26th Nov 2007 07:01
Rio Tinto PLC26 November 2007 Date: 26 November 2007 Ref: PR579g Rio Tinto poised for exceptional growth Rio Tinto today presents its annual investor seminar setting out in detail itsstrategy and growth plans. Chief executive Tom Albanese and some of his senior management team will provideadditional information to investors on the significant value within Rio Tintoand how the Group's portfolio of assets and growth options are exceptionallywell placed to benefit from the global rise in demand for metals and minerals. Five key value drivers will be outlined: • An exceptional growth strategy in iron ore and a strong pricingoutlook, with a conceptual pathway to treble production to over 600 milliontonnes per annum. • Positioned as the world's leading aluminium and bauxite producer withan excellent portfolio of growth projects and a strong market outlook.Anticipated post tax synergies resulting from the Alcan integration have beenincreased by more than 50 per cent from US$600 million to US$940 million perannum. • As one of the world's leading copper businesses Rio Tinto has animpressive pipeline of exciting projects with interests in many of the world'slargest undeveloped mineralisation opportunities. Recent exploration at the LaGranja project in Peru has highlighted the potential for doubling forecastproduction to in excess of 500,000 tonnes per annum. • An increase in the divestment target from at least US$10 billion to atleast US$15 billion following a strategic review. • A capital management strategy focused on enhancing shareholder returnsfrom cash flow while providing flexibility for ongoing growth. The total 2007dividend will be increased by 30 per cent with a further annual total increaseof no less than 20 per cent in each of the following two years. This reflectsthe Board's confidence in the business. Tom Albanese said: "The rise in global mineral demand is a trend that we expectto continue for decades because of fundamental demographic and economic shifts,especially in developing economies like China and India. We believe that thevalue in Rio Tinto is yet to be fully reflected by the market. "We believe we have a better growth pipeline than our competitors, which putsRio Tinto in a strong position to supply the metal-hungry world. We have thepeople, execution capability and resources to work smarter, faster and betterthan our competitors. We also believe our track record of delivery isunrivalled and we look forward with confidence to a hugely exciting future." The seminar will be webcast live at 09.00 GMT/20.00 Australian Eastern DaylightSaving Time on the Rio Tinto website, www.riotinto.com, on Monday, 26 Novemberand available online afterwards. A copy of the presentation as well as atranscript of the presentation will also be available on the Rio Tinto website. Five key value drivers in detail: 1. Exceptional growth prospects in iron ore and strong pricing outlook • Conceptual pathway to production of over 600 million tonnes per annum,including 420 million tonnes per annum from the Pilbara. • US$2.4 billion has been committed to develop the Mesa A and Brockman 4iron ore deposits in the Pilbara in Western Australia. • Targeted additional mineralisation in the Pilbara region of 20 to 30billion tonnes and 8 to 11 billion tonnes at Simandou in Guinea (non-JORCcompliant Rio Tinto estimates). • Pilbara rail and port infrastructure secures Rio Tinto's position asthe premier supplier, positioning Rio Tinto to reap maximum benefit from strongpricing outlook. • Simandou is a major new, high quality haematite deposit (with atargeted grade of 65 per cent iron) in proximity to the Atlantic Basin and theMiddle East. Simandou has a potential production capacity of 70 million tonnesper annum with options to expand to 120 million tonnes per annum and 170 milliontonnes per annum in the future. Feasibility studies are likely to be completedby 2010 with first production in 2013. • Demonstrated capability to deliver growth with a compound annualgrowth rate in iron ore production of 14.8 per cent over the period from 1999 to2007. 