RIO TINTO PLC (Form: 20-F, Received: 02/28/2020 12:11:30)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One)



☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934



☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: 31 December 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to



☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report



Commission file number: 001-10533	Commission file number: 001-34121

Rio Tinto plc	Rio Tinto Limited ABN 96 004 458 404
(Exact Name of Registrant as Specified in Its Charter)	(Exact Name of Registrant as Specified in Its Charter)

England and Wales (Jurisdiction of Incorporation or Organisation)	Victoria, Australia (Jurisdiction of Incorporation or Organisation)

6 St. James's Square London, SW1Y 4AD, United Kingdom (Address of Principal Executive Offices)	Level 7, 360 Collins Street Melbourne, Victoria 3000, Australia (Address of Principal Executive Offices)

Julie Parent, T: 514-848-8519, E: julie.parent@riotinto.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered	Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
American Depositary Shares* Ordinary Shares of 10p each** 3.750% Notes due 2025 7.125% Notes due 2028 5.200% Notes due 2040 4.750% Notes due 2042 4.125% Notes due 2042	RIO	New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange	3.750% Notes due 2025 7.125% Notes due 2028 5.200% Notes due 2040 4.750% Notes due 2042 4.125% Notes due 2042	__	New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange



*	Evidenced by American Depositary Receipts. Each American Depositary Share Represents one Rio Tinto plc Ordinary Shares of 10p each.
**	Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission

Securities registered or to be registered pursuant to Section 12(g) of the Act:



Title of Class			Title of Class Shares
None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



None			None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period

covered by the annual report:



Title of each class	Rio Tinto plc - Number	Rio Tinto Limited - Number	Title of each class
Ordinary Shares of 10p each	1,259,344,591	371,216,214	Shares
DLC Dividend Share of 10p	1	1	DLC Dividend Share
Special Voting Share of 10p	1	1	Special Voting Share

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in rule 405 of the Securities Act.

Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such

reports), and (2) have been subject to such filing requirements for the past 90 days:

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every

Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during

the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition

of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer ☒	Accelerated Filer ☐	Non-Accelerated Filer ☐
		Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark

if the registrant has elected not to use the extended transition period for complying with any new or revised

financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark which basis of accounting the registrants have used to prepare the financial statements included in this filing:

US GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒

Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the

registrants have elected to follow:

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act).

Yes ☐ No ☒

TABLE OF CONTENTS

Contents



PART I	5
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3. KEY INFORMATION	5
ITEM 4. INFORMATION ON THE COMPANY	11
ITEM 4A. UNRESOLVED STAFF COMMENTS	15
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	15
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	30
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	31
ITEM 8. FINANCIAL INFORMATION	32
ITEM 9. THE OFFER AND LISTING	32
ITEM 10. ADDITIONAL INFORMATION	33
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	37

PART II	39
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	39
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	39
ITEM 15. CONTROLS AND PROCEDURES	39
ITEM 16.	39

PART III	40
ITEM 17. FINANCIAL STATEMENTS	40
ITEM 18. FINANCIAL STATEMENTS	40
ITEM 19. EXHIBITS	44

This document comprises the annual report on Form 20-F and the annual report to shareholders for the year ended 31 December 2019 of Rio Tinto plc and Rio Tinto Limited (“2019 Form 20-F”). Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, the information for the 2019 Form 20-F of Rio Tinto set out below is being incorporated by reference from the “Annual report 2019” included as exhibit 15.2 to this 2019 Form 20-F (“Annual report 2019”).

Only (i) the information set out below with the reference to specific pages of the Annual report 2019, including any page references incorporated in the incorporated material unless specifically noted otherwise (ii) the cautionary statement concerning forward-looking statements on the inside cover, and (iii) the Exhibits, shall be deemed to be filed with the Securities and Exchange Commission for any purpose, including incorporation by reference into the Registration Statement on Form F-3 File No. 333-217778, and Registration Statements on Form S-8 File Nos. 333-184397, 333-147914, 333-156093, 333-202546, 333-202547 and 333-224907 and any other documents, including documents filed by Rio Tinto plc and Rio Tinto Limited pursuant to the Securities Act of 1933, as amended, which purport to incorporate by reference the 2019 Form 20-F. Any information herein which is not referenced in the 2019 Form 20-F or the Exhibits themselves, shall not be deemed to be so incorporated by reference. The Annual report 2019 contains references to our website. Information on our website or any other website referenced in the Annual report 2019 is not incorporated into this document and should not be considered part of this document. We have included any website as an inactive textual reference only.

All reference in the 2019 Form 20-F to “we”, “our”, the “company” or the “Group” mean Rio Tinto plc and Rio Tinto Limited. We report in US dollars unless otherwise stated.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A Selected financial data

The information set forth under the headings:


•	“Financial review” on pages 29 to 37;


•	“Five year review” on page 81; and


•	“Shareholder information-Dual listed companies structure” on pages 292 and 293

of the Annual report 2019 is incorporated herein by reference.

2019 dividends

The following chart sets out the amounts of interim and final dividends paid or payable on each share or American Depositary Shares (ADS) in respect of each financial year, but before deduction of any withholding tax.



	2019	2018	2017	2016	2015
Rio Tinto Group - US cents per share
Interim	151.00	127.00	110.00	45.00	107.50
Special	61.00	243.00	—	—	—
Final	231.00	180.00	180.00	125.00	107.50
Total	443.00	550.00	290.00	170.00	215.00
Rio Tinto plc - UK pence per share
Interim	123.32	96.82	83.13	33.80	68.92
Special	49.82	183.55	—	—	—
Final	177.47	135.96	129.43	100.56	74.21
Total	350.61	416.33	212.56	134.36	143.13
Rio Tinto Limited - Australian cents per share
Interim	219.08	170.84	137.72	59.13	144.91
Special	88.50	338.70	—	—	—
Final	349.74	250.89	228.53	163.62	151.89
Total	657.32	760.43	366.25	222.75	296.80
Rio Tinto plc - US cents per ADS
Interim	151.00	126.79	110.99	44.59	104.94
Special	61.00	243.00	—	—	—
Final	231.00	180.00	181.15	125.62	106.66
Total	443.00	549.79	292.14	170.21	211.60

3.B Capitalisation and indebtedness

Not applicable.

3.C Reasons for the offer and use of proceeds

Not applicable.

3.D Risk factors

Risk management

Effective management of risk provides confidence to all our stakeholders in the Group’s ability to meet strategic objectives in alignment with our values - Safety, Teamwork, Respect, Integrity and Excellence.

Emerging risks

As we enter a new era of complexity, we expect to experience increasing uncertainty from the interplay of three global forces; geopolitics, technology and society.

There remain significant implications for the Group that arise from ever-growing geopolitical tensions impacting market sentiment. Rising trade tensions between global centres of demand and supply, geopolitical frictions such as the Hong Kong crisis, and deteriorating corporate balance sheets have the potential to slow global growth and impact demand for our products. This in turn could affect Group earnings. Additionally, as not all societies have benefited equally from globalisation, there is an increasing focus on resource nationalism. Global economic conditions remained uncertain throughout 2019 due to escalated trade tensions and heightened geopolitical instability. This combination created market volatility.

Advances in technology bring both opportunities and threats in the medium term. Digital connectivity, and intelligent systems supported by advanced analytics and artificial intelligence, are expected to drive the fourth stage of industrialisation. We are acutely aware that with increasing reliance on technology comes a necessity to continue to enhance our cyber security.

In the longer term, we see societal expectations around the impact of our business on the local economy, communities and environment continuing to rise. There has also been an increase in focus by investment firms on environmental, social and governance (ESG) issues when considering their investment criteria. Climate change constitutes an important part of the ESG framework. Climate risks and opportunities have formed part of our strategic thinking and investment decisions for over two decades. Our climate change report explains our approach to governance and risk management in this area and sets out our 2030 targets and our ambition to reach net zero emissions by 2050 across our operations.

There remain certain threats, such as natural disasters and pandemics where there is limited capacity in the international insurance markets to transfer such risks. We monitor closely such threats, and develop business resilience plans. We are currently closely monitoring the potential short and medium-term impacts of the Covid-19 virus, including for example supply-chain, mobility, workforce, market and trade flow impacts, as well as the resilience of global financial markets to support recovery. Any longer term impacts will also be considered and monitored, as appropriate.

How we manage risk

Our risk policy and standards commit us to manage risks in a proactive and effective manner. At Rio Tinto, effective risk management requires:


•	Identifying and evaluating risks that matter most in achieving strategic objectives, so resources can be prioritised in the most efficient and effective way


•	Effective communication of risk management information to decision makers across the Group, so we can respond at the right level of the organisation


•	Embedding risk awareness into all decision-making processes to support leaders in managing risks proactively and effectively to improve business performance by either creating or protecting value

•Clearly defined roles and responsibilities for risk management.

Our process for identifying, evaluating, planning, communicating, and managing material business risks is designed to manage uncertainty and, where appropriate, to accept a degree of risk to generate returns. We have an enterprise-wide risk management information system where all material risks, controls and actions are documented and kept current for managing and reporting purposes.

All of our employees and business leaders are responsible for identifying, evaluating and managing risks. Risk management is a key accountability and performance area for our leaders. Our Risk team supports the understanding and management of risks, at all levels of the business. They provide a framework for managing and reporting material risks and support the Risk Management Committee in escalating key issues to the Executive Committee or to the Board, if appropriate.



Roles and responsibilities for risk management in Rio Tinto
Oversight	Board	• Determines the nature and extent of risks that the organisation is willing to take in order to meet our strategic objectives. • Oversees the risk management process and confirms that management’s strategies are within the Board’s risk appetite and tolerances.
Oversight	Board committees	• Monitor and review the maturity and effectiveness of our risk management framework. • Review management reports on the strategies and controls applied to any material business risks identified within the committees’ scope.
Third line	Group Internal Audit	• Provides independent and objective assurance of the effectiveness of the risk management framework.
Second line (Group level)	Executive Committee	• Sets and reviews risk management strategies for risks to the Group’s business strategy, planning and investment decisions. • Defines the Group’s risk tolerances around key business objectives and seeks Board endorsement of those tolerances. • Reviews the Group-level risks at least three times per year and approves material provided to the Board and its committees. • Approves new or revised Group-level controls (policies, standards and procedures) that support the management of material risks.
	Risk Management Committee	• Monitors and reviews the effectiveness of the risk management framework across the Group’s operations and functions on behalf of the Executive Committee and Board. • Provides oversight for the management of material Group-level risks and associated management responses.
	Risk function	• Coordinates and supports Group-level risk management activity and reporting. • Embeds risk management into core business processes, such as planning and capital allocation. • Builds risk management capability and a risk-aware culture throughout the Group.
	Group’s standard-setters	• Develop, maintain and communicate Group-level controls, including policies, standards and procedures. • Assure management’s (product groups and Group functions) compliance to Group-level controls and the control effectiveness in managing risk.
First line (Operational level)	Senior leadership in product groups and functions	• Manage material risks and critical controls within their business activities, escalating when appropriate. • Embed risk analysis and management into their business strategy, planning and investment decisions. • Provide oversight of performance in their area of accountability through Risk, Assurance and Compliance forums.
	Operational management	• Identifies, assesses and manages risks in areas in which management is accountable. • Executes line and functional management responsibilities for implementing and monitoring performance of actions and controls.
	Risk community of practice	• Supports alignment, consistency and continuous improvement of risk management.

Our risk management framework sets out the organisational foundations for designing, implementing, monitoring, reviewing and continually improving risk management throughout the organisation.

A key element of this framework is our Risk Management Standard. Together with the Group’s Risk Policy, the standard outlines the expected outcomes from risk management, the roles and responsibilities associated with implementing risk analysis and management effectively, and the minimum requirements that must be met.

The framework also defines the oversight responsibilities of the Board and the Executive Committee, supported by Group Internal Audit, the Risk Management Committee and central support functions across our business.

The risk management framework lays out a three tier approach to managing risks and controls:


•	First line assurance is the role of risk owners and business leaders. Oversight by senior leadership teams through the Risk, Assurance and Compliance forums chaired by product group chief executives and heads of functions.

•

Second line assurance is provided by our central support functions and technical Centre of Excellence teams eg Underground Mining. As our Group standard-setters, their assurance activities are planned and managed by the Integrated Assurance Office (IAO). Management oversight of this assurance over material Group-level risks is supported by a quarterly Risk Management Committee meeting chaired by the Rio Tinto Group Chief Executive.


•	Third line assurance is conducted by Group Internal Audit (GIA) to provide independent assurance that the risk management and internal controls are effective to the Board and its sub-committees.

Principal risks and uncertainties

The principal risks and uncertainties outlined in this section reflect the risks that could materially affect Rio Tinto or its ability to meet its strategic objectives, either directly or by triggering a succession of events that in aggregate become material to the Group.

Our business units and functions assess the potential economic and non-economic consequences of their respective risks using the framework defined by the Group’s Risk Management Standard. Once identified, each principal risk is reviewed and monitored by the relevant internal experts and by the Risk Management Committee and, as appropriate, by the relevant Board committees and the Board.

We deliver our strategy through The way we work which focuses on the "4Ps": portfolio, people, performance and partners. The principal risks, uncertainties and trends outlined in this report, should be considered as forward-looking statements and are made subject to the cautionary statement on page 300 of the Annual Report 2019.

Risk impact and trend assessment



Market risks
Commodity prices: risk and uncertainty Commodity prices, driven by demand for and supply of the Group’s products, vary and may not be as expected over time. Exchange rate variations and geopolitical issues may offset or exacerbate this risk. Strategic delivery: Portfolio People	Threats Falling commodity prices, or adverse exchange rate movements, reduce cash flow, limiting profitability and shareholder returns. These may trigger impairments and/or impact rating agency metrics. Extended subdued prices may reflect a longer-term fall in demand for the Group’s products, and the reduced earnings and cash flow streams resulting from this may limit investment and/or growth opportunities. Failure to deliver planned returns from commercial insights would negatively impact cash flows for the Group.
China development pathway: risk and uncertainty China’s growth pathway could impact demand for the Group’s products outside of expectations. China is the largest market for our products. Strategic delivery: Portfolio People	Threats An economic slowdown in China, and/or a material change in policy, could result in a slowdown in demand for our products and reduced earnings and cash flow for the Group.



Strategic risks
Execution of acquisitions and divestments: risk and uncertainty Our ability to secure planned value by successfully executing divestments and acquisitions may vary. Strategic delivery: Portfolio People Partners	Threats Divestment and acquisition activity incurs transaction costs that cannot be recouped. They may result in value destruction by realising less than fair value for divestments, or paying more than fair value or failing to integrate successfully acquisitions. The Group may also be liable for the past acts or omissions of assets it has acquired that were unforeseen or greater than anticipated at the time of acquisition. The Group may also face liabilities for divested entities if the buyer fails to honour commitments or the Group agrees to retain certain liabilities.
Capital project development: risk and uncertainty Large capital investments require multi-year execution plans and are complex. The Group’s ability to deliver projects to baseline plan, principally in terms of safety, cost and schedule, may vary due to changes in technical requirements, law and regulation, government or community expectations, or through commercial or economic assumptions proving inaccurate through the execution phase. Strategic delivery: Portfolio Performance	Threats A delay or overrun in a project schedule and/or a significant safety or process safety incident could negatively impact the Group’s profitability, cash flows, ability to repay project-specific debt, asset carrying values, growth aspirations and relationships with key stakeholders.
Strategic partnerships: risk and uncertainty Strategic partnerships play a material role in delivering the Group’s growth, production, cash and market positioning, and these may not always develop as planned. Strategic delivery: Portfolio Performance Partners	Threats The capacity or financial circumstance or business disposition of our joint venture partners may present barriers to investment decisions and/or to the realisation of full value for the joint venture(s). For non-managed operations, the decisions of the controlling partners may cause adverse impacts to the value of the Group’s interest in the operation, or to its reputation, and may expose it to unexpected financial liability.



Financial risk
Liquidity: risk and uncertainty External events and internal capital discipline may impact Group liquidity. Strategic delivery: Performance	Threats The Group’s ability to raise sufficient funds for planned expenditure, such as capital growth and/or mergers and acquisitions, as well as the ability to weather a major economic downturn, could be compromised by a weak balance sheet and/or inadequate access to liquidity.



Resources risks
Exploration and resources: risk and uncertainty The success of the Group’s exploration activity and estimates of Ore reserves and resources may vary. Strategic delivery: Portfolio Performance	Threats A failure to discover new viable orebodies could undermine future growth prospects. If new information comes to light, or operating conditions change, the economic viability of some Ore reserves and mine plans can be restated downwards. As a result, projects may be less successful and of shorter duration than initially anticipated, and/or the asset value may be impaired.



Health, safety, environment and security risks
Health, safety, environment and security: risk and uncertainty Our operations and projects are inherently hazardous, with the potential to cause illness or injury, damage to the environment, disruption to a community or a threat to personal security. Strategic delivery: Portfolio People Performance Partners	Threats Failure to manage our health, safety, environment or community risks could result in a catastrophic event or other long-term damage that could in turn harm the Group’s financial performance and licence to operate.



Climate change
Climate change: risk and uncertainty Climate change is a systemic challenge and will require coordinated actions between nations, between industries and by society at large. It requires a long-term perspective to address both physical climate change and low-carbon transition risks and uncertainties. Strategic delivery: Portfolio Partners	Threats Current and emerging climate regulations have the potential to result in increased costs, change supply and demand dynamics for our products and create legal compliance issues and litigation, all of which could impact the Group’s financial performance and reputation. Our operations also face risk due to physical impacts of climate change, including extreme weather.



Communities and other key stakeholder risks
Sovereign: risk and uncertainty The Group’s operations are located across a number of jurisdictions, which exposes the Group to a wide range of economic, political, societal and regulatory environments. Strategic delivery: Portfolio Performance Partners	Threats Adverse actions by governments and other stakeholders can result in operational/project delays or loss of licence to operate. Other potential actions can include expropriation, changes in taxation, and export or foreign investment restrictions, which may threaten the investment proposition, title, or carrying value of assets. Legal frameworks with respect to policies such as energy, climate change and mineral law may also change in a way that increases costs.
Closure, reclamation and rehabilitation: risk and uncertainty Planning for the future of our sites after they cease their operating life is a core business function governed by our Closure Steering Committee. Estimated costs and liabilities are provided for, and updated annually, over the life of each operation. However, estimates may vary due to a number of factors that either create opportunities or challenges. Strategic delivery: Portfolio Performance Partners	Threats Plans and provisions for closure, reclamation and rehabilitation may vary over time due to changes in stakeholders’ expectations, legislation, standards, technical understanding and techniques. In addition, the expected timing of expenditure could change significantly due to changes in the business environment and orebody knowledge that might vary the life of an operation.



Governance risks
Regulation and regulatory intervention: risk and uncertainty The Group’s reputation and regulatory licences are dependent upon appropriate business conduct and are threatened by actual or perceived breaches of law, reputation and our code of conduct. Strategic delivery: People Partners	Threats Fines may be imposed on Group companies for breaching anti-trust rules, anti-corruption legislation, or sanctions or for human rights violations, or for other inappropriate business conduct. A serious allegation or formal investigation by regulatory authorities (regardless of ultimate finding) could result in a loss in share price value and/or assets or loss of business. Other consequences could include the criminal prosecution of individuals and/or Group companies, imprisonment, fines, legal liabilities and reputational damage to the Group.



Operational and people risks
Operational and commercial excellence: risk and uncertainty Accessing, developing and retaining talent as Rio Tinto and our industry evolves presents a constant challenge. The Group’s ability to maintain its competitive position is dependent on the services of a wide range of internal and external skilled and experienced personnel and contracting partners. Strategic delivery: People Performance	Threats Business interruption or underperformance may arise from a lack of capability in people, standards, processes or systems to prevent, mitigate or recover from an interruption (for example, a significant weather event), which results in a material loss to the Group.

ITEM 4. INFORMATION ON THE COMPANY

4.A History and development of the company

The information set forth under the headings:


•	“Our Strategy” on pages 20 and 21;


•	“Key performance indicators” on pages 22 to 26;


•	“Chief Financial Officer’s statement” on pages 27 and 28;


•	“Portfolio management-Capital projects” on page 38;


•	“Portfolio management-Material acquisitions and divestments” on page 39;


•	“Business reviews-Iron Ore” on pages 40 to 43;


•	“Business reviews-Aluminium” on pages 44 to 47;


•	“Business reviews-Copper and Diamonds” on pages 48 to 51;


•	“Business reviews-Energy and Minerals” on pages 52 to 55;


•	“Business reviews-Growth and Innovation” on pages 56 and 57;


•	“Business reviews-Commercial” on pages 58 and 59;


•	“Sustainability” on pages 60 to 70;


•	“Governance-Additional statutory disclosure-Operating and financial review” on page 139;


•	“Financial statements Note 2-Operating segments” on pages 167 to 170; and


•	“Financial statements Note 37-Purchases and sales of subsidiaries, joint ventures, associates and other interests in businesses” on page 212;


•	“Rio Tinto financial information by business unit” on pages 252 to 254;


•	“Shareholder information-Organisational structure” on page 292;


•	“Shareholder information-History” on page 292;


•	“Shareholder information-Nomenclature and financial data” on page 292;


•	“Shareholder information-Dual listed companies structure” on page 292; and


•	“Contact details-Registered offices” on page 299

of the Annual report 2019 is incorporated herein by reference.

See above Item 3.D, “Principal risks and uncertainties-Strategic Risks”.

In 2019 and 2018, the Group did not receive any public takeover offers by third parties in respect of Rio Tinto plc shares or Rio Tinto Limited shares or make any public takeover offers in respect of other companies’ shares.

Rio Tinto’s Form 20-F and other filings can be viewed on the Rio Tinto website at www.riotinto.com as well as the SEC website at www.sec.gov.

4.B Business overview

The information set forth under the headings:

•“Chairman’s statement” on pages 6 to 9;


•	“Chief Executive’s statement” on pages 10 to 13;


•	“Our business model” on page 14;


•	“Our values” on page 15;


•	“Strategic context” on pages 16 and 17;


•	“Our stakeholders” on pages 18 and 19;


•	“Our strategy” on pages 20 and 21;


•	“Key performance indicators” on pages 22 to 26;


•	“Chief Financial Officer’s statement” on pages 27 and 28;


•	“Financial review” on pages 29 to 37;


•	“Business reviews-Iron Ore” on pages 40 to 43;


•	“Business reviews-Aluminium” on pages 44 to 47;


•	“Business reviews-Copper and Diamonds” on pages 48 to 51;


•	“Business reviews-Energy and Minerals” on pages 52 to 55;


•	“Business reviews-Growth and Innovation” on pages 56 and 57;


•	“Business reviews-Commercial” on pages 58 and 59;


•	“Sustainability” report on pages 60 to 70;


•	“Governance-Additional statutory disclosure-Government regulations” on page 142;


•	“Governance-Additional statutory disclosure-Environmental regulations” on page 142;


•	“Financial statements Note 3-Operating segments-additional information” on pages 171 and 172;


•	“Metals and minerals production” on pages 270 to 272;


•	“Ore reserves” on pages 273 to 280; and


•	“Mines and production facilities” on pages 282 to 287

of the Annual report 2019 is incorporated herein by reference.

See above Item 3.D, “Principal risks and uncertainties-Strategic Risks” and below Item 5.A, “Additional financial information-Sales revenue” (Iron Ore, Aluminium, Copper and Diamonds, Energy and Minerals).

Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934 (the “Exchange Act”). Section 13(r) to the Exchange Act requires an issuer to disclose in its annual reports whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with the Government of Iran during the period covered by the report. The Company notes the following in relation to activities that took place in 2019, or in relation to activities the Company became aware of in 2019 relating to disclosable activities prior to the reporting period.

The Company routinely takes action to protect its intellectual property rights in many countries throughout the world, including Iran. In connection with such protection efforts, the Company has used, directly or indirectly, intellectual property firms with an agent or branch office in Iran to assist with the filing of patent and trade-mark applications, prosecution activities and maintenance in Iran. Contact with the firms has been minimal and solely limited to these activities. Certain transactions related to patents, trademarks and copyright are authorised activities under US sanctions and regulations against Iran (including the filing of an application to obtain a patent or trade-mark in Iran) and the Company believes its limited activities in this regard are consistent with this authorisation.

Rio Tinto acquired its interest in Namibia-based Rössing Uranium Limited (“Rössing”) in 1970. The Iran Foreign Investments Company (“IFIC”) acquired its original minority shareholding in Rössing in 1975. IFIC’s interest predates the establishment of the Islamic Republic of Iran and the U.S. economic sanctions targeting Iran’s nuclear, energy and ballistic missile programs. IFIC acquired a minority shareholding in Rössing in accordance with Namibian law. The Treasury Department’s Office of Foreign Assets Control designated IFIC as a Specially Designated National on 5 November 2018.

On 16 July 2019, the Company completed the sale of its entire interest 68.62 per cent stake in Rössing to China National Uranium Corporation Limited (“CNUC”) for an initial cash payment of $6.5 million and a contingent payment of up to $100 million. The contingent payment is linked to uranium spot prices and Rössing's net income during the next seven calendar years. In addition, the Company will receive a cash payment if CNUC sells the Zelda 20 Mineral Deposit during a restricted period following completion. The total consideration is subject to a maximum cap of $106.5 million. Rio Tinto Marketing Pte Ltd will continue to purchase a quantity of uranium produced by Rössing, in order to satisfy existing contractual commitments with customers.

Rössing was neither a business partnership nor joint venture between the Company and IFIC. Rössing is a Namibian limited liability company with a number of shareholders which included Rio Tinto.

When the Company was a shareholder, IFIC had no uranium product off-take rights. Neither IFIC nor other Government of Iran entities had any supply contracts in place with Rössing and none received any uranium from Rössing. IFIC also did not have access to any technology through its investment in Rössing or rights to such technology.

