Andrew Harding - Rio Tinto

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Information about Andrew Harding - Rio Tinto
News & Politics

Published on March 11, 2014

Author: informaoz


Generating significant business value Andrew Harding Chief executive officer – Iron Ore, China, Japan, Korea AJM Global Iron Ore & Steel Forecast Conference, Perth 2014

©2014, 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 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 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. 2

©2014, Rio Tinto, All Rights Reserved 3 Bringing capacity on-line to meet growth in traditional and developing regions Source: China National Bureau of Statistics, CISA, Rio Tinto Source: United Nations, Global Insight, Rio Tinto Chinese steel demand Million tonnes per annum Growth fundamentals 2010-30 CAGR % 6.1 2.0 0.3 0 5 10 GDP per capita Urban population Population 6.1 2.3 1.0 0 5 10 3.7 2.2 1.0 0 5 10 GDP per capita Urban population Population 2.4 1.9 1.6 0 5 10 China ASEAN Middle East India 0 100 200 300 400 500 600 700 800 2011 2012 2013 2014 ≈4 % (e) 7.5% 2.2%

©2014, Rio Tinto, All Rights Reserved MonthlyQ Lagged Q Actual Spot • Pilbara Blends continue to be base load products for Asian steel industry • Unprecedented demand for 2014 off-take opportunities due to our reputation of providing stable quality and reliable supply • Of our 2014 volume: • ~85% will be sold under term contracts • ~15% uncontracted for sale into the spot market, in support of robust and transparent indices • Pilbara Blend sustainable for decades to come 2014 Pilbara off-take agreements by pricing mechanism 4 Rapid uptake of 2014 off-take opportunities with unfulfilled demand for Rio Tinto iron ores

©2014, Rio Tinto, All Rights Reserved • Mine, rail and port network wholly- owned by IOC ( Rio Tinto 58.7%) • Consistently high quality products with the lowest phosphorous in the industry • 2013 saleable production of 15.4Mt, 9% higher than 2012 • CEP project adds mining fleet, ore delivery, grinding and spiral capacity and power infrastructure • Concentrate expansion project to 23.3 Mt/a expected in H1 2014. Iron Ore Company of Canada operations 5 Iron Ore Company of Canada - fully integrated mine to port system

©2014, Rio Tinto, All Rights Reserved 6 The Pilbara – high quality assets, fully owned and operated, with great optionality • System fully integrated via Operations Centre • All product blending undertaken at port • Strong Resources & Reserves position provides optionality Rio Tinto Pilbara operations Assets • 15 mines • 1,600kms of rail • 4 independent port terminals, with 11 berths, • 3 power stations

©2014, Rio Tinto, All Rights Reserved 0 10 20 30 40 50 60 70 80 Q1 Q2 Q3 Q4 • Severe weather impacts in 1Q, 2Q and 4Q 2013. • Increasing capacity and system alignments enabled improving performances beyond 237Mt/a rating • 2013 mine production of 251Mt (YoY +5%) • 66.5Mt mine production and 68.8Mt shipping in Q4 2013 • Strong contribution to EBITDA and underlying earnings 7 Pilbara performance key to delivering strong 2013 financial results Pilbara mine production Million tonnes per quarter 2010 2011 2012 2013 290 237 Source: Rio Tinto 2013 2012 Change Production (Million tonnes100%) 266.0 253.5 +5% Underlying EBITDA ($ millions) 17,442 15,679 +11% Underlying earnings ($ millions) 9,858 9,247 +7% Iron Ore results Global 2013 vs 2012

©2014, Rio Tinto, All Rights Reserved 8 Continuous improvement outcomes realise significant value Mine • “Right- sizing” the fleet initiative optimising cycle times and payload management • 6 out of 55 West Angelas haul trucks redeployed to other mines • Reductions to occur at other mines Rail • Continued train cycle improvements with electronic controlled pneumatic brakes and additional consists • Payload increases through new train specs and mass and volumetric loading controls • 2013 new consist payload record of 27kt Port • Parker Point outload capacity increased 12Mt/a • Changes to reclamation control program and stockpile profiling • Dual reclaiming to maximise ship loading Pooled fleet railings and payload 26.3 26.4 26.5 26.6 26.7 26.8 26.9 27.0 27.1 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Railings Payload Railings(no.oftrains) Payload(kt) Reclaimer

©2014, Rio Tinto, All Rights Reserved • Improved crane scheduling and alignment of maintenance shuts • $1.4M saved at Brockman 4 alone • Rationalised training and streamlined delivery • Cost savings ~$20M/ yr • Over 200,000 person hours* returned to the business • Hire car expenditure savings ~ $4 • Centralised administration function savings over $5 million per annum 9 Relentless focus on cost- outs to also continue 2013 productivity improvements Hours returned to the business via training transformation 0 30,000 60,000 90,000 120,000 150,000 0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Cumulative *December 2013 annualisedStockpile

