Coking coal and iron ore by zry67523

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									  Rio Tinto: Resourcing
Tomorrow’s Iron Ore Needs

             Ian Bauert
Managing Director – Sales & Marketing
         Rio Tinto Iron Ore


         MB China Iron Ore 2007
             Beijing, China
             24 April 2007
There has been a step change in global steel production

                                                    Global Crude Steel Production
                1400


                1200


                1000                                             Energy shocks in “post
                                                                  industrialised” period
 Million Tons




                 800          “Golden age” of post war
                                 reconstruction and                                         Rapidly rising steel
                                high economic growth                                          consumption
                 600
                                                                                              in emerging
                                                                                               economies
                 400


                 200


                   0
                       1950              1960            1970        1980            1990    2000


                          Source: IISI
World steel consumption per capita is accelerating in a new
growth phase
                               World Steel Consumption and GDP Per Capita, 1950-2005
                  150
                         Post-war expansion to
                  140
                         1970 led to predictions
                  130    of never-ending growth

                  120
                                                                                                    China take-off
      kg/capita




                  110

                  100                          Two oil price shocks and
                                               subsequent recessions led to            Asian Crisis
                   90                          massive lightweighting of
                                               steel-containing products Collapse of USSR led to steel
                   80
                                                                         consumption collapse in
                   70                                                    Eastern Europe

                   60
                    2000        2500      3000       3500       4000      4500        5000   5500        6000        6500
                                                            US$/Capita (Real 1995$)

                  Source: Macquarie Research, September 2006
China has been the major driver of growth

                                       CRUDE STEEL PRODUCTION


                     800.0

                     700.0

                     600.0

                     500.0
    Million tonnes




                     400.0

                     300.0

                     200.0

                     100.0

                       0.0



                      19 8




                      20 3
                      19 8




                      19 2
                      19 3




                      20 9
                      20 0




                      20 4
                      19 2
                      19 3




                      20 5
                         06
                      19 4
                      19 5
                      19 6
                      19 7


                      19 9




                      20 1
                      20 2
                      19 0
                      19 1



                      19 4
                      19 5
                      19 6
                      19 7
                      19 0
                      19 1




                         9




                         0
                         0
                         8
                         8




                         8




                         9
                         8




                         9




                         9
                         8




                         8




                         9



                         9



                         0
                         0
                         0



                         0
                         8




                         8
                         8




                         9
                         9




                         9
                         9
                         8
                      19




                             EC12   JAPAN   CHINA    KOREA      TAIWAN   TOTAL



               Source: IISI
Strong growth in Chinese iron ore import demand is forecast
to continue
             600
                          CRU

                          Citigroup
             500
                          CSFB

                          Morgan Stanley
             400
                          Macquarie
        Mt




                          Merrill Lynch
             300



             200



             100



               0
                   2000   2001      2002   2003   2004   2005   2006   2007   2008   2009   2010
      Source: CRU, Broker reports
China has had a significant impact in all commodities, not just iron ore

                                              China's Share of World Usage
                      50%

                      45%

                      40%              Copper
                      35%              Aluminium
                                       Zinc
                      30%              Nickel
         % of total




                                       Steel
                      25%              Iron Ore (Trade)

                      20%

                      15%

                      10%

                      5%

                      0%
                        1950   1955   1960   1965   1970   1975   1980   1985   1990   1995   2000   2005   2010

        Source: WBMS, Macquarie Research, October 2005
India in its own way increasingly looks like following the well
trodden path of steel intensive development


                                                 S. Korea (980kg)
                                                                          Taiwan (792kg)



                                                                                           Japan (620kg)
                                                                                                           EU (366kg),
Steel intensity (kg/capita)




                                                                                                           US (373kg)
                                China (280Kg)


                                                FSU (109kg)




                              India (40kg)




                                                                    GDP per capita
Rapid demand growth is straining the supply chain

 •   Some examples:

