2 – 5 September 2013
Site visit to iron ore operations
in Western Australia
1
Cautionary statement
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consisting of the slides for a
presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions.
Forward-looking statements
This presentation includes forward-looking statements. All statements other than statements of historical facts included in this
presentation, including, without limitation, those regarding Rio Tinto’s financial position, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to Rio Tinto’s products, production forecasts
and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry
results, to be materially different from any future results, performance or achievements expressed or implied by such forwardlooking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tinto’s present and future business strategies
and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto’s actual
results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels
of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably,
the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and
economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as
changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed
with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking
statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this presentation.
Nothing in this presentation should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will
necessarily match or exceed its historical published earnings per share.
©2013, Rio Tinto, All Rights Reserved
2nd September 2013
Day 1
Day 2
Day 3
Day 4
Extending our competitive advantages
Andrew Harding - Chief executive officer – Iron Ore, China, Japan, Korea
3
Proven sector leadership
• Delivering value for shareholders
• Proven sector leadership in:
− Integrated operational
performance
− Cash costs/ margin improvement
− On time/ budget growth projects
− Sales and marketing strategies
− Utilisation of new technology
− Key stakeholder engagement
• Flexible to changing internal and
external environments
• Relentless focus on safety
©2013, Rio Tinto, All Rights Reserved
Strategy pillars to build on industry leading
performance and deliver best return to shareholders
1. Production
at the Right Cost
Lowest cost production
through unrivalled
technology and high
performing teams
Examples
• System capacity
creep
• Operating and
capital efficiency
4
2. Value-Driven Growth
Disciplined
phasing and low
cost growth
options
Our Vision
Examples
• Product Value In Use
• Infrastructure synergies
• Development options
To remain the
best iron ore
producer in the
world
Examples
• Product strategy
• Supply chain synergies
• Development sequence
3. Maximising Portfolio Value
Leveraging our portfolio of growth
options, product strategy and
sales and supply chain
capabilities
©2013, Rio Tinto, All Rights Reserved
5
Safety performance
Iron Ore all injury frequency rates
2003 – 1H 2013
Per 200,000 hours worked
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
03 04 05 06 07 08 09 10 11 12 1H'13
All injury frequency rate
Lost time injury frequency rate
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
6
Long-term fundamentals for Chinese
iron ore demand remain strong
Chinese steel production and iron ore
requirements
Machinery and transportation increase as
proportion of Chinese steel demand
Million tonnes
%
1200
90%
1200
800
1000
600
800
600
400
400
200
200
0
0
2000
2010
2020
2030
80%
70%
60%
50%
40%
30%
20%
10%
0%
2012
2040
Crude Steel Production
Scrap Generation
Iron Ore Requirement (RHS)
Source: Rio Tinto
Iron ore requirement (Mt)
1400
1000
Steel and Scrap (Mt)
100%
1600
Property
White goods
2030
Infrastructure
Transportation
Machinery
Others
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
7
On-going constraint to the development
of new iron ore supply
Announced and completed iron ore
production capacity (global)
Million tonnes
1000
800
600
400
200
0
Announced for 2008-10
Certain
Probable
Completed by Q4 2010
Possible
Others
completed
1000
Rio Tinto
additional
capacity
800
600
400
• Supply capacity continues to be
constrained
− Reduced sources of project
financing
− Protracted approvals processes
− Mid tier / Junior projects based on
inferior resources
− Challenges working in remote
locations
• Complexity associated with Port
Hedland inner harbour
• Our consistent aim is to have the
next best expansion options
200
0
Announced for 2012-14
Completed by Q2 2013
Source: UNCTAD, Rio Tinto analysis
©2013, Rio Tinto, All Rights Reserved
8
Performance records continue for
our Pilbara iron ore operations
• 2012 low capital expenditure
debottlenecking led to 7mt/a capacity
re- rate to 237 Mt/a
Pilbara mine production
Million tonnes/Quarter
70
• 2012 full year record Pilbara mine
production of 239 Mt
60
50
• Record Q1 & Q2’13 Pilbara mine
production of 57.8 Mt & 62.0 Mt
respectively, despite cyclones and
unseasonal weather
40
30
20
10
0
Q1
2010
Q2
2011
Q3
2012
2013
Q4
• Low spend, high return productivity
initiatives are ‘business as usual’
across the fully integrated mine, rail
and port system
237mtpa
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
9
Strong focus on cash costs management
delivers results, with more expected
• Continued focus on
controlling cash operating
unit costs
Pilbara cash operating unit cost*
(2006 = 100)
200
160
• Inflationary pressures
persist but have eased
140
• 2012 cash cost: US$23.5/t
120
• 2013 H1 cash cost:
US$23.1/t
180
100
− Lower than 2012 H1
levels due to reduced
spend on contractors
and consultants
80
60
40
20
0
FY 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H
2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013
AUD cost
− Lower spend partially
offset by weather
USD cost
*Unit cost shown on the graph is Rio Tinto share of Hamersley Iron and Robe River
calculated from cash costs for Hamersley Iron and Robe River. Excludes royalties, shipping
costs, and in 2006 real terms
©2013, Rio Tinto, All Rights Reserved
10
Leading EBITDA performance in the
Western Australian iron ore industry
• Lowest cost producer in the Pilbara
WA IO – EBITDA per tonne
US$/t and % Margin
140
80%
120
70%
• Consistently achieving a premium
relative to Platts 62% Fe for spot
sales
60%
100
US$/t
40%
60
30%
40
EBITDA %
50%
80
• Integrated marketing and operations
has led to significant value delivery,
for example in scheduling
• Expect Pilbara cash operating cost
position to improve going forward
20%
20
10%
0
0%
H209 H110 H210 H111 H211 H112 H212 H113
RTIO ($US/t)
BHP ($US/t)
FMG ($US/t)
RTIO %
BHP %
FMG %
Source: Rio Tinto ; BHPB; and FMG lodged financial statements
Note: RTIO results exclude Dampier Salt and RT Marine Tonnage based on attributed
shipments (adjusted for Robe River at 65% as per financial results)
Results as reported. All publically available information
©2013, Rio Tinto, All Rights Reserved
11
290Mt/a infrastructure complete and
360Mt/a infrastructure progressing well
• 290 Mt/a first ore on ship 24 August
• 290 Mt/a delivered ahead of
schedule and on budget
• 220 – 290Mt/a delivered at a capital
intensity less than US$140/t (100%)
• Infrastructure expansion to 360Mt/a
fully approved and underway
290Mt/a wharf complete, 360Mt/a in progress
• Multiple options for mine capacity
expansions are being evaluated
− Low cost productivity opportunities
− Expansion of existing mines
− New mine development
Emu Siding upgrade complete
©2013, Rio Tinto, All Rights Reserved
12
Our assets will remain well-positioned
on the contestable market cost curve
2013 Industry cost curve
2020 Industry cost curve
(US$/wmt CFR)
(US$/wmt CFR)
200
200
Vale
Vale
BHP Pilbara
BHP Pilbara
RTIO Pilbara
RTIO Pilbara
FMG Pilbara
150
FMG Pilbara
150
100
100
50
50
0
0
0
500
1000
1500
2000
0
500
Mtpa
1000
1500
2000
Mtpa
Source: Rio Tinto, Wood Mackenzie
Note: Includes shipping and sustaining capital expenditure and is adjusted for inflation and FX
©2013, Rio Tinto, All Rights Reserved
13
Full engagement with our community
stakeholders
• Full community engagement is imperative
to our licence to operate
• Strong Aboriginal focus
− 9 of 10 Indigenous Land Use
