Building on success - growing the Pilbara Greg Lilleyman President, Pilbara Operations
2 Guideline Rio Tinto, in context The Pilbara integrated operations Rio Tinto s major customers: some historical perspective Strong demand, uncertain industry supply Rio Tinto s expansion: seeing is believing Rio Tinto s Mine of the Future TM Summary
3 Rio Tinto a global business Aluminium Copper Diamonds Energy Iron ore Minerals North America Europe Asia Africa Key Mines and mining projects Smelters, refineries, power facilities and processing plants remote from mine South America Australasia
4 Rio Tinto Iron Ore Pilbara Operations
Old friends dealing with regional partners in a broad based market 5
Business history: strong growth of Rio Tinto Iron Ore China business for 40 years 6 No other company has exported anywhere near this amount of iron ore to China and it took 38 years for us to do so. Sam Walsh - On the shipment of the 1 billionth tonne
Despite near-term volatility, the fundamental drivers of Chinese steel demand growth remain strong Chinese steel demand will grow strongly Bt/a Construction Industrial - Export Industrial - Domestic XX% CAGR xx Kg/capita steel intensity 1.1 1% 1.0 3% 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2010 2020 2030 2040 433 613 677 671 The fundamental drivers of Chinese steel demand will remain strong 1 2 3 4 Economic growth Political focus will remain on GDP and income growth as the newly elected government looks to consolidate power and to maintain social stability by delivering economic development and ongoing increases in living standards Urbanisation Urbanisation growth will continue to be strong through to 2030 Infrastructure/construction There is still significant infrastructure investment planned and required as well as increasing rebuild investment Transition to consumption demand The government will continue to transition the economy to consumption based growth, with considerable flow-on demand effects for steel (as construction and infrastructure growth declines) SOURCE: RTIO Industry Analysis 7
There continues to be significant constraint to the development of new iron ore supply 8 Announced and completed iron ore production capacity (global) (million tonnes) 1000 800 600 400 200 0 Announced for 2008-10 Completed by Q4 2010 Announcements do not necessarily translate to supply capacity Competition for labour with oil/ gas Reduced sources of project financing Protracted approvals processes Shortage of specialist mining skills Difficulty working in remote locations 1000 800 600 400 200 0 Certain Probable Possible Rio Tinto Other Announced for 2012-14 Completed by Q3 2012 High cost Chinese domestic supply required to meet demand in the short to medium term Source: UNCTAD, Rio Tinto analysis
We focus on delivering value through productivity and system optimisation 9 Pilbara production (Mt/qtr) 70 60 50 40 30 20 New nameplate capacity at 237Mt/a Operations Centre assists deep system visibility, significantly advancing performance Q3 2012 a record production quarter 62.9Mt, a 5.2% increase on Q3 2011 Shipping remains strong Closing in on the rail bottleneck 10 0 Q1 Q2 Q3 Q4 2010 2011 2012 Installed Capacity Continue to progress improvement initiatives to provide further capacity creep
10 challenging expansion optionality Growth BS4 (II) BS4 (III) $1bn Koodaideri (I) WTS (I) Nammuldi Silvergrass 2012 2013 2014 2015 Warramboo HD4 Yandicoogina WTS (II) Legend Not yet approved Underway Deleted WA -Dep E Marandoo WA- Dep B Sustaining Note: Timing refers to first production
11 and maintaining major project time-lines Rio Tinto Pilbara iron ore shipping capacity (100% basis) (Mt/a) 380 360 340 340 First Ore 360 First Ore Average Annualised Mtpa 320 300 280 260 290 First Ore 4Q 1H 240 220 3Q 200 2010 2011 2012 2013 2014 2015 2016 2017
We have demonstrated superior performance in delivering projects 12 Western Australian construction projects performance (Cost (% of budget)) 250% RTIO projects Non RTIO projects 40 Over budget behind schedule 200% 30 150% 20 10 Months over budget 100% 10 50% 0% Budget Additional months Source: Pit Crew Management Consulting Services 20 30 Under budget ahead of schedule New Cape Lambert stockpile yards
13 Delivering reality Car Ship Dumper Loader Cape Lambert Expansion Cape Lambert Expansion
14 RTIO Reserves and Resources RTIO PILBARA Mineral Reserve History 2001-2012 Tonnes (Mt) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Probable Proven Tonnes 20,000 15,000 10,000 5,000 0 RTIO PILBARA Mineral Resource History (exclusive of Reserves) 2001-2012 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year 1,000,000 800,000 600,000 400,000 200,000 - Drill (m) Inferred Indicated Measured Drilling (m) Report: Rio Tinto 2012 Annual Report CP Name: Resources: Bruce Sommerville, Phil Savory. Reserves: Leon Fouche and Chris Tabb. Date of release: 15 March 2013 Location: http://www.riotinto.com/shareholders/219_reports.asp. Rio Tinto confirms that they are unaware of any subsequent information or data that materially affects the Resources and Reserves
Our Mine of the Future TM is turning competitive advantage into real business value 15 Technology and automation will continue to drive business success Improving sophistication of real time data and progressive cultural change are keys to success Substantial benefits will accrue Cost savings eg recruiting 900 fewer people Managing increasing business complexity Anticipating problem areas Phase II of our Operations Centre will unlock further value across our network
16 Autonomous Haul Trucks 10 trucks at Yandi in a fully autonomous pit 26 trucks are planned at Nammuldi, with 5 trucks currently operational and 5 more to be delivered over the coming weeks 19 trucks are planned for Hope Downs 4, with 3 currently being assembled
17 AutoHaul is an investment of US$518 million to introduce autonomous train operations across our integrated Pilbara rail network It is the first long-distance heavy-haul system of its kind in the world and will place us at the forefront of technological advances Is a key component of our expansion to 360Mtpa in the Pilbara First phase, Driver Assist, is nearing completion and significant engineering works are complete Full implementation is planned for 2015
18 In summary Our Pilbara Operations are part of a truly global mining business Running it efficiently, while expanding within time and cost constraints, is how Rio Tinto creates value We have a long, strong history with China and Japan These mutually beneficial relationship will continue into the future As we deliver expansions to meet future needs of our customers