21 February 2024
Production growth of 3% from focused investment in the health
of our business; underlying EBITDA of $23.9 billion and full year
ordinary dividend of 435 US cents per share
•
Underlying EBITDA of $23.9 billion. Net
cash generated from operating activities of $15.2
billion.
• Profit
after tax attributable to owners of Rio Tinto (referred to as "net
earnings" throughout this release) of $10.1
billion, after $0.7 billion of net
impairment charges, mainly relating to our
Australian alumina refineries.
•
Underlying earnings of $11.8 billion,
leading to a full year ordinary dividend of $7.1
billion, a 60% payout.
At year end
|
2023
|
2022
|
Change
|
Net cash generated from operating
activities (US$ millions)
|
15,160
|
16,134
|
(6) %
|
Purchases of property, plant and
equipment and intangible assets (US$ millions)
|
7,086
|
6,750
|
5 %
|
Free cash flow¹ (US$
millions)
|
7,657
|
9,010
|
(15) %
|
Consolidated sales revenue (US$
millions)
|
54,041
|
55,554
|
(3) %
|
Underlying EBITDA¹ (US$
millions)
|
23,892
|
26,272
|
(9) %
|
Profit after tax attributable to
owners of Rio Tinto (net earnings)² (US$ millions)
|
10,058
|
12,392
|
(19) %
|
Underlying earnings per share
(EPS)¹, ² (US cents)
|
725.0
|
824.7
|
(12) %
|
Ordinary dividend per share (US
cents)
|
435.0
|
492.0
|
(12) %
|
Underlying return on capital
employed (ROCE)¹, ²
|
20%
|
25%
|
|
Net debt¹ (US$
millions)
|
4,231
|
4,188
|
1 %
|
Rio Tinto Chief Executive Jakob
Stausholm said: "The tragic loss of our four Diavik colleagues and
two airline crew members in a plane crash last month is a
devastating reminder of why safety is and must always be our top
priority. We continue to work closely with the authorities to
support their efforts to understand the full facts of what
happened. This tragedy strengthens our resolve to never be
complacent about safety, so that we continue to learn and
improve.
"We are making clear progress as
we shape Rio Tinto into a stronger and even more reliable company.
By focusing on our four objectives, we are
building a portfolio that is fit for the future - including our Oyu
Tolgoi underground copper mine in Mongolia and the Simandou iron
ore project in Guinea. We have taken significant steps over the
past month towards our target to halve our global Scope 1 & 2
carbon emissions this decade with agreements to contract future
renewable wind and solar power for our Gladstone
operations.
"In 2023, we lifted our overall
copper equivalent production by over 3% and delivered resilient
financial results, with underlying EBITDA of
$23.9 billion, free cash flow of $7.7 billion and underlying
earnings of $11.8 billion, after taxes and government
royalties of $8.8 billion. Our balance sheet strength
enables us to continue to invest with discipline while also paying
an ordinary dividend of $7.1 billion,
a 60% payout.
"We will continue paying
attractive dividends and investing in the long-term strength of our
business as we grow in the materials needed for a
decarbonising world."
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"
(APMs) and the detailed reconciliations on
pages 40
to 49.
Our financial results are prepared in accordance with IFRS - see
page 35
for further information. Other 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'.
Resilient financial results, steady improvement in
operational performance
Safety is our top priority. While
we had zero fatalities at our managed operations in 2023,
tragically four colleagues and two airline crew members died in a
plane crash while travelling to our Diavik diamond mine in Canada
in January 2024.
Our team is committed to learning
how we continuously improve safety. This remains imperative
throughout 2024.
By focusing on our four
objectives, and prioritising the health of our assets, our ore body
knowledge and our people, we have improved our operational
performance and delivered resilient financial results. We have
maintained a strong financial position, which allows us to invest
for the future to deliver profitable growth, while also continuing
to pay attractive returns.
As part of our focus on Best
Operator, we continue to roll out the Safe Production System across
our business. This is a multi-year process, which is already
delivering real improvements in our Pilbara iron ore operations,
realising a 5 million tonne production uplift in 2023. We expect to
deliver another 5 million tonne uplift in 2024.
In line with our Excel in
Development objective, we advanced a number of projects, including
making significant progress at the Simandou iron ore project in
Guinea, in collaboration with our joint venture partners. We
achieved first sustainable production at the Oyu Tolgoi copper-gold
mine in Mongolia, which remains on track to ramp up to 500 thousand
tonnes3 of copper per year from 2028 to 2036. In our
aluminium business, we are investing in a significant AP60
expansion and gradually closing our Arvida smelter, in operation
since 1926. We also acquired a 50% equity stake in Matalco from
Giampaolo Group for $738 million to become a leader in recycled
aluminium supply in North America. We are making real progress in
shaping our portfolio for the future, with new technology
developments and one of the most exciting exploration pipelines for
many years.
The low-carbon transition
continues to be at the heart of our strategy, aligned with our
objective of achieving impeccable ESG credentials. In 2023, our
Scope 1 and 2 emissions were 32.6Mt CO2e
(32.7Mt4 in 2022), 6% below our (restated and adjusted)
2018 baseline of 34.5Mt CO2e4.
We continue to progress our six
large carbon abatement programs, focusing on repowering our Pacific
Aluminium operations, renewable energy, aluminium anodes, alumina
process heat, minerals processing and diesel transition. In 2023,
we made significant progress with our decarbonisation commitments,
with two sites fully transitioning to renewable diesel (Boron is
complete and we have announced that Kennecott will transition in
2024). We also focused on progressing our other promising new
technologies including BlueSmeltingTM,
ElysisTM and NutonTM. Key to achieving our
2030 Scope 1 and 2 decarbonisation target is the repowering of our
Gladstone operations in Queensland: our substantial efforts in 2023
have resulted in us signing two major renewable Power Purchase
Agreements in early 2024, one for solar and one for
wind.
A significant development with
respect to potentially reducing Scope 3 emissions, was the
announcement in February 2024 of a new
partnership with BHP and BlueScope to jointly investigate the
development of Australia's first ironmaking Electric Smelting
Furnace (ESF, also known as Electric Melter) pilot plant. This will
consolidate the work each party has completed to date, leveraging
both BHP's and Rio Tinto's deep knowledge of Pilbara iron ores with
BlueScope's unique operating experience in ESF technology. We also
continued to advance our pioneering BioIronTM
technology, which has the potential to support low CO2
steelmaking and significantly reduce our Scope 3 emissions. For
further detail, please refer to our
2023 Climate Change
Report released today.
Inclusion and diversity are
imperative for the sustainable success of the business. We
increased our gender diversity to 24.3% (from 22.9% in 2022). The
increases were distributed across all levels of the organisation
with female senior leaders increasing to 30.1% (from 28.3% in
2022).
Other footnotes are set out in full on page
25.
Guidance
• Our share of capital investment (non-IFRS
measure, refer to APMs on page 46) is unchanged from the 2023
Investor Seminar. In 2024, 2025 and 2026 it 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 $4.0 billion and $2.0 to $3.0 billion
of replacement capital. Sustaining capital includes around $1.5
billion over the next three years on decarbonisation projects ($5
to $6 billion in total up to 2030). This remains subject to
Traditional Owner and other stakeholder engagement, regulatory
approvals and technology developments. All capital guidance is
subject to ongoing inflationary pressures and exchange
rates.
• In
2024, we expect our ongoing exploration and evaluation expense
(excluding Simandou) to be around $1.0 billion. We have been
capitalising all qualifying Simandou costs
from the fourth quarter of 2023: our guidance assumes this
continues.
• In the
coming years, we expect to spend (on a cash basis) around $1
billion per year on closure activities ($0.8 billion in 2023) as we
advance our closure activities at Argyle, Energy Resources of
Australia (ERA), the Gove alumina refinery and legacy sites. Spend
will vary from year to year as we execute individual programs of
work and optimise investment across the portfolio. In 2024,
spending may be somewhat above this level as we consider one-off
investment options to reduce our exposure over the longer
term.
• Effective tax rate on
underlying earnings is expected to be around 30% in
2024.
Unit costs
|
2023
Actuals
|
2024
Guidance
|
Pilbara iron ore unit cash costs,
free on board (FOB) basis - US$ per wet metric tonne
|
21.5
|
21.75-23.50
|
Australian dollar exchange
rate
|
0.66
|
0.66
|
Copper C1 unit costs (includes
Kennecott, Oyu Tolgoi and Escondida) - US cents per lb
|
195
|
140-160
|
• 2024 guidance for
Pilbara unit cash costs reflects the increased
work effort in the mines and persistent labour and parts inflation
in Western Australia.
• Our
Copper C1 unit costs are expected to decrease in 2024, primarily
driven by higher volumes at Oyu Tolgoi as the underground continues
to ramp up and at Kennecott, where refined copper volumes are
expected to increase following the planned smelter rebuild in
2023.
Production (Rio Tinto share, unless otherwise
stated)
|
2023
Actuals
|
2024
Guidance
|
Pilbara iron ore (shipments, 100%
basis) (Mt)
|
331.8
|
323 to
338
|
Bauxite (Mt)
|
54.6
|
53 to
56
|
Alumina (Mt)
|
7.5
|
7.6 to
7.9
|
Aluminium (Mt)
|
3.3
|
3.2 to
3.4
|
Mined copper (consolidated
basis) (kt)5
|
620
|
660 to
720
|
Refined copper (kt)
|
175
|
230 to
260
|
Titanium dioxide slag
(Mt)
|
1.1
|
0.9 to
1.1
|
Iron Ore Company of Canada iron
ore pellets and concentrate (Mt)
|
9.7
|
9.8 to
11.5
|
Boric oxide equivalent
(Mt)
|
0.5
|
~0.5
|
Production guidance is consistent with our Fourth
Quarter Operations Review, released on 16 January
2024.
• Iron ore shipments and
bauxite production guidance remain subject to weather impacts. Pilbara shipments include SP10 products,
which are expected to remain elevated until replacement projects
are delivered. Levels are dependent on the timing of approvals for
planned mining areas, including heritage clearances.
Footnotes set out in full on page 25.
Income Statement
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 40 to 44,
respectively.
The principal factors explaining
the movements in underlying EBITDA are set out in this
table.
|
US$bn
|
2022 underlying EBITDA
|
26.3
|
Prices
|
(1.5)
|
Exchange rates
|
0.6
|
Volumes and mix
|
0.4
|
General inflation
|
(0.4)
|
Energy
|
0.4
|
Operating cash unit
costs
|
(1.4)
|
Higher exploration and evaluation
expenditure (net of profit from disposal of interests in
undeveloped projects)
|
(0.3)
|
Non-cash costs/other
|
(0.2)
|
Change in underlying EBITDA
|
(2.4)
|
2023 underlying EBITDA
|
23.9
|
Resilient financial results, primarily impacted by commodity
price movements
In general, we saw lower prices
for our commodities, as supply improved, outpacing modest demand
growth.
Movements in commodity prices
resulted in a $1.5 billion decline in underlying EBITDA overall
compared with 2022. This was primarily from lower pricing for our
Aluminium business, driven by London Metal Exchange (LME) prices,
lower premiums and lower alumina pricing. Higher realised pricing
in our Iron Ore business was offset by lower pricing for copper,
diamonds and industrial minerals. We have
included a table of prices and exchange rates on page
50.
The monthly average Platts index
for 62% iron fines converted to a Free on Board (FOB) basis was
0.5% higher, on average, compared with 2022.
The average LME price for copper
was 3% lower, the average LME aluminium price was 17% lower while
the gold price was 8% higher compared with 2022.
The Midwest premium duty paid for
aluminium in the US averaged $512 per tonne, 22% lower than in
2022.
Benefit from weaker local currencies in
2023
Compared with 2022, on average,
the US dollar strengthened by 4% against the Australian dollar and
by 4% against the Canadian dollar. Currency movements increased
underlying EBITDA by $0.6 billion relative to 2022.
Improvement in sales volumes but weaker mix
Higher sales volumes across the
portfolio increased underlying EBITDA by $0.7 billion compared to
2022. This was mostly attributable to a 3% increase in Pilbara iron
ore shipments, with the Gudai-Darri mine reaching full capacity,
partly offset by lower portside sales volumes (down 4%). Higher
copper sales were driven by the ramp-up of the Oyu Tolgoi
underground mine. This was partly offset by lower margins achieved
due to our product mix (-$0.3 billion) mainly associated with a
reduced proportion of Aluminium VAP sales and following high
quality diamond sales in 2022.
Impact of inflation offset by lower energy
prices
We saw a $0.4 billion benefit to
underlying EBITDA on the easing of energy prices compared to 2022,
mainly related to lower diesel prices at our Pilbara iron ore
operations, lower energy prices at our alumina refineries and
aluminium smelters, along with lower fuel prices in our Marine
business. General price inflation across our global operations
resulted in a net $0.4 billion reduction in underlying EBITDA,
which includes a $0.2 billion year-on-year benefit from the impact
of inflation on closure provisions.
Unit cost pressures persist due to temporary operational
factors and weaker markets: some easing of market-linked raw
material prices in second half
We remain focused on cost control,
in particular maintaining discipline on fixed costs, which are
expected to be broadly flat in 2024. While inflation has eased, we
continued to see lag effects in its impact on our third party
costs, such as contractor rates, consumables and some raw
materials; we expect this to stabilise in 2024.
In the second half of 2023, we
started to see some easing of market-linked prices for key raw
materials such as caustic, coke and pitch: these benefited
underlying EBITDA by $0.2 billion.
Temporary operational issues
reduced underlying EBITDA by $0.6 billion. We saw a 20% rise in
Copper C1 unit costs, primarily driven by lower refined volumes at
Kennecott following the planned rebuild of the smelter and
refinery. In Minerals, fixed unit cash costs increased at Iron Ore
Company of Canada (IOC), driven by lower production following the
wildfires in Northern Quebec in June as well as extended plant
downtime and conveyor belt failures in the third
quarter.