Agreements completed, covering all of
our Pilbara footprint
− Jobs and training for > 1500 Aboriginal
employees
− $2 billion in contract work with
Aboriginal businesses
• Partnering with WA Government and local
governments, participating in the North
West and fly in / fly out communities
• Community- giving partnerships,
eg. Scitech, Better Beginnings, Black
Swan Theatre, Naturescape and RFDS
©2013, Rio Tinto, All Rights Reserved
14
Extending our competitive advantages
• Lowest cost producer in the Western Australian iron
ore industry with consistent track record of productivity
improvement
• Growth projects continue to be delivered
on or ahead of schedule and on or below budget
• Multiple options for growth beyond 290Mt/a, with low
cost incremental, brownfield and greenfield
opportunities being evaluated
©2013, Rio Tinto, All Rights Reserved
2nd September 2013
Day 1
Day 2
Day 3
Day 4
Projects & Development
Extending our competitive advantages
David Joyce - Managing director, Projects & Development
2
We have demonstrated superior performance in
delivering projects
Western Australian construction projects performance
Cost (% of budget)
RTIO projects
180%
Non RTIO
projects
30
Over budget
behind
schedule
20
160%
140%
10
120%
100%
0
Months over
budget
200%
80%
-10
60%
40%
-20
Superior project delivery:
• Experienced and wellestablished team
comprised of owners,
operations and EPCM
• Full understanding of the
procurement and
construction programme
• Intense focus on capital
intensity delivering
significant value
Under budget
ahead of
-30 schedule
20%
0%
Budget
Additional Months
Source: Rio Tinto, Pit Crew Management Consulting
©2013, Rio Tinto, All Rights Reserved
3
Completed 220 to 290Mt/a pathway at a capital
intensity <$140/t (100%) or $115/t (Rio Share)
Added
capacity
Project
description
Date of
first ore
220Mt/a
to 225Mt/a
Dampier port
debottlenecking
Q1 2011
225Mt/a
to 230Mt/a
Dampier port
incremental
Q1 2012
230Mt/a
to 290Mt/a
Programme
expansion and
re-rating of port,
rail, mines and
infrastructure
Q3 2013
Cape Lambert
©2013, Rio Tinto, All Rights Reserved
4
Expansion to 290Mt/a fully approved,
ahead of schedule and under budget
Approved amount
US$B
Left to commit
US$B
Project
Status
Port
Approved
3.7
0.3
Rail
Approved
1.4
0.1
Western Turner Syncline /
Brockman 4 Phase 2
Approved
1.4
0.1
Nammuldi BWT
Approved
2.2
1.1
Accommodation
Approved
0.3
0.1
Power
Approved
0.5
0.05
Fuel
Approved
0.3
0.05
$9.8bn
$1.8bn
Total
Figures as at end July 2013
©2013, Rio Tinto, All Rights Reserved
5
Early completion and ramp up to 290Mt/a adds
considerable value
290Mt/a port capacity ramp up profile
Million tonnes
• Accelerated infrastructure schedule
enabled first ore on-ship 24th August
300
290
• Ramp up to 290Mt/a capacity
commences 4 months ahead of
original schedule
280
270
260
• All infrastructure in place-port, rail,
power and water
First ore
on ship
• Close co-operation between
implementation and operations
teams
250
240
230
220
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Accelerated ramp-up
Originally announced plan
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
6
Getting the 290 Mt/a expansion right: Port
First train
First ship
Car dumper
Reclaimer
©2013, Rio Tinto, All Rights Reserved
7
Getting the 290 Mt/a expansion right: Rail
Electronically Controlled Pneumatic (ECP) ore car
Cape Lambert Yard – trip service facility
Emu Siding upgrade
Cape Lambert Yard – auto wash facility
©2013, Rio Tinto, All Rights Reserved
8
Getting the 290 Mt/a expansion right: Mines
Nammuldi – early works
WTS1 – Conveyor 2
Brockman 4
WTS1 – Conveyor 2 and Crusher
©2013, Rio Tinto, All Rights Reserved
9
360Mt/a infrastructure progressing well
Amount
approved
US$B
Left to
Commit
US$B
Project
Status
Port
Approved
3.9
1.5
Rail
Approved
0.9
0.2
Power
Approved
0.6
0.1
AutoHaul™ Approved
0.5
0.1
$5.9bn
$1.9bn
Total
• All dredging and wharf piling
completed
• The first of the topside modules have
been installed with the balance due
by November
• Stockyard civil work ready to receive
balanced machines in September
• Both car dumpers civil structure
nearing completion
• Rail formation at Cape Lambert and
50% of rail duplication earthworks
complete
Cape Lambert
©2013, Rio Tinto, All Rights Reserved
10
Realised significant opportunities in the step to
360Mt/a
Theme
Improvement opportunity
Optimising
expansion size
• Replacement of original Cape Lambert car dumper
Challenge the
scope
• Replace Brockman 4 Phase 3 with alternate brownfield expansions
• Expanded port capacity from 340 to 360Mt/a
• 15Mt/a concentrator replaced by stretch of existing and new mines
• Capital reduced from $1.8bn to $0.6bn and now less than $0.3bn
Fit for purpose
implementation
strategies
• Locked in contractor resources for both phases eg. wharf piling,
dredging and rail saving $80m
• Low cost country sourcing eg. camp implementation saving $60m
and balanced machines saving $70m
• Appropriate contracting arrangements eg. EPC for power station
$10m and Nammuldi process plant with a re-schedule benefit
©2013, Rio Tinto, All Rights Reserved
11
Increased ore body knowledge supports the full
range of Pilbara growth pathways
20000
Pilbara
resources, reserves and production1
Million
18000 tonnes
16000
20,000
300
18,000
14000
250
16,000
12000
14,000
• Drilling effort is staying ahead of
production increases
• The drilling focus is on near-mine
opportunities to maximise use of
existing infrastructure
200
10000
12,000
8000
10,000
150
8,000
6000
100
6,000
4000
4,000
50
2000
2,000
00
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Resource:
Inferred
Reserves:
Probable
(RHS)
Proven
(RHS)
Indicated
• Mine planning continue to assess
options for developing the best
business value pathway
• Increased orebody knowledge to
sustain current production levels and
to support expansion plans
Production
Measured
1
Resource and Reserves in dry tonnes, reported on a 100% basis and Resources
exclusive of Reserves. Details of the Mineral Resources Resource and Ore Reserves
from 2001 to 2012 are found in the Rio Tinto Annual Reports
©2013, Rio Tinto, All Rights Reserved
12
Multiple options for mine capacity growth exist
Mine capacity range shows indicative
options dependent on productivity gains
achieved and phasing of growth mine
development
Mine capacity options
Average annualised (Mt/a)
400
375
Indicative Operational Improvement
350
System stretch
~10 Mt/a
325
Brownfield expansion options (examples only)
300
Yandicoogina
~7 Mt/a
275
West Angelas
~6 Mt/a
Brockman 4
~2 Mt/a
250
Greenfield options (examples only)
225
200
2012
2013
2014
2015
2016
2017
Silvergrass
~21 Mt/a
Koodaideri
~36 Mt/a
2018
Indicative mine capacity
©2013, Rio Tinto, All Rights Reserved
13
Extending our competitive advantages
• Growth to 290Mt/a is being completed at a
capital intensity of less than US$140/t (100% Rio
Tinto) or US$115/t (Rio Tinto share)
• Delivering projects ahead of schedule adds early
tonnes and significant business value
• To maximise shareholder value, multiple options
for growth to 360Mt/a are under evaluation
©2013, Rio Tinto, All Rights Reserved
14
©2013, Rio Tinto, All Rights Reserved
2nd September 2013
Day 1
Day 2
Day 3
Day 4
Technical Marketing
Extending our competitive advantages
Warwick Smith - Managing director – Sales & Marketing
Darren Matthews – General manager – Technical Marketing
The ability to continuously maximise value
Industry knowledge
• A deep understanding of markets and the steel
industry
Product alignment
• Aligning our resource base with customer needs
over the long term to maximise product value
Strategic agility
• Continuous development of marketing strategy,
competencies, and excellence in tactical
execution
Supply chain
optimisation
• Maximising supply chain capacity utilisation and
value
2
©2013, Rio Tinto, All Rights Reserved
Iron ores are differentiated by quality and cost
to customer
Quality
3
Logistics
Physical Properties
Freight Rates
Chemical Properties
Market
Metallurgical
Properties
Ship Size
Product Variability
Mill Location and
Inbound Logistics
• Iron ore products are not homogenous and are differentiated by their quality and delivered
cost to customers.