     – Longer equipment delivery times

     – Capital cost pressures

     – Escalating freight rates
  Acute shortages are constraining the supply side
                                 Year 1   Year 2   Year 3           Year 4

             Grinding mills

            Draglines

             Barges
Current
delivery time Locomotives
             Power generators
             Wagons
             Rope Shovels
Normal
              Reclaimers
delivery time
              Tyres

             Large haul trucks
             Crushers

            Ship loaders                                    Source: Rio Tinto estimates
        Capital costs remain under pressure
           Typical breakdown of capital project
            costs in Western Australia in 2006

                                                    Cost increase from 2003 to 2006

                                                     Equipment        +41%

                                                     Materials        +53%

                                                     Labour           +48%

                                                     Engineering      +29%
                                                     /indirect



Source data: Rio Tinto estimates/ Contractor data
 Bulk freight rates are approaching historical highs
$50
                                                                      China Spot Rates

$45


$40


$35


$30


$25


$20


$15


$10


 $5


 $0
  Jan-04   Mar-04   Jun-04    Sep-04          Dec-04         Feb-05    May-05          Aug-05         Nov-05        Jan-06   Apr-06        Jul-06        Oct-06   Dec-06   Mar-07


                             Brazil to Beilun/Baoshan spot rate                 India to Beilun/Baoshan spot rate             WA to Beilun/Baoshan spot rate
         Australian ore into China is extremely attractive both in terms of cost
         and delivery cycles
                                                     Chinese CFR Iron Ore Prices
        100




        90




        80
US$/t




        70




        60




        50




        40
         Jul-05    Oct-05               Jan-06                   Apr-06        Jul-06      Oct-06              Jan-07   Apr-07

                            Brazilian CFR price to China - $/t            Indian CFR WMT        Australian CFR $/t
 Experience in other markets suggests Australian ore can account for
 a much higher percentage of imports in China
               Japan                           Korea




                            China




Source: GTIS, 2006 data
Rio Tinto is a large diversified mining group with global assets


                 Diamonds
                                                      Aluminium

  Zinc, silver Talc Coal
                                                 TiO2 / Iron
  and gold
                                                 Iron Ore      Talc       Talc
                                         Talc
      Gold           Coal
                              Nickel
   Borates           Copper                          Aluminium
                                                                                                          TiO2
    Copper /
      Gold /
     Silver /                                                                                                         Copper / Gold
Molybdenum                                            Iron ore


                       Copper                                                                       Uranium
                                                               Diamonds                                                 Bauxite
                Iron ore                                                                         Diamonds
                                                                                                 Salt                  Coal
                      Copper                                   Uranium                     Iron ore            Coal    Alumina
                                                                                    TiO2
                                                                 Copper                        Talc                    Aluminium
                                                                                             HIsmelt                  Coal
                            Potash                                                                    Copper/gold
                                                                             TiO2                        Aluminium

Feasibility & development                                                                                              Aluminium

Existing operation
                                       Borates
RTIO has a broad customer portfolio with China as our
largest market
                Rio Tinto Sales by Market 2006
                                                               • Total RTIO sales were
                             North America,                      167 million tonnes in 2006,
                                   3%                            up 5% on 2005.
     Other Asia, 13%
                                                  Japan, 32%   • RTIO supplies all major
                                                                 markets.
 Europe, 8%

                                                               • China is RTIO’s largest
                                                                 export market, followed by
                                                                 Japan.


                     China, 44%

   Note: Includes 100% of Joint Venture tonnage
RTIO has been a partner with China for 35 years
RTIO continues to grow in response to rising Chinese iron ore demand,
doubling Pilbara capacity to 220Mtpa over the 2002-2009 period

         Rio Tinto Iron Ore Production*

              250
                              Hamersley                 Robe
                              Hope Downs                IOC (Canada)
              200


              150


              100


                50


                 0
                       99      00     01      02   03   04     05   06    Port Expansions
                                                                         Dampier Cape
                                                                         Phase II Lambert
 * Total Production from Hamersley, Robe and IOC
 Including joint ventures on a 100% basis
Since 2003 RTIO has invested nearly US$5bn in its Pilbara
operations, equivalent to all our earnings during this period