Other cost pressures and weaker
market demand lowered underlying EBITDA by $1.0 billion. In
Minerals, we experienced market weakness for many of our products,
in particular for TiO2 feedstock, which gave rise to
lower volumes and resulting higher unit costs. In the Pilbara, a
higher mine work index and investment in mine maintenance and
system health were in part offset by cost efficiencies on
delivering increased volumes. In Aluminium, we invested in
improving the integrity across our integrated
operations.
Overall, we continue to experience
tightness in our key labour markets, in Western Australia, Quebec
and Utah, which raised costs above general inflation. We also
entered into a new collective bargaining agreement at IOC and
applied the new labour law in Mongolia.
We have also increased our
investment in decarbonisation, research & development,
technology, along with communities and social investment to deliver
on our four objectives.
Increasing our global exploration and evaluation
activity
Our ongoing exploration and
evaluation expenditure in 2023 was $0.9 billion, compared with
guidance of $1.0 billion and $0.7 billion in 2022. The increase was
mainly attributable to increased activity at the Rincon lithium
project in Argentina and across the other product group projects.
We also expensed costs associated with the Simandou iron ore
project in Guinea (included in underlying EBITDA on a 100% basis):
these increased from $0.2 billion to $0.5 billion, with qualifying
Simandou costs being capitalised from the fourth quarter of 2023.
These expenditures were partly offset by a $0.2 billion gain on
disposal of 55% of our interest in the La Granja copper project in
Peru to First Quantum Minerals in 2023, leading to a net charge to
the Income Statement of $1.2 billion (2022: $0.9
billion).
Net earnings
The principal factors explaining
the movements in underlying earnings and net earnings are set out
below.
|
US$bn
|
2022 net
earnings
|
12.4
|
Changes in underlying EBITDA (see above)
|
(2.4)
|
Increase in depreciation and
amortisation (pre-tax) in underlying earnings
|
(0.1)
|
Decrease in interest and finance
items (pre-tax) in underlying earnings
|
0.2
|
Increase in tax on underlying
earnings
|
(0.2)
|
Decrease in underlying earnings
attributable to outside interests
|
0.8
|
Total changes in underlying earnings
|
(1.6)
|
Changes in items excluded from underlying earnings (see
below)
|
(0.7)
|
2023 net
earnings
|
10.1
|
Financial figures are rounded to the nearest million, hence
small differences may result in the totals. Comparative information
has been restated to reflect the adoption of narrow scope
amendments to IAS12 'Income Taxes'.
Increase in tax on underlying earnings
The effective tax rate on
underlying earnings in 2023 was 30% compared with 26% in 2022.
Consequently the tax on underlying earnings increased by $0.2
billion despite a decrease in underlying EBITDA. The rate in 2023
was in line with guidance, whereas the 2022 rate was lower due to
the recognition of additional deferred tax assets in respect of Oyu
Tolgoi and adjustments in respect of prior periods.
Decrease in underlying earnings attributable to outside
interests
We completed the acquisition of
Turquoise Hill Resources' non-controlling interests in December
2022, which resulted in a reduction of Oyu Tolgoi's earnings being
attributable to outside interests and therefore a higher share of
income being attributable to Rio Tinto. The ramp-up of exploration
and evaluation spend at Simandou resulted in greater charges
attributable to outside interests given our 45.05% effective
interest in the project.
Items excluded from underlying earnings
The differences between underlying
earnings and net earnings are set out in this table (all numbers
are after tax and exclude amounts attributable to non-controlling
interests).
|
2023
|
2022
|
Year ended 31 December
|
US$bn
|
US$bn
|
Underlying earnings
|
11.8
|
13.4
|
Items excluded from underlying earnings
|
|
|
Net impairment charges
|
(0.7)
|
(0.1)
|
Change in closure estimates
(non-operating and fully impaired sites)
|
(1.1)
|
(0.2)
|
Foreign exchange and derivative
gains on net debt and intragroup balances and derivatives not
qualifying for hedge accounting
|
(0.3)
|
(0.1)
|
Deferred tax arising on internal
sale of assets in Canadian operations
|
0.4
|
-
|
Gains recognised by Kitimat
relating to LNG Canada's project
|
-
|
0.1
|
Loss on disposal of interest in
subsidiary
|
-
|
(0.1)
|
Gain on sale of Cortez
royalty
|
-
|
0.3
|
Write-off of Federal deferred tax
assets in the United States
|
-
|
(0.9)
|
Total items excluded from underlying
earnings
|
(1.7)
|
(1.0)
|
Net earnings
|
10.1
|
12.4
|
Financial figures are rounded to the nearest million, hence
small differences may result in the totals. Comparative information
has been restated to reflect the adoption of narrow scope
amendments to IAS12 'Income Taxes'.
On pages 43 to 44 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 40.
We recognised net impairment
charges of $0.7 billion (after tax), mainly related to our alumina
refineries in Queensland, taken in the first half of 2023. This was
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. For a detailed explanation of the
impairment process, refer to note 4 to the Financial Statements in
the 2023 Annual Report.
The signing of key agreements with the Government of Guinea and
other joint venture partners for co-development of the
infrastructure for the Simandou iron ore project gave rise to an
impairment reversal trigger, for amounts which had been fully
impaired in 2015. Previously capitalised exploration and evaluation
costs associated with the mine and retained items of property,
plant and equipment totalling $0.2 billion (after tax and outside
interests) have therefore been reversed.
We excluded $1.1 billion of
closure cost charges from underlying earnings, of which
$850 million related to the closure update announced by Energy
Resources of Australia (ERA) on 12 December 2023. This was
considered material and was therefore aggregated with other closure
study updates in the second half of 2023 which were similar in
nature. These other updates were at legacy sites and at the Yarwun
alumina refinery, which was expensed due to the impairment earlier
in the year.
We recognised an exchange and
derivative loss of $0.3 billion (2022: loss of $0.1 billion). The
exchange losses are largely offset by currency translation gains
recognised in equity. The quantum of US dollar debt is largely
unaffected and we will repay it from US dollar sales
receipts.
Our Canadian aluminium business
completed an internal sale of assets. This resulted in the
utilisation of previously unrecognised capital losses and an uplift
in the tax depreciable value of assets on which a deferred tax
asset of $0.4 billion has been recognised.
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 was
$10.1 billion (2022: $12.4 billion). We recorded a profit after tax
in 2023 of $10.0 billion (2022: $13.0 billion) of which a loss of
$0.1 billion was attributable to non-controlling interests (2022
profit: $0.7 billion).
Underlying EBITDA and underlying earnings by product
group
|
Underlying
EBITDA
|
|
Underlying
earnings
|
|
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Year ended 31 December
|
US$bn
|
US$bn
|
%
|
US$bn
|
US$bn
|
%
|
Iron Ore
|
20.0
|
18.6
|
7
%
|
11.9
|
11.2
|
6
%
|
Aluminium
|
2.3
|
3.7
|
(38) %
|
0.5
|
1.5
|
(64) %
|
Copper
|
1.9
|
2.6
|
(26) %
|
0.1
|
0.7
|
(81) %
|
Minerals
|
1.4
|
2.4
|
(42) %
|
0.3
|
0.9
|
(63) %
|
Reportable segment total
|
25.6
|
27.3
|
(6)
%
|
12.9
|
14.3
|
(10) %
|
Simandou iron ore
project
|
(0.5)
|
(0.2)
|
185
%
|
(0.2)
|
(0.1)
|
10 %
|
Other operations
|
-
|
-
|
- %
|
(0.3)
|
(0.3)
|
(28) %
|
Central pension costs, share-based
payments, insurance and derivatives
|
0.2
|
0.4
|
(55) %
|
-
|
0.4
|
(87) %
|
Restructuring, project and one-off
costs
|
(0.2)
|
(0.2)
|
10 %
|
(0.1)
|
(0.1)
|
32 %
|
Other central costs
|
(1.0)
|
(0.8)
|
29 %
|
(0.9)
|
(0.7)
|
29 %
|
Central exploration and
evaluation
|
(0.1)
|
(0.3)
|
(60) %
|
(0.1)
|
(0.2)
|
(71) %
|
Net interest
|
|
|
|
0.3
|
0.1
|
130
%
|
Total
|
23.9
|
26.3
|
(9)
%
|
11.8
|
13.4
|
(12) %
|
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 non-IFRS
measures used by management to assess the performance of the
business and provide additional information which investors may
find useful. For more information on our use of non-IFRS financial
measures in this report, see the section entitled "Alternative
performance measures" (APMs) and the detailed reconciliations on
pages 40
to 49.
Simandou iron ore project
Costs attributable to the Simandou
project in Guinea increased from $0.2 billion to
$0.5 billion (100% basis at underlying EBITDA level) on
ramp-up of project activity in 2023. We commenced capitalising
qualifying spend on Simandou from the fourth quarter of 2023, with
$0.3 billion included in capital expenditure (100%
basis).
Central and other costs
Pre-tax central pension costs,
share-based payments, insurance and derivatives were a
$0.2 billion credit compared with a $0.4 billion credit
in 2022, reflecting movement on derivatives in the two
years.
On a pre-tax basis, restructuring,
project and one-off central costs were mainly associated with
corporate projects and were comparable to 2022.
Other central costs of
$1.0 billion were 29% higher than 2022, reflecting increased
investment in decarbonisation, research & development and
technology. Our core central costs increased in line with
inflation.
On an underlying earnings basis,
net interest was a credit of $0.3 billion (2022: credit of
$0.1 billion),
reflecting Rio Tinto's increased
interest in Oyu Tolgoi and the related financing items following
the acquisition of Turquoise Hill minorities in 2022.
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
$0.3 billion. The bulk of this expenditure in 2023 focused on
copper in Australia, Chile, Colombia, Namibia, the United States
and Zambia; diamonds in Canada; nickel in Brazil, Canada and Peru;
heavy mineral sands in South Africa; and potash in Canada. We
recently partnered with Codelco on the Nuevo Cobre copper project
in the prospective Atacama region in Chile and with Charger Metals
on the Lake Johnston lithium project in the Yilgarn, Western
Australia. This spend is offset by the gain recognised on disposal
of 55% of our interest in the La Granja copper project ($0.2
billion, pre-tax).
Cash flow
|
2023
|
2022
|
Year ended 31 December
|
US$bn
|
US$bn
|
Net cash generated from operating
activities
|
15.2
|
16.1
|
Purchases of property, plant and
equipment and intangible assets
|
(7.1)
|
(6.8)
|
Lease principal
payments
|
(0.4)
|
(0.4)
|
Free cash flow¹
|
7.7
|
9.0
|
Dividends paid to equity
shareholders
|
(6.5)
|
(11.7)
|
Acquisitions
|
(0.8)
|
(0.9)
|
Purchase of the minority interest
in Turquoise Hill Resources Ltd
|
-
|
(3.0)
|
Disposals
|
-
|
0.1
|
Cash receipt from sale of Cortez
royalty
|
-
|
0.5
|
Other
|
(0.4)
|
0.2
|
Movement in net debt/cash¹
|
-
|
(5.8)
|
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.
• $15.2 billion in net cash
generated from operating activities, 6% lower than 2022, primarily
driven by price movements for our major commodities and a $0.9
billion rise in working capital, partly offset by lower taxes paid.
The cash outflow from the working capital increase was driven by
healthy stocks in the Pilbara, still elevated in-process inventory
at Kennecott following the extended smelter rebuild and higher
working capital at Iron & Titanium, reflective of weaker market
conditions. Receivables also reflected a 20% higher iron ore price
at 2023 year end (vs 2022) that will be monetised in 2024.
Operating cash flow was also impacted by lower dividends, primarily
from Escondida ($0.6 billion in 2023; $0.9 billion in
2022).
• Taking into account the
timing of payments in Australia, taxes paid of $4.6 billion in 2023
were at a similar level to 2022, which included around $1.5 billion
of payments related to prior years.
• Our capital expenditure of $7.1 billion was comprised of $1.0
billion of growth ($0.9 billion on a Rio Tinto share basis), $1.6
billion of replacement, $4.3 billion of sustaining and $0.2 billion
of decarbonisation capital (in addition to $0.2 billion
of decarbonisation spend in operating costs). We
expect to spend around $4.0 billion each year on sustaining
capital; spend in 2023 included the smelter and refinery rebuild at
Kennecott ($0.3 billion) and targeted investment in asset health in
Iron Ore and Aluminium. We funded our capital expenditure from
operating activities and generally expect to continue funding our
capital program from internal sources.
• $6.5
billion of dividends paid in 2023, being the 2022 final ordinary
and the 2023 interim ordinary dividends.
• $0.8 billion of
acquisitions related to the Matalco recycling joint venture and the
Nuevo Cobre exploration joint venture with Codelco.
• The above movements,
together with $0.4 billion of other movements, resulted in net
debt1 remaining stable year-on-year at $4.2 billion at
31 December 2023.
Balance sheet
Net debt1
of $4.2 billion was
unchanged at 31 December 2023 compared to
the prior year end.
Our net gearing ratio1
(net debt/(cash) to total capital) was 7% at 31 December 2023
(31 December 2022: 7%). See page 49.
Our total financing liabilities
excluding net debt derivatives at
31 December 2023 (see page 48) were $14.4 billion
(31 December 2022: $12.3 billion) and the weighted average
maturity was around 12 years. At 31 December 2023,
approximately 68% of these liabilities were at floating interest
rates (75% excluding leases). The maximum amount within non-current
borrowings maturing in any one calendar
year is $1.65 billion, which matures in 2033.
On 7 March 2023, we
priced $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 $10.5 billion in cash
and cash equivalents plus other short-term cash investments at
31 December 2023 (31 December 2022:
$8.8 billion).
