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Industrial Minerals Congress


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"Global outlook for borates", presentation by Gary Goldberg, President & Chief Executive Officer, Rio Tinto Minerals, Industrial Minerals Congress, Miami, Florida, March 22 - 24, 2010

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Industrial Minerals Congress

  1. 1. A bright future for industrial minerals Gary Goldberg President and Chief Executive Officer Rio Tinto Minerals IM 20 Congress – Miami, Florida 22 March 2010
  2. 2. Cautionary statement <ul><li>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. </li></ul><ul><li>Forward-Looking Statements </li></ul><ul><li>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 forward-looking statements. </li></ul><ul><li>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 &quot;SEC&quot;) 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. </li></ul><ul><li>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. </li></ul>Slide
  3. 3. Safety share Slide
  4. 4. Introduction <ul><li>Context </li></ul><ul><li>Supply and demand drivers </li></ul><ul><ul><li>Emerging economies </li></ul></ul><ul><ul><li>Food supply </li></ul></ul><ul><ul><li>Urbanization and conservation </li></ul></ul><ul><ul><li>Energy and transportation </li></ul></ul><ul><li>Stakeholders needs and expectations </li></ul><ul><ul><li>Business’ role in solving social issues </li></ul></ul><ul><li>The outlook from Rio Tinto </li></ul>Slide
  5. 5. Iron ore Energy Aluminium Copper Diamonds & Minerals Slide Diversified portfolio based on quality of the opportunity Diamonds TiO 2 Borates Talc Lithium Zircon
  6. 6. Partner of choice on six continents Mines and mining projects Separate processing plants Aluminium Copper Diamonds Energy Iron ore Minerals Africa Europe South America North America Australasia Asia Slide
  7. 7. Energy use GHG emissions Water use Independent recognition and leadership role Recognized for sustainable development leadership <ul><li>Underpins access to resources and markets </li></ul><ul><li>Confers competitive advantage </li></ul><ul><li>Drives longer-term value </li></ul>Slide
  8. 8. People’s needs and expectations drive demand Slide <ul><li>Industrial minerals are essential to life and modern living </li></ul><ul><ul><li>Average lifetime supply of minerals = ~1.3 million pounds 1 </li></ul></ul><ul><li>Demand is driven by: </li></ul><ul><li>What we eat </li></ul><ul><ul><li>More and better food on same amount of land </li></ul></ul><ul><li>Where we live </li></ul><ul><ul><li>By 2030, 60% of the world’s population will be living in urban centers 2 </li></ul></ul><ul><li>How we stay warm and mobile </li></ul><ul><ul><li>People owned 500m cars in 1985, 900m in 2005 and will own 1.5b by the year 2020 3 </li></ul></ul><ul><li>What keeps us up at night </li></ul><ul><ul><li>From climate change and natural disasters to safer products and bigger TVs </li></ul></ul>1 USGS; 2 UN World Population Prospects ; 3 TechnoAssociates Inc.
  9. 9. Developing economies are growing fastest Slide Source: United Nations, World Population Prospects: The 2004 Revision (medium scenario), 2005. Slide Redirection of RTM borax sales Redirection of RTM boric acid sales 57% 22% 21% 30% 24% 46% 0% 10% 20% 30% 40% 50% 60% Americas EMEA Asia 2006 2008 2006 2008 0 1 2 3 4 5 6 7 8 9 10 1950 1970 1990 2010 2030 2050 Less Developed Regions More Developed Regions World population growth (billions) 32% 30% 38% 22% 23% 55% 0% 10% 20% 30% 40% 50% 60% Americas EMEA Asia
  10. 10. Food supply depends on minerals to keep pace Slide <ul><li>Cropland stable over the last 15 years at 700 million hectares </li></ul><ul><li>Yields have increased by 146% in the same time period </li></ul><ul><li>Meat production has increase five-fold over the last 50 years; by 2050 that number will double </li></ul><ul><li>Food supply will keep pace through fertilizers, land management and genetics </li></ul>Source: United Nations Food and Agriculture Organization (FAO) Slide World Grain Production 0 500 1,000 1,500 2,000 2,500 1960 1970 1980 1990 2000 2010 0 50 100 150 200 250 300 350 400 Million tons Per capita (kg) Production Per capita
  11. 11. Urbanization, conservation drive intensity of use Slide <ul><li>Urban settlements in developing countries are growing 5 times faster than in developed countries </li></ul><ul><li>Building codes and standards require more and better glass, insulation, coatings and other construction materials in both mature and emerging economies </li></ul><ul><li>We need more affordable and durable housing, particularly when disasters strike </li></ul>Source: United Nations, World Urbanization Prospects: The 2003 Revision (medium scenario), 2004. Slide Urban population (%) 29 15 17 53 47 37 37 76 55 42 74 85 54 61 82 World Africa Asia Latin America and the Caribbean More Developed Regions 1950 2000 2030
