REG - Rio Tinto - Rio Tinto 2024 half year results
31/07/2024 07:00
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RNS Number : 4806Y Rio Tinto PLC 31 July 2024
31 July 2024
Consistent, stable financial performance as we ramp up our investments in
growth; underlying EBITDA of $12.1 billion and interim ordinary dividend of
177 US cents per share
• Underlying EBITDA of $12.1 billion. Net cash generated from
operating activities of $7.1 billion.
• Profit after tax attributable to owners of Rio Tinto (referred to
as "net earnings" throughout this release) of $5.8 billion.
• Underlying earnings of $5.8 billion, leading to an interim
ordinary dividend of $2.9 billion, a 50% payout.
Six months ended 30 June 2024 2023 Change
Net cash generated from operating activities (US$ millions) 7,056 6,975 1 %
Purchases of property, plant and equipment and intangible assets (US$ 4,018 3,001 34 %
millions)
Free cash flow¹ (US$ millions) 2,843 3,769 (25) %
Consolidated sales revenue (US$ millions) 26,802 26,667 1 %
Underlying EBITDA¹ (US$ millions) 12,093 11,728 3 %
Profit after tax attributable to owners of Rio Tinto (net earnings) (US$ 5,808 5,117 14 %
millions)
Underlying earnings per share (EPS)¹ (US cents) 354.3 352.9 - %
Ordinary dividend per share (US cents) 177.0 177.0 - %
Underlying return on capital employed (ROCE)¹ 19% 20%
At 30 June 2024 At 31 December 2023
Net debt¹ (US$ millions) 5,077 4,231 20 %
Rio Tinto Chief Executive Jakob Stausholm said: "Rio Tinto is both
consistently very profitable and growing. This is being driven by the
disciplined investments we are making to strengthen our operations and
progress major projects for profitable organic growth.
"Our overall copper equivalent production is on track to grow by around 2%
this year, and our ambition is to deliver around 3% of compound annual growth
from 2024 to 2028 from existing operations and projects.
"We are at an inflection point in our growth, with a step change from our
aluminium business and consistent production at our Pilbara iron ore
operations. We have considerable growth in cash flow from the ramp-up of the
underground copper mine at Oyu Tolgoi, and more value to come as our Simandou
investment and Rincon lithium project proceed at pace. We are also solving
some of our most complex challenges through technology and partnerships, such
as the renewable power solutions announced for Boyne and NZAS.
"Our strengthened operations along with stable pricing for our commodities
have allowed us to again deliver robust financial results, with underlying
EBITDA of $12.1 billion. We recorded free cash flow of $2.8 billion, as we
invested in growth, and underlying earnings of $5.8 billion, after taxes and
government royalties of $4.4 billion. Return on capital employed was a
healthy 19%.
"Our strong balance sheet enables us to continue to maintain our practice of a
50% interim payout with a $2.9 billion ordinary dividend, as we continue to
invest with discipline to shape Rio Tinto into an even stronger company."
(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 62 to 69. Our financial results are prepared in accordance with IFRS -
see page 34 for further information.
Progress against our four objectives
Objective Key achievements in the first half of 2024
Best operator Safety is our top priority. 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. The investigation by the authorities is ongoing. Our
team is committed to continuing our safety improvement journey by learning
from these events. This remains imperative throughout 2024.
Our disciplined investment in lifting the health of our assets and focus on
shifting our culture and mindset is delivering results:
• we are committed to having a safe work environment, preventing
catastrophic events and injuries. Our All Injury Frequency Rate (AIFR) in the
first half of 2024 remained stable at 0.36.
• we continue to see good performance from the Oyu Tolgoi
underground mine in Mongolia, with a 15% increase in mined copper production
compared with first half 2023.
• the deployment of the Safe Production System (SPS) has now reached
26 sites. We deepened the maturity of SPS at existing sites during the half,
with three additional sites setting best throughput rates (over a 90 day
period).
• we achieved a 10% increase in bauxite production compared with
first half 2023, which reflects implementation of SPS, especially at Weipa
where we achieved higher plant utilisation and feed rates.
• we are on track to deliver our targeted 5 million tonne production
uplift at Pilbara Iron Ore in 2024 from SPS, which follows the 5 million tonne
achieved in 2023.
Impeccable ESG We have committed to reaching net zero Scope 1 and 2 emissions by 2050 and set
ambitious interim targets relative to our 2018 equity emissions baseline: to
reduce greenhouse gas (GHG) emissions by 50% by 2030.
In 2024 first half, our Scope 1 and 2 emissions were 16.1Mt CO(2)e (16.3Mt in
2023 first half, restated to reflect market-based Scope 2 reporting and
current asset ownership; 32.6Mt in 2023). Our capital expenditure on
decarbonisation projects in 2024 first half was $69 million. We also made $46
million of equity investments related to our decarbonisation programs. Our
related operational expenditure was $96 million.
Progress during the half on decarbonising our operations and value chains
included:
• Rio Tinto
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
announced
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
drive
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
to
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
develop
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
Australia's largest solar farm at Gladstone
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-drive-development-of-australias-largest-solar-farm-at-gladstone)
• Australia's leading iron ore producers partner with BlueScope on
steel decarbonisation
(https://www.riotinto.com/en/news/releases/2024/australias-leading-iron-ore-producers-partner-with-bluescope-on-steel-decarbonisation)
• Rio Tinto signs Australia's
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
largest wind
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
power deal
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
as it
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
works
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
to repower its Gladstone operations
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-signs-australias-biggest-renewable-power-deal-as-it-works-to-repower-its-gladstone-operations)
• Rio Tinto and BHP collaborate on battery-electric haul truck
trials in the Pilbara
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-and-bhp-collaborate-on-battery-electric-haul-truck-trials-in-the-pilbara)
• Rio Tinto to develop BioIron™ R&D facility in Western
Australia to test low-carbon steelmaking
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-develop-bioiron-rd-facility-in-western-australia-to-test-low-carbon-steelmaking)
• Long-term future for New Zealand's Tiwai Point aluminium smelter
secured with new power deals
(https://www.riotinto.com/en/news/releases/2024/long-term-future-for-new-zealands-tiwai-point-aluminium-smelter-secured-with-new-power-deals)
• Rio Tinto to install carbon free aluminium smelting cells using
first ELYSIS technology licence
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-to-install-carbon-free-aluminium-smelting-cells-using-first-elysistm-technology-licence)
• Richards Bay Minerals signs agreement for an additional 140 MW of
renewable energy
(https://www.riotinto.com/en/news/releases/2024/richards-bay-minerals-signs-agreement-for-an-additional-140-mw-of-renewable-energy)
• Ngarluma and Rio Tinto to progress renewable energy project
(https://www.riotinto.com/en/news/releases/2024/ngarluma-and-rio-tinto-to-progress-renewable-energy-project)
Excel in Development We made significant progress with our objective to excel in development with
the following key milestones in the half:
• the ramp-up of the Oyu Tolgoi underground copper-gold mine in
Mongolia is progressing in line with our long-term plan and is on track to
reach 500 thousand tonnes(1) of copper per year from 2028 to 2036.
• the construction of the Simandou high-grade iron ore project in
Guinea is advancing at pace. All con
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
ditions for
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
Rio Tinto's investment
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
to develop the deposi
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
t were sati
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
sfied in July
(https://www.riotinto.com/en/news/releases/2024/conditions-on-simandou-investment-now-satisfied)
, including the completion of necessary Guinean and Chinese regulatory
approvals, and we completed our investment to co-develop the rail and port
infrastructure.
• development of the 3,000 tonne per annum lithium carbonate starter
plant at Rincon in Argentina is on plan: we expect first production by the end
of 2024.
• at the Serbian Critical Raw Materials Summit on 19 July,
governments, potential customers and European leaders endorsed the Jadar
lithium project. This followed the Government of Serbia's reinstatement of the
Jadar project spatial plan to its previously adopted form.
Social licence We continue to strive to restore trust and rebuild relationships, particularly
with Indigenous peoples as we continue to invest in cultural knowledge.
In March, we officially launched a global community perception monitoring
program, Local Voices (https://voconiqlocalvoices.com/en/riotinto/) . The
program is an important part of our commitment to truly listen to communities
so we can continually find better ways to work together. Other key highlights
in the half include:
• Sokhulu and RBM agree to implement trust reform and support
long-term community benefit
(https://www.riotinto.com/en/news/releases/2024/sokhulu-and-rbm-agree-to-implement-trust-reform-and-support-long-term-community-benefit)
• Rio Tinto commits $10 million to boost Tom Price sports and
recreation
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-commits-10-million-to-boost-tom-price-sports-and-recreation)
• Yinhawangka People and Rio Tinto partner to co-design 'Living
Cultures Program'
(https://www.riotinto.com/en/news/releases/2024/yinhawangka-people-and-rio-tinto-partner-to-co-design-living-cultures-program)
• Rio Tinto celebrates WA businesses as regional and Indigenous
supplier spend grows
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-celebrates-wa-businesses-as-regional-and-indigenous-supplier-spend-grows)
• Rio Tinto donates $1.5 million to support the people and community
of Grindavík in Iceland
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-donates-1_5-million-to-support-the-people-and-community-of-grindavk-in-iceland)
• Rio Tinto invests $8 million in Pilbara conservation land
management
(https://www.riotinto.com/en/news/releases/2024/rio-tinto-invests-8-million-in-pilbara-conservation-land-management)
People and culture
We increased our gender diversity to 25.0% (from 24.3% at year end). The
increases were distributed across all levels of the organisation with female
senior leaders increasing to 31.0% (from 30.1% at year end).
During the first half, we continued to work on the Everyday Respect
recommendations. As part of this, we commenced our independently led Progress
Review. The outcomes will enable us to understand where our actions have had
the most impact and where we need to focus on our journey of culture change to
continue to create a safe, respectful and inclusive organisation. We expect to
receive the final report in the fourth quarter of 2024 and will subsequently
make this publicly available.
(1) 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.
Guidance
• Our share of capital investment (non-IFRS measure, refer to APMs on page
67) is unchanged. In 2024, 2025 and 2026 we expect it to be up to $10.0
billion per year, including up to $3.0 billion in growth per year, depending
on opportunities. Each guidance 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 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, the
cash spend is expected to be around $1.2 billion following a one-off
investment in July to reduce our long-term exposure to a legacy site in
France. All these amounts are fully provided for within our provision for
closure costs of $15.9 billion, which has decreased by $1.3 billion since 2023
year end primarily due to a change in discount rate.
• Effective tax rate on underlying earnings is expected to be around 30%
in 2024.
Unit costs H1 2024 Actuals 2024 Guidance
Pilbara iron ore unit cash costs, free on board (FOB) basis - US$ per wet 23.2 21.75-23.50
metric tonne
Australian dollar exchange rate 0.66 0.66
Copper C1 unit costs (includes Kennecott, Oyu Tolgoi and Escondida) - US cents 147 140-160
per lb
Production (Rio Tinto share, unless otherwise stated) H1 2024 Actuals 2024 Guidance
Pilbara iron ore (shipments, 100% basis) (Mt) 158.3 323 to 338
Bauxite (Mt) 28.1 53 to 56(1)
Alumina (Mt) 3.5 7.0 to 7.3
Aluminium (Mt) 1.7 3.2 to 3.4
Mined copper (consolidated basis) (kt) 327 660 to 720(2)
Refined copper (kt) 125 230 to 260
Titanium dioxide slag (Mt) 0.5 0.9 to 1.1
Iron Ore Company of Canada iron ore pellets and concentrate (Mt) 4.8 9.8 to 11.5
Boric oxide equivalent (Mt) 0.2 ~0.5
1. Around the top end
2. Around the bottom end.
• Production guidance is consistent with our Second Quarter Operations
Review, released on 16 July 2024.
• Iron ore shipments and bauxite production guidance remain subject to
weather impacts.
• Expectations for Pilbara iron ore shipments in 2024 remain at 323 to 338
million tonnes. SP10 levels are expected to remain elevated until replacement
projects are delivered. This guidance remains subject to the timing of
approvals for planned mining areas and heritage clearances.
Financial performance
Income Statement
Net earnings and underlying earnings refer to amounts attributable to the
owners of Rio Tinto. The net profit attributable to the owners of Rio Tinto in
2024 first half was $5.8 billion (2023 first half: $5.1 billion). We recorded
a profit after tax in 2024 first half of $5.9 billion (2023 first half: $4.9
billion) of which a profit of $0.1 billion was attributable to non-controlling
interests (2023 first half loss: $0.2 billion).
Underlying EBITDA
To provide additional insight into the performance of our business, we report
underlying EBITDA and underlying earnings. Underlying EBITDA and underlying
earnings are non-IFRS measures. For definitions and a detailed reconciliation
of underlying EBITDA and underlying earnings to the nearest IFRS measures, see
pages 39 and 64, respectively.
The principal factors explaining the movements in underlying EBITDA are set
out in this table.
US$bn
2023 first half underlying EBITDA 11.7
Prices (0.2)
Exchange rates 0.2
Volumes and mix (0.1)
General inflation (including net impact on provisions) (0.4)
Energy 0.1
Operating cash unit costs 0.2
Exploration and evaluation expenditure (net of profit from disposal of 0.2
interests in undeveloped projects)
Non-cash costs/other 0.4
Change in underlying EBITDA 0.4
2024 first half underlying EBITDA 12.1
Consistent financial results as costs stabilise
In general, we saw lower prices for our commodities, as supply improved,
outpacing modest demand growth.
Movements in commodity prices resulted in a $0.2 billion decline in underlying
EBITDA overall compared with 2023 first half, reflecting a lower iron ore
price and lower aluminium premiums, offset by an increase in the copper LME
price.
We have included a table of prices and exchange rates on page 70.
The monthly average Platts index for 62% iron fines converted to a Free on
Board (FOB) basis was 3% lower, on average, compared with 2023 first half.
The average LME price for copper was 4% higher, the average LME aluminium
price was 1% higher while the gold price was 14% higher compared with 2023
first half.
The Midwest premium duty paid for aluminium in the US averaged $417 per tonne,
28% lower than in 2023 first half.
Continued benefit from weaker local currencies
Compared with 2023 first half, on average, the US dollar strengthened by 3%
against the Australian dollar and was broadly flat against the Canadian
dollar. Currency movements increased underlying EBITDA by $0.2 billion
relative to 2023 first half.
Stable sales volumes
Copper equivalent sales volumes were 1.4% higher than 2023 first half,
underpinned by 15% higher copper sales volumes (consolidated share) and an
uplift in volumes from Matalco, following the 2023 acquisition. Underlying
EBITDA was $0.1 billion lower, impacted by the margin lost on 3% lower iron
ore shipments from the Pilbara (consolidated basis).
Impact of inflation partly offset by lower energy prices
The impact of ~3.5% inflation on our cost base lowered underlying EBITDA by
$0.3 billion compared to 2023 first half. The easing of diesel prices and
lower prices for natural gas partly offset this impact.
Unit cost pressures ease in first half as lower market-linked raw material
prices flow through
We remain focused on cost control, in particular maintaining discipline on
fixed costs, which are expected to increase marginally 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; as expected, we are seeing this stabilise in 2024.
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 $0.3
billion.
We saw a 20% decline in Copper C1 unit costs, primarily driven by higher
refined volumes at Kennecott following the restart of the smelter and
refinery.
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 was $0.5 billion, compared
with $0.4 billion in 2023 first half on the same basis. This excludes Simandou
spend which was $0.3 billion in the first half of 2023 and is now being
capitalised. The like-for-like rise was mainly attributable to increased
activity at the Rincon lithium project in Argentina and across the other
product group projects. Overall the charge to the Income Statement was $0.5
billion compared to $0.7 billion in 2023 first half.
Net earnings
The principal factors explaining the movements in underlying earnings and net
earnings are set out below.
US$bn
2023 first half net earnings 5.1
Changes in underlying EBITDA (see above) 0.4
Increase in depreciation and amortisation (pre-tax) in underlying earnings (0.4)
Decrease in interest and finance items (pre-tax) in underlying earnings 0.3
Increase in tax on underlying earnings (0.1)
Increase in underlying earnings attributable to outside interests (0.3)
Total changes in underlying earnings -
Changes in items excluded from underlying earnings (see below) 0.7
Movement in impairment charges net of reversals 0.9
Movement in exchange differences and gains/losses on derivatives (0.2)
2024 first half net earnings 5.8
Financial figures are rounded to the nearest $100 million, hence small
differences may result in the totals.
Modest increase in tax on underlying earnings from higher profits
The 2024 first half effective tax rate on underlying earnings was 29.5%
compared with 30.8% in 2023 first half. The tax on underlying earnings
increased by $0.1 billion primarily driven by the increase in underlying
EBITDA.
Increase in underlying earnings attributable to outside interests
In 2024, expenditure at Simandou was capitalised whereas until September 2023
it was expensed, resulting in a period-on-period decrease in costs
attributable to outside interests following capitalisation.
Items excluded from underlying earnings
The differences between underlying earnings and net earnings are set out in
this table (all numbers are after tax and exclude amounts attributable to
non-controlling interests).
2024 2023
Six months ended 30 June US$bn US$bn
Underlying earnings 5.8 5.7
Items excluded from underlying earnings
Net impairment reversal/(charges) 0.1 (0.8)
Foreign exchange and derivative (losses)/gains on net debt and intragroup - 0.2
balances and derivatives not qualifying for hedge accounting
Total items excluded from underlying earnings 0.1 (0.6)
Net earnings 5.8 5.1
Financial figures are rounded to the nearest $100 million, hence small
differences may result in the totals.
On pages 64 to 65 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 39.
We recognised net impairment reversals of $0.1 billion (after tax), with the
analysis set out on page 41.
Exchange and derivative movements were minimal in first half 2024 (2023 first
half: gain of $0.2 billion). Exchange losses are largely offset by currency
translation gains recognised in equity and vice-versa. The quantum of US
dollar debt is largely unaffected and we will repay it from US dollar sales
receipts.
Net earnings and underlying earnings refer to amounts attributable to the
owners of Rio Tinto.