2. Number one position in global aluminium with excellent growth andmarket outlook following integration of Alcan • Strong outlook for pricing and demand. • Post tax synergy target from Alcan integration increased to US$940million per annum (up from US$600 million), deliverable by the end of 2009. • Enhanced growth options to achieve number one global position inalumina and retain number one position in bauxite and aluminium. • Strong fit with strategic focus on the best assets in the aluminiumindustry - competitively positioned operations with improving cost positionbacked by hydro power. • Cutting edge technology, global reach and operational expertise tocapitalise on the demand outlook. • Renewed focus on upstream assets with decision to explore divestmentof the Engineered Products division. • Attractive growth opportunities in alumina refining with expansions atYarwun and Gove and primary aluminium smelting with expansion at Kitimat inBritish Columbia, a new smelter in Oman and other projects in Abu Dhabi,Malaysia and South Africa 3. One of the world's leading copper businesses with an impressive pipelineof projects • Low position on cash cost curve. • Excellent long term growth prospects with interests in many of theworld's largest undeveloped copper targets. • La Granja in Peru has targeted mineralisation of 4 to 8 billion tonnesat a copper equivalent grade of 0.5 per cent (a non-JORC compliant Rio Tintoestimate). The mine has the potential to produce in excess of 500,000 tonnes perannum, double what was previously anticipated. It was acquired in 2005 for US$22million plus a work commitment of US$60 million. First production is expectedin 2014 • Development work on Oyu Tolgoi is progressing well with significantfurther exploration potential in Mongolia. Average production is projected at440,000 tonnes per annum of copper and 320,000 ounces per annum of gold over theprojected life of the mine. • Significant extension options in copper, gold, and molybdenum atKennecott Utah Copper operations and upside on the Resolution project. • Nickel projects in Indonesia and the US offer a pathway to becoming atop tier global nickel producer. 4. Raising divestment target from at least US$10 billion to at least US$15billion following strategic review • Asset divestment target following the Alcan acquisition raised from atleast US$10 billion to at least US$15 billion following the completion of astrategic review, which has highlighted approximately US$30 billion of potentialdivestments. • Rio Tinto will explore options for the sale of a shortlist of assets.These are all good businesses and any sales will be value driven and dependenton price. The following businesses are included in the short list: o Rio Tinto Alcan Packaging (previously announced) o Rio Tinto Energy America (previously announced) o Rio Tinto Alcan Engineered Products (global) o Cortez/Pipeline (gold, 40 per cent stake, US) o Greens Creek (zinc, lead, silver, 70 per cent stake, US) o Rio Tinto Minerals Talc (Europe, Australia, North America) o Northparkes (copper/gold, 80 per cent stake, Australia) o Sweetwater (uranium project, not operational, US) o Kintyre (uranium project, not operational, Australia) 5. Capital management strategy focused on enhancing shareholder returns andproviding flexibility for ongoing growth. • The total 2007 dividend will be increased by 30 per cent with afurther annual total increase of no less than 20 per cent in each of thefollowing two years, reflecting the Board's belief in the business. • Estimated post tax US$1.7 billion per annum cash flow enhancementexpected by 2010. • Financial strength to pursue capital expenditure programme, forecastat U$9 billion in 2008 and 2009, while maintaining the goal of a single A creditrating and a commitment not to raise equity as part of the refinancing of thedebt incurred in the Alcan transaction. About Rio Tinto Rio Tinto is a leading international mining group headquartered in the UK,combining Rio Tinto plc, a London listed company, and Rio Tinto Limited, whichis listed on the Australian Securities Exchange. Rio Tinto's business is finding, mining, and processing mineral resources. Majorproducts are aluminium, copper, diamonds, energy (coal and uranium), gold,industrial minerals (borax, titanium dioxide, salt, talc) and iron ore.Activities span the world but are strongly represented in Australia and NorthAmerica with significant businesses in South America, Asia, Europe and southernAfrica. Dial in numbers for conference call at 9am (GMT)UK +44 (0)20 7806 1953Australia +61 (0)2 8223 9661Singapore +65 6823 2213Hong Kong +852 3002 1355Japan +81 (0)3 3570 8227International +44 (0)20 7806 1950 Access Code 8345606 For further information, please contact: Media Relations, London Media Relations, Australia Christina Mills Ian HeadOffice: +44 (0) 20 8080 1306 Office: +61 (0) 3 9283 3620Mobile: +44 (0) 7825 275 605 Mobile: +61 (0) 408 360 101 Nick Cobban Amanda BuckleyOffice: +44 (0) 20 8080 1305 Office: +61 (0) 3 9283 3627Mobile: +44 (0) 7920 041 003 Mobile: +61 (0) 419 801 349 Media Relations, US Media Relations, Canada Nancy Ives Bryan TuckerMobile: +1 619 540 3751 Office: +1 514 848 8511 Investor Relations, London Investor Relations, AustraliaNigel Jones Dave SkinnerOffice: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309 David Ovington Investor Relations, North America Office: +44 (0) 20 7753 2326 Jason CombesMobile: +44 (0) 7920 010 978 Office: +1 (0) 801 685 4535 Mobile: +1 (0) 801 558 2645 