Rio Tinto had no power or authority to divest IFIC’s holding in Rössing. The Rössing board took steps in 2012 to terminate IFIC’s involvement in the governance of Rössing. When Rio Tinto was a shareholder in Rössing, IFIC was entitled under Namibian law to attend annual general meetings of Rössing, which they did attend. IFIC was represented on the board of Rössing by two directors. While this level of board representation did not provide IFIC with the ability to influence the conduct of Rössing’s business on its own, the Rössing board nonetheless determined that, in light of international economic sanctions, it would be in the best interest of Rössing to terminate IFIC’s involvement in board activity. Therefore, on 4 June 2012, at the annual general meeting of Rössing, the shareholders, including the Company, voted not to re-elect the two IFIC board members. This ended IFIC’s participation in Rössing board activities.

While IFIC was entitled to its pro rata share of any dividend that the majority of the board declared for all shareholders in Rössing, IFIC had not received such monies since early 2008. Simply by maintaining its own shareholding in Rössing, the Company was not engaging in any activity intended or designed to confer any direct or indirect financial support for IFIC.

While the Company did not view itself as actively transacting or entering into business dealings with an instrumentality of the Government of Iran or a Specially Designated National, this information has been provided to ensure transparency regarding the passive, minority shareholding in Rössing held by IFIC while the Company was a shareholder.

4.C Organisational structure

The information set forth under the headings:


•	“Financial statements Note 33-Principal subsidiaries” on pages 207 to 209;


•	“Financial statements Note 34-Principal joint operations” on page 209;


•	“Financial statements Note 35-Principal joint ventures” on page 210;


•	“Financial statements Note 36-Principal associates” on pages 211 and 212; and


•	“Shareholder information-Organisational structure” on page 292

of the Annual report 2019 is incorporated herein by reference.

4.D Property, plant and equipment

The information set forth under the headings:


•	“Key performance indicators” on pages 22 to 26;


•	“Portfolio management-Capital projects” on page 38;


•	“Business reviews-Iron Ore” on pages 40 to 43;


•	“Business reviews-Aluminium” on pages 44 to 47;


•	“Business reviews-Copper and Diamonds” on pages 48 to 51;


•	“Business reviews-Energy and Minerals” on pages 52 to 55;


•	“Business reviews-Growth and Innovation” on pages 56 and 57;


•	“Business reviews-Commercial” on pages 58 and 59;


•	“Sustainability” on pages 60 to 70;


•	“Governance-Additional statutory disclosure-Environmental regulations” on page 142;


•	“Governance-Additional statutory disclosure-Greenhouse gas emissions” on page 142;


•	“Financial statements Note 14-Property, plant and equipment” on pages 180 to 182;


•	“Metals and minerals production” on pages 270 to 272;


•	“Ore reserves” on pages 273 to 280; and


•	“Mines and production facilities” on pages 282 to 287

of the Annual report 2019 is incorporated herein by reference.

ITEM 4A. UNRESOLVED STAFF COMMENTS

As far as the Group is aware, there are no unresolved written comments from the SEC staff regarding its periodic reports under the Exchange Act received more than 180 days before 31 December 2019.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A Operating results

The information set forth under the headings:


•	“Financial review” on pages 29 to 37;


•	“Business reviews-Iron Ore” on pages 40 to 43;


•	“Business reviews-Aluminium” on pages 44 to 47;


•	“Business reviews-Copper and Diamonds” on pages 48 to 51;


•	“Business reviews-Energy and Minerals” on pages 52 to 55;


•	“Business reviews-Growth and Innovation” on pages 56 and 57;


•	“Business reviews-Commercial” on pages 58 and 59;


•	“Sustainability” on pages 60 to 70;


•	“Governance-Additional statutory disclosure-Government regulations” on page 142;


•	“Governance-Additional statutory disclosure-Environmental regulations” on page 142; and


•	“Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203

of the Annual report 2019 is incorporated herein by reference.

Additional Financial Information

To provide additional insight into the performance of our business, we report underlying EBITDA and underlying earnings, which are defined in “Financial statements Note 2-Operating segments” on pages 167 to 170 of the Annual report 2019.

2019 net earnings of $8.0 billion were $5.6 billion lower than 2018 net earnings of $13.6 billion. Net earnings represent amounts attributable to owners of Rio Tinto. International Financial Reporting Standards (IFRS) requires that the profit/(loss) for the period reported in the income statement should also include earnings/(losses) attributable to non-controlling interests in subsidiaries. The table below lists the principal factors driving the movement in net earnings between periods and reconciles to profit for the year.



Financial performance of 2019 compared to 2018
	2019 vs 2018
	$m		$m
2018 Net earnings			13,638
Prices^(a)	4,382
Exchange rates^(a)	529
Volume and mix^(a)	(20	)
General inflation^(a)	(303	)
Energy^(a)	75
Operating cash cost movements^(a)	(523	)
Higher exploration and evaluation spend^(a)	(136	)
One-off items^(a)	(16	)
Absence of underlying EBITDA from assets divested in 2018, including coking coal^(a)	(1,246	)
Non-cash / other^(a)	319
Total changes in underlying EBITDA	3,061
Decrease in depreciation and amortisation (pre-tax) in underlying earnings	(366	)
Decrease in interest and finance items (pre-tax) in underlying earnings	32
Increase in tax on underlying earnings	(1,011	)
Increase in underlying earnings attributable to outside interests	(151	)
Total change in underlying earnings^(b)			1,565
Increase in net impairment charges	(1,554	)
Decrease in gains on consolidation and gains on disposals	(4,287	)
Movement in exchange differences and gains/losses on derivatives	(904	)
Other	(448	)
Total changes in exclusions from underlying earnings			(7,193	)
2019 net earnings			8,010
Profit attributable to non-controlling interests			(1,038	)
Profit for the year			6,972


(a)	These variances represent the impact on underlying EBITDA.


(b)	Earnings contributions from Group businesses and business segments are based on underlying earnings. Amounts excluded from net earnings in arriving at underlying earnings are described in “Financial statements Note 2-Operating segments” on page 170 of the Annual report 2019.

Prices

Commodity price movements in 2019 increased underlying EBITDA by $4,382 million compared with 2018. This was primarily driven by the strength in the iron ore price and was partly offset by lower prices for copper and aluminium.

The Platts index for 62% iron fines was 39% higher on average compared with 2018 on a free on board (FOB) basis, driven by supply disruptions in the seaborne market and strong demand following record Chinese steel output.

Average London Metal Exchange (LME) prices for copper and aluminium were 8% and 15% lower, respectively, compared with 2018, as global manufacturing activity slowed. The gold price was 10% higher.

The 10% tariff on US imports of aluminium from Canada, in place from 1 June 2018, was removed on 19 May 2019, following agreement between the US and Canadian governments. The midwest premium for aluminium in the US averaged $320 per tonne - 24% lower than in 2018.

Exchange rates

Compared with 2018, on average the US dollar strengthened by 7% against the Australian dollar, by 3% against the Canadian dollar and by 9% against the South African rand. Currency movements increased underlying EBITDA by $529 million relative to 2018.

Volumes

Underlying EBITDA decreased by $20 million compared with 2018 from movements in sales volumes and changes in product mix. A 3% decline in iron ore shipments from the Pilbara, where we experienced weather disruptions and operational challenges at some of our mines in the first half of 2019, were mostly offset by increased bauxite shipments, improved aluminium product mix and higher by-product volumes (gold and molybdenum) from Rio Tinto Kennecott and Oyu Tolgoi.

Energy

Average movements in energy prices compared with 2018 improved underlying EBITDA by $75 million, mainly due to lower diesel prices.

Operating cash cost movements^*

Our cash operating costs rose by $523 million compared with 2018 (on a unit cost basis), primarily reflecting an increase in iron ore unit costs, driven by the first half challenges. There was some respite on cost inflation for certain raw materials for Aluminium, in particular caustic soda and petroleum coke. However, this was partly offset by inflationary pressures on other costs.

* Operating cash cost improvements represent the difference between the current and prior year full cash cost of sales per unit based on the prior year volume sold. This financial performance indicator is used by management internally to assess performance and therefore is considered relevant to users of the accounts.

Exploration and evaluation spend

We spent $136 million, or 28%, more on exploration and evaluation compared with last year. This went to our highest value projects, particularly on evaluating the Resolution copper project in Arizona, advancing our Winu copper/gold deposit in Australia and progressing our Falcon diamond project in Canada.

One off items

One-off items netted out to be $16 million less than in 2018. 2019 underlying EBITDA includes the impact of a $199 million charge at Escondida to reflect the cancellation of existing coal power contracts, a $68 million impact from the curtailment of operations at Richards Bay Minerals (RBM) and $68 million for operational challenges faced at our ISAL and Kitimat aluminium smelters.

In 2018 we suspended operations for two months at Iron Ore Company of Canada before reaching a new labour agreement ($236 million impact). We also suspended production at Rio Tinto Iron & Titanium, following a fatality at our Sorel-Tracy plant and labour disruptions at RBM ($132 million impact).

Non-cash costs/other

The movements in our non-cash costs and other items, which lowered underlying EBITDA by $319 million compared with 2018, reflected significant divestments in 2018 which generated $1,246 million of underlying EBITDA in 2018, primarily the coking coal business and the Grasberg copper mine. Following implementation of IFRS 16 "Leases" on 1 January 2019, a large proportion of our lease expense comprises charges for depreciation and interest and is not included in cash operating costs. In 2019, there was a consequent benefit to underlying EBITDA of approximately $320 million from this change in treatment.

Depreciation and amortisation, net interest and tax

Our depreciation and amortisation charge was $366 million higher than 2018. This was primarily due to the inclusion of depreciation on leases brought on to the balance sheet on adoption of IFRS 16 and completion of the Amrun bauxite mine. The increase was partly offset by the impact of the weaker Australian and Canadian dollars against the US dollar, along with assets divested in 2018.

Interest and finance items (pre-tax) were broadly in line with 2018. This was mainly due to the bond tender we completed in 2018, which reduced our gross debt by $1.9 billion equivalent and incurred $94 million in early redemption costs in 2018. In 2019, there was also a lower level of average net debt and an increase in capitalised

interest. This was offset by the inclusion of interest expense on leases following adoption of IFRS 16 "Leases" in 2019.

The 2019 effective corporate income tax rate on underlying earnings, excluding equity accounted units, was 30%, compared with 29% in 2018. The effective tax rate on underlying earnings in Australia was 31% in 2019 compared with 30% in 2018. We anticipate an effective tax rate on underlying earnings of approximately 30% in 2020.

Items excluded from underlying earnings

Refer to page 20 below for a detailed reconciliation between underlying earnings and net earnings.

Profit

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 2019 was $8.0 billion (2018: $13.6 billion). We recorded a profit after tax in 2019 of $7.0 billion (2018: $13.9 billion) of which a loss of $1.0 billion (2018 profit: $0.3 billion) was attributable to non-controlling interests.

Financial performance of 2018 compared to 2017

2018 net earnings of $13.6 billion were $4.8 billion above the 2017 net earnings of $8.8 billion. The table below lists the principal factors driving the movement in net earnings between periods and reconciles to profit for the year.



	2018 vs 2017
	$m		$m
2017 Net earnings			8,762
Prices^(a)	277
Exchange rates^(a)	286
Volume and mix^(a)	863
General inflation^(a)	(301	)
Energy^(a)	(436	)
Operating cash cost movements ^(a)	(750	)
Higher exploration and evaluation spend^(a)	(43	)
One-off items ^(a)	(23	)
Non-cash / other^(a)	(317	)
Total changes in underlying EBITDA	(444	)
Decrease in depreciation and amortisation (pre-tax) in underlying earnings	391
Decrease in interest and finance items (pre-tax) in underlying earnings	385
Increase in tax on underlying earnings	(149	)
Increase in underlying earnings attributable to outside interests	(2	)
Total change in underlying earnings^(b)			181
Decrease in net impairment charges	377
Increase in gains on consolidation and gains on disposals	1,974
Movement in exchange differences and gains/losses on debt	1,514
Other	830
Total changes in exclusions from underlying earnings			4,695
2018 net earnings			13,638
Profit attributable to non-controlling interests			287
Profit for the year			13,925


(a)	These variances represent the impact on EBITDA.


(b)	Earnings contributions from Group businesses and business segments are based on underlying earnings.

Amounts excluded from net earnings in arriving at underlying earnings are described in “Financial statements Note 2-Operating segments” on page 170 of the Annual report 2019.

Prices

Commodity price movements in 2018 increased underlying EBITDA by $277 million compared with 2017. The FOB (free on board) Platts index for 62% iron Pilbara fines was 4% lower on average compared with 2017. Average LME prices for copper and aluminium were up 6% and 7% respectively, compared with 2017. We also benefitted from higher market premiums for aluminium, in particular the mid-west premium in the US which averaged $419 per tonne in 2018, a 111% rise on 2017’s $199 per tonne.

On 1 March 2018, the US government announced a 10% tariff on US imports of aluminium from Canada, which it implemented on 1 June 2018. We do not expect this to have a significant financial impact on our business in the near term.

Exchange rates

Compared with 2017, on average the US dollar strengthened by 3% against the Australian dollar, stayed flat against the Canadian dollar and weakened by 1% against the South African rand. Currency movements increased underlying EBITDA by $286 million relative to 2017.

Volumes

Higher sales volumes increased underlying EBITDA by $863 million compared with 2017, mainly in iron ore and copper/gold. Our Pilbara iron ore shipments rose as we debottlenecked our rail network following full implementation of AutoHaul™ autonomous trains and ramped up production from our new Silvergrass mine. In copper, we benefitted from better operating performance at Escondida including the absence of the labour disruption in 2017, as well as higher copper grades at Rio Tinto Kennecott and higher gold grades at Oyu Tolgoi.

Energy

Higher energy prices compared with 2017 reduced our underlying EBITDA by $436 million. This was mainly due to the average price of oil rising by roughly 31% in 2018 to $71 per barrel. Our Pacific Aluminium smelters were also affected by higher coal prices and a new power contract.

Operating cash cost movements^*

Our cash operating costs rose by $750 million compared with 2017. The considerable efficiencies we continue to see from our mine-to-market productivity programme were offset by the increasing costs of raw materials – in particular caustic soda, petroleum coke and tar pitch for Aluminium.

Exploration and evaluation spend

We spent $43 million more on exploration and evaluation compared with last year. This went to our highest-value projects, particularly the Resolution copper project in Arizona.

One off items

One-off items were $23 million more than in 2017. At Iron Ore Company of Canada, we suspended operations for two months in 2018 ($236 million impact) before reaching a new labour agreement. At Iron & Titanium, production was suspended after a fatality at our Sorel-Tracy plant and labour disruptions at Richards Bay Minerals ($132 million impact). In 2017, our most significant one-off item was the strike action at Escondida, which led to lower volumes and higher unit costs with a $316 million impact.

Non-cash costs/other

The movements in our non-cash costs and other items lowered EBITDA by $317 million compared with 2017. We had $717 million less in underlying EBITDA following the sale of our coal businesses in 2017 and 2018. This was partly offset by the $278 million gain on sale of the Winchester South and Valeria coal development projects and a $167 million revaluation of a royalty receivable arising from the disposal of the Mount Pleasant coal project in 2016.

Our restructuring costs were $95 million higher as we continued our reorganisation around four operating and commercial hubs.

Depreciation and amortisation, net interest and tax

Our depreciation and amortisation charge was $391 million lower than in 2017, driven by the sale of the thermal coal assets in 2017 and a lower charge at Oyu Tolgoi due to some assets being fully depreciated. Interest and finance items (pre-tax) were $385 million lower than 2017. This was due to a lower level of net debt, lower early redemption costs from bond purchases and an increase in capitalised interest. In 2018, we completed a bond tender, reducing our gross debt by a further $1.94 billion equivalent. We also incurred $94 million in early redemption costs from the bond tender, compared with $256 million in 2017. Since the start of 2016, we have reduced the nominal value of outstanding bonds from approximately $21 billion to around $7.8 billion equivalent, with an average weighted interest rate on the outstanding bonds of around 5%.

The 2018 effective corporate income tax rate on underlying earnings, excluding equity accounted units, was 29%, compared with 28% in 2017. The effective tax rate on underlying earnings in Australia in both years was just over 30%.

Items excluded from underlying earnings

Refer below for a detailed reconciliation between underlying earnings and net earnings.

Profit

The net profit attributable to the owners of Rio Tinto in 2018 totalled $13.6 billion (2017: $8.8 billion). We recorded a profit in 2018 of $13.9 billion (2017: $8.9 billion) of which a profit of $287 million (2017: $89 million) was attributable to non-controlling interests.

Exclusions from underlying earnings 2017-2019

Earnings contributions from Group businesses and business segments are based on underlying earnings. Amounts excluded from net earnings in arriving at underlying earnings are summarised in the discussion of year-on-year results below.



	2019		2018		2017
	$m		$m		$m
Impairment charges	(1,658	)	(104	)	(481	)
Net (losses)/gains on consolidation and disposal of interests in businesses	(291	)	3,996		2,022
Foreign exchange and derivative gains / (losses) on US dollar net debt and intragroup balances and derivatives not qualifying for hedge accounting	(200	)	704		(810	)
Gain on sale of wharf and land in Kitimat, Canada	—		569		—
Changes in closure estimates (non-operating and fully impaired sites)	—		(335	)	—
Changes in corporate tax rates	—		—		(439	)
Rio Tinto Kennecott insurance settlement	—		—		45
Adjustment to deferred tax assets relating to expected divestments	—		—		(202	)
Other exclusions	(214	)	—		—
Total excluded in arriving at underlying earnings	(2,363	)	4,830		135
Net earnings	8,010		13,638		8,762
Underlying earnings	10,373		8,808		8,627

2019

Net impairment charges increased by $1.6 billion compared with 2018, primarily related to the Oyu Tolgoi underground project in Mongolia and the Yarwun alumina refinery in Queensland, Australia. We recognised an impairment charge of $0.8 billion (after tax and non-controlling interests) on the Oyu Tolgoi project, reflecting forecast delays to first production and increased capital spend on the development. We also recognised a $0.8 billion post-tax impairment charge on the Yarwun alumina refinery following ramp-up of the Amrun expansion at Weipa, which resulted in a reassessment of our cash generating units. Weipa is now considered to generate cash inflows largely independent from the downstream alumina operations with which it was previously aggregated for accounting purposes.

In 2018, we recognised $0.1 billion of after tax charges, mainly relating to the carrying value of the ISAL aluminium smelter in Iceland following its reclassification to assets held for sale. In 2019, we recognised a further $0.1 billion post-tax charge as these assets were reclassified back out of assets held for sale.

Gains on disposals were $4.3 billion lower than 2018. In 2019, we recognised a $0.3 billion loss (after tax) from the sale of Rössing Uranium, including a non-cash adjustment for historical foreign exchange losses. In 2018, we realised net gains of $4.0 billion (after tax), primarily from the sale of our Hail Creek and Kestrel coking coal businesses in Australia, the sale of our interest in the Grasberg copper mine in Indonesia and the formation of the ELYSIS joint venture in Canada.

Exchange differences and gains/losses on derivatives were $0.9 billion lower than 2018. In 2019, these gave rise to a $0.2 billion after tax loss. This compared with gains of $0.7 billion in 2018 - mainly on US dollar debt in non-US dollar functional currency Group companies, intragroup balances and on the revaluation of certain derivatives which do not qualify for hedge accounting. These exchange gains are largely offset by currency translation losses recognised in equity. The quantum of US dollar debt is largely unaffected and we will repay it from US dollar sales receipts.

There were $0.4 billion in other changes in items excluded from underlying earnings. In 2019, we recognised a $0.2 billion loss (after tax) related to provisions for obligations in respect of legacy operations. In 2018, we recognised a $0.6 billion gain on sale of surplus land at Kitimat and a $0.3 billion increase in the closure provision at the Argyle diamond mine.

2018

In 2018, we recognised $104 million of post-tax impairment charges, mainly relating to the carrying value of the ISAL aluminium smelter in Iceland following its reclassification to assets held for sale. In 2017, we recognised $481 million (post-tax) of impairment charges, relating primarily to the carrying values of the Roughrider uranium deposit in Canada, the Rössing Uranium mine in Namibia and the Argyle diamond mine in Australia.

2018 net gains on consolidation and disposal of interests in businesses of $4.0 billion (post-tax) included the sale of our Hail Creek and Kestrel coking coal businesses in Australia, the sale of our interest in Grasberg in Indonesia and the formation of the ELYSIS joint venture in Canada. We created this joint venture in May with Alcoa to develop a carbon-free aluminium smelting process and recognised a gain of $141 million (post-tax) for the fair value uplift on forming the joint venture. In 2017, we realised net gains on disposal of interests in businesses of $2.0 billion from the sale of the Coal & Allied thermal coal business in Australia.

Amounts relating to the undeveloped coal properties, Winchester South and Valeria, were included within underlying earnings.

In 2018, we recognised non-cash exchange and derivative gains of $0.7 billion. This was mainly on US dollar debt in non-US dollar functional currency Group companies, intragroup balances, and on the revaluation of certain derivatives which did not qualify for hedge accounting. The exchange gains were largely offset by currency translation losses recognised in equity. The quantum of US dollar debt was largely unaffected.

Other exclusions of $0.2 billion included gains on the sale of surplus land at Kitimat in Canada ($0.6 billion), partially offset by charges recognised to increase closure provisions at ERA and Argyle in Australia ($0.3 billion).

2017

Impairment charges of $481 million (post-tax) were recognised in 2017. This related primarily to the carrying values of the Roughrider uranium deposit in Canada, the Rössing uranium mine in Namibia and the Argyle diamond mine in Australia. Roughrider’s recoverable amount was determined to be $nil following a decision in the first half of 2017 to cease further expenditure on the project. Rössing was impaired due to oversupply in the uranium market resulting in structural changes to forecast prices, while the impairment at Argyle was attributable to lower production volumes, a smaller than expected contribution from productivity improvements and lower realised prices.

Net gains on disposal of interests in businesses of $2,022 million primarily related to the sale of the Coal & Allied thermal coal business which completed on 1 September 2017.

Non-cash exchange and derivative losses in 2017 of $810 million arose primarily on US dollar debt in non-US dollar functional currency Group companies, intragroup balances, and on the revaluation of certain derivatives which do not qualify for hedge accounting. The exchange losses were largely offset by currency translation gains recognised in equity and the quantum of US dollar debt, which will be repaid from US dollar sales receipts and US dollar divestment proceeds, is therefore largely unaffected.

Deferred tax assets were remeasured to reflect lower corporate income tax rates in the US and France as a result of tax legislation changes. Deferred tax assets were also derecognised as a result of revised profit forecasts in France due to expected divestments.

In 2017, the Group received the final settlement on the insurance claims related to the 2013 pit-wall slide at Rio Tinto Kennecott of $233 million pre-tax ($146 million post-tax). Part of the settlement, $73 million pre-tax ($45 million post-tax), was excluded from underlying earnings in line with the treatment of associated costs incurred from 2013 to 2015.



Underlying Earnings by product group 2017-2019	2019		2018		2017
	$m		$m		$m
Iron Ore^(a)	9,638		6,531		6,695
Aluminium	599		1,347		1,583
Copper & Diamonds	554		1,054		263
Energy & Minerals^(a)(b)	611		995		1,239
Other operations	(89	)	(102	)	(138	)
Other items/Intrasegment eliminations	(587	)	(690	)	(483	)
Exploration and evaluation	(231	)	(193	)	(178	)
Net interest	(122	)	(134	)	(354	)
Group underlying earnings	10,373		8,808		8,627
Exclusions	(2,363	)	4,830		135
Net Earnings	8,010		13,638		8,762


(a)	2018 and 2017 underlying earnings has been restated for Iron Ore and Energy & Minerals to adjust for the move of Dampier Salt from the Energy & Minerals product group to the Iron Ore product group in the first half of 2019.


(b)	Includes the Simandou iron ore project in Guinea and Iron Ore Company of Canada.

Sales Revenue

(a)

Consolidated sales revenue for 2019 of $43.2 billion was $2.6 billion or 7% higher than the prior period. Gross sales revenue (including the sales revenue of equity accounted units on a proportionately consolidated basis, after adjusting for sales to subsidiaries) increased from $42.8 billion to $45.4 billion. Rio Tinto’s sales revenue continues to be predominantly attributable to iron ore and aluminium.

Prices



			2019	2018	2017
Commodity	Source	Unit	$	$	$
Average prices
Iron ore 62% Fe Fines FOB	Platts Index less Baltic Exchange Freight Rate	dmt^(a)	85.0	61.8	64.1
Aluminium	LME^(b)	Tonne	1,791	2,110	1,969
Copper	LME^(b)	Pound	2.73	2.97	2.81
Gold	London Bullion Market (LBMA)	Ounce	1,393	1,269	1,257
Year end spot price
Aluminium		Tonne	1,523	1,863	2,256
Copper		Pound	2.79	2.70	3.27
Gold		Ounce	1,523	1,282	1,306


(a)	Dry metric tonne


(b)	LME cash price

The above table shows published prices for Rio Tinto’s commodities for the last three years where these are publicly available, and where there is a reasonable degree of correlation between the published prices and Rio Tinto’s realised prices.

Group sales revenue will not necessarily move in line with these published prices for a number of reasons which are discussed below.

The discussion of revenues below relates to the Group’s gross revenue from sale of commodities, as included in the “Financial information by business unit” on pages 252 to 254 of the Annual report 2019.

Iron Ore

2019 sales revenue compared with 2018

Gross sales revenue increased by $5.4 billion (29%) to $24.1 billion in 2019. The gross sales revenue for our Pilbara operations included freight revenue of $1.7 billion (2018: $1.7 billion).

The significant increase is attributable to higher prices as the Platts index for 62% iron fines was 39% higher on average compared with 2018 on a free on board (FOB) basis. This was partly offset by the effect of lower shipments from the Pilbara, which decreased 3% from the previous period to 327 million tonnes.

In 2019, we priced approximately 76% of our sales with reference to the average index price for the month of shipment and 16% with reference to the prior quarter’s average index lagged by one month, with the remainder sold either on current quarter average, current month average or on the spot market. We made approximately 68% of sales including freight and 32% on an FOB basis.

