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Cape Lambert, Western Australia
Investor seminarSydney
29 November 2012
©2012, 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 StatementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in thispresentation, 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 industryresults, 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. Except as required by applicable regulations or by law, Rio Tinto does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.
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
Shanghai, China
Tom Albanese
3
Chief executive
©2012, Rio Tinto, All Rights Reserved
Agenda4
Introduction, outlook and strategy Tom Albanese
Capital allocation and performance Guy Elliott
Iron Ore Sam Walsh
Break
Other product groups Tom Albanese
Diamonds & Minerals Alan Davies
Summary Tom Albanese
Q & A
©2012, Rio Tinto, All Rights Reserved
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’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 Oct-12
All injuryfrequency rate
Lost time injuryfrequency rate
Injury frequency rates 2003 – Oct 2012Per 200,000 hours worked
5
Safety remains our core value
Testing safety equipment
©2012, Rio Tinto, All Rights Reserved
Overview
• Short term outlook remains uncertain and volatile
• Focus on balance sheet discipline and single A credit rating
• Strong operational performance under tough conditions
• Taking decisive actions to compress costs and optimise returns
• Long term industry fundamentals remain attractive
• Rio Tinto is well positioned
• Strategy is unchanged – large, long life, cost competitive assets
• Disciplined and rigorous capital allocation and prioritisation
• Allocating capital to projects with highest returns in the most attractive sectors
6
©2012, Rio Tinto, All Rights Reserved
• Continued uncertainty in Europe and United States
• Expected fourth quarter pick-up in China− fixed asset investment continues
to strengthen− leading indices are improving
• Chinese leadership transition underway
• Markets expected to remain volatile
Short term market volatility but Chinese indicators are more positive
7
Source: Bloomberg, GK Dragonomics Research
US New private housing starts(Thousands of Units)
400500600700800900
1000
Rebound in infrastructure spending in ChinaFixed asset investment by sector, nominal, 3 month average
©2012, Rio Tinto, All Rights Reserved
• ~2 billion additional people to urbanise by 2030
• Global steel consumption expected to grow by 2 per cent per annum
• China to remain the key driver until mid-2020s
• India and South East Asian economies more than offset flat and then falling consumption in China
• Consumption-led growth will benefit TiO2 and Aluminium
Global commodity demand trajectoriesIndex (2012 = 100)
8
The long term demand outlookremains attractive
Source: Rio Tinto analysis
100
120
140
160
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200
2012 2015 2018 2021 2024 2027 2030
Aluminium - Primary Copper - PrimaryHard coking coal Iron oreThermal coal TiO2
©2012, Rio Tinto, All Rights Reserved
• Cost escalation and rising capital intensity will increase pressure on marginal project returns
• Scarcity of highly skilled labour, access to financing
• Rising threat of resource nationalism
• Recent high profile project deferrals
The industry supply responseis increasingly challenged
9
Source: Brook Hunt – a Wood Mackenzie company
Disruption rates expected to continue% of planned copper production
Sovereign riskCopper supply location (%)
012345678
2004 2005 2006 2007 2008 2009 2010 2011
©2012, Rio Tinto, All Rights Reserved
Within this context, our fundamentalstrategy is consistent and unchanged
• To maximise total shareholder return by sustainably finding, developing, mining and processing natural resources
• Invest in and operate large, long term, cost competitive mines and assets
• Allocate capital to the highest return opportunities
• Investments driven by the attractiveness of commodity sectors, and the quality of each opportunity
10
Total cost position• Operating costs and sustaining capital• Capital intensity of growth
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Tier 1
Lower cost
Higher cost
Higher expandability
Lower expandability
Grow and protectFocus of new
investment
Improve,divestor close
Identify expansion
options
