Future developments and

supply challenges for the

iron ore sector

Eric Finlayson
Head of Exploration

Commodities Week – London 5 October 2010

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Commodities Week - London 5 October 2010 1

 Rio Tinto – a world leader in mining

Aluminium Copper Diamonds & Minerals

#1 in bauxite #5 in copper #1 in titanium dioxide, talc
#2 in aluminium #7 in molybdenum and seaborne salt

#2 in alumina #13 in gold #2 in borates

#4 in diamonds

Energy Iron Ore

#3 in uranium #2 in seaborne iron ore
#5 in export coking coal
#8 in export thermal coal
Commodities Week - London 5 October 2010 2
Source: 2009 Rio Tinto compilation
 Global demand for minerals
Historical CAGR in demand has been ~ 3.5%

45
40 Aluminium Drivers of global demand growth
World Production (Mt)

35
30
• Increasing population
25
20
• Industrialisation of production
15 • Urbanisation of society
10
5
0

180 2500
160 Copper Iron Ore
World Production (Mt)

World Production (Mt)

140 2000

120
1500
100
80
1000
60
40 500
20
0 0

Commodities Week - London 5 October 2010 3

Source: US Geological Survey
 Demand is being driven by China - trend in
seaborne iron ore trade

2009
Total = 905 Mt
Rest
2000 of
Western World
Total = 448 Mt Europe 5%
9%
Rest of
China
World
16% Japan,
13%
Korea &
Western
Japan, Taiwan
Europe
Korea & 18%
30%
Taiwan China
41% 68%

Sources: Clarkson Research Services Commodities Week - London 5 October 2010 4

The Chinese UPLA urban planning network, http://www.upla.cn
 Demand is forcing supply from the high end of
the cost curve

• Over the past 6 years, the main 250

Hamersley Fines to Japan
iron ore exporting countries have
struggled to keep pace with
200
demand
• This has forced high-cost

Cents/DLTU (fob)
domestic Chinese production 150

• Chinese production costs

support high spot and contract
100
prices

50

0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Commodities Week - London 5 October 2010 5
Source: CRU Iron Ore Market Service 2010
 No threat of depletion for iron ore

Iron grade-tonnage curve

Deposits of current economic interest

© Allison Pluda

• Low-grade deposits are common while high-grade deposits are rare

• Technology or incentive price will allow progressive reduction in mineable grades out into the future

Commodities Week - London 5 October 2010 6

 Deposits of current economic interest
150

140 Direct shipping

130
Beneficiation plays
120

Low grade BIF

Cumulative Tonnes Fe (billion)

110

100

90

80

70

60

50

40

30

20

10

0
0 10 20 30 40 50 60 70 80

Grade Fe%
Commodities Week - London 5 October 2010 7
Source: Rio Tinto team analysis
 Global iron ore production normalised for Fe
content

CIS
2.1% Canada 11.1%

1.7% USA

China
14.7%

India
16.2%

Other 8.0% Brazil

18.9%

Australia
3.5% South Africa 24.8%

Commodities Week - London 5 October 2010 8

Source: UNCTAD
 Global iron ore exports

Sweden 1.6%
CIS
3.1% Canada 3.1%

Mauritania 1.1%
India
12.0%

Other 4.9% Brazil

28.5%

4.7% South Africa Australia

41.0%

Commodities Week - London 5 October 2010 9

Source: CRU Iron Ore Market Service 2010
 Our iron ore business has grown to meet demand
Rio Tinto Pilbara iron ore production (100% basis)

Hope Downs
Nammuldi
200
200
Eastern Range
West Angelas
Marandoo
Million Tonnes/year

160
150 Brockman Yandicoogina

120 Channar
100 35 Years 7 Years
Paraburdoo
80

Tom Price
50 Actual production
40 North Ltd
acquisition

00
1966 19691970
1972 1975 1978 1980
1981 1984 1990 1993
1987 1990 1996 1999 2000
2002 2008
2005 2008

1966 1985 2007

Initial infrastructure investment at Tom Price has created a Pilbara iron ore province
Commodities Week - London 5 October 2010 10
 We have continued to grow our resource base to
sustain supply
Rio Tinto Pilbara iron ore reserves* Rio Tinto Pilbara iron ore resources**

3000 16000
14000
2500 R 7%
R 5% 12000 CAG
CAG
2000
10000
1500 8000
6000
1000
4000
500
2000
0 0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009
• Exploration continues to expand the Pilbara resource base
• Over 2.8 million metres have been drilled since 2001 to convert resources into recoverable
reserves
• 400,000 metres of drilling is forecast each year from 2010 to 2014
• A large resource base provides options for future growth

*Reported on a 100% basis. 2000-2009 Reserve increase 1033 Mt, CAGR 4.7%;
** Reported on a 100% basis. 2000 -2008 Resource increase 6,906 Mt, CAGR 6.8%.

