210610 RTCA Financial Community Presentation Web
Transcript of 210610 RTCA Financial Community Presentation Web
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Rio Tinto Coal Australiapresentation
2010
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Rio Tinto Coal Australia
PresentationJune 2010 Sydney
Cautionary statement
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.
Forward-Looking Statements
This presentation includes forward-looking statements. All statements other than statements of historical facts included in this
presentation, including, without limitation, those regarding Rio Tintos financial position, business strategy, plans and objectives of
management for future operations (including development plans and objectives relating to Rio Tintos 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 bysuch forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tintos 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
Tintos 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
'
22
governmena au or es suc as c anges n axa on or r egua on an suc o er r s ac o rs en e n o n os mos recen
Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") 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. Except as required by applicable regulations or by law, Rio Tinto does not undertake any obligation to publicly
update or revise any forward-looking statements, whether as a result of new information or future events.
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.
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Presentation Outline
Rio Tinto Coal Australia FinancialCommunity Presentation
Presentation Outline Presenter
Introduction David Peever Managing DirectorRio Tinto Australia
Rio Tinto Coal Australia (RTCA) Business Overview Bill ChampionManaging DirectorRio Tinto Coal Australia
Economic Outlook and Industry Overview Thermal Coal Metallurgical Coal
Bill Champion
33
Rio Tinto Queensland Coal (RTQC) Bill Champion
Break
Coal & Allied Bill Champion
Questions Bill Champion
Presentation Overview
Rio Tinto Coal Australia FinancialCommunity Presentation
Rio Tinto Coal Australia (RTCA) Business Overview
Economic Outlook and Industry Overview
Thermal Coal
Metallurgical Coal
Rio Tinto Queensland Coal (RTQC)
Coal & Allied
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Rio Tinto Coal Australia Business Overview
RTCA has exposure to the steel industry andenergy sector
Queensland Coal
Assets in Bowen Basin region Operations produce both metallurgical
and thermal coal Resource base is large and
expandable (100% basis) Reserves: 544Mt Additional Resources: 1,422Mt
55
75% Rio Tinto owned Assets located in Newcastle/Hunter
region Operations produce both thermal and
semi-soft coking coal Resource base is large and
expandable (100% basis) Reserves: 1,048Mt Additional Resources: 2,941MtOperating Asset
Greenfield Project
All Injuries Frequency Rate
RTCA Safety
AIFR ratio; number of injuries and medical cases per 200,000 hours worked
3.54
1.35
66
1.060.95
0.760.68
0.47
2004 2005 2006 2007 2008 2009 2010 YTD
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RTCA Financial Community Presentation
Presentation Overview
Rio Tinto Coal Australia (RTCA) Business Overview
Economic Outlook and Industry Overview
Thermal Coal
Metallurgical Coal
Rio Tinto Queensland Coal (RTQC)
Coal & Allied
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Thermal Coal Industry
Thermal coal is a market with attractivemedium term growth prospects
Strong GDP growth, particularly in developing countries, will drive
demand growth Even with the emergence of energy substitutes, coal will remain the
dominant power generation fuel for China and India
Strong demand and supply/cost issues in China and India will likely
drive increased demand for seaborne thermal coal
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Strong GDP growth is forecast, particularlyin developing countries
World GDP
International Dollars Trillions, PPP basis**** Developed
Developing
745
912
17
4
5
6
20
24
29
70
82
99
Euro area***Other advanced
India
China
Rest of World
8.2%
2009-2015 CAGR
9
28 3236
5
2009 2012 2015
Major advancedeconomies*
econom es
Source: IMF
4.0%
* Consists of Canada, France, Germany, Italy, Japan, United Kingdom, and United States** Consists of Australia, Czech Republic, Denmark, Hong Kong SAR, Iceland, Israel, Korea, New Zealand, Norway, Singapore, Sweden,
Switzerland, and Taiwan Province of China*** Austria, Belgium, Cyprus, Finland, Greece, Ireland, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic, Slovenia, and Spain****International dollars are based on PPP exchange rates; A countrys nominal GDP in local currency is converted to International Dollars