Email: [email protected] Website: www.riotinto.com High resolution photographs available at: www.newscast.co.ukPhotos from today's presentation will be available from 11.45am (UK time) at: http://www.piranhaphotography.com/rio-tinto Forward looking statements This article includes "forward-looking statements". All statements other thanstatements of historical facts included in this article, including, withoutlimitation, any regarding Rio Tinto's financial position, business strategy,plans and objectives of management for future operations (including developmentplans and objectives relating to Rio Tinto's products), are forward-lookingstatements. Such forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause the actual results, performanceor achievements of Rio Tinto, or industry results, to be materially differentfrom any future results, performance or achievements expressed or implied bysuch forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding RioTinto's present and future business strategies and the environment in which RioTinto will operate in the future. Among the important factors that could causeRio Tinto's actual results, performance or achievements to differ materiallyfrom those in the forward-looking statements include, among others, levels ofdemand and market prices, the ability to produce and transport productsprofitably, the impact of foreign currency exchange rates on market prices andoperating costs, operational problems, political uncertainty and economicconditions in relevant areas of the world, the actions of competitors,activities by governmental authorities such as changes in taxation or regulationand such other risk factors identified in Rio Tinto's most recent Annual Reporton Form 20-F filed with the United States Securities and Exchange Commission(the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking statementsshould, therefore, be construed in light of such risk factors and undue relianceshould not be placed on forward-looking statements. These forward-lookingstatements speak only as of the date of this article. Rio Tinto expresslydisclaims any obligation or undertaking (except as required by applicable law,the City Code on Takeovers and Mergers (the "Takeover Code"), the UK ListingRules, the Disclosure and Transparency Rules of the Financial Services Authorityand the Listing Rules of the Australian Securities Exchange) to release publiclyany updates or revisions to any forward-looking statement contained herein toreflect any change in Rio Tinto's expectations with regard thereto or any changein events, conditions or circumstances on which any such statement is based. Nothing in this article should be interpreted to mean that future earnings pershare of Rio Tinto plc or Rio Tinto Limited will necessarily match or exceed itshistorical published earnings per share. Subject to the requirements of the Takeover Code, none of Rio Tinto, any of itsofficers or any person named in this article with their consent or any personinvolved in the preparation of this article makes any representation or warranty(either express or implied) or gives any assurance that the implied values,anticipated results, performance or achievements expressed or implied inforward-looking statements contained in this article will be achieved. Responsibility statement The Directors of Rio Tinto plc and Rio Tinto Limited accept responsibility forthe information contained in this announcement. To the best of the knowledge andbelief of the Directors of Rio Tinto plc and Rio Tinto Limited (who have takenall reasonable care to ensure that such is the case), the information containedin this announcement is in accordance with the facts and does not omit anythinglikely to affect the import of such information. Subject to the above, none of Rio Tinto, any of its officers or any person namedin this announcement with their consent or any person involved in thepreparation of this announcement makes any representation or warranty (eitherexpress or implied) or gives any assurance that the implied values, anticipatedresults, performance or achievements expressed or implied in forward lookingstatements contained in this presentation will be achieved. Mineralisation data The targeted additional mineralisation figures in this announcement are based onRio Tinto's exploration and production experience in the relevant regions,including an assessment of tenure areas using surface mapping, drilling resultsand other information. The potential mineralisation is conceptual in nature -there has been insufficient exploration to define a mineral resource and it isuncertain if further exploration will result in the determination of a mineralresource. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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