Portside trading and dampier salt total material moved
2020
Full Year Results
This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this report, 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. 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.
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, but are not limited to: an inability to live up to Rio Tinto’s values and any resultant damage to its reputation; the impacts of geopolitics on trade and investment; the impacts of climate change and the transition to a low-carbon future; an inability to successfully execute and/or realise value from acquisitions and divestments; the level of new ore resources, including the results of exploration programmes and/or acquisitions; disruption to strategic partnerships that play a material role in delivering growth, production, cash or market positioning; damage to Rio Tinto’s relationships with communities and governments; an inability to attract and retain requisite skilled people; declines in commodity prices and adverse exchange rate movements; an inability to raise sufficient funds for capital investment; inadequate estimates of ore resources and reserves; delays or overruns of large and complex projects; changes in tax regulation; safety incidents or major hazard events; cyber breaches; physical impacts from climate change; the impacts of water scarcity; natural disasters; an inability to successfully manage the closure, reclamation and rehabilitation of sites; the impacts of civil unrest; the impacts of the Covid-19 pandemic; breaches of Rio Tinto’s policies, standard and procedures, laws or regulations; trade tensions between the world’s major economies; increasing societal and investor expectations, in particular with regard to environmental, social and governance considerations; the impacts of technological advancements; and such other risks identified in Rio Tinto’s most recent Annual Report and accounts in Australia and the United Kingdom and the 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, or filed with, 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 report. Rio Tinto expressly disclaims any obligation or undertaking (except as required by applicable law, the UK Listing Rules, the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and the Listing Rules of the Australian Securities Exchange) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Rio Tinto’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Reference to consensus figures are not based on Rio Tinto’s own opinions, estimates or forecasts and are compiled and published without comment from, or endorsement or verification by, Rio Tinto. The consensus figures do not necessarily reflect guidance provided from time to time by Rio Tinto where given in relation to equivalent metrics, which to the extent available can be found on the Rio Tinto website.
By referencing consensus figures, Rio Tinto does not imply that it endorses, confirms or expresses a view on the consensus figures. The consensus figures are provided for informational purposes only and are not intended to, nor do they, constitute investment advice or any solicitation to buy, hold or sell securities or other financial instruments. No warranty or representation, either express or implied, is made by Rio Tinto or its affiliates, or their respective directors, officers and employees, in relation to the accuracy, completeness or achievability of the consensus figures and, to the fullest extent permitted by law, no responsibility or liability is accepted by any of those persons in respect of those matters. Rio Tinto assumes no obligation to update, revise or supplement the consensus figures to reflect circumstances existing after the date hereof.
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Image supplied courtesy of Puutu Kunti Kurrama and Pinikura (PKKP) people
Strong performance overshadowed by Juukan Gorge
Fatality-free Second year in a row |
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China’s crude steel production (Mt annualised) | Nov |
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800 | Jan | Feb | Mar | Apr |
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Jul | Aug | Jul 18 | Jan 19 | Jan 20 | Jul 20 | Jan 21 | ||||||||
5 Yr Range | 2019 |
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5 Yr avg | Nov |
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Platts CFR index | |||||||||||||||
Seaborne Iron Ore supply run rate (Mt annualised**) | |||||||||||||||||||||
− Major producers’ shipments rose | |||||||||||||||||||||
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1100 | Jan | Feb | Mar | Apr | Jul | Aug | |||||||||||||||
2016-19 Range | 2016-19 Avg | 2019 | 2020 |
*Platts CFR index for 62% iron fines **Major suppliers annualised, reported at 100%. Sources: Rio Tinto, Mysteel, World Steel Association, Bloomberg, Baltic Exchange, Wood Mackenzie
YoY change reflects change in average annual price
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Jul 18 | Jan 19 | Jul 19 | Jan 20 | Jul 20 | Jul 18 |
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Jul 20 | Jan 21 |
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Jul 18 | ||||||||||
LME Aluminium | HY Average | MWP |
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CP slag |
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Price (c/lb) | |||||||||||||||||||||
Recovery in global demand, led by China | |||||||||||||||||||||
Strong primary imports into China and lower scrap usage | |||||||||||||||||||||
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Product mix has shifted back from commodity grades to Value Added Product (VAP) | |||||||||||||||||||||
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Very strong financial results
2020 | 2019 | Comparison | |
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44.6 | 43.2 | +3% | |
23.9 | 21.2 | +13% | |
27% | 24% | ||
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15.9 | 14.9* | +6% |
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9.4 | 9.2* | +3% |
12.4 | 10.4 | +20% | |
7.70 | 6.36 | +21% | |
9.8 | 8.0 | +22% | |
5.57 | 4.43 | +26% | |
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0.7 | 3.7 |
*Includes capital gains tax paid on divestments of $0.9bn in 2019
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Underlying EBITDA
$bn
3.4 | +3.3 | 0.5 | 0.3 | 24.7 | 0.4 | 0.1 | 0.2 | ||||
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Iron Ore | |||||||||||
Aluminium |
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Energy | Flexed 2019 Underlying EBITDA |
Volumes & Mix | Unit cash costs | Non-cash costs & E&E*/other |
One offs | |||
Copper | +0.4 | ||||||||||
2019 Underlying EBITDA |
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Return on invested capital*, post tax | |
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2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||
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…which we continue to translate into strong cash flows
Cash flow in $bn
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14.9 | 15.9 | ||||||||||||||||||||||
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2010 | 2011 | (8.1) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
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2020 |
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$98.9/t | + 15% | ||
+ 1% |
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$15.4/t | + 7% | ||
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27.5 | + 14% |
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18.8 | + 17% | |||
74% | + 2 pp | |||
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13.2 | + 16% |
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1.3 | + 16% | 1.2-1.6 | ||
1.6 | + 174% | |||
10.2 | + 7% | |||
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74% | + 7pp |
1Dry metric tonne, FOB basis | 2Unit costs are based on operating costs included in EBITDA and exclude royalties (state and third party), freight, depreciation, tax and interest. Operating cost guidance based on A$:US$ FX rate of 0.77 | 3Pilbara only. All other figures reflect Pilbara operations, portside trading and Dampier Salt.