on a PPP basis by dividing by PPP exchange rates
Strong GDP growth in China and India leadsto a significant increase in electricityconsumption in both countries
Forecast Electricity Consumption
% 2007-2015 CAGR
5.07.2
10.6
3.13.2
1.71.8
9.29.8
TWh
Pacific
Europe 0.6%
3.0%
Forecast OECDElectricity Consumption
Forecast Non-OECDElectricity Consumption
1.0%
0.7% 5.0%Driven byurbanisation &industrialisation
TWh
10
2.7
4.70.5
0.93.9
2007 2015
4.5 4.8
2007 2015
NorthAmerica
India
China
es oNon-OECD
Source: World Energy Outlook 2009
0.7%
6.4%
7.2%
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Chinas forecast power generation mix
Despite the emergence of substitutes,Chinas power will continue to be
predominantly generated by coal
TWh
Other
2007-2030CAGR
5,119
6,639485
848
1,046
322
487
3,318
6,692
,
Hydro
AlternativesWindGasNuclear
Coal
4.0%
3.4%
9.4%
8.2%
15.0%
7.7%
1111Source: World Energy Outlook 2009
2,685
2007 2020 2030
81%Coalpercentage ofpowergeneration mix
76% 75%
China has large domestic resources inNorthern China which supply the coastalregions with thermal coal
China domestic thermal coal trade flow
Major producing regions
Major consuming regions
Heilongjiang
Jilin
Liaoning
Shandong
Henan
Shanxi
InnerMongolia
Ningxia
Gansu
Qinghai
Xinjiang
Beijing
Coal resources are primarilylocated in Northern andNorthwest China
Transport of coal fromsupply regions to populationinvolves transportingproduct by rail to ports in theNor th East thenshi in to
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Fujian
Jiangxi
Anhui
Hubei
Hunan
GuangdongGuangxi
Shanghai
Hainan
Shaanxi
Sichuan
Guizhou
Yunnan
Tibet
Jiangsu
Zhejiang
Yangtze River Delta andPearl River Delta
Domestic supply isvulnerable to infrastructure
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China thermal coal consumption
Short-term demand shifts in China have a largeeffect on the seaborne market due to imports
being small relative to overall demand
Million tonnes
Domesticroduction
Imports
Domestic production has largely metconsumption requirements
Urbanisation and industrialisation will increaseconsumption
Existing infrastructure system will be underpressure to meet demand rail near full capacity
2,023
45
2,067
1313Source: World Energy Outlook
Disruptions to infrastructure and/or demandspikes will result in increased seaborne thermalcoal demand
2007
China Thermal Coal Net Imports
China is increasingly relying on seabornethermal coal to meet the demand shortfall
Million Tonnes; Annualised Monthly Net Imports
(20)
0
20
40
60
80
100
120
1414Source: GTIS
(80)
(60)
(40)
Jan
06
May
06
Sep
06
Jan
07
May
07
Sep
07
Jan
08
May
08
Sep
08
Jan
09
May
09
Sep
09
Jan
10
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Indias forecast power generation mix
India will also rely heavily on coal
2,737
TWh
Other
2007-2030CAGR
1,935
188
251
73
106
189
299
72
794
1,649
Hydro
AlternativesWindGas
Nuclear
Coal5.7%
3.1%
8.3%
6.8%
8.1%
14%
1515Source: World Energy Outlook 2009
1,095
537
2007 2020 2030
68%Coalpercentage ofpowergeneration mix
66% 71%
India Coal-Fired Electricity Generation Capacity and thermal coal imports
Indias thermal coal imports will likelydouble over the next 5 years to meet powergeneration demand
Me awatts
India Coal-Fired Electricity Capacity
Mt
India Thermal Coal Imports
76
1542x
3134
40
47
52
60
70
80
Forecast
1616
2008 2017
Indian Government plans to double coal-firedelectricity generation capacity by 2017
Nine ultra mega power stations with a capacity of4000 megawatts each are planned forconstruction
Smaller coal-fired power stations will becommissioned in the lead up to 2012 to supportrobust economic growth
Source: ABARE
2007 2009 2011 2013
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Pricing Mechanisms in Thermal Coal Market
Thermal coal contracts use a variety ofpricing mechanisms
Thermal coal is a large, mature market with various pricing mechanisms annual and spot price contracts based on fixed and/or index prices, tenders,
all providing for variation in start dates and duration
Multiple indices track sales of coal based on specification and region globalCOAL is the worlds leading online coal trading platform
A derivatives market exists Financial derivatives
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Over-the-counter swaps for cash settlement
RTCA Financial Community Presentation
Presentation Overview
Rio Tinto Coal Australia (RTCA) Business Overview
Economic Outlook and Industry Overview