In 2019, we achieved an average iron ore price of $79.0 per wet metric tonne on an FOB basis (2018: $57.8 per wet metric tonne). This equates to $85.9 per dry metric tonne (2018: $62.8 per dry metric tonne).

2018 sales revenue compared with 2017

Gross sales revenue increased by $0.3 billion (1%) to $18.7 billion in 2018 (2018 revenue numbers have been adjusted to take into account Dampier salt being reclassified under the Iron Ore product group in 2019). This included freight revenue for the Pilbara operations of $1.7 billion compared with $1.5 billion.

The small increase was primarily driven by increasing shipments by 2% to 338 million tonnes which was offset by lower prices. The average FOB Platts index for 62% Pilbara fines dropped by 4%.

In 2018, we priced approximately 68% of our sales with reference to the current month average index; 17% with reference to the prior quarter’s average index lagged by one month; 5% with reference to the current quarter average; and 10% on the spot market. Approximately 32% of our sales were made on an FOB basis with the remainder sold including freight.

In 2018, we achieved an average iron ore price of $57.8 per wet metric tonne on an FOB basis (2017: $59.6 per wet metric tonne). This equates to $62.8 per dry metric tonne (2017: $64.8 per dry metric tonne), which compares with the average FOB Platts index of $61.8 per dry metric tonne for the 62% iron Pilbara fines product (2017: $64.1 per dry metric tonne).

Aluminium

2019 sales revenue compared with 2018

Aluminium’s sales revenues are from aluminium and related products such as alumina and bauxite.

Gross sales revenue decreased by 15% to $10.3 billion in 2019. This reflects the significant price declines in alumina and aluminium metal offset by increases in third-party bauxite sales.

In 2019 we achieved an average realised aluminium price of $2,132 per tonne (2018: $2,470 per tonne). This comprised the LME price, a market premium and a value-added product (VAP) premium. The cash LME price averaged $1,791 per tonne, 15% lower than 2018. In our key US market, the midwest premium dropped 24% to $320 per tonne on average in 2019. VAP represented 51% of the primary metal we sold (2018: 54%, excluding the Dunkerque smelter which we sold in 2018) and generated attractive product premiums averaging $234 per tonne of VAP sold (2018: $227 per tonne). We paid a 10% tariff on our Canadian aluminium exports to the United States under Section 232 until the tariff was removed on 19 May 2019.

2018 sales revenue compared with 2017

Gross sales revenue increased by 11% to $12.2 billion in 2018. This reflected the stronger pricing environment, in particular for primary metal in the first half of the year. This was however offset by lower volumes. The lower volumes were primarily due to labour disruptions at the non-managed Becancour smelter in Canada and a power interruption at the Dunkerque smelter in France.

In 2018, we achieved an average realised aluminium price of $2,470 per tonne (2017: $2,231 per tonne). This comprised the LME price, a market premium and a value-added product (VAP) premium. The cash LME price averaged $2,110 per tonne, 7% higher than 2017. Market premiums increased in all regions. In our key US market,

the mid-West premium rose 111% to $419 per tonne (2017: $199 per tonne), driven by the 10% US tariff implemented on 1 June which is included in our operating costs. VAP represented 57% of the primary metal we sold (2017: 57%) and generated attractive product premiums averaging $227 per tonne of VAP sold (2017: $221 per tonne).

Copper and Diamonds

2019 sales revenue compared with 2018

Gross sales revenue of $5.8 billion was 10% lower than 2018. This reflected lower average realised copper prices and lower grades at all our operations, resulting in lower mined and refined copper production volumes. The impact was partly offset by higher throughput from Escondida, productivity improvements at Oyu Tolgoi and improvements in ore processed at Kennecott.

Our average realised copper price decreased by 7% to 275 US cents per pound, which was comparable with an 8% decline in the LME price to 273 US cents per pound.

2018 sales revenue compared with 2017

Gross sales revenue of $6.5 billion was 34% higher than 2017. This reflected increased copper and gold volumes which were driven by higher grades. The rise is also connected to productivity improvements and increased plant throughput at Rio Tinto Kennecott, a return to capacity at Escondida, higher gold grades at Oyu Tolgoi, and a greater metal share at Grasberg.

Average LME copper prices increased 6% to 297 US cents per pound, and the average gold price rose 1% to $1,269 per ounce compared with 2017. These price rises were more than offset by provisional pricing movements.

Energy and Minerals

2019 sales revenue compared with 2018

Gross sales revenues for the product group in 2019 fell by 6% to $5.2 billion.

Excluding the contribution from the divested coal business in 2018, 2019 revenue of $5.2 billion was 15% higher than 2018. The increase reflects the recovery in volumes at Rio Tinto Iron & Titanium and Iron Ore Company of Canada and higher prices for iron ore pellets and concentrate and titanium dioxide feedstocks.

IOC production was 18% higher than 2018, when operations were impacted by a two-month strike.

Titanium dioxide feedstock production was 8% higher than 2018, reflecting improved operational performance and the restart of furnaces.

2018 sales revenue compared with 2017

Gross sales revenue for the product group in 2018 fell by 28% to $5.5 billion (2018 revenue numbers have been adjusted to take into account Dampier salt being reclassified under the Iron Ore product group in 2019). Coal revenue was $1.8 billion lower due to the sale of Coal & Allied Industries Limited in 2017 and the sale of the remaining coking coal assets in the current year.

Excluding the entire contribution from coal in both years, 2018 revenue of $4.5 billion was 5% lower than the 2017 comparative of $4.7 billion (both amounts have been adjusted to take into account Dampier salt being reclassified under the Iron Ore product group in 2019). This reflected lower volumes in iron ore and titanium dioxide feedstocks, partly offset by higher prices.

IOC production and sales in 2018 were affected by a two-month strike at the mine in the second quarter. Pellet production of 8.5 million tonnes (our share 5.0 million tonnes) was 18% lower than 2017, while concentrate production for sale of 6.7 million tonnes (our share 3.9 million tonnes) was 22% lower. Total sales of pellets and concentrates in 2018 were 15.0 million tonnes (our share 8.8 million tonnes), 21% lower than 2017.

Titanium dioxide feedstock production was 15% lower in 2018 compared with 2017 although the resulting impact on revenue was offset by higher prices due to stronger demand and tight supply.

Cash flow

2019 cash flow compared with 2018

We generated $14.9 billion in net cash from our operating activities, 26% higher than 2018. This increase was driven primarily by higher underlying EBITDA from higher iron ore prices and the ongoing management of working capital. We invested $5.5 billion in capital expenditure in 2019 which remains at the same level as 2018. Key projects included the Koodaideri iron ore mine and the completion of the primary production shaft at Oyu Tolgoi, along with sustaining capital spend.

We generated $9.2 billion of free cash flow, 31% higher than 2018, reflecting our higher operating cash flow and consistent capital expenditure. Free cash flow now includes an adjustment to include lease principal repayments of $315 million following adoption in 2019 of IFRS 16 "Leases".

Free cash flow is calculated using the following GAAP measures:



For year ended 31 December	2019 $m	2018 $m
Net cash generated from operating activities	14,912	11,821
Purchases of property, plant and equipment and intangible assets	(5,488)	(5,430	)
Sales of property, plant and equipment and intangible assets	49	586
Lease principal payments	(315)	—
Free cash flow	9,158	6,977

We paid $10.3 billion in dividends to our shareholders. We also repurchased $1.6 billion of our shares, all of which were bought from the market in the UK in 2019.

A full consolidated cash flow statement is contained in the Financial Statements on page 148 of the Annual report 2019.

2018 cash flow compared with 2017

We generated $11.8 billion in net cash from our operating activities, 15% lower than in 2017. This reduction was primarily driven by higher tax payments related to our 2017 profits and adverse working capital movements. We invested $5.4 billion in capital expenditure, 21% more than in 2017 as our major projects ramped up. These included our Oyu Tolgoi underground copper mine in Mongolia, the completion of our Amrun bauxite project in Queensland and the full implementation of AutoHaul™, the automation of our Pilbara train system.

We generated $7.0 billion of free cash flow, 27% lower than 2017, in line with our lower operating cash flow and higher capital expenditure. This was partly offset by proceeds from the sale of property, plant and equipment including $0.5 billion received from the sale of surplus land at Kitimat. In 2018, our mine-to-market productivity programme exit rate was impacted by $0.3 billion of raw material cost headwinds. We are on track to be generating $1.5 billion per year in free cash flow from this programme from 2021.

We paid $5.4 billion in dividends to our shareholders. We also repurchased $5.4 billion of our shares: $2.1 billion of these were bought off-market in Australia and $3.3 billion on-market in the UK in 2018 as part of our ongoing programme.

Balance sheet at 31 December 2019

Our net debt, reconciled to GAAP measures in the “Financial statements Note 24-Net debt” on page 188, of $3.7 billion increased by $3.9 billion in 2019, reflecting final, interim and special dividend payments of $10.3 billion and $1.6 billion of share buy-backs, partly offset by our strong free cash flow. It also reflects a non-cash increase of $1.2 billion following the implementation of IFRS 16 "Leases" from 1 January 2019.

Our net gearing ratio increased to 7% at 31 December 2019 (31 December 2018: -1%). Refer to page 36 of the Annual report 2019.

Total financing liabilities at 31 December 2019 were $14.3 billion and the weighted average maturity was around 10 years. At 31 December 2019, approximately 76% of Rio Tinto’s total borrowings were at floating interest rates. The maximum amount within non-current borrowings maturing in any one calendar year was $1.8 billion, which matures in 2025. These amounts incorporate $1.3 billion lease liabilities recognised at 31 December 2019 following the transition to IFRS 16 "Leases" from 1 January 2019.

Cash and cash equivalents plus other short-term cash investments at 31 December 2019 were $10.6 billion (31 December 2018: $13.3 billion).

Financial instruments and risk management

The Group’s policies with regard to financial instruments and risk management are clearly defined and consistently applied. They are a fundamental part of the Group’s long-term strategy covering areas such as foreign exchange risk, interest rate risk, commodity price risk, credit risk, liquidity risk and capital management. Further details of our Financial instruments and risk management are disclosed in “Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203 of the Annual report 2019.

The Annual report 2019 shows the full extent of the Group’s financial commitments, including debt. The risk factors to which the Group is subject are summarised above in Item 3.D, “Risk factors”.

The effectiveness of internal controls continues to be a high priority in the Rio Tinto Group.

Dividend

The 2019 interim dividend was 151.0 US cents (2018: 127.0 US cents) and the final dividend was determined as 231.0 US cents (2018: 180.0 US cents). In addition, the directors of Rio Tinto announced and paid an interim special dividend in 2019 of 61.0 US cents per share (2018: 243.0 US cents). Dividends paid on Rio Tinto plc and Rio Tinto Limited shares are equalised on a net cash basis; that is, without taking into account any associated tax credits.

Dividends are determined in US dollars. Rio Tinto plc dividends are paid and declared in pounds sterling and Rio Tinto Limited dividends are declared and paid in Australian dollars, converted at exchange rates on 26 February 2020. Details relating to the dividend policy, determination and payment of dividends in sterling, Australian dollars and other currencies and on the payment of dividends to holders of American Depositary Receipts (ADRs) are included under the heading “Shareholder information-Markets” on page 294 of the Annual report 2019 and above in Item 3.A, “Selected financial data”.

Capital and liquidity risk management

The Group’s total capital is defined as equity attributable to owners of Rio Tinto plus equity attributable to non-controlling interests and net debt, as shown below:

Total capital



	2019	2018
	$m	$m
Equity attributable to owners of Rio Tinto	40,532	43,686
Equity attributable to non-controlling interests	4,710	6,137
Net debt/(cash) (Financial Statements Note 24 of the Annual report 2019)	3,651	(255	)
Total capital	48,893	49,568

The Group’s material capital and evaluation projects are listed under the heading “Portfolio management” on page 38 and in “Business reviews-Growth and Innovation” on pages 56 and 57 respectively of the Annual report 2019.

We expect that contractual commitments for expenditure, together with other expenditure and liquidity requirements, will be met from internal cash flow and, to the extent necessary, from the existing facilities described in “Financial statements Note 30-Financial instruments and risk management”, part A(b)(i) on pages 194 and 195 of the Annual report 2019. This note also provides further details of our liquidity and capital risk management.

Treasury management and financial instruments

Details of our Treasury management and financial instruments are disclosed in “Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203 of the Annual report 2019.

Foreign exchange

The following sensitivities give the estimated effect on underlying earnings assuming that each exchange rate moves in isolation. The relationship between currencies and commodity prices is a complex one and movements in exchange rates can cause movements in commodity prices and vice versa. Where the functional currency of an operation is that of a country for which production of commodities is an important feature of the economy, such as the Australian dollar, there is a certain degree of natural protection against cyclical fluctuations, in that the currency tends to be weak, reducing costs in US dollar terms, when commodity prices are low, and vice versa.

Earnings sensitivities – Exchange rate



	Average exchange rate for 2019	Effect on underlying EBITDA of 10% change in full year average
	US cents	+/- $m
Australian dollar	0.70	(529	)
Canadian dollar	0.75	(199	)

The exchange rate sensitivities quoted above include the effect on net operating costs of movements in exchange rates but exclude the effect of the revaluation of foreign currency financial assets and liabilities. They should therefore be used with caution. Further details of our exposure to foreign currency fluctuations and currency derivatives, and our approach to currency hedging, are contained within “Financial statements Note 30-Financial instruments and risk management”, part A(b)(iv), on pages 198 and 199 of the Annual report 2019.

Interest rates

Details of our exposure to interest rate fluctuations are contained within “Financial statements Note 30-Financial instruments and risk management”, part A(b)(v), on pages 199 and 200 of the Annual report 2019.

Commodity prices

The approximate effect on the Group’s underlying EBITDA of a ten per cent change from the full year average market price in 2019 for the following products would be:



		Average market price for 2019	Effect on underlying EBITDA of 10% change in full year average
Commodity	Unit	$	+/- $m
Iron ore 62% Fe Fines FOB	dmt	85.0	2,061
Aluminium	Tonne	1,791	482
Copper	Pound	2.73	350
Gold	Ounce	1,393	54

The sensitivities give the estimated impact on net EBITDA of changes in prices assuming that all other variables remain constant. These should be used with caution. As noted previously, the relationship between currencies and commodity prices is a complex one and changes in exchange rates can influence commodity prices and vice versa.

Further details of our exposure to commodity price fluctuations are contained within “Financial statements Note 30-Financial instruments and risk management”, on part A(b)(ii), on pages 195 to 197 of the Annual report 2019.

Credit risks

Details of our exposure to credit risks relating to financial receivables, financial instruments and cash deposits, are contained within “Financial statements Note 30-Financial instruments and risk management”, part A(b)(iii), on pages 197 and 198 of the Annual report 2019.

Disposals and acquisitions

Information regarding disposals and acquisitions is provided in “Financial statements Note 37-Purchases and sales of subsidiaries, joint ventures, associates and other interests in businesses” on page 212 of the Annual report 2019.

Critical accounting policies and estimates

Many of the amounts included in the financial statements involve the use of judgment and/or estimates. These judgments and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ from the amounts included in the financial statements.

Information about such judgments and estimation is contained under “Judgments in applying accounting policies and key sources of estimation uncertainty” in “Financial statements Note 1-Principal accounting policies” on page 153 of the Annual report 2019.

5.B Liquidity and capital resources

The information set forth under the headings:


•	“Portfolio management-Capital projects” on page 38;


•	“Business reviews-Iron Ore-New projects and growth options” on page 43;


•	“Business reviews-Aluminium-New projects and growth options” on page 47;


•	“Business reviews-Copper and Diamonds-Other new projects and growth options” on page 51;


•	“Business reviews-Energy and Minerals-New projects and growth options” on page 55;


•	“Financial statements Note 22-Borrowings and other financial liabilities” on page 187; and


•	“Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203

of the Annual report 2019 is incorporated herein by reference.

See Item 5.E. and 5F. below which presents information in relation to our material off balance sheet arrangements and contractual commitments.

5.C Research and development, patents and licenses

The information set forth under the headings:


•	“Business reviews-Growth and Innovation” on pages 56 and 57;


•	“Governance-Additional statutory disclosure-Exploration, research and development” on page 142; and


•	“Financial statements Note 4-Net operating costs (excluding items shown separately)” on page 172

of the Annual report 2019 is incorporated herein by reference.

5.D Trend information

The information set forth under the headings:


•	“Chairman’s statement” on pages 6 to 9;


•	“Chief Executive’s statement” on pages 10 to 13;


•	“Our business model” on page 14;


•	“Our values” on page 15;


•	“Strategic context” on pages 16 and 17;


•	“Our stakeholders” on pages 18 and 19;


•	“Our strategy” on pages 20 and 21;


•	“Chief Financial Officer’s statement” on pages 27 and 28;


•	“Financial review” on pages 29 to 37;


•	“Business reviews-Iron Ore” on pages 40 to 43;


•	“Business reviews-Aluminium” on pages 44 to 47;


•	“Business reviews-Copper and Diamonds” on pages 48 to 51;


•	“Business reviews-Energy and Minerals” on pages 52 to 55;


•	“Business reviews-Growth and Innovation” on pages 56 and 57; and


•	“Business reviews-Commercial” on pages 58 and 59

of the Annual report 2019 is incorporated herein by reference.

5.E Off-balance sheet arrangements

Off balance sheet arrangements and contractual commitments

Information regarding the Group’s off balance sheet arrangements and contractual commitments can be found below:


–	Post retirement commitments and funding arrangements is provided in “Financial statements Note 44-Post-retirement benefits” on pages 218 to 223 of the Annual report 2019.


–	Information regarding the Group’s close-down and restoration obligations is provided in “Financial statements Note 26-Provisions (including post-retirement benefits)” on page 189 of the Annual report 2019.


–	Information regarding contingent liabilities, guarantees and commitments is provided in “Financial statements Note 31-Contingencies and commitments” on pages 203 to 205 of the Annual report 2019.


–	Information on the Group's commitments relating to leases is provided in “Financial statements Note 23-Leases” on pages 187 and 188 of the Annual report 2019.


–	Information regarding the Group's obligation to its financial liabilities is provided in “Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203 of the Annual report 2019.


–	Information regarding taxes payable obligations is provided on the Group's balance sheet. Taxes payable include balances that relate to uncertain tax positions. This may mean the commitment is greater or less than that provided.

We expect that these contractual commitments for expenditure, together with other expenditure and liquidity requirements, will be met from internal cash flows and, to the extent necessary, from existing facilities.

Except as disclosed in “Financial statements Note 21-Cash and cash equivalents” on page 186 of the Annual report 2019, there are no material legal or economic restrictions on the ability of our subsidiaries to transfer funds to the company in the form of cash dividends, loans, or advances.

5.F Tabular disclosure of contractual obligations

The table below presents information in relation to our material off balance sheet arrangements and contractual commitments described in Item 5.E.



	<1 yr		1-3 yrs		3-5 yrs		> 5 yrs		Total
At 31 December 2019	$m		$m		$m		$m		$m
Expenditure commitments in relation to:
Other (capital commitments)	(3,069	)	(851	)	(133	)	—		(4,053	)
	(3,069	)	(851	)	(133	)	—		(4,053	)
Long-term debt and other financial obligations*:
Trade and other financial payables	(4,841	)	(57	)	(29	)	(380	)	(5,307	)
Borrowings before Swaps	(723	)	(836	)	(1,950	)	(9,320	)	(12,829	)
Lease liability payments	(349	)	(424	)	(226	)	(671	)	(1,670	)
Expected Future Interest payments	(607	)	(1,184	)	(1,065	)	(3,518	)	(6,374	)
Asset retirement obligations	(541	)	(955	)	(1,100	)	(13,470	)	(16,066	)
Purchase obligations	(2,920	)	(3,136	)	(2,166	)	(8,697	)	(16,919	)
Other	(391	)	(58	)	(105	)	(209	)	(763	)
	(10,372	)	(6,650	)	(6,641	)	(36,265	)	(59,928	)
Total	(13,441	)	(7,501	)	(6,774	)	(36,265	)	(63,981	)

*Other contractual commitments that the Group has where the maturity profile is unknown include pension obligations of $2,714 million, taxes payable of $2,250 million and guarantees of $204 million. Taxes payable include balances that relate to uncertain tax positions. This may mean the commitment is greater or less than that provided.

The Group also has short term lease commitments of $108 million and leases committed but not yet commenced of $119 million which have not been disclosed in the table above.

5.G Safe harbor

The information set forth under the heading “Cautionary statement about forward-looking statements” on page 300 of the Annual report 2019 is incorporated herein by reference.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A Directors and senior management

The information set forth under the headings:


•	“Governance-Board of directors” on pages 84 and 85; and


•	“Governance-Executive committee” on pages 86 and 87

of the Annual report 2019 is incorporated herein by reference.

There are no family relationships between any of our directors or executive committee members. None of our directors or executive committee members are elected or appointed under any arrangement or understanding with any major shareholder, customer, supplier or otherwise.

6.B Compensation

The information set forth under the headings:


•	“Governance-Remuneration report” on pages 110 to 138;


•	“Governance-Remuneration report tables” on pages 130 to 137;


•	“Financial statements Note 26-Provisions (including post-retirement benefits)” on page 189; and


•	“Financial statements Note 44-Post-retirement benefits” on pages 218 to 223

of the Annual report 2019 is incorporated herein by reference.

6.C Board practices

The information set forth under the headings:


•	“Governance-Board of directors” on pages 84 and 85;


•	“Governance-Executive committee” on pages 86 and 87;


•	“Governance-Chairman’s governance review” on pages 88 and 89;


•	“Governance” on pages 84 to 105;


•	“Governance-Compliance with governance codes and standards” on pages 106 to 109;


•	“Governance-Remuneration report-Termination policy” on page 114;


•	“Governance-Remuneration report-Service contracts” on page 123; and


•	“Shareholder information-Directors-Appointment and removal of directors” on page 297

of the Annual report 2019 is incorporated herein by reference.

6.D Employees

The information set forth under the headings:


•	“Our stakeholders-Employees” on page 19;


•	“Sustainability-Safety and health performance 2015-2019” on page 63;


•	“Financial statements Note 5-Employment costs” on page 173; and


•	“Financial statements Note 32-Average number of employees” on page 206

of the Annual report 2019 is incorporated herein by reference.

Rio Tinto focuses on working with our employees and their unions in good faith, seeking fair solutions while maintaining the competitiveness of each of our managed operations. At present we do not anticipate any union activity which would have a material adverse effect on the Group’s managed operations as a whole.

6.E Share ownership

The information set forth under the headings:


•	“Governance-Remuneration report-Other share plans” on page 128;


•	“Governance-Remuneration report tables-table 2, 3 and 3a” on pages 133 to 137;


•	“Financial statements Note 43-Share-based payments” on pages 215 to 217; and


•	“Shareholder information-Substantial shareholders” on page 294

of the Annual report 2019 is incorporated herein by reference.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A Major shareholders

The information set forth under the headings:


•	“Shareholder information-Substantial shareholders” on page 294;


•	“Shareholder information-Analysis of ordinary shareholders” on page 295; and


•	“Shareholder information-Twenty largest registered shareholders” on page 295

of the Annual report 2019 is incorporated herein by reference.

Share ownership

Rio Tinto plc

As at 14 February 2020, there were 32,087 holders of record of Rio Tinto plc’s shares. Of these holders, 379 had registered addresses in the US and held a total of 335,826 Rio Tinto plc shares, representing 0.02 per cent of the total number of Rio Tinto plc shares issued and outstanding as at such date. In addition, 119,778,256 Rio Tinto plc shares were registered in the name of a custodian account in London which represented 9.53 per cent of Rio Tinto plc shares issued and outstanding. These shares were represented by 119,778,256 Rio Tinto plc ADRs held of record by 353 ADR holders. In addition, certain accounts of record with registered addresses other than in the US hold shares, in whole or in part, beneficially for US persons.

Rio Tinto Limited

As at 14 February 2020, there were 156,277 holders of record of Rio Tinto Limited shares. Of these holders, 260 had registered addresses in the US, representing approximately 0.04 per cent of the total number of Rio Tinto Limited shares issued and outstanding as of such date. In addition, nominee accounts of record with registered addresses other than in the US may hold Rio Tinto Limited shares, in whole or in part, beneficially for US persons.

7.B Related party transactions

The information set forth under the heading “Financial statements Note 40-Related-party transactions” on page 214 and “Financial Review” on pages 29 and 37 of the Annual report 2019 is incorporated herein by reference.

7.C Interests of experts and counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A Consolidated statements and other financial information

See below Item 18.

In addition, the information set forth under the headings:


•	“Financial review-Our shareholder returns policy” on page 36;


•	“Sustainability-Ethics and integrity” on pages 68 and 69; and


•	“Financial statements Note 31-Contingencies and commitments” on pages 203 to 205

of the Annual report 2019 is incorporated herein by reference.

See above Item 3.A, “2019 dividends”.

8.B Significant changes

The information set forth under the heading “Financial statements Note 42-Events after the balance sheet date” on page 215 of the Annual report 2019 is incorporated herein by reference.

ITEM 9. THE OFFER AND LISTING

9.A Offer and listing details

The information set forth under the heading “Shareholder information-Markets” on page 294 of the Annual report 2019 is incorporated herein by reference.

9.B Plan of distribution

Not applicable.

9.C Markets

The information set forth under the heading “Shareholder information-Markets” on page 294 of the Annual report 2019 is incorporated herein by reference. For additional information, see also “Description of Securities” under Exhibit 2.1.

9.D Selling shareholders

Not applicable.

9.E Dilution

Not applicable.

9.F Expenses of the issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10.A Share capital

Not applicable.

10.B Memorandum and articles of association

The information set forth under the headings:


•	“Financial review-Our shareholder returns policy” on page 36;


•	“Governance-Compliance with governance codes and standards” on pages 106 to 109;


•	“Shareholder information-Material contracts” on pages 296 and 297;


•	“Shareholder information-Dual listed companies structure” on pages 292 and 293; and


•	“Shareholder information-Exchange controls and foreign investment” on page 297

of the Annual report 2019 is incorporated herein by reference.