Provision for closure costs
At 31 December 2023,
provisions for close-down and restoration costs and environmental
clean-up obligations were $17.2 billion (31 December
2022: $15.8 billion). The increase was largely due to revised
closure estimates following new studies at certain operations and
legacy sites, including ERA, together with the amortisation of
discount ($1.0 billion), which includes the effect of elevated
inflation for the year. This was partly offset by 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 decrease in the provision. $0.8 billion of
the provision was also utilised through spend in 2023.
Our shareholder returns policy
The Board is committed to
maintaining an appropriate balance between cash returns to
shareholders and investment in the business, with the intention of
maximising long-term shareholder value.
At the end of each financial
period, the Board determines an appropriate total level of ordinary
dividend per share. This takes into account the results for the
financial year, the outlook for our major commodities, the Board's
view of the long-term growth prospects of the business and the
company's objective of maintaining a strong balance sheet. The
intention is that the balance between the interim and final
dividend be weighted to the final dividend.
The Board expects total cash
returns to shareholders over the longer term to be in a range of
40% to 60% of underlying earnings in aggregate through the cycle.
Acknowledging the cyclical nature of the industry, it is the
Board's intention to supplement the ordinary dividend with
additional returns to shareholders in periods of strong earnings
and cash generation.
60% payout ratio on the ordinary dividend delivers an
eight-year track record
|
2023
US$bn
|
2022
US$bn
|
Ordinary dividend
|
|
|
Interim¹
|
2.9
|
4.3
|
Final¹
|
4.2
|
3.7
|
Full-year ordinary dividend
|
7.1
|
8.0
|
Payout ratio on ordinary dividend
|
60%
|
60%
|
1 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 final dividend has
been converted at exchange rates applicable on 20 February 2024
(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)
|
177.00
|
267.00
|
Final (US cents)
|
258.00
|
225.00
|
Full-year (US cents)
|
435.00
|
492.00
|
Rio Tinto plc
|
|
|
Interim (UK pence)
|
137.67
|
221.63
|
Final (UK pence)
|
203.77
|
185.35
|
Full-year (UK pence)
|
341.44
|
406.98
|
Rio Tinto Limited
|
|
|
Interim (Australian
cents)
|
260.89
|
383.70
|
Final (Australian
cents)
|
392.78
|
326.49
|
Full-year (Australian
cents)
|
653.67
|
710.19
|
The 2023 final 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 18 April 2024, we will pay the
2023 final ordinary dividend to holders of ordinary shares and
holders of ADRs on the register at the close of business on 8 March
2024 (record date). The ex-dividend date is 7 March
2024.
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
26 March 2024.
We will operate our Dividend
Reinvestment Plans for the 2023 final 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 26 March 2024. 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
Project
(Rio Tinto 100%
owned unless
otherwise stated)
|
Total
capital
cost
(100%
unless
otherwise
stated)
|
Capital remaining to be
spent from
1 Jan 2024
|
Status/Milestones
|
Ongoing
|
|
|
|
Iron ore
|
|
|
|
Investment in the Western Range
iron ore project, a joint venture between Rio Tinto (54%) and China
Baowu Steel Group Co. Ltd (46%) in the Pilbara to sustain
production of the Pilbara BlendTM from Rio Tinto's
existing Paraburdoo hub. First production is anticipated in
2025.
|
$1.3bn
(Rio
Tinto share)6
|
$0.8bn
(Rio
Tinto
share)
|
Approved in September 2022, the
mine will have a capacity of 25 million tonnes per year. The
project includes construction of a primary crusher and an 18
kilometre conveyor connection to the Paraburdoo processing plant.
Construction is currently on schedule with civil work well
advanced, while we continue to progress primary crusher works, bulk
earthworks and mine pre-strip.
|
Investment in the Simandou iron
ore project in Guinea in partnership with CIOH, a Chinalco-led
consortium (the Simfer joint venture) and co-development of the
rail and port infrastructure with Winning Consortium Simandou⁷
(WCS), Baowu and the Republic of Guinea (the partners). Overall,
the co-developed infrastructure represents more than 600 kilometres
of new multi-user (including passenger and general freight
services) rail together with port facilities to be
co-developed by the partners to allow the export of up to 120
million tonnes per year of iron ore mined by Simfer's and WCS's
respective mining concessions.⁸
|
$6.2bn⁹
(estimated Rio Tinto share)
|
$5.7bn
(estimated Rio Tinto share)
|
Announced in December 2023, the
Simfer joint venture10 will develop, own and operate a
60 million tonne per year¹¹ mine in blocks 3 & 4. First
production at the mine is expected in 2025, ramping up over 30
months to an annualised capacity of 60 million tonnes per year (27
million tonnes Rio Tinto share). WCS will construct the project's
~536 kilometre dual track main line as well as the WCS barge port,
while Simfer will construct the ~70 kilometre spur line, connecting
its mining concession to the main rail line. Pending completion and
commissioning of its 60 million tonne per year transhipment vessel
port, Simfer will be able to export its ore using WCS's barge
port.
The Rio Tinto Board has approved
the project, subject to the remaining conditions being met,
including joint venture partner approvals and regulatory
approvals¹² from China and Guinea.
|
Aluminium
|
|
|
|
Investment to expand the
low-carbon AP60 aluminium smelter at the Complexe Jonquière in
Quebec. The investment includes up to $113 million of financial
support from the Quebec government.
|
$1.1bn
|
$1.0bn
|
Approved in June 2023, the
investment will add 96 AP60 pots, representing 160,000 tonnes of
primary aluminium per year, replacing the Arvida smelter which is
set to gradually close from 2024. We continued early works for the
expansion of the AP60 smelter. Commissioning is expected in the
first half of 2026, with the smelter fully ramped up by the end of
that year. Once completed, it 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 by a further six
years.
|
$1.8bn
|
$1.2bn
|
Approved in December 2019, the
investment will further extend strip waste rock 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 (NRS)
area.
|
$0.5bn
|
$0.5bn
|
Approved in June 2023, production
from NRS13 will commence in the first quarter of 2025
(previously 2024) and is expected to ramp up over two years, to
deliver around 250,000 tonnes of additional mined copper over the
next 10 years14 alongside open cut
operations.
|
Development of the Oyu Tolgoi
underground copper-gold mine in Mongolia (Rio Tinto 66%), which is
expected to produce (from the open pit and underground) an average
of ~500,000 tonnes³ of copper per year from 2028 to
2036.
|
$7.06bn
|
$1.0bn
|
We delivered first sustainable
underground production from Panel 0 in March 2023.
The commissioning of
infrastructure for ramp-up to full capacity remains on target: we
expect shafts 3 and 4 and the conveyor to surface in the second
half of 2024, while the concentrator conversion is expected to be
progressively completed from the fourth quarter of 2024 through to
the second quarter of 2025. Construction of primary crusher 2
commenced in December 2023 and is due to be complete by the end of
2025.
|
Future options
|
Status
|
Iron Ore: Pilbara brownfields
|
|
Over the medium term, our Pilbara
system capacity remains between 345 and 360 million tonnes per
year. Meeting this range, and the planned product mix, will require
the approval and delivery of the next tranche of replacement mines
over the next five years.
|
In addition to Western Range
(Greater Paraburdoo), which is under construction, we continue to
progress studies for Hope Downs 1 (Hope Downs 2 and Bedded
Hilltop), Brockman 4 (Brockman Syncline 1), Greater Nammuldi and
West Angelas. 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 to modernise the joint
venture covering the Rhodes Ridge project in the Eastern Pilbara,
providing a pathway for development utilising Rio Tinto's rail,
port and power infrastructure.
|
A resource-drilling program is
currently underway to support future project studies. In December
2023, we announced approval of a $77 million pre-feasibility study
(PFS). This follows completion of an Order of Magnitude study that
considered development of an operation with initial capacity of up
to 40 million tonnes per year, subject to relevant approvals.
Completion of the PFS is expected by the end of 2025 and will be
followed by a feasibility study, with first ore expected by the end
of the decade. Longer term, the resource could support a
world-class mining hub with a potential capacity of more than 100
million tonnes of high-quality iron ore a year.
|
Lithium: Jadar
|
|
Development of the greenfield
Jadar lithium-borates project in Serbia will include an underground
mine with associated infrastructure and equipment, including
electric haul trucks, as well as a beneficiation chemical
processing plant.
|
The Board committed funding in
July 2021, subject to receiving all relevant approvals, permits and
licences. We are focused on consultation with all stakeholders to
explore all options following the Government of Serbia's
cancellation of the Spatial Plan in January 2022.
|
Lithium: Rincon
|
|
We completed the acquisition of
the Rincon Lithium project in Salta province, Argentina in March
2022. Development of a 3,000 tonne per year battery-grade lithium
carbonate starter plant is ongoing with first saleable production
expected at the end of 2024.
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.
|
In July 2022, we approved $140
million of investment and $54 million for early works to support a
full-scale operation. To date, the majority of costs have been
expensed through exploration and evaluation expenditure. In July
2023, we approved a further $195 million to complete the starter
plant: the increase 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.
|
Mineral Sands: Zulti South
|
|
Development of the Zulti South
project at Richards Bay Minerals (RBM) in South Africa (Rio Tinto
74%).
|
Approved in April 2019 to underpin
RBM's supply of zircon and ilmenite over 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 Copper Triangle, in
Arizona, US (Rio Tinto 55%). It has the potential to supply up to
25% of US copper demand.
|
The United States Forest Service
(USFS) continued work to progress the Final Environmental Impact
Statement and complete actions necessary for the land 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 the Paterson
Province in Western Australia. In 2021, we reported our first
Indicated Mineral Resource. The pathway remains subject to
regulatory and other required approvals.
In parallel, we continue to
explore options aimed at enhancing project value, including further
optimisation of the current pathway and alternative development
models and partnerships.
|
In 2023, Project Planning
Agreements were executed with the Nyangumarta and Martu groups, the
Traditional Owners of the land on which the proposed Winu mine and
airstrip will be located. Study activities, drilling and fieldwork
progressed sufficiently to commence Winu's formal Western
Australian Environmental Protection Authority approval process. The
environmental approval deliverables and Project Agreement
negotiations with both Traditional Owner groups remain the
priority.
|
Copper: La Granja
|
|
In August 2023, we completed a
transaction to form a joint venture with First Quantum Minerals
that will work to unlock the development of the La Granja project
in Peru, one of the largest undeveloped copper deposits in the
world, with potential to be a large, long-life
operation.
|
First Quantum Minerals acquired a
55% stake in the project for $105 million and will invest up to a
further $546 million into the joint venture to sole fund capital
and operational costs to take the project through a feasibility
study and toward development. All subsequent expenditures will be
applied on a pro-rata basis in line with shared
ownership.
|
Aluminium: ELYSIS
|
|
ELYSIS, our joint venture with
Alcoa, supported by Apple, the Government of Canada and the
Government of Quebec, is developing a breakthrough inert anode
technology that eliminates all direct greenhouse gases from the
aluminium smelting process.
|
ELYSIS has started commissioning
activities following completion of the construction of the first
commercial-scale prototype cells. ELYSIS expects to start the first
450kA cell in 2024.
|
Iron Ore
Year ended 31 December
|
2023
|
2022
|
Change
|
Pilbara production (million tonnes
- 100%)
|
331.5
|
324.1
|
2
%
|
Pilbara shipments (million tonnes
- 100%)
|
331.8
|
321.6
|
3
%
|
Salt production (million tonnes -
Rio Tinto share)¹
|
6.0
|
5.8
|
4
%
|
|
|
|
|
Segmental revenue (US$
millions)
|
32,249
|
30,906
|
4
%
|
Average realised price (US$ per
dry metric tonne, FOB basis)
|
108.4
|
106.1
|
2
%
|
Underlying EBITDA (US$
millions)
|
19,974
|
18,612
|
7
%
|
Pilbara underlying FOB EBITDA
margin²
|
69%
|
68%
|
|
Underlying earnings (US$
millions)³
|
11,882
|
11,213
|
6
%
|
Net cash generated from operating
activities (US$ millions)
|
14,045
|
14,005
|
- %
|
Capital expenditure (US$
millions)⁴
|
(2,588)
|
(2,940)
|
(12) %
|
Free cash flow (US$
millions)
|
11,374
|
11,033
|
3
%
|
Underlying return on capital
employed³, ⁵
|
64%
|
61%
|
|
Production figures are sometimes more precise than the
rounded numbers shown, hence small differences may result in the
year on year change.
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 reports to the Chief Technical Officer and is
reported outside the Reportable segments.
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'.
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 $20.0 billion
was 7% higher than 2022, with a 2% improvement in realised prices
($0.8 billion) and higher volumes, following the ramp-up of
Gudai-Darri.
Unit costs of $21.5 per tonne were
$0.2 per tonne lower than 2022. Cost escalation from inflation was
offset by a weaker Australian dollar and gains on derivative
contracts. Higher 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 68% in 2022,
largely due to 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, 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, on
the spot market or other mechanisms. We made approximately 74% of
sales including freight and 26% on an FOB basis.
We achieved an average iron ore
price of $99.7 per wet metric tonne on an FOB basis (2022:
$97.6 per wet metric tonne) across our product suite. This equates
to $108.4 per dry metric tonne, assuming 8% moisture (2022: $106.1
per dry metric tonne), which compares with the monthly average
Platts index for 62% iron fines converted to an FOB basis of $110.3
per dry metric tonne (2022: $109.8 per dry metric tonne). The 2%
lower realised price compared to the Platts index was mainly due to
the lower average grades of our portfolio compared to the 62%
index.
Segmental revenue for our Pilbara
operations included freight revenue of $2.1 billion (2022: $2.2
billion).
Net cash generated from operating
activities of $14.0 billion was on a par with 2022. Benefits
from higher realised prices and higher volumes offset a build in
working capital to ensure healthy stocks across the system and an
increased receivables balance due to strong iron ore prices at year
end. Free cash flow of $11.4 billion was $0.3 billion higher than
2022, mostly driven by a $0.4 billion reduction in capital
expenditure to $2.6 billion due to lower spend on replacement
capital.
