REG - Rio Tinto - Rio Tinto 2023 half year results
26/07/2023 07:15
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RNS Number : 2383H Rio Tinto PLC 26 July 2023
26 July 2023
Improved operational performance with 5% volume uplift supports underlying
EBITDA of $11.7 billion and interim dividend of 177 US cents per share
• Net cash generated from operating activities of $7.0 billion.
• Profit after tax attributable to owners of Rio Tinto (referred to as
"net earnings" throughout this release) of $5.1 billion, after $0.8 billion of
impairments relating to our Australian alumina refineries.
• Underlying EBITDA of $11.7 billion and underlying earnings of $5.7
billion, leading to an interim dividend of $2.9 billion, a 50% payout, in
line with our practice.
Six months ended 30 June 2023 2022 Change
Net cash generated from operating activities (US$ millions) 6,975 10,474 (33) %
Purchases of property, plant and equipment and intangible assets (US$ 3,001 3,146 (5) %
millions)
Free cash flow(1) (US$ millions) 3,769 7,146 (47) %
Consolidated sales revenue (US$ millions) 26,667 29,775 (10) %
Underlying EBITDA(1) (US$ millions) 11,728 15,597 (25) %
Profit after tax attributable to owners of Rio Tinto (net earnings)(2) (US$ 5,117 8,943 (43) %
millions)
Underlying earnings per share (EPS)(1 2) (US cents) 352.9 534.9 (34) %
Ordinary dividend per share (US cents) 177.0 267.0 (34) %
Underlying return on capital employed (ROCE)(1) 20% 34%
At 30 June 2023 At 31 December 2022
Net debt(1) (US$ millions) 4,350 4,188
Rio Tinto Chief Executive Jakob Stausholm said: "We have a clear pathway to
building an even stronger Rio Tinto and continue to gain momentum in our
strategy to set the business up for long-term success. We are making good
progress on pursuing our four objectives as we build further momentum in our
Pilbara iron ore business, mindful that we need to raise our game across many
of our other operations.
"Our disciplined investment in lifting the health of our assets and focus on
culture, mindset and relationships is delivering results, with our Pilbara
iron ore business consistently improving its performance with five
consecutive quarters of year-on-year growth. We are taking real steps to shape
our portfolio for the future, with first sustainable production from Oyu
Tolgoi underground, just as we doubled our exposure through the acquisition of
Turquoise Hill Resources. Last week we signed an agreement to form the Matalco
aluminium joint venture to enter the exciting and fast growing aluminium
recycling industry in North America. And the Simandou iron ore project in
Guinea is advancing at pace, with final approvals expected later this year.
"Our robust financials, despite softer market conditions, are driven by the
quality of our assets and our great people, delivering underlying EBITDA of
$11.7 billion, free cash flow of $3.8 billion and underlying earnings of
$5.7 billion, after taxes and government royalties of $4.1 billion. Our
balance sheet strength enables us to continue to invest with discipline while
also paying an interim ordinary dividend of $2.9 billion, a 50% payout, in
line with our practice.
"We will continue paying attractive dividends and investing in the long-term
strength of our business as we sustain and grow our portfolio, while
contributing to society's drive to net zero."
(1) This financial performance indicator is a non-IFRS (as defined below)
measure which is reconciled to directly comparable IFRS financial measures
(non-IFRS measures). It is used internally by management to assess the
performance of the business and is therefore considered relevant to readers of
this document. It is presented here to give more clarity around the underlying
business performance of the Group's operations. For more information on our
use of non-IFRS financial measures in this report, see the section entitled
"Alternative performance measures" (APM) and the detailed reconciliations on
pages 72 to 81. Our financial results are prepared in accordance with IFRS -
see page 39 for further information. Footnotes are set out in full on page 25.
(2) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to page 41 for details.
Progress against our strategy and objectives
Objective Key achievements in the first half of 2023
Best operator Our disciplined investment in lifting the health of our assets and focus on
shifting our culture and mindset is delivering results:
• we are committed to having a safe work environment, preventing
catastrophic events and preventing injuries. Our AIFR in the first half of
2023 remained stable at 0.36. Investigations are under way following
significant process safety incidents at Rio Tinto Iron & Titanium and
Kennecott. We are heightening our focus on managing these risks and continue
to prioritise the safety, health and wellbeing of our workforce, and
communities where we operate.
• sustained momentum from our Pilbara Iron Ore business with a 7%
uplift in production and shipments in the first half: Gudai-Darri reached
capacity and we lifted 2023 shipments guidance to the upper half of the 320 to
335 million tonne range
• successfully ramping up the Oyu Tolgoi underground copper mine,
with 54 drawbells opened from Panel 0, well ahead of plan
• stable performance at our aluminium smelters, with Kitimat ramping
up to schedule
• commenced deployment of the Safe Production System at a further
two sites, taking the total to 20 sites. This programme focuses on
continuously improving safety, strengthening employee engagement and
sustainably lifting operational performance.
Impeccable ESG In 2023 first half, our Scope 1 and 2 emissions were 15.4Mt CO2e (15.5Mt in
2022 first half; 30.3Mt in 2022). Our capital expenditure on decarbonisation
projects in 2023 first half was $95 million, lower than we anticipated when we
set our targets. Our related operational expenditure increased to
approximately $100 million.
Progress during the half on decarbonising our assets included:
• On 3 April, Rio Tinto Iron and Titanium (RTIT) started
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-starts-bluesmelting-demonstration-plant-to-validate-decarbonisation-technology)
its BlueSmelting(TM) demonstration plant at its metallurgical complex in
Sorel-Tracy as part of the process to validate the ground-breaking
BlueSmelting(TM) technology, which aims to decarbonise RTIT's Quebec
Operations.
• On 2 June, our Boron, California operation successfully completed
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-u,-d-,s,-d-,-borax-becomes-first-open-pit-mine-to-transition-to-renewable-diesel)
the full transition of its heavy machinery from fossil diesel to renewable
diesel, making it the first open pit mine in the world to achieve this
milestone.
• On 12 June, we signed
(https://www.riotinto.com/en/news/releases/2023/china-baowu-and-rio-tinto-extend-climate-partnership-to-decarbonise-the-steel-value-chain)
a Memorandum of Understanding (MoU) with China Baowu, the world's biggest
steelmaker, to explore a range of industry-leading new projects in China and
Australia to help decarbonise the steel value chain.
Excel in Development We made significant progress with our objective to excel in development with
the following key milestones in the half:
• a
(https://www.riotinto.com/en/news/releases/2023/underground-production-celebrated-at-oyu-tolgoi)
c
(https://www.riotinto.com/en/news/releases/2023/underground-production-celebrated-at-oyu-tolgoi)
hiev
(https://www.riotinto.com/en/news/releases/2023/underground-production-celebrated-at-oyu-tolgoi)
ed
(https://www.riotinto.com/en/news/releases/2023/underground-production-celebrated-at-oyu-tolgoi)
first sustainable production at the Oyu Tolgoi underground copper mine in
Mongolia, set to become the world's fourth largest copper mine by 2030
• entered
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-and-first-quantum-minerals-partner-to-progress-the-la-granja-copper-project-in-peru)
into an agreement to form a joint venture with First Quantum Minerals to
unlock development of the La Granja copper project in Peru
• approved
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-invests-to-strengthen-copper-supply-in-us)
$498 million for development of the North Rim Skarn underground copper mine at
Kennecott in Utah
• investing
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-to-expand-its-ap60-low-carbon-aluminium-smelter-in-quebec)
$1.1 billion to expand our AP60 aluminium smelter in Quebec
• construction under way at Western Range mine to sustain Pilbara
Iron Ore production with A$1 billion of contracts awar
(https://www.riotinto.com/en/news/releases/2023/western-range-spends-a1-billion-with-wa-businesses)
ded
(https://www.riotinto.com/en/news/releases/2023/western-range-spends-a1-billion-with-wa-businesses)
to Western Australian businesses
• we are advancing the starter plant at the Rincon lithium project
in Argentina: however, full definition of the project, changes to scope and
higher inflation have unfortunately led to an increase in the capital estimate
to $335 million (from $140 million). The learnings and design improvements
will be carried over to the full-scale project.
• investing $0.7 billion in Matalco aluminium recycling joint
venture in North America
• the Simandou iron ore project in Guinea is advancing at pace, with
final approvals expected later this year
Social licence We continue to restore trust and rebuild relationships, particularly with
Indigenous peoples.
• In February, the Naskapi Nation of Kawawachikamach and Iron Ore
Company of Canada signed
(https://www.riotinto.com/en/news/releases/2023/the-naskapi-nation-of-kawawachikamach-and-ioc-sign-the-aganow-agreement)
an agreement to establish a mutually beneficial relationship based on
dialogue, collaboration and trust over the coming decades
• In March, we published
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-publishes-independent-report-on-cultural-heritage-management-performance)
an independent report based on a global audit of our Cultural Heritage
Management compliance and performance
• In May, we published our 2022 Statement on Modern Slavery
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Fs2.bl-1.com%2Fh%2FdtnX8Wyt%3Furl%3Dhttps%3A%2F%2Fwww.riotinto.com%2Fen%2Finvest%2Freports%2Fmodern
-slavery&data=05%7C01%7CTom.Gallop2%40riotinto.com%7C25d1da6c51964e1bebe708db8689a0b9%7C4341df80fbe641bf89b0e6e2379c9c23%7C0%7C0%7C638251697890074650%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=I7A04cbxTCbnC9cVkBN2wSsOsRam4obT3d2kHtTF22A%3D&reserved=0)
.
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Fs2.bl-1.com%2Fh%2FdtnX8Wyt%3Furl%3Dhttps%3A%2F%2Fwww.riotinto.com%2Fen%2Finvest%2Freports%2Fmodern
-slavery&data=05%7C01%7CTom.Gallop2%40riotinto.com%7C25d1da6c51964e1bebe708db8689a0b9%7C4341df80fbe641bf89b0e6e2379c9c23%7C0%7C0%7C638251697890074650%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=I7A04cbxTCbnC9cVkBN2wSsOsRam4obT3d2kHtTF22A%3D&reserved=0)
Although we are not aware of any recorded modern slavery incidents or
complaints in our business during 2022, we are committed to looking for ways
to improve.
• On 2 June, we announced
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-to-invest-in-pilbara-desalination-plant)
plans to invest $395 million in a seawater desalination plant in the Pilbara,
Western Australia, to support future water supply for the company's coastal
operations and communities in the region.
People and Culture
We increased our gender diversity to 23.5% (from 22.9% at year end). The
increases were distributed across all levels of the organisation with female
senior leaders increasing to 28.6% (from 28.3% at year end).
We are taking actions to ensure that everyone at Rio Tinto has a safe,
respectful and inclusive workplace:
• expanding "Purple Banner" communications across many of our
operations to share disrespectful behaviours, leveraging our strong safety
culture
• implementing village councils across sites to provide a safe way
for employees and contractors to raise concerns and give feedback
• carried out a contractor survey at Pilbara Iron Ore to better
understand their experiences, with more than 950 responses
Guidance
• In 2023, we expect our share of capital investment (refer to APMs on page
78) to be $7.0 billion, excluding Simandou. In addition, we expect our share
of investment in Simandou to be around $0.5 billion in the second half of
2023. This guidance assumes all Simandou costs are capitalised in the second
half of the year following the signature of agreements between the joint
venture parties. Our previous guidance was $8.0 billion, depending on the
ramp-up of spend at Simandou.
• In 2024 and 2025, our share of capital investment is expected to be up
to $10.0 billion per year, including up to $3.0 billion in growth per year,
depending on opportunities. Each year also includes sustaining capital of
around $3.5 billion, of which around $1.5 billion a year is for Pilbara iron
ore (subject to ongoing inflationary pressure and exchange rates) and $2.0 to
$3.0 billion of replacement capital. Guidance includes around $1.5 billion
over the next three years on decarbonisation projects. This remains subject to
Traditional Owner and other stakeholder engagement, regulatory approvals and
technology developments.
• In 2023, we expect our exploration & evaluation expense (excluding
Simandou) to be $1.0 billion. In addition, we have incurred $0.3 billion in
evaluation costs for the Simandou iron ore project in the first half on a 100%
basis. As noted above, our guidance assumes all Simandou costs are capitalised
in the second half of the year.
• Effective tax rate on underlying earnings is expected to be around 30%
in 2023.
Unit costs H1 2023 Actuals 2023 Guidance
Pilbara iron ore unit cash costs, free on board (FOB) basis - US$ per wet 21.2 21.0-22.5
metric tonne
Australian dollar exchange rate 0.68 0.70
Copper C1 unit costs (includes Kennecott, Oyu Tolgoi and Escondida) - US cents 184 180-200
per lb
Production (Rio Tinto share, unless otherwise stated) H1 2023 Actuals 2023 Guidance
Pilbara iron ore (shipments, 100% basis) (Mt) 161.7 320 to 335*
Bauxite (Mt) 25.6 54 to 57**
Alumina (Mt) 3.7 7.4 to 7.7
Aluminium (Mt) 1.6 3.1 to 3.3
Mined copper (consolidated basis) (kt)(4) 290 590 to 640
Refined copper (kt) 95 160 to 190
Diamonds (M carats) 1.9 3.0 to 3.8
Titanium dioxide slag (Mt) 0.6 1.1 to 1.4**
Iron Ore Company of Canada iron ore pellets and concentrate (Mt) 4.6 10.0 to 11.0
Boric oxide equivalent (Mt) 0.3 ~0.5
• Production and unit cost guidance is consistent with our Second Quarter
Operations Review, released on 19 July 2023.
• Iron ore shipments and bauxite production guidance remain subject to
weather impacts.
* In the upper half of the range. With higher iron ore production anticipated
in 2023 second half, SP10 is expected to be a larger proportion of shipments
(first half 2023: 10%, on a 100% basis).
** In the lower end of the range
Other footnotes set out in full on page 25.
Decarbonisation targets
• Activity across our global decarbonisation portfolio continues to
accelerate and we remain committed to reducing our Scope 1&2 emissions by
50% by 2030. Delivery of this target remains dependent on the development and
delivery of new low-carbon energy solutions at our Pacific Aluminium
operations that can support an internationally competitive aluminium business.
In 2022, this business unit contributed 70% of our total Scope 2 electricity
emissions and 48% of total Scope 1&2 emissions.
• In addition to the pursuit of abatement projects to 2030 across
renewable electricity, fleet solutions and process heat abatement, we are
committed to our ongoing investment in scaling up industry breakthrough
technologies to support our pathway to net-zero operations (scope 1&2) by
2050. This approach has contributed to continued investment in ELYSIS+ for
aluminium, Hydrogen calcination for alumina(1), BlueSmelting for titanium
dioxide and iron and trialling battery electric mining fleets and trains in
our mining operations.
• We expect to have made financial commitments to industrial abatement
projects representing more than 15% of group emissions by 2025. However,
unless we use carbon offsets, we do not expect to achieve our targeted 15%
reduction in Scope 1&2 emissions until after 2025. Physical delivery of
renewables, diesel replacement and process heat abatement will lag our
financial commitments. These delays are the result of a range of factors
including engineering and construction timelines, the need to carefully
integrate our ambitions with the needs of our local communities and
stakeholder groups and a requirement for additional abatement to address
underlying emissions growth as our production plans evolve.
• Developing our own nature-based solutions and securing high quality
carbon offsets remain a key part of our decarbonisation programme as we work
towards our medium and long term carbon reduction targets.
(1) As part of our commitment to enhanced climate advocacy and transparency
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.riotinto.com%2Fen%2Fnews%2Freleases%2F2023%2Frio-tinto-engages-with-investor-and-civil-society-organisations-on-enhanced-advocacy-approach&data=05%7C01%7CDavid.Ovington%40riotinto.com%7C2878faa64d2d411a700708db8a4d8f04%7C4341df80fbe641bf89b0e6e2379c9c23%7C0%7C0%7C638255837948509701%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=5Z5BvvTw3BssPx7MDymfQcRh2D1J4tvjLhtjO2ex4KA%3D&reserved=0)
, we are publishing a series of briefing papers about our key emissions
sources, efforts to decarbonise specific assets and how policy settings can
support our Scope 1 and 2 emissions reduction targets. The first of these
covers decarbonisation of our Australian alumina refineries
(https://cdn-rio.dataweavers.io/-/media/content/documents/sustainability/climate-change/rt-decarbonising-our-australian-alumina-refineries-2023.pdf?rev=2522c9e09acb43ed85fbaa2423fbd474)
.
Financial performance
Income Statement
Net earnings and underlying earnings refer to amounts attributable to the
owners of Rio Tinto. The net profit attributable to the owners of Rio Tinto in
2023 first half was $5.1 billion (2022 first half: $8.9 billion). We recorded
a profit after tax in 2023 first half of $4.9 billion (2022 first half: $9.4
billion ) of which a loss of $0.2 billion was attributable to non-controlling
interests (2022 first half profit: $0.5 billion).
Underlying EBITDA
To provide additional insight into the performance of our business, we report
underlying EBITDA and underlying earnings. Underlying EBITDA and underlying
earnings are Non-IFRS Measures. For definitions and a detailed reconciliation
of underlying EBITDA and underlying earnings to the nearest IFRS measures, see
pages 46 and 75, respectively.
The principal factors explaining the movements in underlying EBITDA are set
out in this table.
US$bn
2022 first half underlying EBITDA 15.6
Prices (3.3)
Exchange rates 0.4
Volumes and mix 0.4
General inflation (0.2)
Energy -
Operating cash unit costs (0.9)
Higher exploration and evaluation expenditure (0.3)
2023 first half underlying EBITDA 11.7
Solid financial results impacted by significant movements in commodity prices
We saw lower prices, in general, for our commodities, in line with slowing
global demand, with the Chinese recovery predominantly led by the service
sector.
Movements in commodity prices resulted in a $3.3 billion decline in underlying
EBITDA overall compared with 2022 first half. This was primarily from lower
iron ore prices ($1.6 billion), lower London Metal Exchange (LME) copper
prices and a negative provisional pricing impact ($0.2 billion) and lower
pricing for our Aluminium business ($1.4 billion), driven by LME prices and
lower alumina pricing. We have included a table of prices and exchange rates
on page 82.
The monthly average Platts index for 62% iron fines converted to a Free on
Board (FOB) basis was 14% lower, on average, compared with 2022 first half.
The average LME price for copper was 10% lower, the average LME aluminium
price was 24% lower while the gold price was 3% higher compared with 2022
first half.
The midwest premium duty paid for aluminium in the US averaged $583 per tonne,
27% lower than in 2022 first half.
Benefit from weaker local currencies during 2023 first half
Compared with 2022 first half, on average, the US dollar strengthened by 6%
against the Australian dollar and by 6% against the Canadian dollar. Currency
movements increased underlying EBITDA by $0.4 billion relative to 2022 first
half.
Improvement in sales volumes and mix
Higher sales volumes and changes in product mix across the portfolio increased
underlying EBITDA by $0.4 billion compared to 2022 first half. This was mostly
attributable to increased iron ore sales and enhanced product mix, including
higher lump shipments, following improved Pilbara system performance including
the ramp-up of Gudai-Darri.
Impact of rising inflation and generally stable energy prices
We saw a $0.1 billion benefit to underlying EBITDA on the easing of diesel
prices compared to 2022 first half: however, the benefit of this was offset by
other energy prices that remain elevated, reducing underlying EBITDA by $0.1
billion. In addition, general price inflation across our global operations
resulted in a $0.2 billion reduction in underlying EBITDA, net of a $0.2
billion benefit from the impact of inflation on closure provisions.
Lower volumes at some assets drive up unit costs: market-linked raw material
price declines to benefit costs in second half
We remained focused on cost control, in particular maintaining discipline on
fixed costs. Lower production across several assets triggered an overall rise
in our operating cash unit costs, which reduced underlying EBITDA by
approximately $0.4 billion (on a unit cost basis) compared with 2022 first
half. This was mainly at Kennecott from the failure of a conveyor in March and
the rebuild of the smelter and refinery that commenced in May, along with
production being impacted at Iron Ore Company of Canada (IOC) in June
following the wildfires in Northern Quebec. Increases to our nominal cost base
reduced underlying EBITDA by $0.5 billion, where a large proportion of this is
expected to be temporary. In Aluminium, we made targeted investment to improve
the integrity of operations and we continue to see elevated market-linked raw
material prices flow through underlying EBITDA: which have moderated but are
expected to take three to four months to flow through to the Income Statement.
Costs at IOC were higher following the recent collective bargaining agreement
and where we also made targeted investment to improve asset reliability at the
mine, port and rail, concentrator and pellet plant.
Increasing our global exploration and evaluation activity
We increased our exploration and evaluation expenditure by $0.3 billion, or
94%, to $0.7 billion. This was mainly attributable to increased activity at
the Simandou iron ore project in Guinea (where costs are included in
underlying EBITDA on a 100% basis) and the Rincon lithium project in
Argentina.
Net earnings
The principal factors explaining the movements in underlying earnings and net
earnings are set out below.