10.C Material contracts

The information set forth under the headings:


•	“Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203; and


•	“Shareholder information-Material contracts” on pages 296 and 297

of the Annual report 2019 is incorporated herein by reference.

10.D Exchange controls

The information set forth under the heading “Shareholder information-Exchange controls and foreign investment” on page 297 of the Annual report 2019 is incorporated herein by reference.

10.E Taxation

US residents

The following is a summary of the principal UK tax, Australian tax and US federal income tax consequences of the ownership of Rio Tinto plc ADSs, Rio Tinto plc shares and Rio Tinto Limited shares, “the Group’s ADSs and shares”, by a US holder (as defined below). It is not intended to be a comprehensive description of all the tax considerations that are relevant to all classes of taxpayer. This summary does not cover all aspects of US federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership, or disposal of the Group’s ADSs and shares by particular investors (including the alternative minimum tax or net investment income tax). Future changes in legislation may affect the tax consequences of the acquisition, ownership or disposal of the Group’s ADSs and shares.

This summary is based in part on representations by the Group’s depositary bank as depositary for the ADRs evidencing the ADSs and assumes that each obligation in the deposit agreements will be performed in accordance with its terms.

You are a US holder if you are a beneficial owner of the Group’s ADSs and shares and you are for US federal income tax purposes: a citizen or resident of the US; a corporation created or organised under the laws of the United States, any state thereof or the District of Columbia; an estate whose income is subject to US federal income tax regardless of its source; or a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust.

This section applies to US holders only if the Group’s ADSs or shares are held as capital assets for US federal income tax purposes. This section does not address tax considerations applicable to investors that own (directly, indirectly, or by attribution) 5% or more of the stock of the company (by vote or value) and does not apply to shareholders who are members of a special class of holders subject to special rules, including a dealer in securities, a trader in securities who elects to use a mark-to-market method of accounting for securities holdings, a tax exempt organisation, a life insurance company, a person that holds the Group ADSs or shares as part of a straddle or a hedging or conversion transaction, persons that have ceased to be US citizens or lawful permanent residents of the United States, investors holding the Group ADSs or shares in connection with a trade or business conducted outside of the United States, US expatriates or a person whose functional currency is not the US dollar.

This section is based on the US Internal Revenue Code of 1986, as amended (the Code), its legislative history, existing and proposed regulations, published rulings and court decisions, Australian tax law and practice, UK tax law as applied in England and Wales and HM Revenue & Customs published practice (which may not be binding on HM Revenue & Customs) and on the convention between the US and UK, and the convention between the US and Australia (together, the Conventions) which may affect the tax consequences of the ownership of the Group’s ADSs and shares, all as of the date hereof. These laws and conventions are subject to change, possibly on a retroactive basis.

The summary describes the treatment applicable under the conventions in force at the date of this report.

UK taxation of shareholdings in Rio Tinto plc

This section is based on the assumption that for UK tax purposes a US holder who holds ADRs evidencing ADSs will be treated as the owner of the underlying shares represented by the ADSs. Case law in the UK has cast doubt on this view; however HM Revenue & Customs have stated that they will continue to apply their practice of regarding the holder of an ADR as having a beneficial interest in the underlying shares.

Taxation of dividends

Under current UK tax legislation, no withholding tax is required to be withheld from dividends paid by Rio Tinto plc. Where dividends are paid by Rio Tinto plc to a US holder who is not resident in the UK and who does not hold the shares or ADSs in connection with a branch, agency or permanent establishment in the UK, no liability to UK tax will generally arise to the US holder in respect of such dividends.

Capital gains

A US holder, who has at no time been resident in the UK, will not normally be liable to UK tax on capital gains realised on the disposition of a Rio Tinto plc ADS or share unless the holder carries on a trade, profession or vocation in the UK through a branch, agency or permanent establishment in the UK and the ADS or share has been used for the purposes of the trade, profession or vocation or is acquired, held or used for the purposes of such a branch, agency or permanent establishment.

Inheritance tax

Under the UK/US Estate Tax Treaty, a US holder, who is domiciled in the US and is not a national of the UK, will not (provided any US federal or estate gift tax chargeable has been paid) be subject to UK inheritance tax upon the holder’s death or on a transfer during the holder’s lifetime, unless the ADS or share (i) forms part of the business property of a permanent establishment in the UK, (ii) pertains to a fixed base situated in the UK used in the performance of independent personal services, or (iii) is comprised in a settlement (unless, at the time the settlement was made, the settlor was domiciled in the US and was not a national of the UK). Where an ADS or share is subject to both UK inheritance tax and US Federal gift or estate tax, tax payments are relieved in accordance with the priority rules set out in the Treaty.

Stamp duty and stamp duty reserve tax

UK stamp duty should not be required to be paid in respect of a transfer of Rio Tinto plc ADSs provided that the transfer instrument is not executed in, and at all times remains outside, the UK and does not relate to any property situate or to any matter or thing to be done in the UK. Electronic “paperless” purchases of Rio Tinto plc shares are subject to stamp duty reserve tax (SDRT) at a rate of 0.5% of the amount or value of the consideration payable for the transfer. Purchases of Rio Tinto plc shares using a stock transfer form are subject to stamp duty at a rate of 0.5% of the consideration on transactions over £1,000 (rounded up to the nearest £5). Conversions of Rio Tinto plc shares into Rio Tinto plc ADSs will be subject to additional stamp duty or SDRT at a rate of 1.5% of the amount or value of the consideration given or, in certain circumstances, the value of the shares, on all transfers to the depositary or its nominee.

Australian taxation of shareholdings in Rio Tinto Limited

Taxation of dividends

US holders are not normally liable to Australian withholding tax on dividends paid by Rio Tinto Limited because such dividends are normally fully franked under the Australian dividend imputation system, meaning that they are paid out of income that has borne Australian income tax. Any unfranked dividends would suffer Australian withholding tax which under the Australian income tax convention is limited to 15 per cent of the gross dividend.

Capital gains

US holders are not normally subject to any Australian tax on the disposal of Rio Tinto Limited ADSs or shares unless they have been used in carrying on a trade or business wholly or partly through a permanent establishment in Australia, or the gain is in the nature of income sourced in Australia.

Gift, estate and inheritance tax

Australia does not impose any gift, estate or inheritance taxes in relation to gifts of shares or upon the death of a shareholder.

Stamp duty

An issue or transfer of Rio Tinto Limited shares does not require the payment of Australian stamp duty.

US federal income tax

In general, taking into account the earlier assumptions that each obligation of the Deposit Agreement and any related agreement will be performed according to its terms, for US federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to US federal income tax.

Taxation of dividends

Under the US federal income tax laws, and subject to the Passive Foreign Investment Company (PFIC) rules discussed below, if you are a US holder, the gross amount of any distribution a company pays out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) is subject to US federal income taxation as dividend income. The dividend will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from certain other corporations. Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your tax basis in the Group’s ADSs or shares and thereafter as capital gain. The Group does not maintain calculations of its earnings and profits in accordance with US federal income tax accounting principles. US holders should therefore assume that any distributions that a Group member pays with respect to the Group’s ADSs or Shares will be reported as ordinary dividend income.

Dividends paid to a non-corporate US holder generally may be taxable at the reduced rate normally applicable to long-term capital gains provided the shares are readily tradable on an established securities market in the United States or the company paying the dividend qualifies for the benefits of an income tax treaty between the United States and the relevant jurisdiction and certain other requirements are met (including certain holding period requirements). Rio Tinto plc ADSs are traded on the NYSE. Rio Tinto Limited believes it qualifies for the benefits of the convention between the US and Australia.

The dividend is taxable to you when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. The amount of the dividend distribution that you must include in your income as a US holder will be the US dollar value of the non-US dollar payments made, determined at the spot UK pound/US dollar rate (in the case of Rio Tinto plc) or the spot Australian dollar/US dollar rate (in the case of Rio Tinto Limited) on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into US dollars will be treated as ordinary income or loss and will not be eligible for the reduced tax rate normally applicable to capital gains. The gain or loss generally will be income or loss from sources within the US for foreign tax credit limitation purposes.

You must include any Australian tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. Subject to certain limitations, any Australian tax withheld in accordance with the convention between the US and Australia and paid over to Australia will be creditable or deductible against your US federal income tax liability. For foreign tax credit purposes, dividends will generally be income from sources outside the US and will, depending on your circumstances, generally be either “passive” or “general” income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. The rules regarding foreign tax credits are complex and US holders should consult their own tax advisors regarding the outstanding and calculation of foreign tax credits and the application of the foreign tax credit rules to their particular situation.

Taxation of capital gains

Subject to the PFIC rules discussed below, if you are a US holder and you sell or otherwise dispose of the Group’s ADSs or shares, you will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount that you realise and your tax basis, determined in US dollars, in your shares or ADSs. The capital gain of a non-corporate US holder is generally taxed at preferential rates where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. US holders should consult their own tax advisers about how to account for proceeds received on the sale or other disposition of the Group’s ADSs or shares that are not paid in US dollars.

Passive Foreign Investment Company Rules

We believe that the Group’s ADSs or shares should not be treated as stock of a PFIC for US federal income tax purposes for the 2019 taxable year, but this conclusion is a factual determination that is made annually and thus may be subject to change. If we were to be treated as a PFIC, US holders generally would be required (i) to pay a special addition to US tax on certain distributions and gains on sale of the Group’s ADSs or shares, and (ii) to pay tax on any gain from the sale of the Group’s ADSs or shares at ordinary income (rather than capital gains) rates in addition to paying the special addition to tax on this gain. Additionally, dividends that you receive from us will not be eligible for the reduced rate of tax described above under “Taxation of dividends.” US holders should consult their own tax advisors regarding the potential application of the PFIC rules.

Backup Withholding and Information Reporting

The proceeds of a sale or other disposition, as well as dividends and other proceeds, with respect to the Group’s ADSs or shares by a US paying agent or other US intermediary will be reported to the US Internal Revenue Service and to the US holder as may be required under applicable regulations. Backup withholding may apply to these payments if the US holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to comply with applicable certification requirements. Certain US holders are not subject to backup withholding. US holders should consult their tax advisers about these rules and any other reporting obligations that may apply to the ownership or disposition of the Group’s ADSs or shares, including requirements related to the holding of certain foreign financial assets.

10.F Dividends and paying agents

Not applicable.

10.G Statement by experts

Not applicable.

10.H Documents on display

Rio Tinto is subject to the Securities and Exchange Commission reporting requirements for foreign companies. This Form 20-F, which corresponds with the Form 10-K for US public companies, was filed with the SEC on 28 February 2020. Rio Tinto’s Form 20-F and other filings can be viewed on the Rio Tinto website as well as the SEC website at www.sec.gov.

10.I Subsidiary information

Not applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the headings:


•	“Financial statements Note 30-Financial instruments and risk management” on pages 193 to 203; and


•	“Cautionary statement about forward-looking statements” on page 300

of the Annual report 2019 is incorporated herein by reference.

See above Item 3.D, “Principal risks and uncertainties” and Item 5.A, “Additional financial information-Treasury management and financial instruments”.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.D American Depositary Shares

American depositary receipts (ADRs)

Rio Tinto plc has a sponsored ADR facility with JPMorgan Chase Bank NA (JPMorgan) under a Deposit Agreement, dated 13 July 1988, as amended on 11 June 1990, as further amended and restated on 15 February 1999, 18 February 2005 (when JPMorgan became Rio Tinto plc’s depositary), 29 April 2010 and on 19 February 2016. The ADRs evidence Rio Tinto plc ADSs, each representing one ordinary share. The shares are registered with the US Securities and Exchange Commission (SEC), are listed on the NYSE and are traded under the symbol RIO.

Fees and charges payable by a holder of ADSs

In accordance with the terms of the Deposit Agreement, JPMorgan may charge holders of Rio Tinto ADSs, either directly or indirectly, fees or charges up to the amounts described in the table below.



Category	Depositary actions	Associated fee
	Issuance of ADSs against the deposit of shares, including deposits and issuance in respect of: – Share distributions, stock split, rights, merger – Exchange of securities or other transactions – Other events or distributions affecting the ADSs or the deposited securities	$5.00 per 100 ADSs (or portion thereof) evidenced by the new ADSs delivered
Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	$5.00 for each 100 ADSs (or portion thereof)
Withdrawing an underlying share	Acceptance of ADSs surrendered for withdrawal of deposited securities	$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADSs surrendered
Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	$1.50 per ADS
General depositary services, particularly those charged on an annual basis	Other services performed by the depositary in administering the ADRs Provide information about the depositary’s right, if any, to collect fees and charges by offsetting them against dividends received and deposited securities	$0.02 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the depositary by billing holders or deducting such charge from one or more cash dividends or other cash distributions
Expenses of the depositary	Expenses incurred on behalf of holders in connection with: – Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment – The depositary’s or its custodian’s compliance with applicable law, rule or regulation – Stock transfer or other taxes and other governmental charges – Cable, telex, facsimile and electronic transmission/delivery – Expenses of the depositary in connection with the conversion of foreign currency into US dollars (which are paid out of such foreign currency) – Any other charge payable by the depositary or its agents	Expenses payable at the sole discretion of the depositary by billing holders or by deducting charges from one or more cash dividends or other cash distributions

Fees and payments made by the depositary to the issuer

JPMorgan has agreed to reimburse certain company expenses related to the Rio Tinto plc ADR programme and incurred by the Group in connection with the programme. The Group received US $457,869 in respect of expenses incurred by the Group in connection with the ADR programme for the year ended 31 December 2019. JPMorgan did not pay any amount on the Group’s behalf to third parties. JPMorgan also waived certain of its standard fees and expenses associated with the administration of the programme relating to routine programme maintenance, reporting, distribution of cash dividends, annual meeting services and report mailing services.

Under certain circumstances, including removal of JPMorgan as depositary or termination of the ADR programme by the Company, the Company is required to repay JPMorgan any amounts of administrative fees and expenses waived during the 12-month period prior to notice of removal or termination.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable

ITEM 15. CONTROLS AND PROCEDURES

The information set forth under the heading on “Governance-Additional statutory disclosure-Financial reporting” on pages 142 and 143 of the Annual report 2019 is incorporated herein by reference.

PricewaterhouseCoopers LLP and PricewaterhouseCoopers, the auditors of Rio Tinto plc and Rio Tinto Limited respectively, audited the financial statements included in this Form 20-F and audited the effectiveness of internal controls over financial reporting as of 31 December 2019. Their audit report and attestation on the issuer’s internal control over financial reporting is included below under Item 18 “Report of Independent Registered Public Accounting Firms”.

ITEM 16

16.A Audit committee financial expert

The information set forth under the heading “Governance-Audit Committee report” on pages 100 to 103 of the Annual report 2019 is incorporated herein by reference.

16.B Code of ethics

The information set forth under the headings:


•	“Sustainability-Ethics and Integrity” on pages 68 and 69; and


•	“Governance-Audit Committee report-Ethics, integrity and the whistleblowing programme” on page 103

of the Annual report 2019 is incorporated herein by reference.

The way we work applies to employees including the Group’s Chief Executive and Chief Financial Officer and is available on our website at www.riotinto.com. No substantive amendments to a provision of The way we work were made during 2019 and no waivers were granted.

16.C Principal accountant fees and services

The information set forth under the headings:


•	“Governance-Audit Committee report-Fees for audit and non-audit services” on page 102;


•	“Governance-Audit Committee report-External auditors” on page 102; and


•	“Financial statements Note 39-Auditors’ remuneration” on page 214

of the Annual report 2019 is incorporated herein by reference.

16.D Exemptions from the listing standards for audit committees

Not applicable.

16.E Purchases of equity securities by the issuer and affiliated purchasers

The information set forth under the headings:


•	“Governance-Additional statutory disclosure-Share capital” on pages 139 and 140;


•	“Governance-Additional statutory disclosure-Purchases” on page 141;


•	“Financial statements Note 27- Share Capital Rio Tinto plc” on page 190; and


•	“Financial statements Note 28- Share Capital Rio Tinto Limited” on page 190

of the Annual report 2019 is incorporated herein by reference.

16.F Change in registrant’s certifying accountant

PricewaterhouseCoopers LLP and PricewaterhouseCoopers (together, “PricewaterhouseCoopers”), Rio Tinto’s current auditor, has been the Group’s auditor since its formation under a dual listed company structure in 1995. The proposed change of auditor followed a recommendation by the Audit Committee based on a formal tender process. PwC will hold office until the filing of the Form 20-F. KPMG will become the Group’s auditor subject to approval by the shareholders at Rio Tinto’s annual general meetings in 2020.

During the two years prior to 31 December 2019 and the subsequent interim period through the date of this filing (1) PricewaterhouseCoopers has not issued any reports on the financial statements of Rio Tinto that contained an adverse opinion or a disclaimer of opinion, nor were the auditors’ reports of PricewaterhouseCoopers qualified or modified as to uncertainty, audit scope, or accounting principles, and (2) there has not been any disagreement over any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to PricewaterhouseCoopers’ satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its auditor’s reports for such years, or any “reportable event” as described in Item 16F(a)(1)(v) of Form 20-F.

Rio Tinto has provided PricewaterhouseCoopers with a copy of the foregoing disclosure and has requested that they furnish Rio Tinto with a letter addressed to the SEC stating whether or not they agree with the above statements. A copy of such letter, dated 28 February 2020, in which PricewaterhouseCoopers state that they agree with such disclosure, is filed as Exhibit 15.3 to this 2019 Form 20-F.

16.G Corporate governance

The information set forth under the heading “Governance-Compliance with governance codes and standards” on pages 106 to 109 of the Annual report 2019 is incorporated herein by reference.

16.H Mine safety disclosure

The information set forth in Exhibit 16.1 is incorporated herein by reference.

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The financial information concerning the Company set forth under the headings “2019 Financial statements”, “Group income statement” on page 146, "Group statement of comprehensive income" on page 147, "Group cash flow statement" on page 148, "Group balance sheet" on page 149, "Group statement of changes in equity" on page 150 and Notes 1 to 45 on pages 152 to 225, and pages 252 to 254 of the Annual report 2019 is incorporated herein by reference.

Report of Independent Registered Public Accounting Firms

To the Boards of Directors and Shareholders of Rio Tinto plc and Rio Tinto Limited

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of the Rio Tinto Group (comprising Rio Tinto plc and Rio Tinto Limited and their respective subsidiaries) as of 31 December 2019 and 2018, and the related Group income statement, the Group statement of comprehensive income, the Group cash flow statement and the Group statement of changes in equity for each of the three years in the period ended 31 December 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Group’s internal control over financial reporting as of 31 December 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of 31 December 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2019 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and International Financial Reporting Standards as adopted by the European Union. Also in our opinion, the Rio Tinto Group maintained, in all material respects, effective internal control over financial reporting as of 31 December 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Rio Tinto Group’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Group’s consolidated financial statements and on the Rio Tinto Group's internal control over financial reporting based on our audits. We are public accounting firms registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (i) relate to accounts or disclosures that are material to the consolidated financial statements; and (ii) involved especially challenging, subjective, or complex judgements by us. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the recoverable amount of the Oyu Tolgoi and Yarwun cash-generating units

As described in Notes 1 and 6 to the consolidated financial statements, management identified impairment triggers at each of its Oyu Tolgoi and Yarwun cash-generating units (“CGUs”). Following assessment of recoverable amount based on a fair value less costs of disposal (“FVLCD”) methodology, it identified that pre-tax impairment losses had been incurred of $2,240m at Oyu Tolgoi and $1,138m at Yarwun. The determination of recoverable amount required judgement and estimation on the part of management. For Oyu Tolgoi, the critical assumptions include development capital, scheduling, production, discount rate and commodity price assumptions. For Yarwun, the critical assumptions are the alumina price and the discount rate.

The principal considerations for our determination that performing procedures relating to the assessment of the recoverable amounts of these CGUs is a critical audit matter are the significant judgement and estimation required by management in making these assessments and the complexity of the valuations, which in turn led to a high degree of subjectivity and effort in performing procedures relating to the critical assumptions used. In addition, the audit effort involved the use of professionals with specialised skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to impairment, specifically controls in relation to the identification of impairment triggers and determination of recoverable amount, and over key assumptions in valuation models such as commodity prices and discount rates. These procedures included, among others, (i) testing management’s process for developing the recoverable amount estimate; (ii) evaluating the appropriateness of the FVLCD methodology; (iii) testing the completeness, accuracy and relevance of underlying data used in the estimate; and (iv) evaluating the significant assumptions used by management, including development capital, scheduling, production, discount rate and commodity price assumptions. Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering; (i) the current and past performance of the CGUs; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialised skill and knowledge were used to assist in the evaluation of the Group’s FVLCD model and certain significant assumptions, including the discount rate.

Provisions for close-down, restoration and environmental obligations at Rio Tinto Kennecott

As described in Notes 1 and 26 to the consolidated financial statements, there has been an increase in closure and environmental liabilities at Rio Tinto Kennecott of $444m. The most significant component of the increase in this provision is an increased expected cost of closure, identified by management in preparing its closure study, which is ongoing. The estimate required significant judgement in relation to the closure timeframe, the length of any post-closure monitoring period and the discount rate.

The principal considerations for our determination that performing procedures relating to provisions for close-down, restoration and environmental obligations at Rio Tinto Kennecott is a critical audit matter are the significant judgement applied by management in relation to the closure timeframe, the length of any post-closure monitoring period and the discount rate. This in turn led to a high degree of subjectivity and judgement in applying audit procedures to the matter and the audit effort involved the use of professionals with specialised skill and knowledge to assist in evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the estimation of the closure provision, including controls over the calculation of the provision. These procedures also included, among others; (i) testing the existence of legal and/or constructive obligations with respect to the closure provision and considering the intended method of restoration and rehabilitation and associated cost estimate; (ii) testing the cost estimates prepared by management; (iii) testing the mathematical accuracy of management’s calculations and assessing the appropriateness of the discount rate; (iv) reading minutes of the meetings of management’s Investment Committee and the latest available papers detailing findings from the closure study as presented to that Committee; and (v) considering whether the updates in the provision reflected changes to previous estimates or the correction of prior period errors. Professionals with specialised skill and knowledge were used to assist in the evaluation of the cost estimate and the discount rate.

Provisions for uncertain tax positions associated with transfer pricing of certain transactions with the Group’s commercial centre in Singapore

As described in Notes 1 and 9 to the consolidated financial statements, the Group establishes provisions based on its interpretation of tax law and its assessment of the weighted average or most likely amount of the liability, as appropriate. The assessment associated with the provision related to transfer pricing of certain transactions with the Group’s commercial centre in Singapore is subjective and required judgement in determining the possible outcomes, their relative likelihoods, and the quantum of the liability in each of those scenarios.

The principal considerations for our determination that performing procedures relating to provisions for uncertain tax positions associated with transfer pricing of certain transactions with the Group’s commercial centre in Singapore is a critical audit matter are that there was significant judgement by management when determining uncertain tax positions, including a high degree of estimation uncertainty. This in turn led to a high degree of auditor judgement, effort, and subjectivity in performing procedures to evaluate the accurate measurement of uncertain tax positions. Also, the evaluation of audit evidence available to support the tax liabilities for uncertain tax positions is complex as the nature of the evidence is often highly subjective, and the audit effort involved the use of professionals with specialised skill and knowledge to assist in evaluating the audit evidence obtained.



/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP London, United Kingdom 28 February 2020 In respect of the Board of Directors and Shareholders of Rio Tinto plc	/s/ PricewaterhouseCoopers PricewaterhouseCoopers Brisbane, Australia 28 February 2020 In respect of the Board of Directors and Shareholders of Rio Tinto Limited

PricewaterhouseCoopers LLP and PricewaterhouseCoopers have served as auditors of Rio Tinto since its formation under a dual listed company structure in 1995.

A predecessor firm of PricewaterhouseCoopers LLP has served as the auditor of a predecessor company of Rio Tinto plc since 1958 and a predecessor firm of PricewaterhouseCoopers has served as the auditor of a predecessor company of Rio Tinto Limited since 1959.

ITEM 19. EXHIBITS

Exhibits marked “*” have been filed as exhibits to this Annual report on Form 20-F and other exhibits have been incorporated by reference as indicated.