Review of operations
Pilbara operations produced 331.5
million tonnes (100% basis) of iron ore, 2% higher than 2022.
Shipments, on a 100% basis, were 3% higher (+10 million tonnes)
than in 2022, making 2023 the second highest shipment year on
record. Improved system performance supported by a 5 million tonne
uplift from implementation of the Safe Production System, and
ramp-up of Gudai-Darri to its 43 million tonne nameplate capacity,
offset mine depletion. SP10 volumes accounted for 47.5 million
tonnes of 2023 shipments (or 14%).
We continue to see strong demand
for our portside product in China, with sales totalling 23.3
million tonnes in 2023 (2022: 24.3 million tonnes). At the end of
2023, inventory levels were 6.4 million tonnes, including 3.9
million tonnes of Pilbara product. In 2023, approximately 86% of
our portside sales were either screened or blended in Chinese
ports.
In January 2024, Dampier Salt
Limited entered into a sales agreement for the Lake MacLeod salt
and gypsum operation in Carnarvon, Western Australia with
privately-owned salt company Leichhardt Industrials Group for $251
million (A$375 million). Completion of the sale is subject to
certain commercial and regulatory conditions being satisfied. The
transaction is subject to capital gains tax.
Aluminium
Year ended 31 December
|
2023
|
2022
|
Change
|
Bauxite production ('000 tonnes -
Rio Tinto share)
|
54,619
|
54,618
|
0
%
|
Alumina production ('000 tonnes -
Rio Tinto share)
|
7,537
|
7,544
|
0
%
|
Aluminium production ('000 tonnes
- Rio Tinto share)
|
3,272
|
3,009
|
9
%
|
|
|
|
|
Segmental revenue (US$
millions)
|
12,285
|
14,109
|
(13) %
|
Average realised aluminium price
(US$ per tonne)
|
2,738
|
3,330
|
(18) %
|
Underlying EBITDA (US$
millions)
|
2,282
|
3,672
|
(38) %
|
Underlying EBITDA margin
(integrated operations)
|
21%
|
29%
|
|
Underlying earnings (US$
millions)¹
|
538
|
1,504
|
(64) %
|
Net cash generated from operating
activities (US$ millions)
|
1,980
|
3,055
|
(35) %
|
Capital expenditure - excluding
EAUs (US$ millions)²
|
(1,331)
|
(1,377)
|
(3)
%
|
Free cash flow (US$
millions)
|
619
|
1,652
|
(63) %
|
Underlying return on capital
employed¹, ³
|
3%
|
10%
|
|
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'.
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
Although global primary aluminium
demand rose by ~1% in 2023, falling costs and an increase in global
supply led to a 17% reduction in the LME price and lower market and
product premiums. Market-related costs for key materials such as
caustic, coke and pitch moderated with some of this benefitting
underlying EBITDA in the second half. Operating costs particularly
in our mines and refineries increased year on year with a focus on
improved operational stability and asset health. Overall there was
significant margin compression for our Aluminium business with a
38% decrease in underlying EBITDA to $2.3 billion. Underlying
EBITDA margin fell eight percentage points to 21%.
We achieved an average realised
aluminium price of $2,738 per tonne, 18% lower than
2022.
Average realised aluminium prices
comprise the LME price, a market premium and a value-added product
(VAP) premium. The cash LME price averaged $2,250 per tonne, 17%
lower than 2022, while in our key US market, the Midwest premium
duty paid, which is 57% of our total volumes (2022: 57%), decreased
by 22% to $512 per tonne (2022: $655 per tonne). Our VAP sales
represented 46% of the primary metal we sold (2022: 50%) and
generated product premiums averaging $354 per tonne of VAP sold
(2022: $431 per tonne).
Our conversion of underlying
EBITDA to cash remained relatively strong, with net cash generated
from operating activities of $2.0 billion. Free cash flow of $0.6
billion reflected investment in the business of $1.3
billion.
Review of operations
Bauxite production of 54.6
million tonnes was unchanged from 2022. Operations saw a continued improvement in the fourth
quarter, following the challenges of higher-than-average rainfall
at Weipa in the first quarter and equipment downtime at both Weipa
and Gove in the first half.
We shipped 37.3 million tonnes of
bauxite to third parties, 2% lower than 2022. Segmental revenue for
bauxite was also unchanged at $2.4 billion. This includes freight revenue of $0.5
billion (2022: $0.6 billion).
Alumina production of 7.5 million
tonnes was unchanged from 2022, with the Yarwun and Queensland
Alumina Limited (QAL) refineries showing improved operational
stability.
For the 2023 calendar year, as the
result of QAL's activation of a step-in process following sanction
measures enacted by the Australian Government in 2022, we continued
to take on 100% of capacity for as long as the step-in continues.
We have used Rusal's 20% share of capacity under the tolling
arrangement with QAL. This additional output is excluded from our
production results as QAL remains 80% owned by Rio Tinto and 20%
owned by Rusal. On 1 February 2024, the Federal Court of Australia
rendered its decision in the litigation initiated by Rusal against
Rio Tinto and QAL, dismissing Rusal's case. Rio Tinto and QAL are
working to understand the impacts of the decision.
Aluminium production of 3.3
million tonnes was 9% higher
than 2022, after we returned to full capacity at the Kitimat
smelter and completed cell recovery efforts at Boyne during the
third quarter. All other smelters continued to demonstrate stable
performance.
Copper
Year ended 31 December
|
2023
|
2022
|
Change
|
Mined copper production ('000
tonnes - consolidated basis)
|
620
|
607
|
2
%
|
Refined copper production ('000
tonnes - Rio Tinto share)
|
175
|
209
|
(16) %
|
|
|
|
|
Segmental revenue (US$
millions)
|
6,678
|
6,699
|
- %
|
Average realised copper price (US
cents per pound)¹
|
390
|
403
|
(3)
%
|
Underlying EBITDA (US$
millions)
|
1,904
|
2,565
|
(26) %
|
Underlying EBITDA margin (product
group operations)
|
42%
|
49%
|
|
Underlying earnings (US$
millions)
|
133
|
687
|
(81) %
|
Net cash generated from operating
activities (US$ millions)²
|
545
|
1,523
|
(64) %
|
Capital expenditure - excluding
EAUs³ (US$ millions)
|
(1,976)
|
(1,622)
|
22 %
|
Free cash flow (US$
millions)
|
(1,438)
|
(116)
|
|
Underlying return on capital
employed (product group operations)⁴
|
3%
|
6%
|
|
Footnotes are set out in full on page
25. 2022 has been restated
following the transfer of the Simandou iron ore project to outside
the Reporting segments, as it now reports to the Chief Technical
Officer, and to reflect the adoption of narrow scope amendments to
IAS12 'Income Taxes'.
1. Average realised price for all units sold.
Realised price does not include the impact of the provisional
pricing adjustments, which positively impacted revenues by $2
million (2022: $175 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, where we
doubled our interest to 66% following the acquisition of Turquoise
Hill Resources at the end of 2022. However, lower refined copper
volumes and higher unit costs, primarily driven by the planned
smelter and refinery rebuild at Kennecott, in addition to higher
energy prices and an increase in exploration and evaluation
expenditure, led to underlying EBITDA being down 26% to $1.9
billion. Underlying EBITDA margin remained relatively strong at
42%.
Our copper unit costs, at 195
cents per pound, increased by 32 cents, or 20%, as a result of the
lower shipment volumes of refined copper following the planned
rebuild at Kennecott and higher input costs.
We generated $0.5 billion in net
cash from operating activities, a 64% decrease on 2022, from the
same drivers as underlying EBITDA, together with $0.3 billion lower
dividends from Escondida.
Negative free cash flow of $1.4
billion reflected the above movements and significant investment of
$2.0 billion in sustaining capital and our growth projects. This
mainly related to the ongoing development of the Oyu Tolgoi
underground, the projects at Kennecott and evaluation costs at
Resolution and Winu.
Review of operations
Mined copper production, at 620
thousand tonnes, was 2% higher than 2022, reflecting first
sustainable production from Oyu Tolgoi underground in the first
quarter. This offset challenges at Kennecott following a conveyor
failure in March, with the concentrator not returning to full
capacity until the third quarter. Our share of mined copper
production from Escondida was flat at 300 thousand
tonnes.
Refined copper production
decreased by 16% to 175
thousand tonnes as we undertook the largest rebuild of the smelter
and refinery in Kennecott's history across the second and third
quarters. The smelter rebuild was successfully completed in the
fourth quarter of 2023 and the ramp-up is
progressing.
Oyu Tolgoi underground project
During 2023, 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 86 drawbells
opened from Panel 0, including 67 drawbells in 2023.
By the end of 2023, shafts 3 and 4
sinking had reached 923 metres and 1,013 metres below ground level,
respectively. Final depths required for shafts 3 and 4 are 1,130
and 1,176 metres, respectively. Both shafts are expected to be commissioned
in the second half of 2024.
Construction of the conveyor to
surface works continued to plan and was 88% complete at the end of
2023. Commissioning remains on track for the second half of
2024.
Construction of primary crusher 2
commenced in December 2023 and is due to be complete by the end of
2025.
Construction works for the
concentrator conversion remains on schedule. Commissioning is
expected to be progressively completed from the fourth quarter of
2024 through to the second quarter of 2025. Technical studies for
mine design and schedule optimisation for Panels 1 and 2 were
completed during the second quarter15. The operation
remains on track to ramp up to deliver average mined copper
production of ~500 thousand tonnes per year (100% basis) between
2028 and 20363.
Minerals
Year ended 31 December
|
2023
|
2022
|
Change
|
Iron ore pellets and concentrates
production¹ (million tonnes - Rio Tinto share)
|
9.7
|
10.3
|
(6)
%
|
Titanium dioxide slag production
('000 tonnes - Rio Tinto share)
|
1,111
|
1,200
|
(7)
%
|
Borates production ('000 tonnes -
Rio Tinto share)
|
495
|
532
|
(7)
%
|
Diamonds production ('000 carats -
Rio Tinto share)
|
3,340
|
4,651
|
(28) %
|
|
|
|
|
Segmental revenue (US$
millions)
|
5,934
|
6,754
|
(12) %
|
Underlying EBITDA (US$
millions)
|
1,414
|
2,419
|
(42) %
|
Underlying EBITDA margin (product
group operations)
|
30%
|
40%
|
|
Underlying earnings (US$
millions)²
|
312
|
854
|
(63) %
|
Net cash generated from operating
activities (US$ millions)
|
548
|
1,522
|
(64) %
|
Capital expenditure (US$
millions)³
|
(746)
|
(679)
|
10 %
|
Free cash flow (US$
millions)
|
(229)
|
814
|
(128) %
|
Underlying return on capital
employed (product group operations)2, 4
|
13%
|
22%
|
|
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'.
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 $1.4 billion
was 42% lower than 2022, primarily due to lower prices and higher
costs. We experienced market weakness for many of our products, in
particular for TiO2 feedstock, where underlying demand
for pigment was subdued on weak real estate activity in the
Americas, Europe and China. This gave rise to lower sales volumes
and, in combination with the two furnace failures at our RTIT
Quebec operations, resulted in higher unit costs.
Net cash generated from operating
activities of $0.5 billion was 64% lower than 2022, while negative
free cash flow of $0.2 billion reflected the lower underlying
EBITDA, higher working capital due to market conditions and a
modest rise in capital expenditure.
Review of operations
Production of iron ore pellets and
concentrate at IOC of 9.7 million tonnes was 6% lower than 2022
with challenges due to the wildfires in Northern Quebec in the
second quarter, as well as extended plant downtime and conveyor
belt failures in the third quarter.
TiO2 slag production of
1,111 thousand tonnes was 7% lower than 2022. Two furnaces at our
RTIT Quebec Operations remain offline following process safety
incidents in June and July. In the fourth quarter, we
decommissioned an additional furnace, which is due for
reconstruction in 2024. As a result, we entered 2024 with six out
of nine furnaces operating at our RTIT Quebec Operations and three
out of four online at Richards Bay Minerals (RBM).
Borates production was 7% lower
than 2022, as we adjusted for decreased customer demand, despite
improved equipment reliability.
Our share of carats recovered was
28% lower than 2022, due to depleting one of three underground
pipes and reaching the end of life for open pit mining.
Price and exchange rate sensitivities
The following sensitivities give
the estimated effect on underlying EBITDA, assuming that each price
or exchange rate moved in isolation. The relationship between
currencies and commodity prices is a complex one; movements in
exchange rates can affect movements in commodity prices and vice
versa. The exchange rate sensitivities quoted here include the
effect on operating costs of movements in exchange rates, but do
not include the effect of the revaluation of foreign currency
working capital. They should be used with care.
|
Average
published
price/exchange rate for
2023
|
US$
million impact on
full-year 2023
underlying EBITDA
of a 10%
change
in
prices/exchange rates
|
Aluminium (LME) - US$ per
tonne
|
2,250
|
1,016
|
Copper (LME) - US cents per
pound
|
386
|
507
|
Gold - US$ per troy
ounce
|
1,941
|
62
|
Iron ore realised price (FOB
basis) - US$ per dry metric tonne
|
108.4
|
2,695
|
Australian dollar against the US
dollar
|
0.66
|
658
|
Canadian dollar against the US
dollar
|
0.74
|
358
|
Oil (Brent) - US per
barrel
|
84
|
185
|
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
40 to
49. Our financial results are
prepared in accordance with IFRS.
2. Comparative information has been restated to
reflect the adoption of narrow scope amendments to IAS12 'Income
Taxes'.
3. The 500 thousand tonne per year copper
production target (stated as recoverable metal) for the Oyu Tolgoi
underground and open pit mines for the years 2028 to 2036 was
previously reported in a release to the Australian Securities
Exchange (ASX) dated 11 July 2023 "Investor site visit to Oyu
Tolgoi copper mine, Mongolia". All material assumptions
underpinning that production target continue to apply and have not
materially changed.
