Rio Tinto Iron and Titanium At TZMI Congress

TiO 2 feedstocks: A view into the future Presentation to TZMI Congress, Singapore, 22 October 2009 Harry Kenyon-Slaney Managing Director Rio Tinto Iron & Titanium

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Presentation outline
Business updates at RBM and RTF&T
QMM – Why sustainable development is so important
TiO 2 industry – a comparison with other commodities

Richards Bay Minerals
Production tailored to market demand
Rebuild and expansion of SF4 complete
Construction of a Tailings Treatment Plant underway
Evaluation of cogeneration continuing
Empowerment transaction nearing completion

Rio Tinto Fer et Titane (RTF&T)
SF8 and SF9 reconfigured to process Madagascan ilmenite
91% TiO 2 Chloride Slag delivered to market
8 week plant shutdown over summer

QMM is now a reality
First ilmenite shipment to Sorel May 2009
First chloride slag shipment July 2009
Ramp up in line with market demand

Commitment to sustainable development makes us a partner of choice around the world Last 10 years 1998-2007 14.2
Energy and climate change
Land management
Biodiversity
Water management
Safety
Health
Community engagement
Environmental stewardship Social well-being
Business integrity
Human rights
Stakeholder engagement
Sovereign risk
Closure and legacy
Strong governance Economic prosperity
Financial performance
Socio-economic development
Supply chain management

QMM’s experience: Environmental stewardship

QMM’s experience: Social well-being

QMM’s experience: Economic prosperity

QMM’s experience: Strong governance

Demand for TiO 2 is still set to increase strongly as the developing world moves from infrastructure to urbanisation GDP per capita 2000 US$ PPP Percentage of saturation level* Diamonds*** Aluminium Crude Steel Copper Salt Titanium Dioxide Zinc Nickel * Saturation level – point at which consumption per capita does not increase with income levels ** Population income distribution is in market exchange rate terms *** Diamonds is classed as a luxury good and hence saturation levels are not reached within the specified time period Source: Rio Tinto

The long term story remains intact: Urbanisation in developing economies will not be derailed by the current downturn Source: Global Insight, CIA Factbook Urbanisation rates across Asia, the United States and European Union in 2008 Urbanisation rates, income and population Note: Size of bubble reflects total population United States Japan India EU15 China China by Province

Lessons from other commodities: Costs and prices have risen in iron ore… Iron ore mining cost curves and prices Source: CRU, Rio Tinto. Cost curves shown up to the marginal tonne. * Annual benchmark for iron ore fines

…and alumina… Alumina cost curves and prices Source: CRU, Rio Tinto. Cost curves shown up to the marginal tonne. * Average FOB spot price Australia, (2008 price 1H)

And in copper the price increased in excess of the costs …. Source: Data is indexed, 2002 = 100 Brook Hunt, * Annual average LME cash price Cost Price

… so what is wrong with the TiO2 feedstock industry? Source: TZMI, Rio Tinto Data is indexed, 2002 = 100. ! Cost Price

The end producer has realised price rises but this has not flowed down the value chain Source: US Bureau of Labour Statistics, Rio Tinto Index - Real $2009

How will the TiO 2 feedstock industry remain viable ?
Investment is a precursor to a healthy industry
Current returns do not justify reinvestment
Staying power is needed to be ready for the upturn
Rigorous working capital management
Strong cost control
Retain growth options
Supply both sulphate and chloride sectors

Concluding remarks
RBM and RTF&T have taken action to address impact of the global economic crisis
Demand is weak but will recover as consumer confidence returns
QMM is an outstanding resource – but don’t underestimate the challenge of bringing on a project in a developing country
Producers across the supply chain need to make an adequate return on investment for the industry to satisfy future demand

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Rio Tinto Iron and Titanium At TZMI Congress

by Rio Tinto plc on Oct 29, 2009

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Rio Tinto Iron and Titanium At TZMI Congress — Presentation Transcript