Leading in times of change J-S Jacques, chief executive The International Economic Forum of the Americas 23 rd edition, Conference of Montreal 13 June 2017 **Check against delivery** Bonjour. I would like to start by acknowledging the land on which we gather as the traditional territory of the Mohawk Nation, a place which has long served as a site of meeting and exchange between nations. So, this is the perfect place to host the 23 rd meeting of The International Economic Forum of the Americas. Canada is also the perfect country to host this kind of forum, given its global leadership on trade and open markets. In September last year I shared the stage with your Prime Minister, Justin Trudeau, at the B20 event in Hangzhou, in China. We were on a panel to talk about growth at a time when many are finding it elusive. His message of diversity, inclusiveness and open trade is one that is needed right now as protectionism takes hold. We fully support this view, and firmly believe in the messages of diversity, inclusiveness and fair trade too. So, it is nice to be back in Canada we speak the same language. My guess is not many people here would doubt the massive benefits that come from global fair trade. We see it before our eyes every day at home and at work. But we all now have to confront a new reality. People in many parts of the world do not see these benefits or experience them first-hand. While it was good to see the G7 leaders agree to back the pledge to fight protectionism at their recent meeting in Italy in May. My message today is that we all must step up to the plate, as leaders in government and business, to explain why fair trade and open markets are important. That they do benefit the communities we are all privileged to be a part of. And I say fair trade, on purpose. For many years trade has been one-way and needs to be re-balanced to provide win-win benefits or inclusive growth. As I have already stated, in many ways Rio Tinto and Canada have a lot in common. As your Minister for International Trade, Monsieur Champagne, explained when we met at the Australia-Canada forum in Sydney earlier this year, Canada is a trading nation. Its total trade is worth more than two-thirds of its GDP, the second-highest level of the G7 countries, behind only Germany. It is clear trade has played a central role in shaping modern Canada and the world around it. Rio Tinto could be equally considered a trading company. We operate in around 30 countries but in only a few are the materials we produce consumed locally. Page 1 of 5
Trade gives our company life, allows us to generate jobs, pay taxes, and contribute to communities in countries where we operate to pioneer human progress. In 2016 we paid US$4 billion in taxes and royalties to governments globally, which takes our total direct tax contributions to over US$50 billion since 2010. We also have a shared history. As Canada celebrates its 150 th anniversary of Confederation this year, our operations here have a history tracing back more than 100 years. And they have been a core part of Canada s trading history for decades. We are proud to be the biggest mining and metals company in Canada. Our contribution to this country over many years has also been big. Let me give you an example: We have paid C$3.9 billion in total tax contributions in Canada since 2011. But being big isn t really what we are about. We are about being local and relevant. Let s take a look at the numbers we employ around 15,000 people at more than 35 sites in Canada, and we have invested more than C$8 billion here over the past six years. That makes us a Canadian company! Let me give you a few examples of our operations here in Canada. Rio Tinto Fer et Titane has operated in Quebec for more than 65 years. It is one of the leading manufacturers of raw materials for the titanium dioxide industry and a producer of high-quality cast iron, steel and metal powders. Our Iron Ore Company of Canada is a leading producer of iron ore pellets and concentrate, serving customers worldwide. The Diavik Diamond Mine in the Northwest Territories is instrumental in making Canada the world s thirdlargest diamond producer by value. The famous Diavik Foxfire, unearthed in 2015, is the largest recorded gem quality diamond discovered in Canadian history. In British Columbia, we invested C$6 billion in the modernisation of the Kitimat smelter which reached full production last year. The new smelter produces around 50 per cent more aluminium with close to 50 per cent less emissions, and provides ongoing employment for around 1,000 people. Our Aluminium division has its global headquarters here in Montreal, showing our commitment to Quebec where we invest more than C$300 million a year in our aluminium operations. Indeed, the Saguenay-Lac- Saint-Jean region in Quebec and its aluminium industry have an important place at the core of Rio Tinto s business. In the short term, the challenging global market means we are not able to invest in the construction of further significant aluminium capacity. However, we are committed to working with the Quebec government and our partners in the province to ensure our operations remain strong over coming decades. Together, we must innovate and find ways to become even more competitive in the face of low-cost aluminium production from China, the Middle East and Russia. Page 2 of 5