• Blast furnaces run on a combination of sinter, lump, and pellets. Mills select the proportion of
sinter, pellets and lump to suit their blast furnace requirements to optimise cost and
production.
• Key factors considered by steel mills are:
− Chemical, physical and metallurgical properties
− Variability, as this impacts raw material planning and process efficiency
©2013, Rio Tinto, All Rights Reserved
4
Iron ore quality and type
• Iron ore fines and concentrates must be agglomerated prior to reduction in a Blast Furnace
• Mills source a recipe of different ores to produce sinter based on their quality, availability
and cost
Sinter
Europe
China
Canada
India
Australia
South America
©2013, Rio Tinto, All Rights Reserved
5
Iron ores are differentiated by
quality and cost to customer
• Iron content of the iron ore should be as high as possible
• All contaminants influence the total cost of steel production and should be as low as possible.
− Major gangue contaminants such as alumina and silica are removed as slag in the blast furnace.
− Elements such as phosphorus, sulphur and manganese can report to hot metal, requiring removal
in steelmaking
− Trace elements, alkalis and other mineral contaminants also impact steel production
• Product characteristics are reflected in a negotiated adjustment to the iron ore price. This may be as
an absolute or proportional (%) adjustment
Sintering Ores: 56-66% Fe
Concentrates:
62-66% Fe
Direct Charge
Lump: 57-65% Fe
Pellets: 62-68%Fe
Sinter: 55-58% Fe
©2013, Rio Tinto, All Rights Reserved
6
Customers value iron ores differently after
considering the following factors
Agglomeration
Iron-making
Steelmaking
Casting
Technical
Geographical
Sinter Plant
Commercial
Geopolitical
Coke Plant
Blast Furnace
Basic Oxygen
Furnace
Steel
products
Technical
• Every steel mill is different and value varying ores differently
• Key technical factors considered by steel mills which impact iron ore selection and value are:
− The steel products they produce
− Their operating preferences and ore blending options
− The size of their blast furnace or sinter plant
− Quality of metallurgical coal
− Their stock holding and blending capacity
− Mill flexibility to varying Sinter, Pellet and Lump charge
©2013, Rio Tinto, All Rights Reserved
Customers value iron ores differently after
considering the following factors
Technical
Geographical
Commercial
Geopolitical
7
• Geographical
− Delivered costs and availability of fuels and fluxes
− Seasonal preferences
− Availability, cost and quality of alternative ores supply
− By products value or disposal costs
• Commercial
− Purchasing strategies; including diversification of supply
− Preferred contract types
− Own iron ore investments
• Geopolitical
− Environmental compliance (impacting energy costs
and choice of direct charge)
− Carbon Pricing, CO2 exposure and cost, Energy
caps/limitations
©2013, Rio Tinto, All Rights Reserved
8
Alignment of business planning
to customer needs
1. Resource Planning
The attributes of our
product offerings
are determined by
the mineral building
blocks of our
resources
• Market
segmentation
• Resource optimisation
• Customer
Feedback
• Mining sequence
• Ore Processing
• Cut-off grades
• Blending
Integrated
analysis ensures
that resource
value is
maximised
2. Production System
Extraction,
processing, and
blending of
mined products
are key aspects
of product
offering
• Product value
assessment
• Schedule
optimisation
3. Customer and Industry Analysis
Customers purchase iron
ores by evaluating product
characteristics and price
against steel production
cost
©2013, Rio Tinto, All Rights Reserved
9
Our Pilbara products are aligned to
our resource base and customer needs
Product
Strengths
Pilbara Blend
Fines
• The most traded iron ore product globally
• Base load sinter blend in Asian markets
Pilbara Blend
Lump
• Avoids the costs of sintering which will
increase with increasing emissions
legislation
HIY Fines
• Ideal chemical composition for the Asian
sinter blends, with low alumina and
phosphorus
• Coarse sizing aids sinter granulation
Robe Valley
Fines
• Coarse sizing aids sinter granulation
• Low phosphorus
Robe Valley Lump
• Low phosphorus
Pilbara Blend Fines
61.5% Fe, 8.5% H2O
Pilbara Blend Lump
62.5% Fe, 4% H2O
Robe Valley
57.0% Fe, 7% H2O
©2013, Rio Tinto, All Rights Reserved
10
Aligning our resource offering
and our customer base
July 2012 – June 2013
July 2012 – June 2013
actual shipments by market (Pilbara and IOC)
percentage of products by market (Pilbara and IOC)
100%
Japan
22%
90%
80%
70%
60%
50%
Korea,
Taiwan
12%
China
62%
40%
30%
20%
Atlantic
4%
10%
0%
China
PBF
Source: Rio Tinto
PBL
Japan
RRF
RRL
Korea, Taiwan
HIY
Conc.
Atlantic
Pellets
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
11
We continually work with our customers, research providers
and universities to optimise our product offering
• Focused on maintaining long term
relationships
• Improved blast furnace operating
practices
• Improved product understanding
• Slag chemistry fundamentals
• New product evaluations
• Sintering test work
• Environmental studies
©2013, Rio Tinto, All Rights Reserved
12
Extending our competitive advantages
• Consistent alignment of our products to our resource base
and to our customers
• Sustained successful marketing of Pilbara Blend, the largest
globally traded volume iron ore product
• Continued work with customers, research providers and
universities to optimise product offering
©2013, Rio Tinto, All Rights Reserved
1
Cautionary statement
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consisting of the slides for a
presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions.
Forward-looking statements
This presentation includes forward-looking statements. All statements other than statements of historical facts included in this
presentation, including, without limitation, those regarding Rio Tinto’s financial position, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to Rio Tinto’s products, production forecasts
and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry
results, to be materially different from any future results, performance or achievements expressed or implied by such forwardlooking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tinto’s present and future business strategies
and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto’s actual
results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels
of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably,
the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and
economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as
changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed
with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking
statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this presentation.
Nothing in this presentation should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will
necessarily match or exceed its historical published earnings per share.
