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Citi’s Mining Exploration Day – Rio Tinto Exploration
27 June 2016
Attached is a presentation to be given today by Stephen McIntosh, Group executive Growth & Innovation
at the Citigroup exploration conference in Sydney.
The presentation will also be available at www.riotinto.com/presentations.
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Rio Tinto ExplorationStephen McIntosh, Group Executive Growth & Innovation
Citigroup exploration conference27 June 2016
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©2016, Rio Tinto, All Rights Reserved
Cautionary statement2
This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”). By accessing/attending this presentation you acknowledge that you have read and understood the following statement. In this presentation all figures are US dollars unless stated otherwise.
Forward-looking statements
This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Rio Tinto Group. These statements are forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, and Section 21E of the US Securities Exchange Act of 1934. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, “may”, “should”, “will”, “target”, “set to” or similar expressions, commonly identify such forward-looking statements.
Examples of forward-looking statements include those regarding estimated ore reserves, anticipated production or construction dates, costs, outputs and productive lives of assets or similar factors. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors set forth in this presentation.
For example, future ore reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political uncertainty.
In light of these risks, uncertainties and assumptions, actual results could be materially different from projected future results expressed or implied by these forward-looking statements which speak only as to the date of this presentation. Except as required by applicable regulations or by law, the Rio Tinto Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events. The Group cannot guarantee that its forward-looking statements will not differ materially from actual results.
Disclaimer
Neither this presentation, nor the question and answer session, nor any part thereof, may be recorded, transcribed, distributed, published or reproduced in any form, except as permitted by Rio Tinto. By accessing/ attending this presentation, you agree with the foregoing and, upon request, you will promptly return any records or transcripts at the presentation without retaining any copies.
This presentation contains a number of non-IFRS financial measures. Rio Tinto management considers these to be key financial performance indicators of the business and they are defined and/or reconciled in Rio Tinto’s annual results press release and/or Annual report.For
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Safety is fundamental
Exploration All Injury Frequency Rate (AIFR)*Per 200,000 hours worked to May 2016
0.0
0.5
1.0
1.5
2.0
2.5
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
YTD 20160 LTI & 1 MTCsAIFR 0.1
Delivering discoveries safely
Updated: May 2016
• Relentless safety focus – All Injury Frequency Rate lowest on record
• Fatality prevention a key focus
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• Successful exploration track record spanning 70 years
• Continued focus on delivering investible Tier 1 resource options to the Group
• Global reach across multiple commodities
• Renewed greenfield focus
• Applying technology to resolve exploration challenges
• Significant in-house program and partnering with juniors
• Specialist orebody knowledge involvement in investment decisions
• Disciplined divestment of non-core discoveries
4
Rio Tinto Exploration overviewConsistent corporate commitment, delivering value
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Global exploration spend and historic discovery rateFunding sharply down & new greenfield discoveries announced remain subdued
Significant* mineral discoveries (excluding bulk commodities)Western World: 1975 - 2015 (excluding FSU + Eastern Europe + China 1995 - 2015)
0
50
100
150
200
$0
$5
$10
$15
$20
$25
1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Number of discoveries
Expenditures (2015 US$b)
Expe
nditu
res
(201
5 re
al U
S$bn
)
Num
ber o
f dis
cove
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*Significant defined as >100Koz Au, >10Kt Ni, >100Kt Cu equiv, 250Kt Zn+Pb, >5Moz Ag, >5kt U3O8
Source: MinEx Consulting March 2016; Expenditures – SNL Metals & Mining December 2015Note: SNL expenditure data excludes Uranium prior to 2001.
Discoveries
Expenditures
Incomplete discovery
data in recent years
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Exploration industryRisks and value just like other R&D sectors
3,000 raw ideas
300 ideas submitted
125 small projects
9 early stage developments
4 major developments
1.7 launches1 success
Num
ber o
f ide
as
Stage of new business development process 100% of targets 0.1% of targets
Target Generation
TargetTesting
Projectof Merit
Order ofMagnitude
AreaSelection
Discovery
Universal industrial success curve Exploration process
1:3,000
Source: Stevens and Burley, Plotting the rocket of radical innovation, 2003 Source: Rio Tinto
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2002Resolution
Copper
1947Lac AllardIlmenite
1953Elliot Lake
Uranium
1955Weipa
Bauxite
1956PalaboraCopper
1960Kirka
Borates
1962Tom PriceIron Ore
1968RössingUranium
1970Tarong (QLD)Coal
1972ParagominasBauxite
1979Argyle
Diamonds
1982Moro de OuroGold
1983LihirGold
1986Kintyre
Uranium
1996Diavik
Diamonds
2004SimandouIron Ore
2008BunderDiamonds
2008SulawesiNickel
2008MutambaIlmenite
1960SeirritaCopper
1955Mary Kathleen
Uranium
1964PangunaCopper
1968OK TediCopper
1972Richards BayIlmenite
1977KelianGold
1984Kaltim Prima
Coal
1990CenturyLead-Zinc
1996Las Cruces
Copper
2000PRC
Potash
2009JadarLithium
2005Caliwingina
Iron Ore
2005La Granja
Copper