4. In 2023, we improved our carbon emissions
reporting and now use the market-based method as our primary
measure. We also adjusted our 2018 baseline and 2022 emissions to
account for acquisitions and divestments. Further detail on these
changes in reporting is available in our Scope 1, 2 and 3 Emissions
Calculation Methodology Addendum.
5. Mined copper guidance: subsequent to Rio
Tinto's acquisition of Turquoise Hill Resources, which completed on
16 December 2022, mined copper guidance includes Oyu Tolgoi
on a 100% consolidated basis. It continues to reflect our 30% share
of Escondida.
6. Rio Tinto share of the Western Range capital
cost includes 100% of funding costs for Paraburdoo plant
upgrades.
7. WCS is currently a consortium of Singaporean
company, Winning International Group (50%), Weiqiao Aluminium (part
of the China Hongqiao Group) (50%) and United Mining Supply Group
(nominal shareholding). WCS is the holder of Simandou North Blocks
1 & 2 (with the Government of Guinea holding a 15% interest in
the mining vehicle and WCS holding 85%) and associated
infrastructure. Baowu Resources has entered into an agreement to
acquire a 49% share of WCS mine and infrastructure projects through
a Baowu-led consortium, subject to conditions including regulatory
approvals. In the case of the mine, Baowu has an option to increase
to 51% during operations.
8. WCS holds the mining concession for Blocks 1
and 2, while Simfer SA holds the mining concession for blocks 3 and
4. Simfer and WCS will independently develop their
mines.
9. Estimated numbers, subject to approval by the
Simfer board and government authorities. Spend incurred on the
project in 2023 was $0.9 billion of which $539 million was charged
to the Income Statement and $330 million was capitalised ($266
million on a cash basis). All qualifying costs are being
capitalised from the fourth quarter of 2023.
10. Simfer Jersey Limited is a joint venture between the Rio
Tinto Group (53%) and Chalco Iron Ore Holdings Ltd (CIOH) (47%),a
Chinalco-led joint venture of leading Chinese SOEs (Chinalco (75%),
Baowu (20%), China Rail Construction Corporation (2.5%) and China
Harbour Engineering Company (2.5%)). Simfer S.A. is the holder of
the mining concession covering Simandou Blocks 3 & 4, and is
owned by the Guinean State (15%) and Simfer Jersey Limited (85%).
Simfer Infraco Guinée S.A.U. will deliver Simfer's scope of the
co-developed rail and port infrastructure, and is, on the date of
this notice, a wholly-owned subsidiary of Simfer Jersey Limited,
but will be co-owned by the Guinean State (15%) after closing of
the co-development arrangements.
11. The estimated annualised capacity of approximately
60 million dry tonnes per annum iron ore for the Simandou life of
mine schedule was previously reported in a release to the
Australian Securities Exchange (ASX) dated 6 December 2023 titled
"Investor Seminar 2023". Rio Tinto confirms that all material
assumptions underpinning that production target continue to apply
and have not materially changed.
12. Co-development of the rail and port infrastructure
remains subject to a number of conditions, including regulatory
approvals in Guinea and China, the entry into a number of legal
agreements, ratification of the investment framework for
co-development by the Republic of Guinea, and agreement between
Simfer, WCS and the Republic of Guinea regarding the budget for the
rail and port infrastructure.
13. 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.
14. The 250 thousand tonne copper production target for the
Kennecott underground mines over the years 2023 to 2033 was
previously reported in a release to the Australian Securities
Exchange (ASX) dated 20 June 2023 "Rio Tinto invests to strengthen
copper supply in US". All material assumptions underpinning that
production target continue to apply and have not materially
changed.
15. Mine design and plans will be reviewed
by regulatory bodies as part of the OTFS23
process.
Selected financial
information for the
year ended 31 December
2023
Contents:
Selected financial information
|
Page
number
|
Group income statement
|
27
|
Group statement of comprehensive
income
|
28
|
Group cash flow
statement
|
29
|
Group balance sheet
|
31
|
Group statement of changes in
equity
|
33
|
Explanatory notes to the selected financial
information
|
Status of financial
information
|
35
|
Rio Tinto financial information by
business unit
|
36
|
Alternative performance
measures
|
40
|
Group income statement
Year ended 31 December
|
|
2023
US$m
|
2022
US$m
restated(a)
|
Consolidated operations
|
|
|
|
Consolidated sales
revenue
|
|
54,041
|
55,554
|
Net operating costs (excluding
items disclosed separately)
|
|
(37,052)
|
(34,770)
|
Net impairment
(charges)/reversals
|
|
(936)
|
150
|
Loss on disposal of interest in
subsidiary
|
|
-
|
(105)
|
Exploration and evaluation
expenditure (net of profit from disposal of interests in
undeveloped projects)
|
|
(1,230)
|
(896)
|
Operating profit
|
|
14,823
|
19,933
|
Share of profit after tax of
equity accounted units
|
|
675
|
777
|
Impairment of investments in
equity accounted units
|
|
-
|
(202)
|
Profit before finance items and taxation
|
|
15,498
|
20,508
|
Finance items
|
|
|
|
Net exchange (losses)/gains on
external net debt and intragroup balances
|
|
(251)
|
253
|
Losses on derivatives not
qualifying for hedge accounting
|
|
(54)
|
(424)
|
Finance income
|
|
536
|
179
|
Finance costs
|
|
(967)
|
(335)
|
Amortisation of discount on
provisions
|
|
(977)
|
(1,519)
|
|
|
(1,713)
|
(1,846)
|
Profit before taxation
|
|
13,785
|
18,662
|
Taxation
|
|
(3,832)
|
(5,614)
|
Profit after tax for the year
|
|
9,953
|
13,048
|
- attributable to owners of Rio
Tinto (net earnings)
|
|
10,058
|
12,392
|
- attributable to non-controlling
interests
|
|
(105)
|
656
|
|
|
|
|
Basic earnings per share
|
|
620.3c
|
765.0c
|
Diluted earnings per share
|
|
616.5c
|
760.4c
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
Group statement of comprehensive income
|
|
2023
US$m
|
2022
US$m
restated(a)
|
Profit after tax for the year
|
|
9,953
|
13,048
|
|
|
|
|
Other comprehensive income/(loss)
|
|
|
|
Items that will not be reclassified to the income
statement:
|
|
|
|
Re-measurement (losses)/gains on
pension and post-retirement healthcare plans
|
|
(461)
|
578
|
Changes in the fair value of
equity investments held at fair value through other comprehensive
income (FVOCI)
|
|
(24)
|
-
|
Tax relating to these components
of other comprehensive income
|
|
152
|
(123)
|
Share of other comprehensive
(losses)/income of equity accounted units, net of tax
|
|
(3)
|
5
|
|
|
(336)
|
460
|
|
|
|
|
Items that have been/may be subsequently reclassified to the
income statement:
|
|
|
|
Currency translation
adjustment(b)
|
|
644
|
(2,399)
|
Currency translation on subsidiary
disposed of, transferred to the income statement
|
|
-
|
105
|
Fair value movements:
|
|
|
|
- Cash flow hedge
gains/(losses)
|
|
30
|
(167)
|
- Cash flow hedge (gains)/losses
transferred to the income statement
|
|
(39)
|
106
|
Net change in costs of hedging
reserve
|
|
5
|
4
|
Tax relating to these components
of other comprehensive loss
|
|
1
|
21
|
Share of other comprehensive
income/(losses) of equity accounted units, net of tax
|
|
14
|
(27)
|
|
|
655
|
(2,357)
|
Total other comprehensive income/(loss) for the year, net of
tax
|
|
319
|
(1,897)
|
Total comprehensive income for the year
|
|
10,272
|
11,151
|
- attributable to owners of Rio
Tinto
|
|
10,335
|
10,649
|
- attributable to non-controlling
interests
|
|
(63)
|
502
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b) Excludes a currency translation gain of US$47 million (2022:
charge of US$240 million) arising on Rio Tinto Limited's share
capital for the period ended 31 December 2023, which is recognised in the Group
statement of changes in equity on page 33.
Group cash flow statement
|
|
2023
US$m
|
2022
US$m
|
Cash flows from consolidated
operations(a)
|
|
20,251
|
23,158
|
Dividends from equity accounted
units
|
|
610
|
879
|
Cash flows from operations
|
|
20,861
|
24,037
|
Net interest paid
|
|
(612)
|
(573)
|
Dividends paid to holders of
non-controlling interests in subsidiaries
|
|
(462)
|
(421)
|
Tax paid
|
|
(4,627)
|
(6,909)
|
Net cash generated from operating
activities
|
|
15,160
|
16,134
|
Cash flows from investing activities
|
|
|
|
Purchases of property, plant and
equipment and intangible assets
|
|
(7,086)
|
(6,750)
|
Sales of property, plant and
equipment and intangible assets
|
|
9
|
-
|
Acquisitions of subsidiaries,
joint ventures and associates
|
|
(834)
|
(850)
|
Disposals of subsidiaries, joint
ventures, joint operations and associates
|
|
-
|
80
|
Purchases of financial
assets
|
|
(39)
|
(55)
|
Sales of financial
assets(b)(c)
|
|
1,220
|
892
|
Net funding of equity accounted
units
|
|
(144)
|
(75)
|
Other investing cash
flows(d)
|
|
(88)
|
51
|
Net cash used in investing activities
|
|
(6,962)
|
(6,707)
|
Cash flows before financing activities
|
|
8,198
|
9,427
|
Cash flows from financing activities
|
|
|
|
Equity dividends paid to owners of
Rio Tinto
|
|
(6,470)
|
(11,727)
|
Proceeds from additional
borrowings(e)
|
|
1,833
|
321
|
Repayment of borrowings and
associated derivatives(e)
|
|
(310)
|
(790)
|
Lease principal
payments
|
|
(426)
|
(374)
|
Proceeds from issue of equity to
non-controlling interests
|
|
127
|
86
|
Purchase of non-controlling
interest(f)
|
|
(33)
|
(2,961)
|
Other financing cash
flows
|
|
2
|
(28)
|
Net cash used in financing activities
|
|
(5,277)
|
(15,473)
|
Effects of exchange rates on cash
and cash equivalents
|
|
(23)
|
15
|
Net increase/(decrease) in cash and cash
equivalents
|
|
2,898
|
(6,031)
|
Opening cash and cash equivalents
less overdrafts
|
|
6,774
|
12,805
|
Closing cash and cash equivalents
less overdrafts
|
|
9,672
|
6,774
|
(a) Cash flows from consolidated operations
|
|
2023
US$m
|
2022
US$m
|
|
Profit after tax for the year
(comparative restated)(g)
|
|
9,953
|
13,048
|
|
Adjustments for:
|
|
|
|
|
- Taxation (comparative
restated)(g)
|
|
3,832
|
5,614
|
|
- Finance items
|
|
1,713
|
1,846
|
|
- Share of profit after tax of
equity accounted units
|
|
(675)
|
(777)
|
|
- Loss on disposal of interest in
subsidiary
|
|
-
|
105
|
|
- Impairment charges of
investments in equity accounted units after tax
|
|
-
|
202
|
|
- Net impairment
charges/(reversals)
|
|
936
|
(150)
|
|
- Depreciation and
amortisation
|
|
5,334
|
5,010
|
|
- Provisions (including exchange
differences on provisions)
|
|
1,470
|
1,006
|
|
Utilisation of other
provisions
|
|
(104)
|
(176)
|
|
Utilisation of provisions for
close-down and restoration
|
|
(777)
|
(609)
|
|
Utilisation of provisions for
post-retirement benefits and other employment costs
|
|
(277)
|
(254)
|
|
Change in inventories
|
|
(422)
|
(1,185)
|
|
Change in receivables and other
assets
|
|
(418)
|
20
|
|
Change in trade and other
payables
|
|
(86)
|
700
|
|
Other
items(h)
|
|
(228)
|
(1,242)
|
|
|
|
20,251
|
23,158
|
Group cash flow statement (continued)
(b) In
2023, we received net proceeds of US$1,157
million (2022: US$352 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) In
2022, Sale of financial assets includes US$525 million
of cash received from the sale of the gross production royalty at
the Cortez Complex in Nevada, USA.
(d) In 2022,
Other investing cash flows includes inflows relating to payments
from a trust fund controlled by the Government of Australia to
Energy Resources Australia (ERA) for closure activity that has been
completed. At 31 December 2023 the total amount held in
the trust fund was US$349 million (31 December 2022:
US$329 million).
(e) 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 debt securities issued
during the year ended 31 December 2022.
(f) On 16 December 2022, we acquired the remaining 49%
share of Turquoise Hill Resources for expected consideration of
US$3.2 billion inclusive of transaction fees. At 31 December 2022,
US$2,961 had been paid, including US$33 million of transaction
costs. In 2023, further transaction costs of US$33 million
were paid, the balance to dissenting shareholders remains
unpaid.
(g) Comparative
information has been restated to reflect the adoption of narrow
scope amendments to IAS12 'Income Taxes'.
(h) Other items
includes the recognition of realised losses of US$57 million
on currency forwards not designated as hedges (2022: realised
losses US$459 million). In 2022, other items also included the
deduction of the US$432 million relating to the gain
recognised on sale of the Cortez royalty shown in "Sale of
financial assets".
