MBA(managing strategic resources and operation)

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Mine of the Future™ – Rio Tinto’s Innovation Pathway John McGagh – Head of Innovation 25 September 2012 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 thi s 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. Why innovate? Improve productivity, to .. • Improve safety • Improve capital productivity • Improve labour productivity • Improve recovery rates • Remove process waste • Reduce energy use • Find new ore bodies • Recover from difficult ore bodies • Extend resource life 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 3 Demand outlook Shenzhen 1982 Shenzhen 2007 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 4 Supply picture 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 5 Productivity – the Australian example 85.0 95.0 105.0 115.0 125.0 135.0 145.0 155.0 Multifactor productivity (MFP) index – mining MFP Index Source: Australian Bureau of Statistics (ABS) (2011), 5260.0.55.002 – Experimental estimates of industry multifactor productivity, 2010-11 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 6 Implementation of technologies is key Our Mine of the Future™ is shaped by four significant value levers Find Develop Mine Recover • Find future tier one ore bodies • VK1 in initial flight trials • Complex testing programme in 2012 • Develop future block cave mines safer, faster, better • Tunnel boring system trials to commence at Northparkes in 2012 • Optimise resource productivity • Expansion of driverless truck fleet • Operations Centre • Smart drilling and blasting • Autonomous trains (AutoHaul™) • Recover more from mineral deposits • IronX™ iron ore recovery pilot plant to be scaled up in 2012 • NuWave™ copper sorting pilot plant being commissioned at KUC 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 7 Rio Tinto centres Formal long term (around 5 years) alliances with world class institutions provide Rio Tinto access to stable research resources to pursue targeted Rio Tinto programmes. Technology partnerships Strategic partnerships and MoUs with leading global suppliers to help develop technology to commercial outcomes. Centre for Underground Mine Construction Centre for Advanced Mineral Recovery Centre for Materials and Sensing Centre for Advanced Mineral Sorting Centre for Mine Automation 11 5 6& 4 1 14 15 Komatsu Aker Wirth Atlas Copco e2v Tomra University of Nottingham University of Western Australia Herrenknecht Rio Tinto innovation network model 6 1 2 3 4 5 6 Rio Tinto Innovation Centre 1 2 3 4 5 6 1 2 3 4 5 6 7 8 7 1 2&8 3 5 6&4 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 8 • Structured control & governance • Data management & security • Rigorous investment proposals • Freedom-to-operate • Patent families and walls • Trade secrets, copyright & trademarks, individual contracts Idea Proof of Concept Pilot Demo Deploy Support Innovation without intellectual property protection is philanthropy Protecting our intellectual property 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 9 2007 Trials starts on the Operations Centre Automated truck project starts in Western Australia 2008 Automated train trial 2009/10 Automated trucks Pilbara ‘A Pit’ trial 2010 Drillers Aid trial 2012 Cab-less Drill 2011 Komatsu MOU for 150 autonomous trucks deployment 2010/11 Automated drills trial 2010 Operations Centre commissioned 2012 Automated Train Deployment 2008 Atlas Copco Alliance 2012 Advanced Survey Surface – innovation timeline 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 10 Surface mines of the past, present and future Circa 1970 Circa 2012 Circa 2005 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 11 Holistic operational view • Holistic view of the operations • Integrated, near real-time information • Improve decision making • High levels of