INDEX



Exhibit Number	Description
1.1	Articles of Association of Rio Tinto plc (adopted by special resolution passed on 20 April 2009 and amended on 1 October 2009) (incorporated by reference to Exhibit 1.1 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2009, File No. 1‑10533)
1.2	Constitution of Rio Tinto Limited (CAN 004 458 404) (as adopted by special resolution passed on 24 May 2000 and amended by special resolution on 18 April 2002, 29 April 2005, 27 April 2007, 24 April 2008 and 20 April 2009) (incorporated by reference to Exhibit 1.2 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2009, File No. 1‑10533)
2.1*	Description of securities
3.1**	DLC Merger Implementation Agreement, dated 3 November 1995 between CRA Limited and The RTZ Corporation PLC relating to the implementation of the DLC merger (incorporated by reference to Exhibit 2.1 of Rio Tinto plc's Annual report on Form 20-F for the financial year ended 31 December 1995, File No. 1‑10533)
3.2	DLC Merger Sharing Agreement, dated 21 December 1995 and amended on 14 April 2005, 29 April 2005 and 18 December 2009 between CRA Limited and The RTZ Corporation PLC relating to the ongoing relationship between CRA and RTZ following the DLC merger (incorporated by reference to Exhibit 3.2 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2009, File No. 1‑10533)
3.3	RTZ Shareholder Voting Agreement, dated 21 December 1995 and amended on 18 January 2010 between The RTZ Corporation PLC, RTZ Shareholder SVC Pty. Limited, CRA Limited, R.T.Z. Australian Holdings Limited and The Law Debenture Trust Corporation p.l.c (incorporated by reference to Exhibit 3.3 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2009, File No. 1‑10533)
3.4	CRA Shareholder Voting Agreement, dated 21 December 1995 and amended 18 January 2010 between CRA Limited, CRA Shareholder SVC Limited, The RTZ Corporation PLC and The Law Debenture Trust Corporation p.l.c., relating to the RTZ Special Voting Share (incorporated by reference to Exhibit 3.4 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2009, File No. 1‑10533)
4.01	Rio Tinto plc - Share Option Plan 2004 (incorporated by reference to Exhibit 4.3 of Rio Tinto’s Registration statement on Form S-8, File No. 333‑147914)
4.02	Rules of the Rio Tinto plc Performance Share Plan 2013 (incorporated by reference to Exhibit 4.05 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2013, File No. 1‑10533)
4.03	Rules of the Rio Tinto Limited Performance Share Plan 2013 (incorporated by reference to Exhibit 4.06 of Rio Tinto plc Annual report on Form 20-F for the fiscal year ended 31 December 2013, File No. 1‑10533)
4.04	Rules of the Rio Tinto plc Bonus Deferral Plan (incorporated by reference to Exhibit 4.4 of Rio Tinto’s Registration statement on Form S-8, File No. 333‑202547)
4.05	Rules of the Rio Tinto Limited Bonus Deferral Plan (incorporated by reference to Exhibit 4.6 of Rio Tinto’s Registration statement on Form S-8, No. 333‑202547)
4.06	Rules of the Rio Tinto plc Equity Incentive Plan 2018 (incorporated by reference to Exhibit 4.3 of Rio Tinto’s Registration statement on Form S-8, File No. 333-224907)
4.07	Rules of the Rio Tinto Limited Equity Incentive Plan 2018 (incorporated by reference to Exhibit 4.3 of Rio Tinto’s Registration statement on Form S-8, File No. 333-224907)
8.1*	List of subsidiary companies
12.1*	Certifications pursuant to Rule 13a‑14(a) of the Exchange Act
13.1*	Certifications furnished pursuant to Rule 13a‑14(b) of the Exchange Act (such certifications are not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference in any filing under the Securities Act)



15.1*	Consent of Independent Registered Public Accounting Firms to the incorporation of the audit report relating to the Rio Tinto Group and effectiveness of internal control over financial reporting of the Rio Tinto Group by reference in registration statements on Form F-3 and Form S-8
15.2*	Rio Tinto Annual report 2019†
15.3*	Letter from PwC to the SEC
16.1*	Mine safety and health administration safety data
101*	Interactive data files


*	Filed herewith


**	Paper filing in 1995


†	Certain of the information included within Exhibit 15.2, which is provided pursuant to Rule 12b‑23(a)(3) of the Securities Exchange Act of 1934, as amended, is incorporated by reference in this Form 20-F, as specified elsewhere in this Form 20-F. With the exception of the items and pages so specified, the Annual report 2019 is not deemed to be filed as part of this Form 20-F.

Signature

The Registrants hereby certify that they meet all of the requirements for filing on Form 20-F and that they have duly caused and authorised the undersigned to sign this Annual Report on their behalf.



Rio Tinto plc	Rio Tinto Limited
(Registrant)	(Registrant)
/s/ Steve Allen	/s/ Steve Allen
Name: Steve Allen	Name: Steve Allen
Title: Company Secretary	Title: Joint Company Secretary

Date: 28 February 2020	Date: 28 February 2020

Exhibit 2.1

Description of rights of securities registered under Section 12 of the Securities Exchange Act of 1934

As of 31 December 2019, Rio Tinto plc and Rio Tinto Limited (together, “Rio Tinto”, the “Company”, “we”, “us”, and “our”) had the following series of securities registered pursuant to Sections 12(b) of the Exchange Act of 1934.



Title of Each Class	Trading Symbol	Name of Each Exchange on which Registered	Title of Each Class	Trading Symbol	Name of Each Exchange on which Registered
American Depository Shares*	RIO	New York Stock Exchange		---
Ordinary Shares of 10p each**		New York Stock Exchange
3.750% Notes due 2025		New York Stock Exchange	3.750% Notes due 2025		New York Stock Exchange
4.125% Notes due 2042		New York Stock Exchange	4.125% Notes due 2042		New York Stock Exchange
4.750% Notes due 2042		New York Stock Exchange	4.750% Notes due 2042		New York Stock Exchange
5.200% Notes due 2040		New York Stock Exchange	5.200% Notes due 2040		New York Stock Exchange
5.200% Notes due 2040		New York Stock Exchange	5.200% Notes due 2040		New York Stock Exchange
5.200% Notes due 2040		New York Stock Exchange	5.200% Notes due 2040		New York Stock Exchange
7.125% Notes due 2028		New York Stock Exchange	7.125% Notes due 2028		New York Stock Exchange


*	Evidenced by American Depositary Receipts. Each American Depositary Share Represents one Rio Tinto plc Shares of 10p each


**	Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission

American Depositary Shares (“ADSs”) representing one ordinary shares of Rio Tinto plc (the “shares”) are listed and traded on the New York Stock Exchange and, in connection with this listing (but not for trading), the shares are registered under Section 12(b) of the Exchange Act. Shares underlying the ADSs are held by JPMorgan Chase Bank, N.A., as depositary, and holders of ADSs will not be treated as holders of the shares.

This exhibit contains a description of the rights of (i) the holders of shares; (ii) ADS holders; (iii) 3.750% Notes due 2015; (iv) 4.125% Notes due 2042; (v) 4.750% Notes due 2042; (vi) 4.750% Notes due 2042; and (vii) 7.125% Notes 2028.

Item 9. Listing

Item 9.A.3. Preemptive Rights

For additional details, see below, “Variation of rights”.

Item 9.A.5. Type and Class of Securities

Rio Tinto plc’ has issued and fully paid up capital of 10p each. The number of shares that have been issued as of the last day of the financial year ended December 31, 2019 was 1,259,344,591.

Item 9.A.6. Limitations or Qualifications

Rio Tinto plc’s other share classes are: Special Voting share of 10 pence each, DLC Dividend share and Equalisation Share of 10p each (together, the “Other Shares”).

Details of how each Other Share limits or qualifies the rights of the shares is provided below.

Dual listed companies structure

In 1995, Rio Tinto shareholders approved the terms of the dual listed companies’ merger (the DLC structure). The aim was to put shareholders of both companies in substantially the same position they would be in if they held shares in a single entity owning all assets of both companies.

Following the approval of the DLC structure, both companies entered into a DLC Merger Sharing Agreement (the Sharing Agreement). As part of this both companies agreed to be managed in a unified way, to share the same board of directors, and to put in place arrangements to provide shareholders of both companies with a common economic interest in the DLC structure.

To achieve this third objective, the Sharing Agreement fixed the ratio of dividend, voting and capital distribution rights attached to each Rio Tinto plc share and each Rio Tinto Limited share at an Equalisation Ratio of 1:1. This has remained unchanged ever since, although the Sharing Agreement makes clear this can be revised in special circumstances, for example where certain modifications are made to the share capital of one company (such as rights issues, bonus issues, share splits and share consolidations) but not to the other.

Outside the circumstances specified in the Sharing Agreement, the Equalisation Ratio can only be altered with the approval of shareholders under the class rights action approval procedure, described in the Voting arrangements section below. Any adjustments must be confirmed by the Group’s external auditors.

Consistent with the DLC structure, the directors of both companies aim to act in the best interests of Rio Tinto as a whole. The class rights action approval procedure exists to deal with instances where there may be a conflict of interest between the shareholders of the two companies.

To ensure that the boards of both companies are identical, resolutions to appoint or remove directors must be put to shareholders of both companies as Joint Decisions, described in the Voting arrangements section below. The Articles of Association of Rio Tinto plc and the Constitution of Rio Tinto Limited make clear that a person can only be a director of one company if he or she is also a director of the other. This means that if a person were removed as a director of Rio Tinto plc, he or she would also cease to be a director of Rio Tinto Limited.

One consequence of the DLC merger is that Rio Tinto is subject to a wide range of laws, rules and regulatory reviews across multiple jurisdictions. Where these rules differ, Rio Tinto will comply with the requirements in each jurisdiction at a minimum.

Dividend arrangements

The Sharing Agreement ensures that dividends paid on Rio Tinto plc and Rio Tinto Limited shares are equalised on a net cash basis without taking into account any associated tax credits. Dividends are determined in US dollars and (with the exception of ADR holders, paid in sterling and Australian dollars), both companies are required to announce and pay dividends and other distributions at the same time or as close to this as possible.

In the unlikely event that one company does not have sufficient distributable reserves to pay the equalised dividend or equalised capital distribution, it would be entitled to a top-up payment from the other company. The top-up payment could be made as a dividend on the DLC dividend share, or by way of a contractual payment.

If the payment of an equalised dividend would contravene the law applicable to one of the companies, they can depart from the Equalisation Ratio. In that situation, the relevant company must put aside reserves for payment on the relevant shares at a later date.

Rio Tinto shareholders have no direct rights to enforce the dividend equalisation provisions of the Sharing Agreement.

By allowing dividends to be paid between companies and their subsidiaries, DLC dividend shares give the Group extra flexibility to manage internal funds.

Voting arrangements

In principle, the Sharing Agreement enables the shareholders of Rio Tinto plc and Rio Tinto Limited to vote as a joint electorate on any matters that affect them in similar ways. These are referred to as Joint Decisions, and include the creation of new classes of share capital, the appointment or removal of directors and auditors, and the receiving of annual financial statements. All shareholder resolutions that include Joint Decisions are voted on a poll.

The Sharing Agreement also protects shareholders of both companies by requiring joint approval for decisions that do not affect the shareholders of both companies equally. These are known as class rights actions, and are voted on a poll. For example, fundamental elements of the DLC structure cannot be changed unless approved separately by the shareholders of both companies.

Exceptions to these principles can arise in situations such as where legislation requires the separate approval of a decision by the appropriate majority of shareholders in one company, and where approval of the matter by shareholders of the other company is not required.

Where a matter has been expressly categorised as either a Joint Decision or a class rights action, the directors cannot change that categorisation. If a matter falls within both categories, it is treated as a class rights action. In addition, if an issue is not expressly listed in either category, directors can decide how it should be put to shareholders for approval.

To support joint voting arrangements, both companies have entered into shareholder voting agreements, where a Special Voting Share is issued to a special purpose company (SVC) and held in trust for shareholders by a common trustee. Rio Tinto plc (RTP) has issued its Special Voting Share (RTP Special Voting Share) to Rio Tinto Limited (RTL) Shareholder SVC, while Rio Tinto Limited has issued its Special Voting Share (RTL Special Voting Share) to RTP Shareholder SVC. The total number of votes cast on Joint Decisions by the shareholders of one company are decided at a parallel meeting of the other company. The exact role of these SVCs is described below.

In exceptional circumstances, certain shareholders can be excluded from voting at their respective company’s general meetings. For example, they may have acquired shares in the other company in excess of a given threshold without making an offer for all the shares in the other company. In this situation, votes cast by these excluded shareholders are disregarded.

Following the companies’ general meetings, the overall results of the voting are announced to relevant stock exchanges and the media, and published on the Rio Tinto website.

At a Rio Tinto plc shareholders’ meeting during which a Joint Decision is considered, each Rio Tinto plc share carries one vote. The holder of the Special Voting Share has one vote for each vote cast by the public shareholders of Rio Tinto Limited in their parallel meeting. The holder of the Special Voting Share must vote in accordance with the votes cast by public shareholders for and against the equivalent resolution at the parallel Rio Tinto Limited shareholders’ meeting. The holders of Rio Tinto Limited ordinary shares do not hold voting shares in Rio Tinto plc by virtue of their holding in Rio Tinto Limited, and cannot enforce the voting arrangements relating to the Special Voting Share.

Similarly, at a Rio Tinto Limited shareholders’ meeting during which a Joint Decision is considered, each Rio Tinto Limited share carries one vote and the holder of its Special Voting Share will have one vote for each vote cast by the public shareholders of Rio Tinto plc in their parallel meeting. The holder of the Special Voting Share must vote in accordance with the votes cast for and against the equivalent resolution at the parallel Rio Tinto plc shareholders’ meeting. The holders of Rio Tinto plc ordinary shares do not hold any voting shares in Rio Tinto Limited by virtue of their holding in Rio Tinto plc, and cannot enforce the voting arrangements relating to the Special Voting Share.

Capital distribution arrangements

If either company goes into liquidation, the Sharing Agreement ensures a valuation is made of the surplus assets of both companies. If the surplus assets available for distribution by one company on each of the shares held by its shareholders exceed the surplus assets available for distribution by the other company on each of the shares held by its shareholders, then an equalising payment must be made – to the extent permitted by applicable law – such that the amount available for distribution on each share held by shareholders of both companies reflects the Equalisation Ratio.

The aim is to ensure the shareholders of both companies have equivalent entitlements to the assets of the combined Group on a per share basis, taking account of the equalisation ratio.

The Sharing Agreement does not grant any enforceable rights to the shareholders of either company upon liquidation of either company.

Limitations on ownership of shares and merger obligations

The laws and regulations of the UK and Australia impose restrictions and obligations on persons who control interests in publicly listed companies in excess of defined thresholds. These can include an obligation to make a public offer for all outstanding issued shares of the relevant company. The threshold applicable to Rio Tinto plc under UK law and regulations is 30% and to Rio Tinto Limited under Australian law and regulations is 20% on both a standalone and Joint Decision basis.

As part of the DLC merger, the Articles of Association of Rio Tinto plc and the Constitution of Rio Tinto Limited were amended with the aim of extending these laws and regulations to the combined enterprise. This amendment also ensures that a person cannot exercise control over one company without having made offers to the public shareholders of both companies.

This guarantees the equal treatment of both sets of shareholders, and that the two companies are considered as a single economic entity. The Articles of Association of Rio Tinto plc and the Constitution of Rio Tinto Limited impose restrictions on any person who controls, directly or indirectly, 20% or more of the votes on a Joint Decision. If, however, such a person has an interest in either Rio Tinto Limited or Rio Tinto plc only, then the restrictions only apply if they control, directly or indirectly, 30% or more of the votes at that company’s general meetings.

If one of these thresholds is exceeded, the person cannot attend or vote at general meetings of the relevant company, cannot receive dividends or other distributions from the relevant company, and may be divested of their interest by the directors of the relevant company (subject to certain limited exceptions and notification by the relevant company). These restrictions continue to apply until that person has either made a public offer for all the publicly held shares of the other company, has reduced their controlling interest below the thresholds specified, or has acquired through a permitted means at least 50% of the publicly held shares of each company.

This arrangement ensures that offers for the publicly held shares of both companies would be required to avoid the restrictions set out above, even if the interests that breach the thresholds are held in just one of the companies. The directors do not have the discretion to exempt a person from the operation of these rules.

Under the Sharing Agreement, the companies agree to co-operate to enforce the above restrictions contained in their Articles of Association and Constitution.

Guarantees

In 1995, each company entered into a deed poll guarantee in favour of creditors of the other company. In addition, each company guaranteed the contractual obligations of the other and the obligations of other persons guaranteed by the other company, subject to certain limited exceptions.

Beneficiaries under deed poll guarantees can make demands on the relevant guarantor without first having recourse to the company or persons whose obligations are being guaranteed. The obligations of the guarantor under each deed poll guarantee expire upon termination of the Sharing Agreement and under other limited circumstances, but only in respect of obligations arising after such termination and, in the case of other limited circumstances, the publication and expiry of due notice.

The shareholders of the companies cannot enforce the provisions of the deed poll guarantees in relation to their interest in the shares of the other company.

Item 9.A.7. Other Rights

Not applicable.

Item 10. Memorandum and articles of association

Item 10.B.3. Rights of the Shares

Dividend rights

For additional details, see “Dividend arrangements” above.

Voting

Voting at any general meeting of shareholders on a resolution on which the holder of the Special Voting Share is entitled to vote shall be decided by a poll, and any other resolution shall be decided by a show of hands unless a poll has been duly demanded. On a show of hands, every shareholder who is present in person or by proxy (or other duly authorised representative) and is entitled to vote, has one vote regardless of the number of shares held. The holder of the Special Voting Share is not entitled to vote in a show of hands. On a poll, every shareholder who is present in person or by proxy (or other duly authorised representative) and is entitled to vote, has one vote for every ordinary share for which he or she is the holder. In the case of Joint Decisions, the holder of the Special Voting Share has one vote for each vote cast in respect of the publicly held shares of the other company.

A poll may be demanded by any of the following:


•	the chairman of the meeting;


•	at least five shareholders entitled to vote on the resolution;


•	any shareholder(s) representing in the aggregate not less than one tenth (Rio Tinto plc) or one 20th (Rio Tinto Limited) of the total voting rights of all shareholders entitled to vote on the resolution;


•	any shareholder(s) holding Rio Tinto plc shares conferring a right to vote at the meeting on which there have been paid-up sums in the aggregate equal to not less than one tenth of the total sum paid up on all the shares conferring that right; or


•	the holder of the Special Voting Share of either company.

A proxy form gives the proxy the authority to demand a poll, or to join others in demanding one.

The necessary quorum for a Rio Tinto plc general meeting is three members present (in person or by proxy or other duly authorised representative) and entitled to vote. For a Rio Tinto Limited general meeting it is two members present (in person or by proxy or other duly authorised representative).

Matters are transacted at general meetings by the proposing and passing of resolutions as:


•	ordinary resolutions (for example the election of directors), which require the affirmative vote of a majority of persons voting at a meeting for which there is a quorum; and


•	special resolutions (for example amending the Articles of Association of Rio Tinto plc or the Constitution of Rio Tinto Limited), which require the affirmative vote of not less than three-quarters of the persons voting at a meeting at which there is a quorum.

The Sharing Agreement further classifies resolutions as Joint Decisions and class rights actions.

Annual general meetings must be convened with 21 days’ written notice for Rio Tinto plc and with 28 days’ notice for Rio Tinto Limited. In accordance with the authority granted by shareholders at the Rio Tinto plc AGM in 2019, other meetings of Rio Tinto plc may be convened with 14 days’ written notice for the passing of a special resolution, and with 14 days’ notice for any other resolution, depending on the nature of the business to be transacted. All meetings of Rio Tinto Limited require 28 days’ notice. In calculating the period of notice, any time taken to deliver the notice and the day of the meeting itself are not included. The notice must specify the nature of the business to be transacted.

Directors interests

Under Rio Tinto plc’s Articles of Association, a director may not vote in respect of any proposal in which he or she, or any other person connected with him or her, has any interest, other than by virtue of his or her interests in shares or debentures or other securities of, in or through the company, except in certain circumstances, including in respect of resolutions:


•	indemnifying him or her or a third party in respect of obligations incurred by the director on behalf of, or for the benefit of, the company, or in respect of obligations of the company, for which the director has assumed responsibility under an indemnity, security or guarantee;


•	relating to an offer of securities in which he or she may be interested as a holder of securities or as an underwriter;


•	concerning another body corporate in which the director is beneficially interested in less than 1% of the issued shares of any class of shares of such a body corporate;


•	relating to an employee benefit in which the director will share equally with other employees;


•	relating to liability insurance that the company is empowered to purchase for the benefit of directors of the company in respect of actions undertaken as directors (or officers) of the company; and


•	concerning the giving of indemnities in favour of directors or the funding of expenditure by directors to defend criminal, civil or regulatory proceedings or actions against a director.

Under Rio Tinto Limited’s Constitution, a director may be present at a meeting of the board while a matter in which the director has a material personal interest is being considered and may vote in respect of that matter, except where a director is constrained by Australian law.

The directors are empowered to exercise all the powers of the companies to borrow money, to charge any property or business of the companies or all, or any, of their uncalled capital, and to issue debentures or give any other security for a debt, liability or obligation of the companies or of any other person. The directors shall restrict the borrowings of Rio Tinto plc to the limitation that the aggregate amount of all monies borrowed by the company and its subsidiaries shall not exceed an amount equal to 1 ½ times the companies’ share capital plus aggregate reserves unless sanctioned by an ordinary resolution of the company.

Directors are not required to hold any shares of either company by way of qualification.

Appointment and removal of directors

The appointment and replacement of directors is governed by Rio Tinto plc’s Articles of Association and Rio Tinto Limited’s Constitution, relevant UK and Australian legislation, and the UK Corporate Governance Code. The board may appoint a director either to fill a casual vacancy or as an addition to the board, so long as the total number of directors does not exceed the limit prescribed in these constitutional documents. An appointed director must retire and seek election to office at the next AGM of each company. In addition to any powers of removal conferred by the UK Companies Act 2006 and the Australian Corporations Act 2001, the company may by ordinary resolution remove any director before the expiry of his or her period of office and may, subject to these constitutional documents, by ordinary resolution appoint another person who is willing to act as a director in their place. In line with the UK Corporate Governance Code, all directors are required to stand for re-election at each AGM.

Rights upon a winding-up

Except as the shareholders have agreed or may otherwise agree, upon a winding-up, the balance of assets available for distribution after the payment of all creditors (including certain preferential creditors, whether statutorily preferred creditors or normal creditors) and subject to any special rights attaching to any class of shares, is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution should generally be made in cash. A liquidator may, however, upon the adoption of a special resolution of the shareholders, divide among the shareholders the whole or any part of the assets in specie or kind.

Rights attaching to shares

Under UK law, dividends on shares may only be paid out of profits available for distribution, as determined in accordance with generally accepted accounting principles and by the relevant law. Shareholders are entitled to receive such dividends as may be declared by the directors. Directors may also pay shareholders interim dividends as justified by the financial position of the Group.

Under the Australian Corporations Act 2001, dividends on shares may only be paid if the company’s assets exceed its liabilities immediately before the dividend is declared, the excess is sufficient for the payment of the dividend, the payment is fair and reasonable to the company’s shareholders as a whole, and the payment does not materially prejudice the company’s ability to pay its creditors. Any Rio Tinto plc dividend unclaimed after 12 years from the date the dividend was declared, or became due for payment, will be forfeited and returned to the company. Any Rio Tinto Limited dividend unclaimed may be invested or otherwise used by the board for the benefit of the company until claimed or otherwise disposed of according to Australian law. Rio Tinto Limited is governed by the State of Victoria’s unclaimed monies legislation, which requires the company to pay to the state revenue office any unclaimed dividend payments of A$20 or more that on 1 March each year have remained unclaimed for over 12 months.

Variation of rights

If, at any time, the share capital is divided into different classes of shares, the rights attached to each class may be varied, subject to the provisions of the relevant legislation, the written consent of holders of three-quarters in value of the shares of that class, or upon the adoption of a special resolution passed at a separate meeting of the holders of the shares of that class. At every such meeting, all of the provisions of the Articles of Association and Constitution relating to proceedings at a general meeting apply, except that the quorum for Rio Tinto plc should be two or more persons who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class.

Articles of Association, Constitution, and DLC Sharing Agreement

Under the terms of the DLC structure shareholders of Rio Tinto plc and of Rio Tinto Limited entered into certain contractual arrangements designed to place the shareholders of both companies in substantially the same position as if they held shares in a single entity which owned all the assets of both companies. As far as is permitted by the UK Companies Act 2006, the Australian Corporations Act 2001 and ASX Listing Rules, this principle is reflected in the Articles of Association of Rio Tinto plc and in the Constitution of Rio Tinto Limited.

Rights in the event of liquidation

For additional details, see “Capital distribution arrangements” above.

Item 10.B4. Requirements for Amendments

For additional details, see above “Dual listed companies structure”, “Articles of Association, Constitution and DLC Share Agreement”, “Rights attaching to shares” and “Voting” above.

Item 10.B.6. Limitations on the Rights to Own Shares

Exchange controls and foreign investment

Rio Tinto plc

There are no UK foreign exchange controls or other restrictions on the import or export of capital by, or on the payment of dividends to, non-resident holders of Rio Tinto plc shares, or that materially affect the conduct of Rio Tinto plc’s operations. It should be noted, however, that various sanctions, laws, regulations or conventions may restrict the import or export of capital by, or the payment of dividends to, non-resident holders of Rio Tinto plc shares. There are no restrictions under Rio Tinto plc’s Articles of Association or under UK law that limit the right of non-resident owners to hold or vote Rio Tinto plc shares. However, certain of the provisions of the Australian Foreign Acquisitions and Takeovers Act 1975 (the Takeovers Act) described below also apply to the acquisition by non-Australian persons of interests in securities of Rio Tinto plc.

Rio Tinto Limited

Under current Australian legislation, Australia does not impose general exchange or foreign currency controls. Subject to some specific requirements and restrictions, Australian and foreign currency may be freely brought into and sent out of Australia. There are requirements to report cash transfers in or out of Australia of A$10,000 or more. There is a prohibition on (or in some cases the specific prior approval of the Department of Foreign Affairs and Trade or Minister for Foreign Affairs must be obtained for) certain payments or other dealings connected with countries or parties identified with terrorism, or to whom United Nations or autonomous Australian sanctions apply. Sanction, anti-money laundering and counterterrorism laws may restrict or prohibit payments, transactions and dealings or require reporting of certain transactions.

Rio Tinto Limited may be required to deduct withholding tax from foreign remittances of dividends, to the extent that they are unfranked, and from payments of interest.

Acquisitions of interests in shares, and certain other equity instruments in Australian companies by non-Australian (“foreign”) persons are subject to review and approval by the Treasurer of the Commonwealth of Australia under the Takeovers Act.

In broad terms, the Takeovers Act applies to acquisitions of interests in securities in an Australian entity by a foreign person where, as a result, a single foreign person (and any associate) would control 20% or more of the voting power or potential voting power in the entity, or several foreign persons (and any associates) would control 40% or more of the voting power or the potential voting power in the entity. The potential voting power in an entity is determined having regard to the voting shares in the entity that would be issued if all rights (whether or not presently exercisable) in the entity were exercised.

The Takeovers Act also applies to direct investments by foreign government investors, in certain circumstances regardless of the size of the investment. Persons who are proposing relevant acquisitions or transactions may be required to provide notice to the Treasurer before proceeding with the acquisition or transaction.

The Treasurer has the power to order divestment in cases where relevant acquisitions or transactions have already occurred, including where prior notice to the Treasurer was not required. The Takeovers Act does not affect the rights of owners whose interests are held in compliance with the legislation.

