site visit to iron ore operations in western australia
TRANSCRIPT
Site visit to iron ore operations in Western Australia
2–5 September 2013
©2013, Rio Tinto, All Rights Reserved
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 statementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in thispresentation, 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 industryresults, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking 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.
1
Extending our competitive advantagesAndrew Harding - Chief executive officer – Iron Ore, China, Japan, Korea
2nd September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
• 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
3
Proven sector leadership
©2013, Rio Tinto, All Rights Reserved
4
Strategy pillars to build on industry leading performance and deliver best return to shareholders
Our VisionTo remain the best iron ore
producer in the world
2. Value-Driven Growth
Disciplined phasing and low cost growth options
1. Productionat the Right Cost
Lowest cost production through unrivalled technology and high performing teams
3. Maximising Portfolio Value
Leveraging our portfolio of growth options, product strategy andsales and supply chaincapabilities
Examples• Product Value In Use
• Infrastructure synergies• Development options
Examples• Product strategy
• Supply chain synergies• Development sequence
Examples• System capacity
creep• Operating andcapital efficiency
©2013, Rio Tinto, All Rights Reserved
Iron Ore all injury frequency rates2003 – 1H 2013Per 200,000 hours worked
Source: Rio Tinto
5
Safety performance
0.00.20.40.60.81.01.21.41.61.82.02.22.4
03 04 05 06 07 08 09 10 11 12 1H'13
All injury frequency rate
Lost time injury frequency rate
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto Source: Rio Tinto
6
Long-term fundamentals for Chineseiron ore demand remain strong
Chinese steel production and iron ore requirementsMillion tonnes
Machinery and transportation increase as proportion of Chinese steel demand%
0
200
400
600
800
1000
1200
1400
1600
0
200
400
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1000
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2000 2010 2020 2030 2040
Iron
ore
req
uire
men
t (M
t)
Ste
el a
nd S
crap
(M
t)
Crude Steel ProductionScrap GenerationIron Ore Requirement (RHS)
0%
10%
20%
30%
40%
50%
60%
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90%
100%
2012 2030
Property Infrastructure MachineryWhite goods Transportation Others
©2013, Rio Tinto, All Rights Reserved
• 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
Announced and completed iron ore production capacity (global)Million tonnes
Source: UNCTAD, Rio Tinto analysis
7
On-going constraint to the developmentof new iron ore supply
0
200
400
600
800
1000
Announced for 2012-14 Completed by Q2 2013
0
200
400
600
800
1000
Announced for 2008-10 Completed by Q4 2010
Certain Probable Possible Rio Tinto additional capacity
Others completed
©2013, Rio Tinto, All Rights Reserved
• 2012 low capital expenditure debottlenecking led to 7mt/a capacity re- rate to 237 Mt/a
• 2012 full year record Pilbara mine production of 239 Mt
• Record Q1 & Q2’13 Pilbara mine production of 57.8 Mt & 62.0 Mt respectively, despite cyclones and unseasonal weather
• Low spend, high return productivity initiatives are ‘business as usual’ across the fully integrated mine, rail and port system
Pilbara mine productionMillion tonnes/Quarter
Source: Rio Tinto
8
Performance records continue forour Pilbara iron ore operations
0
10
20
30
40
50
60
70
Q1 Q2 Q3 Q4
2010 2011 2012 2013 237mtpa
©2013, Rio Tinto, All Rights Reserved
9
Strong focus on cash costs managementdelivers results, with more expected
• Continued focus on controlling cash operating unit costs
• Inflationary pressures persist but have eased
• 2012 cash cost: US$23.5/t
• 2013 H1 cash cost: US$23.1/t
− Lower than 2012 H1 levels due to reduced spend on contractors and consultants
− Lower spend partially offset by weather
Pilbara cash operating unit cost*(2006 = 100)
*Unit cost shown on the graph is Rio Tinto share of Hamersley Iron and Robe River calculated from cash costs for Hamersley Iron and Robe River. Excludes royalties, shipping costs, and in 2006 real terms
0
20
40
60
80
100
120
140
160
180
200
FY2006
1H2007
2H2007
1H2008
2H2008
1H2009
2H2009
1H2010
2H2010
1H2011
2H2011
1H2012
2H2012
1H2013
AUD cost USD cost
©2013, Rio Tinto, All Rights Reserved
• Lowest cost producer in the Pilbara
• Consistently achieving a premium relative to Platts 62% Fe for spot sales
• Integrated marketing and operations has led to significant value delivery, for example in scheduling
• Expect Pilbara cash operating cost position to improve going forward
WA IO – EBITDA per tonneUS$/t and % Margin
Source: Rio Tinto ; BHPB; and FMG lodged financial statementsNote: 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
10
Leading EBITDA performance in theWestern Australian iron ore industry
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20
40
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80
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120
140
H209 H110 H210 H111 H211 H112 H212 H113
EB
ITD
A %
US
$/t
RTIO ($US/t) BHP ($US/t) FMG ($US/t)
RTIO % BHP % FMG %
©2013, Rio Tinto, All Rights Reserved
• 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$140/t (100%)