Optionality/ expandability/life extension
Implement operating
enhancements
©2012, Rio Tinto, All Rights Reserved
We are taking constant steps to improve the quality of the portfolio
11
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Tier 1
Cash cows
Total cost position
Leveraged plays
Lower costHigher cost
Higher expandability
Lower expandability
Optionality
Marginal assets
Iron oreDiamonds & MineralsCopper
Aluminium Bubble size represents medium, high and very high value (Rio Tinto share)
EnergyUnder review
Divested
©2012, Rio Tinto, All Rights Reserved
A clear and consistent strategy
• The long term demand outlook remains attractive
• Post GFC effects continue to drive short term market uncertainty and volatility
• Increasingly delayed industry supply side response
• Rio Tinto’s fundamental strategy remains unchanged
• Allocating capital to those projects offering the highest returns
• Targeting investment in the most attractive sectors
• Constantly improving the portfolio in line with our strategy
12
Guy Elliott
13
Chief financial officer
Cape Lambert, Western Australia
©2012, Rio Tinto, All Rights Reserved
• Prudent balance sheet and single A credit rating in a volatile environment
• Progressive dividend provides sustainable long term returns to shareholders
• Disciplined and rigorous approach to capital allocation
• Investment programme focused on highest quality opportunities
• Return surplus cash to shareholders
Balancing value adding investment with returnsto shareholders and a prudent balance sheet
14
Cash returns to shareholders
Progressive dividend
increased by 34%
at FY 2011
$7 billionbuy-back
completed
Prudentbalance
sheetmanagement
SingleA creditrating
Average borrowing maturity
of 9 years
Disciplined investment
in highest value opportunities
$10 billion of high returning
growth
Cash from operations and divestment proceeds
©2012, Rio Tinto, All Rights Reserved
Risk Management Committee; Board
Macro-economic
15
Distinctive strategic investment themes and standard evaluation criteria drive our investment approach
NPV Value enhancement
Price assumptions
Asset• Large, long life, low cost• Export markets
Board / Exco
Set evaluation criteria
Economics and Business Evaluation teams
Set ranking criteria
Board / Exco
Jurisdiction
Discount rate assumptions
Project evaluation guidelines
IRR/ROI, EBITDA marginWhere are the highest returns?
Level of payback in first five yearsWhen do we realise the return?
What risks are involved?
• Competitive advantage• Market structure
Sector “sieves”• Market size, demand• Performance
Developinvestmentthemes
©2012, Rio Tinto, All Rights Reserved 16
Our capital allocation process ensures we are making good decisions
Develop investment themes
Set evaluation criteria
Set ranking criteria
Opportunity development
Projectreviewand ranking
Investment Committee
Board
Final decision
©2012, Rio Tinto, All Rights Reserved
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2008 2009 2010 2011 2012F 2013F 2014F 2015F
Sustaining Pilbara - sustaining mines
Pilbara - historical Approved Pilbara growth
Approved other growth Unapproved Pilbara
• Capex programme managed within boundaries of single A credit rating
• Average sustaining capex reduction of >$1 billion in 2013
• $1 billion reduction to Pilbara investment• Further flexibility in Pilbara growth
programme decisions• No new major project approvals in the
near term• Three significant projects in three
commodities coming on line within the next 12 months:− Yarwun 2 currently ramping up− Oyu Tolgoi phase 1− Pilbara 290 expansion
Capital expenditureUS$bn
17
Capital expenditure is being prioritised on the highest quality projects
©2012, Rio Tinto, All Rights Reserved
Strong returns from key approved growth projects
18
Project
Approved capex($bn)
Capex remaining
($bn)*%
complete IRREBITDA Margin
Pilbara 290 9.7 5.8 40% >15% >40%
Pilbara 360 5.5 5.1 <10% >15% >40%
Oyu Tolgoi Ph 1 6.2 0.2 97% >15% >40%
Kitimat 3.3 2.4 34% >15% 30-40%
Note: IRR presented using internal assumptions for volumes and cost and consensus estimates for foreign exchange and commodity prices (as at 23 November 2012). EBITDA Margin is average margin of total asset in the five years following project completion. Both IRR and EBITDA Margin presented as a range only and may vary according to commodity price outcomes and other variables.