predictability • Improved productivity and profitability 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 12 Our future: mine automation system 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 13 Operations Centre: aligning systems “Mission Control” for entire Pilbara network: • 14 mines (some 31 pits) • 1,500km of rail network • 3 port terminals • Power & other infrastructure End-to-end visibility for: • 200 controllers & schedulers • More than 230 technical planning & support staff 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 14 • The “A Pit” trail commenced late 2008 ran for ~900 days. • Trial with AHS trucks (plus drills/comms) • Designed to build up our safety, operational, and regulatory experience • Late 2011 MoU signed with Komatsu for a minimum of 150 Autonomous Haul Trucks in the Pilbara by 2015 • Intent is to underpin Rio Tinto Iron Ore growth with autonomous trucks • Technology operationally deployed in the Junction South East pit (~25 Mt/a) at Yandicoogina mine with 10 trucks. • Rio Tinto Iron Ore managing deployment Autonomous haulage – unsurpassed experience 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 15 Autonomous haulage roll-out 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 16 AutoHaul™ and autonomous drills • Investment of US$518 million to introduce autonomous train operations (AutoHaulTM) across our integrated Pilbara rail network • First long-distance heavy-haul system of its kind in the world • Supports Pilbara expansion • Greater efficiency and productivity • Autonomous drill being trialled across Pilbara network • First cabless drill has arrived and is undergoing testing • Efficiency benefits as single operator can op
erate multiple drills • Consistency in drilling outcomes 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 17 Automation brings productivity increases Reduce schedule variability (2008 = 100) Improved train dumper productivity (2008 = 100) 100 115 127 131 2008 Average 2009 Average 2010 Average 2011 Average 100 66 52 53 2008 Average 2009 Average 2010 Average 2011 Average Example: Safety benefits of autonomous trucks, A Pit Trial before close out …. Significant AHS incidents: Zero Safety incidents: Zero Days in full production: 897 days TMM to date: 57,026,160 t Number of cycles: ~190,000 Total distance travelled: ~570,000 km 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 18 The mining industry is a community comprising miners, suppliers and stakeholders. All members of this community can benefit through new jobs and new opportunities as we pursue productivity improvement through innovation Example Between 2006/07 and 2008/09: • Global revenue for the Australian MTSE industry grew by an annual rate of 19.5% • Export revenue grew by 25.1% • Australian revenue grew by 17.4% • Export revenue was 40% of Australian revenue in 2008/09, up from 35% in 2006/07 • The technology applications sector of the MTSE industry grew by 10.8% Source: ABARE-BRS research report “An economic survey of companies in the Australian mining technology, services and equipment sector, 2006 – 07 to 2008 – 09” …and benefit the mining services industry 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 19 Productivity enhancement – excellence centres Idea Proof of Concept Pilot Demo Deploy Support 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 20 Operations & Excellence Centre Operations Centre • Aligning and integrating systems • Value chain and logistics optimisation • RTIO Operations Centre in Perth controlling Pilbara mines Excellence Centre • Optimisation of mine to metal, “experts-on-line” • Real time (24×7) remote optimisation of our production systems • Prototype operational H2 2012 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 21 People are, and will remain, the “glue” Operations Centre AHS Fleets Autonomous Drills MAS Architecture Remote Ship Load Drillers Aid Copper NuWave™ 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 22 Underground Dvt. Rio Tinto’s Mine of the Future™ 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 23 Questions 25 September 2012 © 2012, Rio Tinto, All Rights Reserved 24