©2014, Rio Tinto, All Rights Reserved WA IO – EBITDA per tonne (US$/t and %) 0% 10% 20% 30% 40% 50% 60% 70% 80% 0 20 40 60 80 100 120 140 H110 H210 H111 H211 H112 H212 H113 H213 EBITDA% US$/t RTIO ($US/t) BHP ($US/t) FMG ($US/t) RTIO % BHP % FMG % 10 Improvements are maintaining the business as the Pilbara’s lowest cost producer Source: Rio Tinto ; BHPB; and FMG lodged financial statements Note: RTIO results exclude Dampier Salt and RT Marine Tonnage based on attributed shipments (adjusted for Robe River at 65% as per financial results). Results as reported. All publically available information Full year cash unit cost ($/t) 0 5 10 15 20 25 2006 2007 2008 2009 2010 2011 2012 2013 AUD cost USD cost • 2013 full year cash unit cost was US$20.80/t, 11% lower than 2012 • Retaining best margin of Pilbara producers Source: Rio Tinto

©2014, Rio Tinto, All Rights Reserved • 290 Mt/a first ore on ship 24 August • 4 months ahead of schedule • $US400M under budget • 220 – 290Mt/a being delivered at a capital intensity <US$140/t (100%) • Extra 53Mt/a Pilbara system nameplate capacity by end 1H 2014 • Nammuldi below water table mine completion on target for Q4 2014 • Deliberate mine bulk stocks strategy, with ~5Mt draw- down in 2014 Nammuldi mine development 11 290Mt/a infrastructure complete and now quickly ramping to fill capacity 290Mt/a complete, 360Mt/a wharf in progress

©2014, Rio Tinto, All Rights Reserved • Infrastructure expansion to 360Mt/a fully approved and underway • Expected completion during H1 2015 • Cape Lambert • All major work packages have been awarded • Earthworks complete, civil works near complete, SMP commenced • Rail • All rolling stock contracts awarded • Duplication earthworks and track construction complete • Full commissioning by late 2Q ‘14 12 Infrastructure development to 360 Mt/a progressing on target Cape Lambert Screenhouse 6 Car dumpers 6 & 7First train at 37.5kp duplication

©2014, Rio Tinto, All Rights Reserved • A rapid, low- cost pathway to increase mine production capacity by more than 60Mt/a by 2017 • Utilises brownfield mine options opportunities at existing operations • Silvergrass decision has been deferred and Koodaideri mine decision not required in the medium term • US$3 billion saving in growth capital over the next 3 years • Capital intensity to reduce from mid $150s/t to $120-130/t (100% basis) 13 Low- cost, brownfields Pilbara growth pathway extracts significant value Mine capacity potential (average annualised) Million tonnes per annum 225 250 275 300 325 350 375 2013 2014 2015 2016 2017 2018 Example brownfield expansions Indicative Mt/a West Angelas (approved 13/02/2014) ~6 Yandicoogina ~8 Brockman ~8 Paraburdoo ~7 Nammuldi ~9 Other ~6 – 10 Source: Rio Tinto

©2014, Rio Tinto, All Rights Reserved Western Turner Syncline - 1 14 Further value opportunities being realised in sustaining tonnage projects • Western Turner Syncline phase 2 approved in February 2014 • Additional 7Mt/a to replace Tom Price ore to commence in mid 2015 • A new WTS phase 1 mine plan allows extension of trucking model • At least 3 year deferral of primary crusher construction and linking to Phase 1 conveyor • ~$500M in deferred capital expenditure • NPV unchanged

©2014, Rio Tinto, All Rights Reserved • Autonomous Haulage System update • >130Mt autonomously moved between 2008-2013. • Improved safety and control • Reduced truck numbers • Expect 10-15% increase in effective utillisation in mature operation • AutoHaul™ • first heavy haul network in the world to be fully automated • scheduled to be operational in 2015 • Safety, cycle time and capacity improvements • Eliminating driver changeovers • High performing teams • Cohesive culture is fundamental • United focus, creative solutions and excellent performance 15 Mine of the Future™ programme continues to turn competitive advantage into real business value Autonomous haul trucks AutoHaul™

©2014, Rio Tinto, All Rights Reserved • Relentless focus on safety • Continual liaison with full range of key stakeholders • Drawing greater value through: • operational performance across integrated system • cash costs/ margin management • on time/ budget growth projects • sales and marketing strategies • utilisation of new technology • Remaining flexible to changing internal and external environments 16 Proven sector leadership continues to return significant value Haul truck

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