* Excludes unapproved capex. ** Rio Tinto Share
©2012, Rio Tinto, All Rights Reserved
Shaping the portfolio in line with our strategy
• Capturing value from assets that no longer fit our strategy− >20 divestments worth a total of $12bn completed since 2008− Various strategic review and divestment processes underway
• Further divestments to come, expect substantial cash proceeds over next 12+ months
19
Divestments in 2012 and assets announced as under review
Alcan Cable, Specialty Aluminas, ZAC
Non-core aluminium and coal assets; not “large” or “long life”
Diamonds business Insufficient scale in context of broader Rio Tinto portfolio
Pacific Aluminium Non core
Palabora Mining Non core
©2012, Rio Tinto, All Rights Reserved
• Aim to maintain a single A credit rating
• Long term and smooth debt maturity profile− Weighted average maturity of over
nine years− $5.5 billion of bonds issued in
2012 with a weighted average maturity of around 12 years and coupon of 3.6%
− $1.7 billion of bonds falling due over next 15 months
• Approximately two thirds of gross debt at fixed interest rates
Prudent balance sheet management20
130 June 2012 maturity profile adjusted for $3 billion bond issue August 2012 and $0.5 billion bond maturity September 2012
Proforma gross debt maturity profile at 30 June 20121
US$bn
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©2012, Rio Tinto, All Rights Reserved
Further significant cost reductions planned21
Source: IPA
Cash cost reduction targetUS$bn, base year = 2012
Australian capital cost inflation2000 = 100
90
100
110
120
130
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150
160
170
180
190
Australian CPI
Typical Mine + Mineral Processing Facility -
Australia (IPA)
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0.5
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2013 2014
2013 savings 2014 savings
Cost reductions are pre-tax, real terms at constant FX
©2012, Rio Tinto, All Rights Reserved
A disciplined approach to capital allocation
• Prudent balance sheet and single A credit rating in a volatile environment
• Clearly defined approach to capital allocation
• Investment programme focused on the highest quality opportunities
• Substantial reductions in capital plan; further flexibility available
• Progressive dividend provides sustainable long term returns to shareholders
• Return surplus cash to shareholders
• Shaping the portfolio in line with our strategy
• Strong operational performance with further significant cost reductions planned
22
Pilbara, Western Australia
Sam Walsh
23
Chief executive Iron Ore
©2012, Rio Tinto, All Rights Reserved
Chinese peak steel production and iron ore requirements in 2030
24
Robust Chinese steel demand growth to peakat around 1 billion tonnes
Infrastructure and buildings decline as proportion of Chinese steel demand
Source: Rio Tinto Source: Rio Tinto
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2000 2010 2020 2030 2040 2050Iro
n or
e re
quire
men
t (M
t)
Ste
el a
nd S
crap
(Mt)
Crude Steel ProductionScrap GenerationIron Ore Requirement (RHS)
0%
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30%
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100%
2010 2020 2030
Machinery TransportationWhite and Metal Goods Residential BuildingsCommercial Buildings Industrial BuildingsInfrastructure
©2012, Rio Tinto, All Rights Reserved
0200400600800
1000
Announced for 2008-10 Completed by Q4 2010
Certain Probable Possible Rio Tinto Other
Announced and completed iron ore production capacity (global)(million tonnes)
• Announcements from others 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
• High cost Chinese domestic supply required to meet demand in the short to medium term
There continues to be significant constraint to the development of new iron ore supply
25
Source: UNCTAD, Rio Tinto analysis
0
200
400
600
800
1000
Announced for 2012-14 Completed by Q3 2012
©2012, Rio Tinto, All Rights Reserved
Implied Chinese domestic production and spot prices
26
Chinese domestic iron ore productionis highly price sensitive
Chinese domestic private cost curve – 2012$/dmt CFR
Source: Platts, CU Steel, China National Bureau of Statistics, Rio Tinto analysis.
277367 397 382
276
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2009 2010 2011 H1 2012 Aug-Sep12
$/dmt,CFR
Mt/annualised
Implied Chinese domestic iron ore productionPlatts 62% Fe price (RH axis)Custeel domestic fines price (RH axis)
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$/dmt CFR
Cumula
Aug-Sept 2012
H1 2012
©2012, Rio Tinto, All Rights Reserved
2012 (Jan-Oct) – actual shipmentsby pricing mechanism
27
Commercially and technically attuned to the needs of customers
2012 (Jan-Oct) – percentageof products by market
Monthly32%
Qtr Lagged33%
Qtr Actual22%
Spot13%
0%
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30%
40%
50%
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70%
80%
90%
100%
China Japan Korea Taiwan India Europe NorthAmerica
PBF PBL RVF RVL HIY Conc. Pellets
©2012, Rio Tinto, All Rights Reserved
80
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Jan-
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Maintaining iron ore sales and marketingsector leadership
• Matching customers with the right product has led to increased value• 2012 PBF spot sales are on average, more than $2/dmt higher than the prevailing