• Infrastructure expansion to 360Mt/a fully approved and underway
• Multiple options for mine capacity expansions are being evaluated
− Low cost productivity opportunities
− Expansion of existing mines
− New mine development
Emu Siding upgrade complete
11
290Mt/a infrastructure complete and360Mt/a infrastructure progressing well
290Mt/a wharf complete, 360Mt/a in progress
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto, Wood MackenzieNote: Includes shipping and sustaining capital expenditure and is adjusted for inflation and FX
12
Our assets will remain well-positionedon the contestable market cost curve
2013 Industry cost curve(US$/wmt CFR)
2020 Industry cost curve(US$/wmt CFR)
0
50
100
150
200
0 500 1000 1500 2000
Vale
BHP Pilbara
RTIO Pilbara
FMG Pilbara
Mtpa
0
50
100
150
200
0 500 1000 1500 2000
Vale
BHP Pilbara
RTIO Pilbara
FMG Pilbara
Mtpa
©2013, Rio Tinto, All Rights Reserved
• 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
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Full engagement with our community stakeholders
©2013, Rio Tinto, All Rights Reserved
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 deliveredon 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
14
2nd September 2013 Day 1 Day 2 Day 3 Day 4
Projects & DevelopmentExtending our competitive advantages
David Joyce - Managing director, Projects & Development
©2013, Rio Tinto, All Rights Reserved
Superior project delivery:
• Experienced and well-established team comprised of owners, operations and EPCM
• Full understanding of the procurement and construction programme
• Intense focus on capital intensity delivering significant value
Source: Rio Tinto, Pit Crew Management Consulting
2
We have demonstrated superior performance in delivering projects
Western Australian construction projects performanceCost (% of budget)
RTIO projects Non RTIOprojects
Over budgetbehind schedule
Under budgetahead ofschedule
Mo
nth
s o
ver
bu
dg
et
-30
-20
-10
0
10
20
30
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
Budget Additional Months
©2013, Rio Tinto, All Rights Reserved
Added capacity
Project description
Date of first ore
220Mt/ato 225Mt/a
Dampier port debottlenecking
Q1 2011
225Mt/ato 230Mt/a
Dampier port incremental
Q1 2012
230Mt/ato 290Mt/a
Programme expansion andre-rating of port, rail, mines and infrastructure
Q3 2013
Cape Lambert
3
Completed 220 to 290Mt/a pathway at a capital intensity <$140/t (100%) or $115/t (Rio Share)
©2013, Rio Tinto, All Rights Reserved
Project StatusApproved amount
US$BLeft to commit
US$B
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
Total $9.8bn $1.8bn
Expansion to 290Mt/a fully approved,ahead of schedule and under budget
4
Figures as at end July 2013
©2013, Rio Tinto, All Rights Reserved
• All infrastructure in place-port, rail, power and water
• Accelerated infrastructure schedule enabled first ore on-ship 24th August
• Ramp up to 290Mt/a capacity commences 4 months ahead of original schedule
• Close co-operation between implementation and operations teams
290Mt/a port capacity ramp up profile Million tonnes
5
Early completion and ramp up to 290Mt/a adds considerable value
220
230
240
250
260
270
280
290
300
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Accelerated ramp-up Originally announced plan
First ore on ship
Source: Rio Tinto
©2013, Rio Tinto, All Rights Reserved
6
Getting the 290 Mt/a expansion right: Port
First train First ship
Car dumper Reclaimer
©2013, Rio Tinto, All Rights Reserved
Cape Lambert Yard – auto wash facilityEmu Siding upgrade
7
Getting the 290 Mt/a expansion right: Rail
Electronically Controlled Pneumatic (ECP) ore car Cape Lambert Yard – trip service facility
©2013, Rio Tinto, All Rights Reserved
8
Getting the 290 Mt/a expansion right: Mines
WTS1 – Conveyor 2 and CrusherBrockman 4
Nammuldi – early works WTS1 – Conveyor 2
©2013, Rio Tinto, All Rights Reserved
• All dredging and wharf piling completed
• The first of the topside modules have been installed with the balance due by November
• Stockyard civil work ready to receive balanced machines in September
• Both car dumpers civil structure nearing completion
• Rail formation at Cape Lambert and 50% of rail duplication earthworks complete
9
360Mt/a infrastructure progressing well
Project Status
Amountapproved
US$B
Left to CommitUS$B
Port Approved 3.9 1.5
Rail Approved 0.9 0.2
Power Approved 0.6 0.1
AutoHaul™ Approved 0.5 0.1
Total $5.9bn $1.9bn
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
• Expanded port capacity from 340 to 360Mt/a
Challenge thescope
• Replace Brockman 4 Phase 3 with alternate brownfield expansions
• 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 implementationstrategies
• 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
0
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16000
18000
20000
Probable (RHS)Proven (RHS)
Production
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300
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
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18,000
20,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
• Drilling effort is staying ahead of production increases
• The drilling focus is on near-mine opportunities to maximise use of existing infrastructure
• 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
Pilbara resources, reserves and production1