Thermal Coal
Metallurgical Coal
Rio Tinto Queensland Coal (RTQC)
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Coal & Allied
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Metallurgical Coal Industry
Metallurgical coal is an attractive productmarket due to high growth and relative
product scarcity
Urbanisation and industrialisation in developing countries
will drive steel consumption growth
Supply is unlikely to keep pace with demand, creating a
demand-supply gap which will push developers into new
regions
Prices are likely to remain high relative to historical levels
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given the lack of substitutes and rapid demand growth
China and other emerging nations will drivesteel consumption growth
Forecast steel consumption by region
Million tonnes
Source: WSA, RTIO analysis 2020
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Evolution of Steel Production Technology
Alternative substitutes have not emerged -steel producers will likely continue to rely on
BOF technologies
=
Million tonnes of crude steel
Basic OxygenFurnace BOF
Electric ArcFurnace (EAF)
Open HearthFurnace (OHF)
67 6972 69
31 30 27 31
2 1 1
, , , ,
2121
2005 2010 2015 2020
Source: McKinsey
Hard Coking Coal Demand Growth Index
Mirroring steel demand, HCC demandgrowth will remain strong for theforeseeable future
Index; 2005 base year 2005-2020CAGR
Asia (excludingChina andIndia)23
27
15
16
21
20
15
19
25
20
15
19
19
100106
129
Europe
North America
Rest of World~3.0%
2.1%
0.2%
1.4%
-0.3%
Index base
2222
Brazil, China &India
20
4456
6420
20
2005 2010 2015 2020
Source: AME; RTCA Analysis
8.0%
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Contract Coal Prices
Prices are likely to remain high relative to historicallevels, supported by strong demand and the lack of
supply and substitutes
US$/t nominal
150
200
250
300
350
Hard Coking Coal
Semi-soft
Semi-soft prices are likelyto remain tied to the HCCprices given expectation ofongoing tightness in themetallurgical coal market
2323
Source: AME
0
50
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Thermal
Changing Pricing Dynamics of Hard Coking Coal Market
There has been a shift towards more flexiblepricing in the hard coking coal market
Coking coal is a smaller market than thermal and has traditionally beenpriced on an annual basis with little spot price activity
There has been a recent shift from an annual pricing structure towardsshorter term price mechanisms with the emergence of both China andIndia into the market
Volatility in the global steel-making coal markets has led to creation ofseveral new indexes for coking coal being developed
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Majority of recent shipments from Australia into Asia are based on anagreed quarterly contract price
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RTCA Financial Community Presentation
Presentation Overview
Rio Tinto Coal Australia (RTCA) Business Overview
Economic Outlook and Industry Overview
Thermal Coal
Metallurgical Coal
Rio Tinto Queensland Coal (RTQC)
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Coal & Allied
Rio Tinto Queensland Coal Summary
Rio Tinto Queensland Coal (RTQC) is a lowcost producer of hard coking and thermalcoal with a range of growth options
Metallurgical coal
Hail Creek Lake Elphinstone Mt Robert
Emerald Region Kestrel Kestrel Mine Extension
Winchester South
ClermontRe ion
Thermal coal
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Key Value drivers Low cost, long life assets Range of growth options Initiatives to resolve
infrastructure challenges
Blair Athol Clermont
Valeria Kestrel West
Operating Asset
Greenfield Project
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2009 Australian Coking Coal Cost Curve
US$/t
Rio Tintos Queensland coking coal assets arecompetitively positioned on the cost curve
Kestrel
HailCreek
27Source: Wood Mackenzie
ProductionKt
0 30 60 90 120
2009 Australian Thermal Coal Cost Curve
US$/t
Rio Tintos Queensland thermal coal assetsare competitively positioned on the cost curve
BlairAthol
Clermont mine positioned
near Blair Athol Slightly higher cost than
Blair Athol due to thehigher strip ratio
28Source: AME
ProductionMt
0 30 60 90 120
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Rio Tinto Queensland Coal Infrastructure Arrangements
Queensland infrastructure arrangementsand expansion options
Expansion from 20 Mtpa to 50 Mtpa underway Newlands system upgrade and northern missing link (GAPE
project) will provide rail capacity