market price (relative to Platts 62% Fe)• Integrated marketing and operations has led to more efficient loading at ports
28
Platts IODEX Iron ore fines 62% Fe($/dmt CFR)
RTIO PBF spot sales (relative to Platts 62% Fe)(c/dmtu)
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©2012, Rio Tinto, All Rights Reserved
• Final commissioning of CEP phase 1 to 22 Mt/a
• On track for phase 2 to 23.3 Mt/a in 2013
• Consistently high quality products with the lowest phosphorus in the industry
• High grade resource base in excess of 2 billion tonnes1, with an extensive drill programme
• Options for expansion to 50 Mt/a through sequential mine developments available for study
IOC has a pipeline of high grade growth options to meet market demand
29
High grade concentrate stockpiles Sept Iles, Quebec
1Note: Meas = 202Mt @ 39.3 %Fe, Ind = 754Mt @ 38.2 %Fe, Inf = 1,417Mt @ 37.8 %FeSource: Rio Tinto Annual Report 2010
IOC concentrate capacity(Mt/a)
Current 2013 New mine studies
2223.3
50
©2012, Rio Tinto, All Rights Reserved
Rio Tinto Operations
Mesa A
Mesa J
Mt Tom Price
Western Range
Marandoo
Koodaideri
Rio Tinto near-term next generation mines
Carajas50km
Pilbara50km
Rio Tinto & JV tenure
Tier one assets within a globally significant Pilbara resource base
30
Hope Downs 4
Hope Downs 1
Yandicoogina
West Angelas
Channar
Eastern Range
Paraburdoo
Silvergrass
Nammuldi
Brockman 4
Western Turner Syncline
Brockman 2
Caliwingina
©2012, Rio Tinto, All Rights Reserved
0
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Resource, reserves and production1
(million tonnes)
31
Resources and reserves growth and drilling effort ahead of production growth
Planned resource development drilling(kilometres)
1 Resource and Reserves in dry tonnes, reported on a 100% basis and Resources exclusive of Reserves. Details of the Mineral Resources Resource and Ore Reserves from 2001 to 2011 are found in the Rio Tinto Annual Reports
Resource InferredIndicatedMeasured
Reserves:
ProbableProved
Production(RHS)
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
©2012, Rio Tinto, All Rights Reserved
0
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Q1 Q2 Q3 Q4
2010 2011 2012 Capacity
• New nameplate capacity at 237Mt/a− Operations Centre assists deep
system visibility, significantly advancing performance
− Q3 2012 a record productionquarter – 62.9Mt, a 5.2% increaseon Q3 2011
− Shipping remains strong− Closing in on the rail bottleneck
• Continue to build mine stocks in preparation for expansion infrastructure being delivered
Pilbara production(Mt/qtr)
32
Rerated 237Mt/a nameplate capacity as a result of deep system visibility
Source: Rio Tinto
©2012, Rio Tinto, All Rights Reserved
35
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Mar‐11
Apr‐1
1May‐11
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Jul‐1
1Au
g‐11
Sep‐11
Oct‐1
1No
v‐11
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g‐12
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2No
v‐12
TC Heidi, Iggy & Lua
25.2
12.58.3
18.822.8
25.2
31.2 31.135.4
0
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30
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2009 2010 2011 2012
()
Mesa J/K Mesa A Warramboo
• Our last major expansion took the integrated system to 220 Mt/a
• Low capex debottlenecking has also assisted capacity gains
• Operational improvements are continuing to stretch the system,for example:− Robe Valley system performance− Car Dumper rates ~ 3%
improvement− Shiploader rates ~ 4%
improvement
Constant system analysis informsa programme of improvement
33
Robe Valley Production(Tonnes (Mt))
Average of a Dampier shiploader throughput(Mtpa, 90 day moving average)
Annualised Rate post de-bottlenecking & 6th consist commissioning
©2012, Rio Tinto, All Rights Reserved
• 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
Our Mine of the Future is turning competitive advantage into real business value
34
©2012, Rio Tinto, All Rights Reserved
Remaining focused on cash costs management35
Pilbara cash operating unit cost*(2006 = 100)
Unit cost shown on the graph is Rio Tinto share of Hamersley Iron and Robe River calculated from cash costs for Hamersley Iron and Robe River. Excludes royalties, shipping costs, and in 2006 real terms
-
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FY2006
1H2007
2H2007
1H2008
2H2008
1H2009
2H2009
1H2010
2H2010
1H2011
2H2011
1H2012
AUD cost USD cost
• Inflationary pressures persist but signs of easing
• We continue with a strong focus on controlling AUD cash operating unit costs
• 2012 first half costs adversely impacted by weather, as is typically the case
• Increased costs H1 primarily due to manning in preparation for expansion
©2012, Rio Tinto, All Rights Reserved
0%
10%
20%
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50%
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80%
0
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H109 H209 H110 H210 H111 H211 H112
RTIO ($US/t) BHP ($US/t) FMG ($US/t)RTIO % BHP % FMG %
• 2012 EBITDA has been impacted by lower sales prices
• Relative to our competitors our performance remains higher
• 1H 2012 cash cost: US$24.50/tonne
• The Pilbara operations continue to generate strong margins
• Our Pilbara cash operating cost position will decline as we expand, with all key infrastructure in place.