Underlying EBITDA and underlying earnings by product group
Underlying EBITDA Underlying earnings
2024 2023 Change 2024 2023 Change
Six months ended 30 June US$bn US$bn % US$bn US$bn %
Iron Ore 8.8 9.8 (10) % 5.2 5.8 (11) %
Aluminium 1.6 1.1 38 % 0.6 0.3 113 %
Copper 1.8 1.1 67 % 0.5 0.2 131 %
Minerals 0.7 0.7 - % 0.1 0.2 (57) %
Reportable segments total 12.9 12.7 1 % 6.3 6.4 (3) %
Simandou iron ore project - (0.3) (98) % - (0.1) (85) %
Other operations 0.1 (0.1) - % (0.1) (0.2) (70) %
Central pension costs, share-based payments, insurance and derivatives (0.2) 0.2 (195) % (0.1) 0.1 (148) %
Restructuring, project and one-off costs (0.1) (0.1) 32 % (0.1) (0.1) 28 %
Other central costs (0.5) (0.5) (4) % (0.4) (0.5) (11) %
Central exploration and evaluation (0.1) (0.1) (15) % (0.1) (0.1) (17) %
Net interest 0.2 0.1 152 %
Total 12.1 11.7 3 % 5.8 5.7 1 %
Financial figures are rounded to the nearest $100 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 62 to
69.
Simandou iron ore project
We commenced capitalising qualifying costs attributable to the Simandou
project in Guinea from the fourth quarter of 2023. In 2023 first half, we
expensed $0.3 billion.
Central and other costs
Pre-tax central pension costs, share-based payments, insurance and derivatives
were a $0.2 billion charge compared with a $0.2 billion credit in 2023 first
half, reflecting the movement on our unrealised derivative position between
the two years as well as the insurance charges incurred by our Captives in
relation to claims made by our Minerals business in 2024.
On a pre-tax basis, restructuring, project and one-off central costs were
mainly associated with corporate projects and were comparable to 2023 first
half.
Other central costs of $0.5 billion were comparable to 2023 first half, with
productivity gains offsetting inflation.
On an underlying earnings basis, net interest was a credit of $0.2 billion
(2023 first half: credit of $0.1 billion) with the variance between the two
years being additional costs associated with the refinancing of Oyu Tolgoi in
2023.
Sustained investment 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 $114 million.
The bulk of this expenditure focused on copper in Chile, Kazakhstan and
Serbia, nickel in Brazil and Canada, lithium in Canada, US, Chile, Rwanda and
Australia, potash in Canada and heavy mineral sands in South Africa and
Rwanda.
Cash flow
2024 2023
Six months ended 30 June US$bn US$bn
Net cash generated from operating activities 7.1 7.0
Purchases of property, plant and equipment and intangible assets (4.0) (3.0)
Lease principal payments (0.2) (0.2)
Free cash flow¹ 2.8 3.8
Dividends paid to equity shareholders (4.1) (3.7)
Chalco Iron Ore Holdings (CIOH) contribution towards Simfer cash expenditures 0.4 -
Other - (0.3)
Movement in net debt¹ (0.8) (0.2)
Financial figures are rounded to the nearest $100 million, hence small
differences may result in the totals.
• $7.1 billion in net cash generated from operating activities, 1% higher
than 2023 first half, primarily driven by higher underlying EBITDA and a
smaller seasonal increase in working capital, partially offset by higher taxes
paid. The cash outflow from working capital of $0.7 billion in the period
reflected the draw down of royalties and taxes payable in the period as prices
fell from late 2023, along with seasonal movements in amounts due to JV
partners and employees. Operating cash flow also benefited from higher
dividends, primarily from Escondida ($0.4 billion in 2024 first half; $0.3
billion in 2023 first half).
• Taxes paid of $2.6 billion were $0.2 billion higher than 2023 first
half, including the impact of timing of payments in Australia.
• Purchases of property, plant and equipment and intangible assets
(capital expenditure) of $4.0 billion was comprised of $1.1 billion of growth
($0.9 billion on a Rio Tinto share basis), $1.1 billion of replacement, $1.7
billion of sustaining and $0.1 billion of decarbonisation capital (in addition
to $0.1 billion of decarbonisation spend in operating costs). We funded our
capital expenditure from operating activities and generally expect to continue
funding our capital program from internal sources.
• $4.1 billion of dividends paid, being the 2023 final ordinary dividend.
• The above movements, including $411 million relating to CIOH paying
its share of cash expenditures until the end of 2023 for the Simandou project
on 28 June 2024, resulted in net debt(1) rising by $0.8 billion during 2024
first half to $5.1 billion at 30 June 2024.
Six months ended 30 June 2024 2023
US$m US$m
Purchase of property, plant and equipment and intangible assets 4,018 3,001
Less: Equity or shareholder loan financing received/due from non-controlling (349) -
interests
Rio Tinto share of capital investment 3,669 3,001
• Our share of capital investment in 2024 first half was $3.7 billion,
comprised of capital expenditure of $4.0 billion net of equity/shareholder
loan financing due from non-controlling interests of $349 million. We expect
this to accelerate in the second half of 2024, as we invest in and fund our
share of the co-developed rail and port infrastructure being progressed in
partnership with Winning Consortium Simandou (WCS)(2), Baowu and the Republic
of Guinea.
(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 62 to 69. Our financial results are prepared in accordance with IFRS -
see page 34 for further information.
(2) WCS is the holder of Simandou North Blocks 1 & 2 and associated
infrastructure vehicle (with the Government of Guinea holding a 15% interest
in each of the Guinean mining and infrastructure vehicles and WCS holding
85%). WCS was originally held by WCS Holdings, a consortium of Singaporean
company, Winning International Group (50%) and Weiqiao Aluminium (part of the
China Hongqiao Group) (50%). On 19 June 2024, Baowu Resources completed the
acquisition of a 49% share of WCS mine and infrastructure projects with WCS
Holdings holding the remaining 51%. In the case of the mine, Baowu also has an
option to increase to 51% during operations. After Closing, Simfer Jersey will
hold 34% of the shares in the WCS Singapore-incorporated infrastructure
entities during construction with WCS holding the remaining 66%.
Balance sheet
Net debt(1) of $5.1 billion at 30 June 2024 increased by $0.8 billion
compared to the year end.
Our net gearing ratio(1) (net debt to total capital) was 8% at 30 June 2024
(31 December 2023: 7%). See page 68.
Our total financing liabilities excluding net debt derivatives at 30 June
2024 (see page 68) were $14.3 billion (31 December 2023: $14.4 billion) and
the weighted average maturity was around 11 years. At 30 June 2024,
approximately 75% of these liabilities were at floating interest rates (83%
excluding leases). The maximum amount within non-current borrowings maturing
in any one calendar year is $1.67 billion, which matures in 2033.
We had $9.7 billion in cash and cash equivalents plus other short-term cash
investments at 30 June 2024 (31 December 2023: $10.5 billion).
Provision for closure costs
At 30 June 2024, provisions for close-down and restoration costs and
environmental clean-up obligations were $15.9 billion (31 December 2023:
$17.2 billion). The decrease was largely due to a revision of the closure
discount rate to 2.5% (from 2.0%), reflecting expectations of higher yields
from long-dated bonds, including the 30-year US Treasury Inflation Protected
Securities, which is a key input to our closure discount rate and resulted in
a $1.0 billion decrease. The provision further reduced by $0.4 billion due
to the strengthening of the US dollar against local currencies and cash spend
on rehabilitation activities of $0.4 billion, offset by amortisation of the
discount ($0.4 billion). In 2024, the cash spend is expected to be around
$1.2 billion following a one-off investment in July to reduce our long term
exposure to a legacy site in France.
(1) This financial performance indicator is a non-IFRS (as defined below)
measure which is reconciled to directly comparable IFRS financial measures
(non-IFRS measures). It is used internally by management to assess the
performance of the business and is therefore considered relevant to readers of
this document. It is presented here to give more clarity around the underlying
business performance of the Group's operations. For more information on our
use of non-IFRS financial measures in this report, see the section entitled
"Alternative performance measures" (APMs) and the detailed reconciliations on
pages 62 to 69. Our financial results are prepared in accordance with IFRS -
see page 34 for further information.
Our shareholder returns policy
The Board is committed to maintaining an appropriate balance between cash
returns to shareholders and investment in the business, with the intention of
maximising long-term shareholder value.
At the end of each financial period, the Board determines an appropriate total
level of ordinary dividend per share. This takes into account the results for
the financial year, the outlook for our major commodities, the Board's view of
the long-term growth prospects of the business and the company's objective of
maintaining a strong balance sheet. The intention is that the balance between
the interim and final dividend be weighted to the final dividend.
The Board expects total cash returns to shareholders over the longer term to
be in a range of 40% to 60% of underlying earnings in aggregate through the
cycle. Acknowledging the cyclical nature of the industry, it is the Board's
intention to supplement the ordinary dividend with additional returns to
shareholders in periods of strong earnings and cash generation.
50% payout ratio on the ordinary dividend, in line with our practice
2024 2023
US$bn US$bn
Ordinary dividend
Interim¹ 2.9 2.9
Payout ratio on ordinary dividend 50% 50%
(1) Based on weighted average number of shares and declared dividends per
share for the respective periods and excluding foreign exchange impacts on
payment.
As announced on 26 July 2024, we determine Rio Tinto plc and Rio Tinto Limited
dividends in US dollars, our reporting currency. Historically, we have
declared and announced these dividends in pounds sterling and Australian
dollars, respectively. However, following changes to Rio Tinto Limited's
constitution approved by shareholders in 2024, we now declare and announce
dividends in US dollars.
Ordinary dividend per share declared 2024 2023
Interim (US cents) 177.0 177.0
The 2024 interim ordinary dividend to be paid to our Rio Tinto Limited
shareholders will be fully franked. The Board expects Rio Tinto Limited to be
in a position to pay fully franked dividends for the foreseeable future.
On 26 September 2024, we will pay the 2024 interim ordinary dividend to Rio
Tinto plc and Rio Tinto Limited holders of ordinary shares and holders of Rio
Tinto plc ADRs (American Depositary Receipts) on the register at the close of
business on 16 August 2024 (record date). The ex-dividend date is 15 August
2024.
Rio Tinto plc and Rio Tinto Limited shareholders may choose to receive their
dividend in US dollars, pounds sterling, Australian dollars, or New Zealand
dollars. Currency conversions will be based on the pound sterling, Australian
dollar and New Zealand dollar exchange rates seven business days before the
dividend payment date. Rio Tinto plc and Rio Tinto Limited shareholders must
register any changes to their currency elections, including elections to
receive their dividend payments in US dollars, by 5 September 2024. In the
absence of updated payment elections being received by the share registrar,
interim dividends will be paid as per the existing payment currency elections.
ADR holders receive dividends at the declared rate in US dollars.
We will operate our Dividend Reinvestment Plans for the 2024 interim dividend
(visit riotinto.com for details). Rio Tinto plc and Rio Tinto Limited
shareholders' election notice for the Dividend Reinvestment Plans must be
received by 5 September 2024. Purchases under the Dividend Reinvestment Plans
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 Total Capital remaining to be spent from Status/Milestones
(Rio Tinto 100% capital cost 1 July 2024
owned unless (100% unless
otherwise stated) otherwise stated)
Ongoing
Iron ore
Investment in the Western Range iron ore project, a joint venture between Rio $1.3bn $0.5bn Approved in September 2022, the mine will have a capacity of 25 million tonnes
Tinto (54%) and China Baowu Steel Group Co. Ltd (46%) in the Pilbara to
per year. The project includes construction of a primary crusher and an 18
sustain production of the Pilbara Blend(TM) from Rio Tinto's existing (Rio Tinto share)(1) (Rio Tinto kilometre conveyor connection to the Paraburdoo processing plant. Construction
Paraburdoo hub. First production is anticipated in 2025.
is now 70% complete, with development of the initial mining area completed
share) during the half. First ore from the new primary crusher and conveyor system is
on plan for 2025.
Investment in the Simandou high grade iron ore project in Guinea in $6.2bn $5.3bn Announced in December 2023, first production at the Simfer mine is expected in
partnership with CIOH, a Chinalco-led consortium (the Simfer joint venture)
2025, ramping up over 30 months to a 60 million tonne per year capacity (27
and co-development of the rail and port infrastructure with Winning Consortium (Rio Tinto (Rio Tinto million tonnes Rio Tinto share).
Simandou(2) (WCS), Baowu and the Republic of Guinea (the partners) for the
export of up to 120 million tonnes per year of iron ore mined by Simfer's and share) share) For the Simfer mine, work on support facilities, including camps, roads, and
WCS's respective mining concessions.(3) The Simfer joint venture(4) will water and waste facilities is
develop, own and operate a 60 million tonne per year(5) mine in blocks 3 &
4. WCS will construct the project's ~536 kilometre dual track main line as progressing well.
well as the WCS barge port, while Simfer will construct the ~70 kilometre spur
line, connecting its mining concession to the main rail line, and the For the Simfer infrastructure scope, we completed preparatory work on the
transshipment vessel port. bridge foundations which will be used to construct the railway spur. All
infrastructure contracts have now been awarded.
All conditions have now been satisfied for Rio Tinto's investment to develop
the deposit, including the completion of necessary Guinean and Chinese
regulatory approvals, and we have completed our investment in WCS(2) to
co-develop the rail and port infrastructure.
Aluminium
Investment to expand the low-carbon AP60 aluminium smelter at the Complexe $1.1bn $0.9bn Approved in June 2023, AP60 expansion construction activities progressed, with
Jonquière in Quebec. The investment includes up to $113 million of financial the first prefabricated steel structures delivered to site. Once completed,
support from the Quebec government. the project will add 96 new AP60 pots, increasing capacity by approximately
160,000 metric tonnes of primary aluminium per year by the end of 2026. This
Commissioning is expected in the first half of 2026, with the smelter fully new capacity, in addition to 30,000 tonnes of new recycling capacity at Arvida
ramped up by the end of that year. Once completed, it is expected to be in the expected to open in the fourth quarter of 2025, will offset the 170,000 tonnes
first quartile of the industry operating cost curve. of capacity lost through the gradual closure of potrooms at the Arvida smelter
from 2024.
Copper
Phase two of the south wall pushback to extend mine life at Kennecott in Utah $1.8bn $1.1bn Approved in December 2019, the investment will further extend strip waste rock
by a further six years. mining and support additional infrastructure development. This will allow
mining to continue into a new area of the orebody between 2026 and 2032. In
March 2023, a further $0.3 billion was approved to primarily mitigate the risk
of failure in an area of geotechnical instability known as Revere, necessary
to both protect open pit value and enable underground development.
Investment in the Kennecott underground development of the North Rim Skarn $0.5bn $0.5bn Approved in June 2023, production from NRS(6) is expected to commence around
(NRS) area. mid-year 2025 and is expected to ramp up over two years, to deliver around
250,000 tonnes of additional mined copper over the next 10 years(7) alongside
open cut operations.
Development of the Oyu Tolgoi underground copper-gold mine in Mongolia (Rio $7.06bn $0.7bn We delivered first sustainable underground production from Panel 0 in March
Tinto 66%), which is expected to produce (from the open pit and underground) 2023.
an average of ~500,000 tonnes(8) of copper per year from 2028 to 2036.
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.
1. Rio Tinto share of the Western Range capital cost includes 100% of
funding costs for Paraburdoo plant upgrades.
2. 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. WCS was originally held by WCS
Holdings, a consortium of Singaporean company, Winning International Group
(50%) and Weiqiao Aluminium (part of the China Hongqiao Group) (50%). On 19
June 2024, Baowu Resources completed the acquisition of a 49% share of WCS
mine and infrastructure projects with WCS Holdings holding the remaining 51%.
In the case of the mine, Baowu also has an option to increase to 51% during
operations. After Closing, Simfer will hold 34% of the shares in the WCS
infrastructure entities during construction with WCS holding the remaining
66%.
3. 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.
4. 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 Infraco Guinée S.A.U. will deliver Simfer Jersey's scope of the
co-developed rail and port infrastructure, and is, an indirect subsidiary of
Simfer Jersey Limited (85%) co-owned by the Guinean State (15%) as of 17 July
2024. 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%).
5. 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.
6. 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.
7. 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.
8. 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.
Future options
Status
Iron Ore: Pilbara brownfields
Over the medium term, our Pilbara system capacity remains between 345 and 360 We continue to work closely with local communities, Traditional Owners and
million tonnes per year. Meeting this range, and the planned product mix, will governments to progress approvals for these new mining projects. We are
require the approval and delivery of the next tranche of replacement mines advancing our next tranche of Pilbara mine replacement studies including the
over the next five years. Hope Downs 1 (Hope Downs 2 and Bedded Hilltop), Brockman 4 (Brockman Syncline
1), Greater Nammuldi and West Angelas projects. Early works have commenced at
Hope Downs 1. Project timelines remain subject to timing of approvals and
heritage clearances with the Greater Nammuldi project starting to diverge from
the original development schedule.
Iron Ore: Rhodes Ridge
In October 2022, Rio Tinto (50%) and Wright Prospecting Pty Ltd (50%) agreed In December 2023, we announced approval of a $77 million pre-feasibility study
to modernise the joint venture covering the Rhodes Ridge project in the (PFS). The PFS continues to progress with good engagement with Traditional
Eastern Pilbara, providing a pathway for development utilising Rio Tinto's Owners and government. The PFS, which is targeting an initial capacity of up
rail, port and power infrastructure. to 40 million tonnes per year, subject to relevant approvals, is expected to
be completed in 2025. First ore is 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 On 16 July 2024, the Constitutional Court of Serbia issued a decision stating
include an underground mine with associated infrastructure and equipment, as the 2022 decree by the Government of Serbia to abolish the Jadar project
well as a beneficiation chemical processing plant. spatial plan was unconstitutional and illegal. Subsequently, the Government of
Serbia has reinstated the spatial plan to its previously adopted form.