Sufficient contracted capacity to facilitate near term productiongrow rom ermon , a r o an esre ne exens on
Further port expansion options exist in the Abbot Point area
DBCT total contracted capacity of 85 Mtpa RTCA has matching rail and port contracts to
provide for Hail Creek, Blair Athol and Clermont Further expansion options at DBCT being studied
by owner Prime Infrastructure
Gladstone has total contracted capacity of
76 Mtpa
Source: 2009 Annual Report
rail corridor to Gladstone
Potential for construction of Wiggins Island
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The Goonyella coal chain is performing wellbelow contracted levels
Addressing Queensland Infrastructure Issues
DBCT ship queue and throughput unacceptable
Ke issuesto beresolved
System underperformance resulting in lostsales and increased demurrage
Rail expansions lag port expansions
Lack of coordinated and integrated strategicand operational planning and execution
Transfer of economic rents to infrastructureowners without performance obligations
Steps underway to resolve
0
1
2
3
4
5
6
7
1H 2006 1H 2007 1H 2008 1H 2009 1H 2010
Monthly throughput (mt) Currentcontractedvolume
30
GAPE project will open up access to AbbotPt relieving Goonyella system
Industry ownership of QR coal tracks willaddress rail-side delivery, planning andperformance issues
Establishment of coal chain coordinationorganisations
Facilitating more options in the rail haulagemarket0
10
20
30
40
50
60
70
Jan 2009 Jul 2009 Jan 2010
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Easing of infrastructure constraints willallow Rio Tinto Queensland Coal to pursue
its desired growth pathRio Tinto Queensland Coal Organic Growth Profile
Million tonnes
15
20
25
30
35Forecast
RSPT* createsuncertainty aroundfuture growth path
Definedgrowth**
Operating at
Upsidepotential***
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0
5
10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Rio Tinto Coal Australia
installedcapacity
* Resource Super Profits Tax** Well defined growth path under review with respect to the RSPT*** Projects yet to reach clear definition of scope under detailed study
Rio Tinto Queensland Coal Resources*
RTQC assets have large resource bases andare expandable
Project Reserves Resources*
Hail Creek 209Mt 136Mt
Blair Athol 18Mt 7Mt
Million tonnes -100% Basis
Clermont 189Mt 15Mt
Kestrel Mine 128Mt 9Mt
Kestrel West n/a 139Mt
Valeria n/a 762Mt
Winchester South n/a 192Mt
Lake Elphinstone n/a 162Mt
Mount Robert n/a n/a
Source: 2009 Annual Report
* Resources are additional to reserves
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Overview of Hail Creek Operations
Hail Creek
Production (100% basis)Operation details
Mt
5.9
4.55.0
6.1
~7.5
6.3
2005 2006 2007 2008 2009 2010F
Operating at expanded 8Mt rate fromsecond half of 2010
Strong growth since development Plant capacity already in place
Long term resource planning work toassess:
Optimal open pit scale Underground options RSPT uncertainty
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Overview of Clermont Region
Clermont Region
Production (100% basis)Operation details
Mt
10.6 10.2
7.9
10.211.3 ~11.0
2005 2006 2007 2008 2009 2010F
Clermont commenced operations in May
Clermont ramping up to ~12Mt rate, as BlairAthol winds down to ~3Mt
Implementation of Clermont Regionarrangements to release synergies
Shared management of Blair Athol andClermont mines
Shared infrastructure
Clermont
Blair Athol
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Overview of Kestrel Mine / Kestrel Mine Extension
Kestrel Mine / Kestrel Mine Extension
Production (100% basis)Operation details
3.7 3.6 3.64.0 3.7
~4.3
2005 2006 2007 2008 2009 2010F
Mt KME offers long life, low cost, coking coal Long life extension to 2032 Significant reduction in operating costs Incremental production (~1mt)
KME slightly behind original schedule expected to commence production in late2012/2013
Taking steps to extend the life of theexisting Kestrel mine
Operating under 5 year labour agreement
which applies through to mid-2014
Future thermal coal options at Kestrel West
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Summary
Rio Tinto Queensland Coal Summary
Low cost, long life hard coking coal and thermal coal assets
Range of resource options, proximate to existinginfrastructure to support future growth (subject to RSPT)
Initiatives to resolve infrastructure challenges is a key focusarea
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RTCA Financial CommunityPresentation
Presentation Overview
Rio Tinto Coal Australia (RTCA) Business Overview
Economic Outlook and Industry Overview