US$bn
2022 first half net earnings 8.9
Total changes in underlying EBITDA (3.9)
Increase in interest and finance items (pre-tax) in underlying earnings (0.4)
Decrease in tax on underlying earnings 0.6
Decrease in underlying earnings attributable to outside interests 0.7
Total changes in underlying earnings (3.0)
Changes in exclusions from underlying earnings:
Gain recognised by Kitimat relating to LNG Canada's project (0.1)
Movement in impairment charges (0.8)
Movement in closure estimates (non-operating and fully impaired sites) 0.1
2023 first half net earnings 5.1
Financial figures are rounded to the nearest million, hence small differences
may result in the totals.
Net interest and finance items
Interest and finance items (pre-tax) were higher mainly as a result of a $0.5
billion increase in finance costs due to higher interest rates and a non-cash
modification charge on refinancing of the Oyu Tolgoi project finance facility,
partially offset by a $0.2 billion increase in finance income due to higher
interest rates.
Tax and non-controlling interests
The 2023 first half effective corporate income tax rate on pre-tax earnings,
excluding equity accounted units, was 30.5%, compared with 24.2% (as restated)
in 2022 first half, the most significant driver of the lower rate in 2022
being the recognition and use of additional deferred tax assets at Oyu Tolgoi.
The effective tax rate on pre-tax earnings in Australia was 30.4%, compared
with 28.7% (as restated) in 2022 first half.
Underlying earnings attributable to outside interests
Earnings attributable to non-controlling interests were lower, mainly due to
lower underlying earnings at Oyu Tolgoi, the acquisition of the Turquoise Hill
minorities in 2022, higher evaluation spend at Simandou and higher interest
costs attributable to non-controlling interests.
Items excluded from underlying earnings
The differences between underlying earnings and net earnings are set out in
this table (all numbers are after tax and exclude non-controlling interests).
Six months ended 30 June 2023 Six months ended 30 June 2022
US$bn US$bn
Underlying earnings 5.7 8.7
Items excluded from underlying earnings
Impairment charges (0.8) -
Gains recognised by Kitimat relating to LNG Canada's project - 0.1
Foreign exchange and derivative gains on net debt and intragroup balances and 0.2 0.2
derivatives not qualifying for hedge accounting
Net earnings 5.1 8.9
Financial figures are rounded to the nearest million, hence small differences
may result in the totals.
On pages 75 to 76 there is a detailed reconciliation from net earnings to
underlying earnings, including pre-tax amounts and additional explanatory
notes. The differences between profit after tax and underlying EBITDA are set
out in the table on page 46.
We recognised impairment charges of $0.8 billion (after tax) in 2023 first
half, mainly related to our alumina refineries in Queensland, triggered by the
challenging market conditions facing these assets, together with our improved
understanding of the capital requirements for decarbonisation and the recently
legislated cost escalation for carbon emissions. There is a detailed
explanation of the impairment process on page 49.
In 2023 first half, we recognised an exchange and derivative gain of $0.2
billion, in line with the first half gain of $0.2 billion. The exchange gains
are largely offset by currency translation losses recognised in equity. The
quantum of US dollar debt is largely unaffected and we will repay it from US
dollar sales receipts.
Underlying EBITDA and underlying earnings by product group
Underlying EBITDA Underlying earnings
2023 2022 Change 2023 2022 Change
Six months ended 30 June US$bn US$bn % US$bn US$bn %
Iron Ore 9.8 10.4 (6) % 5.8 6.5 (11) %
Aluminium 1.1 2.9 (60) % 0.3 1.6 (83) %
Copper 1.1 1.5 (29) % 0.2 0.6 (65) %
Minerals 0.7 1.3 (45) % 0.2 0.4 (58) %
Reportable segment total 12.7 16.1 (21) % 6.4 9.0 (29) %
Simandou iron ore project (0.3) (0.1) 489 % (0.1) - 245 %
Other operations (0.1) (0.1) 8 % (0.2) (0.2) 5 %
Central pension costs, share-based payments, insurance and derivatives 0.2 0.3 (37) % 0.1 0.2 (38) %
Restructuring, project and one-off costs (0.1) (0.1) (2) % (0.1) (0.1) (2) %
Other central costs (0.5) (0.4) 25 % (0.5) (0.4) 25 %
Central exploration and evaluation (0.1) (0.1) 19 % (0.1) (0.1) 20 %
Net interest 0.1 0.1 (23) %
Total 11.7 15.6 (25) % 5.7 8.7 (34) %
Financial figures are rounded to the nearest million, hence small differences
may result in the totals and period-on-period change.
Underlying EBITDA and underlying earnings are APMs used by management to
assess the performance of the business, and provide additional information
which investors may find useful. APMs are reconciled to directly comparable
IFRS financial measures on pages 72 to 81.
Simandou iron ore project
Costs attributable to the Simandou iron ore project in Guinea increased to
$318 million (100% basis at EBITDA level), in line with the rise in activity.
Central and other costs
Pre-tax central pension costs, share-based payments, insurance and derivatives
were a $0.2 billion credit compared with a $0.3 billion credit in 2022 first
half, reflecting a net loss on derivatives recognised in 2023 (of -$65
million) compared to derivative gains recognised in 2022 (of +$65 million),
offset by lower central pension costs.
On a pre-tax basis, restructuring, project and one-off central costs were in
line with 2022 first half mainly associated with corporate projects, in
particular workstreams surrounding Everyday Respect and to support our CSP
objectives.
Other central costs of $0.5 billion were 25% higher than in 2022 first half,
reflecting our increased investment in decarbonisation to support delivery of
our targets, along with investment in technology, R&D and associated
partnerships. This also includes lower internal cost recoveries recharged to
the product groups.
On an underlying earnings basis, net interest was a credit of $0.1 billion in
line with 2022 first half as the impact of higher pre-tax interest costs was
offset by an increase in amounts attributable to non-controlling interests and
tax effects.
Continuing to invest in greenfield exploration
We have a strong portfolio of greenfield exploration projects in early
exploration and studies stages, with activity in 18 countries across eight
commodities. This is reflected in our pre-tax central spend of $0.1 billion.
The bulk of this exploration expenditure was focused on copper in Australia,
Colombia, Chile, Zambia, Peru, the US and Kazakhstan, and diamonds in Angola.
Rio Tinto recently partnered in two lithium exploration projects in Quebec and
greenfield lithium exploration continues in Canada, Australia, the US and
Africa. Exploration for nickel is ongoing in Canada, Finland, Brazil and Peru.
Mine-lease exploration continued at Rio Tinto managed businesses including
Bingham Canyon in the US, Pilbara Iron Ore in Australia and Diavik in Canada.
Cash flow
2023 2022
Six months ended 30 June US$bn US$bn
Net cash generated from operating activities 7.0 10.5
Purchases of property, plant and equipment and intangible assets (3.0) (3.1)
Lease principal payments (0.2) (0.2)
Free cash flow(1) 3.8 7.1
Dividends paid to equity shareholders (3.7) (7.6)
Acquisitions - (0.8)
Other (0.3) -
Movement in net debt/cash(1) (0.2) (1.3)
Financial figures are rounded to the nearest million, hence small differences
may result in the totals.
Footnotes are set out in full on page 25.
• $7.0 billion in net cash generated from operating activities, 33% lower
than 2022 first half, primarily driven by price movements for our major
commodities and a $0.9 billion rise in working capital. This reflected a build
in blasted and mine stocks in the Pilbara to support overall system health,
and higher spares and stores (including seasonality due to the Diavik winter
road). Payables were also lower due to the timing of spend, and normal
volatility in amounts due to JV partners and employees. Operating cash flow
was also impacted by lower dividends from Escondida during the first half
($0.3 billion in 2023 first half; $0.6 billion in 2022 first half).
• Our capital expenditure of $3.0 billion was comprised of $0.3 billion of
growth, $0.7 billion of replacement, $1.9 billion of sustaining and $0.1
billion of decarbonisation capital (in addition to $0.1 billion of
decarbonisation spend in operating costs). We funded our capital expenditure
from operating activities and generally expect to continue funding our capital
programme from internal sources.
• $3.7 billion of dividends paid in 2023 first half, being the 2022 final
ordinary dividend.
• The above movements, together with $0.3 billion of other movements,
resulted in net debt(1) increasing by $0.2 billion in 2023 first half to $4.4
billion at 30 June 2023.
Balance sheet
Net debt(1) increased by $0.2 billion in 2023 first half to $4.4 billion at
30 June 2023 per the above movements.
Our net gearing ratio(1) (net debt/(cash) to total capital) was 8% at 30 June
2023 (31 December 2022: 7%), see page 80.
Our total financing liabilities excluding net debt derivatives at 30 June
2023 (see page 79) were $14.1 billion (31 December 2022: $12.3 billion) and
the weighted average maturity was around 12 years. At 30 June 2023,
approximately 59% of these liabilities were at floating interest rates (65%
excluding leases). The maximum amount within non-current borrowings maturing
in any one calendar year is $1.6 billion, which matures in 2033.
On 7 March 2023, we priced
(https://www.riotinto.com/en/news/releases/2023/rio-tinto-finance-usa-plc-prices-us1_75-billion-of-fixed-rate-notes)
$650 million of 10-year fixed rate SEC-registered debt securities and $1.1
billion of 30-year fixed rate SEC-registered debt securities. The 10-year
notes will pay a coupon of 5.000 per cent and will mature 9 March 2033 and the
30-year notes will pay a coupon of 5.125 per cent and will mature 9 March
2053.
We had $10.4 billion in cash and cash equivalents plus other short-term cash
investments at 30 June 2023 (31 December 2022: $8.8 billion).
Provision for closure costs
At 30 June 2023, provisions for close-down and restoration costs and
environmental clean-up obligations were $14.8 billion (31 December 2022:
$15.8 billion). The principal movement during the period followed a revision
of the closure discount rate to 2.0% (from 1.5%), reflecting expectations of
higher yields from long-dated bonds, which resulted in a $1.1 billion
reduction to the provision. This was partly offset by the amortisation of
discount ($0.6 billion) which includes the effect of elevated inflation
expectations for the year. Utilisation of the provision through spend
($0.3 billion) and a weaker Australian dollar, Canadian dollar and South
African rand against the US dollar ($0.1 billion) also contributed to
lowering the provision.
Our shareholder returns policy
The Board is committed to maintaining an appropriate balance between cash
returns to shareholders and investment in the business, with the intention of
maximising long-term shareholder value.
At the end of each financial period, the Board determines an appropriate total
level of ordinary dividend per share. This takes into account the results for
the financial year, the outlook for our major commodities, the Board's view of
the long-term growth prospects of the business and the company's objective of
maintaining a strong balance sheet. The intention is that the balance between
the interim and final dividend be weighted to the final dividend.
The Board expects total cash returns to shareholders over the longer term to
be in a range of 40% to 60% of underlying earnings in aggregate through the
cycle. Acknowledging the cyclical nature of the industry, it is the Board's
intention to supplement the ordinary dividend with additional returns to
shareholders in periods of strong earnings and cash generation.
50% payout ratio on the interim ordinary dividend, in line with our practice
2023 2022
US$bn US$bn
Ordinary dividend
Interim* 2.9 4.3
Payout ratio on ordinary dividend 50% 50%
* Based on weighted average number of shares and declared dividends per
share for the respective periods and excluding foreign exchange impacts on
payment.
We determine dividends in US dollars. We declare and pay Rio Tinto plc
dividends in pounds sterling and Rio Tinto Limited dividends in Australian
dollars. The 2023 interim dividend has been converted at exchange rates
applicable on 25 July 2023 (the latest practicable date before the dividend
was declared). American Depositary Receipt (ADR) holders receive dividends at
the declared rate in US dollars.
Ordinary dividend per share declared 2023 2022
Rio Tinto Group
Interim - US cents per share 177.00 267.00
Rio Tinto plc
Interim - UK pence per share 137.67 221.63
Rio Tinto Limited
Interim - Australian cents per share 260.89 383.70
The 2023 interim ordinary dividend to be paid to our Rio Tinto Limited
shareholders will be fully franked. The Board expects Rio Tinto Limited to be
in a position to pay fully franked dividends for the foreseeable future.
On 21 September 2023, we will pay the 2023 interim ordinary dividend to
holders of ordinary shares and holders of ADRs on the register at the close of
business on 11 August 2023 (record date). The ex-dividend date is 10 August
2023.
Rio Tinto plc shareholders may choose to receive their dividend in Australian
dollars or New Zealand dollars, and Rio Tinto Limited shareholders may choose
to receive theirs in pounds sterling or New Zealand dollars. Currency
conversions will be based on the pound sterling, Australian dollar and New
Zealand dollar exchange rates five business days before the dividend payment
date. Rio Tinto plc and Rio Tinto Limited shareholders must register their
currency elections by 31 August 2023.
We will operate our Dividend Reinvestment Plans for the 2023 interim dividend
(visit riotinto.com for details). Rio Tinto plc and Rio Tinto Limited
shareholders' election notice for the Dividend Reinvestment Plans must be
received by 31 August 2023. Purchases under the Dividend Reinvestment Plan are
made on or as soon as practicable after the dividend payment date and at
prevailing market prices. There is no discount available.
Capital projects
Approved projects Total approved Approved capital remaining to be spent from Status/Milestones
(Rio Tinto 100% capital cost 1 July 2023
owned unless (100% unless
otherwise stated) otherwise stated)
Ongoing
Iron Ore
Investment in the Western Range iron ore project, a joint venture between Rio $1.3bn $1.0bn Announced in September 2022, the mine will have a capacity of 25 million
Tinto (54%) and China Baowu Steel Group Co. Ltd (46%) in the Pilbara to
tonnes per year. The project includes construction of a primary crusher and an
sustain production of the Pilbara Blend from Rio Tinto's existing Paraburdoo (Rio Tinto share)(3) (Rio Tinto 18-kilometre conveyor connection to the Paraburdoo processing plant.
hub. First production is anticipated in 2025.
Construction continued in line with schedule during the half with site
share) facilities completed and contractors mobilised, while we progressed bulk
earthworks for the fixed plant and pre-strip earthworks for the mine.
Aluminium
Investment to expand the low-carbon AP60 aluminium smelter at the Complexe $1.1bn $1.1bn Approved in June 2023, the investment will add 96 AP60 pots, representing
Jonquière in Quebec. The investment includes up to $113 million of financial 160,000 tonnes of primary aluminium per year, replacing the Arvida smelter
support from the Quebec government. which is set to gradually close from 2024. Commissioning is expected in the
first half of 2026, with the smelter fully ramped up by the end of that year.
Once completed, the smelter is expected to be in the first quartile of the
industry operating cost curve.
Copper
Phase two of the south wall pushback to extend mine life at Kennecott in Utah $1.8bn $1.3bn Approved in December 2019, the investment will further extend strip waste rock
by a further six years. mining and support additional infrastructure development. This will allow
mining to continue into a new area of the orebody between 2026 and 2032. In
March 2023, a further $0.3 billion was approved to primarily mitigate the risk
of failure in an area of geotechnical instability known as Revere, necessary
to both protect open pit value and enable underground development.
Investment in the Kennecott underground development of the North Rim Skarn $0.5bn $0.5bn Approved in June 2023, production from NRS(5) will commence in 2024 and is
(NRS) area. expected to ramp up over two years, to deliver around 250,000 tonnes of
additional mined copper over the next ten years(6) alongside open cut
operations.
Development of the Oyu Tolgoi underground copper/gold mine in Mongolia (Rio $7.06bn $1.4bn The delivery of infrastructure for ramp-up to full capacity remains on target:
Tinto 66%), which is expected to produce (from the open pit and underground) we expect commissioning of shafts 3 and 4 and the conveyor to surface in the
an average of ~500,000 tonnes(7) of copper per year from 2028 to 2036, second half of 2024 and the concentrator conversion in the first half of 2025.
compared with 130,000 tonnes in 2022 (open pit).
We delivered first sustainable underground production from Panel 0 in March
2023. A total of 54 drawbells had been opened at 30 June, including 35 in the
first half.
Future options
Status
Iron Ore: Pilbara brownfields
Over the medium term, our Pilbara system capacity remains between 345 and 360 In addition to Western Range (Greater Paraburdoo), which is under
million tonnes per year. Meeting this range, and the planned product mix, will construction, we continue to progress studies for Hope Downs 1 Sustaining
require the approval and delivery of the next tranche of replacement mines (Hope Downs 2 and Bedded Hilltop), Brockman 4 Sustaining (Brockman Syncline
over the next five years. 1), Greater Nammuldi Sustaining and West Angelas Sustaining. We continue to
work closely with local communities, Traditional Owners and governments to
progress approvals for these new mining projects
Iron Ore: Rhodes Ridge
In October 2022, Rio Tinto (50%) and Wright Prospecting Pty Ltd (50%) agreed A resource-drilling programme is currently underway to support future project
to modernise the joint venture covering the Rhodes Ridge project in the studies. An Order of Magnitude study is underway and is expected to be
Eastern Pilbara, providing a pathway for development utilising Rio Tinto's completed in 2023. The Study considers the development of an operation before
rail, port and power infrastructure. Rhodes Ridge contains 5.8 billion tonnes the end of the decade with initial plant capacity of up to 40 million tonnes
of high-grade Mineral Resources at an average grade of 62.3% Fe. The project's annually, subject to the receipt of relevant approvals.
total resource, 6.7 billion tonnes at an average grade of 61.6% Fe, represents
approximately one third of our existing Resource base in the Pilbara(8).
Iron Ore: Simandou
The Simandou iron ore project in Guinea(9) contains one of the world's largest Negotiations continued to progress, to enable the co-development of rail and
known undeveloped high-grade low-impurity iron ore deposits, demand for which port infrastructure by Simfer, Winning Consortium Simandou and the Guinean
is increasing as steelmakers look to reduce carbon emissions. Simandou is set State. The legal framework for the construction and operations phases will
to diversify our strong iron ore portfolio, complementing our high-grade Iron establish access rights, fiscal regime and schedule, as well as joint venture
Ore Company of Canada products and supporting the long-term attractiveness of arrangements. We also continued to progress early works, including
our Pilbara Blend™ offering. establishing accommodation camps to support continued mobilisation on both our
mine and rail scope, earthworks and geotechnical drilling.
Lithium: Jadar
Development of the greenfield Jadar lithium-borates project in Serbia. The The Board committed funding in July 2021, subject to receiving all relevant
development will include an underground mine with associated infrastructure approvals, permits and licences. We are focused on consultation with all
and equipment, including electric haul trucks, as well as a beneficiation stakeholders to explore all options following the Government of Serbia's
chemical processing plant. cancellation of the Spatial Plan in January 2022.
Lithium: Rincon
We completed the acquisition of the Rincon Lithium project in Salta province, In July 2022, we approved $140 million of investment and $54 million for early
Argentina in March 2022. Development of a 3,000 tonne per year starter, works to support a full-scale operation. To date, the majority of costs have
battery-grade lithium carbonate plant is underway with first saleable been expensed through exploration and evaluation expenditure. In July 2023, we
production now expected at the end of 2024 (previously in the first half of approved a further $195 million to complete the starter plant: the increase
2024). was driven by the project now being fully defined (previously conceptual),
scope adjustments to design (including column performance improvements and
changes to waste and spent brine disposal facilities), rising capital costs
across the lithium industry, particularly for processing equipment and from
broad cost escalation in Argentina. Studies are continuing on the full-scale
plant, which will have benefits of economies of scale, with the capital
intensity, based on current stage of studies, forecast to be in line with
regional lithium industry benchmarks.
Mineral Sands: Zulti South
Development of the Zulti South project at Richards Bay Minerals (RBM) in South Approved in April 2019 to underpin RBM's supply of zircon and ilmenite over
Africa (Rio Tinto 74%). the life of the mine. The project remains on full suspension.
Copper: Resolution
The Resolution Copper project is a proposed underground copper mine in the The United States Forest Service (USFS) continued work to progress the Final
Copper Triangle, in Arizona, United States (Rio Tinto 55%). It has the Environmental Impact Statement and complete actions necessary for the land
potential to supply up to 25% of US copper demand. exchange. We continued to advance partnership discussions with several
federally-recognised Native American Tribes who are part of the formal
consultation process. We are also monitoring the Apache Stronghold versus USFS
case held in the US Ninth Circuit Court of Appeals. While there is significant
local support for the project, we respect the views of groups who oppose it
and will continue our efforts to address and mitigate these concerns.
Copper: Winu
In late 2017, we discovered copper-gold mineralisation at the Winu project in We continued to strengthen our relationships and advanced agreement making
the Paterson Province in Western Australia. In 2021, we reported our first with host Traditional Owners, the Martu and Nyangumarta groups. Drilling,
Indicated Mineral Resource. The pathway is expected to take longer than fieldwork and study activities continued, strengthening the development
originally anticipated and remains subject to regulatory and other required pathway ahead of applications for regulatory and other required approvals.
approvals.
Copper: La Granja
In March 2023, we entered into an agreement with First Quantum Minerals to First Quantum will acquire a 55% stake for $105 million and commit to further
form a joint venture that will work to unlock the development of the La Granja invest up to $546 million to sole fund capital and operational costs through a
copper project in Peru, one of the largest undeveloped copper deposits in the feasibility study and toward development. Upon completion of the sole funding
world. The transaction is expected to complete by the end of the third quarter commitment, all subsequent expenditures will be applied on a pro-rata basis in
of 2023, subject to the satisfaction of regulatory approvals. line with share ownership.