The Board committed funding in July 2021, subject to receiving all relevant Following the decisions, we have continued to focus on consultation with all
approvals, permits and licences. The studies and capital estimates will need key stakeholders, including providing comprehensive factual information about
to be updated before project approval. the project. To support a public dialogue, the Jadar project released the
draft Environmental Impact Assessment (EIA) studies which provide insights
into the project's potential environmental impacts and the proposed mitigation
actions. Independent Serbian and international experts have confirmed the
Jadar Project can be implemented safely in line with the highest environmental
standards. The Jadar project will be subject to stringent environmental
requirements in compliance with Serbian and EU regulations. This includes
having to progress through an extended phase of legal, EIA and permitting
procedures, as well as public consultations, and further business evaluations,
before implementation of the project.
Lithium: Rincon
We completed the acquisition of the Rincon Lithium project in Salta province, Development of the 3,000 tonne per annum battery-grade lithium carbonate
Argentina in March 2022. Studies are continuing on the full-scale plant, which starter plant continues to progress to plan with civil concrete work completed
will have benefits of economies of scale, with the capital intensity, based on and all steel, cable and piping on site, and being progressively installed. An
current stage of studies, forecast to be in line with regional lithium additional 400-bed camp facility has also been constructed, bringing the total
industry benchmarks. number of new beds on site to 900. Commissioning planning is advancing and we
continue to expect first production from the starter plant by the end of 2024.
In July 2022, we approved $140 million of investment and $54 million for early We expect to complete the feasibility study for the full-scale operation in
works to support a full-scale operation. To date, the majority of costs have the third quarter of 2024. We continue to engage with communities, the
been expensed through exploration and evaluation expenditure. In July 2023, we province of Salta and the Government of Argentina to ensure an open and
approved a further $195 million to complete the starter plant. transparent dialogue with stakeholders about the works underway.
Following approval by the Argentine Congress of the new "RIGI" legislation
(Law 27,742), we intend to capitalise qualifying Rincon expenditure from 1
July 2024.
Mineral Sands: Zulti South
Development of the Zulti South project at Richards Bay Minerals (RBM) in South Approved in April 2019 to underpin RBM's supply of zircon and ilmenite over
Africa (Rio Tinto 74%). the life of the mine. The project remains on indefinite suspension, while a
feasibility study refresh is underway.
Copper: Resolution
The Resolution Copper project is a proposed underground copper mine in the The Ninth Circuit Court of Appeals denied Apache Stronghold's request to
Copper Triangle, in Arizona, US (Rio Tinto 55%). It has the potential to further hear their case to stop the land exchange between Resolution Copper
supply up to 25% of US copper demand. and the federal government. It is anticipated that Apache Stronghold will file
a petition in the second half of 2024 for the case to be heard by the U.S.
The United States Forest Service (USFS) continued work to progress the Final Supreme Court. We continue to progress the FEIS with the USFS, but they have
Environmental Impact Statement (FEIS) and complete actions necessary for the yet to advise on the date of re-publication. We also advanced partnership
land exchange. discussions with federally-recognised Native American Tribes who are part of
the formal consultation process. 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 concerns.
Copper: Winu
In late 2017, we discovered copper-gold mineralisation at the Winu project in We continue to work with the Traditional Owners to progress the Winu
the Paterson Province in Western Australia. In 2021, we reported our first copper-gold project, which remains subject to all of the required approvals.
Indicated Mineral Resource. The pathway remains subject to regulatory and Drilling, studies and fieldwork to advance the key environmental permitting
other required approvals. and Project Agreement negotiations with Nyangumarta and the Martu remain our
priority.
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.
Copper: La Granja
In August 2023, we completed a transaction to form a joint venture with First First Quantum Minerals acquired a 55% stake in the project for $105 million
Quantum Minerals that will work to unlock the development of the La Granja and will invest up to a further $546 million into the joint venture to sole
project in Peru, one of the largest undeveloped copper deposits in the world, fund capital and operational costs to take the project through a feasibility
with potential to be a large, long-life operation. 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 We will install carbon free aluminium smelting cells at our Arvida smelter in
Canada and the Government of Quebec, is developing a breakthrough inert anode Quebec using the first technology licence issued by the ELYSIS joint venture.
technology that eliminates all direct greenhouse gases from the aluminium We will design, engineer and build a demonstration plant equipped with ten
smelting process. pots operating at 100 kiloamperes (kA), for a total investment of $285 million
(Rio Tinto $179 million, Government of Quebec $106 million). The plant will
have an annual capacity of 2,500 tonnes of commercial quality aluminium, with
first production targeted by 2027.
The joint venture is continuing its R&D program to scale up the ELYSIS(TM)
technology. It has begun commissioning the larger prototype 450 kA cells at
the Alma smelter, with the start-up sequence set to begin in 2024.
Review of operations
Iron Ore
Six months ended 30 June 2024 2023 Change
Pilbara production (million tonnes - 100%) 157.4 160.5 (2) %
Pilbara shipments (million tonnes - 100%) 158.3 161.7 (2) %
Salt production (million tonnes - Rio Tinto share)¹ 3.0 3.1 (4) %
Segmental revenue (US$ millions) 15,206 15,600 (3) %
Average realised price (US$ per dry metric tonne, FOB basis) 105.8 107.2 (1) %
Underlying EBITDA (US$ millions) 8,807 9,792 (10) %
Pilbara underlying FOB EBITDA margin² 67% 69%
Underlying earnings (US$ millions) 5,170 5,787 (11) %
Net cash generated from operating activities (US$ millions) 6,312 6,782 (7) %
Capital expenditure (US$ millions)(3) (1,258) (1,094) 15 %
Free cash flow (US$ millions) 5,029 5,639 (11) %
Underlying return on capital employed(4) 55% 63%
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. 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 excluding net interest divided by average capital employed.
Financial performance
Underlying EBITDA of $8.8 billion was 10% lower than 2023 first half,
primarily due to lower realised prices ($0.2 billion) and lower shipments,
which were impacted by a train collision in May.
Unit cost guidance for 2024 is unchanged at $21.75 to $23.5 per tonne (based
on an average A$:US$ exchange rate of 0.66). In 2024 first half, unit costs
were $23.2 per tonne, with shipments weighted to the second half.
Our Pilbara operations delivered an underlying FOB EBITDA margin of 67%,
compared with 69% in 2023 first half, largely due to the lower iron ore price
and lower volumes.
We price the majority of our iron ore sales (77%) by reference to the average
index price for the month of shipment. In 2024 first half, we priced
approximately 10% of sales with reference to the prior quarter's average index
lagged by one month with the remainder sold either on current quarter average,
on the spot market or other mechanisms. We made approximately 74% of sales
including freight and 26% on an FOB basis.
We achieved average pricing in the first half of 2024 of $97.3 per wet metric
tonne ($98.6 in the first half of 2023) on an FOB basis (equivalent to $105.8
per dry metric tonne, with an 8% moisture assumption). This compares to the
average first half price for the monthly average Platts index for 62% iron
fines converted to a FOB basis of $106.0 per dry metric tonne.
Segmental revenue for our Pilbara operations included freight revenue of $1.1
billion (2023 first half: $0.9 billion).
Net cash generated from operating activities of $6.3 billion was 7% lower
than 2023 first half, driven by the same drivers as underlying EBITDA. Free
cash flow of $5.0 billion was $0.6 billion lower than 2023 first half, mostly
driven by the $0.2 billion increase in capital expenditure
Review of operations
Pilbara operations produced 157.4 million tonnes (100% basis), 2% lower than
2023 first half. Shipments (100% basis) were also 2% lower. Productivity gains
offset ore depletion, however production and shipping in the half were
impacted by a train collision in May, which resulted in around six days of
lost rail capacity and full stockpiles at some mines.
Our iron ore portside sales in China were 14.0 million tonnes in the first
half of 2024 (11.9 million tonnes in 2023 first half). At the end of June,
inventory levels were 6.1 million tonnes (6.4 million tonnes at the end of
December 2023), including 3.2 million tonnes of Pilbara product. In the first
half of 2024, approximately 90% 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$375 million). Completion of the sale is subject to certain commercial and
regulatory conditions being satisfied. The transaction is subject to capital
gains tax.
Aluminium
Six months ended 30 June 2024 2023 Change
Bauxite production ('000 tonnes - Rio Tinto share) 28,142 25,581 10 %
Alumina production ('000 tonnes - Rio Tinto share) 3,540 3,720 (5) %
Aluminium production ('000 tonnes - Rio Tinto share) 1,650 1,598 3 %
Segmental revenue (US$ millions) 6,486 6,263 4 %
Average realised aluminium price (US$ per tonne) 2,746 2,866 (4) %
Underlying EBITDA (US$ millions) 1,577 1,140 38 %
Underlying EBITDA margin (integrated operations) 27% 21%
Underlying earnings (US$ millions) 555 260 113 %
Net cash generated from operating activities (US$ millions) 1,112 777 43 %
Capital expenditure - excluding EAUs (US$ millions)(1) (705) (597) 18 %
Free cash flow (US$ millions) 390 165 136 %
Underlying return on capital employed(2) 7% 4%
1. 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).
2. Underlying return on capital employed (ROCE) is defined as underlying
earnings excluding net interest divided by average capital employed.
Financial performance
We saw a 1% increase in the average LME price but there was no corresponding
uplift in market and product premiums. Market-related costs for key materials
such as caustic, coke and pitch moderated with some of this flowing through to
underlying EBITDA, offsetting some of the impact from a higher alumina price.
Overall there was significant rise in margins for our Aluminium business with
a 38% increase in underlying EBITDA to $1.6 billion. Underlying EBITDA margin
rose six percentage points to 27%.
We achieved an average realised aluminium price of $2,746 per tonne, 4% lower
than 2023 first half. The average realised aluminium prices comprise the LME
price, a market premium and a value-added product (VAP) premium. The cash LME
price averaged $2,358 per tonne, 1% higher than 2023 first half, while in our
key US market, the Midwest premium duty paid, which is 59% of our total
volumes (2023 first half: 56%), decreased by 28% to $417 per tonne (2023 first
half: $583 per tonne). Our VAP sales represented 45% of the primary metal we
sold (2023 first half: 47%) and generated product premiums averaging $287 per
tonne of VAP sold (2023 first half: $377 per tonne).
Our cash generation remained relatively strong, with net cash generated from
operating activities of $1.1 billion, a rise of 43%. Free cash flow of $0.4
billion reflected investment in the business of $0.7 billion.
Review of operations
Bauxite production of 28 million tonnes was 10% higher than 2023 first half,
reflecting the implementation of the Safe Production System, especially at
Weipa where we achieved higher plant utilisation and feed rates. As a
consequence, our Group full year bauxite production guidance is expected to be
around the top end of our 53 to 56 million tonne range.
We shipped 19.2 million tonnes of bauxite to third parties, 13% higher than
2023 first half. Segmental revenue for bauxite increased 29% to $1.4 billion.
This includes freight revenue of $0.2 billion (2023 first half: $0.2 billion).
Alumina production of 3.5 million tonnes was 5% lower than 2023 first half,
due to the impacts to our Gladstone operations from the breakage of the
third-party operated Queensland Gas Pipeline in March. The gas pipeline outage
has reduced our third party sales but there has been no impact on our
aluminium production. As a result, our net long alumina position in 2024 first
half was only 0.1 million tonnes.
As the result of sanction measures by the Australian Government, Rio Tinto has
taken on 100% of capacity of Queensland Alumina Limited (QAL) for as long as
the sanctions continue. This results in use of Rusal's 20% share of capacity
by Rio Tinto under the tolling arrangement with QAL. This additional output is
excluded from our production results as QAL remains 80% owned by Rio Tinto and
20% owned by Rusal.
Aluminium production of 1.7 million tonnes was 3% higher than 2023 first half,
with our smelters continuing to demonstrate stable performance, with ISAL
returning to 100% capacity after reducing its electricity load following
volcanic eruptions earlier in the half.
Copper
Six months ended 30 June 2024 2023 Change
Mined copper production ('000 tonnes - consolidated basis) 327 290 13 %
Refined copper production ('000 tonnes - Rio Tinto share) 125 95 32 %
Segmental revenue (US$ millions) 4,408 3,487 26 %
Average realised copper price (US cents per pound)¹ 419 396 6 %
Underlying EBITDA (US$ millions) 1,804 1,082 67 %
Underlying EBITDA margin (product group operations) 53% 43%
Underlying earnings (US$ millions) 457 198 131 %
Net cash generated from operating activities (US$ millions)² 1,101 409 169 %
Capital expenditure - excluding EAUs³ (US$ millions) (970) (917) 6 %
Free cash flow (US$ millions) 127 (512)
Underlying return on capital employed (product group operations)⁴ 7% 4%
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 $93 million (2023 first half: $10 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
Improved financials benefited from the steady ramp-up at Oyu Tolgoi and the
Kennecott smelter resuming normal operations following the rebuild in 2023.
Underlying EBITDA increased by 67% from first half 2023 and free cash flow
turned positive supported by a strong LME copper price and higher volumes.
Overall, our mined copper rose by 13% and refined by 32%.
Our copper unit costs, at 147 cents per pound, down by 37 cents per pound, or
20%, as a result of the higher production of refined copper with the Kennecott
smelter processing material from both the mine and concentrate inventory.
Guidance for 2024 copper C1 unit cost is unchanged at 140 to 160 US cents per
pound.
We generated $1.1 billion in net cash from operating activities, a 169%
increase from first half 2023, from the same drivers as underlying EBITDA and
a higher dividend from Escondida.
Review of operations
Mined copper production, at 327 thousand tonnes, was 13% higher than 2023
first half, reflecting higher output from all three operations. Oyu Tolgoi
benefited from the continued ramp-up in underground production in line with
our long term plan, Escondida saw an improvement in concentrator feed grade as
mining continued into higher grade zones, together with higher concentrator
output, while Kennecott was higher following the conveyor outage in 2023 first
half.
Refined copper production increased by 32% to 125 thousand tonnes with the
Kennecott smelter and refinery returning to normal operations following the
successful rebuild in 2023.
Oyu Tolgoi underground project
In 2024 first half, we delivered 2,845 thousand tonnes of ore milled from the
underground mine at an average copper head grade of 1.86% and 18,295 thousand
tonnes from the open pit with an average grade of 0.38%. The ramp-up remains
on track to reach 500 thousand tonnes of copper production per annum (100%
basis and stated as recoverable metal) for the Oyu Tolgoi underground and open
pit mines for the years 2028 to 2036(1).
We continue to see good performance from the underground mine, with a total of
114 drawbells opened from Panel 0, including 27 during the half.
The sinking of ventilation Shafts 3 and 4 was completed in April following the
breakthrough to surface. Both shafts remain on track to be commissioned in the
second half of 2024.
Construction works for the conveyor to surface continued to plan and were 97%
complete at the end of the quarter. Commissioning remains on track for the
second half of 2024.
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.
Construction of primary crusher 2 is progressing to plan and remains on track
to be completed by the end of 2025.
We expect to enter negotiations on a new Collective Labour Agreement in the
second half of the year. Our current agreement expires in April 2025.
(1) 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.
Minerals
Six months ended 30 June 2024 2023 Change
Iron ore pellets and concentrates production¹ (million tonnes - Rio Tinto 4.8 4.6 4 %
share)
Titanium dioxide slag production ('000 tonnes - Rio Tinto share) 492 589 (16) %
Borates production ('000 tonnes - Rio Tinto share) 246 257 (4) %
Diamonds production ('000 carats - Rio Tinto share) 1,441 1,924 (25) %
Segmental revenue (US$ millions) 2,738 2,889 (5) %
Underlying EBITDA (US$ millions) 687 689 - %
Underlying EBITDA margin (product group operations) 34% 30%
Underlying earnings (US$ millions) 77 179 (57) %
Net cash generated from operating activities (US$ millions) 267 89 200 %
Capital expenditure (US$ millions)(2) (271) (304) (11) %
Free cash flow (US$ millions) (19) (229) (92) %
Underlying return on capital employed (product group operations)(3) 12% 13%
1. Iron Ore Company of Canada (IOC) continues to be reported within
Minerals.
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.
3. Underlying return on capital employed (ROCE) is defined as underlying
earnings (product group operations) excluding net interest divided by average
capital employed.
Financial performance
Underlying EBITDA of $0.7 billion was in line with first half 2023, primarily
due to lower volume for titanium dioxide feedstocks and diamonds, and the
lower iron ore price. Underlying demand for titanium dioxide feedstocks
remains soft while the borates market is recovering from supply chain
disruptions.
Net cash generated from operating activities of $0.3 billion was 200% higher
than first half 2023, while negative free cash flow of $19 million reflected
the lower underlying EBITDA, higher working capital due to market conditions
and lower capital expenditure.
Underlying EBITDA and net cash generated from operating activities include
$0.2 billion(1) insurance proceeds relating to the process safety incidents at
RTIT and the forest fires at IOC in 2023.
Review of operations
Production of iron ore pellets and concentrate at IOC of 4.8 million tonnes
was 4% higher than first half 2023 when production was impacted by wildfires.
Production is expected to be weighted to the second half of 2024 supported by
seasonal factors.
TiO(2) slag production of 492 thousand tonnes was 16% lower than first half
2023, primarily driven by continued weak market conditions. Whilst a furnace
reconstruction is underway at our RTIT Quebec Operations, we continue to
operate six out of nine furnaces in Quebec and three out of four at Richards
Bay Minerals (RBM).
Borates production was 4% lower than first half 2023, impacted by unplanned
plant downtime in April and recovering market demand.
Our share of carats recovered was 25% lower than first half 2023. Production
was impacted by the tragic plane crash earlier in the year, as well as
cessation of A21 open pit mining in the third quarter of 2023.
(1) There is no overall financial impact to the Rio Tinto Group, with the
offset reflected centrally.
Price and exchange rate sensitivities
The following sensitivities give the estimated effect on underlying EBITDA,
assuming that each price or exchange rate moved in isolation. The relationship
between currencies and commodity prices is a complex one; movements in
exchange rates can affect movements in commodity prices and vice versa. The
exchange rate sensitivities quoted here include the effect on operating costs
of movements in exchange rates, but do not include the effect of the
revaluation of foreign currency working capital. They should be used with
care.