©2013, Rio Tinto, All Rights Reserved
3rd September 2013
Day 1
Day 2
Day 3
Pilbara mine operations
Extending our competitive advantages
Michael Gollschewski - Managing director, Pilbara Mines
Day 4
Pilbara mine network
3
©2013, Rio Tinto, All Rights Reserved
Fully integrated operations
4
©2013, Rio Tinto, All Rights Reserved
Mine schematic - Multiple improvement options
5
©2013, Rio Tinto, All Rights Reserved
Pilbara iron ore: mines, ports and typical quality
of product
Ore group
Mines
Ore-types
Banded Iron Formation derived Iron Deposits
Paraburdoo
(inc. Channar
Eastern
Range)
B
Brockman 2
Brockman 4
Hope Downs 4
B
B
B
Products
Mt Tom
Price / WTS
Channel Iron Deposits
Marandoo
Nammuldi
MM
MM
B & MM
West
Angelas
MM
Pilbara Blend (PB)
Hope
Downs 1
MM
Yandicoogina
PIS
Mesa Mesa
AJ
PIS
HIY
F
L&F
L&F
6
RV
L&F
Ports
Ore-types
 B = Brockman Iron Formation
 MM = Marra Mamba Iron Formation
 PIS = Yandicoogina pisolite
 PIS = Robe Valley pisolite
Dampier
Cape Lambert A
Cape Lambert B
Product
Fe (dry basis)
Moisture
Pilbara Blend Lump
62.5%
4.0%
Pilbara Blend Fines
61.5%
8.5%
Robe Valley Lump
57.0%
6.0%
Robe Valley Fines
57.0%
7.0%
Yandicoogina Fines
58.5%
9.0%
©2013, Rio Tinto, All Rights Reserved
7
Mine portfolio consistently performing
above design
• Consistent record performances
Total Material Moved and Saleable Ore
Production (Mt)
250
70
60
200
50
150
40
30
100
20
50
10
-
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
TMM (LHS)
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
• Material moved in Q2 increased as a
result of higher production and prestripping at Marandoo, HD4 and
Nammuldi as part of the 290 ramp up
• Continual improvements in running
the system
− Dynamic planning favours trains to
lower mine cycle times
− Optimising mine planning and
blasting to decrease haul
distances and increase throughput
rates in the plants
SOP (RHS)
©2013, Rio Tinto, All Rights Reserved
Mine of the Future™ programme continues
as a key value generator…
8
• In total, 100Mt autonomously moved
over West Angelas, Yandicoogina
and Nammuldi sites from Jan 2008
to Jun 2013
• Real-time monitoring and
improvement of unit costs and
productivity
− Truck cycle times
− Improved maintenance
− Better performance on
tyres and fuel
Autonomous trucks
• Reduced capital expenditure on
machines and infrastructure
“Smart” explosives truck
Autonomous drilling
©2013, Rio Tinto, All Rights Reserved
9
…. and costs continue to be robustly managed
• Contractor cost savings ~ $7.5m YTD
− Reduction in contractor use
− Use of non original equipment
manufacturer suppliers
• Maintenance cost savings and avoidance
of ~$23m YTD
− Component life extension
− Challenging our maintenance tactics to
condition based
• Optimisation of support functions ~$11m
YTD
• Maintenance ‘Breakthrough’ ~ $5m YTD
− Improving maintenance labour
productivity
Yandicoogina
©2013, Rio Tinto, All Rights Reserved
Mine production is on track to deliver 290Mt/a
Pilbara Iron quarterly mine production forecast
Annualised
350
10
• Proven ability to ramp up and integrate
new expansion tonnes
− HD4 applied best practice
developments
290Mt/a
300
− Brockman 4 already at close to design
run rate (40 Mt/a)
250
− Western Turner Syncline operational
using trucking operation with conveyor
scheduled for completion end of 2013
200
150
100
− Nammuldi schedule for first ore in Q3,
2014
50
0
13Q1 13Q2 13Q3 13Q4 14Q1¹ 14Q2¹ 14Q3 14Q4
Actuals
Forward Looking
• Available mine stocks and productivity
improvements will be used to fill any short
term spare infrastructure capacity
Ramp Up to 290
1. Production forecasted to be impacted by weather
©2013, Rio Tinto, All Rights Reserved
11
Visits to two premier mine operations
Hope Downs
Yandicoogina
Newest site
Large scale very low cost operation
Centralised services function
First fully automated truck mine
Wet plant design enhancement
Continued low capital intensity expansions
Joint Venture operation
Rio Tinto CEO Safety Award 2012
HD4 operations
©2013, Rio Tinto, All Rights Reserved
12
Extending our competitive advantages
• Many hundreds of productivity and cost improvement
opportunities across the full suite of 14 mine operations
• Continued record mine performance and proven ability
to ramp up and integrate new expansion tonnes
• Mine of the Future key™ to unlocking further
productivity and cost improvement
©2013, Rio Tinto, All Rights Reserved
3rd September 2013
Day 1
Day 2
Day 3
Day 4
Hope Downs 4
Extending our competitive advantages
John Dumbill - General manager, Greater Hope Downs
2
Safety guidelines
Please observe the following rules during your visit:
• Follow the advice of your host; visitors are to be escorted at all times
• Wear safety glasses at all times while outside and hard hats when advised
• Wear seat belts when provided
• No smoking inside buildings or vehicles
• Jewellery not permitted to be worn on site
i.e. rings, earrings (except for studs)
• In an emergency, your host will lead
you to the nearest Muster Point
©2013, Rio Tinto, All Rights Reserved
Greater Hope Downs development stages
3
Hope Downs 1
• Initial development; 22 Mt/a Dry – Hope
Downs North
− ‘Dry plant’
− Stockyard (660 kt) live capacity
− Completed in Q1 2008
• Expansion; 22 Mt/a to 30 Mt/a Dry –
Hope Downs South
− Modified crushing & screening circuit
− Completed in Q1 2009
Hope Downs 4
• Greenfields Mine site development to
support the expansion to 290 Mt/a
− 15Mt/a Dry crushing & screening circuit
− Wet plant
− Stockyard (900 kt) live Capacity
− Currently in wet commissioning
Mine site, HD4
©2013, Rio Tinto, All Rights Reserved
Hope Downs 4 – the newest mine operation
4
Processing high grade, high
phosphorus Brockman (HPB) ore to
produce lump and fines products
Target material:
2013 – TMM 42.1 Mt SOP 6.0 Mt
2014 – TMM 62.1 Mt SOP 16.6 Mt
• 70-80% of the high grade ore is
below the water table
• Wet screening was selected to
optimise productivity
Screening plant, HD4
©2013, Rio Tinto, All Rights Reserved
Deployment of the autonomous truck fleet
5
• In early stages of deployment with
“go-live” scheduled for early 2014
• AHS will deliver planned total
material movement with three less
trucks, a 14% productivity
improvement.
• Expected significant improvement in
− Tyre life
− Fuel usage
− Maintenance costs
− Cycle time
− Real time data generation
− Safety
Autonomous trucks
©2013, Rio Tinto, All Rights Reserved
6
Key learnings and application
Standardised design
• Front end primary sizers are replicas
of Yandicoogina
• Train load out design based on Hope
Downs 1
Train load out, HD4
• Similar plant being constructed at
Marandoo
Operational readiness
• Swift mobilisation of the operations
team to site using their expertise to
conduct the mine pre-strip work
Screening plant, HD4
©2013, Rio Tinto, All Rights Reserved
7
Sustainable cost reductions
Centralised services for flights and
accommodation saving of ~$3M*
• Most cost effective flight for the sector
• Direct employee cost saving (travel,
accommodation, site allowances etc.)