Item 10.B.7. Provisions Affecting Any Change of Control

Limitations on voting and shareholding

Except for the provisions of the Takeovers Act, there are no limitations imposed by law, Rio Tinto plc’s Articles of Association or Rio Tinto Limited’s Constitution, on the rights of non-residents or foreigners to hold the Group’s ordinary shares or ADRs, or to vote that would not apply generally to all shareholders.

For additional details, see above “Limitations on ownership of shares and merger obligations” above.

Item 10.B.8. Ownership Threshold

See “Limitations on ownership of shares and merger obligations” and “Limitations on voting and shareholding”above.

Item 10.B.9. Differences Between the Law of Different Jurisdictions

See above “Rights of the Shares” above.

Item 10.B.10. Changes in Capital

For additional details, see “Variation of rights” and “Articles of Association, Constitution, and DLC Sharing Agreement” above.

AMERICAN DEPOSITARY SHARES

Item 12. Other Securities

Item 12.D.1. Name and address of Depositary

JPMorgan Chase Bank, N.A., as depositary, will issue the ADSs representing our shares. JPMorgan Chase Bank, N.A., has been appointed as the depositary pursuant a deposit agreement among the depositary, the holders the ADSs thereunder, and Rio Tinto plc. Each ADS represents one shares of Rio Tinto plc. The depositary’s principal office at which the ADSs will be administered is located at 4 New York Plaza, New York, New York, 10004.

Item 12.D.2. Description of American Depositary Shares

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having ADSs registered in your name on the books of the depositary, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are. Your ADSs will be issued on the books of the depositary in book-entry form, in which case your ADSs will be held through the depositary’s direct registration system reflecting your ownership of these ADSs. Your ADSs will be evidenced by one or more American Depositary Receipts (“ADRs”).

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. The depositary or its nominee will be the holder of record of the shares underlying your ADSs. As a holder of ADSs, you will have ADS holder rights. The deposit agreement to be entered into among us, the depositary, you, as an ADS holder, and the other holders and beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreements and the ADRs. Because the depositary or its nominee will actually be the record owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf.

Definitions in deposit agreement

"Company" shall mean Rio Tinto plc, incorporated under the laws of England, and its successors.

"Depositary" shall mean JPMorgan Chase Bank, N.A., a national banking association organized under the laws of the United States of America and any successor as depositary hereunder. The term "Principal Office", when used with respect to the Depositary, shall mean the office of the Depositary, which at the date of this amended and restated Agreement is 4 New York Plaza, New York, New York, 10004.

"Custodian" shall mean the London, England office of the Depositary, and, as agent of the Depositary, any other firm or corporation in England which may hereafter be appointed by the Depositary as substitute or additional custodian or custodians hereunder, as the context shall require and the term "Custodians" shall mean all of them, collectively.

"Deposit Agreement" shall mean this Agreement, as the same may be amended from time to time.

"Rio Tinto Shares" shall mean Ordinary Shares in registered form of the Company and shall include the rights to receive such Ordinary Shares.

"Deposited Securities" as of any time shall mean Rio Tinto Shares at such time deposited or deemed to be deposited under this Deposit Agreement and any and all other securities, property and cash received by the Depositary or the Custodian in respect thereof and at such time held hereunder, subject as to cash to the provisions.

"Receipts" shall mean the American Depositary Receipts issued hereunder representing American Depositary Shares. Receipts may, but need not be, in physical certificated form.

"Direct Registration Receipts" means a Receipt, the ownership of which is recorded on the Direct Registration System. References to "Receipts" shall include Direct Registration Receipts, unless the context otherwise requires.

"American Depositary Shares" shall mean the rights represented by the Receipts issued hereunder and the interests in the Deposited Securities represented thereby. Each American Depositary Share shall represent one Rio Tinto Share.

"Owner" shall mean the person in whose name a Receipt is registered on the books of the Depositary maintained for such purpose.

"Dollars" shall mean United States dollars. The terms "Pounds" and "pence" shall mean the currency of the United Kingdom.

"Securities Act of 1933" shall mean the United States Securities Act of 1933, as from time to time amended.

"Securities Exchange Act of 1934" shall mean the United States Securities Exchange Act of 1934 as from time to time amended.

"Commission" shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in the United States.

"English Registrar" shall mean Computershare Investor Services PLC, PO Box 82, The Pavilions, Bridgewater Road, Bristol, BS99 7NH, United Kingdom, a company organized under the laws of England, which carries out the duties of registrar for the Ordinary Shares of the Company or any successor as registrar for the Ordinary Shares of the Company.

"deliver", "execute", "issue", "register", "surrender", "transfer" or "cancel", when used with respect to Direct Registration Receipts, refer to an entry or entries or an electronic transfer or transfers in the Direct Registration System.

"Direct Registration System" means the system for the uncertificated registration of ownership of securities established by The Depository Trust Company ("DTC") and utilized by the Depositary pursuant to which the Depositary may record the ownership of Receipts without the issuance of a certificate, which ownership shall be evidenced by periodic statements issued by the Depositary to the Owners entitled thereto. For purposes hereof, the Direct Registration System shall include access to the Profile Modification System maintained by DTC, which provides for automated transfer of ownership between DTC and the Depositary.

"Receipt register" means the register maintained by the Depositary for the registration of transfer, combination and split-up of Receipts, and, in the case of Direct Registration Receipts, shall include the Direct Registration System.

Transfer, Split-Ups, And Combinations Of Receipts.

The transfer of this Receipt is registrable on the books of the Depositary at its Principal Office by the Owner hereof in person or by duly authorized attorney, upon surrender of this Receipt properly endorsed for transfer or accompanied by proper instruments of transfer and funds sufficient to pay any applicable transfer taxes and the fees and expenses of the Depositary and upon compliance with such regulations, if any, as the Depositary may establish for such purpose. This Receipt may be split into other such Receipts, or may be combined with other such Receipts into one Receipt, representing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered. As a condition precedent to the execution and delivery, registration of transfer, split-up, combination, or surrender of any Receipt or withdrawal of any Deposited Securities, the Depositary or the Custodian may require payment from the presentor of the Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Rio Tinto Shares being deposited or withdrawn) and payment of any applicable fees may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with such regulations, if any, as the Depositary may establish consistent with the provisions of the Deposit Agreement.

The delivery of Receipts against deposits of Rio Tinto Shares generally or against deposits of particular Rio Tinto Shares may be suspended, or the transfer of Receipts in particular instances may be refused, or the transfer or surrender of outstanding Receipts generally may be suspended, during any period when the Receipt register is closed, or if any such action is deemed necessary or advisable by the Depositary or in the case of the American Depositary Share issuance books only, by the Company, at any time or from time to time because of any requirement of law or of any government or governmental body or commission, or under any provision of the Deposit Agreement. Without limitation of the foregoing, the Depositary will not knowingly accept for deposit under the Deposit Agreement any Rio Tinto Shares required to be registered under the provisions of the Securities Act of 1933, unless a registration statement is in effect as to such Rio Tinto Shares.

Warranties of depositors.

Every person depositing Rio Tinto Shares under the Deposit Agreement represents and warrants that (a) such Rio Tinto Shares and the certificates therefor are duly authorized, validly issued and outstanding, fully paid, nonassessable and legally obtained by such person (b) all pre-emptive and comparable rights, if any, with respect to such Rio Tinto Shares have been validly waived or exercised, (c) the person making such deposit is duly authorized so to do, (d) the Rio Tinto Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and (e) such Rio Tinto Shares (A) are not "restricted securities" as such term is defined in Rule 144 under the Securities Act of 1933 ("Restricted Securities") unless at the time of deposit the requirements of paragraphs (c), (e), (f) and (h) of Rule 144 shall not apply and such Shares may be freely transferred and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. To the extent the person depositing Rio Tinto Shares is an "affiliate" of the Company as such term is defined in Rule 144, the person also represents and warrants that upon the sale of the American Depositary Shares, all of the provisions of Rule 144 which enable the Rio Tinto Shares to be freely sold (in the form of American Depositary Shares) will be fully complied with and, as a result thereof, all of the American Depositary Shares issued in respect of such Rio Tinto Shares will not be on the sale thereof, Restricted Securities. Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of American Depositary Shares in respect thereof and the transfer of such American Depositary Shares. The Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate compliance with the requirements of the Securities Act of 1933 or the Rules made thereunder.

Filing proofs, certificates, and other information.

Any person presenting Rio Tinto Shares for deposit or any Owner of a Receipt may be required from time to time to file such proof of citizenship or residence, exchange control approval, or such information relating to the registration on the books of the

Company (or the appointed agent of the Company for transfer and registration of Rio Tinto Shares, which may, but need not be the English Registrar) of the Rio Tinto Shares presented for deposit or other information, to execute such certificates and to make such representations and warranties, (i) as the Depositary may, in good faith, deem necessary or proper to comply with applicable laws or regulations or to enable the Depositary to perform its obligations under the Deposit Agreement or (ii) other than in the case of the delivery of any Deposited Securities, as the Company may reasonably require by written notice to the Depositary. The Depositary may withhold the delivery or registration of transfer of any Receipt or the distribution or sale of any dividend or other distribution or rights or of the proceeds thereof or the delivery of any Deposited Securities until such proof or other information is filed or such certificates are executed. The Depositary or the Custodian, as the case may be, shall, at the request and expense of the Company, provide the Company with copies of information it receives.

Reports; inspection of transfer books.

The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the Securities and Exchange Commission. Such reports and communications may be inspected and copied through the Commission’s EDGAR system or at the public reference facilities maintained by the Commission located at 100 F Street, N.E., Washington, D.C. 20549.

The Depositary will make available for inspection by Owners of Receipts at its Principal Office any reports and communications, including any proxy soliciting material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company. The Depositary will also send to Owners of Receipts copies of such reports when furnished by the Company pursuant to the Deposit Agreement.

The Depositary will keep at its Principal Office a Receipt register for the registration of Receipts and transfers of Receipts which at all reasonable times shall be open for inspection by the Company and Owners of Receipts, provided that such inspection shall not be for the purpose of communicating with Owners of Receipts in the interest of a business or object other than the business of the Company or a matter related to the Deposit Agreement or the Receipts.

Dividends and distributions.

Whenever the Depositary receives any cash dividend or other cash distribution on any Deposited Securities, the Depositary will, if at the time of receipt thereof any amounts received in a non-United States currency can in the reasonable judgment of the Depositary be converted on a reasonable basis into United States dollars transferable to the United States, and subject to the Deposit Agreement, convert such dividend or distribution into dollars and will distribute the amount thus received to the Owners of Receipts entitled thereto, in proportion to the number of American Depositary Shares representing such Deposited Securities held by them respectively; provided, however, that in the event that the Company or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes, the amount distributed to the Owner of Receipts for American Depositary Shares representing such Deposited Securities shall be reduced accordingly.

Whenever the Depositary receives any distribution other than cash or Rio Tinto Shares upon any Deposited Securities, the Depositary will cause the securities or property received by it to be distributed to the Owners of Receipts entitled thereto, in any manner that the Depositary in good faith may reasonably deem equitable and practicable for accomplishing such distribution; provided, however, that if in the reasonable opinion of the Depositary such distribution cannot be made proportionately among the Owners of Receipts entitled thereto, or if for any other reason the Depositary or the Company in good faith and reasonably deems such distribution not to be feasible, the Depositary may, after consultation with the Company, adopt such method as it may in good faith and reasonably deem equitable and practicable for the purpose of effecting such distribution, including the sale, at public or private sale, of the securities or property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Depositary to the Owners of Receipts entitled thereto as in the case of a distribution received in cash.

If any distribution consists of a dividend in, or free distribution of, Rio Tinto Shares, the Depositary shall, unless the Company shall request otherwise, distribute to the Owners of outstanding Receipts entitled thereto, additional Receipts for an aggregate number of American Depositary Shares representing the amount of Rio Tinto Shares received as such dividend or free distribution. In lieu of delivering Receipts for fractional American Depositary Shares in any such case, the Depositary will sell the amount of Rio Tinto Shares represented by the aggregate of such fractions and distribute the net proceeds, all in the manner and subject to the conditions set forth in the Deposit Agreement. If, at the request of the Company, additional Receipts are not so distributed, each American Depositary Share shall thenceforth also represent the additional Rio Tinto Shares distributed upon the Deposited Securities represented thereby.

In the event that the Depositary determines that any distribution in property (including Rio Tinto Shares and rights to subscribe therefor) is subject to any tax which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Rio Tinto Shares and rights to subscribe therefor) in such amounts and in such manner as the Depositary deems necessary and practicable to pay any such taxes, at public or private sale, and the Depositary shall distribute the net proceeds of any such sale after deduction of such taxes to the Owners of Receipts entitled thereto.

Rights.

Distribution to Owners. Whenever the Company intends to distribute to the holders of the Deposited Securities rights to subscribe for additional Rio Tinto Shares, the Company shall give notice thereof to the Depositary at least 45 days prior to the proposed distribution stating whether or not it wishes such rights to be made available to Owners. Upon receipt of a notice indicating that the Company wishes such rights to be made available to Owners, the Depositary shall consult with the Company to determine, and the Company shall determine, whether it is lawful and reasonably practicable to make such rights available to the Owners. The Depositary shall make such rights available to Owners only if (i) the Company shall have timely requested that such rights be made available to Owners, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.07 of the Deposit Agreement, and (iii) the Depositary shall have determined that such distribution of rights is lawful and reasonably practicable. In the event any of the conditions set forth above are not satisfied, the Depositary shall proceed with the sale of the rights as contemplated below or, if timing or market conditions may not permit, do nothing thereby allowing such rights to lapse. In the event all conditions set forth above are satisfied, subject to any other agreements the Depositary may reasonably request, the Depositary shall establish procedures (x) to distribute such rights (by means of warrants or otherwise) and (y) to enable the Owners to exercise the rights (upon payment of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes and other governmental charges). Nothing herein shall obligate the Depositary to make available to the Owners a method to exercise such rights to subscribe for Rio Tinto Shares (rather than American Depositary Shares).

Sale of Rights. If (i) the Company does not timely request the Depositary to make the rights available to Owners or requests that the rights not be made available to Owners, (ii) the Depositary fails to receive satisfactory documentation within the terms of the Deposit Agreement or determines it is not lawful or reasonably practicable to make the rights available to Owners, or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper. The Company shall assist the Depositary to the extent necessary to determine such legality and practicability. The Depositary shall, upon such sale, convert and distribute proceeds of such sale (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes and governmental charges) upon the terms set forth in the Deposit Agreement.

Lapse of Rights. If the Depositary is unable to make any rights available to Owners upon the terms described or to arrange for the sale of the rights upon the terms described, the Depositary shall allow such rights to lapse.

The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Owners in general or any Owners in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or exercise, or (iii) the content of any materials forwarded to the Owners on behalf of the Company in connection with the rights distribution.

Notwithstanding anything to the contrary in this Article, If registration (under the Securities Act and/or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Owners and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Owners (i) unless and until a registration statement under the Securities Act (and/or such other applicable law) covering such offering is in effect or (ii) unless the Company furnishes to the Depositary at the Company’s own expense opinion(s) of counsel to the Company in the United States and counsel to the Company in any other applicable country in which rights would be distributed, in each case satisfactory to the Depositary, to the effect that the offering and sale of such securities to Owners are exempt from, or do not require registration under, the provisions of the Securities Act or any other applicable laws. In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of property (including rights) an amount on account of taxes or other governmental charges, the amount distributed to the Owners shall be reduced accordingly. In the event that the Depositary determines that any distribution in property (including Rio Tinto Shares and rights to subscribe therefor) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Rio Tinto Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes and charges.

There can be no assurance that Owners generally, or any Owner in particular, will be given the opportunity to exercise rights on the same terms and conditions as the holders of Rio Tinto Shares or be able to exercise such rights. Nothing herein shall obligate the Company to file any registration statement in respect of any rights or Rio Tinto Shares or other securities to be acquired upon the exercise of such rights.

Record dates.

Whenever any cash dividend or other cash distribution shall become payable or any distribution other than cash shall be made, or whenever rights shall be issued with respect to the Deposited Securities, or whenever the Depositary shall receive notice of any meeting of holders of Rio Tinto Shares or other Deposited Securities, the Depositary shall, after consultation with the Company if practicable in the case of a record date set in response to a Company record date, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company), for the determination of the Owners who

shall be entitled to receive such dividend, distribution or rights, or the net proceeds of the sale thereof, or to give instructions for the exercise of voting rights at any such meeting, or for fixing the date on or after which each American Depositary Share will represent the changed number of Rio Tinto Shares. Subject to the Deposit Agreement, only such Owners at the close of business on such record date shall be entitled to receive any such distribution or proceeds, to give such voting instructions, to receive such notice or solicitation or to act or be responsible or obligated in respect of any such other matter.

Voting of deposited securities.

Upon receipt of notice of any meeting of holders of Rio Tinto Shares or other Deposited Securities, unless otherwise requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, mail to the Owners of Receipts a notice which shall contain (a) such information as is contained in such notice of meeting and in any related material supplied by the Company to the Depositary, (b) a statement that the Owners of Receipts as of the close of business on a specified record date will be entitled, subject to any applicable provision of English law and of the Articles of Association of the Company, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the amount of Rio Tinto Shares or other Deposited Securities represented by their respective American Depositary Shares and (c) a statement as to the manner in which such instructions may be given, including an express indication that instructions may be given to the Depositary to give a discretionary proxy to a person designated by the Company. Upon the written request of an Owner of a Receipt on such record date, actually received on or before the date established by the Depositary for such purpose, the Depositary shall endeavor in so far as practicable to vote or cause to be voted the amount of Rio Tinto Shares or other Deposited Securities represented by such Receipt in accordance with the instructions set forth in such request. The Depositary shall not, and the Depositary shall ensure that the Custodian and the nominee(s) of the Depositary or the Custodian shall not, vote or attempt to vote or exercise or attempt to exercise any other rights in respect of Deposited Securities, other than in accordance with prior written instructions of the Owners of Receipts therefor, and shall not vote or attempt to exercise the right to vote or exercise or attempt to exercise any other right attaching to Rio Tinto Shares or other Deposited Securities, if no instructions are received with respect to such securities. Notwithstanding anything contained in the Deposit Agreement or any Receipt, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the American Depositary Shares are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Owners a notice that provides Owners with, or otherwise publicizes to Owners, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Owners are strongly encouraged to forward their voting instructions as soon as possible. Voting instructions will not be deemed received until such time as the American Depositary Receipt department responsible for proxies and voting has received such instructions notwithstanding that such instructions may have been physically received by JPMorgan Chase Bank, N.A., as Depositary, prior to such time.

Changes affecting deposited securities.

Subject to the other provisions of the Deposit Agreement, the Depositary may, in its discretion, and shall if reasonably requested by the Company, amend the Receipts or distribute additional or amended Receipts (with or without calling Receipts for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split up, consolidation, cancellation or other reclassification of Deposited Securities, any Rio Tinto Share distribution or other distribution not distributed to Owners or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company, and to the extent the Depositary does not so amend the Receipts or make a distribution to Owners to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each American Depositary Share evidenced shall automatically represent its pro rata interest in the Deposited Securities as then constituted. Promptly upon the occurrence of any of the aforementioned changes affecting Deposited Securities, the Company shall notify the Depositary in writing of such occurrence and as soon as practicable after receipt of such notice from the Company, may instruct the Depositary to give notice thereof, at the Company's expense, to Owners in accordance with the provisions hereof. Upon receipt of such instruction, the Depositary shall give notice to the Owners in accordance with the terms thereof, as soon as reasonably practicable.

Liability of the company and depositary.

Neither the Depositary, its agents nor the Company shall incur any liability to any person, including any Owner or beneficial owner of an interest in American Depositary Shares, if, by reason of any present or future law, rule, regulation, fiat, order or decree of the United States, the United Kingdom or any other country, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, or by reason of any provision, present or future, of the Memorandum and Articles of Association of the Company, or of or governing the Deposited Securities, or by reason of any act of God, war, terrorism, nationalization or other circumstance beyond its control the Depositary, its agents or the Company shall be prevented, delayed or forbidden from doing or performing, or subjected to any civil or criminal penalty in connection with, any act or thing which by the terms of the Deposit Agreement, the Memorandum and Articles of Association of the Company or the Deposited

Securities it is provided shall be done or performed (including, without limitation, voting); nor shall the Depositary, its agents or the Company incur any liability to any Owner of a Receipt by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing which by the terms of the Deposit Agreement it is provided shall or may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement (including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable) nor, in any case, shall the Depositary, its agents or the Company incur any liability to any Owner or beneficial owner of an interest in American Depositary Shares or other person by reason of any nonperformance or delay.

The Depositary, the Company, their agents and each of them shall: (a) assume no liability except to perform its obligations to the extent they are specifically set forth in the Deposit Agreement without gross negligence or willful misconduct; (b) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or Receipt; (c) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or Receipt, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; and (d) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Rio Tinto Shares for deposit, any Owner, or any other person believed by it to be competent to give such advice or information, and (e) any one or more of (a) through (d). The Depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. The Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any Custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. The Depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale. The Depositary shall not incur any liability for the content of any information submitted to it by or on behalf of the Company for distribution to the Owners or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement or for the failure or timeliness of any notice from the Company. The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties. The Depositary shall be under no obligation to inform Owners or any other holders of an interest in any American Depositary Shares about the requirements of English law, rules or regulations or any changes therein or thereto. The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, for the manner in which any such vote is cast or for the effect of any such vote. The Depositary may rely upon instructions from the Company or its counsel in respect of any approval or license required for any currency conversion, transfer or distribution. Subject to the Company's Memorandum and Articles of Association and applicable law, the Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in Receipts. Notwithstanding anything to the contrary set forth herein or in any Receipt, the Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any Owner or Owners, any American Depositary Shares, Receipt or Receipts or otherwise related hereto or thereto to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. None of the Depositary, the Custodian or the Company shall be liable for the failure by any Owner or beneficial owner to obtain the benefits of credits on the basis of non-U.S. tax paid against such Owners or beneficial owners income tax liability. The Depositary and the Company shall not incur any liability for any tax consequences that may be incurred by Owners and beneficial owners on account of their ownership of the Receipts or American Depositary Shares. Neither the Depositary, the Company nor any of their respective agents shall be liable to Owners or holders of interests in American Depositary Shares for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought. No disclaimer of liability under the Securities Act of 1933 is intended by any provision of the Deposit Agreement.

The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that the Depositary acted without gross negligence or willful misconduct with respect to the same matter during the period in which it previously acted as Depositary. Notwithstanding anything to the contrary contained in the Deposit Agreement (including the Receipts) and subject to the Deposit Agreement, the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that the Custodian has (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in the jurisdiction in which the Custodian is located.

The Depositary reserves the right to utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated under the Deposit Agreement. All purchases and sales of securities will be handled by the Depositary in accordance with its then current policies, which are currently set forth in the "Depositary Receipt Sale and Purchase of Security" section.

By holding an American Depositary Share or an interest therein, Owners and owners of American Depositary Shares each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York, and by holding an American Depositary Share or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

Amendment.

The form of the Receipts and any provisions of the Deposit Agreement may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect, which they may deem necessary or desirable. Any amendment which shall impose or increase any fees or charges (other than the fees of the Depositary for the execution and delivery of Receipts and taxes and other governmental charges), or which shall otherwise prejudice any substantial existing right of Owners of Receipts, shall, however, not become effective as to outstanding Receipts until the expiration of 30 days after notice of such amendment shall have been given to the Owners of outstanding Receipts. Every Owner of a Receipt at the time any amendment so becomes effective shall be deemed, by continuing to hold such Receipt, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. Any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the American Depositary Receipts to be registered on Form F-6 under the Securities Act of 1933 or (b) the American Depositary Receipts or Rio Tinto Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Owners, shall be deemed not to prejudice any substantial rights of Owners. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of Receipt to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and the Receipt at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to Owners or within any other period of time as required for compliance. In no event shall any amendment impair the right of the Owner of any Receipt to surrender such Receipt and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.

Termination of deposit agreement.

The Depositary shall at any time at the direction of the Company terminate the Deposit Agreement by mailing notice of such termination to the Owners of all Receipts then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may likewise terminate the Deposit Agreement if at any time 60 days shall have expired after the Depositary shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment as provided in the Deposit Agreement. If any Receipts shall remain outstanding after the date of termination, the Depositary thereafter shall discontinue the registration of transfers of Receipts, shall suspend the distribution of dividends to the Owners thereof, and shall not give any further notices or perform any further acts under the Deposit Agreement, except that the Depositary shall continue to collect dividends and other distributions pertaining to Deposited Securities, shall sell rights as provided in the Deposit Agreement, and shall continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for Receipts surrendered to the Depositary. At any time after the expiration of one year from the date of termination, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it thereunder, without liability for interest, for the pro rata benefit of the Owners of Receipts which have not theretofore been surrendered. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of a Receipt, any expenses for the account of the Owner of such Receipt in accordance with the terms and conditions of this Deposit Agreement, and any applicable taxes or governmental charges). Upon the termination of the Deposit Agreement, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary with respect to indemnification, charges, and expenses.

DEBT SECURITIES

Item 12.A Debt Securities

Each series of guaranteed notes listed on the New York Stock Exchange has been issued by Rio Tinto Finance (USA) Limited or Rio Tinto Finance (USA) plc fully and unconditionally guaranteed by Rio Tinto plc and Rio Tinto Limited (the “Guarantors”). Each of these series of the notes and related guaranteed was issued pursuant to an effective registration statement and a related prospectus and prospectus supplements setting for the terms of the relevant series of notes and related guarantees.

Rio Tinto Finance (USA) Limited, a wholly owned subsidiary of Rio Tinto Limited, and Rio Tinto Finance (USA) plc, an indirect wholly owned subsidiary of Rio Tinto plc, Rio Tinto Finance (USA) Limited and Rio Tinto Finance (USA) plc (together, the “Issuers”) are finance companies through which the Rio Tinto Group conducts its treasury operations.

The following table sets for the dates of the registration statements, dates of the base prospectus, dates of issuance and issuer for each relevant series of the notes (“Notes”).