Aluminium: ELYSIS
ELYSIS, our joint venture with Alcoa, supported by Apple, the Government of Construction of the first commercial-scale prototype cells is underway at our
Canada and the Government of Quebec, is developing a breakthrough inert anode Alma smelter and is expected to become operational in 2023. ELYSIS aims to
technology that eliminates all direct greenhouse gases from the aluminium have its technology available for installation from 2024 and production of
smelting process. larger volumes of carbon-free aluminium approximately two years later.
Review of operations
Iron Ore
Six months ended 30 June 2023 2022 Change
Pilbara production (million tonnes - 100%) 160.5 150.3 7 %
Pilbara shipments (million tonnes - 100%) 161.7 151.4 7 %
Salt production (million tonnes - Rio Tinto share)(1) 3.1 2.6 18 %
Segmental revenue (US$ millions) 15,600 16,610 (6) %
Average realised price (US$ per dry metric tonne, FOB basis) 107.2 120.5 (11) %
Underlying EBITDA (US$ millions) 9,792 10,395 (6) %
Pilbara underlying FOB EBITDA margin(2) 69% 70%
Underlying earnings (US$ millions)(3) 5,787 6,473 (11) %
Net cash generated from operating activities (US$ millions) 6,782 8,512 (20) %
Capital expenditure (US$ millions)(4) (1,094) (1,472) (26) %
Free cash flow (US$ millions) 5,639 7,023 (20) %
Underlying return on capital employed(5 3) 63% 72%
Production figures are sometimes more precise than the rounded numbers shown,
hence small differences may result in the year on year change.
Footnotes are set out in full on page 25.
1. Dampier Salt is reported within Iron Ore, reflecting management
responsibility. Iron Ore Company of Canada continues to be reported within
Minerals. The Simandou iron ore project in Guinea is now reported within Other
Operations.
2. The Pilbara underlying free on board (FOB) EBITDA margin is defined as
Pilbara underlying EBITDA divided by Pilbara segmental revenue,
excluding freight revenue.
3. Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to page 41 for details.
4. Capital expenditure is the net cash outflow on purchases less sales of
property, plant and equipment; capitalised evaluation costs; and purchases
less sales of other intangible assets.
5. Underlying return on capital employed (ROCE) is defined as underlying
earnings excluding net interest divided by average capital employed.
Financial performance
Underlying EBITDA of $9.8 billion was 6% lower than 2022 first half, due to
lower prices ($1.2 billion), following a 14% decline in the monthly average
Platts index for 62% iron fines adjusted to an FOB basis. This was partly
offset by higher sales volumes and improved product mix following the ramp-up
of Gudai-Darri. We continued to target investment in pit health and asset
maintenance across the Pilbara.
Unit costs of $21.2 per tonne are $0.6 per tonne lower than 2022 first half.
Cost escalation from inflation was offset by a weaker Australian dollar while
increased iron ore volumes offset a higher mine work index and mine
maintenance costs.
Our Pilbara operations delivered an underlying FOB EBITDA margin of 69%,
compared with 70% in 2022 first half, largely due to the change in the iron
ore price.
We price the majority of our iron ore sales (79%) by reference to the average
index price, for the month of shipment. In 2023 first half, we priced
approximately 10% of sales with reference to the prior quarter's average index
lagged by one month with the remainder sold either on current quarter average,
current month average or on the spot market. We made approximately 74% of
sales including freight and 26% on an FOB basis.
We achieved an average iron ore price of $98.6 per wet metric tonne on an FOB
basis (2022 first half: $110.9 per wet metric tonne) across our product suite.
This equates to $107.2 per dry metric tonne, assuming 8% moisture (2022 first
half: $120.5 per dry metric tonne), which compares with the monthly average
Platts index for 62% iron fines converted to an FOB basis of $109.8 per dry
metric tonne (2022 first half: $128.2 per dry metric tonne). The 2% lower
realised price compared to the Platts index was due to lower average grades.
Segmental revenue for our Pilbara operations included freight revenue of
$0.9 billion (2022 first half: $1.1 billion).
Net cash generated from operating activities of $6.8 billion was $1.7 billion
lower than 2022 first half, due to lower pricing and a build in working
capital, partially offset by higher volumes. Free cash flow of $5.6 billion
was $1.4 billion lower than 2022 first half due to the factors above,
partially offset by a $0.4 billion reduction in capital expenditure to $1.1
billion following completion of brownfield mines in 2022.
Review of operations
Pilbara operations produced 160.5 million tonnes (Rio Tinto share 135.8
million tonnes), 7% higher than 2022 first half. Shipments of 161.7 million
tonnes (Rio Tinto share 136.4 million tonnes), which were also 7% higher,
included 16.8 million tonnes of lower grade SP10 products, 10% of shipments,
on a 100% basis (2022 first half: 15% of shipments).
The ramp-up of Gudai-Darri continued to plan, with the mine reaching nameplate
capacity on a sustained basis during the second quarter. We achieved record
first quarter shipments and the highest first half shipments since 2018. At
Dampier Port there was planned major maintenance and a train derailment on 17
June. The rail line was reopened on 21 June.
We continue to see strong demand for our portside product in China, with sales
totalling 11.9 million tonnes in the first half of 2023 (14.2 million tonnes
in 2022 first half). At the end of June, inventory levels were 5.7 million
tonnes, including 2.6 million tonnes of Pilbara product. In 2023 first half,
approximately 90% of our portside sales were either screened or blended in
Chinese ports.
Aluminium
Six months ended 30 June 2023 2022 Change
Bauxite production ('000 tonnes - Rio Tinto share) 25,581 27,757 (8) %
Alumina production ('000 tonnes - Rio Tinto share) 3,720 3,765 (1) %
Aluminium production ('000 tonnes - Rio Tinto share) 1,598 1,467 9 %
Segmental revenue (US$ millions) 6,263 7,796 (20) %
Average realised aluminium price (US$ per tonne) 2,866 3,808 (25) %
Underlying EBITDA (US$ millions) 1,140 2,866 (60) %
Underlying EBITDA margin (integrated operations) 21% 41%
Underlying earnings (US$ millions)(1) 260 1,570 (83) %
Net cash generated from operating activities (US$ millions) 777 2,088 (63) %
Capital expenditure - excluding EAUs (US$ millions)(2) (597) (625) (4) %
Free cash flow (US$ millions) 165 1,450 (89) %
Underlying return on capital employed(3) 4% 20%
Footnotes are set out in full on page 25.
1. Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to page 41 for details.
2. Capital expenditure is the net cash outflow on purchases less sales of
property, plant and equipment; capitalised evaluation costs; and purchases
less sales of other intangible assets. It excludes equity accounted units
(EAUs).
3. Underlying return on capital employed (ROCE) is defined as underlying
earnings excluding net interest divided by average capital employed.
Financial performance
Weaker demand from western markets, partly offset by a recovery in demand in
China, where inventories are at a seven-year low, led to a 24% reduction in
the LME price and lower market and product premiums. Market-related costs for
key materials such as caustic, coke and pitch are moderating in line with the
oil price: this benefit will not flow through to underlying EBITDA until the
second half. These two factors led to significant margin compression for our
Aluminium business and a 60% decrease in underlying EBITDA to $1.1 billion.
Underlying EBITDA margin fell 20 percentage points to 21%.
We achieved an average realised aluminium price of 2,866 per tonne, 25% lower
than 2022 first half.
Average realised aluminium prices comprise the LME price, a market premium and
a value-added product (VAP) premium. The cash LME price averaged $2,329 per
tonne, 24% lower than 2022 first half, while in our key US market, the
mid-west premium duty paid, which is 56% of our total volumes (2022 first
half: 58%), decreased by 27% to $583 per tonne (2022 first half: $801 per
tonne). Our VAP sales represented 47% of the primary metal we sold (2022 first
half: 52%) and generated product premiums averaging $377 per tonne of VAP sold
(2022 first half: $422 per tonne).
Review of operations
Bauxite production of 25.6 million tonnes was 8% lower than 2022 first half,
as our Weipa operations were affected by higher-than-average rainfall during
the wet season, resulting in reduced pit access and longer haul distances.
Production was further affected by equipment downtime at both Weipa and Gove.
We shipped 17.0 million tonnes of bauxite to third parties, 14% lower than
2022 first half. Segmental revenue for bauxite declined 11% to $1.1 billion;
this includes freight revenue of $0.2 billion (2022 first half: $0.3 billion).
Alumina production of 3.7 million tonnes was 1% lower than 2022 first half,
with improved operational stability at our Yarwun and Vaudreuil refineries
offset by unplanned plant downtime at Queensland Alumina Limited (QAL).
As the result of QAL's activation of a step-in process following sanction
measures by the Australian Government, we have taken on 100% of capacity for
as long as the step-in continues. We are using Rusal's 20% share of capacity
under the tolling arrangement with QAL. This additional output is excluded
from our production results as QAL remains 80% owned by Rio Tinto and 20%
owned by Rusal.
Aluminium production of 1.6 million tonnes was 9% higher than 2022 first half,
as we benefited from the continued ramp-up of the Kitimat smelter. Recovery at
the Boyne and Kitimat smelters is progressing to plan with full ramp-up
expected to be completed later in the year. All of our other aluminium
smelters continued to demonstrate stable performance in the half.
Copper
Six months ended 30 June 2023 2022 Change
Mined copper production ('000 tonnes - consolidated basis) 290 292 (1) %
Refined copper production ('000 tonnes - Rio Tinto share) 95 104 (9) %
Segmental revenue (US$ millions) 3,487 3,547 (2) %
Average realised copper price (US cents per pound)(1) 396 447 (11) %
Underlying EBITDA (US$ millions) 1,082 1,534 (29) %
Underlying EBITDA margin (product group operations) 43% 54%
Underlying earnings (US$ millions) 198 571 (65) %
Net cash generated from operating activities (US$ millions)(2) 409 1,094 (63) %
Capital expenditure - excluding EAUs(3) (US$ millions) (917) (730) 26 %
Free cash flow (US$ millions) (512) (354) (45) %
Underlying return on capital employed (product group operations)(4) 4% 10%
Footnotes are set out in full on page 25. 2022 has been restated following the
transfer of Simandou to Other operations.
1. Average realised price for all units sold. Realised price does not
include the impact of the provisional pricing adjustments, which negatively
impacted revenues by $4 million (2022 first half: $30 million negative).
2. Net cash generated from operating activities excludes the operating
cash flows of equity accounted units (EAUs) but includes dividends from EAUs
(Escondida).
3. Capital expenditure is the net cash outflow on purchases less sales of
property, plant and equipment, capitalised evaluation costs and purchases less
sales of other intangible assets. It excludes EAUs.
4. Underlying return on capital employed (ROCE) is defined as underlying
earnings (product group operations) excluding net interest divided by average
capital employed.
Financial performance
We delivered first sustainable production from the underground mine at Oyu
Tolgoi and benefited from a doubling in our interest following the acquisition
of Turquoise Hill Resources in 2022. However, the $0.2 billion impact of lower
LME prices and higher unit costs, driven by lower production volumes from
Kennecott due to the conveyor failure and the planned smelter and refinery
rebuild, led to underlying EBITDA being down 29% to $1.1 billion. Rising cash
costs, higher energy prices and an increase in exploration and evaluation
expenditure also impacted underlying EBITDA. Underlying EBITDA margin remained
strong at 43%.
Our copper unit costs, at 184 cents per pound, increased by 36 cents, largely
driven by the decline in copper volumes, together with rising input and higher
labour costs.
We generated $0.4 billion in net cash from operating activities, a 63%
decrease on 2022 first half, from the same drivers as underlying EBITDA,
together with $0.3 billion lower dividends from Escondida.
Negative free cash flow of $0.5 billion reflected the above movements and
significant investment of $1.0 billion in our projects. This mainly related to
the ongoing development of Oyu Tolgoi underground, the projects at Kennecott
and evaluation costs at Resolution and Winu.
Review of operations
Mined copper production, at 290 thousand tonnes, was 1% lower than 2022 first
half. While we benefited from the continued ramp-up of the high grade
underground mine at Oyu Tolgoi, this was offset by Kennecott's concentrator
operating at reduced rates, as we recovered from a conveyor failure in March
2023.
The 9% decrease in refined copper production to 95 thousand tonnes reflected
the largest rebuild of the smelter and refinery in Kennecott's history which
commenced in May and is now expected to conclude in September 2023, reflected
in our revised refined copper guidance.
Oyu Tolgoi underground project
During the half, Rio Tinto, Oyu Tolgoi and the Government of Mongolia
continued to work together towards the implementation of Mongolian
Parliamentary Resolution 103.
We continue to see strong performance from the underground mine, with a total
of 54 drawbells opened from Panel 0, including 35 drawbells during the half.
To date we are yet to lose a drawbell or draw point from the underground mine.
At the end of June, shafts 3 and 4 sinking had reached 627 metres and 740
metres below ground level respectively. Final depths required for shafts 3 and
4 are 1,148 and 1,149 metres below ground level respectively. As reported
(https://www.riotinto.com/en/invest/presentations/2023/oyu-tolgoi-site-visit)
in our presentation materials for the Oyu Tolgoi site tour in July, we now
expect both shafts to be commissioned in the second half of 2024 (previously
first half of 2024) with shaft sinking rates now meeting those required for
commissioning.
Technical studies for mine design and schedule optimisation for Panels 1 and 2
were completed during the second quarter(10). The operation remains on track
to ramp up to deliver average mined copper production of ~500ktpa (100% basis)
between 2028 and 2036(7).
Minerals
Six months ended 30 June 2023 2022 Change
Iron ore pellets and concentrates production(1) (million tonnes - Rio Tinto 4.6 5.0 (8) %
share)
Titanium dioxide slag production ('000 tonnes - Rio Tinto share) 589 566 4 %
Borates production ('000 tonnes - Rio Tinto share) 257 260 (1) %
Diamonds production ('000 carats - Rio Tinto share) 1,924 2,140 (10) %
Segmental revenue (US$ millions) 2,889 3,403 (15) %
Underlying EBITDA (US$ millions) 689 1,259 (45) %
Underlying EBITDA margin (product group operations) 30% 40%
Underlying earnings (US$ millions)(2) 179 423 (58) %
Net cash generated from operating activities (US$ millions) 89 636 (86) %
Capital expenditure (US$ millions)(3) (304) (268) 13 %
Free cash flow (US$ millions) (229) 353 (165) %
Underlying return on capital employed (product group operations)(4) 13% 21%
Footnotes are set out in full on page 25.
1. Iron Ore Company of Canada (IOC) continues to be reported within
Minerals.
2. Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to page 41 for details.
3. Capital expenditure is the net cash outflow on purchases less sales of
property, plant and equipment; capitalised evaluation costs; and purchases
less sales of other intangible assets.
4. Underlying return on capital employed (ROCE) is defined as underlying
earnings (product group operations) excluding net interest divided by average
capital employed.
Financial performance
Underlying EBITDA of $0.7 billion was 45% lower than 2022 first half,
primarily due to lower iron ore prices, lower volumes for Iron & Titanium
and diamonds, some of which have been deferred to the second half of the year,
and higher costs.
Net cash generated from operating activities of $0.1 billion was 86% lower
than 2022 first half, while negative free cash flow of $0.2 billion, reflected
the lower underlying EBITDA and a modest rise in capital expenditure.
Review of operations
Production of iron ore pellets and concentrate at IOC was 8% lower than 2022
first half. Performance improved during the first five months of the year but
we then lost ~3.5 weeks of production due to wild fires in Northern Quebec,
which resulted in an extended shutdown.
Titanium dioxide production was 4% higher than 2022 first half due to improved
operational performance at our smelters, despite some production constraints
at RBM from nationwide loadshedding of electrical power.
Borates production was 1% lower than 2022 first half, as we adjusted to timing
of customer demand, despite strong production rates, higher grades and
improved equipment reliability.
Our share of carats recovered was 10% lower than 2022 first half, due to an
underground pipe and an area of the open pit reaching end of life of during
the period.
Price and exchange rate sensitivities
The following sensitivities give the estimated effect on underlying EBITDA,
assuming that each price or exchange rate moved in isolation. The relationship
between currencies and commodity prices is a complex one; movements in
exchange rates can affect movements in commodity prices and vice versa. The
exchange rate sensitivities quoted here include the effect on operating costs
of movements in exchange rates, but do not include the effect of the
revaluation of foreign currency working capital. Please use them with care.
Average published US$ million impact on
price/exchange rate for full-year 2023
2023 first half underlying EBITDA
of a 10% change
in prices/exchange rates
Aluminium - US$ per tonne 2,329 1,151
Copper - US cents per pound 396 523
Gold - US$ per troy ounce 1,932 59
Iron ore realised price (FOB basis) - US$ per dry metric tonne 107.2 2,786
Australian dollar against the US dollar 0.68 712
Canadian dollar against the US dollar 0.74 369
Oil (Brent) - US per barrel 86 193
Footnotes
1. This financial performance indicator is a non-IFRS (as defined below)
measure which is reconciled to directly comparable IFRS financial measures
(non-IFRS measures). It is used internally by management to assess the
performance of the business and is therefore considered relevant to readers of
this document. It is presented here to give more clarity around the underlying
business performance of the Group's operations. For more information on our
use of non-IFRS financial measures in this report, see the section entitled
"Alternative performance measures" (APM) and the detailed reconciliations on
pages 72 to 81. Our financial results are prepared in accordance with IFRS -
see page 39 for further information.
2. Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to page 41 for details.
3. Rio Tinto share includes 100% of funding costs for Paraburdoo plant
upgrades.
4. Mined copper guidance: subsequent to Rio Tinto's acquisition of
Turquoise Hill Resources which completed on 16 December, 2023 mined copper
guidance includes Oyu Tolgoi on a 100% consolidated basis and continues to
reflect our 30% share of Escondida.
5. The NRS Mineral Resources and Ore Reserves, together with the Lower
Commercial Skarn (LCS) Mineral Resources and Ore Reserves, form the
Underground Skarns Mineral Resources and Ore Reserves.
6. This production target for 2023 to 2033 is underpinned as to 25% by
Probable Ore Reserves, 9% by Indicated Resources, and 66% by Inferred
Resources. Mined copper is reported as total recoverable metal. These
estimates of Mineral Resources and Ore Reserves were reported in a release to
the Australian Securities Exchange (ASX) dated 20 June 2023 titled "Rio Tinto
Kennecott Mineral Resources and Ore Reserves" which is available on Rio
Tinto's website at Resources & Reserves (riotinto.com), and have been
prepared by Competent Persons in accordance with the requirements of the
Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves, 2012 (JORC Code) and the ASX Listing Rules.
7. The 500kpta copper and 350kozpa gold target (stated as recoverable
metal) for the Oyu Tolgoi underground and open pit mines for the years 2028 to
2036 is underpinned 13% by Proved Ore Reserves and 87% by Probable Ore
Reserves. This production target has been scheduled from mine designs based on
the Oyu Tolgoi Feasibility Study 2020 (OTFS20), which are not materially
different to current mine designs, by Competent Persons in accordance with the
requirements of the JORC code.
8. The Mineral Resource estimates for the Rhodes Ridge Joint Venture (JV)
were reported in our 2020 Annual Report released to the ASX on 22 February
2021 (and form part of the Pilbara Mineral Resource estimates reported in our
2021 Annual Report released to the ASX on 24 February 2022). The Competent
Persons responsible for reporting these Mineral Resource estimates were Mr P
Savory, who is a Fellow of The Australasian Institute of Mining and
Metallurgy, and Ms N Brajkovich and Mr C Kyngdon, who are Members of The
Australasian Institute of Mining and Metallurgy. We are not aware of any new
information or data that materially affects these Mineral Resource estimates
and confirm that all material assumptions and technical parameters
underpinning the estimate continue to apply and have not materially changed.
The form and context in which the Competent Persons' findings are presented
have not been materially modified from when they were reported. Mineral
Resources are quoted in this release on a 100% basis, as dry in-situ tonnes.
9. The Simandou iron ore project operates under the Simfer joint venture
where the Government of Guinea holds 15% and Simfer Jersey holds 85%. Simfer
Jersey is owned by Rio Tinto (53%) and Chalco Iron Ore Holdings (CIOH) (47%).
CIOH is owned by Chinalco (75%), Baowu (20%), China Civil Engineering
Construction Corporation (CCECC) (2.5%) and China Harbour Engineering Company
(CHEC) (2.5%).
10. Mine design and plans will be reviewed by regulatory bodies as part of the
OTFS23 process.
DIRECTORS' REPORT
for the half year ended 30 June 2023
Review of operations and important events
A detailed review of the Group's operations, the results of those operations
during the half year ended 30 June 2023 and likely future developments are
given on pages 1 to 25. Important events that have occurred during the period
and up until the date of this report are set out below.