Generating significant business value Andrew Harding Chief executive – Iron Ore, China, Japan, Korea AJM Global Iron Ore & Steel Forecast Conference, Perth 2014 ©2014, 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 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 forwardlooking 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. 2 ©2014, Rio Tinto, All Rights Reserved 3 Bringing capacity on-line to meet growth in traditional and developing regions Source: China National Bureau of Statistics, CISA, Rio Tinto Source: United Nations, Global Insight, Rio Tinto Chinese steel demand Million tonnes per annum Growth fundamentals 2010-30 CAGR % 6.1 2.0 0.3 0 5 10 GDP per capita Urban population Population 6.1 2.3 1.0 0 5 10 3.7 2.2 1.0 0 5 10 GDP per capita Urban population Population 2.4 1.9 1.6 0 5 10 China ASEAN Middle East India 0 100 200 300 400 500 600 700 800 2011 2012 2013 2014 ≈4 % (e) 7.5% 2.2% ©2014, Rio Tinto, All Rights Reserved Q Lagged Monthly Q Actual Spot • Pilbara Blends continue to be base load products for Asian steel industry • Unprecedented demand for 2014 off-take opportunities due to our reputation of providing stable quality and reliable supply • Of our 2014 volume: • ~85% will be sold under term contracts • ~15% uncontracted for sale into the spot market, in support of robust and transparent indices • Pilbara Blend sustainable for decades to come 2014 Pilbara off-take agreements by pricing mechanism 4 Rapid uptake of 2014 off-take opportunities with unfulfilled demand for Rio Tinto iron ores ©2014, Rio Tinto, All Rights Reserved • Mine, rail and port network whollyowned by IOC ( Rio Tinto 58.7%) • Consistently high quality products with the lowest phosphorous in the industry • 2013 saleable production of 15.4Mt, 9% higher than 2012 • CEP project adds mining fleet, ore delivery, grinding and spiral capacity and power infrastructure • Concentrate expansion project to 23.3 Mt/a expected in H1 2014. Iron Ore Company of Canada operations 5 Iron Ore Company of Canada – fully integrated mine to port system ©2014, Rio Tinto, All Rights Reserved 6 The Pilbara – high quality assets, fully owned and operated, with great optionality • System fully integrated via Operations Centre • All product blending undertaken at port • Strong Resources & Reserves position provides optionality Rio Tinto Pilbara operations Assets • 15 mines • 1,600kms of rail • 4 independent port terminals, with 11 berths, • 3 power stations ©2014, Rio Tinto, All Rights Reserved 0 10 20 30 40 50 60 70 80 Q1 Q2 Q3 Q4 • Severe weather impacts in 1Q, 2Q and 4Q 2013. • Increasing capacity and system alignments enabled improving performances beyond 237Mt/a rating • 2013 mine production of 251Mt (YoY +5%) • 66.5Mt mine production and 68.8Mt shipping in Q4 2013 • Strong contribution to EBITDA and underlying earnings 7 Pilbara performance key to delivering strong 2013 financial results Pilbara mine production Million tonnes per quarter 2010 2011 2012 2013 290 237 Source: Rio Tinto 2013 2012 Change Production (Million tonnes100%) 266.0 253.5 +5% Underlying EBITDA ($ millions) 17,442 15,679 +11% Underlying earnings ($ millions) 9,858 9,247 +7% Iron Ore results Global 2013 vs 2012 ©2014, Rio Tinto, All Rights Reserved 8 Continuous improvement outcomes realise significant value Mine • “Right- sizing” the fleet initiative optimising cycle times and payload management • 6 out of 55 West Angelas haul trucks redeployed to other mines • Reductions to occur at other mines Rail • Continued train cycle improvements with electronic controlled pneumatic brakes