Million tonnes
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
11
Increased ore body knowledge supports the full range of Pilbara growth pathways
Resource: Reserves:
Inferred
Indicated
Measured
©2013, Rio Tinto, All Rights Reserved
Mine capacity range shows indicative options dependent on productivity gains achieved and phasing of growth mine development
Mine capacity optionsAverage annualised (Mt/a)
12
Multiple options for mine capacity growth exist
200
225
250
275
300
325
350
375
400
2012 2013 2014 2015 2016 2017 2018
Indicative mine capacity
Greenfield options (examples only)
Silvergrass ~21 Mt/a
Koodaideri ~36 Mt/a
Brownfield expansion options (examples only)
Yandicoogina ~7 Mt/a
West Angelas ~6 Mt/a
Brockman 4 ~2 Mt/a
Indicative Operational Improvement
System stretch ~10 Mt/a
©2013, Rio Tinto, All Rights Reserved
• 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
13
Extending our competitive advantages
©2013, Rio Tinto, All Rights Reserved
14
Technical MarketingExtending our competitive advantages
Warwick Smith - Managing director – Sales & Marketing
Darren Matthews – General manager – Technical Marketing
2nd September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
2
The ability to continuously maximise value
• A deep understanding of markets and the steel industryIndustry knowledge
• Aligning our resource base with customer needs over the long term to maximise product valueProduct alignment
• Continuous development of marketing strategy, competencies, and excellence in tactical execution
Strategic agility
• Maximising supply chain capacity utilisation and value
Supply chainoptimisation
©2013, Rio Tinto, All Rights Reserved
Iron ores are differentiated by quality and cost to customer
• 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
3
Quality Logistics
Physical Properties
Chemical Properties
Metallurgical Properties
Product Variability
Freight Rates
Market
Ship Size
Mill Location and Inbound Logistics
©2013, Rio Tinto, All Rights Reserved
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
4
Europe
South America
CanadaChina
India Australia
Sinter
©2013, Rio Tinto, All Rights Reserved
Iron ores are differentiated byquality 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
5
Sintering Ores: 56-66% Fe Direct ChargeLump: 57-65% FePellets: 62-68%FeSinter: 55-58% Fe
Concentrates:62-66% Fe
©2013, Rio Tinto, All Rights Reserved
Technical
Geographical
Commercial
Geopolitical
Customers value iron ores differently after considering the following factors
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
6
Sinter Plant
Blast Furnace
Steelmaking CastingAgglomeration Iron-making
Basic OxygenFurnaceCoke Plant
Steelproducts
©2013, Rio Tinto, All Rights Reserved
Technical
Geographical
Commercial
Geopolitical
7
Customers value iron ores differently after considering the following factors
• 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 planningto customer needs
Integrated analysis ensures
that resource value is
maximised
2. Production System
Extraction, processing, and blending of mined products are key aspects of product offering
1. Resource Planning
The attributes of our product offerings are determined by the mineral building blocks of our resources
3. Customer and Industry Analysis
Customers purchase ironores by evaluating product characteristics and priceagainst steel productioncost
• Marketsegmentation
• Resource optimisation • Customer
Feedback
• Product valueassessment• Scheduleoptimisation
• Mining sequence• Ore Processing • Cut-off grades
• Blending
©2013, Rio Tinto, All Rights Reserved
9
Our Pilbara products are aligned toour resource base and customer needs
Product Strengths
Pilbara BlendFines
• The most traded iron ore product globally• Base load sinter blend in Asian markets
Pilbara BlendLump
• Avoids the costs of sintering which will increase with increasing emissions legislation
HIY Fines • Ideal chemical composition for the Asiansinter blends, with low alumina and phosphorus
• Coarse sizing aids sinter granulation
Robe ValleyFines
• Coarse sizing aids sinter granulation• Low phosphorus
Robe Valley Lump • Low phosphorus
Pilbara Blend Fines61.5% Fe, 8.5% H2O
Pilbara Blend Lump62.5% Fe, 4% H2O
Robe Valley57.0% Fe, 7% H2O
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto Source: Rio Tinto
10
Aligning our resource offeringand our customer base
July 2012 – June 2013actual shipments by market (Pilbara and IOC)
July 2012 – June 2013percentage of products by market (Pilbara and IOC)
China62%
Atlantic4%
Korea, Taiwan12%
Japan22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Japan Korea, Taiwan Atlantic
PBF PBL RRF RRL HIY Conc. Pellets
©2013, Rio Tinto, All Rights Reserved
• 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
11
We continually work with our customers, research providers and universities to optimise our product offering
©2013, Rio Tinto, All Rights Reserved
• 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
12
Extending our competitive advantages
©2013, Rio Tinto, All Rights Reserved
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 statementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in thispresentation, 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 industryresults, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking 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.