• Less site accommodation required
Village contract saving of ~$5M*
• Savings identified in volume, mobilisation,
facilities maintenance, cost avoidance
• Potential future savings to be found in
management rationalisation, consumables and
centralised kitchens
Greater Hope Downs savings of ~$3M*
• Leveraging skills and expertise across both
Hope Downs sites
• Combined Crane, Training and Business
Improvement teams
Conveyor belt, HD4
*Expected savings for 2013
©2013, Rio Tinto, All Rights Reserved
8
Extending our competitive advantages
• Leveraging key learnings from past builds with
standardised design and operational readiness
• Optimising key productivity platforms with wet screening
and autonomous trucks
©2013, Rio Tinto, All Rights Reserved
3rd September 2013
Day 1
Day 2
Day 3
Day 4
Yandicoogina region
Extending our competitive advantages
Alex Bates - General manager, Yandicoogina region
2
Safety guidelines
Please observe the following rules during your visit:
• Follow the advice of your host; visitors are to be escorted at all times
• Wear safety glasses at all times while outside and hard hats when advised
• Wear seat belts when provided
• No smoking inside buildings or vehicles
• Jewellery not permitted to be worn on site
i.e. rings, earrings (except for studs)
• In an emergency, your host will lead
you to the nearest Muster Point
©2013, Rio Tinto, All Rights Reserved
3
Yandicoogina – Overview
Junction Central
Dry Plant – 24 Mt/a
• Primary Jaw Crusher
• Scalping screens
• Secondary cone crusher
• Tertiary cone crushers
• Product screening
• Overland conveyor
Junction South East
Dry Plant – 16 Mt/a
• Primary sizer
• Secondary sizer
• Overland conveyor
Loop
• 4 x ~275 kt stockpiles
• One product HIY fines
• Tertiary crushing
& screening
• 2 reclaimers
• 2 train loadouts
Wet Plant – 12 Mt/a
• Primary sizer
• Wet scrubbers
• Dewatering screens
• Secondary cone crusher
• Overland conveyor
Rail distance ~450 km to Cape Lambert (or Dampier)
Mine overview, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
4
Low capital intensity development expansion
Expansion; 20 Mt/a
to 24 Mt/a
• Modified crushing &
screening circuit
• Capex US$75M
Initial development; 15 Mt/a
• ‘Dry plant’
• Stockyard (66 Kt live
capacity)
• Capex US$360M
Expansion; 24 Mt/a
to 36 Mt/a
• New 12 Mt/a ‘wet plant’
• 15 Mt/a low grade ore feed
• Capex US$200M
Expansion; 15 Mt/a
to 20 Mt/a
• Modified crushing &
screening circuit
• Capex US$77M
2000
1998
Expansion; 36 Mt/a
to 52 Mt/a
• New 16 Mt/a capacity ‘dry
plant’
• Additional rail loop and train
load out
• Capex US$530M
2004
2005
2007
Million tonnes
60.00
50.00
40.00
30.00
20.00
10.00
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Yandicoogina SOP
©2013, Rio Tinto, All Rights Reserved
5
Productivity improvements – Yandicoogina
Dry plant increased tonnes:
YANDI Dry Plant
• Identified in 2008, process control
improvements and new equipment at a
cost of approximately $150k
26
3,900
3,800
3,700
3,600
3,500
3,400
3,300
3,200
25
24
23
Mt/a
TPOH
(tonnes per operating hour/ saleable ore product)
22
21
20
2009
2010
2011
TPOH
2012
SOP
YANDI Wet Plant
(tonnes per operating hour)
2,100
2,000
TPOH
• Increased production from 3,450 to 3,750
tonnes per operating hour added
additional capacity of 1.8Mt/a
1,900
1,800
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Wet plant increased throughput:
• Oversize conveyor identified as a
bottleneck
• Drive system upgrade in mid 2012 at a
cost of $350k resulted in an increase of
approximately 300 tonnes per hour (12%)
increase in feed rate
©2013, Rio Tinto, All Rights Reserved
6
Productivity improvements – Yandicoogina
YANDI TLO
(tonne per car)
125
Train load out
• Two waves – 2008/09 followed by
2011/12
TPC
120
115
110
105
100
Jan 08Jul 08Jan 09Jul 09Jan 10Jul 10Jan 11Jul 11Jan 12Jul 12Jan 13Jul 13
• Initial improvement due to upgrade of
TLO1 and various plant modifications
including track scales and improved
control systems
• Fine tuning of control systems,
challenging perceived system
limitations and constraints, operator
involvement resulted in second step
change
• 260 fewer train trips required per
year from 15 tonnes/car capacity
increase
Train load out, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
7
Cost initiatives
Contractor cost reduction – ~$2m YTD
• Reduce the costs associated with major contractors (labour hire, catering contractors
and airline carriers)
• Ongoing improvements in shutdown management to reduce contractor requirements
Mining cost reduction initiatives – ~$1m YTD
• Installation of new JSE Haul road to reduce travel distance
• Reduction in blasting consumables
• Introduction of Yellow Dot servicing – trials still being undertaken 2013
• Haul truck hydraulic kidney looping – $514k projected in 2014
Operations, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
8
Extending our competitive advantages
• Continued high value, low capital intensity development
options
• First mine with fully automated truck fleet showing
notable improvements
©2013, Rio Tinto, All Rights Reserved
1
Cautionary statement
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consisting of the slides for a
presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions.
Forward-looking statements
This presentation includes forward-looking statements. All statements other than statements of historical facts included in this
presentation, including, without limitation, those regarding Rio Tinto’s financial position, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to Rio Tinto’s products, production forecasts
and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry
results, to be materially different from any future results, performance or achievements expressed or implied by such forwardlooking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tinto’s present and future business strategies
and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto’s actual
results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels
of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably,
the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and
economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as
changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed
with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking
statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this presentation.
Nothing in this presentation should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will
necessarily match or exceed its historical published earnings per share.