Notes	Registration Statement	Date of Base Prospectus	Issuer/ Date of Issuance
$1,200,000,000 3.750% Guaranteed Notes due 2025	333-196694	12 June 2014	Rio Tinto Finance (USA) Limited 12 June 2015
$750,000,000 4.125% Guaranteed Notes due 2042	333-175037	16 March 2012	Rio Tinto Finance (USA) plc 17 August 2012
$500,000,000 4.750% Guaranteed Notes due 2042	333-175037	16 March 2012	Rio Tinto Finance (USA) plc 20 March 2012
$350,000,000 5.200% Guaranteed Notes due 2040	333-175037	21 June 2011	Rio Tinto Finance (USA) Limited 15 September 2011
$300,000,000 5.200% Guaranteed Notes due 2040	333-151839	17 May 2011	Rio Tinto Finance (USA) Limited 19 May 2011
$500,000,000 5.20% Guaranteed Notes due 2040	333-151839	14 April 2009	Rio Tinto Finance (USA) Limited 29 October 2010
$750,000,000 7.125% Guaranteed Notes due 2028	333-151839	23 June 2008	Rio Tinto Finance (USA) Limited 25 June 2008

DESCRIPTION OF GUARANTEED DEBT SECURITIES

General

The Bank of New York Mellon (“BNYM”) acts as the trustee under the indenture dated July 2, 2001, which was amended and restated on March 16, 2012 (the “Base Indenture”) and amended by the supplemental indenture dated May 8, 2017 (the “First Supplemental Indenture”, which together with the Base Indenture is referred to herein as the “Indenture”). The trustee has two principal functions:


•	First, it can enforce the rights of holders of the debt securities against us if we default on debt securities issued under the Indenture. There are some limitations on the extent to which the trustee acts on behalf of holders of the debt securities, described below under “— Default and Related Matters — Events of Default — Remedies If an Event of Default Occurs” below; and


•	Second, the trustee performs administrative duties for us, such as sending interest payments to holders, transferring debt securities to new buyers and sending notices to holders.

Both Rio Tinto plc and Rio Tinto Limited act as the guarantors of the debt securities issued under the Indenture. The guarantees are described under “— Guarantees” below.

The Indenture and its associated documents contain the full legal text of the matters described in this section. The Indenture, the debt securities and the guarantees are governed by New York law. A copy of the form of Indenture is filed with the SEC as an exhibit to the registration statement. See “Where You Can Find More Information” below for information on how to obtain a copy.

We may issue as many distinct series of debt securities under the Indenture as we wish. This section summarizes all material terms of the debt securities and the guarantees that are common to all series, unless otherwise indicated in the prospectus supplement relating to a particular series.

Interest rates

In addition to debt securities that bear interest at fixed rates, we may, from time to time, issue floating rate debt securities that bear interest at rates based on one or more of the following base rates:


•	LIBOR; or


•	any other interest rates (which may include a combination of more than one of the interest rate bases described above) as may be described in the applicable prospectus supplement.

LIBOR. A LIBOR note is a floating rate debt security that will bear interest at a base rate equal to LIBOR, which will be the London interbank offered rate for deposits in U.S. dollars or any other index currency, as specified in the applicable prospectus supplement. In addition, the applicable LIBOR base rate will be adjusted by the spread or spread multiplier, if any, specified in the applicable prospectus supplement.

LIBOR will be determined in the following manner:

•

LIBOR will be the arithmetic mean of the offered rates appearing on the Reuters LIBOR page, unless that page by its terms cites only one rate, in which case that rate; in either case, as of 11:00 A.M., London time, on the relevant interest determination date, for deposits of the relevant index currency having the relevant index maturity beginning on the relevant interest reset date. The applicable prospectus supplement will indicate the index currency, the index maturity and the reference page that apply to the debt security and how interest determination dates and interest reset dates will be determined.

•

If fewer than two of the rates described above appears on the Reuters LIBOR page or no rate appears on any page on which only one rate normally appears, then LIBOR will be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the relevant interest determination date, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the calculation agent: deposits of the index currency having the relevant index maturity, beginning on the relevant interest reset date and in a representative amount. The calculation agent will request the principal London office of each of these banks to provide a quotation of its rate. If at least two quotations are provided, LIBOR for the relevant interest determination date will be the arithmetic mean of the quotations.


•	If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for the relevant interest determination date will be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M., London time, in the principal financial center for the country of the index currency, on that

interest determination date, by three major banks in that financial center selected by the calculation agent: loans of the index currency having the relevant index maturity, beginning on the relevant interest reset date and in a representative amount.


•	If fewer than three banks selected by the calculation agent provide quotations as described above, LIBOR for the new interest period will be LIBOR in effect for the prior interest period. If the initial base rate has been in effect for the prior interest period, however, it will remain in effect.

The reference banks and dealers employed by the calculation agent in determining the base rate may include the calculation agent itself and its affiliates.

Guarantees

Both Rio Tinto plc and Rio Tinto Limited will fully and unconditionally guarantee the payment of the principal of, premium, if any, and interest on the debt securities, including any additional amounts which may be payable in respect of the debt securities, as described below under “— Special Situations — Payment of Additional Amounts”. [Each of] Rio Tinto plc and Rio Tinto Limited guarantee the payment of such amounts when such amounts become due and payable, whether at the stated maturity of the debt securities, by declaration or acceleration, call for redemption or otherwise. Each of Rio Tinto plc and Rio Tinto Limited is individually obligated to pay such amounts.

Legal Ownership

Street Name and Other Indirect Holders

Investors who hold debt securities in accounts at banks or brokers will generally not be recognized by us as legal holders of debt securities. This is called holding in street name. Instead, we would recognize only the bank or broker, or the financial institution the bank or broker uses to hold its debt securities. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments on the debt securities, either because they agree to do so in their customer agreements or because they are legally required to do so. Holders of debt securities who hold in street name should check with their institutions to find out:


•	how it handles payments in respect of the debt securities and notices;


•	whether it imposes fees or charges;


•	how it would handle voting if it were ever required;


•	whether and how holders can instruct it to send their debt securities, registered in their own names so they can be direct holders as described below; and


•	how it would pursue rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests.

Direct Holders

Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, run only to persons who are registered as holders of debt securities. As noted above, we do not have obligations to holders who hold in street name or other indirect means, either because such holders choose to hold debt securities in that manner or because the debt securities are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that holder is legally required to pass the payment along to the street name customer but does not do so.

Global Securities

A global security is a special type of indirectly held security, as described above under “— Street Name and Other Indirect Holders”. If we choose to issue debt securities in the form of global securities, the ultimate beneficial owners can only be indirect holders.

We require that the global security be registered in the name of a financial institution we select. In addition, we require that the debt securities included in the global security not be transferred to the name of any other direct holder unless the special circumstances described below occur. The financial institution that acts as the sole direct holder of the global security is called the depositary. Any person wishing to own a security must do so indirectly by virtue of an account with a broker, bank or other financial institution that in turn has an account with the depositary. The prospectus supplement indicates whether a particular series of debt securities will be issued only in the form of global securities.

Special Investor Considerations for Global Securities. As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize this type of investor as a holder of debt securities and instead deal only with the depositary that holds the global security.

Investors in debt securities that are issued only in the form of global debt securities should be aware that:


•	They cannot get debt securities registered in their own names.


•	They cannot receive physical certificates for their interests in the debt securities.


•	They will be street name holders and must look to their own banks or brokers for payments on the debt securities and protection of their legal rights relating to the debt securities, as explained above under “— Legal Ownership — Street Name and Other Indirect Holders”.


•	They may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required by law to own their debt securities in the form of physical certificates.


•	The depositary’s policies will govern payments, transfers, exchange and other matters relating to holders’ interests in the global security. We and the trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in the global security. We and the trustee also do not supervise the depositary in any way.


•	The depositary will require that interests in a global security be purchased or sold within its system using same-day funds.

Special Situations When Global Security Will Be Terminated. In a few special situations described later, the global security will terminate and interests in it will be exchanged for physical certificates representing debt securities. After that exchange, the choice of whether to hold debt securities directly or in street name will be up to the investor. Investors must consult their own bank or brokers to find out how to have their interests in debt securities transferred to their own name so that they will be direct holders. The rights of street name investors and direct holders in the debt securities have been described above in the subsections entitled “— Legal Ownership — Street Name and Other Indirect Holders” and “— Direct Holders”.

The special situations for termination of a global security are:


•	When the depositary notifies us that it is unwilling, unable or ceases to be a clearing agency registered under the Exchange Act.


•	When an event of default on the debt securities has occurred and has not been cured. Defaults are discussed below under “— Default and Related Matters — Events of Default”.

When a global security terminates, the depositary (and not we or the trustee) is responsible for deciding the names of the institutions that will be the initial direct holders.

Overview of Remainder of this Description

The remainder of this description summarizes:


•	Additional mechanics relevant to the debt securities under normal circumstances, such as how to transfer ownership and where we make payments.


•	Holders’ rights under several special situations, such as if we merge with another company, if we want to change a term of the debt securities or if we want to redeem the debt securities for tax reasons.


•	Holders’ rights to receive payment of additional amounts due to changes in the withholding requirements of various jurisdictions.


•	Covenants contained in the Indenture that restrict our and Rio Tinto’s ability to incur liens. A particular series of debt securities may have additional covenants.


•	Holders’ rights if we default in respect of our obligations under the debt securities or experience other financial difficulties.


•	Our relationship with the trustee.

Additional Mechanics

Exchange and Transfer

The debt securities will be issued:


•	only in fully registered form;


•	without interest coupons; and


•	unless indicated in the applicable prospectus supplement, in denominations that are even multiples of U.S.$1,000.

Holders may have their debt securities broken into more debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. This is called an exchange.

Holders may exchange or transfer their debt securities at the office of the trustee. The trustee acts as our agent for registering debt securities in the names of holders and transferring the securities. We may change this appointment to another entity or perform the service ourselves. The entity performing the role of maintaining the list of registered holders is called the security registrar. It will also register transfers of the debt securities.

Holders will not be required to pay a service charge to transfer or exchange debt securities, but may be required to pay for any tax or other governmental charge associated with the exchange or transfer. The transfer or exchange of a registered debt security will only be made if the security registrar is satisfied with a holder’s proof of ownership.

If we have designated additional transfer agents, they are named in the prospectus supplement. We may cancel the designation of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

If the debt securities are redeemable and we redeem less than all of the debt securities of a particular series, we may block the transfer or exchange of debt securities during a specified period of time in order to freeze the list of holders to prepare the mailing. The period begins 15 days before the day we mail the notice of redemption and ends on the day of that mailing. We may also refuse to register transfers or exchanges of debt securities selected for redemption. However, we will continue to permit transfers and exchanges of the unredeemed portion of any security being partially redeemed.

Payment and Paying Agents

We will pay interest to holders who are direct holders listed in the trustee’s records at the close of business on a particular day in advance of each due date for interest, even if such holders no longer own the security on the interest due date. That particular day, usually the Clearing System Business Day immediately prior to the interest due date, is called the regular record date and is stated in the prospectus supplement.

We will pay interest, principal and any other money due on your debt securities at the corporate trust office of the trustee in New York, NY. That office is currently located at 101 Barclay Street, Floor 7E, New York, NY 10286. Holders must make arrangements to have payments picked up at or wired from that office. We may also choose to pay interest by mailing checks.

Interest on global securities will be paid to the holder thereof by wire transfer of same-day funds.

Holders buying and selling debt securities must work out between them how to compensate for the fact that we will pay all the interest for an interest period to, in the case of registered debt securities, the one who is the registered holder on the regular record date. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller. This prorated interest amount is called accrued interest.

Street name and other indirect holders should consult their banks or brokers for information on how they will receive payments.

We may also arrange for additional payment offices, and may cancel or change these offices, including our use of the trustee’s corporate trust office. These offices are called paying agents. We may also choose to act as our own paying agent. We must notify holders of changes in the paying agents for any particular series of debt securities.

Notices

We and the trustee will send notices only to direct holders, using their addresses as listed in the security register.

Regardless of who acts as paying agent, all money that we pay to a paying agent that remains unclaimed at the end of two years after the amount is due to direct holders will be repaid to us. After that two-year period, holders may look only to us for payment and not to the trustee, any other paying agent or anyone else.

Special Situations

Mergers and Similar Events

We, Rio Tinto plc and Rio Tinto Limited are generally permitted to consolidate or merge with another entity. We, Rio Tinto plc and Rio Tinto Limited are also permitted to sell or lease substantially all of our assets to another entity or to buy or lease substantially all of the assets of another entity. However, Rio Tinto Finance (USA) Limited may only take these actions if the successor entity is incorporated or organized under the laws of Australia, any state thereof, or the United States, any state thereof, or the District of Columbia and Rio Tinto Finance (USA) plc may only take these actions if the successor entity is incorporated or organized under the laws of the United Kingdom, or any political subdivision thereof, or the United States, any state thereof, or the District of Columbia. In addition, neither we, Rio Tinto plc nor Rio Tinto Limited may take any of these actions unless all the following conditions are met:


•	Where Rio Tinto Finance (USA) Limited, Rio Tinto Finance (USA) plc, Rio Tinto plc or Rio Tinto Limited merges out of existence or sells or leases substantially all its assets, the successor entity must be duly organized and validly existing under the laws of the applicable jurisdiction.


•	If such successor entity is organized under the laws of a jurisdiction other than Australia, the United Kingdom, or the United States, any state thereof, or the District of Columbia, it must indemnify holders against any governmental charge or other cost resulting from the transaction.

•

Neither we, Rio Tinto plc nor Rio Tinto Limited may be in default on the debt securities or guarantees immediately prior to such action and such action must not cause a default. For purposes of this no-default test, a default would include an event of default that has occurred and not been cured, as described below under “— Default and Related Matters — Events of Default — What is An Event of Default?” A default for this purpose would also include any event that would be an event of default if the requirements for notice of default or existence of defaults for a specified period of time were disregarded.

•

If we, Rio Tinto plc or Rio Tinto Limited merges out of existence, sells, or leases substantially all of our or their assets, the successor entity must execute a supplement to the Indenture, known as a supplemental indenture. In the supplemental indenture, the entity must promise to be bound by every obligation in the Indenture applicable to Rio Tinto Finance (USA) Limited, Rio Tinto Finance (USA) plc, Rio Tinto plc or Rio Tinto Limited, as the case may be.

•

We, Rio Tinto plc or Rio Tinto Limited, as the case may be, must deliver a certificate and an opinion of counsel to the trustee, each stating that the consolidation, merger, conveyance, transfer or lease, and, if applicable, the supplemental indenture pursuant to which the successor entity assumes our obligations or the obligations of Rio Tinto plc or Rio Tinto Limited, are in compliance with the Indenture.


•	Neither our nor Rio Tinto’s assets or properties may become subject to any impermissible lien unless the debt securities issued under the Indenture are secured equally and ratably with the indebtedness secured by the impermissible lien. Impermissible liens are described in further detail below under “— Restrictive Covenants — Restrictions on Liens”.

Under the Indenture, Rio Tinto or any Rio Tinto subsidiary may assume our obligations under the debt securities. This would likely be a taxable event to U.S. holders. U.S. holders would likely be treated as having exchanged their debt securities for other debt securities issued by Rio Tinto or such subsidiary and therefore may have to recognize gain or loss for U.S. federal income tax purposes upon such assumption.

Modification and Waiver

There are three types of changes we can make to the Indenture and the debt securities.

Changes Requiring the Approval of all Holders. First, there are changes that cannot be made to the debt securities without the specific approval of each holder of the debt securities of the applicable series. Following is a list of those types of changes:


•	changes to the stated maturity of the principal or the interest payment dates on a debt security;


•	any reduction in amounts due on a debt security;


•	changes to any of our obligations to pay additional amounts described later under “— Special Situations — Payment of Additional Amounts”;


•	any reduction in the amount of principal payable upon acceleration of the maturity of a debt security following a default;


•	changes in the place or currency of payment on a debt security;


•	any impairment of holders’ right to sue for payment;


•	any reduction in the percentage of holders of debt securities whose consent is needed to modify or amend the Indenture;


•	any reduction in the percentage of holders of debt securities whose consent is needed to waive compliance with various provisions of the Indenture or to waive various defaults; and


•	any modification, in any manner adverse to the holders of the debt securities, to the obligations of Rio Tinto plc or Rio Tinto Limited in respect of the payment of principal, premium, if any, and interest, if any.

Changes Requiring a Majority Vote. The second type of change to the Indenture and the debt securities is the kind that requires a vote in favor by holders of debt securities owning a majority of the principal amount of the particular series affected. Most changes fall into this category, except for clarifying changes, amendments, supplements and other changes that would not adversely affect holders of the debt securities in any material respect. The same vote would be required for us to obtain a waiver of all or part of the covenants described below or a waiver of a past default. However, we cannot obtain a waiver of a payment default or any other aspect of the Indenture or the debt securities listed in the first category described above under “— Changes Requiring the Approval of all Holders” unless we obtain the individual consent of each holder to the waiver.

Changes Not Requiring Approval. The third type of change does not require any vote by holders of debt securities. This type is limited to clarifications and other changes that would not adversely affect holders of the debt securities in any material respect.

Further Details Concerning Voting. When taking a vote, we will use the following rules to decide how much principal amount to attribute to a security:


•	For original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity of the debt securities were accelerated to that date because of a default.


•	For debt securities whose principal amount is not known (for example, because it is based on an index), we will use a special rule for that security described in the prospectus supplement.


•	For debt securities denominated in one or more foreign currencies or currency units, we will use the U.S. dollar equivalent.


•	Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under “— Restrictive Covenants — Defeasance and Discharge”.

•

We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities that are entitled to vote or take other action under the Indenture. In limited circumstances, the trustee will be entitled to set a record date for action by holders. If we or the trustee set a record date for a vote or other action to be taken by holders of a particular series, that vote or action may be taken only by persons who are holders of outstanding debt securities of that series on the record date and must be taken within 180 days following the record date or another period that we may specify (or as the trustee may specify, if it set the record date). We may shorten or lengthen (but not beyond 180 days) this period from time to time.

Street name and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the Indenture or the debt securities or request a waiver.

Optional Tax Redemption

The debt securities of any series may be redeemed in whole but not in part, in the three situations described below. The redemption price for the debt securities will be equal to the principal amount of the debt securities being redeemed plus accrued interest and any additional amounts due on the date fixed for redemption. Holders must receive between 10 and 60 days’ notice before their debt securities are redeemed.

The first situation is where, as a result of a change in or amendment to any laws, regulations or rulings or the official application or interpretation of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or any amendment to, any treaty or treaties affecting taxation, any of we, Rio Tinto plc or Rio Tinto Limited determines that it would be required to pay additional amounts as described below under “— Payment of Additional Amounts”.

The second situation is where, as a result of a change in or amendment to any laws, rulings or regulations or the official application or interpretation of such laws, rulings or regulations, or any change in the official application or interpretation of, or any execution of or any amendment to, any treaty or treaties affecting taxation, Rio Tinto plc or Rio Tinto Limited or any subsidiary of either of them determines that it would have to deduct or withhold tax on any payment to us to enable it to make a payment of principal or interest on a debt security.

In the first and second situations, the option to redeem the debt securities applies only in the case of changes or amendments that occur on or after the date specified in the prospectus supplement for the applicable series of debt securities and in the jurisdiction where Rio Tinto plc and Rio Tinto Limited are incorporated. If we, Rio Tinto plc or Rio Tinto Limited, as the case may be, have been succeeded by another entity, the applicable jurisdiction will be the jurisdiction in which such successor entity is organized, and the applicable date will be the date the entity became a successor.

In addition, in the case of the first and second situations, we, Rio Tinto plc or Rio Tinto Limited will not have the option to redeem if we could have avoided the payment of additional amounts or the deduction or withholding by using reasonable measures available to us.

The third situation is where, following a merger or consolidation of Rio Tinto plc or Rio Tinto Limited or a transfer or lease of all of Rio Tinto plc’s or Rio Tinto Limited’s assets, the person formed by such merger, consolidation, transfer or lease is organized under the laws of a jurisdiction other than the United States, the United Kingdom or Australia, or any political subdivisions thereof, and is required to pay additional amounts as described under “— Payment of Additional Amounts”.

We, Rio Tinto plc or Rio Tinto Limited shall deliver to the trustee an Officer’s Certificate to the effect that the circumstances required for redemption exist.

Restrictive Covenants

Restrictions on Liens

Some of our property may be subject to a mortgage or other legal mechanism that gives our and Rio Tinto’s lenders preferential rights in that property over other lenders, including the holders of the debt securities, or over our and Rio Tinto’s general creditors if we fail to pay them back. These preferential rights are called liens. We promise that we will not become obligated on any new debt for borrowed money that is secured by a lien on any of our properties, unless we grant an equivalent or higher-ranking lien on the same property to the holders of the debt securities.

We need not comply with this restriction if the amount of all debt that would be secured by liens on our properties, excluding the debt secured by the liens that are listed below, is less than 10% of Rio Tinto’s consolidated net worth plus minorities. Consolidated net worth plus minorities is defined in the Indenture as a measure of the net worth of Rio Tinto that includes amounts attributable to the outside interests in the accounting subsidiaries of Rio Tinto. A substantial portion of the consolidated assets of Rio Tinto is held by their subsidiaries and thus would not be subject to this restriction on liens.

This restriction on liens applies only to liens for borrowed money. In addition, this restriction on liens also does not apply to debt secured by a number of different types of liens. These types of liens include the following:


•	any lien existing on or before the date of the issuance of the applicable series of debt securities;


•	any lien arising by operation of law and not as a result of any act or omission on our part;


•	liens arising from any judgment against us that does not give rise to an event of default;


•	any lien created on property (or the title documents for that property) acquired after the date of the issuance of the applicable series of debt securities for the sole purpose of financing or refinancing or securing the cost of that property so long as the principal moneys secured by the property do not exceed the cost of that acquisition;


•	any lien over property (or the title documents for that property) that was in existence at the time we acquired the property;


•	any lien over assets and/or, where such assets comprise substantially the whole of the assets of their owner, shares or stock in the owner of those assets that secures project finance borrowing to finance the costs of developing, or acquiring and developing, those assets;


•	any lien over property, including improvements, which was developed, constructed or improved by us, acquired after the date of the issuance of the applicable series of debt securities,


•	to secure the payment of all or any part of the cost of development or construction of or improvement on the property, or


•	to secure the payment of all or any part of the cost of development or construction of or improvement on the property, or


•	to secure indebtedness incurred by us for the purpose of financing all or any part of the cost of development or construction or of improvements on the property,

so long as the secured indebtedness does not exceed the higher of the cost or the fair market value of that development, construction or improvement;


•	any lien arising solely by operation of law over any credit balance or cash held in an account with a financial institution;


•	any lien arising in transactions entered into or established for our benefit in connection with any of the following:


•	the operation of cash management programs;


•	other payment netting arrangements;


•	derivatives transactions (including swaps, caps, collars, options, futures transactions, forward rate agreements and foreign exchange transactions and any other similar transaction (including any option with respect to any of the foregoing) and any combination of any of the foregoing);


•	other normal banking transactions; or


•	in the ordinary course of letter of credit transactions;


•	any lien securing our indebtedness for borrowed money incurred in connection with the financing of our accounts receivable;


•	any lien arising in the ordinary course of dealings in base and precious metals, other minerals, petroleum or any other materials;


•	any lien incurred or deposits made in the ordinary course of business, including, but not limited to;


•	any mechanics’, materialmen’s, carriers’, workmen’s, vendors’ or similar lien;


•	any lien securing amounts in connection with workers’ compensation unemployment insurance and other types of social security; and


•	any easements, right-of-way, restrictions and other similar charges;


•	any lien securing all or part of our interest in any mine or mineral deposit and/or facilities and/or any agreement or instrument relating to a mine or mineral deposit that is in favor of any operator or participant in that mine, mineral deposit or facility if


•	the lien serves as security for any sum which may become due to


•	an operator in its capacity as operator; or


•	to a participant by virtue of any agreement or instrument relating to such mine or mineral deposit and/or facilities; and


•	the lien is limited to the relevant mine or mineral deposit and/or facilities;


•	any lien upon specific items of our inventory or other goods, and proceeds inventory or other goods, securing our obligations relating to bankers’ acceptances, issued or created for our account to facilitate the purchase, shipment or storage of the inventory or other goods;


•	any lien incurred or deposits made securing our performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of like nature incurred in the ordinary course of our business;

•

any lien on any of our property in favor of the Federal Government of the United States or the government of any state thereof, or the government of Australia or the government of any state or territory thereof, the United Kingdom, or the government of any member nation of the European Union, or any instrumentality of any of them, securing our obligations under any contract or payments owed to such entity pursuant to applicable laws, rules, regulations or statutes;


•	any liens securing taxes or assessments or other applicable governmental charges or levies;


•	any liens securing industrial revenue, development or similar bonds issued by us, or for our benefit, provided that the industrial revenue, development or similar bonds are non-recourse to us;


•	the sale or other transfer of


•	any minerals in place, or for the future production of minerals, for a specified period of time or in any amount such that, the purchaser will realize from such sale or transfer a specified amount of money or minerals; or


•	any other interest in property that is commonly referred to as a “production payment”;


•	any liens in favor of any company in the Rio Tinto Group;


•	any liens securing indebtedness for which we have paid money or deposited securities in an arrangement to discharge in full any liability relating to that indebtedness; and


•	any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any lien referred to above, so long as


•	the amount does not exceed the principal amount of the borrowed money secured by the lien which is to be extended, renewed or replaced; and


•	the extension, renewal or replacement lien is limited to all or a part of the same property, including improvements that secured the lien to be extended, renewed or replaced.

Under the Indenture, the following are not considered liens securing indebtedness and so are not prevented by the restrictions:


•	any acquisition of any property or assets by us that is subject to any reservation that creates or reserves for the seller an interest in any metals or minerals in place or the proceeds from their sale;


•	any conveyance or assignment in which we convey or assign an interest in any metals or minerals in place or the proceeds from their sale; or


•	any lien upon any of our wholly or partially owned or leased property or assets, to secure the payment of our proportionate part of the development or operating expenses in realizing the metal or mineral resources of such property.