Average published US$ million impact on
price/exchange rate for 2024 first half full-year 2024
underlying EBITDA
of a 10% change
in prices/exchange rates
Aluminium (LME) - US$ per tonne 2,358 1,212
Copper (LME) - US cents per pound 412 627
Gold - US$ per troy ounce 2,203 74
Iron ore realised price (FOB basis) - US$ per dry metric tonne 105.8 2,662
Australian dollar against the US dollar 0.66 752
Canadian dollar against the US dollar 0.74 320
Oil (Brent) - US per barrel 84 183
DIRECTORS' REPORT
for the half year ended 30 June 2024
Review of operations and important events
A detailed review of the Group's operations, the results of those operations
during the half year ended 30 June 2024 and likely future developments are
given on pages 1 to 23. Important events that have occurred during the period
and up until the date of this report are set out below.
Financial
On 28 March 2024, we published our 2023 Taxes and Royalties Paid Report,
detailing $8.5 billion of global taxes and royalties paid during the year.
This compares to $10.8 billion in 2022, which included around $1.5 billion of
Australian corporate tax payments related to prior years. In the past ten
years, Rio Tinto has paid $76 billion in taxes and royalties globally, of
which more than 78% was paid in Australia.
On 23 May 2024, we published a report on payments to governments made by Rio
Tinto and its subsidiary undertakings for the year ended 31 December 2023 as
required under the UK's Report on Payments to Governments Regulations 2014 (as
amended in December 2015). Rio Tinto paid US$8.5 billion of taxes and
royalties and a further US$1.8 billion on behalf of its employees during 2023.
Operations
On 16 January 2024, we announced Dampier Salt Limited (a joint venture between
Rio Tinto (68%), Marubeni Corporation (22%) and Sojitz (10%)) had 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 A$375 million (US$251 million).
On 24 January 2024, we announced we will drive development of Australia's
largest solar power project near Gladstone, after agreeing to buy all
electricity from the 1.1GW(1) Upper Calliope Solar Farm to provide renewable
power to Rio Tinto's Gladstone operations. Under a new renewable power
purchase agreement ("PPA") signed with European Energy Australia, Rio Tinto
will buy all power generated from the Upper Calliope solar farm for 25 years.
On 24 January 2024, we were informed by authorities that four team members
from our Diavik diamond mine and two airline crew members had died in a plane
crash near Fort Smith, Northwest Territories, Canada. Another member of our
Diavik team survived the crash and received treatment in hospital.
On 21 February 2024, we announced we had signed Australia's largest renewable
PPA to date to supply our Gladstone operations in Queensland, agreeing to buy
the majority of electricity from Windlab's planned 1.4GW Bungaban wind energy
project. Under the new PPA with Windlab, Rio Tinto will buy 80% of all power
generated from the Bungaban wind energy project over 25 years.
On 31 May 2024, we announced New Zealand Aluminium Smelters (NZAS) had signed
20-year electricity arrangements that secure the future of the Tiwai Point
aluminium smelter to continue competitively producing high-purity, low-carbon
metal, backed by a diversified mix of renewable electricity from New Zealand's
South Island. In a separate transaction, Rio Tinto entered into an agreement
to acquire Sumitomo Chemical Company Limited's 20.64% interest in NZAS for an
undisclosed price. On completion of the transaction, NZAS will be 100% owned
by Rio Tinto.
On 28 June 2024, we announced we will install carbon free aluminium smelting
cells at our Arvida smelter in Quebec, Canada, using the first technology
licence issued by the ELYSIS joint venture. This investment will support the
ongoing development of the breakthrough ELYSIS(TM) technology and allow Rio
Tinto to build expertise in its installation and operation.
1. 1.1GWac or 1.3GWp
People
On 21 February 2024, we announced that Simon McKeon will step down as a
Non-Executive Director at the conclusion of the Rio Tinto Limited annual
general meeting on 2 May 2024.
On 8 April 2024, we announced that Bold Baatar will succeed Alf Barrios as
Chief Commercial Officer effective 1 September 2024, following Alf's decision
to retire from Rio Tinto.
Rio Tinto 2024 Annual General Meetings (AGMs)
The annual general meetings of Rio Tinto plc and Rio Tinto Limited were held
on 4 April 2024 and 2 May 2024 respectively. Under Rio Tinto's dual listed
companies structure established in 1995, decisions on significant matters
affecting shareholders of Rio Tinto plc and Rio Tinto Limited in similar ways
are taken through a joint electoral procedure.
At Rio Tinto plc's AGM on 4 April 2024, Resolution 25 (Authority to purchase
Rio Tinto plc shares), put to Rio Tinto plc shareholders only, was passed with
less than 80% of votes in favour. Shining Prospect (a subsidiary of the
Aluminium Corporation of China "Chinalco") voted against it. Chinalco has not
sold any of its shares in Rio Tinto plc and now has a holding of over 14%
given its non-participation in the Company's significant share buy-back
programmes. This places Chinalco close to the 14.99% holding threshold agreed
with the Australian Government at the time of its original investment in Rio
Tinto.
Directors
The Directors serving on the Boards of Rio Tinto plc and Rio Tinto Limited
were as follows:
Notes Date of appointment
Chair
Dominic Barton (P&R, N and S) 4 April 2022
Executive Directors
Jakob Stausholm, Chief Executive 3 September 2018
Peter Cunningham, Chief Financial Officer 17 June 2021
Non-Executive Directors
Sam Laidlaw (senior independent director, Rio Tinto plc) (P&R, N and S) 10 February 2017
Simon Henry (A&R and N) 1 April 2017
Jennifer Nason (P&R) 1 March 2020
Ngaire Woods (N and S) 1 September 2020
Ben Wyatt (P&R and A&R) 1 September 2021
Kaisa Hietala (A&R and S) 1 March 2023
Dean Dalla Valle (P&R, N and S) 1 June 2023
Susan Lloyd-Hurwitz (P&R) 1 June 2023
Martina Merz (S) 1 February 2024
James O'Rourke (A&R) 25 October 2023
Sharon Thorne (A&R) 1 July 2024
Notes
(A&R) Audit & Risk Committee, (P&R) People & Remuneration
Committee, (N) Nominations Committee, (S) Sustainability Committee.
Dividend
The 2023 final dividend was paid on 18 April 2024 to holders of Rio Tinto plc
and Rio Tinto Limited ordinary shares and Rio Tinto plc ADR holders. The 2023
final dividend, equivalent to 258 US cents per share was determined by the
Board on 20 February 2024. Rio Tinto plc shareholders received 203.77 pence
per share for the final dividend and Rio Tinto Limited shareholders received
392.78 Australian cents per share for the final dividend based on the
applicable exchange rates on 11 April 2024. ADR holders receive dividends at
the declared rate in US dollars.
The 2024 interim dividend, equivalent to 177 US cents per share will be paid
on 26 September 2024 to Rio Tinto Limited, Rio Tinto plc and Rio Tinto plc ADR
shareholders on the register at the close of business on 16 August 2024. The
ex-dividend date for the 2024 interim dividend for Rio Tinto Limited, Rio
Tinto plc and Rio Tinto plc ADR shareholders is 15 August 2024.
Principal risks and uncertainties
The principal risks and uncertainties that could materially impact our ability
to deliver on our strategic priorities are set out on pages 81 to 88 of the
2023 Annual Report. For the remaining six months of the financial year, these
remain broadly consistent with the trends reported in the Annual Report.
We continue to monitor and respond to changes in our risk profile, including
those arising from changes in the macroeconomic and geopolitical
environment.
Publication of half year results
In accordance with the UK Financial Conduct Authority's Disclosure Guidance
& Transparency Rules and the Australian Securities Exchange Listing Rules,
the half year results will be made public and are available on the Rio Tinto
Group website.
Auditor's independence declaration
KPMG, the auditors of Rio Tinto Limited, have provided the auditor's
independence declaration as required under section 307C of the Corporations
Act 2001 in Australia. This has been reproduced on page 57 and forms part of
this report.
The Directors' report is made in accordance with a resolution of the Board.
Dominic Barton
Chair
31 July 2024
Condensed consolidated interim financial statements for the
six months ended 30 June 2024
Contents
Interim financial statements Page number
Group income statement 28
Group statement of comprehensive income 29
Group cash flow statement 30
Group balance sheet 32
Group statement of changes in equity 33
Selected explanatory notes to the interim financial statements
1 Basis of preparation 34
2 Changes in accounting policies 35
3 Segmental information 37
4 Segmental information - additional information 40
5 Impairment 41
6 Taxation 43
7 Acquisitions and disposals 44
8 Cash and cash equivalents 44
9 Close-down, restoration and environmental provisions 45
10 Financial instruments 46
11 Commitments and contingencies 50
12 Events after the balance sheet date 52
Directors' declaration 53
Independent Auditors' Review Reports of KPMG LLP ("KPMG UK") to Rio Tinto plc 54
and of KPMG ("KPMG Australia") to the members of Rio Tinto Limited
Lead Auditor's Independence Declaration under Section 307C of the Australian 57
Corporations Act 2001
Additional voluntary disclosure for the shareholders
Rio Tinto financial information by business unit 58
Alternative performance measures 62
Metal prices and exchange rates 70
Group income statement
Six months ended 30 June Note 2024 2023
US$m US$m
Consolidated operations
Consolidated sales revenue 3, 4 26,802 26,667
Net operating costs (excluding items disclosed separately) (18,096) (17,535)
Net impairment reversals/(charges) 5 41 (1,175)
Exploration and evaluation expenditure (net of profit from disposal of (488) (710)
interests in undeveloped projects)
Operating profit 8,259 7,247
Share of profit after tax of equity accounted units 422 431
Profit before finance items and taxation 8,681 7,678
Finance items
Net exchange gains on external net debt and intragroup balances 43 103
(Losses)/gains on derivatives not qualifying for hedge accounting (81) 32
Finance income 272 245
Finance costs (381) (536)
Amortisation of discount on provisions (419) (592)
(566) (748)
Profit before taxation 8,115 6,930
Taxation 6 (2,225) (1,983)
Profit after tax for the period 5,890 4,947
- attributable to owners of Rio Tinto (net earnings) 5,808 5,117
- attributable to non-controlling interests 82 (170)
Basic earnings per share 357.9c 315.7c
Diluted earnings per share 355.8c 313.9c
The notes on pages 34 to 52 are an integral part of these condensed
consolidated interim financial statements.
Group statement of comprehensive income
Six months ended 30 June 2024 2023
US$m US$m
Profit after tax for the period 5,890 4,947
Other comprehensive income/(loss)
Items that will not be reclassified to the income statement:
Re-measurement gains/(losses) on pension and post-retirement healthcare plans 115 (53)
Changes in the fair value of equity investments held at fair value through (14) (17)
other comprehensive income (FVOCI)
Tax relating to these components of other comprehensive income (30) 16
Share of other comprehensive income/(loss) of equity accounted units, net of 4 (3)
tax
75 (57)
Items that have been/may be subsequently reclassified to the income statement:
Currency translation adjustment((a)) (1,085) (387)
Fair value movements:
- Cash flow hedge gains - 50
- Cash flow hedge losses/(gains) transferred to the income statement 7 (26)
Net change in costs of hedging reserve 2 2
Tax relating to these components of other comprehensive loss (2) (16)
Share of other comprehensive (loss)/income of equity accounted units, net of (21) 11
tax
(1,099) (366)
Total other comprehensive (loss) for the period, net of tax (1,024) (423)
Total comprehensive income for the period 4,866 4,524
- attributable to owners of Rio Tinto 4,846 4,698
- attributable to non-controlling interests 20 (174)
(a) Excludes a currency translation charge of US$99 million (30 June
2023: US$66 million) arising on Rio Tinto Limited's share capital for the
period ended 30 June 2024, which is recognised in the Group statement of
changes in equity on page 33.
Group cash flow statement
Six months ended 30 June Note 2024 2023
US$m US$m
Cash flows from consolidated operations((a)) 9,673 9,435
Dividends from equity accounted units 421 287
Cash flows from operations 10,094 9,722
Net interest paid (305) (286)
Dividends paid to holders of non-controlling interests in subsidiaries (91) (46)
Tax paid (2,642) (2,415)
Net cash generated from operating activities 7,056 6,975
Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets (4,018) (3,001)
Sales of property, plant and equipment and intangible assets 17 8
Acquisitions of subsidiaries, joint ventures and associates - (15)
Purchases of financial assets (53) (16)
Sales of financial assets((b)) 424 862
Net funding of equity accounted units (36) (88)
Other investing cash flows 122 14
Net cash used in investing activities (3,544) (2,236)
Cash flows before financing activities 3,512 4,739
Cash flows from financing activities
Equity dividends paid to owners of Rio Tinto (4,121) (3,691)
Proceeds from additional borrowings((c)) 62 1,858
Repayment of borrowings and associated derivatives (76) (272)
Lease principal payments (212) (213)
Proceeds from issue of equity to non-controlling interests((d)) 445 61
Purchase of non-controlling interest - (23)
Other financing cash flows 1 -
Net cash used in financing activities (3,901) (2,280)
Effects of exchange rates on cash and cash equivalents (30) (59)
Net (decrease)/increase in cash and cash equivalents (419) 2,400
Opening cash and cash equivalents less overdrafts 9,672 6,774
Closing cash and cash equivalents less overdrafts 8 9,253 9,174
(a) Cash flows from consolidated operations 2024 2023
US$m US$m
Profit after tax for the period 5,890 4,947
Adjustments for:
- Taxation 6 2,225 1,983
- Finance items 566 748
- Share of profit after tax of equity accounted units (422) (431)
- Net impairment (reversals)/charges 5 (41) 1,175
- Depreciation and amortisation 2,821 2,485
- Provisions (including exchange differences on provisions) (41) 63
Utilisation of other provisions (51) (44)
Utilisation of provisions for close-down and restoration 9 (361) (333)
Utilisation of provisions for post-retirement benefits and other employment (61) (115)
costs
Change in inventories (41) (293)
Change in receivables and other assets 107 (6)
Change in trade and other payables (751) (628)
Other items((e)) (167) (116)
9,673 9,435
Group cash flow statement (continued)
(b) During the six months to 30 June 2024, we received net proceeds of
US$422 million (30 June 2023: US$801 million) from our sales and purchases of
investments within a separately managed portfolio of fixed income instruments.
Purchases and sales of these securities are reported on a net cash flow basis
within "Sales of financial assets" or "Purchases of financial assets"
depending on the overall net position at each reporting date.
(c) On 7 March 2023, we issued US$650 million 10-year fixed rate, and
US$1.1 billion of 30-year fixed rate, SEC-registered bonds. The 10-year
notes, which mature on 9 March 2033, have a coupon of 5% and the 30-year
notes, which mature on 9 March 2053 have a coupon of 5.125%. The funds were
received net of issuance fees and discount.
(d) On 28 June 2024, we received a payment of US$411 million from Chalco Iron
Ore Holdings Ltd (CIOH) in relation to their share of cash expenditure for the
Simandou iron ore project in Guinea incurred up until the end of December 2023
to progress critical works. On 11 July 2024, we received a further US$575
million from CIOH for cash calls by Simfer Jersey to 30 June 2024. Refer to
note 12 for further details.
(e) Other items includes the recognition of realised losses of US$78 million
on currency forwards not designated as hedges (30 June 2023: realised gains
US$32 million).
Group balance sheet
Note 30 June 31 December 2023
2024 US$m
US$m
Non-current assets
Goodwill 785 797
Intangible assets 3,773 4,389
Property, plant and equipment 66,579 66,468
Investments in equity accounted units 4,454 4,407
Inventories 202 214
Deferred tax assets 3,435 3,624
Receivables and other assets 1,665 1,659
Other financial assets 572 481
81,465 82,039
Current assets
Inventories 6,517 6,659
Receivables and other assets 3,884 3,945
Tax recoverable 196 115
Other financial assets 569 1,118
Cash and cash equivalents 8 9,256 9,673
20,422 21,510
Total assets 101,887 103,549
Current liabilities
Borrowings (767) (824)
Leases (332) (345)
Other financial liabilities (305) (273)
Trade and other payables (7,689) (8,238)
Tax payable (227) (542)
Close-down, restoration and environmental provisions 9 (1,737) (1,523)
Provisions for post-retirement benefits and other employment costs (362) (361)
Other provisions (615) (637)
(12,034) (12,743)
Non-current liabilities
Borrowings (12,115) (12,177)
Leases (1,085) (1,006)
Other financial liabilities (524) (513)
Trade and other payables (564) (596)
Tax payable (30) (31)
Deferred tax liabilities (2,443) (2,584)
Close-down, restoration and environmental provisions 9 (14,134) (15,627)
Provisions for post-retirement benefits and other employment costs (1,080) (1,197)
Other provisions (714) (734)
(32,689) (34,465)
Total liabilities (44,723) (47,208)
Net assets 57,164 56,341
Capital and reserves
Share capital((a))
- Rio Tinto plc 207 207
- Rio Tinto Limited 3,278 3,377
Share premium account 4,324 4,324
Other reserves 7,295 8,328
Retained earnings 40,149 38,350
Equity attributable to owners of Rio Tinto 55,253 54,586
Attributable to non-controlling interests 1,911 1,755
Total equity 57,164 56,341
(a) At 30 June 2024, Rio Tinto plc had 1,252.6 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 period presented.
As required to be disclosed under the ASX Listing Rules, the net tangible
assets per share amounted to US$31.22 (31 December 2023: US$30.45).