1
Pilbara mine operationsExtending our competitive advantages
Michael Gollschewski - Managing director, Pilbara Mines
3rd September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
3
Pilbara mine network
©2013, Rio Tinto, All Rights Reserved
4
Fully integrated operations
©2013, Rio Tinto, All Rights Reserved
5
Mine schematic - Multiple improvement options
©2013, Rio Tinto, All Rights Reserved
Pilbara iron ore: mines, ports and typical quality of product
6
Cape Lambert A
Pilbara Blend (PB)
L & F
Mines
Ore-types
Ore group
Products
L & F
Ports
Ore-types B = Brockman Iron Formation MM = Marra Mamba Iron Formation PIS = Yandicoogina pisolite PIS = Robe Valley pisolite
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%
Dampier Cape Lambert B
HIY
F
RVL & F
Yandicoogina
PIS
Mesa MesaA JPIS
Channel Iron DepositsBanded Iron Formation derived Iron Deposits
Brockman 2
B
Paraburdoo (inc. Channar
EasternRange)
B
Brockman 4
B
Nammuldi
MM
WestAngelas
MM
HopeDowns 1
MM
Marandoo
MM
Mt TomPrice / WTS
B & MM
Hope Downs 4
B
©2013, Rio Tinto, All Rights Reserved
• Consistent record performances
• Material moved in Q2 increased as a result of higher production and pre-stripping 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
Total Material Moved and Saleable Ore Production (Mt)
7
Mine portfolio consistently performingabove design
-
10
20
30
40
50
60
70
-
50
100
150
200
250
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
TMM (LHS) SOP (RHS)
©2013, Rio Tinto, All Rights Reserved
• 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 ontyres and fuel
• Reduced capital expenditure on machines and infrastructure
“Smart” explosives truck
8
Mine of the Future™ programme continuesas a key value generator…
Autonomous trucks
Autonomous drilling
©2013, Rio Tinto, All Rights Reserved
• 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
9
…. and costs continue to be robustly managed
©2013, Rio Tinto, All Rights Reserved
• Proven ability to ramp up and integrate new expansion tonnes
− HD4 applied best practice developments
− Brockman 4 already at close to design run rate (40 Mt/a)
− Western Turner Syncline operational using trucking operation with conveyor scheduled for completion end of 2013
− Nammuldi schedule for first ore in Q3, 2014
• Available mine stocks and productivity improvements will be used to fill any short term spare infrastructure capacity
Pilbara Iron quarterly mine production forecast Annualised
1. Production forecasted to be impacted by weather
10
Mine production is on track to deliver 290Mt/a
0
50
100
150
200
250
300
350
13Q1 13Q2 13Q3 13Q4 14Q1¹ 14Q2¹ 14Q3 14Q4
Actuals Forward Looking Ramp Up to 290
290Mt/a
©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
• 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
12
Extending our competitive advantages
Hope Downs 4Extending our competitive advantages
John Dumbill - General manager, Greater Hope Downs
3rd September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
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 sitei.e. rings, earrings (except for studs)
• In an emergency, your host will leadyou to the nearest Muster Point
2
©2013, Rio Tinto, All Rights Reserved
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
3
Greater Hope Downs development stages
Mine site, HD4
©2013, Rio Tinto, All Rights Reserved
Processing high grade, high phosphorus Brockman (HPB) ore to produce lump and fines products
Target material:2013 – TMM 42.1 Mt SOP 6.0 Mt2014 – 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
4
Hope Downs 4 – the newest mine operation
©2013, Rio Tinto, All Rights Reserved
• 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
5
Deployment of the autonomous truck fleet
Autonomous trucks
©2013, Rio Tinto, All Rights Reserved
Standardised design
