Continuing to grow the Pilbara powerhouse


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Greg Lilleyman, President Pilbara Operations, from Rio Tinto has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website:

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Continuing to grow the Pilbara powerhouse

  1. 1. Building on success- growing the PilbaraGreg Lilleyman – President, Pilbara Operations
  2. 2. Guideline•  Rio Tinto, in context•  The Pilbara integrated operations•  Rio Tinto’s major customers: some historical perspective•  Strong demand, uncertain industry supply•  Rio Tinto’s expansion: seeing is believing•  Rio Tinto’s Mine of the Future TM•  Summary2
  3. 3. KeyMines and mining projectsSmelters, refineries, powerfacilities and processing plantsremote from mineAfricaEuropeSouthAmericaNorthAmericaAustralasiaAsiaAluminium Copper Diamonds Energy Iron ore MineralsRio Tinto – a global business3
  4. 4. Rio Tinto Iron Ore – Pilbara Operations4
  5. 5. 5Old friends – dealing with regional partners in abroad based market
  6. 6. Business history: strong growth of Rio Tinto IronOre China business for 40 years“No other company has exported anywhere near this amount of iron ore to Chinaand it took 38 years for us to do so.”Sam Walsh - On theshipment of the 1 billionth tonne6
  7. 7. The fundamental drivers of Chinese steeldemand will remain strong0.20.1020402030202020101. 613 677 671Bt/aChinese steel demand will grow stronglySOURCE: RTIO Industry Analysis3%1%XX% CAGREconomic growthPolitical focus will remain on GDP andincome growth as the newly electedgovernment looks to consolidate powerand to maintain social stability bydelivering economic development andongoing increases in living standardsUrbanisationUrbanisation growth will continue to bestrong through to 2030Infrastructure/constructionThere is still significant infrastructureinvestment planned and required as wellas increasing rebuild investmentTransition to consumption demandThe government will continue to transitionthe economy to consumption basedgrowth, with considerable flow-on demandeffects for steel (as construction andinfrastructure growth declines)12347Industrial - ExportIndustrial - DomesticConstructionxx Kg/capita steel intensityDespite near-term volatility, the fundamental driversof Chinese steel demand growth remain strong
  8. 8. There continues to be significant constraint tothe development of new iron ore supply02004006008001000Announced for 2008-10 Completed by Q4 2010Certain Probable Possible Rio Tinto OtherAnnounced and completed iron ore productioncapacity (global)(million tonnes)•  Announcements do not necessarilytranslate 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 supplyrequired to meet demand in the shortto medium termSource: UNCTAD, Rio Tinto analysis02004006008001000Announced for 2012-14 Completed by Q3 20128
  9. 9. 9We focus on delivering value throughproductivity and system optimisation …Pilbara production(Mt/qtr) •  New nameplate capacity at 237Mt/a−  Operations Centre assists deepsystem visibility, significantlyadvancing 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 progress improvementinitiatives to provide furthercapacity creep010203040506070Q1 Q2 Q3 Q42010 2011 2012 Installed Capacity
  10. 10. 10… challenging expansion optionality …Note: Timing refers to firstproductionYandicoogina2012 2013 2014 2015BS4 (II)SustainingGrowthWarrambooWA -Dep ELegend• Not yet approved• Underway• DeletedHD4MarandooWTS (II)WA- Dep BWTS (I) NammuldiBS4 (III)SilvergrassKoodaideri (I)$1bn
  11. 11. 11… and maintaining major project time-linesRio Tinto Pilbara iron ore shipping capacity (100% basis)(Mt/a)2002202402602803003203403603802010 2011 2012 2013 2014 2015 2016 2017AverageAnnualisedMtpa290 First Ore3Q4Q1H340 First Ore360 First Ore
  12. 12. We have demonstrated superior performance indelivering projects302010102030400%50%100%150%200%250%Budget Additional monthsWestern Australian construction projects performance(Cost (% of budget))Source: Pit Crew Management Consulting ServicesRTIO projects Non RTIOprojectsOver budgetbehindscheduleUnder budgetahead ofscheduleMonthsoverbudgetNew Cape Lambertstockpile yards12
  13. 13. Cape Lambert ExpansionDelivering reality …13Cape Lambert ExpansionCape Lambert ExpansionShip LoaderCar Dumper
  14. 14. Our Mine of the FutureTM is turning competitiveadvantage into real business value•  Technology and automation willcontinue to drive business success•  Improving sophistication of real timedata and progressive cultural changeare keys to success•  Substantial benefits will accrue− Cost savings – eg recruiting 900fewer people− Managing increasing businesscomplexity− Anticipating problem areas•  Phase II of our Operations Centrewill unlock further value across ournetwork15
  15. 15. 16Autonomous Haul Trucks•  10 trucks at Yandi in a fullyautonomous pit•  26 trucks are planned at Nammuldi,with 5 trucks currently operationaland 5 more to be delivered over thecoming weeks•  19 trucks are planned for HopeDowns 4, with 3 currently beingassembled
  16. 16. 17•  AutoHaul™ is an investment of US$518 million to introduce autonomous trainoperations across our integrated Pilbara rail network•  It is the first long-distance heavy-haul system of its kind in the world and willplace us at the forefront of technological advances•  Is a key component of our expansion to 360Mtpa in the Pilbara•  First phase, Driver Assist, is nearing completion and significant engineeringworks are complete•  Full implementation is planned for 2015
  17. 17. •  Our Pilbara Operations are part of a trulyglobal mining business•  Running it efficiently, while expandingwithin time and cost constraints, is howRio Tinto creates value•  We have a long, strong history withChina and Japan•  These mutually beneficial relationship willcontinue into the future•  As we deliver expansions to meet futureneeds of our customersIn summary …18