Group statement of changes in equity
Six months ended 30 June 2024 Attributable to owners of Rio Tinto
Share capital Share premium Other reserves Retained earnings Total Non-controlling Total
US$m account US$m US$m US$m interests equity
US$m US$m US$m
Opening balance 3,584 4,324 8,328 38,350 54,586 1,755 56,341
Total comprehensive income for the period((a)) - - (1,050) 5,896 4,846 20 4,866
Currency translation arising on Rio Tinto Limited's share capital (99) - - - (99) - (99)
Dividends((b)) - - - (4,121) (4,121) (310) (4,431)
Own shares purchased from Rio Tinto shareholders to satisfy share awards to - - (12) (2) (14) - (14)
employees((c))
Change in equity interest held by Rio Tinto - - - (1) (1) 1 -
Equity issued to holders of non-controlling interests - - - - - 445 445
Employee share awards charged to the income statement - - 29 27 56 - 56
Closing balance 3,485 4,324 7,295 40,149 55,253 1,911 57,164
Six months ended 30 June 2023 Attributable to owners of Rio Tinto
Share capital Share premium Other reserves Retained earnings Total Non-controlling Total
US$m account US$m US$m US$m interests equity
US$m US$m US$m
Opening balance 3,537 4,322 7,755 35,020 50,634 2,107 52,741
Total comprehensive income for the period((a)) - - (379) 5,077 4,698 (174) 4,524
Currency translation arising on Rio Tinto Limited's share capital (66) - - - (66) - (66)
Dividends((b)) - - - (3,691) (3,691) (262) (3,953)
Own shares purchased from Rio Tinto shareholders to satisfy share awards to - - (3) (3) (6) - (6)
employees((c))
Treasury shares reissued and other movements - 2 - - 2 - 2
Equity issued to holders of non-controlling interests - - - - - 61 61
Employee share awards charged to the income statement - - 27 27 54 - 54
Closing balance 3,471 4,324 7,400 36,430 51,625 1,732 53,357
(a) Refer to the Group statement of comprehensive income for further
details. Adjustments to other reserves include currency translation
attributable to owners of Rio Tinto, other than that arising on Rio Tinto
Limited's share capital.
(b) Dividends per share announced or paid during the period are
summarised below:
Six months ended 30 June 2024 2023
US$ US$
Dividends per share: Ordinary - paid during the period 258.0c 225.0c
Ordinary dividends per share: announced with the results for the period 177.0c 177.0c
(c) Net of contributions received from employees for share awards.
Selected explanatory notes to the interim financial statements
1. Basis of preparation
The condensed consolidated interim financial statements included in this
report have been prepared in accordance with International Accounting
Standards (IAS) 34 "Interim Financial Reporting" as issued by the
International Accounting Standards Board (IASB) and as adopted for use in the
United Kingdom (UK), the UK law (United Kingdom Companies Act 2006) applicable
to companies reporting under International Financial Reporting Standards
(IFRS), applicable Australian law (Australian Corporations Act 2001) and in
accordance with an order, under section 340 of the Corporations Act 2001,
issued by the Australian Securities and Investments Commission (ASIC) on
11 July 2024 (ASIC class order).
These condensed consolidated interim financial statements represent a
'condensed set of financial statements' as referred to in the Disclosure
Guidance and Transparency Rules sourcebook (DTR) issued by the Financial
Conduct Authority (FCA) applicable to interim financial reporting.
Accordingly, they do not include all of the information required for a full
annual financial report and are to be read in conjunction with the Group's
annual financial statements for the year ended 31 December 2023.
The 2023 annual financial statements were prepared on a going concern basis in
accordance with UK-adopted international accounting standards, applicable UK
law and applicable Australian law as amended by the ASIC class order and to
meet IAS as issued by the IASB and interpretations issued from time to time by
the IFRS Interpretations Committee (IFRS IC) which were mandatory at
31 December 2023.
The above accounting standards and interpretations are collectively referred
to as 'IFRS' in this report and contain the principles we use to create our
accounting policies. Where necessary, adjustments are made to the locally
reported assets, liabilities, and results of subsidiaries, joint arrangements
and associates to bring their accounting policies in line with ours for
consistent reporting.
These condensed consolidated interim financial statements are unaudited and do
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The financial information as at 31 December 2023 included in this
report has been extracted from the full financial statements filed with the
Registrar of Companies. The Auditors' report on these full financial
statements was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis of matter and did not
contain statements under section 498 (2) (regarding adequacy of accounting
records and returns), or under section 498 (3) (regarding provision of
necessary information and explanations) of the Companies Act 2006.
Going concern
Management has prepared detailed cash flow forecasts for the next 18 months
and has updated life-of-mine plan models with longer-term cash flow
projections. These forecasts demonstrate that the Group has sufficient cash,
other liquid resources and undrawn credit facilities to enable it to meet its
obligations as they fall due. As such, the Directors considered it appropriate
to adopt the going concern basis of accounting in preparing the interim
financial information.
1. Basis of preparation (continued)
Alternative performance measures
We present certain non-IFRS financial measures (non-IFRS measures), which are
reconciled to directly comparable IFRS financial measures on pages 62 to 69 of
this report. These non-IFRS measures herein, referred to as alternative
performance measures (APMs), are used by management to assess the performance
of the business and may therefore be useful to investors. They are not a
substitute for the IFRS measures and should be considered supplementary to
those measures.
Reconciliation with Australian Accounting Standards
Our financial statements have been prepared in accordance with IFRS, as
defined in the "Basis of preparation" section on page 34, which differs in
certain respects from the version of IFRS that is applicable in Australia,
referred to as Australian Accounting Standards (AAS). We are required to
disclose the effect of the adjustments to our consolidated income statement,
consolidated total comprehensive income/(loss) and consolidated shareholders'
funds if our accounts were prepared under the version of IFRS that is
applicable in Australia. This is in order to satisfy the obligations of Rio
Tinto Limited to prepare consolidated accounts under Australian company law,
as amended by an order issued by the Australian Securities and Investments
Commission on 11 July 2024.
Prior to 1 January 2004, our financial statements were prepared in accordance
with UK Generally Accepted Accounting Practice (UK GAAP). Under IFRS, goodwill
on acquisitions prior to 1998, which was eliminated directly against equity in
the Group's UK GAAP financial statements, has not been reinstated. This was
permitted under the rules governing the transition to IFRS set out in IFRS 1.
The equivalent Australian Standard, AASB 1, does not provide for the netting
of goodwill against equity. As a consequence, shareholders' funds under AAS
include the residue of such goodwill, which amounted to US$381 million at
30 June 2024 (31 December 2023: US$380 million).
Save for the exception described above, the Group's financial statements
prepared in accordance with IFRS are consistent with the requirements of AAS.
Changes in accounting policies
The condensed consolidated interim financial statements have been prepared on
the basis of accounting policies, methods of computation and presentation
consistent with those applied in the financial statements for the year ended
31 December 2023, except for the accounting requirements set out below,
effective as at 1 January 2024.
New standards and amendments applicable for the current period
Classification of liabilities as current or non-current liabilities with
covenants (Amendments to IAS 1 "Presentation of Financial Statements")
We adopted the Amendments to IAS 1 which specify the requirements for
classifying liabilities as current or non-current. The amendments clarify that
a right to defer settlement must exist at the end of the reporting period and
that classification is unaffected by the likelihood that an entity will
exercise its deferral right. In addition, a requirement has been introduced
whereby an entity must disclose when a liability arising from a loan agreement
is classified as non-current and the entity's right to defer settlement is
contingent on compliance with future covenants within twelve months. The
amendments do not have a material impact on the Group.
2. Changes in accounting policies (continued)
Lease liability in a sale and leaseback (Amendments to IFRS 16 "Leases")
We adopted the Amendments to IFRS 16 which specify the requirements that a
seller-lessee uses in measuring the lease liability arising in a sale and
leaseback transaction. The amendments do not have an impact on the Group.
Supplier finance arrangements (Amendments to IAS 7 "Statement of Cash Flows"
and IFRS 7 "Financial Instruments: Disclosures")
We adopted the Amendments to IAS 7 and IFRS 7 which clarify the
characteristics of supplier finance arrangements and require additional
disclosure of such arrangements. The amendments do not have a material impact
on the Group. We have applied a transition exemption not to provide the
disclosures in the interim period in the year of initial application.
New standards or amendments issued but not yet effective
During the six months ended 30 June 2024, we have not early adopted any
amendments, standards or interpretations that have been issued but are not yet
effective.
3. Segmental information
Our management structure is based on product groups (PG) together with global
support functions whose leaders make up the Executive Committee. The Executive
Committee members each report directly to our Chief Executive who is the chief
operating decision maker (CODM) and is responsible for allocating resources
and assessing performance of the operating segments. The CODM's primary
measure of profit is underlying EBITDA (as defined on page 39).
Our reportable segments are as follows:
Reportable segment Principal activities
Iron Ore Iron ore mining and salt and gypsum production in Western Australia.
Aluminium Bauxite mining; alumina refining; aluminium smelting and recycling.
Copper Mining and refining of copper, gold, silver, molybdenum, other by-products and
licencing of extraction technologies.
Minerals Includes mining and processing of borates, titanium dioxide feedstock and iron
concentrate and pellets from the Iron Ore Company of Canada. Also includes
diamond mining, sorting and marketing and development projects for battery
materials, such as lithium.
Management responsibility for the Simandou iron ore project in Guinea
('Simandou') during the build phase of the project falls under the Chief
Technical Officer and, therefore, is included in "Other Operations", which is
below reportable segments in our segmental analysis.
3. Segmental information (continued)
2024 2023
Six months ended 30 June Segmental revenue((a)) Underlying EBITDA((b)) Capital expenditure((c)) Segmental revenue((a)) Underlying EBITDA((b)) Capital expenditure((c))
US$m US$m US$m US$m US$m US$m
Iron Ore 15,206 8,807 1,258 15,600 9,792 1,094
Aluminium 6,486 1,577 705 6,263 1,140 597
Copper 4,408 1,804 970 3,487 1,082 917
Minerals 2,738 687 271 2,889 689 304
Reportable segments total 28,838 12,875 3,204 28,239 12,703 2,912
Other operations 49 85 754 97 (395) 32
Inter-segment transactions (107) 10 (154) (17)
Share of equity accounted units((d)) (1,978) (1,515)
Central pension costs, share-based payments, insurance and derivatives (158) 167
Restructuring, project and one-off costs (111) (84)
Central costs (494) (512)
Central exploration and evaluation expenditures (114) (134)
Proceeds from disposal of property, plant and equipment 17 8
Other items 43 49
Consolidated sales revenue 26,802 26,667
Purchases of property, plant and equipment and intangible assets 4,018 3,001
Underlying EBITDA 12,093 11,728
(a) Segmental revenue includes consolidated sales revenue plus the
equivalent sales revenue of equity accounted units in proportion to our equity
interest (after adjusting for sales to/from subsidiaries). Segmental revenue
measures revenue on a basis that is comparable to our underlying EBITDA
metric.
(b) Underlying EBITDA (calculated on page 39) is reported to provide
greater understanding of the underlying business performance of Rio Tinto's
operations.
(c) Capital expenditure for reportable segments includes the net cash
outflow on purchases less disposals of property, plant and equipment,
capitalised evaluation costs and purchases less disposals of other intangible
assets. The details provided include 100% of subsidiaries' capital expenditure
and Rio Tinto's share of the capital expenditure of joint operations.
(d) Consolidated sales revenue includes subsidiary sales of US$121
million (30 June 2023: US$21 million) to equity accounted units which are not
included in segmental revenue. Segmental revenue includes the Group's
proportionate share of product sales by equity accounted units (after
adjusting for sales to subsidiaries) of US$2,099 million (30 June 2023:
US$1,536 million) which are not included in consolidated sales revenue.
3. Segmental information (continued)
Reconciliation of profit after tax to underlying EBITDA
Underlying EBITDA represents profit before taxation, net finance items,
depreciation and amortisation adjusted to exclude the EBITDA impact of items
which do not reflect the underlying performance of our reportable segments.
Items excluded from profit after tax are those gains and losses that,
individually or in aggregate with similar items, are of a nature and size to
require exclusion in order to provide additional insight into the underlying
business performance. The following items are excluded from profit after tax
in arriving at underlying EBITDA in each period irrespective of materiality:
- Depreciation and amortisation in subsidiaries, excluding capitalised
depreciation;
- Depreciation and amortisation in equity accounted units;
- Taxation and finance items in subsidiaries;
- Taxation and finance items in equity accounted units;
- Unrealised gains/(losses) on embedded derivatives not qualifying for
hedge accounting;
- Net gains/(losses) on disposal of interests in subsidiaries;
- Impairment charges net of reversals;
- The underlying EBITDA of discontinued operations;
- Adjustments to closure provisions where the adjustment is associated
with an impairment charge and for legacy sites where the disturbance or
environmental contamination relates to the pre-acquisition period.
In addition, there is a final judgmental category which includes, where
applicable, other credits and charges that, individually or in aggregate if of
a similar type, are of a nature or size to require exclusion in order to
provide additional insight into underlying business performance. For the
periods ended 30 June 2024 and 30 June 2023, there were no items in this
category.
Six months ended 30 June 2024 2023
US$m US$m
Profit after tax for the period 5,890 4,947
Taxation 2,225 1,983
Profit before taxation 8,115 6,930
Depreciation and amortisation in subsidiaries, excluding capitalised 2,719 2,405
depreciation((a))
Depreciation and amortisation in equity accounted units 275 238
Finance items in subsidiaries 566 748
Taxation and finance items in equity accounted units 483 373
Gains on embedded commodity derivatives not qualifying for hedge accounting (3) (112)
(including foreign exchange)
Net impairment (reversals)/charges((b)) (18) 1,175
Change in closure estimates (non-operating and fully impaired sites)((c)) (44) (29)
Underlying EBITDA 12,093 11,728
(a) Depreciation and amortisation in subsidiaries for the period ended
30 June 2024 is net of capitalised depreciation of US$102 million (30 June
2023: US$80 million).
(b) Refer to note 5 for allocation of net impairment (reversals)/charges
between consolidated amounts and share of profit in EAUs.
(c) For the period ended 30 June 2024, the credit to the income statement
relates to the impact of a change in discount rate, expressed in real-terms,
from 2.0% to 2.5% (30 June 2023: from 1.5% to 2.0%) as applied to provisions
for close-down, restoration and environmental liabilities at legacy sites
where the environmental damage preceded ownership by Rio Tinto.
4. Segmental information - additional information
Consolidated sales revenue by destination((a))
Six months ended 30 June 2024 2023 2024 2023
% % US$m US$m
Greater China 58.1 58.1 15,569 15,482
United States of America 16.0 14.6 4,288 3,885
Asia (excluding Greater China and Japan) 6.9 7.3 1,834 1,957
Japan 6.6 6.7 1,769 1,791
Europe (excluding UK) 5.1 5.8 1,373 1,537
Canada 3.0 2.9 800 785
Australia 1.8 1.7 489 451
UK 0.2 0.2 64 66
Other countries 2.3 2.7 616 713
Consolidated sales revenue 100.0 100.0 26,802 26,667
(a) Consolidated sales revenue by geographical destination is based on the
ultimate country of the product's destination, if known. Where the ultimate
destination is not known, we have defaulted to the shipping address of the
customer. Rio Tinto is domiciled in both the UK and Australia.
Consolidated sales revenue by product
Six months ended 30 June Revenue from Other Consolidated Revenue from contracts Other Consolidated sales revenue
contracts revenue((a)) sales revenue with customers revenue((a)) 2023
with 2024 2024 2023 2023 US$m
customers US$m US$m US$m US$m
2024
US$m
Iron ore 16,572 (527) 16,045 16,319 12 16,331
Aluminium, alumina and bauxite 6,105 54 6,159 6,194 (45) 6,149
Copper 2,194 33 2,227 1,695 (6) 1,689
Industrial minerals (comprising titanium dioxide slag, zircon, borates and 1,173 (2) 1,171 1,246 (1) 1,245
salt)
Gold 345 5 350 236 3 239
Diamonds 149 - 149 250 - 250
Other products and freight services((b)) 701 - 701 765 (1) 764
Consolidated sales revenue 27,239 (437) 26,802 26,705 (38) 26,667
(a) Consolidated sales revenue includes both revenue from contracts with
customers, accounted for under IFRS 15 "Revenue from Contracts with
Customers", and subsequent movements in provisionally priced receivables,
accounted for under IFRS 9, and included in "Other revenue" above.
(b) "Other products and freight services" includes metallic co-products,
molybdenum, silver and other commodities.
5. Impairment
Six months ended 30 June Pre-tax amount Taxation Non-controlling Net Amount Pre-tax amount
2024 2024 interest 2024 2023
US$m US$m 2024 US$m US$m
US$m
Aluminium - Tiwai Point 41 37 - 78 -
Aluminium - Porto Trombetas (MRN) (23) - - (23) -
Aluminium - Alumina refineries - - - - (1,175)
Net impairment reversals/(charges) 18 37 - 55 (1,175)
Allocated as:
Property, plant and equipment 41 (1,175)
Share of profit after tax of equity accounted units (23)
Net impairment reversals/(charges) 18 (1,175)
Comprising:
Impairment reversals/(charges) of consolidated balances 41 (1,175)
Impairment charges related to EAUs (pre-tax) (35) -
Net impairment reversals/(charges) in the financial information by business 6 (1,175)
unit (page 58)
Taxation 49 347
Non-controlling interests - -
Net impairment reversals/(charges) in the income statement 55 (828)
30 June 2024
Aluminium - Tiwai Point, New Zealand
On 30 May 2024, we signed 20-year power arrangements with electricity
generators Meridian Energy, Contact Energy and Mercury NZ to set pricing for
an aggregate of 572 megawatts of electricity to meet the smelter's electricity
needs. These new arrangements have been identified as an impairment reversal
trigger as they give us confidence that the smelter can continue operations
competitively beyond the existing supply arrangement which ran to December
2024.
An impairment reversal is limited by the amount of depreciation that would
have been charged had the previous impairments not occurred. In this case, as
the previous depreciation period was until December 2024, the impairment
reversal is limited to US$41 million. The recoverable amount for the
cash-generating unit, based on value-in-use assumptions aligned with the
near-term business plan, comfortably exceeds the carrying value incorporating
an impairment reversal amount and, therefore, the previous impairments have
been reversed to the maximum extent possible. This impairment reversal also
resulted in the recognition of deferred tax assets of US$37 million due to the
improved forecast for taxable profits.