• Front end primary sizers are replicas of Yandicoogina
• Train load out design based on Hope Downs 1
• 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
6
Key learnings and application
Train load out, HD4
©2013, Rio Tinto, All Rights Reserved
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 andcentralised 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
7
Sustainable cost reductions
*Expected savings for 2013
©2013, Rio Tinto, All Rights Reserved
• Leveraging key learnings from past builds with standardised design and operational readiness
• Optimising key productivity platforms with wet screening and autonomous trucks
8
Extending our competitive advantages
Yandicoogina regionExtending our competitive advantages
Alex Bates - General manager, Yandicoogina region
3rd September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
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 sitei.e. rings, earrings (except for studs)
• In an emergency, your host will leadyou to the nearest Muster Point
2
©2013, Rio Tinto, All Rights Reserved
Junction Central Dry Plant – 24 Mt/a• Primary Jaw Crusher• Scalping screens• Secondary cone crusher• Tertiary cone crushers• Product screening• Overland conveyor
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)
3
Yandicoogina – Overview
Junction South EastDry 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
Mine overview, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
4
Low capital intensity development expansion
2000 2004 2005 2007
Initial development; 15 Mt/a• ‘Dry plant’• Stockyard (66 Kt live
capacity)• Capex US$360M
Expansion; 15 Mt/a to 20 Mt/a• Modified crushing &
screening circuit• Capex US$77M
Expansion; 20 Mt/ato 24 Mt/a• Modified crushing &
screening circuit • Capex US$75M
Expansion; 24 Mt/ato 36 Mt/a• New 12 Mt/a ‘wet plant’• 15 Mt/a low grade ore feed• Capex US$200M
Expansion; 36 Mt/ato 52 Mt/a• New 16 Mt/a capacity ‘dry
plant’• Additional rail loop and train
load out• Capex US$530M
1998
-
10.00
20.00
30.00
40.00
50.00
60.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Yandicoogina SOP
Mill
ion
tonn
es
©2013, Rio Tinto, All Rights Reserved
Dry plant increased tonnes:
• Identified in 2008, process control improvements and new equipment at a cost of approximately $150k
• Increased production from 3,450 to 3,750 tonnes per operating hour added additional capacity of 1.8Mt/a
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
5
Productivity improvements – Yandicoogina
YANDI Dry Plant(tonnes per operating hour/ saleable ore product)
20
21
22
23
24
25
26
3,2003,3003,4003,5003,6003,7003,8003,900
2009 2010 2011 2012
Mt/
a
TP
OH
TPOH SOP
YANDI Wet Plant(tonnes per operating hour)
1,800
1,900
2,000
2,100
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
TP
OH
©2013, Rio Tinto, All Rights Reserved
Train load out
• Two waves – 2008/09 followed by 2011/12
• 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
6
Productivity improvements – Yandicoogina
YANDI TLO(tonne per car)
100
105
110
115
120
125
Jan 08Jul 08Jan 09Jul 09Jan 10Jul 10Jan 11Jul 11Jan 12Jul 12Jan 13Jul 13
TP
C
Train load out, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
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
7
Operations, Yandicoogina
©2013, Rio Tinto, All Rights Reserved
• Continued high value, low capital intensity development options
• First mine with fully automated truck fleet showing notable improvements
8
Extending our competitive advantages
©2013, Rio Tinto, All Rights Reserved
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 statementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in thispresentation, 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 industryresults, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking 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.