Financial
On 6 March 2023, we resolved a previously self-disclosed investigation by the
SEC into certain contractual payments made to a former consultant in 2011,
relating to the Simandou project in the Republic of Guinea. Without admitting
to or denying the SEC's findings, Rio Tinto paid a $15 million civil penalty
for violations of the books and records and internal controls provisions of
the Foreign Corrupt Practices Act.
On 7 March 2023, we priced US$650 million of 10-year fixed rate SEC-registered
debt securities and US$1.1 billion of 30-year fixed rate SEC-registered debt
securities. The bonds were issued by Rio Tinto Finance (USA) plc and are fully
and unconditionally guaranteed by Rio Tinto plc and Rio Tinto Limited. The
10-year notes will pay a coupon of 5.000% and will mature on 9 March 2033 and
the 30-year notes will pay a coupon of 5.125% and will mature 9 March 2053.
On 3 April 2023, we published our 2022 Taxes and Royalties Paid Report,
detailing $10.8 billion of global taxes and royalties paid during the year.
This compares to $13.3 billion in 2021, during very strong commodity prices,
and is the third-highest annual global taxes and royalties paid by Rio Tinto
since it published its first annual Taxes Paid report, for 2010. In the past
ten years, Rio Tinto has paid $74.9 billion in taxes and royalties globally,
of which more than 78% was paid in Australia.
On 4 April 2023, we announced our support for Energy Resources of Australia
Ltd's (ERA) plans for an Interim Entitlement Offer (IEO), which sought to
raise up to A$369 million to address funding requirements for the Ranger
Rehabilitation Project in Australia's Northern Territory to the end of the
second quarter of 2024. Rio Tinto, which owns 86.3% of ERA's shares,
subscribed for its full entitlements under the terms of the IEO, at a cost of
A$319 million. Rio Tinto notes that ERA has, in the IEO offer material,
recognised the Mirarr People's opposition to further uranium mining on their
land. This was a relevant factor in Rio Tinto's recent decision to no longer
report the Jabiluka deposit as a Mineral Resource.
On 30 May 2023, we published a report on payments to governments made by Rio
Tinto and its subsidiary undertakings for the year ended 31 December 2022 as
required under the UK's Report on Payments to Governments Regulations 2014 (as
amended in December 2015). Rio Tinto paid $10.8 billion of taxes and royalties
and a further $1.6 billion on behalf of its employees during 2022.
On 2 June 2023, we announced plans to invest $395 million in a seawater
desalination plant in the Pilbara, Western Australia, to support future water
supply for the company's coastal operations and communities in the region. The
proposed Dampier Seawater Desalination Plant, which remains subject to
Commonwealth and State Government approvals, will be located within Rio
Tinto's existing iron ore port operations at Parker Point. It will have an
initial nominal capacity of four gigalitres annually with the potential for
this to increase to eight gigalitres in the future. The project includes
construction of a new supply pipeline to connect to the existing water
network. Subject to relevant approvals, construction is expected to commence
in 2024 with the facility expected to be operational and producing water in
2026.
Operations
On 30 March 2023, we announced we had entered into an agreement with First
Quantum Minerals ("First Quantum") to form a joint venture that will work to
unlock the development of the La Granja copper project in Peru. Under the
proposed transaction, First Quantum will acquire a 55% stake in the project
for $105 million, and commit to further invest up to $546 million into the
joint venture to sole fund capital and operational costs to take the project
through a feasibility study and toward development.
On 2 May 2023, together with BHP, we invited expressions of interest from
technology providers, equipment manufacturers, reagent suppliers, startups and
research groups across the globe with innovative ideas and technologies to
help improve tailings dewatering and management performance. Together we aim
to jointly identify a portfolio of tailings management partners with whom they
can work to accelerate the development of technologies that could increase
water recovery and reduce potential safety risks and environmental footprints
associated with tailings storage facilities.
On 12 June 2023, we announced we had signed a Memorandum of Understanding with
China Baowu to explore a range of industry leading new projects in China and
Australia to help decarbonise the steel value chain.
On 12 June 2023, we announced an investment of $1.1 billion to expand our AP60
aluminium smelter equipped with low-carbon technology at Complexe Jonquière
in Canada. The total investment includes up to $113 million of financial
support from the Quebec government. This expansion will coincide with the
gradual closure of potrooms at the Arvida smelter on the same site. While at
our Alma smelter in Lac-Saint-Jean, Quebec, we commenced construction to
increase our capacity to cast low-carbon, high-value aluminium billets.
On 13 June 2023, we announced a partnership with Gemco Rail to bring local
iron ore rail car manufacturing and bearing maintenance to the Pilbara region
in an industry-first. This partnership will enable Gemco Rail to expand its
existing operations to establish the first ever rail ore car manufacturing and
maintenance facility in the Pilbara, creating new jobs, increasing spend with
local and Indigenous businesses and supporting local economic growth. Rio
Tinto expects to invest approximately A$150 million to purchase 100 locally
built ore rail cars over six years as well as continued investment in bearing
refurbishment over ten years, to support the company's Pilbara operations.
On 20 June 2023, we announced $498 million of funding to deliver underground
development and infrastructure for an area known as the North Rim Skarn(1)
(NRS) at Kennecott. Production from the NRS will commence in 2024 and is
expected to ramp up over two years, to deliver ~250 thousand tonnes of
additional mined copper over the next 10 years(2) alongside open cut
operations.
1. The NRS Mineral Resources and Ore Reserves, together with the Lower
Commercial Skarn (LCS) Mineral Resources and Ore Reserves, form the
Underground Skarns Mineral Resources and Ore Reserves.
2. This production target for 2023 to 2033 is underpinned 25% by Probable
Ore Reserves, 9% by Indicated Resources, and 66% by Inferred Resources. Mined
copper is reported as total recoverable metal. These estimates of Mineral
Resources and Ore Reserves were reported in a release dated 20 June 2023
titled "Rio Tinto Kennecott Mineral Resources and Ore Reserves" (Table 1
Release) which is available on Rio Tinto's website at resources & reserves
(riotinto.com), and have been prepared by Competent Persons in accordance with
the requirements of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and the ASX
Listing Rules.
People
On 16 March 2023, we announced that we had appointed Dean Dalla Valle and
Susan Lloyd-Hurwitz as non-executive directors effective 1 June 2023.
On 13 June 2023, we announced that Ivan Vella, Chief Executive Aluminium will
leave Rio Tinto in December 2023.
Rio Tinto 2023 Annual General Meetings (AGMs)
The annual general meetings of Rio Tinto plc and Rio Tinto Limited were held
on 6 April 2023 and 4 May 2023, respectively. Under Rio Tinto's dual listed
companies structure established in 1995, decisions on significant matters
affecting shareholders of Rio Tinto plc and Rio Tinto Limited in similar ways
are taken through a joint electoral procedure.
At Rio Tinto plc's AGM on 6 April 2023, Resolution 21 (Authority to purchase
Rio Tinto plc shares), put to Rio Tinto plc shareholders only, was passed with
less than 80% of votes in favour. Shining Prospect (a subsidiary of the
Aluminium Corporation of China "Chinalco") voted against it. Chinalco has not
sold any of its shares in Rio Tinto plc and now has a holding of over 14%
given its non-participation in the Company's significant share buy-back
programmes. This places Chinalco close to the 14.99% holding threshold agreed
with the Australian Government at the time of its original investment in Rio
Tinto.
Directors
The directors serving on the Boards of Rio Tinto plc and Rio Tinto Limited as
at 30 June 2023 were:
Notes Date of appointment
Chairman
Dominic Barton (P&R, N and S) 4 April 2022
Executive directors
Jakob Stausholm, Chief Executive Officer 3 September 2018
Peter Cunningham, Chief Financial Officer 17 June 2021
Non-executive directors
Sam Laidlaw (senior independent director, Rio Tinto plc) (P&R, N and S) 10 February 2017
Simon McKeon (senior independent director, Rio Tinto Limited) (A&R, P&R and N) 1 January 2019
Megan Clark (P&R, N and S) 20 November 2014
Simon Henry (A&R and N) 1 April 2017
Jennifer Nason (P&R and N) 1 March 2020
Ngaire Woods (P&R, N and S) 1 September 2020
Ben Wyatt (A&R and N) 1 September 2021
Kaisa Hietala (N and S) 1 March 2023
Dean Dalla Valle (N and S) 1 June 2023
Susan Lloyd-Hurwitz (P&R and N) 1 June 2023
Notes
(A&R) Audit & Risk Committee, (P&R) People & Remuneration
Committee, (N) Nominations Committee, (S) Sustainability Committee
Dividend
The 2022 final dividend was paid on 20 April 2023 to holders of Rio Tinto plc
and Rio Tinto Limited ordinary shares and Rio Tinto plc ADR holders. The 2022
final dividend, equivalent to 225 US cents per share was determined by the
Board on 21 February 2023. Rio Tinto plc shareholders received 185.35 pence
per share for the final dividend and Rio Tinto Limited shareholders received
326.49 Australian cents per share for the final dividend based on the
applicable exchange rates on 13 April 2023. ADR holders receive dividends at
the declared rate in US dollars.
The 2023 interim dividend, equivalent to 177 US cents per share will be paid
on 21 September 2023 to Rio Tinto Limited, Rio Tinto plc and Rio Tinto plc ADR
shareholders on the register at the close of business on 11 August 2023. The
ex-dividend date for the 2023 interim dividend for Rio Tinto Limited, Rio
Tinto plc and Rio Tinto plc ADR shareholders is 10 August 2023. Rio Tinto plc
shareholders will receive 137.67 pence per share for the interim dividend and
Rio Tinto Limited shareholders will receive 260.89 Australian cents per share
for the interim dividend based on the applicable exchange rates on 25 July
2023. ADR holders receive dividends at the declared rate in US dollars.
Principal risks and uncertainties
The principal risks and uncertainties that could materially impact our ability
to deliver on our strategic priorities are set out on pages 79 to 86 of the
2022 Annual Report. For the remaining six months of the financial year, these
remain broadly consistent with the trends reported in the Annual Report.
Our operations and growth projects continue to be impacted by high unplanned
absences, tight labour markets, rising input costs and supply chain
disruptions. We continue to monitor areas of uncertainty in the short to
medium term, including the evolving situation with the war in Ukraine and
potential further Russian sanctions and elevated inflation.
Publication of half year results
In accordance with the UK Financial Conduct Authority's Disclosure Guidance
& Transparency Rules and the Australian Securities Exchange Listing Rules,
the half year results will be made public and are available on the Rio Tinto
Group website.
Auditor's independence declaration
KPMG, the auditors of Rio Tinto Limited, have provided the auditor's
independence declaration as required under section 307C of the Corporations
Act 2001 in Australia. This has been reproduced on page 67 and forms part of
this report.
The Directors' report is made in accordance with a resolution of the Board.
Dominic Barton
Chairman
26 July 2023
Condensed consolidated interim financial statements for the
six months ended 30 June 2023
Contents:
Interim financial statements Page number
Group income statement 31
Group statement of comprehensive income 32
Group cash flow statement 33
Group balance sheet 35
Group statement of changes in equity 37
Selected explanatory notes to the interim financial statements
1 Basis of Preparation 39
2 Changes in accounting policies 41
3 Segmental information 44
4 Segmental information - additional information 48
5 Impairment charges 49
6 Taxation 50
7 Acquisitions 51
8 Cash and cash equivalents 52
9 Provisions including post-retirement benefits 52
10 Financial instruments 54
11 Commitments and Contingencies 58
12 Events after the balance sheet date 61
Directors' declaration 62
Independent Auditors' Review Reports of KPMG LLP ("KPMG UK") to Rio Tinto plc 63
and of KPMG ("KPMG Australia") to the members of Rio Tinto Limited
Lead Auditor's Independence Declaration under Section 307C of the Australian 67
Corporations Act 2001
Additional voluntary disclosure for the shareholders
Rio Tinto financial information by business unit 68
Alternative performance measures 72
Metal prices and exchange rates 82
Group income statement
Six months ended 30 June Note 2022
2023 US$m
US$m Restated((a))
Consolidated operations
Consolidated sales revenue 3, 4 26,667 29,775
Net operating costs (excluding items disclosed separately) (17,535) (17,202)
Impairment charges 5 (1,175) -
Exploration and evaluation expenditure (net of profit relating to interests in (710) (367)
undeveloped projects)
Operating profit 7,247 12,206
Share of profit after tax of equity accounted units 431 468
Profit before finance items and taxation 7,678 12,674
Finance items
Net exchange gains on external and intragroup net debt balances 103 387
Net gains/(losses) on derivatives not qualifying for hedge accounting 32 (205)
Finance income 245 17
Finance costs (536) (55)
Amortisation of discount on provisions 9 (592) (503)
(748) (359)
Profit before taxation 6,930 12,315
Taxation 2, 6 (1,983) (2,867)
Profit after tax for the period 4,947 9,448
- attributable to owners of Rio Tinto (net earnings) 5,117 8,943
- attributable to non-controlling interests (170) 505
Basic earnings per share 315.7c 552.3c
Diluted earnings per share 313.9c 549.0c
(a) Comparative information has been restated to reflect the adoption
of narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for
details.
The notes on pages 39 to 61 are an integral part of these condensed
consolidated interim financial statements.
Group statement of comprehensive income
Six months ended 30 June Note 2022
2023 US$m
US$m Restated((a))
Profit after tax for the period 4,947 9,448
Other comprehensive (loss)/income
Items that will not be reclassified to the income statement:
Re-measurement (losses)/gains on pension and post-retirement healthcare plans (53) 829
Changes in the fair value of equity investments held at fair value through (17) (8)
other comprehensive income (FVOCI)
Tax relating to these components of other comprehensive income 16 (216)
Share of other comprehensive (losses)/income of equity accounted units, net of (3) 5
tax
(57) 610
Items that have been/may be subsequently reclassified to the income statement:
Currency translation adjustment((b)) (387) (1,532)
Fair value movements:
- Cash flow hedge gains/(losses) 50 (79)
- Cash flow hedge (gains)/losses transferred to the income statement (26) 100
Net change in costs of hedging reserve 2 (38)
Tax relating to these components of other comprehensive loss (16) 8
Share of other comprehensive income/(losses) of equity accounted units, net of 11 (7)
tax
(366) (1,548)
Total other comprehensive loss for the period, net of tax (423) (938)
Total comprehensive income for the period 4,524 8,510
- attributable to owners of Rio Tinto 4,698 8,078
- attributable to non-controlling interests (174) 432
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
(b) Excludes a currency translation charge of US$66 million (30 June 2022:
charge of US$185 million) arising on Rio Tinto Limited's share capital for the
period ended 30 June 2023, which is recognised in the Group statement of
changes in equity on page 37.
Group cash flow statement
Six months ended 30 June Note 2022
2023 US$m
US$m
Cash flows from consolidated operations((a)) 9,435 13,912
Dividends from equity accounted units 287 633
Cash flows from operations 9,722 14,545
Net interest paid (286) (217)
Dividends paid to holders of non-controlling interests in subsidiaries (46) (41)
Tax paid (2,415) (3,813)
Net cash generated from operating activities 6,975 10,474
Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets (3,001) (3,146)
Sales of property, plant and equipment and intangible assets 8 1
Acquisitions of subsidiaries, joint ventures and associates 7 (15) (825)
Purchases of financial assets (16) (66)
Sales of financial assets((b)) 862 52
Net funding of equity accounted units (88) (48)
Other investing cash flows 14 10
Net cash used in investing activities (2,236) (4,022)
Cash flows before financing activities 4,739 6,452
Cash flows from financing activities
Equity dividends paid to owners of Rio Tinto (3,691) (7,595)
Proceeds from additional borrowings((c)) 1,858 144
Repayment of borrowings and associated derivatives (272) (211)
Lease principal payments (213) (183)
Proceeds from issue of equity to non-controlling interests 61 22
Purchase of non-controlling interests (23) -
Other financing cash flows - 1
Net cash used in financing activities (2,280) (7,822)
Effects of exchange rates on cash and cash equivalents (59) (26)
Net increase/(decrease) in cash and cash equivalents 2,400 (1,396)
Opening cash and cash equivalents less overdrafts 6,774 12,805
Closing cash and cash equivalents less overdrafts 8 9,174 11,409
(a) Cash flows from consolidated operations
Profit after tax for the period (comparative restated) 2 4,947 9,448
Adjustments for:
- Taxation (comparative restated) 2, 6 1,983 2,867
- Finance items 748 359
- Share of profit after tax of equity accounted units (431) (468)
- Impairment charges 5 1,175 -
- Depreciation and amortisation 2,485 2,459
- Provisions (including exchange differences on provisions) 9 63 496
Utilisation of other provisions 9 (44) (51)
Utilisation of provisions for close-down and restoration 9 (333) (256)
Utilisation of provisions for post-retirement benefits and other employment 9 (115) (122)
costs
Change in inventories (293) (582)
Change in receivables and other assets (6) (128)
Change in trade and other payables (628) 267
Other items((d)) (116) (377)
9,435 13,912
Group cash flow statement (continued)
(b) During the six months to 30 June 2023, we received net proceeds of
US$801 million (30 June 2022: US$51 million) from our sales and purchases of
investments within a separately managed portfolio of fixed income instruments.
Purchases and sales of these securities are reported on a net cash flow basis
within "Sales of financial assets" or "Purchases of financial assets"
depending on the overall net position at each reporting date.
(c) On 7 March 2023, we issued US$650 million 10-year fixed rate, and
US$1.1 billion of 30-year fixed rate, SEC-registered bonds. The 10-year
notes, which mature on 9 March 2033, have a coupon of 5% and the 30-year
notes, which mature on 9 March 2053 have a coupon of 5.125%. The funds were
received net of issuance fees and discount. There were no issuances during the
period ended 30 June 2022.
(d) Other items includes recognition of realised gains of US$32 million on
currency forwards not designated as hedges (30 June 2022: realised losses
US$242 million).
Group balance sheet
Note 30 June 2023 31 December 2022
US$m US$m
Restated((a))
Non-current assets
Goodwill 776 826
Intangible assets 3,697 3,645
Property, plant and equipment 63,101 64,734
Investments in equity accounted units 3,574 3,298
Inventories 214 203
Deferred tax assets 2 3,085 2,796
Receivables and other assets 1,927 1,893
Other financial assets 404 406
76,778 77,801
Current assets
Inventories 6,423 6,213
Receivables and other assets 3,544 3,478
Tax recoverable 305 347
Other financial assets 1,327 2,160
Cash and cash equivalents 8 9,179 6,775
20,778 18,973
Total assets 97,556 96,774
Current liabilities
Borrowings (176) (923)
Leases (298) (292)
Other financial liabilities (13) (69)
Trade and other payables (7,630) (8,047)
Tax payable (204) (223)
Close-down and restoration provisions 9 (1,249) (1,142)
Provisions for post-retirement benefits and other employment costs 9 (352) (353)
Other provisions 9 (524) (554)
(10,446) (11,603)
Non-current liabilities
Borrowings (12,673) (10,148)
Leases (931) (908)
Other financial liabilities (782) (904)
Trade and other payables (587) (604)
Tax payable (35) (36)
Deferred tax liabilities 2 (3,078) (3,164)
Close-down and restoration provisions 9 (13,597) (14,617)
Provisions for post-retirement benefits and other employment costs 9 (1,346) (1,305)
Other provisions 9 (724) (744)
(33,753) (32,430)
Total liabilities (44,199) (44,033)
Net assets 53,357 52,741
Capital and reserves
Share capital((b))
- Rio Tinto plc 207 207
- Rio Tinto Limited 3,264 3,330
Share premium account 4,324 4,322
Other reserves 7,400 7,755
Retained earnings 36,430 35,020
Equity attributable to owners of Rio Tinto 51,625 50,634
Attributable to non-controlling interests 1,732 2,107
Total equity 53,357 52,741
Group balance sheet (continued)
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
(b) At 30 June 2023, Rio Tinto plc had 1,255.9 million ordinary shares in
issue and held by the public, and Rio Tinto Limited had 371.2 million shares
in issue and held by the public. There were no cross holdings of shares
between Rio Tinto Limited and Rio Tinto plc in either periods presented. As
required to be disclosed under the ASX Listing Rules, the net tangible assets
per share amounted to US$29.07 (31 December 2022: US$28.48).