                               Major commitments for
                               each year:                                                      Cape Lambert
                                                                                               Upgrade
                        5000                                                           Hope
                                                                   Dampier Port B,     Downs
                                                                   Yandi 52Mtpa &
                        4000                                         Brownfields
                                                                     expansions
    Cumulative, $US m




                        3000                                         Rail
                                                                  expansion
                                                  Dampier Port A,
                                                  Yandi 36Mtpa &
                        2000                    West Angelas 25Mtpa                              Recently completed projects

                                         Eastern Range &
                                                                                                 Projects in progress
                        1000             Yandi 24Mtpa                                            New commitments
                                 West
                               Angelas

                           0
                               2000      2001     2002     2003       2004      2005      2006        2007
                        *On a 100% commitment basis
   Iron Ore accounted for nearly half Rio Tinto’s capital spending
   in 2006

5000
          Group capital spending ($ million)                                       Copper
                                                                                    16%


4000
                                                             Industrial
                                                              minerals                      Iron ore
                                                                9%                            49%
3000
                                                        Diamonds
                                                           6%

2000                                                     Aluminium
                                                            6%


                                                                          Energy
1000
                                                                           14%

                                                        Capital spending by product group in 2006

  0
   1999   2000   2001   2002   2003   2004     2005   2006          2007
    RTIO is now planning for a significant lift beyond 220 Mtpa
    in the Pilbara

                                            Location                      Reserves (Mt)*       Resources (Mt)*
•    Continued market growth supports the
     need for further expansion             Pilbara                             2,580                 11,590

•    We have a solid platform for further   Canada                              416                   1,371
     growth:
                                            Brazil                              214                    429
      –   Extensive resource base           * Reserves are SEC and JORC compliant, resources are
                                            JORC compliant. Reported in 2006 Rio Tinto annual
                                            report, includes 100% of joint ventures.
      –   Unrivalled infrastructure

      –   Various development options                                     RTIO Drilled metres
                                                            500
                                                            400
      –   Strong customer portfolio
                                             metre ('000)



                                                            300

                                                            200
                                                            100
                                                              0
                                                                  2001   2002    2003   2004   2005     2006    2007
                                                                                                               target
RTIO has extensive resources located in proximity to world class infrastructure
                                                    Hamersley Iron                  RTE

                                                           EL Pending                      EL Pending


                                                           Live Tenement                   Live Tenement


                                                           HI/Rhodes Ridge
                                                           Joint Venture Tenement


                                                    State Agreement                 ROBE RIVER

                                                           ML265SA -                       EL Pending
                                                           Channar Joint Venture

                                                                                           Live Tenement
                                                           M272SA

                                                                                           State Agreement
                                                           M274SA
                                                                                           ML248SA

                                                           ML246SA


                                                           ML4SA
                                                                                    Hamersley/Hope Dow ns JV
                                                           ML252SA
                                                                                           Tenement

                                                                                           State Agreement
                                                                                           M282SA
RTIO is vigorously pursuing our global development opportunities




                          IOC

                                             Orissa
                                Simandou


                      Corumba
                                            Hamersley
                                            Robe

   Markets supplied                         HIsmelt
   Operations
   Projects
    RTIO: Creating a truly global iron ore business




      HIsmelt                                     Iron Ore Company of Canada




                    Pilbara – Western Australia
Simandou - Guinea                                      Corumba - Brasil
    RTIO: Resourcing Tomorrow’s Iron Ore Needs

•    Strong underlying market demand to continue

•    RTIO achieved record production in 2006 and will continue to grow strongly

•    World class assets and a substantial resource base

•    Earnings being ploughed back into the business

•    Expansion to 220Mtpa in Pilbara to be completed by 2009

•    Planning for a significant lift in capacity beyond 220Mtpa in the Pilbara

•    Global development opportunities being vigorously pursued

								
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