1
Pilbara port operationsExtending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
4th September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
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 sitei.e. rings, earrings (except for studs)
• In an emergency, your host will leadyou to the nearest Muster Point
3
©2013, Rio Tinto, All Rights Reserved
4
Fully integrated operations
©2013, Rio Tinto, All Rights Reserved
5
Port schematic - Multiple improvement options
Source: Online Data Source: SAP, Offline Data Source: PDS
©2013, Rio Tinto, All Rights Reserved
Single owner, single user and each port readily expandable
Current port capacity is 237 Mt/a:• Parker Point: 102 Mt/a• East Intercourse Island: 50 Mt/a• Cape Lambert: 85 Mt/a
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
6
Parker Point
East Intercourse Island (EII)
Cape Lambert
290Mt/a Combined assets:• 6 car dumpers• 11 shipping berths• 6 ship loaders
©2013, Rio Tinto, All Rights Reserved
7
Product flow and logistics at the ports
Cape Lambert A
HIY
F
RVL & F
Yandicoogina
PIS
Mesa MesaA JPIS
Channel Iron DepositsBanded Iron Formation derived Iron Deposits
Pilbara Blend (PB)
L & F
Dampier
Mines
Ore-types
Ore group
Products
L & F
Ports
Brockman 2
B
Paraburdoo (inc. Channar
EasternRange)
B
Brockman 4
B
Nammuldi
MM
WestAngelas
MM
HopeDowns 1
MM
Marandoo
MM
Mt TomPrice / WTS
B & MM
Stockpiling and blending Pilbara Blend at Dampier and Cape Lambert B
Ore-types ; B = Brockman Iron Formation, MM = Marra Mamba Iron Formation, PIS = pisolite
Hope Downs 4
B
Cape Lambert B
©2013, Rio Tinto, All Rights Reserved
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
• Dumper capacity has increased as a result of improvement work and faster train turnaround times
Parker Pt Outload rates – SL3P(tonnes per operating hour)
8
Port capacity improvements and debottlenecking delivering record performance
7,500
7,700
7,900
8,100
8,300
8,500
8,700
8,900
9,100
9,300
9,500
Jul2012
Aug2012
Sep2012
Oct2012
Nov2012
Dec2012
Jan2013
Feb2013
Mar2013
Apr2013
May2013
Jun2013
Net
Rat
e (T
PO
H)
©2013, Rio Tinto, All Rights Reserved
• 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
9
Cost savings initiatives are ensuringincreased cash flow for the business
©2013, Rio Tinto, All Rights Reserved
We are well-prepared to commission and operate the expanded port assets
• 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
10
First 290Mt/a ore on ship, Cape Lambert B
©2013, Rio Tinto, All Rights Reserved
• 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
11
Extending our competitive advantages
©2013, Rio Tinto, All Rights Reserved
12
Pilbara rail operationsExtending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
4th September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
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 sitei.e. rings, earrings (except for studs)
• In an emergency, your host will leadyou to the nearest Muster Point
2
©2013, Rio Tinto, All Rights Reserved
3
Fully integrated operations
©2013, Rio Tinto, All Rights Reserved
• 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
4
Single owner, single user and proximity to present and future resources and operations
©2013, Rio Tinto, All Rights Reserved
5
Significant rail expansions readilyenable 290Mt/a system performance
CD5C first train 20th July
Q2 2013 Q3 2013 Q4 2013
290Mt
38
42
Emu upgrade
Hope Downs 4First railings
ECP fit out
35
SL11C first ore
CD5C full rate
Juna Downs upgrade
42 consists in service
35 consists
in service
MarandooPhase II
Q1 2014 Q2 2014
Emu – Cape Lambert Track Duplication
©2013, Rio Tinto, All Rights Reserved
• Car dumper improvement projects underway to standardise the way we work and replicate success has yielded improvements of in excess2 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
Pooled Fleet Payload Tonnes
6
While working to deliver 290Mt/a capacity,we never take our focus off productivity …
110
111
112
113
114
115
116
230
231
232
233
234
235
236
25.425.625.826.026.226.426.626.827.027.2
1,500
1,600
1,700
1,800
1,900
2,000
2,100 Railings (LHS) Payload
(RHS)
Tonnes per-car (RHS)
No
. of
trai
ns
per
qu
arte
rC
on
sist
len
gth
(n
o. o
f ca
rs)
To
nn
es p
er-c
arkt
per
co
nsi
st
~27kt
Consist length (LHS)
©2013, Rio Tinto, All Rights Reserved
… 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
• Employee and associated cost savings – including: structural changes; accommodation and flight cost reductions
7
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
1.70
1.90
2.10
2.30
2.50
2.70Jan-1
3
Fe
b-13
Mar-13
Apr-13
May-1
3
Jun-13
Jul-13
Aug-13
Sep-13
Oct-1
3
Nov-13
Dec-13
Railways 2013 Litres of diesel used to rail 1000t of Iron ore
L / KTonne.Km 2012 Average
©2013, Rio Tinto, All Rights Reserved
• Invested US$518 million as part of Mine of the Future™
• World’s first fully autonomous, long-distance, 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
• Reduced training and accommodation requirements
Rio Tinto iron ore train, Pilbara operations
8
Capturing further system benefitsthrough AutoHaul™
©2013, Rio Tinto, All Rights Reserved
• 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:
• Idea generation (first phase completed in 2012)
• Undertaking conceptual and order of magnitude level study of the ideas
Fuel cars
9
Continued testing of the Rail of the Future
Rail of the Future ore 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
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 statementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in thispresentation, 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 industryresults, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking 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.