  12. 12. Slide Slide Minerals play a role in energy and transportation solutions <ul><li>Signs of life in automotive demand associated with restocking </li></ul><ul><ul><li>Weight reduction and fuel efficiency are key trends </li></ul></ul><ul><li>Renewable energy sources are small but growing </li></ul><ul><ul><li>Biofuels now make up 1.67 percent of the total world liquid fuel supply 1 </li></ul></ul><ul><ul><li>The wind now generates more than 1.5 percent of the world’s electricity 2 </li></ul></ul><ul><ul><li>Photovoltaic power installed globally climbed from 9,000 MW in 2007 to nearly 15,000 MW in 2008 3 </li></ul></ul><ul><li>Lithium demand projected to rise sharply </li></ul><ul><ul><li>Credit Suisse predicted a 10.3 percent annual growth in demand between 2009 and 2020 4 </li></ul></ul>1 F.O. Licht, World Ethanol and Biofuels Report, 20 August 2009 2 World Wind Energy Association 3 European Photovoltaic Industry Association 4 Demand for Lithium is poised to take off; Clifford Krauss, New York Times, March 10, 2010
  13. 13. Supply drivers vary widely <ul><li>“ Without a market, an industrial mineral deposit is merely a geological curiousity” – Peter Harben </li></ul><ul><li>Our markets dictate our investment </li></ul><ul><li>Our prices are negotiated not determined </li></ul><ul><li>We differentiate ourselves through </li></ul><ul><ul><li>New products and applications </li></ul></ul><ul><ul><li>New processing methods </li></ul></ul><ul><ul><li>Supply chain advantages </li></ul></ul><ul><ul><li>Product quality and consistency </li></ul></ul><ul><li>Capital constraints have slowed capacity expansions and exploration activities ... </li></ul><ul><li>But with economic recovery, acquisitions are on the rise </li></ul><ul><li>Mining legislation is biggest hurdle in developed countries </li></ul><ul><li>Geopolitical risk and infrastructure is biggest hurdle in developing countries </li></ul>Slide
  14. 14. Anticipating and adapting to society’s expectations Slide <ul><li>People trust business less, and expect more </li></ul><ul><li>Give your employees the means to do their best </li></ul><ul><li>Practice statesmanship </li></ul><ul><li>Take responsibility for your full sphere of influence </li></ul><ul><li>Think of your customers as advocates, not consumers </li></ul><ul><li>Align with the long-term interests of shareholders </li></ul>
  15. 15. Safety – giving people the means to do their best Slide <ul><li>Technology </li></ul><ul><ul><li>Exposures and equipment </li></ul></ul><ul><li>Ownership </li></ul><ul><ul><li>Accountability at all levels </li></ul></ul><ul><li>Behaviors </li></ul><ul><ul><li>Training and reinforcement </li></ul></ul>1998 Lassing disaster
  16. 16. Environment – net positive impact in Madagascar Slide <ul><li>First shipment of ilmenite in 2009 after 23-year development effort </li></ul><ul><li>Investment leaves infrastructure legacy worth more than $350 million </li></ul><ul><li>Recognized for excellent stewardship through 2009 Nedbank Award </li></ul><ul><li>Goal to have a net positive impact on environment </li></ul>
  17. 17. Economics – creating the Mine of the Future™ <ul><li>Advanced mining technologies to support continued expansions in the Pilbara </li></ul><ul><li>Technology will spread to other Rio Tinto operations over time </li></ul><ul><li>Benefits include better safety, improved productivity, reduced energy consumption </li></ul>“ Mine-of-the-future” “ commenced R&D testing December 2008 AHS Trial Pit Autonomous Drilling “ Smart” Explosives Truck Slide Autonomous Haulage Remote Operations Centre High Precision GPS & Accumine Machine Supervision & Control Autonomous Trains
  18. 18. The outlook from Rio Tinto <ul><li>Great opportunities driven by growth in emerging economies </li></ul><ul><li>Great expectations driven by society’s access to information </li></ul><ul><li>Strategy pillars </li></ul><ul><li>Health, Safety & Environment </li></ul><ul><ul><li>Eliminate all injuries through a focus on safe behaviors </li></ul></ul><ul><ul><li>Maximize how our products and operations contribute to sustainable development </li></ul></ul><ul><li>Operational & Financial Performance </li></ul><ul><ul><li>Maximize value to shareholders and stakeholders </li></ul></ul><ul><li>Growth & Innovation </li></ul><ul><ul><li>Discover and develop mineral assets based on quality of opportunity </li></ul></ul><ul><li>People </li></ul><ul><ul><li>Attract and retain talent; develop leaders and capacity wherever we operate </li></ul></ul><ul><li>Communities & Government </li></ul><ul><ul><li>Partner of choice around the world </li></ul></ul><ul><li>Customers & Markets </li></ul><ul><ul><li>Supplier of choice in all sectors; mature and emerging economies </li></ul></ul>Slide
  19. 19. Summary <ul><li>Cycles are part of our industry – and the pace of change is getting faster </li></ul><ul><li>Our industry has a stronger connection to consumers and social trends </li></ul><ul><li>The future is bright – if we anticipate and adapt to demand drivers </li></ul><ul><li>The future is bright – if we understand and meet society’s expectations </li></ul><ul><li>The future is bright – if we take responsibility for developing solutions and shaping the future ... rather than waiting for it to shape us </li></ul>Slide
  20. 20. Thank you Slide