©2013, Rio Tinto, All Rights Reserved
4th September 2013
Day 1
Day 2
Day 3
Pilbara port operations
Extending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
Day 4
3
Safety guidelines
Please observe the following rules during your visit:
• Follow the advice of your host; visitors are to be escorted at all times
• Wear safety glasses at all times while outside and hard hats when advised
• Wear seat belts when provided
• No smoking inside buildings or vehicles
• Jewellery not permitted to be worn on site
i.e. rings, earrings (except for studs)
• In an emergency, your host will lead
you to the nearest Muster Point
©2013, Rio Tinto, All Rights Reserved
Fully integrated operations
4
©2013, Rio Tinto, All Rights Reserved
Port schematic - Multiple improvement options
5
Source: Online Data Source: SAP, Offline Data Source: PDS
©2013, Rio Tinto, All Rights Reserved
Single owner, single user and each port readily
expandable
6
Current port capacity is 237 Mt/a:
• Parker Point: 102 Mt/a
• East Intercourse Island: 50 Mt/a
• Cape Lambert: 85 Mt/a
Parker Point
East Intercourse Island (EII)
All three terminals are managed as one port:
• Sharing of common support such as: Safety, Maintenance,
Engineering, and Scheduling
• Optimisation of ship queuing and tug fleet
• Balancing of ore production by product and grade through rail
connections
• Shared learning and standardisation of processes
Combined manning: ~1,150
Current combined assets:
• 5 car dumpers
• 9 shipping berths
• 5 ship loaders
290Mt/a Combined assets:
• 6 car dumpers
• 11 shipping berths
• 6 ship loaders
Cape Lambert
©2013, Rio Tinto, All Rights Reserved
7
Product flow and logistics at the ports
Ore group
Mines
Ore-types
Banded Iron Formation derived Iron Deposits
Paraburdoo
(inc. Channar
Eastern
Range)
B
Brockman 2
Brockman 4
Hope Downs 4
B
B
B
Products
Mt Tom
Price / WTS
B & MM
Channel Iron Deposits
Marandoo
Nammuldi
MM
MM
West
Angelas
MM
Pilbara Blend (PB)
MM
Yandicoogina
PIS
Mesa Mesa
AJ
PIS
HIY
F
L&F
L&F
Hope
Downs 1
RV
L&F
Ports
Dampier
Cape Lambert B
Cape Lambert A
Ore-types ; B = Brockman Iron Formation, MM = Marra Mamba Iron Formation, PIS = pisolite
Stockpiling and blending Pilbara Blend at Dampier and Cape Lambert B
©2013, Rio Tinto, All Rights Reserved
Port capacity improvements and
debottlenecking delivering record performance
Parker Pt Outload rates – SL3P
(tonnes per operating hour)
9,500
9,300
Significant rate improvements on both
inload and outload circuits have
increased port capacity in the past 12
months
• At Parker Point, improvements have
increased ship loading rates by
nearly 1,000 tonnes per hour during
2012
9,100
Net Rate (TPOH)
8
8,900
8,700
8,500
• Dumper capacity has increased as a
result of improvement work and
faster train turnaround times
8,300
8,100
7,900
7,700
7,500
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013
©2013, Rio Tinto, All Rights Reserved
9
Cost savings initiatives are ensuring
increased cash flow for the business
• Contractor cost savings of ~$8m
year to date have been realised by
ensuring the right skills are used for
each job
• Changes to bulking methods,
allowing the sharing of resources
across the Ports ~$4.5m
• Bringing shut wash-down activities
in-house ~$3.0m
Cape Lambert
©2013, Rio Tinto, All Rights Reserved
We are well-prepared to commission and
operate the expanded port assets
10
• Operational readiness is the key to effectively delivering the expanded port assets
− Operational involvement at all project stages providing input to design and developing
an understanding of future operations
− Progressive handover and acceptance
− Integrated commissioning team with operations and expansion personnel
• Preparation for marine operations via monitoring, modelling, simulators and test ships
• Integration of the new operation within the supply chain
First 290Mt/a ore on ship, Cape Lambert B
©2013, Rio Tinto, All Rights Reserved
11
Extending our competitive advantages
• Single owner, single user and each port readily
expandable and unconstrained
• Many hundreds of productivity and cost improvement
opportunities across 3 port operations
• Seamless integration of growth and operational
infrastructure, enabling value to be delivered early
©2013, Rio Tinto, All Rights Reserved
12
©2013, Rio Tinto, All Rights Reserved
4th September 2013
Day 1
Day 2
Day 3
Day 4
Pilbara rail operations
Extending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
2
Safety guidelines
Please observe the following rules during your visit:
• Follow the advice of your host; visitors are to be escorted at all times
• Wear safety glasses at all times while outside and hard hats when advised
• Wear seat belts when provided
• No smoking inside buildings or vehicles
• Jewellery not permitted to be worn on site
i.e. rings, earrings (except for studs)
• In an emergency, your host will lead
you to the nearest Muster Point
©2013, Rio Tinto, All Rights Reserved
3
Fully integrated operations
©2013, Rio Tinto, All Rights Reserved
Single owner, single user and proximity to
present and future resources and operations
4
• 39 Pooled fleet and 6 Robe Valley trains
operate on 1,500km of rail (42 and 6 by
end of October)
• 173 locomotives and 9,800 wagons in
fleet
• Rail is going through a period of
significant change and growth. This
includes:
− Introduction of new technology
− New systems and processes
− Structural changes
− New and expanded infrastructure
• Our progress has been positive, key
projects are on schedule and we are
operating at a lower cost base
• Traditionally rail has been the bottleneck
– this is soon to be rectified
©2013, Rio Tinto, All Rights Reserved
5
Significant rail expansions readily
enable 290Mt/a system performance
Q2 2013
Q3 2013
Q1 2014
Q4 2013
Q2 2014
CD5C
full rate
290Mt
Marandoo
Phase II
Hope Downs 4
First railings
42 consists in
service
Juna Downs upgrade
35
consists
in
service
42
Emu – Cape Lambert
Track Duplication
Emu upgrade
38
35
CD5C
first train
20th July
ECP fit out
SL11C first ore
©2013, Rio Tinto, All Rights Reserved
While working to deliver 290Mt/a capacity,
we never take our focus off productivity …
Pooled Fleet Payload
Railings
(LHS)
~27kt
Payload
(RHS)
1,900
1,800
1,700
1,600
1,500
236
235
234
116
Tonnes
per-car
(RHS)
115
114
113
233
112
232
231
230
27.2
27.0
26.8
26.6
26.4
26.2
26.0
25.8
25.6
25.4
Consist length (LHS)
111
110
kt per consist
2,000
Tonnes per-car
2,100
Consist length
(no. of cars)
No. of trains per quarter
Tonnes
6
• Car dumper improvement projects
underway to standardise the way we
work and replicate success has
yielded improvements of in excess
2 Mt/a
• Q1’13 delivered a new record (~27kt)
in train payload, driven by both
consist length and tonnes-per-car
performance
• Electronic controlled pneumatic
brakes fitted to rail fleet is expected
to show improved braking
performance and train cycle times –
the overall benefit is expected to be
2.8Mtpa
©2013, Rio Tinto, All Rights Reserved
7
… and sustainable cost improvement
Rail has made significant reductions in
cost position through the following
focus areas:
• Fuel efficiency initiatives ~$2m YTD
• Contractor savings ~$3.5m YTD
including: negotiated savings;
escalation containment; headcount
reductions; and replacement of
contractors with in-house resources
Ambitious Fuel Efficiency Programme is
reaping results:
More than 15 Initiatives including:
• Off-lining locos
• Auto engine stop start policy
• Loco engine parameter changes
• Driver assist and electronic controlled
pneumatic braking
Railways 2013 Litres of diesel used to rail
1000t of Iron ore
2.70
• Employee and associated cost
savings – including: structural
changes; accommodation and flight
cost reductions
2.50
2.30
2.10
1.90
1.70
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
L / KTonne.Km
2012 Average
©2013, Rio Tinto, All Rights Reserved
8
Capturing further system benefits
through AutoHaul™
• Invested US$518 million as part of Mine
of the Future™
• World’s first fully autonomous, longdistance, heavy-haul rail system when it
becomes fully operational in Q2 2015.
• The first phase is on track to commence
operation between Rosella and the coast
in July 2014
Key benefits
• Improved productivity, efficiency and
safety outcomes through greater flexibility
in scheduling and removal of driver
changeover times
Rio Tinto iron ore train, Pilbara operations
• Reduced training and accommodation
requirements
©2013, Rio Tinto, All Rights Reserved
9
Continued testing of the Rail of the Future
• Without conventional expansion of
track and rolling stock assets, are we
capable of:
− Achieving 1,500,000 safe and
efficient tonnes railed every day
This involves:
Rail of the Future ore cars
• Idea generation (first phase
completed in 2012)
• Undertaking conceptual and order of
magnitude level study of the ideas
Fuel cars
©2013, Rio Tinto, All Rights Reserved
10
Extending our competitive advantages
• Single owner, single user rail network and proximity to
present and future resources and operations
• Many hundreds of productivity and cost improvement
opportunities across 1,600km of rail operations and
related infrastructure
• Seamless integration of growth and operational
infrastructure, enabling value to be delivered early
©2013, Rio Tinto, All Rights Reserved
1
Cautionary statement
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”) and consisting of the slides for a
presentation concerning Rio Tinto. By reviewing/attending this presentation you agree to be bound by the following conditions.