5. Impairment (continued)
Aluminium - Porto Trombetas (MRN), Brazil
In preparing the local accounts for the year to 31 December 2023, after the
publication of the Rio Tinto 2023 annual report, the directors of Mineração
Rio do Norte S.A. (MRN) recorded a local impairment charge triggered by cost
increases, unfavourable exchange rates and declining sales prices. The Rio
Tinto share of that impairment is US$35 million pre-tax and US$23 million
post-tax, and is included within the current period share of profit after tax
of equity accounted units.
Rio Tinto's share of bauxite produced by MRN is vertically integrated into our
Quebec Smelter cash-generating unit included in North America Aluminium
operations. We reviewed the carrying value of the investment in equity
accounted unit as part of this cash-generating unit and did not identify
indicators of impairment.
30 June 2023
Aluminium - Alumina refineries, Australia
The Gladstone alumina refineries are responsible for more than half of our
scope 1 carbon dioxide emissions in Australia and therefore have been a key
focus as we evaluate options to decarbonise our assets. In March 2023, the
Australian Parliament legislated to introduce a requirement for large heavy
industrial carbon emitters to purchase carbon credits based on their scope 1
emissions with a reducing baseline for these emissions. The challenging market
conditions facing these assets, together with our improved understanding of
the capital requirements for decarbonisation and the legislated cost
escalation for carbon emissions, were identified as impairment triggers during
the six months ended 30 June 2023.
Using a fair value less cost of disposal methodology and discounting
real-terms post-tax cash flows at 6.6%, we recognised a pre-tax impairment
charge of US$1,175 million (post-tax US$828 million). This represented a full
impairment of the property, plant and equipment at the Yarwun alumina refinery
(US$948 million) and an impairment of US$227 million for the property, plant
and equipment of Queensland Alumina Limited ('QAL'). These impairments reflect
market participant assumptions and the difficult trading conditions for these
assets which have operated below our planned output during the first half of
2023.
For QAL, the recoverable amount (net present value of US$325 million) was
represented by future cash flows attributable to the double digestion project.
This major capital project improves the energy efficiency of the alumina
production process and significantly reduces carbon emissions. These cash
flows were risk adjusted to reflect the pre-feasibility study stage of project
evaluation. If investment in the double digestion project was not approved,
the post-tax impairment charge would have been US$325 million greater and
result in a full impairment of QAL.
Impact of climate change on our business - Gladstone alumina refineries
We are committed to the decarbonisation of our assets to reduce Scope 1 and 2
emissions by 50% by 2030 and to net zero emissions by 2050 relative to our
2018 equity baseline. We anticipate that further carbon action may be
necessary to align with the goals of the Paris agreement to limit temperature
increases to 1.5(o)C. To illustrate the sensitivity of the refinery valuations
to the cost of carbon credits, we modelled a 10% increase in those unit costs
across all years, before the impact of decarbonisation projects with all other
inputs to the 30 June 2023 impairment valuation remaining constant. For QAL,
this sensitivity indicated a reduction in the pre-tax value by US$99 million;
however, this was expected to be largely mitigated by decarbonisation
projects, including double digestion. There was no impact at Yarwun as all
property, plant and equipment was already fully impaired.
6. Taxation
Prima facie tax reconciliation
Six months ended 30 June 2024 2023
US$m US$m
Profit before taxation((a)) 8,115 6,930
Prima facie tax payable at UK rate of 25% (2023: 23.5%)((b)) 2,029 1,628
Higher rate of taxation of 30% on Australian earnings (2023: 30%) 325 373
Other tax rates applicable outside the UK and Australia (136) (130)
Tax effect of profit from equity accounted units and related expenses((a)) (106) (101)
Impact of changes in tax rates (15) -
Resource depletion allowances (7) (6)
Recognition of previously unrecognised deferred tax assets (49) (62)
Write-down of previously recognised deferred tax assets 42 40
Utilisation of previously unrecognised deferred tax assets (9) (10)
Unrecognised current period operating losses((c)) 146 259
Adjustments in respect of prior periods 14 (4)
Other items (9) (4)
Total taxation charge 2,225 1,983
(a) The Group profit before tax includes profit after tax of equity
accounted units. Consequently, the tax effect on the profit from equity
accounted units is included as a separate reconciling item in this prima facie
tax reconciliation.
(b) As a UK headquartered and listed Group, the reconciliation of expected
tax on accounting profit to tax charge uses the UK corporate tax rate to
calculate the prima facie tax payable. In 2024, the UK tax rate for the period
was 25% (2023: 23.5%) due to the previously reported increase in the UK
corporation tax rate from 19% to 25% effective 1 April 2023. Rio Tinto is also
listed in Australia, and the reconciliation includes the impact of the higher
tax rate in Australia where a significant proportion of the Group's profits
are currently earned. The impact of other tax rates applicable outside the UK
and Australia is also included. The weighted average statutory corporate tax
rate on profit before tax is approximately 29% (30 June 2023: 30%)
(c) Unrecognised current period operating losses include tax losses around
the Group for which no tax benefit is currently recognised due to uncertainty
regarding whether suitable taxable profits will be earned in the future to
obtain value from the tax losses.
Future tax developments
We continue to monitor and evaluate the domestic implementation by relevant
countries of the Organisation for Economic Co-operation and Development's
(OECD) Pillar Two which seeks to apply a 15% global minimum tax. Pillar Two
was substantively enacted by the United Kingdom on 20 June 2023, with
application from 1 January 2024.
We estimate that the exposure to additional taxation under Pillar Two is
immaterial for the Group. Our reported tax charge of US$2,225 million includes
US$1 million current tax expense related to Pillar Two measures. We apply the
IAS 12 temporary mandatory exception from deferred tax accounting for Pillar
Two.
7. Acquisition and disposals
There were no material acquisitions and disposals during the six months to
30 June 2024 or the six months to 30 June 2023.
In the second half of 2023, we completed the acquisition of a 57.7% share in
Agua de la Falda establishing the Nuevo Cobre exploration and evaluation
project and acquired a 50% interest in the Matalco aluminium recycling joint
venture. We also completed the sale of a 55% interest in the undeveloped La
Granja project in Peru. These transactions are described in the 2023 Annual
Report and did not have a material impact on profit or loss in the periods
presented.
8. Cash and cash equivalents
Closing cash and cash equivalents less overdrafts for the purposes of the cash
flow statement differs from cash and cash equivalents on our balance sheet as
per the following reconciliation:
Closing cash and cash equivalents less overdrafts 30 June 31 December 30 June
2024
2023
2023
US$m US$m US$m
Balance per Group balance sheet 9,256 9,673 9,179
Bank overdrafts repayable on demand (unsecured) (3) (1) (5)
Balance per Group cash flow statement 9,253 9,672 9,174
9. Close-down, restoration and environmental provisions
30 June 2024((a))
31 December 2023
US$m US$m
Opening balance 17,150 15,759
Adjustment on currency translation (395) 241
Adjustments to mining properties/right of use assets:
- changes to existing and new provisions 25 629
- change in discount rate((b)) (787) (921)
Charged/(credited) to profit:
- increases to existing and new provisions 79 1,654
- change in discount rate((b)) (235) (168)
- decreases and unused amounts reversed (27) (195)
- exchange losses/(gains) on provisions 14 (16)
- amortisation of discount 412 955
Utilised in the period (361) (777)
Transfers and other movements (4) (11)
Closing balance 15,871 17,150
Balance sheet analysis:
Current 1,737 1,523
Non-current 14,134 15,627
Total 15,871 17,150
(a) Close-down, restoration and environmental provisions at 30 June 2024
have not been adjusted for closure-related receivables amounting to
US$364 million (31 December 2023: US$366 million) due from the ERA trust
fund and other financial assets held for the purposes of meeting closure
obligations. These are included within "Receivables and other assets" on the
balance sheet.
(b) Close-down, restoration and environmental provisions of US$15,871
million (31 December 2023: US$17,150 million) are based on risk-adjusted cash
flows expressed in real terms. The recent upward trajectory in interest rates
has resulted in expectations of higher yields from long-dated bonds, including
the 30-year US Treasury Inflation Protected Securities, which is a key input
to our closure provision discount rate. On 30 June 2024, we revised the
closure discount rate from 2.0% to 2.5% (30 June 2023: from 1.5% to 2.0%),
applied prospectively from that date. This assumption is based on the currency
in which we plan to fund the closures and our expectation of long-term
interest rate and exchange rate parity in the locations of our operations.
10. Financial instruments
Valuation hierarchy of financial instruments carried at fair value on a
recurring basis
The table below shows the classifications of our financial instruments by
valuation method in accordance with IFRS 13 "Fair Value Measurement" at
30 June 2024 and 31 December 2023.
All instruments shown as being held at fair value have been classified as fair
value through the profit and loss unless specifically footnoted.
30 June 2024 31 December 2023
Held at fair value Held at amortised cost Total Held at fair value Held at amortised cost Total
US$m US$m US$m US$m
Level 1((a)) Level 2((b)) Level 3((c)) Level 1((a)) Level 2((b)) Level 3((c))
US$m US$m US$m US$m US$m US$m
Assets
Cash and cash equivalents((d)) 4,129 - - 5,127 9,256 2,722 - - 6,951 9,673
Investments in equity shares and funds((e)) 82 - 136 - 218 85 - 96 - 181
Other investments, including loans((f)) 474 - 300 21 795 896 - 228 153 1,277
Trade and other financial receivables((g)) 16 1,115 - 2,055 3,186 9 1,383 - 1,851 3,243
Forward, option and embedded derivatives contracts, not designated as - 32 59 - 91 - 28 26 - 54
hedges((h))
Derivatives related to net debt((i)) - 37 - - 37 - 87 - - 87
Liabilities
Trade and other financial payables((j)) - (80) - (6,005) (6,085) - (47) - (6,277) (6,324)
Forward, option and embedded derivatives contracts, designated as hedges((h)) - - (158) - (158) - - (174) - (174)
Forward, option and embedded derivatives contracts, not designated as - (64) (65) - (129) - (63) (29) - (92)
hedges((h))
Derivatives related to net debt((i)) - (532) - - (532) - (516) - - (516)
(a) Valuation is based on unadjusted quoted prices in active markets for
identical financial instruments.
(b) Valuation is based on inputs that are observable for the financial
instruments, which include quoted prices for similar instruments or identical
instruments in markets which are not considered to be active, or inputs,
either directly or indirectly based on observable market data.
10. Financial instruments (continued)
(c) Valuation is based on inputs that cannot be observed using market data
(unobservable inputs). The change in valuation of our level 3 instruments for
the period to 30 June 2024 and 31 December 2023 is as follows:
30 June 2024 31 December 2023
Level 3 financial assets and liabilities US$m US$m
Opening balance 147 131
Currency translation adjustments (1) (2)
Total realised gains/(losses) included in:
- consolidated sales revenue - 12
- net operating costs (11) (18)
Total unrealised gains/(losses) included in:
- net operating costs 94 43
Total unrealised gains/(losses) transferred into other comprehensive income 9 (1)
through cash flow hedges
Additions to financial assets/(liabilities) 50 29
Disposals/maturity of financial instruments (16) (47)
Closing balance 272 147
Net gains included in the income statement for assets and liabilities held at 84 31
period end
(d) Our Cash and cash equivalents of US$9,256 million (31 December 2023:
US$9,673 million), includes US$4,129 million (31 December 2023: US$2,722
million) relating to money market funds which are treated as fair value
through profit or loss (FVPL) under IFRS 9 with the fair value movements
reported as finance income.
(e) Investments in equity shares and funds include US$192 million
(31 December 2023: US$157 million) of equity shares, not held for trading,
where we have irrevocably elected to present fair value gains and losses on
revaluation in other comprehensive income (FVOCI). The election is made at an
individual investment level.
(f) Other investments, including loans, covers cash deposits in
rehabilitation funds, government bonds, managed investment funds and royalty
receivables.
(g) Trade receivables include provisionally priced invoices. The related
revenue is initially based on forward market selling prices for the quotation
periods stipulated in the contracts with changes between the provisional price
and the final price recorded separately within "Other revenue". The selling
price can be measured reliably for the Group's products, as it operates in
active and freely traded commodity markets. At 30 June 2024, US$1,080 million
(31 December 2023: US$1,362 million) of provisionally priced receivables were
recognised.
(h) Level 3 derivatives mainly consist of derivatives embedded in
electricity purchase contracts linked to the LME, midwest premium and billet
premium with terms expiring between 2025 and 2036 (31 December 2023: 2025 and
2036). Derivatives related to renewable power purchase agreements are linked
to forward electricity prices with terms expiring between 2053 and 2054.
(i) Net debt derivatives include interest rate swaps and cross-currency
swaps. As part of the International Swaps and Derivatives Association (ISDA)
Fallbacks Protocol, on 1 July 2023 we completed the transition of our US LIBOR
derivatives to SOFR on cessation of US LIBOR at 30 June 2023. There was no
impact on our hedging arrangements after taking into account the IFRS 9
'Financial Instruments' LIBOR reform reliefs.
(j) Trade and other financial payables comprise trade payables, other
financial payables, accruals and amounts due to equity accounted units.
There were no material transfers between level 1 and level 2, or between level
2 and level 3 in the current or prior period.
10. Financial instruments (continued)
Valuation techniques and inputs
The techniques used to value our more significant fair value
assets/(liabilities) categorised under level 2 and level 3 are summarised
below:
30 June 2024 31 December 2023
Description Fair value Fair value Valuation technique Significant Inputs
US$m US$m
Level 2
Interest rate swaps (212) (163) Discounted cash flows • Applicable market quoted swap yield curves
• Credit default spread
Cross currency interest rate swaps (283) (266) Discounted cash flows • Applicable market quoted swap yield curves
• Credit default spread
• Market quoted FX rate
Provisionally priced receivables 1,080 1,362 Closely related listed product • Applicable forward quoted metal price
Level 3
Renewable power purchase agreements (7) - Discounted cash flows • Forward electricity price
• Energy volume
Derivatives embedded in electricity contracts (157) (186) Option pricing model • LME forward aluminium price
• Midwest premium and billet premium
Royalty receivables 279 214 Discounted cash flows • Forward commodity price
• Mine production
Sensitivity analysis in respect of level 3 financial instruments
For assets/(liabilities) classified under level 3, the effect of changing the
significant unobservable inputs on carrying value has been calculated using a
movement that we deem to be reasonably probable.
Net derivative liabilities related to our renewable power purchase agreements
have a fair value of US$7 million at 30 June 2024 (31 December 2023: nil).
The fair value is calculated as the present value of the future contracted
cash flows using risk-adjusted forecast prices including credit adjustments. A
10% increase in forecast electricity prices over the remaining term of the
contract would result in a US$221 million increase in fair value and a 10%
decrease in forecast electricity prices would result in a US$221 million
decrease in fair value.
To value the long-term aluminium embedded power derivatives, we use
unobservable inputs when the term of the derivative extends beyond observable
market prices. Changing the level 3 inputs to reasonably possible alternative
assumptions does not change the fair value significantly, taking into account
the expected remaining term of contracts for either reported period. The fair
value of these derivatives is a net liability of US$157 million at 30 June
2024 (31 December 2023: US$186 million).
10. Financial instruments (continued)
Royalty receivables include amounts arising from our divested coal businesses
with a carrying value of US$279 million (31 December 2023: US$214 million).
These are classified as "Other investments, including loans" within "Other
financial assets". The fair values are determined using level 3 unobservable
inputs. These royalty receivables include US$97 million from forecast
production beyond 2030. These have not been adjusted for potential changes in
production rates that could occur due to climate change targets impacting the
operator.
The main unobservable input is the long-term coal price used over the life of
these royalty receivables. A 15% increase in the coal spot price would result
in a US$26 million increase (31 December 2023: US$64 million increase) in the
carrying value. A 15% decrease in the coal spot price would result in a US$81
million decrease (31 December 2023: US$39 million decrease) in the carrying
value. We have used a 15% assumption to calculate our exposure as it
represents the annual coal price movement that we deem to be reasonably
probable (on an annual basis over the long run).
Fair values disclosure of financial instruments
The following table shows the carrying value and fair value of our borrowings
including those which are not carried at an amount which approximates their
fair value 30 June 2024 and 31 December 2023. The fair values of some of our
financial instruments approximate their carrying values because of their short
maturity, or because they carry floating rates of interest.
30 June 2024 31 December 2023
Carrying Fair Carrying Fair
value value value value
US$m US$m US$m US$m
Listed bonds 8,532 8,221 8,607 8,672
Oyu Tolgoi project finance 3,851 4,085 3,850 4,090
Other 499 501 544 494
Total borrowings (including overdrafts) 12,882 12,807 13,001 13,256
Borrowings relating to listed bonds are categorised as level 1 in the fair
value hierarchy while those relating to project finance drawn down by Oyu
Tolgoi use a number of level 3 valuation inputs.
In the prior period, we refinanced the Oyu Tolgoi project finance on 16
February 2023 with a syndicate of international financial institutions, export
credit agencies and commercial lenders. The lenders agreed to a deferral of
the principal repayments by three years to June 2026 and to an extension of
the final maturity date by five years from 2030 to 2035. As part of
refinancing, the debt transitioned to the SOFR benchmark to which we applied
the Phase 2 IBOR reform relief under IFRS 9. The refinancing did not result in
a derecognition of the drawn down amount, however we recognised an accounting
loss on modification of US$123 million related to changes other than the
benchmark transition and capitalised transaction costs incurred of US$50
million.
Our remaining borrowings have a fair value measured by discounting estimated
cash flows with an applicable market quoted yield, and are categorised as
level 2 in the fair value hierarchy.
Our borrowings are subject to a number of financial and non-financial
covenants. The Group complied with these covenants during the period ending
30 June 2024 and expects to comply with these covenants for at least 12
months after the reporting date
11. Commitments and contingencies
Contingent liabilities (subsidiaries, joint operations, joint ventures and
associates)
Contingent liabilities, indemnities and other performance guarantees represent
the potential outflow of funds from the Group for the satisfaction of
obligations, including those under contractual arrangements (for example,
undertakings related to supplier agreements) not provided for on the balance
sheet, where the likelihood of the contingent liabilities, guarantees or
indemnities being called is assessed as possible rather than probable or
remote.