Canada can take great pride in the fact that our aluminium operations here are world class. With clean hydropower energy and our long-term commitment to advancing smelting technology through R&D, we produce some of the world s lowest carbon footprint aluminium here in Canada. Rio Tinto sees a strong, long-term future for Canadian aluminium in our key market of North America, where increasing demand is expected from the automotive industry. This relationship is a shining example of the benefits of fair trade, with Canadian aluminium producers and American downstream processors and manufacturers operating as an integrated supply chain. It is estimated some automotive parts make up to six value-adding trips across the Canadian-US border before they end up in a finished product. Clearly, both countries benefit from this partnership. The US has access to reliable, high-quality Canadian aluminium that is produced in a responsible way. And the 9,000 Canadians employed in the aluminium industry are delivering a key product for the US aluminium processing sector that employs more than 150,000 Americans. So, the Canada and US trade partnership is important. Let me give you an example, which shows the importance of this relationship perfectly: Trucks rolling across one single bridge the Ambassador Bridge between Windsor, Ontario and Detroit, Michigan carry trade equal in value to all the trade between the US and its G7 partner Germany. Just think about that. In closing, Rio Tinto operates in over 30 countries and has been in business for over 140 years much of this time in Canada. We are used to operating in times of change, which is the key theme of this conference. Change is certainly the new normal. Apart from the inequities I have mentioned already, we live in an age where 15 to 18 words in a tweet makes informed news, where climate change and environmental concerns are becoming social issues, and where technology is changing the rules of the game. Ours is a business with cycles, which are sometimes hard to predict. In global markets, commodity prices rise and fall sometimes in a dramatic way over a short period of time. Imagine managing a company, where the price for your key commodity can drop by 50 per cent in one year, which can mean a multibillion dollar reduction in cash flow. The only way to survive, and thrive in times of change, is to take a long-term view, to invest in world-class assets, and maintain balance sheet strength. We plan in a strategic way over time horizons of many decades and invest accordingly. As such, we need consistent policy and stable investment settings a level playing field. Rio Tinto has choices of where to spend its limited capital dollars US$5 billion in 2017 and we will look for attractive destinations that offer great talent, great partners and great certainty and consistency. Open borders and fair trade are absolutely critical for a company like ours. In the face of populism, protectionism and increasing nationalism we see licence to operate issues as make or break for our industry. In this environment, remaining competitive is getting harder for both business and nations. Canada must do all it can to increase its competitiveness and make the most of its many strengths. You know mining well and you understand its value, but to be very frank it has been getting harder to do business here over the years from employee relations, to tax to managing land access. Page 3 of 5
And we should not forget this: Investment and growth drive wealth generation. Which in turn means higher living standards for us all. The danger in the current climate is that we focus on wealth distribution and not wealth creation. Both are absolutely critical but without growth we will have no wealth created to fairly distribute. Fair trade drives growth. So, this is key. And Canada is showing leadership. Finalising trade agreements with Europe, and next up the US. And in the future I would suggest a look to the East might be wise China s One Belt One Road initiative presents us all with food for thought. But leadership is required at all levels businesses must also step up to the plate. We need to explain our value-add to society, be responsible and make sure our voice is heard. The benefits of fair trade and inclusive growth are important messages that must be shared not just in the corridors of power and boardrooms, but even more so in communities around the world. In doing so, we will all enjoy a bright, inclusive and positive future. Thanks for listening. Page 4 of 5
Contacts media.enquiries@riotinto.com riotinto.com Follow @RioTinto on Twitter Media Relations, United Kingdom Illtud Harri T +44 20 7781 1152 M +44 7920 503 600 David Outhwaite T +44 20 7781 1623 M +44 7787 597 493 Media Relations, Australia Ben Mitchell T +61 3 9283 3620 M +61 419 850 212 Anthony Havers T +61 8 9425 8557 M +61 459 847 758 David Luff T +44 20 7781 1177 M +44 7780 226 422 Investor Relations, United Kingdom John Smelt T +44 20 7781 1654 M +44 7879 642 675 David Ovington T +44 20 7781 2051 M +44 7920 010 978 Investor Relations, Australia Natalie Worley T +61 3 9283 3063 M +61 409 210 462 Rachel Storrs T +61 3 9283 3628 M +61 417 401 018 Nick Parkinson T +44 20 7781 1552 M +44 7810 657 556 Rio Tinto plc 6 St James s Square London SW1Y 4AD United Kingdom T +44 20 7781 2000 Registered in England No. 719885 Rio Tinto Limited 120 Collins Street Melbourne 3000 Australia T +61 3 9283 3333 Registered in Australia ABN 96 004 458 404 Page 5 of 5