Forward-looking statements
This presentation includes forward-looking statements. All statements other than statements of historical facts included in this
presentation, including, without limitation, those regarding Rio Tinto’s financial position, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to Rio Tinto’s products, production forecasts
and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry
results, to be materially different from any future results, performance or achievements expressed or implied by such forwardlooking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tinto’s present and future business strategies
and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto’s actual
results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels
of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably,
the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and
economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as
changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed
with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking
statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this presentation.
Nothing in this presentation should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will
necessarily match or exceed its historical published earnings per share.
©2013, Rio Tinto, All Rights Reserved
5th September 2013
Day 1
Day 2
Operations Centre
Extending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
Kellie Parker – General manager – Operations Centre
Day 3
Day 4
Safety while visiting the Operations Centre
3
• Two levels of alarm
− Beep Beep – prepare to evacuate
− Whoop Whoop – follow your guide to
muster point
• In the event of an emergency, please stay
with your host and follow their instructions
• The control room is an operating site, with
people listening to radios and
concentrating on safety critical tasks. We
ask that visitors keep noise levels to a
minimum if entering the control room and
turn off all mobile phones
• Photography is not permitted
The muster point for all OC personnel i.e.
control room and office block is located at
the rear of the external power storage shed,
South East.
©2013, Rio Tinto, All Rights Reserved
Seamless integrated operations –
bringing it all together
4
©2013, Rio Tinto, All Rights Reserved
System wide, real time information allows clear
visibility of capabilities, issues and rapid responses
5
• Nerve centre of Pilbara operations
• Operational improvements evident through
increased production efficiencies and
records
• Will continue to unlock value across our
network by remaining responsive to supply
and responsible about costs
• Building a trusting progressive cultural
change through engagement and sharing of
best practices, backed by accurate
performance data
• Phase II of our Operations Centre will unlock
further value across our network through
− Standardisation of interface processes
with sites and across the supply chain
− Improve the sophistication of real time
data with advances in technology
Control room, Operations Centre
©2013, Rio Tinto, All Rights Reserved
Full end to end visibility means that the entire
network is optimised
PPt
Helicopter view of the
Pilbara Supply Chain
allows agile response
to continually maximise
system throughput
EII
6
CLB
CLA
Recent Car Dumper cycle time improvements has the potential
to release additional capacity in the order of ~2 Mt per annum
~14 minutes (median) cycle time
improvements at Parker Point car
dumpers from Q2’12 to Q2’13.
~6 minutes (median) cycle time
improvement Clearing Train at CD1C;
~4 minutes improvement Place Train
time at CD2C
Mesa A
Coordinated planning between Operations Centre
and operational teams help to deliver fast recovery
to mitigate losses during weather events and
unplanned breakdowns
Mesa J
Coordinated effort to reduce
cycle times at train loadouts.
Capacity released on the order
of ~1 Mt per annum to the
System
Nammuldi
Brockman 2
Brockman 4
Tom Price
Marandoo
Yandicoogina
Hope Downs
Overall train loading time
improved by ~15 minutes
(median) from Q2’12 to Q2’13
Paraburdoo
West Angelas
*Capacity gain is based on simulation results in the 290 Mtpa world
©2013, Rio Tinto, All Rights Reserved
Close proximity of teams allows rapid response
to system issues
Unplanned wharf
belt replacement at
Cape Lambert and
wet weather
7
Cape Lambert
• No railed tonnes were lost
during the unplanned wharf
belt replacement at Cape
Lambert and wet weather
affecting the coastal region
during June
• Port stocks were built up
by 2Mt
• Maintenance shuts realigned
Rail closure due to
severe Q1 weather
Rail
• Significant rain fall in Q1
• Impacted various sections of
the rail network
• System view meant we are
able to slow some parts of
production value chain and
allow others to continue
©2013, Rio Tinto, All Rights Reserved
It provides insight into system bottlenecks and
where to focus improvement efforts …
Controller productivity report examples
8
• Increased mine production
through standardising and
improving truck park up
across mines
• Improved plant production
through using central control
to transfer learnings and
improvements across plants
• ~2 Mt/a improvement
sustainably delivered
through shut alignment,
standardisation,
debottlenecking and
production systems
alignment at no capital cost
©2013, Rio Tinto, All Rights Reserved
9
…and assists in reducing and avoiding costs
Real time condition data sent
to the Operations Centre
• Improving the condition and
life of our asset components
• Analyse real time equipment
data to highlight potential
issues before they escalate
to failures
• Manage such issues as part
of scheduled maintenance
rather than unplanned
breakdowns
• HME maintenance costs of
~$8M YTD have been
avoided
On board systems on
the haul truck monitor
asset condition and
alarms if an abnormal
condition is detected
The Asset Health Evaluator at the Operations
Centre reviews alarms and on-line data and
determines appropriate action including
stopping the truck and reducing the severity
or potential of a failure
• Understanding the true
condition of assets has
allowed further cost
avoidance by challenging
planned maintenance and
change outs
©2013, Rio Tinto, All Rights Reserved
With growth, the Operations Centre allows
continued focus on system optimisation
10
290Mt/a
Operations Centre supports an integrated mining operation
• Protect value chain from downside whilst enabling upside opportunities during
commissioning and future operations
• Early involvement in projects, including active involvement in commissioning teams
ensures a smooth transition into operation
• Incorporate operational improvements, lessons learnt and opportunities for
standardisation into new operations
• Lead an integrated approach to ensuring we are ready to run our expanded supply chain
©2013, Rio Tinto, All Rights Reserved
11
Extending our competitive advantages
• The nerve centre of the Pilbara integrated
network, seamlessly bringing it all together
• Full end to end visibility means the entire system
is optimised
• Comprehensive insight into system bottlenecks,
improvement efforts and reduction and avoidance
of costs
©2013, Rio Tinto, All Rights Reserved
12
©2013, Rio Tinto, All Rights Reserved
5th September
Day 1
Day 2
Day 3
Day 4
Sales & Marketing
Extending our competitive advantages
Warwick Smith - Managing director, Sales & Marketing
2
The ability to continuously maximise value
Industry knowledge
• A deep understanding of markets and the steel
industry
Product alignment
• Aligning our resource base with customer needs
over the long term to maximise product value
Strategic agility
Supply chain
optimisation
• Continuous development of marketing strategy,