WA IO – EBITDA per tonne(US$/t and %)
36
Leading EBITDA performance in the Western Australia iron ore industry
Source: Rio Tinto ; BHPB; and FMG lodged financial statementsNote: RTIO results exclude Dampier Salt and RT Marine Tonnage based on attributed shipments (adjusted for Robe River at 65% as per financial resultsResults as reported
©2012, Rio Tinto, All Rights Reserved
0
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0 500 1,000 1,500 2,000 2,500
FMG Pilbara Vale
BHP Pilbara RTIO assets
Mtpa
$/wmt CFR
Cumulative capacity
2012 Industry cost curve($/wmt CFR North China)
37
Our assets will continue to be well- positioned on the contestable market cost curve
2020 Industry cost curve($/wmt CFR North China)
Source: Rio Tinto, CRU, AMENote: Includes shipping, royalties and sustaining capital expenditure and is adjusted for inflation and FX
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FMG Pilbara Vale
BHP Pilbara RTIO assets
Mtpa
$/wmt CFR
Cumulative capacity
RT Pilbara
IOC
Simandou
IOC
RT Pilbara
©2012, Rio Tinto, All Rights Reserved
30
20
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10
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0%
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150%
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Budget Additional months
We have demonstrated superior performancein delivering projects
38
Western Australian construction projects performance(Cost (% of budget))
Source: Rio Tinto, Pit Crew Management Consulting
RTIO projects Non RTIOprojects
Over budgetbehind schedule
Under budgetahead ofschedule
Mo
nth
s o
ver
bu
dg
et
New Cape Lambert stockpile yards
©2012, Rio Tinto, All Rights Reserved 39
US$1 billion saving for 360 Mt/aexpansion programme
Note: Timing refers to first production
Yandicoogina
2012 2013 2014 2015
BS4 (II)
Sustaining
Growth
Warramboo
WA -Dep ELegend• Not yet approved• Underway• Deleted
HD4
Marandoo
WTS (II)
WA- Dep B
WTS (I) Nammuldi
BS4 (III)
Silvergrass
Koodaideri (I)$1bn
©2012, Rio Tinto, All Rights Reserved
200
220
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260
280
300
320
340
360
380
2010 2011 2012 2013 2014 2015 2016 2017
Rio Tinto Pilbara iron ore shipping capacity (100% basis)(Mt/a)
40
All “first ore” commitments remain well on-track
Source: Rio Tinto
Aver
age
Annu
alis
edM
tpa
290 First Ore
4Q
1H
340 First Ore
360 First Ore
4Q
©2012, Rio Tinto, All Rights Reserved
200225250275300325350375400425
2010 2011 2012 2013 2014 2015 2016 2017
200225250275300325350375400425
2010 2011 2012 2013 2014 2015 2016 2017
High value optionality of large mine capital vs. low cost incremental system gains
41
Source: Rio Tinto
All growth mines developed(Average Annualised (Mtpa))
Fewer growth mines developed(Average Annualised (Mtpa))
Achievable opportunity 360 Programme (FS) shipped tonnes Port capacity
©2012, Rio Tinto, All Rights Reserved
• Major productivity opportunities exist with volume, capital and labour, with low cost gains, eg− Implement control logic adjustments
and blending control at Brockman 4 (II) plant to provide ~3Mt/a increase
− The 7 Mile rail yard optimisation will deliver ~1Mt/a
− Parker Point reclaimer project expected to deliver ~3Mt/a
− Sustaining capital reduction target of 10-15%
• Achievable through extending our technology- enabled operating model
A robust productivity platform will facilitate growth up to and beyond nameplate capacities
42
©2012, Rio Tinto, All Rights Reserved
Summary
• Ramping supply and customer engagement to meet continuing steel mill customer demand from China and other emerging markets
• First- class asset optionality of a resource-rich Pilbara precinct and the ability to balance large capital mine spend with low cost incremental system gains
• Reaping competitive advantage from innovation in technology and automation, including a rated capacity increased by 7Mt/a through productivity improvements
• Continuing as the Pilbara’s lowest cost, most productive producer
• The demonstrated leader in expansion projects;− Reducing capital spend by $1 billion and holding capital intensity at early
US$150’s− New expansion target of 290Mt/a, 340Mt/a and 360Mt/a− Providing early expansion tonnes at 340Mt/a by 4Q 2014
43
Cape Lambert, Western Australia
Investor seminar - BreakSydney
29 November 2012
Tom Albanese
45
Chief executive
Oyu Tolgoi, Mongolia
©2012, Rio Tinto, All Rights Reserved
• Earnings impacted by lower prices, a high Australian dollar, and high input costs
• Cost per tonne to build new thermal coal capacity now more expensive in Australia than rest of world
• Focus is on pulling short term productivity levers to boost earnings:− first quartile equipment
performance− procurement− labour cost/productivity
• Significant cost compression in 2013• Coal project options in Australia
under review
Energy: challenging market and cost position46
Source: “Opportunity at Risk: Regaining our competitive edge in minerals resources”, commissioned by and prepared for the Minerals Council of Australia, Port Jackson Partners September 2012
Capital spend to build new thermalcoal capacityUS$ per tonne of capacity
