African Iron Ore Metal Bulletin, Johannesburg, 6-8 November Alan Davies, Chief executive Diamonds and Minerals, Rio Tinto

Transcription

1 African Iron Ore Metal Bulletin, Johannesburg, 6-8 November Alan Davies, Chief executive Diamonds and Minerals, Rio Tinto

2 6-8 November 2012 Metal Bulletin African Iron Ore Conference 2012, Rio Tinto, All Rights Reserved 2 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.

3 3 Our presence in Africa is growing Simandou (Guinea) Murowa Diamonds (Zimbabwe) Palabora Mining Company (Sth Africa) Rio Tinto Coal Mozambique CBG Sangaredi Mine (Guinea) Mutamba Project (Mozambique) Rio Tinto Alcan Alucam (Cameroon) QIT Madagascar Minerals (QMM) Key Rössing Uranium Mine (Namibia) Mines and mining projects Smelters, refineries, power facilities and processing plants remote from mine Aluminium Copper Diamonds Energy Iron ore Minerals Richard Bay Minerals (RBM) (Sth Africa) 3

4 4 Near term uncertainty is likely to persist Synchronised slowdown underway Purchasing Managers Index Manufacturing Platts IODEX 62% Fe, $/dmt, CFR North China Monthly new home sales growth in China % change year on year Source: CEIC / NBS Source: Platts

5 5 However, the long term demand outlook remains attractive Global commodity demand trajectories Index 2012 = 100 ~2 billion additional people to urbanise by 2030 Global steel consumption expected to grow by 2 per cent per annum China to remain key driver until mid- 2020s China GDP per capita currently 19% of USA levels India and South East Asian economies more than offset flat and then falling consumption in China Consumption-led growth will benefit TiO2 and Aluminium Source: Rio Tinto analysis

6 6 Chinese steel production is expected to grow to around 1 billion tonnes per year towards 2030 Chinese crude steel production Million tonnes 1-1 Chinese steel demand by sector Million tonnes xx Decade average compound annual growth rate (%) Source: Rio Tinto analysis Source: Rio Tinto analysis

7 7 Steel growth still has a long way to run Total steel demand over respective 20-year period tonnes per capita Steel intensity and GDP Kg/capital crude steel production 1,400 1,200 1,000 China on track to exceed 500 kg/capita level of crude steel production for first time in 2011 Korea China (actual) Japan China (forecast) Germany USA 200 India ,000 20,000 30,000 40,000 GDP per capita (PPP basis, $2005) Note: Steel stock refers to the level of cumulative steel consumed within an economy over a 20-year period Source: Rio Tinto analysis Note: Stylistic representation Source: Correlates of War, Maddison, Global Insight, Rio Tinto

8 8 The industry supply response is increasingly challenged Announced and completed iron ore capacity million tonnes Over the 7 years to 2018, it is expected that 700Mt of global supply additions will be required: o 500 Mt to satisfy expected demand growth o 200 Mt to replace expected high cost supply exits We expect to add ~ 25% of required supply Cost escalation and rising capital intensity will increase pressure on marginal project returns Scarcity of highly skilled labour, access to financing Recent high profile project deferrals Source: UNCTAD, Rio Tinto analysis

9 9 Simandou, a world class project in a world class province Progressive delivery of the Simandou project Ile Coastal Plain Mamou Range Eastern Plateau Region Mine Kabak Mamou Faranah Conakry Forécariah Sierra Leone Guinea Beyla Liberia One of the largest known undeveloped iron ore deposits in a resource-rich province ~100Mtpa progressive mine development, 650km trans-guinean railway and deep water port near Conakry Project is advancing against clear segmented milestones agreed with the Government of Guinea New airstrips West rail (multiple fronts) East rail (multiple fronts) Proposed rail line Potential phased ore delivery Camps & logistic centres Infrastructure corridor Marine Offload Facility Stockyard earthworks Pre-stripping (Oueleba main) Access Road and Causeway Further investment will be made as the Government of Guinea progresses its financing strategy and grants approvals for the next steps in developing rail and port infrastructure

10 6-8 November 2012 Metal Bulletin African Iron Ore Conference We are the right partner to move this project forward 10 WA construction projects performance Cost (% of budget) 250% RTIO projects Non RTIO projects 40 Over budget behind schedule 200% % Month hs over bud dget 100% 10 50% 0% Under budget ahead of schedule Budget Additional months Source: Pit Crew Management Consulting Services

11 11 A unique development partnership A project of this magnitude requires a unique approach to development Partnership with Government of Guinea, Chinalco and IFC underpins strategy Project financing will provide additional opportunities for risk management and governance for all partners Working alongside our partners towards the common goal of responsible and sustainable development Tree-planting in Simandou to symbolise the partnership between Rio Tinto, China and Guinea

12 6-8 November 2012 Metal Bulletin African Iron Ore Conference 2012, Rio Tinto, All Rights Reserved 12 Phased development and ramp up of Simandou Simandou infrastructure declared a Project of National Interest for Guinea by presidential decree Construction of the pioneering marine offload facility underway Proceeding with preparatory works such as roads, logistics centres and construction camps Engineering progressing towards a Bankable Feasibility Study Completion of Social Impact Environment Assessment Capital efficient deployment strategy in line with approvals and financing for construction works

13 13 Building mutually beneficial relationships will be key Implementing best practice sustainable stewardship and engagement Cross-sector partnerships to encourage economic diversification Capacity development and training to build skills and institutions Mentoring in procurement process Aim to create an opportunity for social and economic development

14 14 Leveraging our competitive advantages Pioneer in developing and operating mining and infrastructure assets globally Access to world class engineering and construction expertise for delivery of mega-mining projects Commitment to sustainable stewardship are core competitive advantage Recognised industry leader in technology and innovation

15 African Iron Ore Metal Bulletin, Johannesburg, 6-8 November Alan Davies, Chief executive Diamonds and Minerals, Rio Tinto