and additional consists • Payload increases through new train specs and mass and volumetric loading controls • 2013 new consist payload record of 27kt Port • Parker Point outload capacity increased 12Mt/a • Changes to reclamation control program and stockpile profiling • Dual reclaiming to maximise ship loading Pooled fleet railings and payload 26.3 26.4 26.5 26.6 26.7 26.8 26.9 27.0 27.1 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Railings Payload Railings (no. of trains) Payload (kt) Reclaimer ©2014, Rio Tinto, All Rights Reserved • Improved crane scheduling and alignment of maintenance shuts • $1.4M saved at Brockman 4 alone • Rationalised training and streamlined delivery • Cost savings ~$20M/ yr • Over 200,000 person hours* returned to the business • Hire car expenditure savings ~ $4M • Centralised administration function savings over $5 million per annum 9 Relentless focus on cost- outs to also continue 2013 productivity improvements Hours returned to the business via training transformation 0 30,000 60,000 90,000 120,000 150,000 0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Cumulative *December 2013 annualised Stockpile ©2014, Rio Tinto, All Rights Reserved WA IO – EBITDA per tonne (US$/t and %) 0% 10% 20% 30% 40% 50% 60% 70% 80% 0 20 40 60 80 100 120 140 H110 H210 H111 H211 H112 H212 H113 H213 EBITDA % US$/t RTIO ($US/t) BHP ($US/t) FMG ($US/t) RTIO % BHP % FMG % 10 Improvements are maintaining the business as the Pilbara’s lowest cost producer Source: Rio Tinto ; BHPB; and FMG lodged financial statements Note: RTIO results exclude Dampier Salt and RT Marine Tonnage based on attributed shipments (adjusted for Robe River at 65% as per financial results). Results as reported. All publically available information Full year cash unit cost ($/t) 0 5 10 15 20 25 2006 2007 2008 2009 2010 2011 2012 2013 AUD cost USD cost • 2013 full year cash unit cost was US$20.80/t, 11% lower than
2012 • Retaining best margin of Pilbara producers Source: Rio Tinto ©2014, Rio Tinto, All Rights Reserved • 290 Mt/a first ore on ship 24 August • 4 months ahead of schedule • $US400M under budget • 220 – 290Mt/a being delivered at a capital intensity <us$140 t=”” (100%)=”” •=”” extra=”” 53mt=”” a=”” pilbara=”” system=”” nameplate=”” capacity=”” by=”” end=”” 1h=”” 2014=”” nammuldi=”” below=”” water=”” table=”” mine=”” completion=”” on=”” target=”” for=”” q4=”” deliberate=”” bulk=”” stocks=”” strategy,=”” with=”” ~5mt=”” draw-=”” down=”” in=”” development=”” 11=”” 290mt=”” infrastructure=”” complete=”” and=”” now=”” quickly=”” ramping=”” to=”” fill=”” complete,=”” 360mt=”” wharf=”” progress=”” ©2014,=”” rio=”” tinto,=”” all=”” rights=”” reserved=”” expansion=”” fully=”” approved=”” underway=”” expected=”” during=”” h1=”” 2015=”” cape=”” lambert=”” major=”” work=”” packages=”” have=”” been=”” awarded=”” earthworks=”” civil=”” works=”” near=”” smp=”” commenced=”” rail=”” rolling=”” stock=”” contracts=”” duplication=”” track=”” construction=”” full=”” commissioning=”” late=”” 2q=”” ‘14=”” 12=”” 360=”” mt=”” progressing=”” screenhouse=”” 6=”” first=”” train=”” at=”” 37.5kp=”” car=”” dumpers=”” &=”” 7=”” rapid,=”” low-=”” cost=”” pathway=”” increase=”” production=”” more=”” than=”” 60mt=”” 2017=”” utilises=”” brownfield=”” options=”” opportunities=”” existing=”” operations=”” silvergrass=”” decision=”” has=”” deferred=”” koodaideri=”” not=”” required=”” the=”” medium=”” term=”” us$3=”” billion=”” saving=”” growth=”” capital=”” over=”” next=”” 3=”” years=”” intensity=”” reduce=”” from=”” mid=”” $150s=”” $120-130=”” (100%=”” basis)=”” 13=”” cost,=”” brownfields=”” extracts=”” significant=”” value=”” potential=”” (average=”” annualised)=”” million=”” tonnes=”” per=”” annum=”” 225=”” 250=”” 275=”” 300=”” 325=”” 350=”” 375=”” 2013=”” 2016=”” 2018=”” example=”” expansions=”” indicative=”” west=”” angelas=”” (approved=”” 