Contingent liabilities, indemnities and other performance guarantees were
US$445 million at 30 June 2024 (31 December 2023: US$435 million).
There were no material contingent liabilities arising in relation to the
Group's joint ventures and associates. We have not established provisions for
certain additional legal claims in cases where we have assessed that a payment
is either not probable or cannot be reliably estimated. A number of our
companies are, and will likely continue to be, subject to various legal
proceedings and investigations that arise from time to time. As a result, the
Group may become subject to substantial liabilities that could affect our
business, financial position and reputation. Litigation is inherently
unpredictable and large judgments may at times occur. The Group may in the
future incur judgments or enter into settlements of claims that could lead to
material cash outflows. We do not believe that any of these proceedings will
have a materially adverse effect on our financial position.
Contingent liabilities - not quantifiable
The current status of contingent liabilities where it is not practicable to
provide a reliable estimate of possible financial exposure is:
Litigation disputes
Litigation matter Latest update
2011 Contractual payments in Guinea In 2023, we resolved a previously self-disclosed investigation by the SEC into
certain contractual payments totalling US$10.5 million made to a consultant
who had provided advisory services in 2011, relating to the Simandou project
in the Republic of Guinea. In August 2023, the UK Serious Fraud Office closed
its case and announced that the Australian Federal Police maintains a live
investigation into the matter. Rio Tinto continues to co-operate fully with
relevant authorities.
At 30 June 2024, the outcome of this investigation remains uncertain, but it
could ultimately expose the Group to material financial cost. No provision has
been recognised for the investigation. We believe this case is unwarranted and
will defend the allegation vigorously.
11. Commitments and contingencies (continued)
Other contingent liabilities
We continue to modernise agreements with Traditional Owner groups in response
to the Juukan Gorge incident. We have created provisions, within "Other
provisions", based on our best estimate of historical claims. However, the
process is incomplete and it is possible that further claims could arise
relating to past events.
Close-down, restoration and environmental provisions are not recognised for
those operations that have no known restrictions on their lives as the date of
closure cannot be reliably estimated. This applies primarily to our Canadian
aluminium smelters, which are not dependent upon a specific orebody and have
access to indefinite-lived power from owned hydropower stations with water
rights permitted by local governments. In these instances, a closure
obligation may exist at the reporting date. However, due to the indefinite
nature of asset lives it is not possible to arrive at a sufficiently reliable
estimate for the purposes of recognising a provision. Close-down, restoration
and environmental provisions are recognised at these operations for separately
identifiable closure activities which can be reasonably estimated, such as the
demolition and removal of fixed structures after a pre-determined period. Any
contingent liability for these assets will crystallise into a closure
provision if and when a decision is taken to cease operations.
Capital commitments
Our capital commitments include:
- open purchase orders for managed operations and non-managed tolling
entities;
- expenditure on major projects already authorised by our Investment
Committee for non-managed operations.
Capital commitments, excluding the Group's share of joint venture capital
commitments, were US$6,251 million (31 December 2023: US$4,385 million).
They do not include the estimated incremental capital expenditure relating to
decarbonisation projects of US$5 billion to US$6 billion between 2022 and 2030
unless otherwise contractually committed.
On a legally enforceable basis, capital commitments would be approximately
US$2.1 billion (31 December 2023: US$1.4 billion) as many of the contracts
relating to the Group's projects have various cancellation clauses.
The Group's share of joint venture capital commitments was US$154 million at
30 June 2024 (31 December 2023: US$227 million).
12. Events after the balance sheet date
On 11 July 2024, we received US$575 million from CIOH for its share of 2024
cash calls for the period ended 30 June 2024, which are scheduled based on
budgeted expenditure.
On 15 July 2024, all conditions required for Rio Tinto's investment to
develop the Simandou high-grade iron ore deposit in Guinea were satisfied,
including the completion of necessary Guinean and Chinese regulatory
approvals. On the same date, Simfer Jersey's investment in Winning Consortium
Simandou (WCS) for co-development of the rail and port infrastructure became
unconditional.
On 17 July 2024, Simfer Jersey received equity injections of US$166 million
from Rio Tinto and US$147 million from CIOH. These were used to acquire a 34%
equity interest in the WCS Ports and Railway entities for combined
consideration of US$313 million. Further shareholder loan funding to the WCS
entities was made on the same day directly by Rio Tinto and CIOH in proportion
to their 53%:47% ownership interest of Simfer Jersey.
Directors' declaration
Directors' statement of responsibility
In the Directors' opinion:
The condensed consolidated interim financial statements on pages 28 to 52
including the notes have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the UK, applicable UK law, and applicable
Australian law as amended by the Australian Securities and Investments
Commission Order dated 11 July 2024. We have used the most appropriate
accounting policies for Rio Tinto's business, supported by reasonable and
prudent judgements.
The condensed consolidated interim financial statements give a true and fair
view of the Rio Tinto Group's financial position as at 30 June 2024 and of
its performance, as represented by the results of its operations,
comprehensive income and expense and its cash flows for the six months then
ended. There are reasonable grounds to believe that each of the Rio Tinto
Group, Rio Tinto Limited and Rio Tinto plc will be able to pay its debts as
and when they become due and payable.
The interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R, namely:
- an indication of important events that have occurred during the first
six months and their impact on the condensed set of consolidated interim
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report.
Signed in accordance with a resolution of the Board of Directors.
Dominic Barton
Chair
31 July 2024
Jakob Stausholm
Chief Executive
31 July 2024
Peter Cunningham
Chief Financial Officer
31 July 2024
Independent Auditors' Review Reports of KPMG LLP ("KPMG UK") to Rio Tinto plc
and of KPMG ("KPMG Australia") to the members of Rio Tinto Limited
Conclusions
For the purpose of these reports, the terms 'we' and 'our' denote KPMG UK in
relation to UK responsibilities and reporting obligations to Rio Tinto plc,
and KPMG Australia in relation to Australian responsibilities and reporting
obligations to the members of Rio Tinto Limited.
We have been engaged by Rio Tinto Group ("the Group") to review and have
reviewed the accompanying condensed consolidated interim financial statements
("Interim Financial Statements") in the Interim Results 2024 ("Interim
Report") of the Rio Tinto Group as at and for the six month period ended
30 June 2024 which comprises the:
• Group income statement
• Group statement of comprehensive income;
• Group cash flow statement;
• Group balance sheet;
• Group statement of changes in equity; and
• The related explanatory notes to the Interim Financial Statements
on pages 34 to 52.
The Rio Tinto Group consists of Rio Tinto plc, Rio Tinto Limited and their
respective subsidiaries including the Group's share of joint arrangements and
associates as at and for the six months ended 30 June 2024. KPMG Australia
considers the Directors' Declaration, on page 53, to be part of the Interim
Financial Statements when forming its conclusion.
Review conclusion by KPMG UK
Based on our review, nothing has come to our attention that causes us to
believe that the Interim Financial Statements in the Interim Report for the
six months ended 30 June 2024 are not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's
Financial Conduct Authority ("the UK FCA").
Review conclusion by KPMG Australia
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the Interim Financial Statements of the Rio
Tinto Group, including the Directors' Declaration, does not comply with the
Australian Corporations Act 2001, as amended by the Australian Securities and
Investments Commission Order dated 11 July 2024, including:
• giving a true and fair view of the Group's financial position as
at 30 June 2024 and of its performance for the six months ended on that date;
and
• complying with International Accounting Standards ("IAS") 34
Interim Financial Reporting as adopted for use in the UK and the Australian
Corporations Regulations 2001.
KPMG, an Australian partnership and KPMG LLP, a UK limited liability
partnership, are member firms of the KPMG global organisation of independent
member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All rights reserved. The KPMG name and logo are
trademarks used under license by the independent member firms of the KPMG
global organisation. KPMG Australia's liability limited by a scheme approved
under Professional Standards Legislation.
Basis for conclusions
KPMG UK conducted its review in accordance with International Standard on
Review Engagements (UK) 2410 Review of Interim Financial Information Performed
by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in
the UK.
In conducting its review, KPMG UK has complied with the ethical and
independence requirements of the UK FRC Ethical Standards as applied to listed
public interest entities.
KPMG Australia conducted its review in accordance with Auditing Standard on
Review Engagements ASRE 2410 Review of a Financial Report Performed by the
Independent Auditor of the Entity ("ASRE 2410"), as issued by the Australian
Auditing and Assurance Standards Board.
KPMG Australia are independent of the Group in accordance with the auditor
independence requirements of the Australian Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) ("the Code") that are relevant to our audit of the
annual financial report in Australia. In conducting its review, KPMG Australia
have also fulfilled its other ethical responsibilities in accordance with
these requirements.
Auditors' responsibilities for the review of the Interim Financial Statements
A review of Interim Financial Statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
that accompanies the Interim Financial Statements and is contained in the
Interim Report and consider whether it contains any apparent misstatements or
material inconsistencies with the information in the Interim Financial
Statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) or Australian Auditing Standards
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, neither KPMG UK nor KPMG Australia express an audit opinion.
KPMG Australia's responsibility is to express a conclusion on the Interim
Financial Statements, including the Directors' Declaration, based on its
review. ASRE 2410 requires KPMG Australia to conclude whether they have
become aware of any matter that makes them believe that the Interim Financial
Statements, including the Directors' Declaration, do not comply with the
Corporations Act 2001, as amended by the Australian Securities and Investments
Commission Order dated 11 July 2024, including giving a true and fair view of
the Group's financial position as at 30 June 2024 and its performance for the
six months ended on that date, and complying with IAS 34 Interim Financial
Reporting as adopted or use in the UK and the Australian Corporations
Regulations 2001.
KPMG UK's responsibilities are further described in the Our responsibility
section of our report.
KPMG UK's conclusions relating to going concern
Based on KPMG UK's review procedures, which are less extensive than those
performed in an audit as described in the Basis for conclusion section of this
report, nothing has come to KPMG UK's attention that causes us to believe that
the Directors have inappropriately adopted the going concern basis of
accounting, or that the Directors have identified material uncertainties
relating to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Responsibilities of the Directors for the Interim Financial Statements and
Interim Report
The Interim Report, including the Interim Financial Statements, is the
responsibility of, and has been approved by, the Directors of Rio Tinto plc
and the Directors of Rio Tinto Limited.
The Directors of Rio Tinto plc are responsible for:
• preparing the half-yearly financial report in accordance with the
DTR of the UK FCA;
• preparing the Interim Financial Statements in accordance with IAS
34 Interim Financial Reporting as adopted for use in the UK. As disclosed in
note 1, the annual financial statements of the group are prepared in
accordance with UK-adopted international accounting standards; and
• assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
The Directors of Rio Tinto Limited are responsible for:
• the preparation of Interim Financial Statements, including the
Directors' Declaration, that give a true and fair view in accordance with IAS
34 Interim Financial Reporting as adopted for use in the UK and the Australian
Corporations Act 2001 as amended by the Australian Securities and Investments
Commission Order dated 11 July 2024.
• such internal control as the Directors determine is necessary to
enable the preparation of the Interim Financial Statements, including the
Directors' Declaration, that give a true and fair view and is free from
material misstatement, whether due to fraud or error.
Our responsibility
KPMG UK's responsibility is to express to the Rio Tinto plc a conclusion on
the Interim Financial Statements in the Interim Report based on its review.
KPMG UK's conclusion, including its conclusions relating to going concern, are
based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
KPMG UK's report is made solely to Rio Tinto plc in accordance with the terms
of KPMG UK's engagement to assist the Company in meeting the requirements of
the DTR of the UK FCA. KPMG UK's review has been undertaken so that we might
state to Rio Tinto plc those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than Rio Tinto plc for
our review work, for this report, or for the conclusions we have reached.
KPMG Australia's report is made solely to Rio Tinto Limited's members, as a
body, in accordance with the Australian Corporations Act 2001 as amended by
the Australian Securities and Investments Commission Order dated 11 July
2024. Our review work has been undertaken so that we might state to the
members of Rio Tinto Limited those matters we are required to state to them in
this report, and the further matters we are required to state to them in
accordance with the terms agreed with Rio Tinto Limited, and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than Rio Tinto Limited's members, as a body,
for our review work, for this report, or for the conclusion we have reached.
Jonathan Downer
Trevor Hart
for and on behalf of KPMG LLP
Partner
Chartered
Accountants
Level 8/235 St Georges Terrace
15 Canada
Square
Perth WA 6000
London
E14 5GL
United Kingdom
31 July
2024
31 July
2024
Lead Auditor's Independence Declaration under Section 307C of the Australian
Corporations Act 2001
To the Directors of Rio Tinto Limited
I declare that, to the best of my knowledge and belief, in relation to the
review of Rio Tinto Limited for the six months ended 30 June 2024 there have
been:
a) no contraventions of the auditor independence requirements as set out
in the Australian Corporations Act 2001 in relation to the review; and
b) no contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of Rio Tinto Limited and the entities it
controlled as at or during the six-months ended 30 June 2024.
KPMG
Trevor Hart
Partner
Perth
31 July 2024
KPMG, an Australian partnership and a member firm of the KPMG global
organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent
member firms of the KPMG global organisation.
KPMG Australia's liability is limited by a scheme approved under Professional
Standards Legislation.
Rio Tinto financial information by business unit
Segmental revenue((a)) Underlying EBITDA((a)) Depreciation and amortisation Underlying earnings((a))
Six months ended 30 June Rio Tinto 2024 2023 2024 2023 2024 2023 2024 2023
interest US$m US$m US$m US$m US$m US$m US$m US$m
%
Iron Ore
Pilbara (b) 14,398 14,705 8,856 9,541 1,087 1,036 5,295 5,712
Dampier Salt 68.4 199 192 61 54 11 10 21 22
Evaluation projects/other (c) 1,649 1,356 (246) 59 - - (248) (50)
Intra-segment (c) (1,040) (653) 136 138 - - 102 103
Total Iron Ore Segment 15,206 15,600 8,807 9,792 1,098 1,046 5,170 5,787
Aluminium
Bauxite (d) 1,407 1,091 513 279 203 189 198 18
Alumina (e) 1,510 1,406 175 36 66 105 63 (70)
North American Aluminium (f) 3,435 3,457 811 779 397 349 308 315
Pacific Aluminium (g) 1,368 1,303 182 111 76 69 69 55
Intra-segment and other (1,576) (1,456) (20) 12 - 1 (19) 1
Integrated operations 6,144 5,801 1,661 1,217 742 713 619 319
Other product group items 342 462 10 10 - - 6 6
Product group operations 6,486 6,263 1,671 1,227 742 713 625 325
Evaluation projects/other - - (94) (87) - - (70) (65)
Total Aluminium Segment 6,486 6,263 1,577 1,140 742 713 555 260
Copper
Kennecott 100.0 1,250 832 456 139 382 213 25 (93)
Escondida 30.0 1,676 1,427 1,128 863 216 173 501 411
Oyu Tolgoi 66.0 1,022 826 509 320 178 146 167 55
Product group operations 3,948 3,085 2,093 1,322 776 532 693 373
Evaluation projects/other 460 402 (289) (240) 3 3 (236) (175)
Total Copper Segment 4,408 3,487 1,804 1,082 779 535 457 198
Minerals
Iron Ore Company of Canada 58.7 1,333 1,221 540 399 113 101 172 120
Rio Tinto Iron & Titanium (h) 839 1,011 348 287 104 101 160 118
Rio Tinto Borates 100.0 388 401 96 102 33 30 42 56
Diamonds (i) 149 250 (63) 70 19 17 (65) 44
Product group operations 2,709 2,883 921 858 269 249 309 338
Evaluation projects/other 29 6 (234) (169) - - (232) (159)
Total Minerals Segment 2,738 2,889 687 689 269 249 77 179
Reportable segments total 28,838 28,239 12,875 12,703 2,888 2,543 6,259 6,424
Simandou iron ore project (j) - - (7) (318) - - (17) (114)
Other operations (k) 49 97 92 (77) 157 137 (52) (173)
Inter-segment transactions (107) (154) 10 (17) 4 (18)
Central pension costs, share-based payments, insurance and derivatives (158) 167 (71) 147
Restructuring, project and one-off costs (111) (84) (77) (60)
Central costs (494) (512) 51 43 (405) (453)
Central exploration and evaluation (114) (134) (95) (114)
Net interest 204 81
Underlying EBITDA/earnings 12,093 11,728 5,750 5,720
Items excluded from underlying EBITDA/earnings 59 141 58 (603)
Reconciliation to Group income statement
Share of equity accounted unit sales and intra-subsidiary/equity accounted (1,978) (1,515)
unit sales
Net impairment reversals/(charges) (l) 6 (1,175)
Depreciation and amortisation in subsidiaries excluding capitalised (2,719) (2,405)
depreciation
Depreciation and amortisation in equity accounted units (275) (238) (275) (238)
Taxation and finance items in equity accounted units (483) (373)
Finance items (566) (748)
Consolidated sales revenue/profit before taxation/depreciation and 26,802 26,667 8,115 6,930 2,821 2,485 5,808 5,117
amortisation/net earnings
Rio Tinto financial information by business unit (continued)
Capital expenditure((a)(m)) Operating assets((n))
for the six months ended 30 June as at
Rio Tinto 2024 2023 30 June 2024 31 December 2023
interest US$m US$m US$m US$m
%
Iron Ore
Pilbara (b) 1,247 1,085 18,260 17,959
Dampier Salt 68.4 11 9 158 146
Evaluation projects/other (c) - - 736 780
Intra-segment (c) - - (141) (243)
Total Iron Ore Segment 1,258 1,094 19,013 18,642
Aluminium
Bauxite (d) 71 79 2,440 2,649
Alumina (e) 130 151 1,167 1,315
North American Aluminium (f) 457 314 10,622 10,582
Pacific Aluminium (g) 47 53 321 340
Intra-segment and other - - 867 997
Total Aluminium Segment 705 597 15,417 15,883
Copper
Kennecott 100.0 332 327 2,465 2,606
Escondida 30.0 - - 2,893 2,844
Oyu Tolgoi 66.0 635 585 16,200 15,334
Product group operations 967 912 21,558 20,784
Evaluation projects/other 3 5 199 262
Total Copper Segment 970 917 21,757 21,046
Minerals
Iron Ore Company of Canada 58.7 117 120 1,298 1,347
Rio Tinto Iron & Titanium (h) 97 107 3,330 3,386
Rio Tinto Borates 100.0 23 25 465 502
Diamonds (i) 34 37 87 29
Product group operations 271 289 5,180 5,264
Evaluation projects/other - 15 878 873
Total Minerals Segment 271 304 6,058 6,137
Reportable segments total 3,204 2,912 62,245 61,708
Simandou iron ore project (j) 742 - 1,192 738
Other operations (k) 12 32 (2,359) (2,634)
Inter-segment transactions 21 20
Other items 43 49 (769) (1,015)
Total 4,001 2,993 60,330 58,817
Add back: Proceeds from disposal of property, plant and equipment 17 8
Total purchases of property, plant & equipment and intangibles as per cash 4,018 3,001
flow statement
Add: Net debt (5,077) (4,231)
Equity attributable to owners of Rio Tinto 55,253 54,586
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 alternative performance 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 62 to 69).