Thermal Coal
Metallurgical Coal
Rio Tinto Queensland Coal (RTQC)
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Coal & Allied
Coal & Allied is a large thermal and semi-soft coking coalproducer in the Hunter Valley with significant growth potential
Mount Thorley Warkworth
An integrated operation of two open cut mineslocated adjacent to each other 15km south west of
Singleton Coal & Allied ownership Mt Thorley 80% Warkworth 56%
Thermal and semi-soft coking coal product
Hunter Valley Operations
A multi -seam mul ti l eo encut m i ni n o era ti on
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,located approximately 24km north of Singleton
Coal & Allied 100% ownership Thermal and semi-soft coking coal product
Bengalla
An open cut mine located 4km south west ofMuswellbrook in the Hunter Valley
Coal & Allied 40% ownership Thermal coal product
Operating Asset
Greenfield Project
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Coal & Allied is well positioned to capture value fromdemand growth in thermal and semi-soft coking coal
Competitive margin position due to production of thermal
and semi-soft coking coal
Easing of infrastructure bottlenecks will allow mines to run
at installed capacity
Clearly defined growth path beyond existing installed
3939
capac y su ec o
*
Despite short term cost challenges, Coal & Allieds relativemargin position is strong due to semi-soft production
-
US$/t
Bengalla
MtThorley
Warkworth
HunterValley
Operations
Thermal Coal ContractPrice US$98/t FOB
4040
Source: AME; RTCA analysis
* Cost per tonne calculated by adjusting total site cost for by-product revenue. Total cash cost was calculated by applyingAME cash cost estimates to saleable production estimates and subtracting by-product (semi-soft ) revenue. By-productrevenue was calculated using FOB Newcastle contract prices for semi-soft coking coal (US$170/t) and AME exportproduction estimates.
0 25 50 75 100 125 150 175
Saleable Production(Mt)
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Initiatives are underway to improve future cost competitiveness
Cost Reduction Initiative
Operating at installed capacity
On-site initiatives Truck & shovel productivity Labour optimisation Sourcing CHPP improvements Maintenance
Latent Capacity (100% basis)
Mt
11
9
14
12
21%
25%
41
Equipment upgrades
Mine planning (coal recovery and semi-softproduction)
Off-site initiatives Overcoming infrastructure constraints Optimising the coal chain operations
HVO MTW
2009 production Fixed plant capacity
Over the last 3 years, the industry has agreed a new Long-TermCommercial Framework that facilitates industry growth both byproducers and infrastructure providers
2010200920082007
Wide rangingindustry negotiations
PWCS applies to havecommon user
Greiner reviewconducted
Capacity FrameworkAgreements
New port arrangementstook effect 1 January
ImplementationLaunch ofdiscussions
42
provisions waived
NPC rejects application
Broader discussionsinitiated
Industry agrees broadframework
completed/signed
ACCC approves long-term framework
First nominations forfirm, Long-Term Takeor Pay agreements atPWCS
Below-railarrangements stillunder negotiation
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The agreed long term framework provides producers withcertainty and fairness in the distribution of available port capacity
Provide certainty of capacity to producers by:
suspending the Common User Clauses and allow long term contracts at PWCS
specifying that PWCS must expand in a specified timeframe to satisfy anyproducer who wishes to contract with it for expansion tonnes
providing for each current user of PWCS to contract for their portion of the BaseTonnage at the terminal, which is calculated as each producers highest usagefor the period from 2004 to 2008
giving PWCS access to more land on Kooragang Island on which to expand andbuild a new terminal (T4)
43
Ensure equitable sharing of available capacity by:
Forcing a fairer split of port capacity between NCIG producers and non-NCIGproducers
discouraging over-nomination (or gaming) due to take or pay nature of contracts
minimising the extent to which coal producers are affected by the actions of otherproducers
imposing conditions that NCIG Shareholders must meet in order to increase theircapacity entitlements at PWCS
The arrangements for track access are still being finalised,with the focus on ensuring alignment with terminal contracts
Process to date Key objectives for Coal & Allied
ARTC submitted Access Undertaking(draft contract terms) in April, 2009
