Delivering value through the cycle
Michael Gollschewski, managing director Pilbara Mines Global Iron Ore & Steel Forecast Conference 8 March 2016, Hyatt Regency, Perth
First iron ore shipment from Dampier August 1966
Delivering value through the cycle Michael Gollschewski, managing - - PowerPoint PPT Presentation
Delivering value through the cycle Michael Gollschewski, managing director Pilbara Mines Global Iron Ore & Steel Forecast Conference 8 March 2016, Hyatt Regency, Perth First iron ore shipment from Dampier August 1966 2 Cautionary
Michael Gollschewski, managing director Pilbara Mines Global Iron Ore & Steel Forecast Conference 8 March 2016, Hyatt Regency, Perth
First iron ore shipment from Dampier August 1966
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. 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
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
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 marke t 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. In this presentation all figures are US dollars unless stated otherwise. 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. 2
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Iron Ore all injury frequency rate
Per 200,000 hours worked
450 employees trained as peer supporters
3
20 40 60 80 100 120 140 250 500 750 1000 1250 1500
2015 Wood Mackenzie iron ore cost curve (Mt/a)
USD/wmt CFR
60 120 180 0% 20% 40% 60% 80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Iron ore price (FOB WA, US$/dmt)
EBITDA margin RTIO Pilbara Price
Rio Tinto Pilbara EBITDA margin vs. iron ore spot price
4
price falls
Source; Rio Tinto, Wood Mackenzie
CY2015 Production (Mt) CY2014 Production (Mt)
50 100 50 100 50 100 50 100 50 100 50 100 50 100 50 100
Liaoning Southwest Shanxi Inner Mongolia Shandong Other Provinces Anhui Hebei
250 300 350
National Total
32 5 275
marginal production
110
1,600 1,650 1,700 1,750 1,800 1,850 1,900
Mt
Iron ore market balance China domestic production
5
Source; Rio Tinto
6
Pilbara
working capital
improvement initiatives
FY15
reduced from 42 hours to 35 hours
truck operator
completed on time in 2015
Source; Rio Tinto, company reports
20.4 18.7 16.2 13.8 H1 2014 H2 2014 H1 2015 H2 2015
Pilbara cash unit cost
US$ per tonne 22000
25000 28000 38000 15000 20000 25000 30000 35000 40000 2013 2014 2015 2016
Haul truck engine life extension
Hrs
7
Source; Rio Tinto
8
Product options
requirements
High value initiatives
System optimisation
Improved cycle time from 42 hours to 35 hours
13% improvement in load & haul costs 14% improvement in effective truck utilisation 10% increase in drill availability
Improved utilisation of ore body Improved drill and blast accuracy Reduced explosive costs
5 Mt/a, commenced 2015/2016 5 Mt/a, commencing in 2017 Access low phosphorous ore for Pilbara Blend
90.0% 100.0% 110.0% 120.0% Jan-15 Apr-15 Jul-15 Oct-15
Autonomous Haul Trucks Performance Effective utilisation indexed to all manned sites
9
Source; Rio Tinto
Cape Lambert ore train
10