Group balance sheet
|
|
2023
US$m
|
2022
US$m
Restated(a)
|
Non-current assets
|
|
|
|
Goodwill
|
|
797
|
826
|
Intangible assets
|
|
4,389
|
3,645
|
Property, plant and
equipment
|
|
66,468
|
64,734
|
Investments in equity accounted
units
|
|
4,407
|
3,298
|
Inventories
|
|
214
|
203
|
Deferred tax assets
|
|
3,624
|
2,796
|
Receivables and other
assets
|
|
1,659
|
1,893
|
Other financial assets
|
|
481
|
406
|
|
|
82,039
|
77,801
|
Current assets
|
|
|
|
Inventories
|
|
6,659
|
6,213
|
Receivables and other
assets
|
|
3,945
|
3,478
|
Tax recoverable
|
|
115
|
347
|
Other financial assets
|
|
1,118
|
2,160
|
Cash and cash
equivalents
|
|
9,673
|
6,775
|
|
|
21,510
|
18,973
|
Total assets
|
|
103,549
|
96,774
|
|
|
|
|
Current liabilities
|
|
|
|
Borrowings
|
|
(824)
|
(923)
|
Leases
|
|
(345)
|
(292)
|
Other financial
liabilities
|
|
(273)
|
(69)
|
Trade and other
payables
|
|
(8,238)
|
(8,047)
|
Tax payable
|
|
(542)
|
(223)
|
Close-down and restoration
provisions
|
|
(1,523)
|
(1,142)
|
Provisions for post-retirement
benefits and other employment costs
|
|
(361)
|
(353)
|
Other provisions
|
|
(637)
|
(554)
|
|
|
(12,743)
|
(11,603)
|
Non-current liabilities
|
|
|
|
Borrowings
|
|
(12,177)
|
(10,148)
|
Leases
|
|
(1,006)
|
(908)
|
Other financial
liabilities
|
|
(513)
|
(904)
|
Trade and other
payables
|
|
(596)
|
(604)
|
Tax payable
|
|
(31)
|
(36)
|
Deferred tax
liabilities
|
|
(2,584)
|
(3,164)
|
Close-down and restoration
provisions
|
|
(15,627)
|
(14,617)
|
Provisions for post-retirement
benefits and other employment costs
|
|
(1,197)
|
(1,305)
|
Other provisions
|
|
(734)
|
(744)
|
|
|
(34,465)
|
(32,430)
|
Total liabilities
|
|
(47,208)
|
(44,033)
|
Net assets
|
|
56,341
|
52,741
|
|
|
|
|
Capital and reserves
|
|
|
|
Share
capital(b)
|
|
|
|
- Rio Tinto plc
|
|
207
|
207
|
- Rio Tinto Limited
|
|
3,377
|
3,330
|
Share premium account
|
|
4,324
|
4,322
|
Other reserves
|
|
8,328
|
7,755
|
Retained earnings
|
|
38,350
|
35,020
|
Equity attributable to owners of Rio Tinto
|
|
54,586
|
50,634
|
Attributable to non-controlling
interests
|
|
1,755
|
2,107
|
Total equity
|
|
56,341
|
52,741
|
Group balance sheet (continued)
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b) At
31 December 2023, Rio Tinto plc had 1,251.3 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$30.45 (31 December 2022: US$28.48).
Group statement of changes in equity
Year ended 31 December 2023
|
Attributable to owners of Rio
Tinto
|
|
|
Share
capital
US$m
|
Share
premium
account
US$m
|
Other
reserves
US$m
|
Retained
earnings
US$m
|
Total
US$m
|
Non-controlling
interests
US$m
|
Total
equity
US$m
|
Opening balance as previously reported
|
3,537
|
4,322
|
7,805
|
34,511
|
50,175
|
2,099
|
52,274
|
Adjustment for transition to new
accounting pronouncements(a)
|
-
|
-
|
(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(b)
|
-
|
-
|
585
|
9,750
|
10,335
|
(63)
|
10,272
|
Currency translation arising on
Rio Tinto Limited's share capital
|
47
|
-
|
-
|
-
|
47
|
-
|
47
|
Dividends(e)
|
-
|
-
|
-
|
(6,466)
|
(6,466)
|
(462)
|
(6,928)
|
Newly consolidated
operation
|
-
|
-
|
-
|
-
|
-
|
33
|
33
|
Own shares purchased from Rio Tinto
shareholders to satisfy share awards to
employees(c)
|
-
|
-
|
(78)
|
(17)
|
(95)
|
-
|
(95)
|
Change in equity interest held by
Rio Tinto
|
-
|
-
|
-
|
(13)
|
(13)
|
13
|
-
|
Treasury shares reissued and other
movements
|
-
|
2
|
-
|
-
|
2
|
-
|
2
|
Equity issued to holders of
non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
127
|
127
|
Employee share awards charged to
the income statement
|
-
|
-
|
66
|
76
|
142
|
-
|
142
|
Closing balance
|
3,584
|
4,324
|
8,328
|
38,350
|
54,586
|
1,755
|
56,341
|
|
|
|
|
|
|
|
|
Year ended 31 December
2022
|
Attributable to owners of Rio Tinto
|
|
|
Share
capital
US$m
|
Share
premium
account
US$m
|
Other
reserves
US$m
|
Retained
earnings
US$m
|
Total
US$m
|
Non-controlling
interests
US$m
|
Total
equity
US$m
|
Opening balance as previously
reported(d)
|
3,777
|
4,320
|
9,998
|
33,320
|
51,415
|
5,158
|
56,573
|
Adjustment for transition to new
accounting pronouncements(a)
|
-
|
-
|
(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
year(b)
|
-
|
-
|
(2,193)
|
12,842
|
10,649
|
502
|
11,151
|
Currency translation arising on
Rio Tinto Limited's share capital
|
(240)
|
-
|
-
|
-
|
(240)
|
-
|
(240)
|
Dividends(e)
|
-
|
-
|
-
|
(11,716)
|
(11,716)
|
(421)
|
(12,137)
|
Own shares purchased from Rio Tinto
shareholders to satisfy share awards to
employees(c)
|
-
|
-
|
(84)
|
(16)
|
(100)
|
-
|
(100)
|
Change in equity interest held by
Rio Tinto
|
-
|
-
|
-
|
701
|
701
|
(3,907)
|
(3,206)
|
Treasury shares reissued and other
movements
|
-
|
2
|
-
|
-
|
2
|
-
|
2
|
Equity issued to holders of
non-controlling interests
|
-
|
-
|
-
|
(711)
|
(711)
|
797
|
86
|
Employee share awards charged to
the income statement
|
-
|
-
|
56
|
63
|
119
|
-
|
119
|
Transfers and other
movements
|
-
|
-
|
-
|
-
|
-
|
(30)
|
(30)
|
Closing balance
(restated)
|
3,537
|
4,322
|
7,755
|
35,020
|
50,634
|
2,107
|
52,741
|
Group statement of changes in equity
(continued)
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b) Refer to the Group statement of comprehensive income for
further details. Adjustments to other reserves include currency
translation attributable to owners of Rio Tinto, other than that
arising on Rio Tinto Limited's share capital.
(c) Net of contributions received from employees for share
awards.
(d) In 2022, the opening balance includes a US$17 million
adjustment for the prospective adoption of Amendments to IAS 37
"Provisions, Contingent Liabilities and Contingent Assets", as
reported in the prior year financial statements.
(e) Dividends per
share announced or paid during the period are summarised
below:
Year ended 31 December
|
2023
US$
|
2022
US$
|
Dividends per share: Ordinary -
paid during the year
|
402.0c
|
684.0c
|
Dividends per share: Special - paid
during the year
|
-
|
62.0c
|
Ordinary dividends per share:
announced with the results for the year
|
258.0c
|
225.0c
|
Status of financial information
The full year financial
information contained in this announcement, which does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006, has been derived from the statutory accounts
for the year ended 31 December 2023.
These statutory accounts have been audited, were approved by the
Board on 21 February 2024,
and will be filed with the Registrar of Companies
in the United Kingdom and the Australian Securities and Investments
Commission in due course. Statutory accounts for the year
ended 31 December 2022 have been
filed with the Registrar of Companies.
Unless stated otherwise, financial
information for the years ended 31 December
2023 and 31 December 2022 has
been extracted from the full financial statements for that year
prepared under the historical cost convention, as modified by the
revaluation of certain derivative contracts, the impact of fair
value hedge accounting on the hedged items and the accounting for
post-retirement assets and obligations.
The Auditors' reports on the full
financial statements for the years ended 31 December 2023 and 31
December 2022 were both unqualified and, in relation to Rio Tinto
plc, did not contain a statement 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 United Kingdom Companies Act 2006, and in relation to Rio
Tinto Limited, contained a statement that the financial report is
in accordance with the Corporations Act 2001 as amended by the ASIC
Order dated 16 July 2021.
Rio Tinto financial information by business
unit
|
|
Segmental
revenue(c) for the year ended 31
December
|
Underlying
EBITDA(c) for the year ended 31
December
|
Depreciation and amortisation
for the year ended 31 December
|
Underlying
earnings(c) for the year ended 31
December
|
|
Rio
Tinto
interest
%
|
2023
US$m
|
2022
US$m
|
2023
US$m
|
2022
US$m
|
2023
US$m
|
2022
US$m
|
2023
US$m
|
2022
US$m
|
|
|
|
Adjusted(a)
|
|
Adjusted(a)
|
|
Adjusted(a)
|
|
Restated(a)(b)
|
Iron Ore
|
|
|
|
|
|
|
|
|
|
Pilbara
|
(d)
|
30,867
|
29,313
|
19,828
|
18,474
|
2,128
|
2,011
|
11,945
|
11,106
|
Dampier Salt
|
68.4
|
422
|
352
|
120
|
56
|
21
|
19
|
49
|
19
|
Evaluation
projects/other
|
(e)
|
2,701
|
2,711
|
57
|
33
|
-
|
-
|
(89)
|
53
|
Intra-segment
|
(e)
|
(1,741)
|
(1,470)
|
(31)
|
49
|
-
|
-
|
(23)
|
35
|
Total Iron Ore Segment
|
|
32,249
|
30,906
|
19,974
|
18,612
|
2,149
|
2,030
|
11,882
|
11,213
|
|
|
|
|
|
|
|
|
|
|
Aluminium
|
|
|
|
|
|
|
|
|
|
Bauxite
|
|
2,390
|
2,396
|
662
|
618
|
373
|
361
|
141
|
101
|
Alumina
|
|
2,882
|
3,215
|
136
|
289
|
170
|
200
|
(56)
|
18
|
North American Aluminium
(m)
|
|
6,581
|
7,561
|
1,480
|
2,426
|
710
|
704
|
566
|
1,266
|
Pacific Aluminium
|
|
2,613
|
3,102
|
169
|
497
|
165
|
135
|
18
|
261
|
Intra-segment and other
|
|
(2,953)
|
(3,138)
|
(11)
|
12
|
-
|
-
|
(15)
|
(8)
|
Integrated operations
|
|
11,513
|
13,136
|
2,436
|
3,842
|
1,418
|
1,400
|
654
|
1,638
|
Other product group
items
|
|
772
|
973
|
9
|
25
|
-
|
-
|
5
|
15
|
Product group
operations
|
|
12,285
|
14,109
|
2,445
|
3,867
|
1,418
|
1,400
|
659
|
1,653
|
Evaluation
projects/other
|
|
-
|
-
|
(163)
|
(195)
|
-
|
-
|
(121)
|
(149)
|
Total Aluminium Segment
|
|
12,285
|
14,109
|
2,282
|
3,672
|
1,418
|
1,400
|
538
|
1,504
|
|
|
|
|
|
|
|
|
|
|
Copper
|
|
|
|
|
|
|
|
|
|
Kennecott
|
100.0
|
1,430
|
1,923
|
178
|
857
|
500
|
624
|
(328)
|
12
|
Escondida
|
30.0
|
2,756
|
2,628
|
1,619
|
1,641
|
355
|
330
|
684
|
798
|
Oyu Tolgoi
|
(f)
|
1,625
|
1,424
|
639
|
449
|
476
|
194
|
161
|
130
|
Product group
operations
|
|
5,811
|
5,975
|
2,436
|
2,947
|
1,331
|
1,148
|
517
|
940
|
Evaluation
projects/other(a)
|
|
867
|
724
|
(532)
|
(382)
|
5
|
5
|
(384)
|
(253)
|
Total Copper Segment
|
|
6,678
|
6,699
|
1,904
|
2,565
|
1,336
|
1,153
|
133
|
687
|
|
|
|
|
|
|
|
|
|
|
Minerals
|
|
|
|
|
|
|
|
|
|
Iron Ore Company of
Canada
|
58.7
|
2,500
|
2,818
|
942
|
1,381
|
214
|
207
|
293
|
475
|
Rio Tinto Iron &
Titanium
|
(g)
|
2,172
|
2,366
|
582
|
799
|
222
|
224
|
221
|
374
|
Rio Tinto Borates
|
100.0
|
802
|
742
|
212
|
155
|
58
|
54
|
125
|
80
|
Diamonds
|
(h)
|
444
|
816
|
44
|
330
|
35
|
45
|
26
|
151
|
Product group
operations
|
|
5,918
|
6,742
|
1,780
|
2,665
|
529
|
530
|
665
|
1,080
|
Evaluation
projects/other
|
|
16
|
12
|
(366)
|
(246)
|
1
|
1
|
(353)
|
(226)
|
Total Minerals Segment
|
|
5,934
|
6,754
|
1,414
|
2,419
|
530
|
531
|
312
|
854
|
|
|
|
|
|
|
|
|
|
|
Reportable segments total
|
|
57,146
|
58,468
|
25,574
|
27,268
|
5,433
|
5,114
|
12,865
|
14,258
|
Simandou iron ore
project
|
(i)
|
-
|
-
|
(539)
|
(189)
|
-
|
-
|
(160)
|
(145)
|
Other operations
|
(j)
|
142
|
192
|
(39)
|
(16)
|
290
|
272
|
(250)
|
(347)
|
Inter-segment
transactions
|
|
(231)
|
(256)
|
8
|
24
|
|
|
4
|
26
|
Central pension costs, share-based
payments, insurance and derivatives
|
|
|
|
168
|
377
|
|
|
48
|
374
|
Restructuring, project and one-off
costs
|
|
|
|
(190)
|
(173)
|
|
|
(112)
|
(85)
|
Central costs
|
|
|
|
(990)
|
(766)
|
95
|
94
|
(898)
|
(651)
|
Central exploration and
evaluation
|
|
|
|
(100)
|
(253)
|
|
|
(60)
|
(209)
|
Net interest
|
|
|
|
|
|
|
|
318
|
138
|
Underlying EBITDA/earnings
|
|
|
|
23,892
|
26,272
|
|
|
11,755
|
13,359
|
Items excluded from underlying
EBITDA/earnings
|
|
|
|
(1,257)
|
269
|
|
|
(1,697)
|
(967)
|
Reconciliation to Group income statement
|
|
|
|
|
|
|
|
|
|
Share of equity accounted unit
sales and intra-subsidiary/equity accounted unit sales
|
|
(3,016)
|
(2,850)
|
|
|
|
|
|
|
Impairment charges
|
|
|
|
(936)
|
(52)
|
|
|
|
|
Depreciation and amortisation in
subsidiaries excluding capitalised depreciation
|
|
|
|
(4,976)
|
(4,871)
|
|
|
|
|
Depreciation and amortisation in
equity accounted units
|
|
|
|
(484)
|
(470)
|
(484)
|
(470)
|
|
|
Taxation and finance items in
equity accounted units
|
|
|
