only South Pushback • Provides a platform for growth and supports a decade of high-quality cash flow • Phased development optimises life of mine plan and preserves optionality for future pushbacks Next Pushback Study • Next Pushback study und