Group statement of changes in equity
Six months ended 30 June 2023 Attributable to owners of Rio Tinto
Share capital Share premium Other reserves Retained earnings Total Non-controlling Total
US$m account US$m US$m US$m interests equity
US$m US$m US$m
Opening balance as previously reported 3,537 4,322 7,805 34,511 50,175 2,099 52,274
Change in accounting policy (note 2) - - (50) 509 459 8 467
Restated opening balance 3,537 4,322 7,755 35,020 50,634 2,107 52,741
Total comprehensive income for the year - - (379) 5,077 4,698 (174) 4,524
Currency translation arising on Rio Tinto Limited's share capital (66) - - - (66) - (66)
Dividends((a)) - - - (3,691) (3,691) (262) (3,953)
Own shares purchased from Rio Tinto shareholders to satisfy share awards to - - (3) (3) (6) - (6)
employees((b))
Treasury shares reissued and other movements - 2 - - 2 - 2
Equity issued to holders of non-controlling interests - - - - - 61 61
Employee share awards charged to the income statement - - 27 27 54 - 54
Closing balance 3,471 4,324 7,400 36,430 51,625 1,732 53,357
Six months ended 30 June 2022 Attributable to owners of Rio Tinto
Share capital Share premium Other reserves Retained earnings Total Non-controlling Total
US$m account US$m US$m US$m interests equity
US$m US$m US$m
Opening balance as previously reported 3,777 4,320 9,998 33,320 51,415 5,158 56,573
Change in accounting policy (note 2) - - (22) 537 515 8 523
Restated opening balance 3,777 4,320 9,976 33,857 51,930 5,166 57,096
Total comprehensive income for the period (restated: refer to note 2) - - (1,477) 9,555 8,078 432 8,510
Currency translation arising on Rio Tinto Limited's share capital (185) - - - (185) - (185)
Dividends((a)) - - - (7,584) (7,584) (266) (7,850)
Own shares purchased from Rio Tinto shareholders to satisfy share awards to - - (3) (3) (6) - (6)
employees((b))
Change in equity interest held by Rio Tinto - - - (484) (484) 484 -
Treasury shares reissued and other movements - 2 - - 2 - 2
Equity issued to holders of non-controlling interests - - - (711) (711) 733 22
Employee share awards charged to the income statement - - 24 23 47 - 47
Closing balance (restated) 3,592 4,322 8,520 34,653 51,087 6,549 57,636
Group statement of changes in equity (continued)
(a) Dividends per share announced or paid during the period are summarised
below:
Six months ended 30 June 2022
2023 US$m
US$m
Dividends per share: Ordinary - paid during the period 225.0c 417.0c
Dividends per share: Special - paid during the period - 62.0c
Ordinary dividends per share: announced with the results for the period 177.0c 267.0c
(b) Net of contributions received from employees for share awards.
Selected explanatory notes to the interim financial statements
1. Basis of preparation
The condensed consolidated interim financial statements included in this
report have been prepared in accordance with: International Accounting
Standards (IAS) 34 'Interim Financial Reporting' as issued by the
International Accounting Standards Board (IASB) and as adopted for use in the
United Kingdom (UK), the UK law (Companies Act 2006) applicable to companies
reporting under International Financial Reporting Standards (IFRS), applicable
Australian law (Australian Corporations Act 2001) and in accordance with an
order, under section 340 of the Australian Corporations Act 2001, issued by
the Australian Securities and Investments Commission (ASIC) on 16 July 2021
(ASIC order).
These condensed consolidated interim financial statements represent a
'condensed set of financial statements' as referred to in the Disclosure
Guidance and Transparency Rules sourcebook (DTR) issued by the Financial
Conduct Authority (FCA) applicable to interim financial reporting.
Accordingly, they do not include all of the information required for a full
annual financial report and are to be read in conjunction with the Group's
annual financial statements for the year ended 31 December 2022.
The 2022 annual financial statements were prepared on a going concern basis in
accordance with UK-adopted international accounting standards, applicable UK
law and applicable Australian law as amended by the ASIC class Order and to
meet IAS as issued by the IASB and interpretations issued from time to time by
the IFRS Interpretations Committee (IFRS IC) which were mandatory at
31 December 2022.
The above accounting standards and interpretations are collectively referred
to as 'IFRS' in this report and contain the principles we use to create our
accounting policies. Where necessary, adjustments are made to the locally
reported assets, liabilities, and results of subsidiaries, joint arrangements
and associates to bring their accounting policies in line with ours for
consistent reporting.
These condensed consolidated interim financial statements are unaudited and do
not constitute statutory accounts as defined in Section 434 of the United
Kingdom Companies Act 2006. The financial information as at 31 December 2022
included in this report has been extracted from the full financial statements
filed with the Registrar of Companies and adjusted for new accounting policies
(refer to note 2 for further details). The Auditors' report on these full
financial statements was unqualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis of matter and
did not contain statements under section 498 (2) (regarding adequacy of
accounting records and returns), or under section 498 (3) (regarding provision
of necessary information and explanations) of the Companies Act 2006.
Going concern
Management has prepared detailed cash flow forecasts for the next 18 months
and has updated life-of-mine plan models with longer-term cash flow
projections. These forecasts demonstrate that the Group has sufficient cash,
other liquid resources and undrawn credit facilities to enable it to meet its
obligations as they fall due. As such, the directors considered it appropriate
to adopt the going concern basis of accounting in preparing the interim
financial information.
1. Basis of preparation (continued)
Alternative performance measures
We present certain alternative performance measures (APMs), which are
reconciled to directly comparable IFRS financial measures on pages 72 to 81 of
this report. These APMs are used by management to assess the performance of
the business and may therefore be useful to investors. They are not a
substitute for the IFRS measures and should be considered supplementary to
those measures.
Reconciliation with Australian Accounting Standards
Our financial statements have been prepared in accordance with IFRS which
differs in certain respects from the version of International Financial
Reporting Standards that is applicable in Australia, referred to as Australian
Accounting Standards (AAS). We are required to disclose the effect of the
adjustments to our consolidated income statement, consolidated total
comprehensive income/(loss) and consolidated shareholders' funds if our
accounts were prepared under the version of IFRS that is applicable in
Australia. This is in order to satisfy the obligations of Rio Tinto Limited to
prepare consolidated accounts under Australian company law, as amended by an
order issued by the Australian Securities and Investments Commission on 16
July 2021.
Prior to 1 January 2004, our financial statements were prepared in accordance
with UK GAAP. Under IFRS, goodwill on acquisitions prior to 1998, which was
eliminated directly against equity in the Group's UK GAAP financial
statements, has not been reinstated. This was permitted under the rules
governing the transition to IFRS set out in IFRS 1. The equivalent Australian
Standard, AASB 1, does not provide for the netting of goodwill against equity.
As a consequence, shareholders' funds under AAS include the residue of such
goodwill, which amounted to US$381 million at 30 June 2023 (31 December
2022: US$380 million).
Save for the exception described above, the Group's financial statements
prepared in accordance with IFRS are consistent with the requirements of AAS.
2. Changes in accounting policies
The condensed consolidated interim financial statements have been drawn up on
the basis of accounting policies, methods of computation and presentation
consistent with those applied in the financial statements for the year ended
31 December 2022, except for the accounting requirements set out below,
effective as at 1 January 2023.
New standards and amendments applicable for the current period
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12 'Income Taxes' (IAS 12), mandatory in 2023
and endorsed by the UK)
At 1 January 2023, we adopted narrow-scope amendments to IAS 12 and have
restated comparative periods in accordance with the transition arrangements.
These amendments introduce an exclusion to the initial recognition exemption
application for transactions giving rise to equal and offsetting taxable and
deductible temporary differences.
Under the amendments, separate deferred tax assets and liabilities are
calculated and recognised, prior to application of any required recovery
testing and permitted offsetting, and subsequent movements in those deferred
tax assets and liabilities are recognised in the income statement. Our
previous accounting policy stated that "where the recognition of an asset and
liability from a single transaction gives rise to equal and offsetting
temporary differences, we apply the initial recognition exemption allowed by
IAS 12, and consequently recognise neither a deferred tax asset nor a deferred
tax liability in respect of these temporary differences".
The most significant impact of implementing these amendments was from
temporary differences related to the Group's provisions for close-down and
restoration, and lease obligations and corresponding capitalised closure costs
and right-of-use assets. Adjustments to deferred tax assets and liabilities
related to these balances have been recognised as at 1 January 2021, being
the beginning of the earliest comparative period to be presented in the
financial statements for the year ended 31 December 2023, with the cumulative
effect recognised as an adjustment to retained earnings or other components of
equity at that date. For other transactions, the impact of which was
immaterial, the amendments apply only to those taking place on or after
1 January 2021. The impact on equity attributable to owners of Rio Tinto at
1 January 2023 of implementing the amendments to IAS 12 is as follows:
At 1 January 2023 2022 2021
US$m US$m US$m
Equity attributable to owners of Rio Tinto (previously reported) 50,175 51,415 47,054
Impact of IAS 12 amendments((a)) 459 515 516
Restated equity attributable to owners of Rio Tinto 50,634 51,930 47,570
(a) Retained earnings adjustments at 1 January 2023 and 2022 include the
impact of income statement adjustments for the years ended 31 December 2022
and 2021, respectively.
2. Changes in accounting policies (continued)
The restatement of deferred tax balances for the comparative reporting date is
as follows:
31 December 2022
US$m
Deferred tax assets (previously reported) 2,766
Impact of IAS 12 amendments 30
Deferred tax assets (restated) 2,796
Deferred tax liabilities (previously reported) (3,601)
Impact of IAS 12 amendments 437
Deferred tax liabilities (restated) (3,164)
Net impact of IAS 12 amendments on deferred tax balances 467
Comprising, prior to offsetting of balances:
Deferred tax assets arising from:
- Provisions and other liabilities 1,586
- Capital allowances (57)
1,529
Deferred tax liabilities arising from Capital allowances (1,062)
Restatement of pre-offset balances at 31 December 2022 represents additional
gross deferred tax liabilities of US$922 million and gross deferred tax assets
of US$1,380 million in relation to close-down and restoration obligations and
related capitalised closure costs, and additional gross deferred tax
liabilities of US$140 million and gross deferred tax assets of US$149 million
in relation to lease liabilities and related right-of-use assets.
The impact of restatement on net earnings for the six months ended 30 June
2022 is a net credit of US$35 million related to depreciation of closure and
right of use assets and settlement of closure and lease liabilities.
IFRS 17 'Insurance Contracts' and amendments to IFRS 17 'Insurance Contracts'
(mandatory in 2023 and endorsed by the UK)
We implemented IFRS 17 'Insurance Contracts' on 1 January 2023, which
provides consistent principles for all aspects of accounting for insurance
contracts. The standard does not have a material impact on the Group.
2. Changes in accounting policies (continued)
Other amendments
We adopted amendments to IAS 1 'Presentation of Financial Statements' and IFRS
Practice Statement 2 'Making Materiality Judgements', requiring companies to
disclose their material accounting policies rather than their significant
accounting policies. The amendments do not have a material impact on the
Group.
We adopted amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors clarifying how companies should distinguish changes in
accounting policies from changes in accounting estimates, with a primary focus
on the definition of and clarifications on accounting estimates. The
amendments do not have a material impact on the Group.
New standards or amendments issued but not yet effective
During the six months ended 30 June 2023, we have not early adopted any
amendments, standards or interpretations that have been issued but are not yet
effective.
3. Segmental information
Our management structure is based on principal product groups (PG) together
with global support functions whose leaders make up the Executive Committee.
The Executive Committee members each report directly to our Chief Executive
who is the chief operating decision maker (CODM) and is responsible for
allocating resources and assessing performance of the operating segments. The
CODM's primary measure of profit is underlying EBITDA. Finance costs and net
debt are managed on a Group-wide basis and are therefore excluded from the
segmental results.
The Copper reportable segment has been adjusted to reflect a change in
management responsibility for the Simandou iron ore project in Guinea
(Simandou) to the Chief Technical Officer. As a result, Simandou is now
included in "Other Operations", which is below reportable segments in our
segmental analysis. Prior period comparatives have been adjusted accordingly.
Our reportable segments are as follows:
Reportable segment Principal activities
Iron Ore Iron ore mining and salt and gypsum production in Western Australia.
Aluminium Bauxite mining; alumina refining; aluminium smelting.
Copper Mining and refining of copper, gold, silver, molybdenum, other by-products and
exploration activities which is the responsibility of the Copper product group
chief executive.
Minerals Includes businesses with products such as borates, titanium dioxide feedstock
together with the Iron Ore Company of Canada (iron ore mining and iron
concentrate/pellet production). Also includes diamond mining, sorting and
marketing and development projects for battery minerals, such as lithium.
The Rio Tinto financial information by business unit provided on pages 68 to
Error! Bookmark not defined. provides additional voluntary business unit
disclosure which we consider useful to the users of the financial statements.
3. Segmental information (continued)
2022
2023 Adjusted((a))
Six months ended 30 June Segmental revenue((b)) Underlying EBITDA((c)) Capital expenditure((d)) Segmental revenue((b)) Underlying EBITDA((c)) Capital expenditure((d))
US$m US$m US$m US$m US$m US$m
Iron Ore 15,600 9,792 1,094 16,610 10,395 1,472
Aluminium 6,263 1,140 597 7,796 2,866 625
Copper 3,487 1,082 917 3,547 1,534 730
Minerals 2,889 689 304 3,403 1,259 268
Reportable segments total 28,239 12,703 2,912 31,356 16,054 3,095
Other Operations 97 (395) 32 107 (125) 9
Inter-segment transactions (154) (17) (149) (1)
Share of equity accounted units((e)) (1,515) (1,539)
Central pension costs, share-based payments, insurance and derivatives 167 265
Restructuring, project and one-off costs (84) (86)
Central costs (512) (397)
Central exploration and evaluation expenditures (134) (113)
Proceeds from disposal of property, plant and equipment 8 1
Other items 49 41
Consolidated sales revenue/Purchases of property, plant and equipment and 26,667 3,001 29,775 3,146
intangible assets
Underlying EBITDA 11,728 15,597
(a) Comparative information has been adjusted to reflect the movement of
the Simandou iron ore project from the "Copper" reportable segment to "Other
Operations".
(b) Segmental revenue includes consolidated sales revenue plus the
equivalent sales revenue of equity accounted units in proportion to our equity
interest (after adjusting for sales to/from subsidiaries). Segmental revenue
measures revenue on a basis that is comparable to our underlying EBITDA
metric.
(c) Underlying EBITDA (calculated on page 46) is reported to provide
greater understanding of the underlying business performance of Rio Tinto's
operations.
(d) Capital expenditure for reportable segments includes the net cash
outflow on purchases less disposals of property, plant and equipment,
capitalised evaluation costs and purchases less disposals of other intangible
assets. The details provided include 100% of subsidiaries' capital expenditure
and Rio Tinto's share of the capital expenditure of joint operations.
Following a change in definition applied for the first time in the second half
of 2022, capital expenditure numbers have been adjusted to exclude capitalised
expenditure relating to equity accounted units.
(e) Consolidated sales revenue includes subsidiary sales of US$21 million
(2022: US$27 million) to equity accounted units which are not included in
segmental revenue. Segmental revenue includes the Group's proportionate share
of product sales by equity accounted units (after adjusting for sales to
subsidiaries) of US$1,536 million (2022: US$1,566 million) which are not
included in consolidated sales revenue.
3. Segmental information (continued)
Reconciliation of profit after tax to underlying EBITDA
Underlying EBITDA represents profit before taxation, net finance items,
depreciation and amortisation adjusted to exclude the EBITDA impact of items
which do not reflect the underlying performance of our reportable segments.
Items excluded from profit after tax are those gains and losses that,
individually or in aggregate with similar items, are of a nature and size to
require exclusion in order to provide additional insight into the underlying
business performance. The following items are excluded from profit after tax
in arriving at underlying EBITDA in each period irrespective of materiality:
- Depreciation and amortisation in subsidiaries and equity
accounted units;
- Taxation and finance items in equity accounted units;
- Taxation and finance items relating to subsidiaries;
- Unrealised gains/(losses) on embedded derivatives not
qualifying for hedge accounting;
- Net gains/(losses) on disposal of interests in
subsidiaries;
- Impairment charges net of reversals;
- The underlying EBITDA of discontinued operations;
- Adjustments to closure provisions where the adjustment is
associated with an impairment charge and for legacy sites where the
disturbance or environmental contamination relates to the pre-acquisition
period.
In addition, there is a final judgmental category which includes, where
applicable, other credits and charges that, individually or in aggregate if of
a similar type, are of a nature or size to require exclusion in order to
provide additional insight into underlying business performance. In the six
months ended to 30 June 2023 there is no item in this category. For the
period ended 30 June 2022 the category included the gain recognised by
Kitimat relating to LNG Canada's project.
Six months ended 30 June 2023 2022
US$m US$m
Restated((a))
Profit after tax for the period 4,947 9,448
Taxation 1,983 2,867
Profit before taxation 6,930 12,315
Depreciation and amortisation in subsidiaries excluding capitalised 2,405 2,405
depreciation((b))
Depreciation and amortisation in equity accounted units 238 242
Finance items in subsidiaries 748 359
Taxation and finance items in equity accounted units 373 363
Gains on embedded commodity derivatives not qualifying for hedge accounting (112) (14)
(including foreign exchange)
Impairment charges((c)) 1,175 -
Change in closure estimates (non-operating and fully impaired sites)((d)) (29) 43
Gain recognised by Kitimat relating to LNG Canada's project((e)) - (116)
Underlying EBITDA 11,728 15,597
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
3. Segmental information (continued)
(b) Depreciation and amortisation in subsidiaries for the period ended
30 June 2023 is net of capitalised depreciation of US$80 million (30 June
2022: US$54 million).
(c) Refer to note 5.
(d) For the period ended 30 June 2023, the credit to the income statement
relates to the impact of a change in discount rate applied to provisions for
close-down, restoration and environmental liabilities at legacy sites where
the environmental damage preceded ownership by Rio Tinto, from 1.5% to 2%. In
the six months ended 30 June 2022, the charge relates to re-estimates of
underlying closure cash flows of these sites.
(e) During the first half of 2022, LNG Canada elected to terminate their
option to purchase additional land and facilities for expansion of their
operations at Kitimat, Canada. The resulting gain was excluded from underlying
EBITDA consistent with prior periods as it was part of a series of
transactions that together were material.
4. Segmental information - additional information
Consolidated sales revenue by destination((a))
Six months ended 30 June 2023 2022 2023 2022
% % US$m US$m
Adjusted Adjusted
Greater China((b)) 58.1 % 54.6 % 15,482 16,261
United States of America 14.6 % 16.3 % 3,885 4,848
Asia (excluding Greater China and Japan) 7.3 % 6.6 % 1,957 1,958
Japan 6.7 % 6.8 % 1,791 2,039
Europe (excluding UK) 5.8 % 6.7 % 1,537 1,995
Canada 2.9 % 3.1 % 785 933
Australia 1.7 % 2.0 % 451 596
UK 0.2 % 0.4 % 66 133
Other countries 2.7 % 3.5 % 713 1,012
Consolidated sales revenue 100.0 % 100.0 % 26,667 29,775
(a) Consolidated sales revenue by geographical destination is based on the
ultimate country of the product's destination, if known. Where the ultimate
destination is not known, we have defaulted to the shipping address of the
customer. Rio Tinto is domiciled in both the UK and Australia.
(b) Consolidated sales revenue by destination has been adjusted to classify
Taiwan and China together as "Greater China", as noted in our 2022 Annual
Report.
Consolidated sales revenue by product
Six months ended 30 June Revenue from Other Consolidated Revenue from contracts Other Consolidated sales revenue
contracts revenue((a)) sales revenue with customers revenue((a)) 2022
with 2023 2023 2022 2022 US$m
customers US$m US$m US$m US$m
2023
US$m
Iron ore 16,319 12 16,331 17,547 91 17,638
Aluminium, alumina and bauxite 6,194 (45) 6,149 7,321 298 7,619
Copper 1,695 (6) 1,689 1,702 (38) 1,664
Industrial minerals (comprising titanium dioxide slag, borates and salt) 1,246 (1) 1,245 1,233 (3) 1,230
Gold 236 3 239 322 9 331
Diamonds 250 - 250 465 - 465
Other products((b)) 765 (1) 764 829 (1) 828
Consolidated sales revenue 26,705 (38) 26,667 29,419 356 29,775
(a) Consolidated sales revenue includes both revenue from contracts with
customers, accounted for under IFRS 15 and subsequent movements in
provisionally priced receivables, accounted for under IFRS 9, and included in
"Other revenue" above.
(b) "Other products" includes metallic co-products, molybdenum, silver and
other commodities. Individually the revenue from each of these products is
less than 15% of the total "Other products" category.
5. Impairment charges
Six months ended 30 June 2023 2022
US$m US$m
Aluminium - Alumina refineries (1,175) -
Allocated as:
Property, plant and equipment (1,175) -
30 June 2023
Aluminium - Alumina refineries, Australia
The Gladstone alumina refineries are responsible for more than half of our
scope 1 carbon dioxide emissions in Australia and therefore have been a key
focus as we evaluate options to decarbonise our assets. In March 2023, the
Australian Parliament legislated to introduce a requirement for large heavy
industrial carbon emitters to purchase carbon credits based upon their scope 1
emissions with a reducing baseline for these emissions. The challenging market
conditions facing these assets, together with our improved understanding of
the capital requirements for decarbonisation and the now legislated cost
escalation for carbon emissions have been identified as impairment triggers.
Using a fair value less cost of disposal methodology and discounting
real-terms post-tax cash flows at 6.6%, we have recognised a pre-tax
impairment charge of US$1,175 million (post-tax US$828 million). This
represents a full impairment of the property, plant and equipment at the
Yarwun alumina refinery (US$948 million) and an impairment of US$227 million
for the property, plant and equipment of Queensland Alumina Limited (QAL).
These impairments reflect market participant assumptions and the difficult
trading conditions for these assets which have operated below our planned
output.