2007Chapudi
Coal
1991Corumba
Iron ore
1996Sepon
Copper
1956SangarediBauxite
2004EagleNickel
2004ConstanciaCopper
1999Murowa
Diamonds
2014Yandi BraidIron Ore
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2015MTW / HV*Coal
2013SaskatchewanPotash
2011AmargosaBauxite
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Founding discoveries for key product groupsSignificant discoveries in new commodities*Mt Thorley Warkworth / Hunter Valley
Rio Tinto’s track record of discoveries*Unique capability to develop entry into new commodities
*Discovery: Resource estimate and Order of Magnitude study completed
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Rio Tinto’s significant discoveries* 2000 to 2015A global exploration effort
Saskatchewan2012, potash
Eagle2004, nickel**
Resolution2002, copper
La Granja2005, copper Amargosa
2011, bauxite
Potasio Rio Colorado2000, potash*
Simandou2004, iron ore
Bunder,2008, diamonds
Mutamba2008, mineral sands****
Jadar2009, borate/lithium
Sulawesi2008, nickel laterite***
Caliwingina2005, iron ore
Yandi Braid2014, iron ore
Aluminium
Copper & Diamonds
Energy & Minerals
Iron Ore
Greenfield projects
Brownfield projects
*sold to Vale in 2009 **sold to Lundin in 2013 ***sold in 2014 ****JV with Savannah in 2015
Mt Thorley Warkworth / Hunter Valley2015, coking coal
*Discovery: Resource estimate and Order of Magnitude study completed
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Rio Tinto Exploration’s regional structureMulti-commodity teams and cross-region portfolio prioritisation
Bangalore
Brisbane
MelbournePerth
Vientiane
Beijing
Moscow
Almaty Ulaan BataarLondon
Santiago
Brasilia
Salt Lake CityVancouver
Lima
Johannesburg
Americas Africa-Eurasia Australasia
Head of ExplorationHead of ExplorationxxxxxpxpHead ooooioiot ooooooonont oooioiooioooatat ooitiooaa iitt ooottiiooiiHead of Exploration
Risk, Finance, Compliance, Commercial
Group global functional support (HR, IS&T & HSEC oversight) Group global functional support (HR, IS&T & HSEC oversight)Group global functional support (HR, IS&T & HSEC oversight) Regional offices
Project Generation Group(commodity & orebody knowledge specialists, data & information management,
targeted research & development)
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Bauxite9% Energy
9%
D&M2%Iron Ore
8%
Copper66%
R&D6%
OECD + Peru68%
Non-OECD32%
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Rio Tinto Exploration – where we operateExploring for 8 different commodities across 17 countries
Aluminum Copper & Diamonds Energy & Minerals Iron Ore Greenfield projects Brownfield projects
Current Operations
Expenditure by regions - 2015
Expenditure by commodity - 2015
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Rio Tinto Exploration – partneringWorking collaboratively across the industry delivers additional options
Aluminum Copper & Diamonds Energy & Minerals Iron Ore Greenfield projects Brownfield projects
Current OperationsFor
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Rio Tinto Exploration - Jadar discoveryJadar is a world class lithium resource
Jadarite recognised as a new mineral
OoM completed;JORC compliant resource
estimation completed
Large scale semi continuous pilot plant
tested
3D seismic studies
Exploration team established in Serbia
Discovery by RTM Exploration
2000
2005
2010
2015
1998
Jadar Basin first visited
Jadar layered mineralised zones
PFS commenced
PFS ongoing
Jadar core sample
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Tier 1 copper resourcesDifficult to find, slow to develop
• One Tier 1 copper greenfield discovery is made on average every 4 years
• A greater proportion of future discoveries will be in non-OECD countries
• In the OECD setting future discoveries will be deeper than historic discoveries
• Significant exploration around existing operations has resulted in a number of Tier 1 brownfield discoveries
• The average time from concept to delivery of a discovery of a Tier 1 resource is 10 years
• Timeframe is increasing due to regulatory requirements, community involvement etc
• Average time-lag from discovery of a Tier 1 copper resource to production is 12 years
• Jurisdiction, brownfield / greenfield, deposit grade distribution, grade, depth of cover and time in the economic cycle can impact this
0.0
1.0
2.0
3.0
4.0
5.0
1950 1960 1970 1980 1990 2000 2010
0
10
20
30
40
1950 1960 1970 1980 1990 2000 2010
1
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4. Los Sulfatos3. Kamoa2. Rosario West1. Pebble East
5. Escondida Este
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Rek
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Tier 1 copper discoveries
Cu price US$/lb
Dis
cove
ries
Year
s to
pro
duct
ion
12 years
12345
Tier 1 copper development timelines
Sources: SNL, Rio Tinto, public presentations and academic papers
GreenfieldBrownfield
Sources: SNL, Rio Tinto, public presentations and academic papers
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Improving discovery rates14
Combination of old & new technologies and effective data integration yielding knowledge
New Technologies and Concepts
Resistate Indicator Minerals & Greenrocks
Bundoora Micro-Analytical Facility Greenrocks & RIMS
VK1 gravity gradiometer
Data Integration
Very large scale compilation of government,
open file and Rio Tinto proprietary data
Accessible by all geoscientists
Advanced visualization software
Traditional Methods
Mapping
Sampling
Geophysics
Drilling
Analysis
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• Strong track record of exploration success
• Continued strategic commitment to exploration
• Strong in house expertise working across multiple commodities and geographies.
• Collaboration across the industry to access opportunities
• Using leading-edge technology to continue discovery success in mature terrains
15
ConclusionsProducing a pipeline of value accretive growth options to deliver future returns
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