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15.4 | 1.6 | 16.0 | |||||
14.4 | 0.6 | 0.4 | 14.4 | ||||
− Gudai-Darri commissioning costs |
− FX effects of $1.60/t with A$/US$ of 0.77 versus
0.69 in 2020. A significant majority of operating costs
(ex freight and royalties) are A$ denominated
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2019A | 2020A | COVID-19 | Gudai-Darri commission-ing | Study costs, resource development |
Other1 | 2021 mid point of guidance2 | Further investment in productivity and automation will deliver improved effectiveness of our integrated system (pathway to around two-thirds autonomous trucks by end of 2021) |
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Aluminium
Stable operations and commercial flexibility
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2020 | |||
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- 9% | |||
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$ 271/t | |||
56.1Mt | + 2% | 56-59Mt | ||
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8.0Mt | + 4% |
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3.2Mt | - % | |||
Canadian smelters –hot metal cash costs3 |
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9.3 |
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2.2 | - 6% | ||
26% | - pp | Agreement reached on NZAS to | ||
1.9 |
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0.8 | - 8% | ||
0.2 | ||||
0.9 | + 9% |
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3% |
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2020 |
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283c/lb | + 3% | ||
528kt | - 9% | |||
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155kt | - 40% |
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- 14% | ||||
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111c/lb | + 20% |
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5.4 | - 7% |
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2.2 | + 5% | ||
47% | + 6pp | |||
1.1 | - 29% |
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0.4 | - % | ||
1.3 | - 7% | |||
(0.6) | - 124% |
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6% | + 1pp |
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Energy & Minerals
Solid operational delivery in face of significant COVID-19 restrictions
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2020 | |||
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- 7% |
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$790/t | + 1% | |||
10.4Mt | - 1% | 10.5-12.0Mt | ||
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1.1Mt | - 7% |
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0.5Mt | - 8% | ~0.5Mt | ||
pellet lines now in operation | ||||
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5.0 | - 3% | ||
1.6 | - 7% | Feasibility study at Jadar lithium- | ||
35% | - 2pp | borate project to be complete by | ||
1.1 | - 24% |
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0.3 | - 14% | ||
0.1 | - 43% | |||
0.6 | - 26% |
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12% | - 3pp |
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Disciplined allocation of capital
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2020 capex of $6.2bn comprised of $3bn sustaining and $3.2bn development and replacement | ||||||
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~7.5 | ~7.5 | Guidance for 2021 and 2022 is around $7.5bn (previously around $7bn). Cumulative capex of ~$21bn 2020-2022 versus $20bn previously | ||
5.4 | 5.5 | Increase is largely due to currency with around half of the capex exposed to A$ and exchange rate assumption of 0.77 versus 0.68 previously |
2018A | 2019A | 2020A |
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Sustaining capex of $3.0-3.5bn per year including Pilbara Iron Ore sustaining capex at $1.2-1.6bn per year | |||
Sustaining | Pilbara replacement | |||||||
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Balance sheet strength adds to our resilience
Net debt $bn | Balance sheet strength is an asset. Offers resilience and creates optionality | |||||
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Gearing 1% and net debt to LTM^ EBITDA of 0.03x | ||||||
11.3 | Operating cash flow of $15.9bn after paying $7.8bn in taxes and royalties | |||||
9.6 | 10.0 | 9.3 | 9.3 | Invested $6.2bn and distributed $6.3bn to shareholders |
3.8 |
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5.6 | 4.9 |
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4.9 |
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Dec-16 | Jun-17 | Dec-17 | Jun-18 | Dec-18 |
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Reported net debt |
*Pro-forma net debt adjusts for the remainder of previously announced buy-backs from operations, lags in shareholder returns from disposal proceeds, Australian tax lag and disposal-related tax lag
and the impact of IFRS 16 Leases accounting change for the prior periods. This lease accounting change is reflected in the June and December 2019 reported net debt ^LTM = Last Twelve Months
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160 | ||
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2016 | 2017 | 2018 | 2019 | 2020 | |||
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Additional return | Return of disposal proceeds |
*Excluding divestment proceeds returned to shareholders
20 |
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