7361
ROW Australia
106
174
ROW Australia
2007 2011/12
©2012, Rio Tinto, All Rights Reserved
Coal• Mozambique: − Significant exploration activity in Moatize Basin− Resource and infrastructure studies progressing
with industry & Government
Uranium• Promising exploration programme in the highly
prospective Athabasca basin following 2012 acquisition of Hathor
• Exploration decline commenced at ERA to prove up and extend underground uranium resource at Ranger
• Active exploration of new satellite resource (Z20) at Rössing. Further development of growth projects dependent on market conditions
Divestments• US$227 million net gain on sale of Extract and
Kalahari interests• US$50 million from sale of Riversdale Holdings
(74% shareholder in ZAC)
Energy portfolio maintains long term optionality47
Roughrider Project, Saskatchewan
Benga Mine, Mozambique
©2012, Rio Tinto, All Rights Reserved
• $366m sustainable EBITDA improvements since 2011
• Annual business improvement run-rate exceeding $250 million
• Accelerating and increasing cost reduction − Further reductions in SG&A− Productivity improvements
• Revenue improvement from production creep, value added product and bauxite
• Yarwun 2 and Kitimat to deliver EBITDA improvement
• Portfolio management
Rio Tinto Alcan on track to deliver over $1.6 billion of EBITDA improvement by end of 2015
48
*As at September 2012
Business improvement by source%
Total transformation$ millions
0
500
1000
1500
2000
2011 2012* 2013 2014 2015
Actual Business improvement Growth
51%
17%
16%
16%
CostsCreepValue Added ProductBauxite
©2012, Rio Tinto, All Rights Reserved
• Binding power agreement with Inner Mongolia signed− All lines energised and commissioning
commenced week of November 12th
• Project 97% complete
• Sales contracts for 75% of concentratein place
• Transitioning to 90% Mongolian operations workforce
Countdown to first commercial production at Oyu Tolgoi
49
Event Timeline
First ore through SAG mill January 2013
First concentrate production 1 month post commissioning
Commercial production(30 days at 70%)
May – June 2013
Alan Davies
50
Chief executive, Diamonds & Minerals
©2012, Rio Tinto, All Rights Reserved
• Portfolio of industry leading businesses
• Global macro-trends are driving mid-late cycle demand growth
• TiO2 poised to become a significant contributor to Group earnings over the coming decade
• Strong underlying position in minerals, with significant optionality to grow
• Well placed to supply the growing Asian salt market
• Diamonds strategic review progressing
• Simandou is changing the way mining projects are delivered in Africa
A leader in our markets and well placedto capture value from the economic cycle
51
Richards Bay Minerals, South Africa
©2012, Rio Tinto, All Rights Reserved
A portfolio of industry leading assets52
• #1 producer of TiO2 feedstocks
• Mines in South Africa, Canada, Madagascar with significant expansion potential
• Portfolio optimised through technology and expertise
• #2 producer of refined borates
• Tier one mine in California with expansion optionality
• Jadar lithium-borate project in Serbia
• Potash JV in Saskatchewan
• #3 rough diamond producer &leader in coloureds
• Mines in Aus, Canada, Zimbabwe
• Project in India• Strategic review
underway
• #1 exporter of solar salt
• JV between Rio Tinto (68%), Marubeni (22%), Sojitz(10%)
• 3 mines in Western Australia
• Largest untapped iron ore deposit
• High grade (65-66% Fe)
• Lowest quartile cost producer
• Unique development partnership
Titanium dioxide Minerals Diamonds Salt Simandou
©2012, Rio Tinto, All Rights Reserved
Pigment apparent consumption Kg of pigment, GDP per capita (2001 – 2011)
53
Titanium dioxide to follow a similar development path to steel
TiO2 demand developmentMillion tonnes, pigment (LHS), crude steel (RHS)
Source: Rio Tinto, TZ Minerals International Source: Rio Tinto, World Steel Association
Steel –1991
Steel –2011
0
200
400
600
800
1000
1200
1400
1600
1800
2000
0
2
4
6
8
10
12
14
16
18
2001 2011 2020 2030 2040 2050
Developing EconomiesChinaDeveloped economiesWorld steel production (RHS)
China(2040)
©2012, Rio Tinto, All Rights Reserved
• 3 new operations the size of RBM will need to be brought online by 2020 to satisfy demand projections
• Slow industry supply-side response
• Some market softness in 2013 expected – coincides with two furnace rebuilds
• RBM acquisition provides control of tier 1, highly cash generative asset
• Potential to further expand mining and refining capacity by up to 50%
• Strong resource position to capture further demand upside
TiO2 supply and demand growthMillions TiO2 units
54
Rio Tinto Iron and Titanium has optionsto participate in market growth
Source: Rio Tinto
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
10
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Online supply Committed projectsDemand Rio Tinto growth options
©2012, Rio Tinto, All Rights Reserved
Co-products add significant portfolio value
• Leveraging technology to create valuable products instead of waste
• Co-products include high purity iron, steel, metal powders, zircon and rutile.