For QAL, the recoverable amount (net present value of US$325 million) is
represented by future cash flows attributable to the double digestion project.
This major capital project improves the energy efficiency of the alumina
production process and significantly reduces carbon emissions. These cash
flows have been risk adjusted to reflect the pre-feasibility study stage of
project evaluation. If investment in the double digestion project was not
approved, the post-tax impairment charge would be US$325 million greater and
result in a full impairment of QAL.
Impact of climate change on our business - Gladstone alumina refineries
We are committed to the decarbonisation of our assets to reduce scope 1 and
scope 2 emissions by 50% by 2030 and to net zero emissions by 2050 relative to
our 2018 equity baseline. We anticipate that further carbon action may be
necessary to align with the goals of the Paris agreement to limit temperature
increases to 1.5(o)C. To illustrate the sensitivity of the refinery valuations
to the cost of carbon credits, we have modelled a 10% increase in those unit
costs across all years, before the impact of decarbonisation projects with all
other inputs remaining constant. For QAL, this sensitivity indicates a
reduction in the pre-tax value by US$99 million, however this is expected to
be largely mitigated by decarbonisation projects, including double digestion.
There is no impact at Yarwun as all property, plant and equipment is already
fully impaired.
30 June 2022
There were no impairment charges during the six months ended 30 June 2022.
6. Taxation
Prima facie tax reconciliation
Six months ended 30 June
2023 2022((a))
US$m US$m
Restated((b))
Profit before taxation 6,930 12,315
Prima facie tax payable at UK rate of 23.5% (2022: 19%)((c)) 1,628 2,340
Higher rate of taxation of 30% on Australian earnings (2022: 30%) 373 924
Other tax rates applicable outside the UK and Australia (130) 68
Tax effect of profit from equity accounted units and related expenses((d)) (101) (89)
Impact of changes in tax rates - (12)
Resource depletion allowances (6) (14)
Recognition of previously unrecognised deferred tax assets((e)) (62) (209)
Write-down of previously recognised deferred tax assets 40 8
Utilisation of previously unrecognised deferred tax assets (10) (50)
Unrecognised current period operating losses((f)) 259 71
Adjustments in respect of prior periods((g)) (4) (137)
Other items (4) (33)
Total taxation charge 1,983 2,867
(a) Consistent with the presentation adopted in the 2022 Financial
Statements, prima facie tax reconciliation comparatives have been revised. We
have allocated the tax relating to exclusions (historically shown separately
in the financial statements) to the appropriate tax line items above. The
presentation of the impact of including profit after tax from equity accounted
units within the Group profit before tax has also been revised as described in
note (d) below.
(b) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
(c) As a UK headquartered and listed Group, the reconciliation of expected
tax on accounting profit to tax charge uses the UK corporation tax rate to
calculate the prima facie tax payable. Given the increase in the UK
corporation tax rate from 19% to 25% effective 1 April, the UK rate for the
year will be 23.5%. Rio Tinto is also listed in Australia, and the
reconciliation includes the impact of the higher tax rate in Australia where a
significant proportion of the Group's profits are currently earned. The impact
of other tax rates applicable outside the UK and Australia is also included.
The weighted average statutory corporate tax rate on profit before tax is
approximately 30% (30 June 2022: 29%).
(d) The Group profit before tax includes profit after tax of equity
accounted units. Consequently, the tax effect on the profit from equity
accounted units is included as a separate reconciling item in this prima facie
tax reconciliation.
(e) Recognition of previously unrecognised deferred tax assets includes
amounts in respect of Oyu Tolgoi where ongoing progress towards sustainable
underground production reduces the risk that tax losses will expire if not
recovered against taxable profits within eight years.
6. Taxation (continued)
(f) Unrecognised current period operating losses include tax losses around
the Group for which no tax benefit is currently recognised due to uncertainty
for the purposes of IAS 12 regarding whether suitable taxable profits will be
earned in future to obtain value for the tax losses.
(g) In the six months ended 30 June 2022, adjustments in respect of prior
periods include amounts related to the settlement of all tax disputes with the
Australian Tax Office for the years 2010 to 2021.
Future tax developments
We continue to monitor and evaluate the Organisation for Economic Co-operation
and Development's (OECD) Two Pillar Solution to Address the Tax Challenges
Arising from the Digitalisation of the Economy. Pillar Two of those proposals
seeks to apply a 15% global minimum tax and was substantively enacted by the
United Kingdom on 20 June 2023, with application from 1 January 2024.
We have adopted the guidance contained in International Tax Reform - Pillar
Two Model Rules - Amendments to IAS 12 released on 23 May 2023 that provides
a temporary mandatory exception from deferred tax accounting for Pillar Two.
Under these amendments, any Pillar Two taxes incurred by the Group will be
accounted for as current taxes from 1 January 2024. We are in the process of
evaluating the cash tax implications of the global minimum tax rules and will
include disclosures related to expected impacts, if any, in the Group's 2023
full year consolidated financial statements.
On 17 May 2023, the Chamber of Deputies of Chile approved a new mining
royalty which will impact Escondida through a 1% ad-valorem component and an
increased operating margin component, all limited by a maximum overall tax
rate of 46.5%. The new mining royalty will be effective as of 1 January 2024.
The legislation was not substantively enacted at 30 June 2023 and therefore
the impact on our results for the year ended 31 December 2023, which is not
expected to be material, will be accounted for in the second half of the year
following substantive enactment.
7. Acquisitions
30 June 2023
There were no material acquisitions during six months to 30 June 2023.
30 June 2022
On 29 March 2022, we completed the acquisition of Rincon Mining Pty Limited,
the owner of a lithium project in Argentina. Total cash consideration was
US$825 million. The transaction was treated as an asset purchase with US$822
million of capitalised exploration and evaluation recorded for the principal
economic resource. The balance of total consideration was allocated to
property, plant & equipment and other assets/liabilities. For the Group
cash flow statement we had determined that, since Rincon constitutes a group
of companies, it was appropriate to present the cash outflow as "Acquisitions
of subsidiaries, joint ventures and associates" rather than as separate asset
purchases even though it did not meet the definition of a business
combination.
8. Cash and cash equivalents
Closing cash and cash equivalents less overdrafts for the purposes of the cash
flow statement differs from cash and cash equivalents on our balance sheet as
per the following reconciliation:
Closing cash and cash equivalents less overdrafts 30 June 31 December 30 June
2023
2022
2022
US$m US$m US$m
Balance per Group balance sheet 9,179 6,775 11,412
Bank overdrafts repayable on demand (unsecured) (5) (1) (3)
Balance per Group cash flow statement 9,174 6,774 11,409
9. Provisions including post-retirement benefits
Post-retirement benefits and other employee entitlements((a)) Close-down, Other provisions 30 June 2023
restoration and environmental((b)) 31 December 2022
US$m US$m US$m US$m US$m
Opening balance as previously reported 1,658 15,759 1,298 18,715 18,053
Adjustment on currency translation 14 (105) (7) (98) (841)
Adjustments to mining properties/right of use assets:
- changes to existing and new provisions - (55) - (55) 524
- change in discount rate((c)) - (960) - (960) -
Charged/(credited) to profit:
- increases to existing and new provisions 100 185 51 336 1,137
- change in discount rate((c)) - (166) (18) (184) -
- decreases and unused amounts reversed (2) (52) (24) (78) (150)
- exchange (gains)/losses on provisions - (9) (2) (11) 17
- amortisation of discount((d)) - 578 14 592 1,519
Utilised in the period (115) (333) (44) (492) (1,039)
Re-measurement losses/(gains) recognised in other comprehensive income 42 - - 42 (701)
Transfers and other movements 1 4 (20) (15) 196
Closing balance 1,698 14,846 1,248 17,792 18,715
Balance sheet analysis:
Current 352 1,249 524 2,125 2,049
Non-current 1,346 13,597 724 15,667 16,666
Total 1,698 14,846 1,248 17,792 18,715
(a) The provision for post-retirement benefits and other employee
entitlements includes a provision for long service leave of US$281 million
(31 December 2022: US$271 million), based on the relevant entitlements in
certain Group operations and includes US$28 million (31 December 2022: US$32
million) of provision for redundancy and severance payments.
9. Provisions including post-retirement benefits (continued)
(b) Close-down, restoration and environmental liabilities at 30 June 2023
have not been adjusted for closure-related receivables amounting to
US$348 million (31 December 2022: US$351 million) due from the ERA trust
fund and other financial assets held for the purposes of meeting closure
obligations. These are included within "Receivables and other assets" on the
balance sheet.
(c) Provisions of US$14,846 million (31 December 2022: US$15,759 million)
for close-down and restoration costs and environmental clean-up obligations
are based on risk-adjusted discounted cash flows expressed in real-terms. The
present volatility in interest rates has filtered down to expectations of
higher yields from long-dated bonds, including the 30-year US Treasury
Inflation Protected Securities, which is a key input to our closure provision
discount rate. On 30 June 2023 we revised the closure discount rate to 2%
(from 1.5%), applied prospectively from that date.
(d) The present value of close-down, restoration and environmental
liabilities has been uplifted due to the re-measurement of underlying cash
flows for inflation in the year. The amortisation of discount of
US$578 million (30 June 2022: US$503 million) is used to systematically
uplift cash-flows including a forecast of full year inflation at the start of
each reporting period. At the end of each half-year we updated the underlying
cash flows for the latest estimate of experienced inflation for the current
period and recorded this as "changes to existing provisions". For operating
sites this adjustment usually results in a corresponding adjustment to
Property, Plant and Equipment and for closed and fully impaired sites the
adjustment is charged or credited to the income statement.
10. Financial Instruments
Valuation hierarchy of financial instruments carried at fair value on a
recurring basis
The table below shows the classifications of our financial instruments by
valuation method in accordance with IFRS 13 at 30 June 2023 and 31 December
2022.
All instruments shown as being held at fair value have been classified as fair
value through the profit and loss unless specifically footnoted.
At 30 June 2023 At 31 December 2022
Held at fair value Held at fair value
Total Level 1((a)) Level 2((b)) Level 3((c)) Held at Total Level 1((a)) Level 2((b)) Level 3((c)) Held at
US$m US$m US$m US$m amortised cost US$m US$m US$m US$m amortised costs
US$m US$m
Assets
Cash and cash equivalents((d)) 9,179 2,455 - - 6,724 6,775 2,725 - - 4,050
Investments in equity shares and funds((e)) 167 86 - 81 - 222 147 - 75 -
Other investments, including loans((f)) 1,474 1,232 - 200 42 2,275 2,018 - 229 28
Trade and other financial receivables((g)) 2,908 13 1,242 - 1,653 2,765 18 1,306 - 1,441
Forward, option and embedded derivatives contracts, not designated as 90 - 18 72 - 67 - 16 51 -
hedges((h))
Derivatives related to net debt((i)) - - - - - 2 - 2 - -
Liabilities
Trade and other financial payables((j)) (6,175) - (72) - (6,103) (6,485) - (30) - (6,455)
Forward, option and embedded derivatives contracts, designated as hedges((h)) (104) - - (104) - (189) - - (189) -
Forward, option and embedded derivatives contracts, not designated as (27) - (12) (15) - (92) - (57) (35) -
hedges((h))
Derivatives related to net debt((i)) (664) - (664) - - (692) - (692) - -
10. Financial Instruments (continued)
(a) Valuation is based on unadjusted quoted prices in active markets for
identical financial instruments.
(b) Valuation is based on inputs that are observable for the financial
instruments, which include quoted prices for similar instruments or identical
instruments in markets which are not considered to be active, or inputs,
either directly or indirectly based on observable market data.
(c) Valuation is based on inputs that cannot be observed using market data
(unobservable inputs). The change in valuation of our level 3 instruments for
the period to 30 June 2023 is below:
30 June 2023
Level 3 financial assets and liabilities US$m
Opening balance 131
Currency translation adjustments (6)
Total realised gains/(losses) included in:
- consolidated sales revenue 5
- net operating costs (13)
Total unrealised gains included in:
- net operating costs 66
Total unrealised gains transferred into other comprehensive income through 49
cash flow hedges
Additions to financial assets/(liabilities) 13
Disposals/maturity of financial instruments (11)
Closing balance 234
Net gains included in the income statement for assets and liabilities held at 70
period end
(d) Our "cash and cash equivalents" of US$9,179 million (31 December
2022: US$6,775 million), includes US$2,455 million (31 December 2022:
US$2,725 million) relating to money market funds which are treated as fair
value through profit or loss (FVPL) under IFRS 9 with the fair value movements
going into finance income.
(e) Investments in equity shares and funds include US$152 million
(31 December 2022: US$153 million) of equity shares, not held for trading,
where we have irrevocably elected to present fair value gains and losses on
revaluation in other comprehensive income (FVOCI). The election is made at an
individual investment level.
(f) Other investments, including loans, covers, cash deposits in
rehabilitation funds, government bonds, managed investment funds and royalty
receivables.
(g) Trade receivables include provisionally priced invoices. The related
revenue is initially based on forward market selling prices for the quotation
periods stipulated in the contracts with changes between the provisional price
and the final price recorded separately within "Other revenue". The selling
price can be measured reliably for the Group's products, as it operates in
active and freely traded commodity markets. At 30 June 2023, US$1,154 million
(31 December 2022: US$1,234 million) of provisionally priced receivables were
recognised.
10. Financial Instruments (continued)
(h) Level 3 derivatives consist of derivatives embedded in electricity
purchase contracts linked to the LME, midwest premium and billet premium with
terms expiring between 2025 and 2036 (31 December 2022: 2025 and 2036).
(i) Net debt derivatives include interest rate swaps and cross-currency
swaps. As part of the International Swaps and Derivatives Association (ISDA)
Fallbacks Protocol, on 1 July 2023 we completed the transition of our US
LIBOR derivatives to SOFR on cessation of US LIBOR at 30 June 2023. There has
been no impact on our hedging arrangements after taking into account the IFRS
9 'Financial Instruments' LIBOR reform reliefs.
(j) Trade and other financial payables comprise trade payables, other
financial payables, accruals and amounts due to equity accounted units.
There were no material transfers between level 1 and level 2, or between level
2 and level 3 in the period ended 30 June 2023 or in the year ended
31 December 2022.
Valuation techniques and inputs
The techniques used to value our more significant fair value
assets/(liabilities) categorised under Level 2 and Level 3 are summarised
below:
Description Fair Value Valuation technique Significant Inputs
US$m
Level 2
Interest rate swaps (346) Discounted cash flows Applicable market quoted swap yield curves
Credit default spread
Cross currency interest rate swaps (320) Discounted cash flows Applicable market quoted swap yield curves
Credit default spread
Market quoted FX rate
Provisionally priced receivables 1,154 Closely related listed product Applicable forward quoted metal price
Level 3
Derivatives embedded in electricity contracts (79) Option pricing model LME forward aluminium price
Midwest premium and billet premium
Royalty receivables 191 Discounted cash flows Forward commodity price
Mine production
Sensitivity analysis in respect of level 3 financial instruments
For assets/(liabilities) classified under level 3, the effect of changing the
significant unobservable inputs on carrying value has been calculated using a
movement that we deem to be reasonably probable.
To value the long-term aluminium embedded power derivatives, we use
unobservable inputs when the term of the derivative extends beyond observable
market prices. Changing the level 3 inputs to reasonably possible alternative
assumptions does not change the fair value significantly, taking into account
the expected remaining term of contracts for either reported period. The fair
value of these derivatives is a net liability of US$79 million at 30 June
2023 (31 December 2022: US$208 million).
10. Financial Instruments (continued)
Royalty receivables include amounts arising from our divested coal businesses
with a carrying value of US$191 million (31 December 2022: US$209 million).
These are classified as "Other investments, including loans" within "Other
financial assets". The fair values are determined using level 3 unobservable
inputs. These royalty receivables include US$82 million from forecast
production beyond 2030. These have not been adjusted for potential changes in
production rates that could occur due to climate change targets impacting the
operator.
The main unobservable input is the long-term coal price used over the life of
these royalty receivables. A 15% increase in the coal spot price would result
in a US$61 million increase (31 December 2022: US$68 million increase) in the
carrying value. A 15% decrease in the coal spot price would result in a US$21
million decrease (31 December 2022: US$18 million decrease) in the carrying
value. We have used a 15% assumption to calculate our exposure as it
represents the annual coal price movement that we deem to be reasonably
probable (on an annual basis over the long run).
Fair values disclosure of financial instruments
The following table shows the carrying amounts and fair values of our
borrowings including those which are not carried at an amount which
approximates their fair value at 30 June 2023 and 31 December 2022. The fair
values of our remaining financial instruments approximate their carrying
values because of their short maturity, or because they carry floating rates
of interest.
30 June 2023 31 December 2022
Carrying Fair Carrying Fair
value value value value
US$m US$m US$m US$m
Borrowings (including overdrafts) 12,849 13,048 11,071 11,192
Total borrowings with a carrying value of US$8.4 billion (31 December 2022:
US$6.6 billion) relate to listed bonds with a fair value of US$8.4 billion
(31 December 2022: US$6.6 billion) and are categorised as level 1 in the fair
value hierarchy. Borrowings with a carrying value of US$3.8 billion
(31 December 2022: US$3.8 billion) relate to project finance drawn down by
Oyu Tolgoi, with a fair value of US$4.1 billion (31 December 2022: US$3.9
billion) using a number of level 3 valuation inputs. We refinanced the project
finance on 16 February 2023 with a syndicate of international financial
institutions, export credit agencies and commercial lenders. The lenders have
agreed to a deferral of the principal repayments by three years to June 2026
and to an extension of the final maturity date by five years from 2030 to
2035. As part of refinancing, the debt transitioned to the SOFR benchmark to
which we applied the Phase 2 IBOR reform relief under IFRS 9. The refinancing
did not result in a derecognition of the drawn down amount, however we
recognised an accounting loss on modification of US$123 million related to
changes other than the benchmark transition and capitalised transaction costs
incurred of US$50 million. Our remaining borrowings have a fair value measured
by discounting estimated cash flows with an applicable market quoted yield,
and are categorised as level 2 in the fair value hierarchy.
11. Commitments and contingencies
Contingent liabilities (subsidiaries, joint operations, joint ventures and
associates)
Contingent liabilities, indemnities and other performance guarantees represent
the potential outflow of funds from the Group for the satisfaction of
obligations including those under contractual arrangements (for example
undertakings related to supplier agreements) not provided for in the balance
sheet, where the likelihood of the contingent liabilities, guarantees or
indemnities being called is assessed as possible rather than probable or
remote.
Contingent liabilities, indemnities and other performance guarantees were
US$486 million at 30 June 2023 (31 December 2022: US$498 million).
There were no material contingent liabilities arising in relation to the
Group's joint ventures and associates. We have not established provisions for
certain additional legal claims in cases where we have assessed that a payment
is either not probable or cannot be reliably estimated. A number of our
companies are, and will likely continue to be, subject to various legal
proceedings and investigations that arise from time to time. As a result, the
Group may become subject to substantial liabilities that could affect our
business, financial position and reputation. Litigation is inherently
unpredictable and large judgments may at times occur. The Group may in the
future incur judgments or enter into settlements of claims that could lead to
material cash outflows. We do not believe that any of these proceedings will
have a materially adverse effect on our financial position.
Contingent liabilities - not quantifiable
The current status of contingent liabilities where it is not practicable to
provide a reliable estimate of possible financial exposure is:
11. Commitments and contingencies (continued)
Litigation disputes
Litigation matter Latest update
Timing of the impairment of Rio Tinto Coal Mozambique (US securities and In October 2017, Rio Tinto announced that it had been notified by the U.S.
exchange commission) Securities and Exchange Commission (SEC) that the SEC had filed a complaint in
relation to Rio Tinto's disclosures and timing of the impairment of Rio Tinto
Coal Mozambique (RTCM). The impairment was reflected in Rio Tinto's 2012
year-end accounts. The SEC alleges that Rio Tinto, a former chief executive,
Tom Albanese, and a former chief financial officer, Guy Elliott, committed
violations of the antifraud, reporting, books and records, and internal
control provisions of the federal securities law by not accurately disclosing
the value of RTCM and not impairing it when Rio Tinto published its 2011
year-end accounts in February 2012 or its 2012 interim results in August 2012.
In June 2019, the trial court dismissed an associated US class action on
behalf of securities holders. In August 2020, the appeals court partially
overturned the court's dismissal and the trial court dismissed the case again
in 2022. The securities holders have appealed further to reinstate their
claims, and the court received briefing in 2023. No provision has been
recognised for this case.
2011 Contractual payments in Guinea Rio Tinto continues to co-operate fully with relevant authorities in
connection with their investigations in relation to contractual payments
totalling US$10.5 million made to a consultant who had provided advisory
services in 2011 on the Simandou project in Guinea. In August 2018, the court
dismissed a related US class action commenced on behalf of securities holders.
On 6 March 2023, we resolved a previously self-disclosed investigation by the
SEC into certain contractual payments totalling US$10.5 million made to a
consultant who had provided advisory services in 2011, relating to the
Simandou project in the Republic of Guinea. Without admitting to or denying
the SEC's findings, Rio Tinto paid US$15 million civil penalty for violations
of the books and records and internal controls provisions of the Foreign
Corrupt Practices Act.