|
(741)
|
(640)
|
|
|
|
|
Finance items
|
|
|
|
(1,713)
|
(1,846)
|
|
|
|
|
Consolidated sales revenue/profit before
taxation/depreciation and amortisation/net
earnings
|
|
54,041
|
55,554
|
13,785
|
18,662
|
5,334
|
5,010
|
10,058
|
12,392
|
Rio Tinto financial information by business unit
(continued)
|
|
Capital
expenditure(c)(k)
for the year ended 31
December
|
Operating
assets(l)
as at 31
December
|
|
Rio
Tinto
interest
%
|
2023
US$m
|
2022
US$m
|
2023
US$m
|
2022
US$m
|
|
|
|
Adjusted(a)
|
|
Restated(a)(b)
|
Iron Ore
|
|
|
|
|
|
Pilbara
|
(d)
|
2,563
|
2,906
|
17,959
|
17,785
|
Dampier Salt
|
68.4
|
25
|
34
|
146
|
153
|
Evaluation
projects/other
|
(e)
|
-
|
-
|
780
|
835
|
Intra-segment
|
(e)
|
-
|
-
|
(243)
|
(220)
|
Total Iron Ore Segment
|
|
2,588
|
2,940
|
18,642
|
18,553
|
|
|
|
|
|
|
Aluminium
|
|
|
|
|
|
Bauxite
|
|
159
|
161
|
2,649
|
2,458
|
Alumina
|
|
325
|
356
|
1,315
|
2,400
|
North American Aluminium
(m)
|
|
748
|
752
|
10,582
|
9,343
|
Pacific Aluminium
|
|
99
|
108
|
340
|
159
|
Intra-segment and other
|
|
-
|
-
|
997
|
629
|
Total Aluminium Segment
|
|
1,331
|
1,377
|
15,883
|
14,989
|
|
|
|
|
|
|
Copper
|
|
|
|
|
|
Kennecott
|
100.0
|
735
|
563
|
2,606
|
2,027
|
Escondida
|
30.0
|
-
|
-
|
2,844
|
2,792
|
Oyu Tolgoi
|
(f)
|
1,230
|
1,056
|
15,334
|
13,479
|
Product group
operations
|
|
1,965
|
1,619
|
20,784
|
18,298
|
Evaluation projects/other
(a)
|
|
11
|
3
|
262
|
165
|
Total Copper Segment
|
|
1,976
|
1,622
|
21,046
|
18,463
|
|
|
|
|
|
|
Minerals
|
|
|
|
|
|
Iron Ore Company of
Canada
|
58.7
|
364
|
366
|
1,347
|
1,147
|
Rio Tinto Iron &
Titanium
|
(g)
|
240
|
217
|
3,386
|
3,351
|
Rio Tinto Borates
|
100.0
|
49
|
34
|
502
|
496
|
Diamonds
|
(h)
|
66
|
48
|
29
|
(84)
|
Product group
operations
|
|
719
|
665
|
5,264
|
4,910
|
Evaluation
projects/other
|
|
27
|
14
|
873
|
874
|
Total Minerals Segment
|
|
746
|
679
|
6,137
|
5,784
|
|
|
|
|
|
|
Reportable segments total
|
|
6,641
|
6,618
|
61,708
|
57,789
|
Simandou iron ore
project
|
(i)
|
266
|
-
|
738
|
(22)
|
Other operations
|
(j)
|
57
|
53
|
(2,634)
|
(1,850)
|
Inter-segment
transactions
|
|
|
|
20
|
12
|
Other items
|
|
113
|
79
|
(1,015)
|
(1,107)
|
Total
|
|
7,077
|
6,750
|
58,817
|
54,822
|
Add back: Proceeds from disposal
of property, plant and equipment
|
|
9
|
-
|
|
|
Total purchases of property, plant & equipment and
intangibles as per cash flow statement
|
|
7,086
|
6,750
|
|
|
Add: Net (debt)/cash
|
|
|
|
(4,231)
|
(4,188)
|
Equity attributable to owners of Rio Tinto
|
|
|
|
54,586
|
50,634
|
Notes to financial information by business
unit
Business units are classified
according to the Group's management structure. Our management
structure is based on product groups 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 and is
responsible for allocating resources and assessing performance of
the operating segments. Finance costs and net debt are managed on a
Group-wide basis and are therefore excluded from the segmental
results.
The disclosures in this note
include certain non-IFRS financial measures (non-IFRS measures).
For more information on the non-IFRS measures used by the Group,
including definitions and calculations, refer to section entitled
alternative performance measures (pages 40 to 49).
(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 year ended 31 December 2022 and
2021 and operating assets as at 31 December 2022 and 2021 have been
restated for the impact of narrow-scope amendments to IAS
12. Details of these amendments are
disclosed in note 2 to the Financial Statements of our 2023 Annual
Report.
(c) Segmental revenue and
Capital expenditure are defined within Alternative performance
measures section on page 40
and page 46, respectively. Underlying EBITDA
is defined and calculated within the Alternative performance
measures section on pages 40
to 41. Underlying Earnings is defined and
calculated within the Alternative performance measures section on
pages 43 and 44.
(d) Pilbara represents the Group's 100% holding in Hamersley, 50%
holding in Hope Downs Joint Venture, 54% holding in Western Range
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 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 relate to the sale of remaining inventory and
Diavik.
(i) Rio Tinto Simfer UK Limited (which is wholly owned by the
Group) holds a 53% interest in Simfer Jersey Limited (Simfer
Jersey), a company incorporated in Jersey. Simfer Jersey, in turn,
has an 85% interest in Simfer S.A., the company that operates the
Simandou mining project in Guinea. As at 31 December 2023, Simfer
Jersey also owns 100% of Simfer InfraCo Guinée S.A., a company
incorporated in Guinea, which will deliver Simfer's scope of the
co-developed rail and port infrastructure. The Group therefore has
a 45.05% indirect interest in Simfer S.A. and a 53% indirect
interest in Simfer InfraCo Guinée S.A. These entities are
consolidated as subsidiaries and together referred to as the
Simandou iron ore project.
(j) Other operations includes our 86% interest in Energy
Resources of Australia, sites being rehabilitated under the
management of Rio Tinto Closure, 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.
From 16 June 2022, Commercial Treasury and related central costs
are reported as part of 'Other operations' instead of 'Other items'
in previous periods
(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.
(l) Operating assets of the Group represents equity attributable
to Rio Tinto adjusted for net (debt)/cash. 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)/cash 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).
(m)
North American Aluminium comprises our reporting
unit formerly known as Primary Metal and from 1 December 2023 our
50% interest in Matalco which focuses on recycling of aluminium.
The operations are principally located in Canada and USA, however
this reporting unit also includes our interests in ISAL (Iceland)
and Sohar (Oman).
Alternative performance measures
The Group presents certain
non-IFRS financial measures (non-IFRS measures) which are
reconciled to directly comparable IFRS financial measures below.
These non-IFRS measures hereinafter referred to as alternative
performance measures (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).
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.
Reconciliation of profit after tax to underlying
EBITDA
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 year 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
judgemental 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 2023, this includes all re-estimates of the closure provisions
for fully impaired sites identified in the second-half of the year
due to the materiality of the adjustment in aggregate. In 2022 this
category included the gain recognised by Kitimat relating to LNG
Canada's project and the gain recognised upon sale of the Cortez
royalty.
|
2023
US$m
|
2022
US$m
Restated(a)
|
Profit after tax for the year
|
9,953
|
13,048
|
Taxation
|
3,832
|
5,614
|
Profit before taxation
|
13,785
|
18,662
|
Depreciation and amortisation in
subsidiaries excluding capitalised
depreciation(b)
|
4,976
|
4,871
|
Depreciation and amortisation in
equity accounted units
|
484
|
470
|
Finance items in
subsidiaries
|
1,713
|
1,846
|
Taxation and finance items in
equity accounted units
|
741
|
640
|
(Gains)/losses on embedded
commodity derivatives not qualifying for hedge accounting
(including foreign exchange)
|
(15)
|
(6)
|
Impairment charges net of
reversals(c)
|
936
|
52
|
Gain recognised by Kitimat relating
to LNG Canada's project(d)
|
-
|
(116)
|
Change in closure estimates
(non-operating and fully impaired sites)(e)
|
1,272
|
180
|
Loss on disposal of interests in
subsidiary(c)
|
-
|
105
|
Gain on sale of the Cortez
royalty(f)
|
-
|
(432)
|
Underlying EBITDA
|
23,892
|
26,272
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b) Depreciation and amortisation in subsidiaries for the year
ended 31 December 2023 is net of capitalised depreciation of
US$358 million (2022: US$139 million; 2021:
US$172 million).
(c) Detailed
information over impairment charges is disclosed
in note 4 to the Financial Statements of our 2023 Annual Report.
(d) During 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 years as it was part of a
series of transactions that together were
material.
(e) In 2023 the charge includes US$0.9
billion related to the closure provision update
announced by Energy Resources of Australia on 12 December 2023
together with the update included in their half year results for
the period ended 30 June 2023, published in August. This update was
considered material and therefore it was aggregated with other
closure study updates which were similar in nature and have been
excluded from underlying EBITDA. The other closure study updates
were at legacy sites managed by our central closure team as well as
an update at Yarwun alumina refinery which was expensed due to the
impairment earlier in the year. In 2022, the charge related to
re-estimates of underlying closure cash flows for legacy sites
where the environmental damage preceded ownership by Rio
Tinto.
(f) On 2 August 2022, we completed the sale of a gross production
royalty which was retained following the disposal of the Cortez
Complex in 2008. The gain recognised on sale of the royalty was
excluded from underlying EBITDA on the grounds of individual
magnitude.
Underlying EBITDA margin
Underlying EBITDA margin is
defined as Group underlying EBITDA divided by the aggregate of
consolidated sales revenue and our share of equity account unit
sales after eliminations.
|
2023
US$m
|
2022
US$m
|
Underlying EBITDA
|
23,892
|
26,272
|
Consolidated sales
revenue
|
54,041
|
55,554
|
Share of equity accounted unit
sales and inter-subsidiary/equity accounted unit sales
eliminations
|
3,016
|
2,850
|
|
57,057
|
58,404
|
Underlying EBITDA margin
|
42
%
|
45
%
|
Pilbara underlying FOB EBITDA margin
The Pilbara underlying free on
board (FOB) EBITDA margin is defined as Pilbara underlying EBITDA
divided by Pilbara segmental revenue, excluding freight
revenue.
|
2023
US$m
|
2022
US$m
|
Pilbara
|
|
|
Underlying EBITDA
|
19,828
|
18,474
|
Pilbara segmental
revenue
|
30,867
|
29,313
|
Less: Freight revenue
|
(2,098)
|
(2,206)
|
Pilbara segmental revenue,
excluding freight revenue
|
28,769
|
27,107
|
Pilbara underlying FOB EBITDA margin
|
69
%
|
68
%
|
Underlying EBITDA margin from Aluminium integrated
operations
Underlying EBITDA margin from
integrated operations is defined as underlying EBITDA divided by
segmental revenue.
|
2023
US$m
|
2022
US$m
|
Aluminium
|
|
|
Underlying EBITDA - integrated
operations
|
2,436
|
3,842
|
Segmental revenue - integrated
operations
|
11,513
|
13,136
|
Underlying EBITDA margin from integrated
operations
|
21
%
|
29
%
|
Underlying EBITDA margin (product group
operations)
Underlying EBITDA margin (product
group operations) is defined as underlying EBITDA divided by
segmental revenue.
|
2023
US$m
|
2022
US$m
|
Copper
|
|
|
Underlying EBITDA - product group
operations
|
2,436
|
2,947
|
Segmental revenue - product group
operations
|
5,811
|
5,975
|
Underlying EBITDA margin - product group
operations
|
42
%
|
49
%
|
|
2023
US$m
|
2022
US$m
|
Minerals
|
|
|
Underlying EBITDA - product group
operations
|
1,780
|
2,665
|
Segmental revenue - product group
operations
|
5,918
|
6,742
|
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 year
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;
and
•
adjustments to closure provisions where the
adjustment is associated with an impairment charge, or for legacy
sites where the disturbance or environmental contamination relates
to the pre-acquisition period.
In addition, there is a final
judgemental 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.