1
Operations CentreExtending our competitive advantages
Clayton Walker - Managing director, Pilbara Supply Chain
Kellie Parker – General manager – Operations Centre
5th September 2013 Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
• 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
3
Safety while visiting the Operations Centre
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
4
Seamless integrated operations –bringing it all together
©2013, Rio Tinto, All Rights Reserved
• 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
5
System wide, real time information allows clear visibility of capabilities, issues and rapid responses
©2013, Rio Tinto, All Rights Reserved
6
Full end to end visibility means that the entire network is optimised
EII
PPt
Mesa J
Mesa A
NammuldiBrockman 2
Brockman 4
Tom Price
ParaburdooWest Angelas
Hope Downs
YandicooginaMarandoo
CLACLB
Recent Car Dumper cycle time improvements has the potential to release additional capacity in the order of ~2 Mt per annum
Coordinated effort to reduce cycle times at train loadouts. Capacity released on the order of ~1 Mt per annum to the System
~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
Overall train loading time improved by ~15 minutes (median) from Q2’12 to Q2’13
Coordinated planning between Operations Centre and operational teams help to deliver fast recovery to mitigate losses during weather events and unplanned breakdowns
Helicopter view of the Pilbara Supply Chain allows agile responseto continually maximise system throughput
*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
Cape Lambert
• No railed tonnes were lostduring the unplanned wharf belt replacement at Cape Lambert and wet weather affecting the coastal region during June
• Port stocks were built upby 2Mt
• Maintenance shuts realigned
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
7
Unplanned wharf belt replacement at Cape Lambert and
wet weather
Rail closure due to severe Q1 weather
©2013, Rio Tinto, All Rights Reserved
It provides insight into system bottlenecks and where to focus improvement efforts …
• 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
8
Controller productivity report examples
©2013, Rio Tinto, All Rights Reserved
…and assists in reducing and avoiding costs
• 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
• Understanding the true condition of assets has allowed further cost avoidance by challenging planned maintenance and change outs
9
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
Real time condition data sent to the Operations Centre
©2013, Rio Tinto, All Rights Reserved
With growth, the Operations Centre allows continued focus on system optimisation
• 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
10
290Mt/a
Operations Centre supports an integrated mining operation
©2013, Rio Tinto, All Rights Reserved
• 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
11
Extending our competitive advantages
©2013, Rio Tinto, All Rights Reserved
12
Sales & MarketingExtending our competitive advantages
Warwick Smith - Managing director, Sales & Marketing
5th September Day 1 Day 2 Day 3 Day 4
©2013, Rio Tinto, All Rights Reserved
2
The ability to continuously maximise value
• A deep understanding of markets and the steel industryIndustry knowledge
• Aligning our resource base with customer needs over the long term to maximise product valueProduct alignment
• Continuous development of marketing strategy, competencies, and excellence in tactical execution
Strategic agility
• Maximising supply chain capacity utilisation and value
Supply chainoptimisation
©2013, Rio Tinto, All Rights Reserved
Source: Platts Source: Mysteel, Shanghai Futures exchange, Bloomberg
3
Recent developments in iron oreand steel prices
Iron Ore Spot prices $/dmt, CFR China
China steel prices and forwards RMB/t
100
110
120
130
140
150
160
Dec-12 Mar-13 Jun-13 Sep-13
Platts 62%
3000
3200
3400
3600
3800
4000
4200
4400
Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
Rebar spot prices (Shanghai)Rebar forwardsHRC spot prices
©2013, Rio Tinto, All Rights Reserved
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
4
Chinese Crude Steel Production (Mt Annualised)
Chinese Mill and Trader Steel Stocks(Days of consumption)
200
300
400
500
600
700
800
900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2008 2009 2010 2011 2012 2013
Mt
Source: China NBS, RTIO Industry Analysis Source: Mysteel, CISA, RTIO Industry Analysis
10
12
14
16
18
W1 W11 W21 W31 W41 W51
Days
2010 2011 2012 2013
©2013, Rio Tinto, All Rights Reserved
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
5
Chinese iron ore stockpiles at port(Mt)
Chinese mill iron ore stocks (Mt) and share of total requirements