02=”” 2014)=”” ~6=”” yandicoogina=”” ~8=”” brockman=”” paraburdoo=”” ~7=”” ~9=”” other=”” –=”” 10=”” source:=”” tinto=”” western=”” turner=”” syncline=”” -=”” 1=”” 14=”” further=”” being=”” realised=”” sustaining=”” tonnage=”” projects=”” phase=”” 2=”” february=”” additional=”” 7mt=”” replace=”” tom=”” price=”” ore=”” commence=”” new=”” wts=”” plan=”” allows=”” extension=”” of=”” trucking=”” model=”” least=”” year=”” deferral=”” primary=”” crusher=”” linking=”” conveyor=”” ~$500m=”” expenditure=”” npv=”” unchanged=”” autonomous=”” haulage=”” update=””>130Mt autonomously moved between 2008-2013. • Improved safety and control • Reduced truck numbers • Expect 10-15% increase in effective utillisation in mature operation • AutoHaul™ • first heavy haul network in the world to be fully automated • scheduled to be operational in 2015 • Safety, cycle time and capacity improvements • Eliminating driver changeovers • High performing teams • Cohesive culture is fundamental • United focus, creative solutions and excellent performance 15 Mine of the Future™ programme continues to turn competitive advantage into real business value Autonomous haul trucks AutoHaul™ ©2014, Rio Tinto, All Rights Reserved • Relentless focus on safety • Continual liaison with full range of key stakeholders • Drawing greater value through: • operational performance across integrated system • cash costs/ margin management • on time/ budget growth projects • sales and marketing strategies • utilisation of new technology • Remaining flexible to changing internal and external environments 16 Proven sector leadership continues to return significant value Haul truck
1. Rio Tinto – Introduction
2. Rio Tinto Australia – Introduction
3. Rio Tinto ‘Mine of the Future’ – History & Evolution
4. Mine of the Future Project – Current Status of Components
5. Sustainable Mining (Rio Tinto)
6. Supply Chain and Global Logistics (Rio Tinto)
7. Intersection of strategy, Operations, Technology and mining
8. References
1. About Rio Tinto. (n.d.). Retrieved from www.riotinto.com: http://www.riotinto.com/aboutus/about-rio-tinto-5004.aspx
2. Francesca Marenge, J. M. (n.d.). Rio Tinto & Mine of the Future. Retrieved from www.academia.edu: https://www.academia.edu/9844005/Case_Study_of_Rio_Tinto_and_Mine_of_the_Future
3. Innovation, J. M.-H. (2012). Mine of the Future™ –Rio Tinto’s Innovation Pathway. Rio Tinto.
4. Iron Ore. (2014). Retrieved from www.riotinto.com: http://www.riotinto.com/iron-ore-158.aspx
5. James Manyika, M. C. (2013). Disruptive technologies: Advances that will transform life, business, and the global economy. Retrieved from www.mckinsey.com: http://www.mckinsey.com/insights/business_technology/disruptive_technologies
6. Mine of the Future™. (n.d.). Retrieved from www.riotinto.com: http://www.riotinto.com/ironore/mine-of-the-future-9603.aspx
7. Rail. (n.d.). Retrieved from www.riotinto.com: http://www.riotinto.com/ironore/rail-9752.aspx
8. report, R. T. (2014). Delivering sustainable shareholder returns.
9. Rio Tinto. (2014). Retrieved from www.riotinto.com: http://www.riotinto.com/aboutus/about-rio-tinto-5004.aspx
10. Rio Tinto in Australia. (n.d.). Retrieved from www.riotinto.com: http://www.riotinto.com/australia/rio-tinto-in-australia-9664.aspx
11. Rio Tinto unveils latest Mine of the Future™ innovation. (2014, March 13). Retrieved from www.riotinto.com: http://www.riotinto.com/media/media-releases-237_10054.aspx
12. Sustainable development. (n.d.). Retrieved from www.riotinto.com: http://www.riotinto.com/ironore/sustainable-development-9604.aspx
13. Tinto, R. (2015). Rio Tinto in Australia. Retrieved from www.riotinto.com: http://www.riotinto.com/australia-9559.aspx
14. Unlimited, A. (2012). Australia – Sustainable Mining.
15. WA, I. O. (2012). Sustainable development report 2012. Rio Tinto.

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