a. Segmental revenue, Underlying EBITDA and Capital expenditure are
defined and calculated in note 3 from pages 37 to 39. Underlying Earnings is
defined and calculated within the Alternative performance measures section on
pages 63 to 65.
b. 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.
c. 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".
d. Bauxite represents the Group's 100% interest in Gove and Weipa, 22%
interest in Porto Trombetas and 22.9% interest in Sangarédi.
e. Alumina represents the Group's 100% interest in Jonquière (Vaudreuil),
Yarwun, 80% interest in Queensland Alumina and 10% interest in São Luis
(Alumar).
f. North American Aluminium represents the Group's 100% interest in
Alma, Arvida, Grande-Baie, ISAL, Kitimat, Laterrière, 40% interest in
Alouette, 25.1% interest in Bécancour, 20% interest in Sohar and 50% interest
in Matalco.
g. Pacific Aluminium represents the Group's 100% interest in Bell Bay,
59.4% interest in Boyne Island, 79.4% interest in Tiwai Point and 51.6%
interest in Tomago. We have entered into agreements to increase our interest
in Boyne Island and Tiwai Point, however those transactions had not completed
at 30 June 2024.
h. 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%).
i. Relates to our (100%) interest in the Diavik diamond mine and diamond
marketing operations.
j. 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 will carry out the Simandou mining operations in
Guinea. Simfer Jersey also owns 100% of Simfer InfraCo Guinée S.A., a company
incorporated in Guinea, which will deliver Simfer Jersey's scope of the
co-developed rail and port infrastructure. Additionally, Simfer Jersey owns
100% of Simfer Marine Singapore Pte Ltd, a Singaporean entity, which will
own the transhipment vessels (TSV) and holds a 100% interest in Simfer Marine
Guinée S.A., a Guinea entity, which will operate the TSV. As at 30 June
2024, the Group, therefore, has a 45.05% indirect interest in Simfer S.A. and
a 53% indirect interest in both Simfer InfraCo Guinée S.A. and Simfer
Marine Singapore Pte Ltd. These entities are consolidated as subsidiaries and
together referred to as the Simandou iron ore project.
Notes to financial information by business unit (continued)
k. 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.
l. Refer to note 5 for allocation of impairment reversals/(charges)
between consolidated amounts and share of profit in EAUs.
m. 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.
n. 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).
Alternative performance measures
The Group presents certain alternative performance 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). The reconciliation can be
found in note 3.
Underlying EBITDA
Underlying EBITDA represents profit before taxation, net finance items,
depreciation and amortisation adjusted to exclude the EBITDA impact of items
which do not reflect the underlying performance of our reportable segments.
The reconciliation of profit after tax to underlying EBITDA can be found in
the segmental information note on page 39.
Underlying EBITDA margin
Underlying EBITDA margin is defined as Group underlying EBITDA divided by the
aggregate of consolidated sales revenue and our share of equity account unit
sales after eliminations.
Six months ended 30 June 2024 2023
US$m US$m
Underlying EBITDA 12,093 11,728
Consolidated sales revenue 26,802 26,667
Share of equity accounted unit sales and inter-subsidiary/equity accounted 1,978 1,515
unit sales eliminations
28,780 28,182
Underlying EBITDA margin 42 % 42 %
Alternative performance measures (continued)
Pilbara underlying FOB EBITDA margin
The Pilbara underlying free on board (FOB) EBITDA margin is defined as Pilbara
underlying EBITDA divided by Pilbara segmental revenue, excluding freight
revenue.
Six months ended 30 June 2024 2023
US$m US$m
Pilbara
Underlying EBITDA 8,856 9,541
Pilbara segmental revenue 14,398 14,705
Less: Freight revenue (1,145) (913)
Pilbara segmental revenue, excluding freight revenue 13,253 13,792
Pilbara underlying FOB EBITDA margin 67 % 69 %
Underlying EBITDA margin from Aluminium integrated operations
Underlying EBITDA margin from integrated operations is defined as underlying
EBITDA divided by segmental revenue.
Six months ended 30 June 2024 2023
US$m US$m
Aluminium
Underlying EBITDA - integrated operations 1,661 1,217
Segmental revenue - integrated operations 6,144 5,801
Underlying EBITDA margin from integrated operations 27 % 21 %
Underlying EBITDA margin (product group operations)
Underlying EBITDA margin (product group operations) is defined as underlying
EBITDA divided by segmental revenue.
Six months ended 30 June 2024 2023
US$m US$m
Copper
Underlying EBITDA - product group operations 2,093 1,322
Segmental revenue - product group operations 3,948 3,085
Underlying EBITDA margin - product group operations 53 % 43 %
Six months ended 30 June 2023
2024 US$m
US$m
Minerals
Underlying EBITDA - product group operations 921 858
Segmental revenue - product group operations 2,709 2,883
Underlying EBITDA margin - product group operations 34 % 30 %
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.
Alternative performance measures (continued)
The following items are excluded from net earnings in arriving at underlying
earnings in each period irrespective of materiality:
• net gains/(losses) on disposal of interests in subsidiaries;
• impairment charges and reversals;
• profit/(loss) after tax from discontinued operations;
• exchange and derivative gains and losses. This exclusion includes
exchange gains/(losses) on external net debt and intragroup balances,
unrealised gains/(losses) on currency and interest rate derivatives not
qualifying for hedge accounting, unrealised gains/(losses) on certain
commodity derivatives not qualifying for hedge accounting, and unrealised
gains/(losses) on embedded derivatives not qualifying for hedge accounting;
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".
Reconciliation of net earnings to underlying earnings
Six months ended 30 June Pre-tax Taxation Non-controlling Net amount Net amount
2024 2024 interests 2024 2023
US$m US$m 2024 US$m US$m
US$m
Net earnings 8,115 (2,225) (82) 5,808 5,117
Items excluded from underlying earnings
Impairment (reversals)/charges((a)) (18) (37) - (55) 828
Foreign exchange and derivative losses/(gains):
- Exchange gains on external net debt, intragroup balances and (38) 6 2 (30) (98)
derivatives((b))
- Losses/(gains) on currency and interest rate derivatives not qualifying 69 4 2 75 (24)
for hedge accounting((c))
- Gains on embedded commodity derivatives not qualifying for hedge (3) (1) (3) (7) (76)
accounting((d))
Change in closure estimates (non-operating and fully impaired sites)((e)) (44) 3 - (41) (27)
Total excluded from underlying earnings (34) (25) 1 (58) 603
Underlying earnings 8,081 (2,250) (81) 5,750 5,720
(a) Refer to note 5 for allocation of impairment (reversals net of
charges)/charges between consolidated amounts and share of profit in EAUs.
(b) Exchange gains on external net debt, intragroup balances and
derivatives includes post-tax foreign exchange losses on net debt of US$132
million (30 June 2023: US$6 million) offset by post-tax gains of US$162
million (30 June 2023: US$104 million) on intragroup balances, primarily as a
result of the Australian dollar weakening against the US dollar.
Alternative performance measures (continued)
(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) For the six months 30 June 2024, a post-tax credit of US$41 million
(30 June 2023: US$27 million) arose from the change in discount rate applied
to provisions for close-down, restoration and environmental liabilities at
legacy sites where the environmental damage preceded ownership by Rio Tinto,
from 2.0% to 2.5% (30 June 2023: from 1.5% to 2.0%).
Basic underlying earnings per share
Basic underlying earnings per share is calculated as underlying earnings
divided by the weighted average number of shares outstanding during the
period.
Six months ended 30 June 2024 2023
Net earnings (US$ million) 5,808 5,117
Weighted average number of shares (millions) 1,622.7 1,621.0
Basic earnings per ordinary share (cents) 357.9 315.7
Items excluded from underlying earnings per share (cents)((a)) (3.6) 37.2
Basic underlying earnings per ordinary share (cents) 354.3 352.9
(a) Calculation of items excluded from underlying earnings per share:
Six months ended 30 June 2024 2023
Income excluded from underlying earnings (US$m) (refer to page 64) (58.0) 603.0
Weighted average number of shares (millions) 1,622.7 1,621.0
Items excluded from underlying earnings per share (cents) (3.6) 37.2
We have provided basic underlying earnings per share as this allows the
comparability of financial performance adjusted to exclude items which do not
reflect the underlying performance of the Group's operations.
Alternative performance measures (continued)
Interest cover
Interest cover is a financial metric used to monitor our ability to service
debt. It represents the number of times finance income and finance costs
(including amounts capitalised) are covered by profit before taxation, before
finance income, finance costs, share of profit after tax of equity accounted
units and items excluded from underlying earnings, plus dividends from equity
accounted units.
Six months ended 30 June 2024 2023
US$m US$m
Profit before taxation 8,115 6,930
Add back
Finance income (272) (245)
Finance costs 381 536
Share of profit after tax of equity accounted units (422) (431)
Items excluded from underlying earnings (34) 899
Add: Dividends from equity accounted units 421 287
Calculated earnings 8,189 7,976
Finance income 272 245
Finance costs (381) (536)
Add: Amounts capitalised (222) (120)
Total net finance costs before capitalisation (331) (411)
Interest cover 25 19
Payout ratio
The payout ratio is used by us to guide the dividend policy we implemented in
2016, under which we have sought to return 40-60% of underlying earnings, on
average through the cycle, to shareholders as dividends. It is calculated as
total equity dividends per share to owners of Rio Tinto declared in respect of
the financial year divided by underlying earnings per share (as defined
above). Dividends declared usually include an interim dividend paid in the
year, and a final dividend paid after the end of the year. Any special
dividends declared in respect of the financial year are also included.
Six months ended 30 June 2024 2023
(cents) (cents)
Interim dividend declared per share 177.0 177.0
Underlying earnings per share 354.3 352.9
Payout ratio 50 % 50 %
Alternative performance measures (continued)
APMs derived from cash flow statement
Capital expenditure
Capital expenditure includes the net sustaining and development expenditure on
property, plant and equipment, and on intangible assets. This is equivalent to
"Purchases of property, plant and equipment and intangible assets" in the cash
flow statement less "Sales of property, plant and equipment and intangible
assets".
This measure is used to support management's objective of effective and
efficient capital allocation as we need to invest in existing assets in order
to maintain and improve productive capacity, and in new assets to grow the
business.
Rio Tinto share of capital investment
Rio Tinto's share of capital investment represents our economic investment in
capital projects.
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.
Six months ended 30 June 2024 2023
US$m US$m
Purchase of property, plant and equipment and intangible assets 4,018 3,001
Less: Equity or shareholder loan financing received/due from non-controlling (349) -
interests((a))
Rio Tinto share of capital investment 3,669 3,001
(a) On 11 July 2024, we received US$575 million from Chalco Iron Ore
Holdings Ltd (CIOH), of which US$349 million relates to CIOH's share of
capital expenditure incurred on the Simandou project to 30 June 2024. Refer to
note 12 for further details.
Free cash flow
Free cash flow is defined as net cash generated from operating activities
minus purchases of property, plant and equipment and intangibles and payments
of lease principal, plus proceeds from the sale of property, plant and
equipment and intangible assets.
This measures the net cash returned by the business after the expenditure of
sustaining and development capital. This cash can be used for shareholder
returns, reducing debt and other investing/financing activities.
Six months ended 30 June 2024 2023
US$m US$m
Net cash generated from operating activities 7,056 6,975
Less: Purchase of property, plant and equipment and intangible assets (4,018) (3,001)
Less: Lease principal payments (212) (213)
Add: Sales of property, plant and equipment and intangible assets 17 8
Free cash flow 2,843 3,769
Alternative performance measures (continued)
APMs derived from the balance sheet
Net debt
Net debt is total borrowings plus lease liabilities less cash and cash
equivalents and other liquid investments, adjusted for derivatives related to
net debt.
Net debt measures how we are managing our balance sheet and capital structure.
Six months ended 30 June 2024
Financial liabilities Other assets
Borrowings Lease liabilities((b)) Derivatives related to net debt Cash and cash equivalents including overdrafts Other investments Net debt
US$m
excluding overdrafts US$m ((c)) ((a)) ((d))
((a)) US$m US$m US$m
US$m
At 1 January (13,000) (1,351) (429) 9,672 877 (4,231)
Foreign exchange adjustment 37 22 (21) (30) - 8
Cash movements excluding exchange movements 15 212 (2) (389) (422) (586)
Other non-cash movements 69 (300) (43) - 6 (268)
At 30 June (12,879) (1,417) (495) 9,253 461 (5,077)
(a) Borrowings excluding overdrafts of US$12,879 million (31 December
2023: US$13,000 million) differs from Borrowings on the balance sheet as it
excludes bank overdrafts of US$3 million (31 December 2023: US$1 million)
which has been included in cash and cash equivalents for the net debt
reconciliation.
(b) Other non-cash movements in lease liabilities include the net impact
of additions, modifications and terminations during the period.
(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$461 million (31 December 2023: US$877
million) of highly liquid financial assets held in a separately managed
portfolio of fixed income instruments classified as held for trading.
Net gearing ratio
Net gearing ratio is defined as net debt divided by the sum of net debt and
total equity at the end of each period. It demonstrates the degree to which
the Group's operations are funded by debt versus equity.
30 June 2024 31 December 2023
US$m US$m
Net debt (5,077) (4,231)
Net debt (5,077) (4,231)
Total equity (57,164) (56,341)
Net debt plus total equity (62,241) (60,572)
Net gearing ratio 8% 7%
Alternative performance measures (continued)
Underlying return on capital employed
Underlying return on capital employed (ROCE) is defined as underlying earnings
excluding net interest divided by average capital employed (operating assets).
Underlying ROCE measures how efficiently we generate profits from investment
in our portfolio of assets.
Six months ended 30 June 2024 2023
US$m US$m
Profit after tax attributable to owners of Rio Tinto (net earnings) 5,808 5,117
Items added back to derive underlying earnings (58) 603
Underlying earnings 5,750 5,720
Add/(deduct):
Finance income per the income statement (272) (245)
Finance costs per the income statement 381 536
Tax on finance cost (105) (191)
Non-controlling interest share of net finance costs (236) (207)
Net interest cost in equity accounted units (Rio Tinto share) 28 26
Net interest (204) (81)
Adjusted underlying earnings 5,546 5,639
Annualised adjusted underlying earnings 11,092 11,278
Equity attributable to owners of Rio Tinto - beginning of the period 54,586 50,634
Net debt - beginning of the period 4,231 4,188
Operating assets - beginning of the period 58,817 54,822
Equity attributable to owners of Rio Tinto - end of the period 55,253 51,625
Net debt - end of the period 5,077 4,350
Operating assets - end of the period 60,330 55,975
Average operating assets 59,574 55,399
Underlying return on capital employed 19 % 20 %
Metal prices and exchange rates
Six months to 30 June 2024 Six months to 30 June 2023 Increase/ (Decrease) Year to
31 December 2023
Metal prices - average for the period
Copper - US cents/lb 412 396 4 % 386
Aluminium - US$/tonne 2,358 2,329 1 % 2,250
Gold - US$/troy oz 2,203 1,932 14 % 1,941
Six month average to 30 June At 30 June At 31 December
Exchange rates against the US dollar 2024 2023 Increase/ (Decrease) 2024 2023 Increase/ (Decrease) 2023
Pound sterling 1.27 1.23 3 % 1.26 1.26 - % 1.28
Australian dollar 0.66 0.68 (3) % 0.67 0.66 2 % 0.69
Canadian dollar 0.74 0.74 - % 0.73 0.75 (3) % 0.76
Euro 1.08 1.08 - % 1.07 1.09 (2) % 1.11
South African rand 0.053 0.055 (4) % 0.054 0.053 2 % 0.054
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, United Kingdom Media Relations, Australia Media Relations, Americas
Matthew Klar Matt Chambers Simon Letendre
M +1 514 796 4973
M +44 7796 630 637 M +61 433 525 739
Malika Cherry
M +1 418 592 7293
David Outhwaite Alyesha Anderson
M +44 7787 597 493 M +61 434 868 118 Vanessa Damha
M +1 514 715 2152
Michelle Lee
M + 61 458 609 322
Investor Relations, United Kingdom Investor Relations, Australia
David Ovington Tom Gallop
M +61 439 353 948
M +44 7920 010 978
Amar Jambaa
M +61 472 865 948
Laura Brooks
M +44 7826 942 797
Weiwei Hu
M +44 7825 907 230
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 43, 120 Collins Street
London SW1Y 4AD
United Kingdom Melbourne 3000
T +44 20 7781 2000 Australia
Registered in England
No. 719885
T +61 3 9283 3333
Registered in Australia
ABN 96 004 458 404
riotinto.com
This announcement is authorised for release to the market by Rio Tinto's Group
Company Secretary.
LEI: 213800YOEO5OQ72G2R82
Classification: 1.2 half yearly financial reports and audit reports/limited
reviews
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