Commodities Week - London 5 October 2010 11

Source: 2000 to 2009 Rio Tinto annual reports
 Technology for safer and more efficient open-pits

Advanced robotics and remote operations drive the

Mine of the FutureTM

Autonomous drilling Smart charging Autonomous haulage Autonomous trains

Perth
Commodities Remote
Week Operations
- London Centre
5 October 2010 12
Technology for improved process efficiency

• Linking ore body knowledge with

innovative processing technology
permits optimal resource exploitation
• Through the Mine-of-the-Futuretm
programme, Rio Tinto is pursuing a
number of step-change upgrading
technologies for iron ore
• Upgrading will permit the brownfield
exploitation of lower grade deposits

200 µm

0P Goethite
(P < 0.2%)
1P Goethite
(0.2 – 0.7%)
2P Goethite
(0.7 – 1.5%)
3P Goethite
(> 1.5%) Hematite

Commodities Week - London 5 October 2010 13

A fully integrated supply chain

• Provision of infrastructure is a major consideration for all iron ore development projects
• Rio Tinto infrastructure is increasingly supported by a dedicated fleet operated by Rio Tinto
Marine. In 2009, Rio Tinto Iron Ore sold 115Mt CFR ex-Pilbara
• A fully integrated supply chain optimises scheduling and shore-based capital efficiency by
minimising berthing gaps and vessel queues

Commodities Week - London 5 October 2010 14

Greenfield exploration – the trade-off between
discovery potential and country risk
Iron ore exploration in DRC
IHS Global Insight
Country Risk Ratings
Rank Country Current
Overall Risk
1 Sweden 1.33
2 Canada / Singapore 1.40

9 Australia 1.50
25 Chile 1.80
71 South Africa 2.37
86 Brazil 2.66
89 India 2.73
105 Russia 2.97
199 Guinea 4.30

203 Democratic Republic of Congo 4.46

204 Somalia 4.80

Commodities Week - London 5 October 2010 15

VK1 – a step-change in exploration technology

• Rio Tinto is collaborating with UWA to

develop the next-generation airborne
gravity gradiometer (AGG)

• The technical objective is to deliver a

reliable AGG with a resolution of 1 Eö/√Hz

• The key inventions are protected by many

patent families

• Initial test flights completed over the VK1 Host platform

Kauring test site in Western Australia in in aircraft
the past month
30 Eö/√Hz noise 8 Eö/√Hz noise 1 Eö/√Hz noise
• Production flying 2012 – with external
interest from the mining, petroleum and
defence sectors

Marra Mamba BIF Model

Commodities Week - London 5 October 2010 16

 Climate change – a major industry challenge

• We see a carbon-constrained future framed by the context of global warming

• We see structurally higher energy prices
• Competitive advantage will accrue to companies with ‘low-carbon’ ore-bodies

Commodities Week - London 5 October 2010 17

Source: transformationallogistics.wordpress.com
Conclusions

• Global demand for the major industrial commodities has doubled roughly every
twenty years. This demand growth is likely to continue.
• Global reserves and resources for these commodities are replaced as fast as they
are mined. Peak metal is not on the horizon.
• Low-cost iron ore production is dominated by high-grade deposits in Australia,
Brazil and India. This is unlikely to change anytime soon.
• Step-change innovation in mining and processing technology will extend the
productive lives of the high-grade iron ore mining districts by converting lower-
grade mineralisation to ore. Greenfield beneficiation plays will struggle to
compete.
• Greenfield exploration in frontier countries offers the promise of rich new high-
grade discoveries. However, the capacity of these countries to support major
production may be undermined by sovereign risk factors.
• Quality of resource is an important criterion for a major mining company like Rio
Tinto. “Low-carbon” ore bodies will become increasingly important as we move
towards a carbon-constrained world.

Commodities Week - London 5 October 2010 18