• Provides greater flexibility to respond to changing market environment
• Co-products account for nearly 50% of revenues for the last five years
• Steady increase in value projected
55
RTIT revenue by product lineUS$, billions, 100% basis
0
0.5
1
1.5
2
2.5
2007 2008 2009 2010 2011
Co-product revenue TiO2 feedstock revenue
©2012, Rio Tinto, All Rights Reserved
• Replacing long-term price contracts
• Exposure to prices potentially up to 300% higher than those under long term contracts
• Inventory overhang for zircon and high grade feedstocks putting pressure on short term pricing
• Zircon is produced as a non-discretionary by-product of TiO2
• Medium to long term industry fundamentals remain robust, underpinning titanium dioxide business
• Leveraging marketing experience
Outlook continues to be strong with some short term oversupply in high grade feedstock
56
Source: Rio Tinto
Price progression estimates from TZMI and brokersUS$ nominal
TiO2 contract volumes split 2011 – 2015‘000 TiO2 units
0
1000
2000
3000
2005 2007 2009 2011 2013
Rutile TiO2 slags Zircon
0500
1000150020002500
2011 2012 2013 2014 2015
Longer-term pricing Shorter-term pricing
©2012, Rio Tinto, All Rights Reserved
Supplying borates to high growth end users57
Global refined borate demand driversCumulative kmt boric oxide B2O3 equivalent
Industry demand for 5 Mol1 products5 Mol industry equivalent industry, B203 kmt
Industry demand for boric acid productsBoric acid industry equivalent industry, B203 kmt
• High growth in refined borates driven by rising environmental and productivity standards
• Product strategy focussing on supplying the high quality products to high demand end users
• Short term tightness in sodium borates industry, mid to long term upside in boric acid
*CAGR from 2012 – 2020Source: Rio Tinto
15 Mol is the primary sodium borate product sold by RTM
5.4%
6.1%
5.2%
CAGR*
0200400600800
100012001400
Urbanisation Energy Efficiency Agriculture
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total 5 mol supply Total 5 mol equivalent demand
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total BA supply Total BA equivalent demand
©2012, Rio Tinto, All Rights Reserved
• Tier 1 orebody at Boron, California• Consistent quality and reliability• Flexible production responsive to
market demand • Leveraging upside pricing potential • Incremental capacity expansions• MDDK* introduces a new process− Supports efficient mine utilisation− Optimise product mix− Low capital intensity
• Strategic options for development from Jadar
Strategic optionality built into theborates business
58
Source: Rio Tinto
Global refined borate share of sales2010, %
Rio Tinto productionB203 kmt
RTM, 33.6%
Eti, 38.7%SVM, 6.5%
SAM, 6.2%
Bor, 3.4%China, 10.5%
Other, 1.1%
• MDDK – Modified Direct Dissolving of Kernite
©2012, Rio Tinto, All Rights Reserved
Expansion into complementary sectors59
Jadar Lithium-Borate, Serbia Potash, Saskatchewan
• 2 high value product streams from one mine• Expansion of global borate sales• Potential to supply 20% lithium market• Currently in pre-feasibility phase
• Developement JV in premier potash basin• Synergies with borates businesses• Exploration targeting a tier one resource
suitable for solution mining – initial results promising
• Proximity to available infrastructure, including Rio Tinto owned Kitimat port
©2012, Rio Tinto, All Rights Reserved
• Three operations in Western Australia with a combined capacity in excess of 10Mtpa with ability to expand to meet demand growth
• Synergies with the iron ore business• Demand growth driven by Chinese
imports to fuel automotive, construction and electronic sectors
• Potential for incremental expansion in response to demand growth in China
• Lower energy costs compared with China domestic well salt competitors
• ~75% 2013 pricing contracts completed
Dampier Salt1 – the world’s largest exporterof salt
60
1Rio Tinto 68%, Marubeni 22%, Sojitz 10%Source: Rio Tinto
Asian salt demandMillion tonnes
Chinese salt importsMillion tonnes
-
40
80
120
160
2010 2014 2018 2022 2026 2030
