continuing to grow the pilbara powerhouse
DESCRIPTION
Greg Lilleyman, President Pilbara Operations, from Rio Tinto has presented at the Global Iron Ore & Steel Forecast Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsyTRANSCRIPT
Building on success - growing the Pilbara Greg Lilleyman – President, Pilbara Operations
Guideline
• Rio Tinto, in context
• The Pilbara integrated operations
• Rio Tinto’s major customers: some historical perspective
• Strong demand, uncertain industry supply
• Rio Tinto’s expansion: seeing is believing
• Rio Tinto’s Mine of the Future TM
• Summary
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Key
Mines and mining projects
Smelters, refineries, power facilities and processing plants remote from mine
Africa
Europe
South America
North America
Australasia
Asia
Aluminium Copper Diamonds Energy Iron ore Minerals
Rio Tinto – a global business
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Rio Tinto Iron Ore – Pilbara Operations
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5
Old friends – dealing with regional partners in a broad based market
Business history: strong growth of Rio Tinto Iron Ore China business for 40 years
“No other company has exported anywhere near this amount of iron ore to China and it took 38 years for us to do so.”
Sam Walsh - On the shipment of the 1 billionth tonne
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The fundamental drivers of Chinese steel demand will remain strong
0.2
0.1 0
2040 2030 2020 2010
1.1 1.0
0.9 0.8 0.7 0.6
0.5 0.4 0.3
433 613 677 671
Bt/a
Chinese steel demand will grow strongly
SOURCE: RTIO Industry Analysis
3% 1%
XX% CAGR
Economic growth
Political focus will remain on GDP and income growth as the newly elected government looks to consolidate power and to maintain social stability by delivering economic development and ongoing increases in living standards Urbanisation Urbanisation growth will continue to be strong through to 2030
Infrastructure/construction
There is still significant infrastructure investment planned and required as well as increasing rebuild investment
Transition to consumption demand
The government will continue to transition the economy to consumption based growth, with considerable flow-on demand effects for steel (as construction and infrastructure growth declines)
1
2
3
4
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Industrial - Export
Industrial - Domestic
Construction
xx Kg/capita steel intensity
Despite near-term volatility, the fundamental drivers of Chinese steel demand growth remain strong
There continues to be significant constraint to the development of new iron ore supply
0 200 400 600 800
1000
Announced for 2008-10 Completed by Q4 2010
Certain Probable Possible Rio Tinto Other
Announced and completed iron ore production capacity (global) (million tonnes)
• Announcements do not necessarily translate to supply capacity − Competition for labour with oil/ gas − Reduced sources of project financing − Protracted approvals processes − Shortage of specialist mining skills − Difficulty working in remote locations
• High cost Chinese domestic supply required to meet demand in the short to medium term
Source: UNCTAD, Rio Tinto analysis
0
200
400
600
800
1000
Announced for 2012-14 Completed by Q3 2012
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We focus on delivering value through productivity and system optimisation …
Pilbara production (Mt/qtr) • New nameplate capacity at 237Mt/
a − Operations Centre assists deep
system visibility, significantly advancing performance
− Q3 2012 a record production quarter – 62.9Mt, a 5.2% increase on Q3 2011
− Shipping remains strong − Closing in on the rail bottleneck
• Continue to progress improvement initiatives to provide further capacity creep
0
10
20
30
40
50
60
70
Q1 Q2 Q3 Q4
2010 2011 2012 Installed Capacity
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… challenging expansion optionality …
Note: Timing refers to first production
Yandicoogina
2012 2013 2014 2015
BS4 (II)
Sustaining
Growth
Warramboo
WA -Dep E Legend • Not yet approved • Underway • Deleted
HD4
Marandoo
WTS (II)
WA- Dep B
WTS (I) Nammuldi
BS4 (III)
Silvergrass
Koodaideri (I) $1bn
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… and maintaining major project time-lines
Rio Tinto Pilbara iron ore shipping capacity (100% basis) (Mt/a)
200
220
240
260
280
300
320
340
360
380
2010 2011 2012 2013 2014 2015 2016 2017
Aver
age
Ann
ualis
ed
Mtp
a 290 First Ore
3Q
4Q
1H
340 First Ore
360 First Ore
We have demonstrated superior performance in delivering projects
30
20
10
10
20
30
40
0%
50%
100%
150%
200%
250%
Budget Additional months
Western Australian construction projects performance (Cost (% of budget))
Source: Pit Crew Management Consulting Services
RTIO projects Non RTIO projects
Over budget behind schedule
Under budget ahead of schedule
Mon
ths
over
bu
dget
New Cape Lambert stockpile yards
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Cape Lambert Expansion
Delivering reality …
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Cape Lambert Expansion Cape Lambert Expansion
Ship Loader Car Dumper
Our Mine of the FutureTM is turning competitive advantage into real business value
• Technology and automation will continue to drive business success
• Improving sophistication of real time data and progressive cultural change are keys to success
• Substantial benefits will accrue − Cost savings – eg recruiting 900
fewer people − Managing increasing business
complexity − Anticipating problem areas
• Phase II of our Operations Centre will unlock further value across our network
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Autonomous Haul Trucks
• 10 trucks at Yandi in a fully autonomous pit
• 26 trucks are planned at Nammuldi, with 5 trucks currently operational and 5 more to be delivered over the coming weeks
• 19 trucks are planned for Hope Downs 4, with 3 currently being assembled
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• AutoHaul™ is an investment of US$518 million to introduce autonomous train operations across our integrated Pilbara rail network
• It is the first long-distance heavy-haul system of its kind in the world and will place us at the forefront of technological advances
• Is a key component of our expansion to 360Mtpa in the Pilbara
• First phase, Driver Assist, is nearing completion and significant engineering works are complete
• Full implementation is planned for 2015
• Our Pilbara Operations are part of a truly global mining business
• Running it efficiently, while expanding within time and cost constraints, is how Rio Tinto creates value
• We have a long, strong history with China and Japan
• These mutually beneficial relationship will continue into the future
• As we deliver expansions to meet future needs of our customers
In summary …
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