Strongest possible commitment to buildtrack capacity backed by long-termcontracts with producers
ACCC Draft Determination in March,2010 suggested ARTC proposal wouldbe rejected
Provisions that ensure ARTCappropriately manages performanceshortfalls, and vessel queues
ARTC drafting revised AU, with Coal & Below-rail pricing sends appropriate
44
Allied providing significantinput/feedback
signals to encourage optimal system use
Producers can sign contractspre-ACCC approval, or wait for new
ACCC process
ARTC held accountable for failing todeliver track capacity as contracted
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The new arrangements are intended to move the coal chaintowards a fully integrated system behaving as if it has asingle owner
-
IntegratedPlanning
ClearPropertyrights
HVCCC has full authorityfor planning, measuringand improvingperformance
Infrastructure managershave authority andaccountability to executeHVCCC plan
Delay accounting,penalties & incentives forperformance
Producers capture upsideof performanceimprovements
AlignedContracts
Targetedimprovementprogram
Align contractual terms ofterminal, track, and trainservice providers
Producers use theircapacity allocation withoutit being infringed upon bythe actions of others
Develop program ofinitiatives for efficiency andreliability improvements
Coordinate investmentdecisions to ensure efficientuse of capital
45
Coal & Allied has the ability to achieve strong growth in theshort to medium term
Coal & Allied Organic Growth Profile
Million tonnes
20
25
30
35
40
45
50
Definedgrowth**
Upsidepotential***
Forecast
RSPT* creates
uncertainty aroundfuture growth path
46
Source: Rio Tinto Coal Australia
0
5
10
15
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
installedcapacity
* Resource Super Profits Tax** Well defined growth path under review with respect to the RSPT*** Projects yet to reach clear definition of scope under detailed study
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Map of Coal & Allied resources
Coal & Allied assets have large resource bases that presentexpansion options
Million tonnes -100% Basis
Project Reserves Resources
Hunter ValleyOperations
278Mt 1,413Mt
Mount Thorley 24Mt 129Mt
Warkworth 270Mt 530Mt
Bengalla 126Mt 170Mt
Mt Pleasant 350Mt 699Mt
* Resources are additional to reserves
47
Source: 2009 Annual Report
Overview of Hunter Valley Operations and Mt Thorley-Warkworth
Operation detailsHunter Valley OperationsProduction (100% basis)
HVO and MTW mines have in recent yearsbeen operating well below rated plantcapacities due to issues in NSW coal chain
Port capacity framework provides certaintyto allow return to operation at normalcapacity
In combination with productivityimprovement initiatives underway, a returnto scale is a positive step towards loweringunit costs at these mines
Mt12.4 12.0
10.1 10.811.2
~12.0
2005 2006 2007 2008 2009 2010F
Mt Thorley-WarkworthProduction 100%basis
48
Semi-soft flexibility a favourablecharacteristic of these resources
Mt
10.311.2
8.7 9.2 8.5~9.5
2005 2006 2007 2008 2009 2010F
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Overview of Bengalla
Operation details Production (100% basis)
6.05.5 5.2 5.3 5.5 ~5.5
2005 2006 2007 2008 2009 2010F
Feasibility study approaching completion 1st stage ~7.5mt pa saleable
production 2nd stage ~8.5mt pa saleable
production
Project now under review
Further work on dragline capacity and pitscheduling complexity to achieve 2ndstage
49
Overview of Mt Pleasant Project
Project details
Mt Pleasant
Pre-feasibility study approaching completion
Project now under review
Existing study scope targeting 8.5Mt of saleableproduction at full capacity, with additional expansionpotential
Potential for cooperation with Bengalla JV Infrastructure Land/tenure
Bengalla
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a er
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Coal & Allied Summary
Competitive margin position due to production of thermal
and semi-soft coking coal
Easing of infrastructure bottlenecks will allow mines to run
at installed capacity
Clearly defined growth path beyond existing installed
capac y su ec o
51
Rio Tinto Coal Australia Summary
Rio Tinto Coal Australia Summary
xposure to attract ve mar ets w t strong eman
fundamentals driven primarily by the urbanisation and
industrialisation of China and India
Low cost, long life assets capable of delivering growth
beyond existing installed capacity
RSPT places this growth potential at risk
Sustainable Development capability critical to ongoing
licence to operate and grow
Environment
Communities
People commitment, health and safety