No provision has been recognised for other related investigations.
At 30 June 2023, the outcome of these matters remains uncertain, but they
could ultimately result in a material financial impact. We believe these cases
are unwarranted and will defend against the allegations vigorously. A
dedicated Board committee continues to monitor the progress of these matters.
11. Commitments and contingencies (continued)
Other contingent liabilities
We are modernising agreements with Traditional Owner groups in response to the
Juukan Gorge incident. We have created provisions, within "Other provisions",
based on our best estimate of historical claims; however, the process is
incomplete and it is possible that further claims could arise relating to past
events.
Close-down and restoration provisions are not recognised for those operations
that have no known restrictions on their lives as the date of closure cannot
be reliably estimated. This applies primarily to our Canadian aluminium
smelters, which are not dependent upon a specific orebody and have access to
indefinite-lived power from owned hydro-power stations with water rights
permitted by local governments. In these instances, a closure obligation may
exist at the reporting date; however, due to the indefinite nature of asset
lives it is not possible to arrive at a sufficiently reliable estimate for the
purposes of recognising a provision. Close-down and restoration provisions are
recognised at these operations for separately identifiable closure activities
which can be reasonably estimated, such as the demolition and removal of fixed
structures after a pre-determined period. Any contingent liability for these
assets will crystallise into a closure provision if and when a decision is
taken to cease operations.
Capital commitments at 30 June 2023
Capital commitments, excluding the Group's share of joint venture capital
commitments, were US$3,743 million (31 December 2022: US$3,354 million). Our
capital commitments include open purchase orders for managed operations and
expenditure on major projects already authorised by our Investment Committee
for non-managed operations. They do not include the estimated incremental
capital expenditure relating to decarbonisation projects of US$7.5 billion
between 2022 and 2030 unless otherwise contractually committed. On a legally
enforceable basis, capital commitments would be approximately US$1.3 billion
(31 December 2022: US$1.0 billion) as many of the contracts relating to the
Group's projects have various cancellation clauses.
The Group's share of joint venture capital commitments was US$13 million at
30 June 2023 (31 December 2022: US$15 million).
12. Events after the balance sheet date
On 21 July 2023, we announced that the Group would form a joint venture with
the Giampaolo Group to manufacture and market recycled aluminium products.
Under the terms of the agreement, the Group will acquire a 50% equity stake in
Giampaolo Group's wholly-owned Matalco business for US$700 million, subject
to usual closing adjustments. Matalco has 6 facilities in the US and 1 in
Canada, with capacity to produce around 900,000 tonnes of recycled aluminium a
year. Matalco's leadership team will continue to manage its operations and Rio
Tinto will be responsible for sales and marketing following a transition
period after completion of the transaction. We expect the transaction to
complete in the first half of 2024, subject to customary regulatory approvals.
There were no other significant events after the balance sheet date requiring
disclosure.
Directors' declaration
Directors' statement of responsibility
In the directors' opinion:
The condensed consolidated interim financial statements on pages 31 to 61
including the notes have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the UK, applicable UK law, and applicable
Australian law as amended by the Australian Securities and Investments
Commission Order dated 16 July 2021. We have used the most appropriate
accounting policies for Rio Tinto's business, supported by reasonable and
prudent judgements.
The condensed consolidated interim financial statements give a true and fair
view of the Rio Tinto Group's financial position as at 30 June 2023 and of
its performance, as represented by the results of its operations,
comprehensive income and expense and its cash flows for the six months then
ended. There are reasonable grounds to believe that each of the Rio Tinto
Group, Rio Tinto Limited and Rio Tinto plc will be able to pay its debts as
and when they become due and payable.
The interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R, namely:
- an indication of important events that have occurred during the first
six months and their impact on the condensed set of consolidated interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report.
Signed in accordance with a resolution of the Board of Directors.
Dominic Barton
Chairman
26 July 2023
Jakob Stausholm
Chief executive
26 July 2023
Peter Cunningham
Chief financial officer
26 July 2023
Independent Auditors' Review Reports of KPMG LLP ("KPMG UK") to Rio Tinto plc
and of KPMG ("KPMG Australia") to the members of Rio Tinto Limited
Conclusions
For the purpose of these reports, the terms 'we' and 'our' denote KPMG UK in
relation to UK responsibilities and reporting obligations to Rio Tinto plc,
and KPMG Australia in relation to Australian responsibilities and reporting
obligations to the members of Rio Tinto Limited.
We have been engaged and have reviewed the accompanying condensed consolidated
interim financial statements ("Interim Financial Statements") in the Interim
Results 2023 ("Interim Report") of the Rio Tinto Group ("the Group") as at and
for the six months ended 30 June 2023 which comprises the:
• Group income statement
• Group statement of comprehensive income;
• Group cash flow statement;
• Group balance sheet;
• Group statement of changes in equity; and
• The related explanatory notes to the Interim Financial Statements
on pages 39 to 61.
The Rio Tinto Group consists of Rio Tinto plc, Rio Tinto Limited and their
respective subsidiaries including the Group's share of joint arrangements and
associates at 30 June 2023 or during the six months ended 30 June 2023. KPMG
Australia considers the Directors' Declaration to be part of the Interim
Financial Statements when forming its conclusion.
Review conclusion by KPMG UK
Based on our review, nothing has come to our attention that causes us to
believe that the Interim Financial Statements in the Interim Report are not
prepared, in all material respects, in accordance with International
Accounting Standard ('IAS') 34 Interim Financial Reporting as adopted for use
in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
Review conclusion by KPMG Australia
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the Interim Financial Statements of the Rio
Tinto Group, including the Directors' Declaration, do not comply with the
Australian Corporations Act 2001 as amended by the Australian Securities and
Investments Commission Order dated 16 July 2021, including:
• giving a true and fair view of the Group's financial position as
at 30 June 2023 and of its performance for the six months ended on that date;
and
• complying with International Accounting Standard ('IAS') 34
Interim Financial Reporting as adopted for use in the UK and the Australian
Corporations Regulations 2001.
KPMG, an Australian partnership and KPMG LLP, a UK limited liability
partnership, are member firms of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG
global organisation. KPMG Australia's liability limited by a scheme approved
under Professional Standards Legislation.
Basis for conclusions
KPMG UK conducted its review in accordance with International Standard on
Review Engagements (UK) 2410 Review of Interim Financial Information Performed
by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in
the UK.
In conducting its review, KPMG UK has complied with the ethical and
independence requirements of the UK FRC Ethical Standard as applied to listed
public interest entities.
KPMG Australia conducted its review in accordance with Auditing Standard on
Review Engagements ASRE 2410 Review of a Financial Report Performed by the
Independent Auditor of the Entity ("ASRE 2410"), as issued by the Australian
Auditing and Assurance Standards Board.
KPMG Australia is independent of the Group in accordance with the auditor
independence requirements of the Australian Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to its audit of the
annual Group financial statements in Australia. In conducting its review,
KPMG Australia has also fulfilled its other ethical responsibilities in
accordance with these requirements.
KPMG UK's and KPMG Australia's responsibilities are further described in the
Auditors' Responsibilities for the Review of the Interim Financial Statements
section of our report.
KPMG UK's conclusions relating to going concern
Based on KPMG UK's review procedures, which are less extensive than those
performed in an audit as described in the Basis for conclusions section of
this report, nothing has come to KPMG UK's attention that causes it to believe
that the directors have inappropriately adopted the going concern basis of
accounting, or that the directors have identified material uncertainties
relating to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the group will continue in operation.
Responsibilities of the Directors for the Interim Financial Statements and
Interim Report
The Interim Report is the responsibility of, and has been approved by, the
Directors of Rio Tinto plc and the Directors of Rio Tinto Limited.
The Directors of Rio Tinto plc are responsible for:
▪ preparing the Interim Report in accordance with the DTR of the UK
FCA;
▪ the preparation of Interim Financial Statements in accordance with
IAS 34 as adopted for use in the UK. As disclosed in note 1, the annual
financial statements of the group are prepared in accordance with UK-adopted
international accounting standards; and
▪ assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so, in the preparation of the Interim Financial Statements.
The Directors of Rio Tinto Limited are responsible for:
• the preparation of Interim Financial Statements, including the
Directors' Declaration, that give a true and fair view in accordance with
International Accounting Standard 34 Interim Financial Reporting as adopted
for use in the UK and the Australian Corporations Act 2001 as amended by the
Australian Securities and Investments Commission Order dated 16 July 2021
• such internal control as the Directors of Rio Tinto Limited
determine is necessary to enable the preparation of the Interim Financial
Statements, including the Directors' Declaration, that give a true and fair
view and are free from material misstatement, whether due to fraud or error.
Auditors' Responsibilities for the Review of the Interim Financial Statements
KPMG UK's responsibility is to express to Rio Tinto plc a conclusion on the
Interim Financial Statements based on its review. KPMG UK's conclusion,
including its conclusions relating to going concern, are based on procedures
that are less extensive than audit procedures, as described in the Basis for
Conclusions section of this report.
KPMG Australia's responsibility is to express a conclusion on the Interim
Financial Statements, including the Directors' Declaration, based on its
review. ASRE 2410 requires KPMG Australia to conclude whether we have become
aware of any matter that makes us believe that the Interim Financial
Statements, including the Directors' Declaration, do not comply with the
Corporations Act 2001 as amended by the Australian Securities and Investments
Commission Order dated 16 July 2021, including giving a true and fair view of
the Group's financial position as at 30 June 2023 and its performance for the
six months ended on that date, and complying with International Accounting
Standard 34 Interim Financial Reporting as adopted for use in the UK and the
Corporations Regulations 2001.
A review of Interim Financial Statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
that accompanies the Interim Financial Statements and is contained in the
Interim Report and consider whether it contains any apparent misstatements or
material inconsistencies with the information in the Interim Financial
Statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) or Australian Auditing Standards
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, neither KPMG UK or KPMG Australia expresses an audit opinion.
The purpose of our review work and to whom we owe our responsibilities
KPMG UK's report is made solely to Rio Tinto plc in accordance with the terms
of KPMG UK's engagement to assist Rio Tinto plc in meeting the requirements of
the DTR of the UK FCA. Our review work has been undertaken so that we might
state to Rio Tinto plc those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than Rio Tinto plc for
our review work, for this report, or for the conclusions we have reached.
KPMG Australia's report is made solely to Rio Tinto Limited's members, as a
body, in accordance with the Australian Corporations Act 2001 as amended by
the Australian Securities and Investments Commission Order dated 16 July 2021.
Our review work has been undertaken so that we might state to the members of
Rio Tinto Limited those matters we are required to state to them in this
report, and the further matters we are required to state to them in accordance
with the terms agreed with Rio Tinto Limited, and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than Rio Tinto Limited's members, as a body, for our review work,
for this report, or for the conclusion we have reached.
Jonathan Downer
Trevor Hart
for and on behalf of KPMG
LLP
Partner
Chartered
Accountants
Perth
London
26 July 2023
26 July
2023
KPMG
26 July 2023
Lead Auditor's Independence Declaration under Section 307C of the Australian
Corporations Act 2001
To the Directors of Rio Tinto Limited
I declare that, to the best of my knowledge and belief, in relation to the
review of Rio Tinto Limited for the six months ended 30 June 2023 there have
been:
a) no contraventions of the auditor independence requirements as set out
in the Australian Corporations Act 2001 in relation to the review; and
b) no contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of Rio Tinto Limited and the entities it
controlled as at or during the six-months ended 30 June 2023.
KPMG
Trevor Hart
Partner
Perth
26 July 2023
KPMG, an Australian partnership and a member firm of the KPMG global
organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent
member firms of the KPMG global organisation.
KPMG Australia's liability is limited by a scheme approved under Professional
Standards Legislation.
Rio Tinto financial information by business unit
Segmental revenue((c)) Underlying EBITDA((c)) Depreciation and amortisation Underlying earnings((c))
Six months ended 30 June Rio Tinto
interest 2023 2022 2023 2022 2023 2022 2023 2022
% US$m US$m US$m US$m US$m US$m US$m US$m
Adjusted((a)) Adjusted((a)) Adjusted((a)) Restated((a)(b))
Iron Ore
Pilbara (d) 14,705 15,517 9,541 10,119 1,036 1,013 5,712 6,239
Dampier Salt 68.4 192 161 54 9 10 10 22 -
Evaluation projects/other (e) 1,356 1,698 59 268 - - (50) 234
Intra-segment (e) (653) (766) 138 (1) - - 103 -
Total Iron Ore Segment 15,600 16,610 9,792 10,395 1,046 1,023 5,787 6,473
Aluminium
Bauxite 1,091 1,219 279 337 189 180 18 80
Alumina 1,406 1,716 36 415 105 96 (70) 227
Primary Metal 3,457 4,246 779 1,714 349 348 315 1,002
Pacific Aluminium 1,303 1,705 111 463 69 60 55 317
Intra-segment and other (1,456) (1,724) 12 12 1 1 1 -
Integrated operations 5,801 7,162 1,217 2,941 713 685 319 1,626
Other product group items 462 634 10 26 - - 6 19
Product group operations 6,263 7,796 1,227 2,967 713 685 325 1,645
Evaluation projects/other - - (87) (101) - - (65) (75)
Total Aluminium Segment 6,263 7,796 1,140 2,866 713 685 260 1,570
Copper
Kennecott 100.0 832 983 139 442 213 298 (93) 68
Escondida 30.0 1,427 1,401 863 966 173 171 411 490
Oyu Tolgoi (f) 826 805 320 313 146 88 55 142
Product group operations 3,085 3,189 1,322 1,721 532 557 373 700
Evaluation projects/other((a)) 402 358 (240) (187) 3 2 (175) (129)
Total Copper Segment 3,487 3,547 1,082 1,534 535 559 198 571
Minerals
Iron Ore Company of Canada 58.7 1,221 1,480 399 775 101 99 120 268
Rio Tinto Iron & Titanium (g) 1,011 1,090 287 337 101 113 118 142
Rio Tinto Borates 100.0 401 359 102 57 30 25 56 21
Diamonds (h) 250 465 70 193 17 17 44 91
Product group operations 2,883 3,394 858 1,362 249 254 338 522
Evaluation projects/other 6 9 (169) (103) - - (159) (99)
Total Minerals Segment 2,889 3,403 689 1,259 249 254 179 423
Reportable segments total 28,239 31,356 12,703 16,054 2,543 2,521 6,424 9,037
Simandou iron ore project (i) - - (318) (54) - - (114) (33)
Other operations (j) 97 107 (77) (71) 137 133 (173) (165)
Inter-segment transactions (154) (149) (17) (1) (18) -
Central pension costs, share-based payments, insurance and derivatives 167 265 147 237
Restructuring, project and one-off costs (84) (86) (60) (61)
Central costs (512) (397) 43 47 (453) (363)
Central exploration and evaluation (134) (113) (114) (95)
Net interest 81 105
Underlying EBITDA/earnings 11,728 15,597 5,720 8,662
Items excluded from underlying EBITDA/earnings 141 87 (603) 281
Reconciliation to Group income statement
Share of equity accounted unit sales and intra-subsidiary/equity accounted (1,515) (1,539)
unit sales
Impairment charges (1,175) -
Depreciation and amortisation in subsidiaries excluding capitalised (2,405) (2,405)
depreciation
Depreciation and amortisation in equity accounted units (238) (242) (238) (242)
Taxation and finance items in equity accounted units (373) (363)
Finance items (748) (359)
Consolidated sales revenue/profit before taxation/depreciation and 26,667 29,775 6,930 12,315 2,485 2,459 5,117 8,943
amortisation/net earnings
Rio Tinto financial information by business unit (continued)
Capital expenditure((k)) Operating assets((l))
for the six as at
months ended 30 June
Rio Tinto 30 June 2023 31 December 2022
interest 2023 2022 US$m US$m
% US$m US$m
Adjusted((a)) Restated((a)(b))
Iron Ore
Pilbara (d) 1,085 1,459 17,770 17,785
Dampier Salt 68.4 9 13 160 153
Evaluation projects/other (e) - - 636 835
Intra-segment (e) - - (117) (220)
Total Iron Ore Segment 1,094 1,472 18,449 18,553
Aluminium
Bauxite 79 57 2,455 2,458
Alumina 151 164 1,293 2,400
Primary Metal 314 358 9,618 9,343
Pacific Aluminium 53 46 302 159
Intra-segment and other - - 700 629
Total Aluminium Segment 597 625 14,368 14,989
Copper
Kennecott 100.0 327 246 2,195 2,027
Escondida 30.0 - - 2,726 2,792
Oyu Tolgoi (f) 585 484 14,293 13,479
Product group operations 912 730 19,214 18,298
Evaluation projects/other 5 - 224 165
Total Copper Segment 917 730 19,438 18,463
Minerals
Iron Ore Company of Canada 58.7 120 126 1,217 1,147
Rio Tinto Iron & Titanium (g) 107 106 3,342 3,351
Rio Tinto Borates 100.0 25 13 513 496
Diamonds (h) 37 22 37 (84)
Product group operations 289 267 5,109 4,910
Evaluation projects/other 15 1 878 874
Total Minerals Segment 304 268 5,987 5,784
Reportable segments total 2,912 3,095 58,242 57,789
Simandou iron ore project (i) - - 128 (22)
Other operations (j) 32 9 (1,703) (1,850)
Inter-segment transactions (6) 12
Other items 49 41 (686) (1,107)
Total 2,993 3,145 55,975 54,822
Add back: Proceeds from disposal of property, plant and equipment 8 1
Total purchases of property, plant & equipment and intangibles as per cash 3,001 3,146
flow statement
Add: Net debt (4,350) (4,188)
Equity attributable to owners of Rio Tinto 51,625 50,634
Notes to financial information by business unit
Business units are classified according to the Group's management structure.
(a) The financial information by business unit has been adjusted to reflect
a change in management responsibility for the Simandou iron ore project from
Copper to the Chief Technical Officer. As a result, we have moved Simandou
outside of reportable segments and accordingly adjusted prior period
comparatives.
(b) Underlying earnings for the six months ended 30 June 2022 and operating
assets as at 31 December 2022 have been restated for the impact of
narrow-scope amendments to IAS 12, refer to note 2 for details.
(c) Segmental revenue, underlying EBITDA and capital expenditure are defined
and calculated in note 3 from pages 44 to 47. Underlying earnings is defined
and calculated within the alternative performance measures section on pages 72
to 81.
(d) Pilbara represents the Group's 100% holding in Hamersley, 50% holding in
Hope Downs Joint Venture and 65% holding in Robe River Iron Associates. The
Group's net beneficial interest in Robe River Iron Associates is 53%, as 30%
is held through a 60% owned subsidiary and 35% is held through a 100% owned
subsidiary.
(e) Segmental revenue, underlying EBITDA, underlying earnings and operating
assets within Evaluation projects/other include activities relating to the
shipment and blending of Pilbara and Iron Ore Company of Canada (IOC) iron ore
inventories held at portside in China and sold to domestic customers.
Transactions between Pilbara and our portside trading business are eliminated
through the Iron Ore "intra-segment" line and transactions between IOC and the
portside trading business are eliminated through "inter-segment transactions".
(f) Until 16 December 2022, our interest in Oyu Tolgoi was held indirectly
through our 50.8% investment in Turquoise Hill Resources Ltd (TRQ), where
TRQ's principal asset was its 66% investment in Oyu Tolgoi LLC, which owned
the Oyu Tolgoi copper-gold mine. Following the purchase of TRQ we now directly
hold a 66% investment in Oyu Tolgoi LLC.
(g) Includes our interests in Rio Tinto Iron and Titanium Quebec Operations
(100%), QIT Madagascar Minerals (QMM, 80%) and Richards Bay Minerals
(attributable interest of 74%).
(h) Includes our interests in Argyle (100%) residual operations which
relates to the sale of previously mined inventory and Diavik.
(i) Simfer Jersey Limited, a company incorporated in Jersey, in which the
Group has a 53% interest, has an 85% interest in Simfer S.A., the company that
manages the Simandou project in Guinea. The Group therefore has a 45.05%
indirect interest in Simfer S.A. These entities are consolidated as
subsidiaries and together referred to as the Simandou iron ore project.
Notes to financial information by business unit (continued)
(j) Other operations include our 100% interest in the Gove alumina
refinery (under rehabilitation), Rio Tinto Marine, and the remaining legacy
liabilities of Rio Tinto Coal Australia. These include provisions for onerous
contracts, in relation to rail infrastructure capacity, partly offset by
financial assets and receivables relating to contingent royalties and disposal
proceeds.
(k) Capital expenditure is the net cash outflow on purchases less sales of
property, plant and equipment, capitalised evaluation costs and purchases less
sales of other intangible assets as derived from the Group cash flow
statement. The details provided include 100% of subsidiaries' capital
expenditure and Rio Tinto's share of the capital expenditure of joint
operations but exclude equity accounted units. We have adjusted the
comparatives for this change in definition.