competencies, and excellence in tactical execution
• Maximising supply chain capacity utilisation and
value
©2013, Rio Tinto, All Rights Reserved
3
Recent developments in iron ore
and steel prices
Iron Ore Spot prices
China steel prices and forwards
$/dmt, CFR China
RMB/t
4400
160
4200
150
4000
140
3800
130
3600
120
3400
110
3200
100
Dec-12
Mar-13
Jun-13
Sep-13
3000
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Rebar spot prices (Shanghai)
Rebar forwards
HRC spot prices
Platts 62%
Source: Platts
Source: Mysteel, Shanghai Futures exchange, Bloomberg
©2013, Rio Tinto, All Rights Reserved
4
Very strong growth in demand so far in 2013
• Strong growth in steel demand so far in 2013 driven by real estate, infrastructure and auto production
• Steel stocks have seen continued draw-down, with trader stocks declining ~9% over the month of July
• Improved steel prices in China has given support to mill margins and iron ore prices
Chinese Crude Steel Production
Chinese Mill and Trader Steel Stocks
(Mt Annualised)
(Days of consumption)
Mt
Days
18
900
800
16
700
600
14
500
400
12
300
200
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2008
2009
2010
2011
Source: China NBS, RTIO Industry Analysis
2012
2013
W1
W11
W21
2010
2011
W31
W41
2012
W51
2013
Source: Mysteel, CISA, RTIO Industry Analysis
©2013, Rio Tinto, All Rights Reserved
5
While iron ore stock levels are lower YoY
• Iron ore ports stocks remain well below this time last year
• Iron ore stock levels at mills are also at low levels compared to consumption requirements
Chinese iron ore stockpiles at port
Chinese mill iron ore stocks (Mt) and share
of total requirements
(Mt)
120
100%
50
90%
100
80%
40
70%
80
60%
30
60
50%
40%
20
40
30%
20%
10
20
10%
0
Aug/12
Oct/12
Dec/12
Australia
Feb/13
Brazil
Apr/13
India
Jun/13
Aug/13
0
Jan-12
0%
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Domestic ore average inventory
Import ore average inventory
Ore stocks as a percentage of requirements
Others
Source: Mysteel, RTIO Industry Analysis
Source: CISA, Mysteel, RTIO Industry Analysis
©2013, Rio Tinto, All Rights Reserved
6
While China will remain key, it does not
make up the entire short term growth story
Japan
• A weakened currency has lifted exports and
invigorated some sectors – orders for machinery
and ships have strengthened providing support to
the economy and steel industry
Contestable iron ore demand
(Mt)
2,000
1,800
South Korea
• Capacity expansions are expected to add over
11Mtpa of steel capacity by 2018
1,600
1,400
Rest of Asia (including India)
• Current ASEAN steel expansion plans are for a
significant increase in steelmaking capacity out to
2018. This could translate to up to 30Mt of
additional steel production from 2012 levels
1,200
1,000
800
600
Europe
• While not returning to pre-GFC highs, a recovering
Europe should see annual steel production
increase ~25Mt by 2018
400
200
0
2012
2013
China
2014
JKT
2015
2016
Europe
2017
2018
RoW
Source: RTIO Industry Analysis
NOTE: Rest of World includes:EU27, CIS, North & South America,
ASEAN and Other Asia, Middle East and Africa
South America
• Continued economic development and expansion
of the steel industry should add ~25Mt of steel
production by 2018
©2013, Rio Tinto, All Rights Reserved
7
Long-term fundamentals for Chinese
iron ore demand remain strong
Chinese steel production and iron ore
requirements
Machinery and transportation increases as
proportion of Chinese steel demand
Million tonnes
%
1200
90%
1200
800
1000
600
800
600
400
400
200
Iron ore requirement (Mt)
1400
1000
Steel and Scrap (Mt)
100%
1600
200
0
2010
2020
2030
70%
60%
50%
40%
30%
20%
10%
0%
0
2000
80%
2012
2040
Crude Steel Production
Scrap Generation
Iron Ore Requirement (RHS)
Property
White goods
Source: Rio Tinto
2030
Infrastructure
Transportation
Machinery
Others
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
8
Chinese domestic iron ore production
is highly price sensitive
Chinese domestic private cost curve – 2012
$/dmt CFR
260
• The steepness of the iron ore cost
curve above $100/t means that small
changes in supply and demand can
have major impacts on prices
240
• Private Chinese iron ore miners have
in the past acted rationally and
quickly to a changing price
environment
220
200
180
H1
2012
160
140
• Chinese domestic iron ore
production costs will continue to
increase strongly, driven by an
appreciating currency, a move to
underground mines, rising power,
wage, and other input costs
Aug-Sept
2012
120
100
80
60
40
20
0
0
50
100
150
200
Cumula
250
300
350
Mtpa
• ~70% of Chinese domestic mine
production was privately owned
Source: Platts, CU Steel, China National Bureau of Statistics,
Rio Tinto analysis
©2013, Rio Tinto, All Rights Reserved
9
Aligning our resource offering
and our customer base
July 2012 – June 2013
July 2012 – June 2013
actual shipments by market (Pilbara and IOC)
percentage of products by market (Pilbara and IOC)
100%
Japan
22%
90%
80%
70%
60%
50%
Korea,
Taiwan
12%
China
62%
40%
30%
20%
Atlantic
4%
10%
0%
China
PBF
Source: Rio Tinto
Japan
PBL
RRF
RRL
Korea, Taiwan
HIY
Conc.
Atlantic
Pellets
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
10
Linking product placement and
commercial marketing objectives
July 2012 – June 2013
Estimated 2014
actual shipments by pricing mechanism (Pilbara)
shipments by pricing mechanism (Pilbara)
Spot
12%
Spot
17%
Q Actual
12%
Monthly
45%
Q Lagged
31%
Source: Rio Tinto
Q Actual
8%
Monthly
49%
Q Lagged
26%
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
11
RTIO’s electronic tender spot sales
channel – scalable and secure
• Simultaneously invites more than 90 pre-qualified buyers to bid on a spot shipment
• Seamlessly contracts with highest bidder
• “Sealed” bids and defined processes ensures impartiality
E-tender smart phone app
E-tender internet “gateway”
©2013, Rio Tinto, All Rights Reserved
12
RTIO maintains sector leading performance
and is able to respond to changes quickly
Platts IODEX Iron ore fines 62% Fe
RTIO PBF spot sales (relative to Platts 62% Fe)
($/dmt CFR)
(c/dmtu)
170
30
160
25
150
20
140
15
130
10
120
5
110
(5)
100
Jun-13
May-13
Apr-13
Mar-13
Jan-13
Feb-13
Dec-12
Nov-12
Oct-12
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Sep-12
Jul-12
Source: Platts, Rio Tinto
Nov-12
Oct-12
Sep-12
Jul-12
Aug-12
80
Aug-12
(10)
90
Source: Platts, BCI, Rio Tinto
©2013, Rio Tinto, All Rights Reserved
13
The capabilities required to maximise
revenue continue to evolve
• In 2007 we established Rio Tinto Iron Ore Asia in Singapore as the operational headquarters for
sales and marketing in the Asia pacific region
• Since 2007 the iron ore industry presence in Singapore has grown and Singapore is rapidly
becoming the global iron ore trading hub
• Iron Ore Asia is co-located with Rio Tinto Marine which leads to more efficient scheduling processes
and integrated freight procurement, a key enabler for mine to customer supply chain optimisation
• The relative contribution to overall profitability of product price adjustments and management of the
port to customer supply chain, will increase as iron ore prices decline.
©2013, Rio Tinto, All Rights Reserved
14
Extending our competitive advantages
• Long-term fundamentals of global steel demand
remain strong, particularly China
• Continued alignment between our resource offering
and our customer base, delivering mutual value
• Supporting the development of independent index
pricing and price risk management services, with an
intention to sell more via spot transactions
©2013, Rio Tinto, All Rights Reserved
Rio Tinto plc
2 Eastbourne Terrace
London W2 6LG
United Kingdom
Rio Tinto Limited
120 Collins Street
Melbourne, Victoria 3000
Australia
T +44 (0)20 7781 2000
T +61 (0)3 9283 3333
riotinto.com