Exclusions from underlying
earnings relating to equity accounted units are stated after tax
and included in the column "Pre-tax".
|
Pre-tax
2023
US$m
|
Taxation
2023
US$m
|
Non-controlling
interests
2023
US$m
|
Net amount
2023
US$m
|
Net
amount
2022
US$m
Restated(a)
|
Net earnings
|
13,785
|
(3,832)
|
105
|
10,058
|
12,392
|
Items excluded from underlying earnings
|
|
|
|
|
|
Impairment charges net of
reversals(j)
|
936
|
(499)
|
215
|
652
|
52
|
Foreign exchange and derivative
(losses)/gains:
|
|
|
|
|
|
- Exchange losses/(gains) on
external net debt, intragroup balances and
derivatives(b)
|
253
|
(12)
|
2
|
243
|
(216)
|
- Losses on currency and
interest rate derivatives not qualifying for hedge
accounting(c)
|
58
|
30
|
(1)
|
87
|
373
|
- (Gains)/losses on embedded
commodity derivatives not qualifying for hedge
accounting(d)
|
(21)
|
6
|
(8)
|
(23)
|
(20)
|
Change in closure estimates
(non-operating and fully impaired sites)(e)
|
1,272
|
(51)
|
(119)
|
1,102
|
178
|
Deferred tax arising on internal
sale of assets in Canadian operations(f)
|
-
|
(364)
|
-
|
(364)
|
-
|
Gains recognised by Kitimat
relating to LNG Canada's project(g)
|
-
|
-
|
-
|
-
|
(106)
|
Loss on disposal of interest in
subsidiary
|
-
|
-
|
-
|
-
|
105
|
Gain on sale of the Cortez
royalty(h)
|
-
|
-
|
-
|
-
|
(331)
|
Write-off of Federal deferred tax
assets in the United States(i)
|
-
|
-
|
-
|
-
|
932
|
Total excluded from underlying earnings
|
2,498
|
(890)
|
89
|
1,697
|
967
|
Underlying earnings
|
16,283
|
(4,722)
|
194
|
11,755
|
13,359
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b) Exchange losses on external net debt and intragroup balances
includes post-tax foreign exchange losses on net debt of US$316
million offset by post-tax gains of US$73 million
on intragroup balances, primarily as a result of
the Australian dollar strengthening against the US dollar. In 2022,
exchange gains on external net debt and intragroup balances
included post-tax foreign exchange losses on net debt of US$262
million offset by post-tax gains of US$478
million on intragroup balances, primarily as a result of the
Australian dollar weakening against the US dollar during the
year.
(c) 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.
(d) 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.
(e) In 2023, the charge includes US$0.9 billion related to
the closure provision update announced by Energy Resources of
Australia on 12 December 2023 together with the update included in
their half year results for the period ended 30 June 2023,
published in August. This update was considered material and
therefore it was aggregated with other closure study updates which
were similar in nature and have been excluded from underlying
earnings. The other closure study updates were at legacy sites
managed by our central closure team as well as an update at Yarwun
alumina refinery which was expensed due to the impairment earlier
in the year. In 2022, the charge related to re-estimates of
underlying closure cash flows for legacy sites where the
environmental damage preceded ownership by Rio
Tinto.
(f) During the year the Canadian aluminium business completed an
internal sale of assets which resulted in the utilisation of
previously unrecognised capital losses and an uplift in the tax
depreciable value of assets on which a deferred tax asset of US$364
million is recognised.
(g) During 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 years as it was part of a
series of transactions that together were
material.
(h) On 2 August 2022, we completed the sale of a gross production
royalty which was retained following the disposal of the Cortez
Complex in 2008. The gain recognised on sale of the royalty was
excluded from underlying earnings on the grounds of individual
magnitude.
(i) In 2022, we wrote down our deferred tax assets in the United
States following the introduction of the Corporate Alternative
Minimum Tax regime. The amount has been restated from US$820
million as previously reported to US$932 million to reflect the
adoption of narrow-scope amendments to IAS 12 as referred to in
footnote (a).
(j) Detailed information about impairment charges is
disclosed in note 4 to the Financial Statements of our 2023
Annual Report.
Basic underlying earnings per share
Basic underlying earnings per
share is calculated as underlying earnings divided by the weighted
average number of shares outstanding during the year.
Year ended 31 December
|
2023
|
2022
Restated(a)
|
Net earnings (US$
million)
|
10,058
|
12,392
|
Weighted average number of shares
(millions)
|
1,621.4
|
1,619.8
|
Basic earnings per ordinary share
(cents)
|
620.3
|
765.0
|
Items excluded from underlying
earnings per share (cents)(b)
|
104.7
|
59.7
|
Basic underlying earnings per ordinary share
(cents)
|
725.0
|
824.7
|
(a)
Comparative information has been restated to
reflect the adoption of narrow scope amendments to IAS12 'Income
Taxes'.
(b)
Calculation of items excluded from underlying
earnings per share:
|
2023
|
2022
Restated(a)
|
Income excluded from underlying
earnings (US$m) (refer to page 44)
|
1,697.0
|
967.0
|
Weighted average number of shares
(millions)
|
1,621.4
|
1,619.8
|
Items excluded from underlying earnings per share
(cents)
|
104.7
|
59.7
|
(a)
Comparative information has been restated to
reflect the adoption of narrow scope amendments to IAS12 'Income
Taxes'.
We have provided basic underlying
earnings per share as this allows the comparability of financial
performance adjusted to exclude items that do not reflect the
underlying performance of the Group's operations.
Interest cover
Interest cover is a financial
metric used to monitor our ability to service debt. It represents
the number of times finance income and finance costs (including
amounts capitalised) are covered by profit before taxation, before
finance income, finance costs, share of profit after tax of equity
accounted units and items excluded from underlying earnings, plus
dividends from equity accounted units.
|
2023
US$m
|
2022
US$m
|
Profit before taxation
|
13,785
|
18,662
|
Add back
|
|
|
Finance income
|
(536)
|
(179)
|
Finance costs
|
967
|
335
|
Share of profit after tax of
equity accounted units
|
(675)
|
(777)
|
Items excluded from underlying
earnings
|
2,498
|
(49)
|
Add: Dividends from equity
accounted units
|
610
|
879
|
Calculated earnings
|
16,649
|
18,871
|
|
|
|
Finance income
|
536
|
179
|
Finance costs
|
(967)
|
(335)
|
Add: Amounts
capitalised
|
(279)
|
(416)
|
Total net finance costs before
capitalisation
|
(710)
|
(572)
|
|
|
|
Interest cover
|
23
|
33
|
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.
|
2023
(cents)
|
2022
(cents)
Restated(a)
|
Interim dividend declared per
share
|
177.0
|
267.0
|
Final dividend declared per
share
|
258.0
|
225.0
|
Total dividend declared per share for the
year
|
435.0
|
492.0
|
|
|
|
Underlying earnings per
share
|
725.0
|
824.7
|
|
|
|
Payout ratio
|
60
%
|
60
%
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
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.
|
2023
US$m
|
2022
US$m
|
2021
US$m
|
Purchase of property, plant and
equipment and intangible assets
|
7,086
|
6,750
|
7,384
|
Less: Equity or shareholder loan
financing received/due from non-controlling interests
|
(125)
|
-
|
-
|
Rio Tinto share of capital
investment
|
6,961
|
6,750
|
7,384
|
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.
|
2023
US$m
|
2022
US$m
|
Net cash generated from operating
activities
|
15,160
|
16,134
|
Less: Purchase of property, plant
and equipment and intangible assets
|
(7,086)
|
(6,750)
|
Less: Lease principal
payments
|
(426)
|
(374)
|
Add: Sales of property, plant and
equipment and intangible assets
|
9
|
-
|
Free cash flow
|
7,657
|
9,010
|
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.
|
2023
|
|
Financial
liabilities
|
Other
assets
|
|
|
Borrowings
excluding
overdrafts
(a)
US$m
|
Lease
liabilities(b)
US$m
|
Net debt related
derivatives
(c)
US$m
|
Cash and cash equivalents
including overdrafts
(a)
US$m
|
Other
investments
(d)
US$m
|
Net debt
US$m
|
At 1 January
|
(11,070)
|
(1,200)
|
(690)
|
6,774
|
1,998
|
(4,188)
|
Foreign exchange
adjustment
|
(87)
|
(21)
|
62
|
(23)
|
-
|
(69)
|
Cash movements excluding exchange
movements
|
(1,523)
|
426
|
(4)
|
2,921
|
(1,157)
|
663
|
Other non-cash movements
|
(320)
|
(556)
|
203
|
-
|
36
|
(637)
|
At 31 December
|
(13,000)
|
(1,351)
|
(429)
|
9,672
|
877
|
(4,231)
|
(a) Borrowings excluding overdrafts of US$13,000 million
(2022: US$11,070 million) differs from
Borrowings on the balance sheet as it excludes bank overdrafts of
US$1 million (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
year.
(c) Included within "Derivatives related to net debt" are
interest rate and cross currency interest rate swaps that are in
hedge relationships with the Group's debt.
(d) Other investments includes US$877 million (2022: US$1,998
million) of highly liquid financial assets held in a separately
managed portfolio of fixed income instruments classified as held
for trading.
Net gearing ratio
Net gearing ratio is defined as
net debt divided by the sum of net debt and total equity at the end
of each year. It demonstrates the degree to which the Group's
operations are funded by debt versus equity.
|
2023
US$m
|
2022
US$m
Restated(a)
|
Net debt
|
(4,231)
|
(4,188)
|
|
|
|
Net debt
|
(4,231)
|
(4,188)
|
Total equity
|
(56,341)
|
(52,741)
|
Net debt plus total equity
|
(60,572)
|
(56,929)
|
Net gearing ratio
|
7%
|
7%
|
(a) Comparative information has been restated to reflect the
adoption of narrow scope amendments to IAS12 'Income
Taxes'.
Underlying return on capital employed
Underlying return on capital
employed ("ROCE") is defined as underlying earnings excluding net
interest divided by average capital employed (operating
assets).
Underlying ROCE measures how
efficiently we generate profits from investment in our portfolio of
assets.
|
2023
US$m
|
2022
US$m
Restated(a)
|
Profit after tax attributable to owners of Rio Tinto (net
earnings)
|
10,058
|
12,392
|
Items added back to derive
underlying earnings
|
1,697
|
967
|
Underlying earnings
|
11,755
|
13,359
|
Add/(deduct):
|
|
|
Finance income per the income
statement
|
(536)
|
(179)
|
Finance costs per the income
statement
|
967
|
335
|
Tax on finance cost
|
(373)
|
(238)
|
Non-controlling interest share of
net finance costs
|
(429)
|
(98)
|
Net interest cost in equity
accounted units (Rio Tinto share)
|
53
|
42
|
Net interest
|
(318)
|
(138)
|
Adjusted underlying earnings
|
11,437
|
13,221
|
|
|
|
Equity attributable to owners of
Rio Tinto - beginning of the year(a)
|
50,634
|
51,930
|
Net debt/(cash) - beginning of the
year
|
4,188
|
(1,576)
|
Operating assets - beginning of the year
|
54,822
|
50,354
|
Equity attributable to owners of
Rio Tinto - end of the year(a)
|
54,586
|
50,634
|
Net debt - end of the
year
|
4,231
|
4,188
|
Operating assets - end of the year
|
58,817
|
54,822
|
Average operating assets
|
56,820
|
52,588
|
Underlying return on capital employed
|
20 %
|
25 %
|
(a)
Comparative information has been restated to
reflect the adoption of narrow scope amendments to IAS12 'Income
Taxes'.
Metal prices and exchange rates
|
|
12 month average to 31
December 2023
|
12 month
average to 31 December 2022
|
Increase/
(Decrease)
|
|
|
|
|
|
Metal prices - average for the period
|
|
|
|
Copper
|
- US cents/lb
|
386
|
398
|
(3)
%
|
Aluminium
|
- US$/tonne
|
2,250
|
2,703
|
(17) %
|
Gold
|
- US$/troy oz
|
1,941
|
1,800
|
8
%
|
|
Twelve month average to 31
December
|
At 31
December
|
Exchange rates against the US dollar
|
2023
|
2022
|
Increase/
(Decrease)
|
2023
|
2022
|
Increase/
(Decrease)
|
Pound sterling
|
1.24
|
1.24
|
-
%
|
1.28
|
1.21
|
6
%
|
Australian dollar
|
0.66
|
0.69
|
(4)
%
|
0.69
|
0.68
|
1
%
|
Canadian dollar
|
0.74
|
0.77
|
(4)
%
|
0.76
|
0.74
|
3
%
|
Euro
|
1.08
|
1.05
|
3
%
|
1.11
|
1.07
|
4
%
|
South African rand
|
0.054
|
0.061
|
(11) %
|
0.054
|
0.059
|
(8)
%
|
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), are forward-looking statements. The words "intend",
"aim", "project", "anticipate", "estimate", "plan", "believes",
"expects", "may", "should", "will", "target", "set to" 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. 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; 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 Covid-19
pandemic; breaches of Rio Tinto's policies, standard and
procedures, laws or regulations; trade tensions between the world's
major economies; 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") or Form 6-Ks furnished to, or
filed with, 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.
Contacts
|
Please
direct all enquiries to media.enquiries@riotinto.com
|
Media Relations, UK
Matthew Klar
M+ 44 7796 630 637
David Outhwaite
M +44 7787 597 493
Media Relations, Americas
Simon Letendre M +1 514 796
4973
Malika Cherry M +1 418 592 7293
Investor Relations, UK
Menno Sanderse
M: +44 7825 195 178
David Ovington
M +44 7920 010 978
Laura Brooks
M +44 7826 942 797
|
Media Relations, Australia
Matt Chambers
M +61 433 525 739
Jesse Riseborough
M +61 436 653 412
Alyesha Anderson
M +61 434 868 118
Investor Relations, Australia
Tom Gallop
M +61 439 353 948
Amar Jambaa
M +61 472 865 948
|
Rio Tinto plc
6 St James's Square
London SW1Y 4AD
United Kingdom
T +44 20 7781 2000
Registered in England
No. 719885
|
Rio Tinto Limited
Level 43, 120 Collins
Street
Melbourne 3000
Australia
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
Classification: 3.1 Additional
regulated information required to be disclosed under the laws of a
Member State