(l) Operating assets of the Group represents equity attributable to Rio
Tinto adjusted for net debt. Operating assets of subsidiaries, joint
operations and the Group's share relating to equity accounted units are made
up of net assets adjusted for net debt and post-retirement assets and
liabilities, net of tax. Operating assets are stated after the deduction of
non-controlling interests; these are calculated by reference to the net assets
of the relevant companies (i.e., inclusive of such companies' debt and amounts
due to or from Rio Tinto Group companies).
Alternative performance measures
The Group presents certain alternative performance measures (APMs) which are
reconciled to directly comparable IFRS financial measures below. These APMs
are used by management to assess the performance of the business and provide
additional information, which investors may find useful. APMs are presented in
order to give further insight into the underlying business performance of the
Group's operations.
APMs are not consistently defined and calculated by all companies, including
those in the Group's industry. Accordingly, these measures used by the Group
may not be comparable with similarly titled measures and disclosures made by
other companies. Consequently, these APMs should not be regarded as a
substitute for the IFRS measures and should be considered supplementary to
those measures.
The following tables present the Group's key financial measures not defined
according to IFRS and a reconciliation between those APMs and their nearest
respective IFRS measures.
APMs derived from the income statement
The following income statement measures are used by the Group to provide
greater understanding of the underlying business performance of its operations
and to enhance comparability of reporting periods. They indicate the
underlying commercial and operating performance of our assets including
revenue generation, productivity and cost management.
Segmental revenue
Segmental revenue includes consolidated sales revenue plus the equivalent
sales revenue of equity accounted units in proportion to our equity interest
(after adjusting for sales to/from subsidiaries). The reconciliation can be
found in note 3.
Underlying EBITDA
Underlying EBITDA represents profit before taxation, net finance items,
depreciation and amortisation adjusted to exclude the EBITDA impact of items
that do not reflect the underlying performance of our reportable segments.
The reconciliation of profit after tax to underlying EBITDA can be found in
the segmental information note on page 46.
Alternative performance measures (continued)
Underlying EBITDA margin
Underlying EBITDA margin is defined as Group underlying EBITDA divided by the
aggregate of consolidated sales revenue and our share of equity account unit
sales after eliminations.
Six months ended 30 June 2022
2023 US$m
US$m
Underlying EBITDA 11,728 15,597
Consolidated sales revenue 26,667 29,775
Share of equity accounted unit sales and inter-subsidiary/equity accounted 1,515 1,539
unit sales eliminations
28,182 31,314
Underlying EBITDA margin 42 % 50 %
Pilbara underlying FOB EBITDA margin
The Pilbara underlying free on board (FOB) EBITDA margin is defined as Pilbara
underlying EBITDA divided by Pilbara segmental revenue, excluding freight
revenue.
Six months ended 30 June 2022
2023 US$m
US$m
Pilbara
Underlying EBITDA 9,541 10,119
Pilbara segmental revenue 14,705 15,517
Less: Freight revenue (913) (1,110)
Pilbara segmental revenue, excluding freight revenue 13,792 14,407
Pilbara underlying FOB EBITDA margin 69 % 70 %
Underlying EBITDA margin from Aluminium integrated operations
Underlying EBITDA margin from integrated operations is defined as underlying
EBITDA divided by segmental revenue.
Six months ended 30 June 2022
2023 US$m
US$m
Aluminium
Underlying EBITDA - integrated operations 1,217 2,941
Segmental revenue - integrated operations 5,801 7,162
Underlying EBITDA margin from integrated operations 21 % 41 %
Alternative performance measures (continued)
Underlying EBITDA margin (product group operations)
Underlying EBITDA margin (product group operations) is defined as underlying
EBITDA divided by segmental revenue.
Six months ended 30 June 2022
2023 US$m
US$m
Copper
Underlying EBITDA - product group operations 1,322 1,721
Segmental revenue - product group operations 3,085 3,189
Underlying EBITDA margin - product group operations 43 % 54 %
Six months ended 30 June 2022
2023 US$m
US$m
Minerals
Underlying EBITDA - product group operations 858 1,362
Segmental revenue - product group operations 2,883 3,394
Underlying EBITDA margin - product group operations 30 % 40 %
Underlying earnings
Underlying earnings represents net earnings attributable to the owners of Rio
Tinto, adjusted to exclude items that do not reflect the underlying
performance of the Group's operations.
Exclusions from underlying earnings are those gains and losses that,
individually or in aggregate with similar items, are of a nature and size to
require exclusion in order to provide additional insight into underlying
business performance.
The following items are excluded from net earnings in arriving at underlying
earnings in each period irrespective of materiality:
- Net gains/(losses) on disposal of interests in
subsidiaries.
- Impairment charges and reversals.
- Profit/(loss) after tax from discontinued operations.
- Exchange and derivative gains and losses. This exclusion
includes exchange gains/(losses) on external net debt and intragroup balances,
unrealised gains/(losses) on currency and interest rate derivatives not
qualifying for hedge accounting, unrealised gains/(losses) on certain
commodity derivatives not qualifying for hedge accounting, and unrealised
gains/(losses) on embedded derivatives not qualifying for hedge accounting.
- Adjustments to closure provisions where the adjustment is
associated to an impairment charge, for legacy sites where the disturbance or
environmental contamination relates to the pre-acquisition period.
In addition, there is a final judgmental category which includes, where
applicable, other credits and charges that, individually or in aggregate if of
a similar type, are of a nature or size to require exclusion in order to
provide additional insight into underlying business performance.
Alternative performance measures (continued)
Earnings and exclusions relating to equity accounted units are stated after
tax and included in the column "Pre-tax".
Reconciliation of net earnings to underlying earnings
Six months ended 30 June Pre-tax Taxation Non-controlling Net amount Net amount
2023 2023 interests 2023 2022
US$m US$m 2023 US$m US$m
US$m Restated((a))
Net earnings 6,930 (1,983) 170 5,117 8,943
Items excluded from underlying earnings
Impairment charges((b)) 1,175 (347) - 828 -
Foreign exchange and derivative (gains)/losses:
- Foreign exchange gains on external net debt and intragroup balances((c)) (104) 5 1 (98) (368)
- (Gains)/losses on currency and interest rate derivatives not qualifying (42) 16 2 (24) 154
for hedge accounting((d))
- Gains on embedded commodity derivatives not qualifying for hedge (101) 26 (1) (76) (1)
accounting((e))
Change in closure estimates (non-operating and fully impaired sites)((f)) (29) 2 - (27) 41
Gain recognised by Kitimat relating to LNG Canada's project((g)) - - - - (107)
Total excluded from underlying earnings 899 (298) 2 603 (281)
Underlying earnings 7,829 (2,281) 172 5,720 8,662
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
(b) Refer to note 5.
(c) Exchange gains on external net debt and intragroup balances included
post-tax foreign exchange losses on net debt of US$6 million offset by
post-tax gains of US$104 million on intragroup balances, primarily as a result
of the Australian dollar weakening against the US dollar. During the six
months ended 30 June 2022, exchange gains on external net debt and intragroup
balances included post-tax foreign exchange gains on intragroup balances of
US$508 million partially offset by post-tax losses of US$140 million on
external net debt/cash, primarily as a result of a weakening Australian dollar
against the US dollar during the period.
(d) Valuation changes on currency and interest rate derivatives, which are
ineligible for hedge accounting, other than those embedded in commercial
contracts, and the currency revaluation of embedded US dollar derivatives
contained in contracts held by entities whose functional currency is not the
US dollar.
(e) Valuation changes on derivatives, embedded in commercial contracts, that
are ineligible for hedge accounting, but for which there will be an offsetting
change in future Group earnings. Mark-to-market movements on commodity
derivatives entered into with the commercial objective of achieving spot
pricing for the underlying transaction at the date of settlement are included
in underlying earnings.
Alternative performance measures (continued)
(f) For the six months ended 30 June 2023, a post-tax credit of US$27
million arose from the change in discount rate applied to provisions for
close-down, restoration and environmental liabilities at legacy sites where
the environmental damage preceded ownership by Rio Tinto, from 1.5% to 2%. In
the six months ended 30 June 2022, a post-tax charge of US$41 million arose
from inflationary increases, to provisions for such liabilities, in excess of
discount amortisation.
(g) During the first half of 2022, LNG Canada elected to terminate their
option to purchase additional land and facilities for expansion of their
operations at Kitimat, Canada. The resulting gain was excluded from underlying
earnings consistent with prior periods as it was part of a series of
transactions that together were material.
Basic underlying earnings per share
Basic underlying earnings per share is calculated as underlying earnings
divided by the weighted average number of shares outstanding during the
period.
Six months ended 30 June 2022
2023 Restated((a))
Net earnings (US$ million) 5,117 8,943
Weighted average number of shares (millions) 1,621.0 1,619.3
Basic earnings per ordinary share (cents) 315.7 552.3
Items excluded from underlying earnings per share (cents)((b)) 37.2 (17.4)
Basic underlying earnings per ordinary share (cents) 352.9 534.9
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
(b) Calculation of items excluded from underlying earnings per share
2023 2022
Expense/(income) excluded from underlying earnings (refer to page 75) 603 (281)
Weighted average number of shares (millions) 1,621.0 1,619.3
Items excluded from underlying earnings per share (cents) 37.2 (17.4)
We have provided basic underlying earnings per share as this allows the
comparability of underlying financial performance adjusted to exclude items,
that do not reflect the underlying performance of the Group's operations.
Alternative performance measures (continued)
Interest cover
Interest cover is a financial metric used when managing our risk. It
represents the number of times finance income and finance costs (including
amounts capitalised) are covered by profit before taxation before finance
income, finance costs, share of profit after tax of equity accounted units and
items excluded from underlying earnings, plus dividends from equity accounted
units.
Six months ended 30 June 2022
2023 US$m
US$m
Profit before taxation 6,930 12,315
Add back
Finance income (245) (17)
Finance costs 536 55
Share of profit after tax of equity accounted units (431) (468)
Items excluded from underlying earnings 899 (271)
Add: Dividends from equity accounted units 287 633
Calculated earnings 7,976 12,247
Finance income 245 17
Finance costs (536) (55)
Add: Amounts capitalised (120) (208)
Total net finance costs before capitalisation (411) (246)
Interest cover 19 50
Payout ratio
The payout ratio is used by us to guide the dividend policy we implemented in
2016, under which we have sought to return 40-60% of underlying earnings, on
average through the cycle to shareholders as dividends. It is calculated as
total equity dividends per share to owners of Rio Tinto declared in respect of
the financial year divided by underlying earnings per share (as defined
above). Dividends declared usually include an interim dividend paid in the
year, and a final dividend paid after the end of the year. Any special
dividends declared in respect of the financial year are also included.
Six months ended 30 June 2022
2023 (cents)
(cents)
Interim dividend declared per share 177.0 267.0
Underlying earnings per share (comparative restated, refer to note 2) 352.9 534.9
Payout ratio 50 % 50 %
Alternative performance measures (continued)
APMs derived from cash flow statement
Capital expenditure
Capital expenditure includes the net sustaining and development expenditure on
property, plant and equipment and on intangible assets. This is equivalent to
"Purchases of property, plant and equipment and intangible assets" in the cash
flow statement less "Sales of property, plant and equipment and intangible
assets".
This measure is used to support management's objective of effective and
efficient capital allocation as we need to invest in existing assets in order
to maintain and improve productive capacity, and in new assets to grow the
business.
Rio Tinto share of capital investment
Rio Tinto's share of capital investment represents our economic investment in
capital projects. This measure was introduced in 2022 to better represent the
Group's share of funding for capital projects which are jointly funded with
other shareholders, and which may differ from the consolidated basis included
in the Capital expenditure APM. This better reflects our approach to capital
allocation.
The measure is based upon the Capital expenditure APM, adjusted to deduct
equity or shareholder loan financing provided to partially owned subsidiaries
by non-controlling interests in respect of major capital projects in the
period. In circumstances where the funding to be provided by non-controlling
interests is not received in the same period as the underlying capital
investment, this adjustment is applied in the period in which the underlying
capital investment is made, not when the funding is received. Where funding
which would otherwise be provided directly by shareholders is replaced with
project financing, an adjustment is also made to deduct the share of project
financing attributable to the non-controlling interest.This adjustment is not
made in cases where Rio Tinto has unilaterally guaranteed this project
financing. Lastly, funding contributed by the Group to Equity Accounted Units
for its share of investment in their major capital projects is added to the
measure. No adjustment is made to the Capital expenditure APM where capital
expenditure is funded from the operating cash flows of the subsidiary or
Equity Accounted Unit.
In the current and prior periods the Capital expenditure APM and Rio Tinto
share of capital investment are identical. However, the capital guidance on
page 4 has been provided on this new basis and a reconciliation of the measure
will be published in future periods when the two measures differ.
Alternative performance measures (continued)
Free cash flow
Free cash flow is defined as net cash generated from operating activities
minus purchases of property, plant and equipment and intangibles and payments
of lease principal, plus proceeds from the sale of property, plant and
equipment and intangible assets.
This measures the net cash returned by the business after the expenditure of
sustaining and development capital. This cash can be used for shareholder
returns, reducing debt and other investing/financing activities.
Six months ended 30 June 2022
2023 US$m
US$m
Net cash generated from operating activities 6,975 10,474
Less: Purchase of property, plant and equipment and intangible assets (3,001) (3,146)
Less: Lease principal payments (213) (183)
Add: Sales of property, plant and equipment and intangible assets 8 1
Free cash flow 3,769 7,146
APMs derived from the balance sheet
Net debt
Net debt is total borrowings plus lease liabilities less cash and cash
equivalents and other liquid investments, adjusted for derivatives related to
net debt.
Net debt measures how we are managing our balance sheet and capital structure.
Financing liabilities Other assets
Six months ended 30 June 2023 Borrowings Lease liabilities((b)) Net debt related derivatives((c)) Cash and cash equivalents including overdrafts((a)) Other investments((d)) Net debt
US$m
excluding overdrafts((a)) US$m US$m US$m US$m
US$m
Analysis of changes in net debt
Opening balance (11,070) (1,200) (690) 6,774 1,998 (4,188)
Foreign exchange adjustment (48) (1) 45 (59) - (63)
Cash movements excluding exchange movements (1,586) 213 - 2,459 (801) 285
Other non-cash movements (140) (241) (19) - 16 (384)
Closing balance (12,844) (1,229) (664) 9,174 1,213 (4,350)
(a) Borrowings excluding overdrafts, of US$12,844 million (31 December
2022:US$11,070 million) differs from Borrowings on the balance sheet as it
excludes bank overdrafts of US$5 million (31 December 2022: US$1 million)
which has been included in cash and cash equivalents for the net debt
reconciliation.
(b) Other non-cash movements in lease liabilities include the net impact of
additions, modifications and terminations during the period.
Alternative performance measures (continued)
(c) Included within "Net debt related derivatives" are interest rate and
cross currency interest rate swaps that are in hedge relationships with the
Group's debt.
(d) Other investments comprise highly liquid financial assets held in
managed investment funds classified as held for trading.
Net gearing ratio
Net gearing ratio is defined as net debt divided by the sum of net debt and
total equity at the end of each period. It demonstrates the degree to which
the Group's operations are funded by debt versus equity.
30 June 2023 31 December 2022
US$m US$m
Net debt (4,350) (4,188)
Net debt (4,350) (4,188)
Total equity (comparative restated, refer to note 2) (53,357) (52,741)
Net debt plus total equity (57,707) (56,929)
Net gearing ratio 8% 7%
Alternative performance measures (continued)
Underlying return on capital employed
Underlying return on capital employed ("ROCE") is defined as underlying
earnings excluding net interest divided by average capital employed (operating
assets).
Underlying ROCE measures how efficiently we generate profits from investment
in our portfolio of assets.
30 June 2023 30 June 2022
US$m US$m
Restated((a))
Profit after tax attributable to owners of Rio Tinto (net earnings) 5,117 8,943
Items added back to derive underlying earnings (refer to page 75) 603 (281)
Underlying earnings 5,720 8,662
Add/(deduct):
Finance income per the income statement (245) (17)
Finance costs per the income statement 536 55
Tax on finance cost (191) (120)
Non-controlling interest share of net finance costs (207) (40)
Net interest cost in equity accounted units (Rio Tinto share) 26 17
Net interest (81) (105)
Adjusted underlying earnings 5,639 8,557
Annualised adjusted underlying earnings 11,278 17,114
Equity attributable to owners of Rio Tinto - beginning of the period 50,634 51,930
(restated, refer to note 2)
Net debt/(cash) - beginning of the period 4,188 (1,576)
Operating assets - beginning of the period 54,822 50,354
Equity attributable to owners of Rio Tinto - end of the period 51,625 51,087
(restated, refer to note 2)
Net debt/(cash) - end of the period 4,350 (291)
Operating assets - end of the period 55,975 50,796
Average operating assets 55,399 50,575
Underlying return on capital employed 20 % 34 %
(a) Comparative information has been restated to reflect the adoption of
narrow scope amendments to IAS12 'Income Taxes', refer to note 2 for details.
Metal prices and exchange rates
Six months to 30 June 2023 Six months to 30 June 2022 Increase/ (Decrease) Year to 31 December 2022
Metal prices - average for the period
Copper - US cents/lb 396 442 (10) % 398
Aluminium - US$/tonne 2,329 3,082 (24) % 2,703
Gold - US$/troy oz 1,932 1,874 3 % 1,800
Six month average to 30 June At 30 June
Exchange rates against the US dollar 2023 2022 Increase/ (Decrease) 2023 2022 Increase/ (Decrease) At 31 December 2022
Pound sterling 1.23 1.30 (5) % 1.26 1.21 4 % 1.21
Australian dollar 0.68 0.72 (6) % 0.66 0.69 (4) % 0.68
Canadian dollar 0.74 0.79 (6) % 0.75 0.78 (4) % 0.74
Euro 1.08 1.09 (1) % 1.09 1.05 4 % 1.07
South African rand 0.055 0.065 (15) % 0.053 0.062 (15) % 0.059
Forward-looking statements
This report includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical facts included in this report, 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) and for future total cash
returns to shareholders, are forward-looking statements. The words "aim",
"anticipate", "estimate", "plan", "believes", "expects", "may", "should",
"will", "target", "set to", "continue" or similar expressions, commonly
identify such 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, particularly in light of the current economic
climate and the significant volatility, uncertainty and disruption arising in
connection with the Ukraine conflict. 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, but are not limited to: an inability to
live up to Rio Tinto's values and any resultant damage to its reputation; the
impacts of geopolitics on trade and investment; the impacts of climate change
and the transition to a low-carbon future; an inability to successfully
execute and/or realise value from acquisitions and divestments; the level of
new ore resources, including the results of exploration programmes and/or
acquisitions; disruption to strategic partnerships that play a material role
in delivering growth, production, cash or market positioning; damage to Rio
Tinto's relationships with communities and governments; an inability to
attract and retain requisite skilled people; declines in commodity prices and
adverse exchange rate movements; the impacts of inflation; an inability to
raise sufficient funds for capital investment; inadequate estimates of ore
resources and reserves; delays or overruns of large and complex projects;
changes in tax regulation; safety incidents or major hazard events; cyber
breaches; physical impacts from climate change; the impacts of water scarcity;
natural disasters; an inability to successfully manage the closure,
reclamation and rehabilitation of sites; the impacts of civil unrest; the
impacts of the Ukraine conflict; breaches of Rio Tinto's policies, standard
and procedures, laws or regulations; trade tensions between the world's major
economies; potential further Russian sanctions; increasing societal and
investor expectations, in particular with regard to environmental, social and
governance considerations; the impacts of technological advancements; and such
other risks identified in Rio Tinto's most recent Annual Report and accounts
in Australia and the United Kingdom and the most recent Annual Report on Form
20-F filed with the United States Securities and Exchange Commission (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
report. Rio Tinto expressly disclaims any obligation or undertaking (except as
required by applicable law, the UK Listing Rules, the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority and the Listing Rules of
the Australian Securities Exchange) to release publicly any updates or
revisions to any forward-looking statement contained herein to reflect any
change in Rio Tinto's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
Nothing in this report 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. Past performance cannot be relied
on as a guide to future performance.
Contacts Please direct all enquiries to media.enquiries@riotinto.com
Media Relations, UK Media Relations, Australia
Matthew Klar Matt Chambers
M+ 44 7796 630 637 M +61 433 525 739
David Outhwaite Jesse Riseborough
M +44 7787 597 493 M +61 436 653 412
Alyesha Anderson
M +61 434 868 118
Media Relations, Americas Investor Relations, Australia
Simon Letendre Tom Gallop
M +1 514 796 4973
M +61 439 353 948
Malika Cherry
Amar Jambaa
M +1 418 592 7293
M +61 472 865 948
Investor Relations, UK
Menno Sanderse
M: +44 7825 195 178
David Ovington
M +44 7920 010 978
Laura Brooks
M +44 7826 942 797
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 43, 120 Collins Street
London SW1Y 4AD
United Kingdom Melbourne 3000
T +44 20 7781 2000 Australia
Registered in England
No. 719885
T +61 3 9283 3333
Registered in Australia
ABN 96 004 458 404
riotinto.com
This announcement is authorised for release to the market by Rio Tinto's Group
Company Secretary.
LEI: 213800YOEO5OQ72G2R82
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