Vietnam Phillipines Malaysia IndonesiaTaiwan South Korea Japan China
1.62.7
4.15
2009 2010 2011 2012F
CAGR33%
3%
0%0%0%8%
10%
16%
CAGR
©2012, Rio Tinto, All Rights Reserved
• Strong industry fundamentalsdriving price− Lack of significant discoveries and
long development lead times− Late cycle demand development
being led by China and India
• Continuing to invest in growth options− Argyle underground moving
forward, Crusher 1 to be commissioned early Q1 2013
− Open pit mining at Diavikcomplete, underground mining from all three pipes underway
− Bunder project in pre-feasibility
Diamonds are well positioned forprofitable growth
61
Courageous Spirit, inaugural Bunder diamond jewellery collection
©2012, Rio Tinto, All Rights Reserved
Sierra Leone
Liberia
Faranah
Beyla
Mamou
Conakry
Forécariah
Ile Coastal Plain Mamou Range Eastern Plateau Region MineKabak
Guinea
• Largest known undeveloped iron ore deposit in the world
• Progressive development of railway, mine and port
• First shipment of ore by mid-2015
• Project is advancing against clear milestones agreed with the Government of Guinea
• Investment will be phased in line with:− Finalisation of Investment
Agreement− Finalisation of partner and project
financing strategy − Government approvals for work on
the ground
Simandou, a tier one iron ore projectin a world class province
62
New airstrips
Pre-stripping (Oueleba main)
Camps & logistic centresInfrastructure corridorMarine Offload FacilityStockyard earthworks
Potential phased ore delivery Proposed rail line
West rail (multiple fronts)East rail (multiple fronts)
Access Road and Causeway
Progressive delivery of the Simandou project
©2012, Rio Tinto, All Rights Reserved
• Partnership underpins development strategy and risk management approach
• Local and sustainable development− Cross-sector partnerships to
encourage economic diversification
− Capacity development and training to build skills and institutions
• Infrastructure creates a key lever for regional economic development
A project of this magnitude requires a unique approach to development
63
Drill pads, Simandou,Guinea
©2012, Rio Tinto, All Rights Reserved
• Simandou infrastructure declared a Project of National Interest for Guinea by Presidential Decree
• Scope and location of rail and port approved
• Construction of the pioneering marine offload facility underway
• Proceeding with preparatory works such as roads along corridor and to the mine, logistic centres and construction camps
• Engineering progressing towards a Bankable Feasibility Study
• Completion of Social Impact and Environment Assessment
Phased development and ramp up64
Road development between Farannahand Kissidougou
Ground clearing work at the port
©2012, Rio Tinto, All Rights Reserved
• Entering a new phase of demand growth for commodities
• Global shift in wealth and demographic profiles driving demand for our products
• Assets provide exposure to different economic drivers and later-cycle inflection points
• Maximising shareholder value through a diverse portfolio of world class, long life, expandable assets operating as sector leaders
• Generating options to participate in market demand growth
• Developing a tier 1 iron ore project in Guinea
Diamonds and Minerals poised to becomea significant contributor to the Group
65
Rehabilitated land at Richards Bay Minerals,South Africa
Shanghai, China
Tom Albanese
66
Chief executive
©2012, Rio Tinto, All Rights Reserved
Executing our strategy
• Long term industry fundamentals remain attractive
• Rio Tinto’s strategy remains unchanged – large, long life, low cost assets
• Disciplined and rigorous capital allocation and prioritisation
• Optimisation of capital expenditure; further flexibility available
• Strong operational performance with further significant cost reductions planned
• Material cash proceeds to be delivered through ongoing portfolio optimisation
• Technology and innovation delivers substantial value
• Focused on maximising total shareholder return
67
Cape Lambert, Western Australia
Investor seminarSydney
29 November 2012