Source: Mysteel, RTIO Industry Analysis Source: CISA, Mysteel, RTIO Industry Analysis
0
20
40
60
80
100
120
Aug/12 Oct/12 Dec/12 Feb/13 Apr/13 Jun/13 Aug/13
Australia Brazil India Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10
20
30
40
50
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13
Domestic ore average inventoryImport ore average inventoryOre stocks as a percentage of requirements
©2013, Rio Tinto, All Rights Reserved
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
South Korea• Capacity expansions are expected to add over
11Mtpa of steel capacity by 2018
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
Europe • While not returning to pre-GFC highs, a recovering
Europe should see annual steel production increase ~25Mt by 2018
South America• Continued economic development and expansion
of the steel industry should add ~25Mt of steel production by 2018
Contestable iron ore demand(Mt)
Source: RTIO Industry AnalysisNOTE: Rest of World includes:EU27, CIS, North & South America, ASEAN and Other Asia, Middle East and Africa
6
While China will remain key, it does notmake up the entire short term growth story
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2012 2013 2014 2015 2016 2017 2018
China JKT Europe RoW
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto Source: Rio Tinto
7
Long-term fundamentals for Chineseiron ore demand remain strong
Chinese steel production and iron ore requirementsMillion tonnes
Machinery and transportation increases as proportion of Chinese steel demand%
0
200
400
600
800
1000
1200
1400
1600
0
200
400
600
800
1000
1200
2000 2010 2020 2030 2040
Iron
ore
req
uire
men
t (M
t)
Ste
el a
nd S
crap
(M
t)
Crude Steel ProductionScrap GenerationIron Ore Requirement (RHS)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2030
Property Infrastructure MachineryWhite goods Transportation Others
©2013, Rio Tinto, All Rights Reserved
• The steepness of the iron ore cost curve above $100/t means that small changes in supply and demand can have major impacts on prices
• Private Chinese iron ore miners have in the past acted rationally and quickly to a changing price environment
• Chinese domestic iron ore production costs will continue to increase strongly, driven by an appreciating currency, a move to underground mines, rising power, wage, and other input costs
• ~70% of Chinese domestic mine production was privately owned
Chinese domestic private cost curve – 2012$/dmt CFR
Source: Platts, CU Steel, China National Bureau of Statistics,Rio Tinto analysis
8
Chinese domestic iron ore productionis highly price sensitive
0
20
40
60
80
100
120
140
160
180
200
220
240
260
0 50 100 150 200 250 300 350Mtpa
Cumula
Aug-Sept 2012
H1 2012
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto Source: Rio Tinto
9
Aligning our resource offeringand our customer base
July 2012 – June 2013actual shipments by market (Pilbara and IOC)
July 2012 – June 2013percentage of products by market (Pilbara and IOC)
China62%
Atlantic4%
Korea, Taiwan12%
Japan22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Japan Korea, Taiwan Atlantic
PBF PBL RRF RRL HIY Conc. Pellets
©2013, Rio Tinto, All Rights Reserved
Source: Rio Tinto Source: Rio Tinto
10
Linking product placement andcommercial marketing objectives
July 2012 – June 2013actual shipments by pricing mechanism (Pilbara)
Estimated 2014shipments by pricing mechanism (Pilbara)
Monthly45%
Q Lagged31%
Q Actual12%
Spot12%
Monthly49%
Q Lagged26%
Q Actual8%
Spot17%
©2013, Rio Tinto, All Rights Reserved
RTIO’s electronic tender spot saleschannel – 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
11
E-tender smart phone app
E-tender internet “gateway”
©2013, Rio Tinto, All Rights Reserved
Source: Platts, Rio Tinto Source: Platts, BCI, Rio Tinto
12
RTIO maintains sector leading performanceand is able to respond to changes quickly
Platts IODEX Iron ore fines 62% Fe($/dmt CFR)
RTIO PBF spot sales (relative to Platts 62% Fe)(c/dmtu)
80
90
100
110
120
130
140
150
160
170
Jul-1
2
Aug
-12
Sep
-12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb
-13
Mar
-13
Apr
-13
May
-13
Jun-
13
(10)
(5)
-
5
10
15
20
25
30
Jul-1
2
Aug
-12
Sep
-12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb
-13
Mar
-13
Apr
-13
May
-13
Jun-
13
©2013, Rio Tinto, All Rights Reserved
The capabilities required to maximiserevenue 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.
13
©2013, Rio Tinto, All Rights Reserved
• 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
14
Extending our competitive advantages
Rio Tinto plc2 Eastbourne TerraceLondon W2 6LGUnited Kingdom
T +44 (0)20 7781 2000
riotinto.com
Rio Tinto Limited120 Collins StreetMelbourne, Victoria 3000Australia
T +61 (0)3 9283 3333