Restrictions on Sales and Leasebacks

Neither we, Rio Tinto plc nor Rio Tinto Limited will enter into any sale and leaseback transaction involving a property, other than as allowed by this covenant. A sale and leaseback transaction is an arrangement between us and a bank, insurance company or other lender or investor where we lease a property that we previously owned for more than 270 days and sold to a lender or investor or to any person to whom the lender or investor has advanced funds on the security of the principal property.

The restriction on sales and leasebacks does not apply to any sale and leaseback transaction between any companies of the Rio Tinto Group. It also does not apply to any lease with a term, including renewals, of three years or less. Further, the Indenture does not restrict the ability of any subsidiary (other than Rio Tinto Finance (USA) Limited and Rio Tinto Finance (USA) plc) to enter into sale and leaseback transactions. A substantial portion of our and Rio Tinto’s consolidated assets is held directly by subsidiaries and so would not be subject to the covenant restricting sale and leaseback transactions.

The covenant allows us to enter into sale and leaseback transactions in two additional situations. First, we may enter sale and leaseback transactions if we could grant a lien on the property in an amount equal to the indebtedness attributable to the sale and leaseback transaction without being required to grant an equivalent or higher-ranking lien to the holders of the debt securities under the restriction on liens described above.

Second, we may enter sales and leaseback transactions if, within one year of the transaction, we invest an amount equal to at least the net proceeds of the sale of the principal property that we lease in the transaction or the fair value of that property, whichever is greater. This amount must be invested in any of our property or used to retire indebtedness for money that we borrowed, incurred or assumed that either has a maturity of 12 months or more from the date of incurrence of the indebtedness or which may be extended beyond 12 months from that date at our and Rio Tinto’s option.

Defeasance and Covenant Defeasance

The following discussion of defeasance and discharge will be applicable to a series of debt securities only if the prospectus supplement applicable to the series so states.

Defeasance and Discharge

We, Rio Tinto plc and Rio Tinto Limited can legally release ourselves from any payment or other obligations on the debt securities, except for various obligations described below, if we, Rio Tinto plc or Rio Tinto Limited, in addition to other actions, put in place the following arrangements for you to be repaid:


•	We, Rio Tinto plc or Rio Tinto Limited must deposit in trust for the benefit of all other direct holders of the debt securities a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates.

•

We, Rio Tinto plc or Rio Tinto Limited must deliver to the trustee a legal opinion of counsel of recognized standing with respect to such matters confirming that either (A) there has been a change in U.S. federal income tax law or (B) we have received from, or there has been published by, the U.S. Internal Revenue Service a ruling in each case to the effect that we may make the above deposit without causing holders to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves.

However, even if we, Rio Tinto plc or Rio Tinto Limited take these actions, a number of our obligations relating to the debt securities will remain. These include the following obligations:


•	to register the transfer and exchange of debt securities;


•	to replace mutilated, destroyed, lost or stolen debt securities;


•	to maintain paying agencies; and


•	to hold money for payment in trust.

Covenant Defeasance

We, Rio Tinto plc or Rio Tinto Limited can be legally released from compliance with certain covenants, including those described under “— Restrictive Covenants” and any that may be described below and including the related Events of Default if we, Rio Tinto plc or Rio Tinto Limited, as the case may be, take all the steps described above under “— Defeasance and Discharge” except that the opinion of counsel does not have to refer to a change in U.S. federal income tax laws or a ruling from the U.S. Internal Revenue Service.

Further Issues

We may from time to time, without your consent, create and issue further notes having the same terms and conditions as the notes so that the further issue is consolidated and forms a single series with such notes, provided that such further issue constitutes a “qualified reopening” for U.S. federal income tax purposes or such further notes are issued with not more than a de minimis amount of original issue discount for U.S. federal income tax purposes.

Default and Related Matters

Ranking

The debt securities are not secured by any of our property or assets. Accordingly, holders of debt securities are unsecured creditors of Rio Tinto. The debt securities are not subordinated to any of our other debt obligations and therefore they rank equally with all our other unsecured and unsubordinated indebtedness.

Events of Default

Holders will have special rights if an event of default occurs and is not cured, as described later in this subsection.

What Is An Event of Default? The term event of default means any of the following:


•	Neither we, Rio Tinto plc nor Rio Tinto Limited pay the principal or any premium on a debt security and, in the case of technical or administrative difficulties, only if such failure to pay persists for more than three business days. As used here, a business day is a week day on which financial institutions in New York and the applicable place of payment are open for business.


•	Neither we, Rio Tinto plc nor Rio Tinto Limited pay interest or any additional amounts on a debt security within 30 days of its due date.


•	Neither we, Rio Tinto plc nor Rio Tinto Limited make a deposit of any applicable sinking fund payment within 30 days of its due date, or any applicable longer period of grace.

•

We, Rio Tinto plc or Rio Tinto Limited remain in breach of a covenant or any other term of the Indenture or series of debt securities for 90 days after we, Rio Tinto plc or Rio Tinto Limited, as the case may be, receive a notice of default stating we, Rio Tinto plc or Rio Tinto Limited are in breach. The notice must be sent by either the trustee or holders of 25% of the principal amount of debt securities of the affected series.

•

We, Rio Tinto plc or Rio Tinto Limited file for bankruptcy or certain other events in bankruptcy, insolvency or reorganization occur, unless, in the case of Rio Tinto plc or Rio Tinto Limited, the reorganization is a voluntary winding up carried out in accordance with English or Australian statutory requirements as applicable and which results in a legal entity that is liable under the guarantees, and which owns the assets of Rio Tinto plc or Rio Tinto Limited, respectively.


•	Our other borrowings in principal amount of at least U.S.$50,000,000 are accelerated by reason of a default and steps are taken to obtain repayment of these borrowings.


•	We fail to make a payment of principal of at least U.S.$50,000,000 or fail to honor any guarantee or indemnity with respect to borrowings of at least U.S.$50,000,000 and steps are taken to enforce either of these obligations.


•	Any mortgage, pledge or other charge granted by us in relation to any borrowing of at least U.S.$50,000,000 becomes enforceable and steps are taken to enforce the mortgage, pledge or other charge, as the case may be.


•	Any other event of default described in the prospectus supplement occurs.

Remedies If an Event of Default Occurs. If an event of default has occurred and has not been cured, the trustee or the holders of 25% in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be canceled by the holders of at least a majority in principal amount of the debt securities of the affected series if we, Rio Tinto plc or Rio Tinto Limited have paid the outstanding amounts, other than amounts due because of the acceleration of maturity, and we, Rio Tinto plc or Rio Tinto Limited have satisfied certain other conditions.

Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the Indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability. This protection is called an indemnity. If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in performing any other action under the Indenture.

Before bypassing the trustee and bringing a lawsuit or other formal legal action or taking other steps to enforce rights or protect interests relating to the debt securities, the following must occur:


•	The trustee must be given written notice that an event of default has occurred and remains uncured.


•	The holders of 25% in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default, and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action.


•	The trustee must have not taken action for 60 days after receipt of the above notice and offer of indemnity and the trustee has not received an inconsistent direction from the holders of a majority in principal amount of all outstanding debt securities during that period.

However, such limitations do not apply to a suit instituted for the enforcement of payment of the principal of or interest on a debt security on or after the respective due dates.

Street name and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and to make or cancel a declaration of acceleration.

We and Rio Tinto will furnish to the trustee every year a written statement of certain of our and Rio Tinto’s officers certifying that, to their knowledge, we and Rio Tinto are in compliance with the Indenture and the debt securities, or else specifying any default.

Regarding the Trustee

If an event of default occurs, or an event occurs that would be an event of default if the requirements for giving default notice or the default having to exist for a specific period of time were disregarded, the trustee may be considered to have a conflicting interest with respect to the debt securities for purposes of the Trust Indenture Act of 1939. In that case, the trustee may be required to resign as trustee under the applicable indenture and we would be required to appoint a successor trustee.

CLEARANCE AND SETTLEMENT

General

Debt securities we issue may be held through one or more international and domestic clearing systems. The principal clearing systems we will use are the book-entry systems operated by The Depository Trust Company, or DTC, in the United States, Clearstream Banking, société anonyme in Luxembourg (“Clearstream, Luxembourg”) and Euroclear SA/NV (“Euroclear”) in Brussels, Belgium. These systems have established electronic securities and payment transfer, processing, depositary and custodial links among themselves and others, either directly or through custodians and depositaries. These links allow securities to be issued, held and transferred among the clearing systems without the physical transfer of certificates.

Other Clearing Systems

We may choose any other clearing system for a particular series of debt securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement.

Primary Distribution

The distribution of debt securities will be cleared through one or more of the clearing systems that we have described above or any other clearing system that is specified in the applicable prospectus supplement. Payment for debt securities will be made on a delivery versus payment or free delivery basis. These payment procedures will be more fully described in the applicable prospectus supplement.

Clearance and settlement procedures may vary from one series of debt securities to another according to the currency that is chosen for the specific series of debt securities. Customary clearance and settlement procedures are described below.

We will submit applications to the relevant system or systems for the debt securities to be accepted for clearance. The clearance numbers that are applicable to each clearance system will be specified in the applicable prospectus supplement.

Clearance and Settlement Procedures — DTC

DTC participants that hold securities through DTC on behalf of investors will follow the settlement practices applicable to U.S. corporate debt obligations in DTC’s Same-Day Funds Settlement System.

Debt securities will be credited to the securities custody accounts of these DTC participants against payment in the same-day funds, for payments in U.S. dollars, on the settlement date. For payments in a currency other than U.S. dollars, securities will be credited free of payment on the settlement date.

Clearance and Settlement Procedures — Euroclear and Clearstream, Luxembourg

We understand that investors that hold their securities through Euroclear or Clearstream, Luxembourg accounts will follow the settlement procedures that are applicable to conventional Eurobonds in registered form.

Debt securities will be credited to the securities custody accounts of Euroclear and Clearstream, Luxembourg participants on the business day following the settlement date, for value on the settlement date. They will be credited either free of payment or against payment for value on the settlement date.

Secondary Market Trading

Trading between DTC Participants

We understand that secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC’s rules. Secondary market trading will be settled using procedures applicable to U.S. corporate debt obligations in DTC’s Same-Day Funds Settlement System.

If payment is made in U.S. dollars, settlement will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants involved.

Trading between Euroclear and/or Clearstream, Luxembourg Participants

We understand that secondary market trading between Euroclear and/or Clearstream, Luxembourg participants will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg. Secondary market trading will be settled using procedures applicable to conventional Eurobonds in registered form.

Trading between a DTC Seller and a Euroclear or Clearstream, Luxembourg Purchaser

A purchaser of debt securities that are held in the account of a DTC participant must send instructions to Euroclear or Clearstream, Luxembourg at least one business day prior to settlement. The instructions will provide for the transfer of the securities from the selling DTC participant’s account to the account of the purchasing Euroclear or Clearstream, Luxembourg participant. Euroclear or Clearstream, Luxembourg, as the case may be, will then instruct the common depositary for Euroclear and Clearstream, Luxembourg to receive the debt securities either against payment or free of payment.

Special Timing Considerations

You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving debt securities through Clearstream, Luxembourg and Euroclear on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.

In addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream, Luxembourg and Euroclear on the same business day as in the United States. U.S. investors who wish to transfer their interests in the debt securities, or to receive or make a payment or delivery of debt securities, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream, Luxembourg or Euroclear is used.

DESCRIPTION OF NOTES

The following description is a summary of each of our individual Notes and does not purport to be complete. It is subject to and qualified in its entirety by reference to the indenture dated 2 July 2001with The Bank of New York Mellon, as trustee, the Issuers and the Guarantors, as supplemented and amended dated as of 16 March 2012 and as supplemented by the First Supplemental Indenture dated 8 May 2017.

DESCRIPTION OF GUARANTEED 3.75% NOTES DUE 2015



Issuer	Rio Tinto Finance (USA) Limited
Notes Offered	U.S.$1,200,000,000 3.750% notes due 2025
Guarantees	Full and unconditional guarantees of the principal, interest, premium, if any, and any other additional amounts payable in respect of the notes.
Stated Maturity	June 15, 2025
Principal Amount of Notes Being Issued	U.S.$1,200,000,000
Issue Price	99.333%
Ranking	The notes and guarantees are not secured by any of our or Rio Tinto’s respective property or assets and will rank equally with all other unsecured and unsubordinated indebtedness. Since Rio Tinto plc and Rio Tinto Limited are holding companies and currently conduct their operations through subsidiaries, payments on the guarantees are effectively subordinated to the other liabilities of those subsidiaries.
Interest Rate	3.750%
Date Interest Starts Accruing	June 16, 2015
Interest Payment Dates	Semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2015
Business day convention	Following, Unadjusted
Day count fraction	30/360
Optional Redemption	The notes will be redeemable at our option or at the option of Rio Tinto plc and Rio Tinto Limited, in whole or in part, at any time. See “Description of Guaranteed Notes — Optional Redemption” above. Upon redemption, we will pay a redemption price equal to (i) if such redemption occurs prior to March 15, 2025, the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us or Rio Tinto, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus a spread of 25 basis points or (ii) if such redemption occurs on or after March 15, 2025, 100% of the principal amount of the notes to be redeemed, together, in either case, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. The “Comparable Treasury Issue” for purposes of the definition contained in “Description of Guaranteed Notes — Optional Redemption” will be the U.S. Treasury security selected by the quotation agents as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes to be redeemed.
Tax Redemption	In the event of various tax law changes that require us, Rio Tinto plc or Rio Tinto Limited to pay additional amounts and other limited circumstances, as described above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes for redemption at 100% of their aggregate principal amount plus accrued interest to the date of redemption.
Form of Notes; Clearance and Settlement	We will issue the notes in fully registered form. The notes will be represented by one or more global securities registered in the name of a nominee of DTC and deposited with The Bank of New York Mellon, as depositary. You will hold a beneficial interest in the notes through DTC in book-entry form. Indirect holders trading their beneficial interest in the notes through DTC must trade in DTC’s same-day funds settlement system and pay in immediately available funds. Secondary market trading through Euroclear and Clearstream, Luxembourg will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg.
Denomination	The notes will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof.
Trustee and Paying Agent	The Bank of New York Mellon
Listing	New York Stock Exchange.

General

We were offered U.S.$1,200,000,000 initial aggregate principal amount of 3.750% notes due 2025. Book-entry interests in the notes are issued, as described above in “Clearance and Settlement”, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000.

The notes bear interest 3.75%, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. Interest on the notes is computed on the basis of a 360-day year of twelve 30-day months. If any interest payment date (other than the maturity date) would otherwise be a day that is not a business day, the relevant interest payment date will be postponed to the next day that is a business day.

A “business day” means any day other than a day on which banks are permitted or required to be closed in London and New York, NY. The Indenture, the notes and the guarantees will be governed by New York law.

The notes are unsecured, unsubordinated indebtedness of Rio Tinto Finance (USA) Limited and rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

Rio Tinto plc and Rio Tinto Limited each unconditionally guarantee on an unsubordinated basis the due and punctual payment of the principal of and any premium and interest on the notes, when and as any such payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of the notes are unsecured, unsubordinated obligations of Rio Tinto plc and Rio Tinto Limited. The guarantees rank equally with all other unsecured and unsubordinated indebtedness of Rio Tinto plc and Rio Tinto Limited from time to time outstanding. Because Rio Tinto plc and Rio Tinto Limited are holding companies, the notes are effectively subordinated to any indebtedness of each of their subsidiaries.

The trustee is The Bank of New York Mellon. See “Description of Guaranteed Debt Securities — Default and Related Matters” above for a description of the trustee’s procedures and remedies available in the event of default.

The principal corporate trust office of the trustee in New York, NY, is currently designated as the principal paying agent. We may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.

Payment of principal of and interest on the notes, so long as the notes are represented by global securities, as discussed below, will be made in immediately available funds. Beneficial interests in the global securities are traded in the same-day funds settlement system of The Depository Trust Company, referred to as DTC, and secondary market trading activity in such interests are therefore settled in same-day funds.

Optional Redemption

We or Rio Tinto may redeem the notes in whole or in part, at our option or at the option of Rio Tinto plc and Rio Tinto Limited at any time and from time to time at a redemption price equal to (i) if such redemption occurs prior to March 15, 2025, the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus a spread of 25 basis points or (ii) if such redemption occurs on or after March 15, 2025, 100% of the principal amount of the notes to be redeemed, together, in either case, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply:

•

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity (computed as of the third business day immediately preceding that redemption date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date.


•	“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes.


•	“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us to act as the “Independent Investment Banker.”

•

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for that redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Banker for the notes obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.


•	“Reference Treasury Dealer” means each of Citigroup Global Markets Inc., Deutsche Bank Securities Inc., SG Americas Securities, LLC, HSBC Securities (USA) Inc., Mitsubishi UFJ Securities (USA), Inc., RBC Capital Markets, LLC and their

respective successors and one other nationally recognized investment banking firm that is a Primary Treasury Dealer specified from time to time by us, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York, NY (a “Primary Treasury Dealer”), we shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

•

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New York, NY time, on the third business day preceding that redemption date.

•

“Remaining Scheduled Payments” means, with respect to each note to be redeemed, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related redemption date but for such redemption, provided, however, that, if that redemption date is not an interest payment date with respect to such notes, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to that redemption date.

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. On and after any redemption date, interest will cease to accrue on the notes or any portion thereof called for redemption. On or before any redemption date, we shall deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued interest on the notes to be redeemed on such date. If less than all of the notes is to be redeemed, the notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and appropriate. The redemption price shall be calculated by the Independent Investment Banker and us, and the trustee and any paying agent for the notes shall be entitled to rely on such calculation.

Payment of Additional Amounts

All payments of principal, premium (if any) and interest in respect of the notes or the guarantees are made free and clear of, and without withholding or deduction for, any taxes, assessments, duties or governmental charges imposed, levied or collected by any jurisdiction in which we, Rio Tinto plc or Rio Tinto Limited, as the case may be, or any successor entity, are organized (or any political subdivision or taxing authority of or in that jurisdiction having power to tax). If withholding or deduction is required by law, we, Rio Tinto plc or Rio Tinto Limited, as the case may be, must, subject to certain exceptions, pay to each holder of the notes additional amounts as may be necessary in order that every net payment of principal of (and premium, if any, on) and interest on the notes after deduction or other withholding for or on account of any present or future tax, assessment, duty or other governmental charge, will not be less than the amount that would have been payable on the notes in the absence of such deduction or withholding. The requirement to pay additional amounts and the exceptions thereto are discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”.

Tax Redemption

In the event of various tax law changes and other limited circumstances that require us, Rio Tinto plc or Rio Tinto Limited to pay additional amounts as described above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes for redemption. This means we may repay the notes early. Our ability to redeem the notes is discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Optional Tax Redemption.” If we call the notes as a result of such tax law changes, we must pay 100% of their principal amount (including any additional amounts). We will also pay the holders accrued interest if we have not otherwise paid interest through the redemption date (including any additional amounts). Notes will stop bearing interest on the redemption date, even if the holders do not collect their money.

Notice of Redemption

In either of the situations discussed above, we will give notice to DTC of any redemption we propose to make at least 30 days, but not more than 60 days, before the redemption date. Notice by DTC to participating institutions and by these participants to street name holders of indirect interests in the notes will be made according to arrangements among them and may be subject to statutory or regulatory requirements.

Defeasance and Discharge

We may release ourselves from any payment or other obligations on the notes as described above under “Description of Guaranteed Debt Securities — Defeasance and Covenant Defeasance — Defeasance and Discharge”.

DESCRIPTION OF GUARANTEED 4.125% NOTES DUE 2042



Issuer	Rio Tinto Finance (USA) plc
Notes Offered	U.S.$750,000,000 4.125% notes due 2042
Guarantees	Full and unconditional guarantees of the principal, interest, premium, if any, and any other additional amounts payable in respect of the notes are given by Rio Tinto plc and Rio Tinto Limited.
Stated Maturity	August 21, 2042
Principal Amount of Notes Being Issued	U.S.$750,000,000
Issue Price	97.346%
Ranking	The notes and guarantees are not secured by any of our or Rio Tinto’s respective property or assets and will rank equally with all other unsecured and unsubordinated indebtedness. Since Rio Tinto plc and Rio Tinto Limited are holding companies and currently conduct their operations through subsidiaries, payments on the guarantees are effectively subordinated to the other liabilities of those subsidiaries.
Interest Rate	4.125%
Date Interest Starts Accruing	August 21, 2012
Interest Payment Dates	Semi-annually in arrears on February 21 and August 21 of each year, commencing February 21, 2013.
First Interest Payment Date	February 21, 2013
Optional Redemption	Each series of notes will be redeemable at our option or at the option of Rio Tinto plc and Rio Tinto Limited, in whole or in part, at any time. See “Description of Guaranteed Notes — Optional Redemption” above. Upon redemption, we will pay a redemption price equal to (i) the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us or Rio Tinto, the sum of the present values of the remaining scheduled payments of principal and interest on the relevant series of notes (excluding any interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus a spread of 25 basis points in the case of the 2042 notes or (ii) if such redemption occurs on or after February 21, 100% of the principal amount of the notes to be redeemed, together, in each case, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. The “Comparable Treasury Issue” for purposes of the definition contained in “Description of Guaranteed Notes — Optional Redemption” will be the U.S. Treasury security selected by the quotation agents as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes to be redeemed.
Tax Redemption	In the event of various tax law changes that require us, Rio Tinto plc or Rio Tinto Limited to pay additional amounts and other limited circumstances, as described under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes of each series for redemption at 100% of their aggregate principal amount plus accrued interest to the date of redemption.
Form of Notes; Clearance and Settlement	We will issue the notes in fully registered form. The notes will be represented by one or more global securities registered in the name of a nominee of DTC and deposited with The Bank of New York Mellon, as depositary. You will hold a beneficial interest in the notes through DTC in book-entry form. Indirect holders trading their beneficial interest in the notes through DTC must trade in DTC’s same-day funds settlement system and pay in immediately available funds. Secondary market trading through Euroclear and Clearstream, Luxembourg will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg.
Denomination	The notes will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof.
Trustee and Paying Agent	The Bank of New York Mellon
Listing	New York Stock Exchange

General

We offered U.S.$750,000,000 initial aggregate principal amount of 4.125% notes due 2042. Book-entry interests in the notes are issued, as described above in “Clearance and Settlement”, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at 4.125%, payable semi-annually in arrears on February 21 and August 21 of each year, commencing February 21, 2013. The regular record dates for payments of interest are February 6 and August 6. Interest on the notes are computed on the basis of a 360-day year of twelve 30-day months. A “business day” means any day other than a day on which banks are permitted or required to be closed in London and New York, NY. The Indenture, the notes and the guarantees will be governed by New York law.

The notes are unsecured, unsubordinated indebtedness of Rio Tinto Finance (USA) plc and rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

Rio Tinto plc and Rio Tinto Limited each unconditionally guarantee on an unsubordinated basis the due and punctual payment of the principal of and any premium and interest on the notes, when and as any such payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of the notes are unsecured, unsubordinated obligations of Rio Tinto plc and Rio Tinto Limited. The guarantees rank equally with all other unsecured and unsubordinated indebtedness of Rio Tinto plc and Rio Tinto Limited from time to time outstanding. Because Rio Tinto plc and Rio Tinto Limited are holding companies, the notes will effectively be subordinated to any indebtedness of each of their subsidiaries.

The trustee is The Bank of New York Mellon. See “Description of Guaranteed Debt Securities—Default and Related Matters” for a description of the trustee’s procedures and remedies available in the event of default.

Payment of principal of and interest on the notes, so long as the notes are represented by global securities, as discussed above, are immediately available funds. Beneficial interests in the global securities are traded in the same-day funds settlement system of The Depository Trust Company, referred to as DTC, and secondary market trading activity in such interests are therefore settled in same-day funds.

Optional Redemption

We or Rio Tinto may redeem any series of notes in whole or in part, at our option or at the option of Rio Tinto plc and Rio Tinto Limited at any time and from time to time at a redemption price equal to (i) if such redemption occurs prior February 21, 2042, the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us or Rio Tinto, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus a spread of 25 basis points, or (ii) if such redemption occurs on or after February 21, 2042, 100% of the principal amount of the notes to be redeemed, together, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply:

•


•	“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the relevant series of notes.


•	“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us to act as the “Independent Investment Banker.”

•

“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding that redemption date, as set forth in the daily statistical release designated H.15 (519) (or any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for that redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Banker for the notes obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.

•

“Reference Treasury Dealer” means each of HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, RBS Securities Inc., BNP Paribas Securities Corp., RBC Capital Markets, LLC, SG Americas Securities, LLC, Standard Chartered Bank and their respective successors and one other nationally recognized investment banking firm that is a Primary Treasury Dealer specified from time to time by us, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York, NY (a “Primary Treasury Dealer”), we shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

•

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. On and after any redemption date, interest will cease to accrue on the notes or any portion thereof called for redemption. On or before any redemption date, we shall deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued interest on the notes to be redeemed on such date. If less than all of a series of notes is to be redeemed, the notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and appropriate. The redemption price shall be calculated by the Independent Investment Banker and us, and the trustee and any paying agent for the notes shall be entitled to rely on such calculation.

Payment of Additional Amounts

All payments of principal, premium (if any) and interest in respect of the notes or the guarantees are free and clear of, and without withholding or deduction for, any taxes, assessments, duties or governmental charges imposed, levied or collected by any jurisdiction in which we, Rio Tinto plc or Rio Tinto Limited, as the case may be, or any successor entity, is organized (or any political subdivision or taxing authority of or in that jurisdiction having power to tax). If withholding or deduction is required by law, we, Rio Tinto plc or Rio Tinto Limited, as the case may be, must, subject to certain exceptions, pay to each holder of the notes additional amounts as may be necessary in order that every net payment of principal of (and premium, if any, on) and interest on the notes after deduction or other withholding for or on account of any present or future tax, assessment, duty or other governmental charge, will not be less than the amount that would have been payable on the notes in the absence of such deduction or withholding. The requirement to pay additional amounts and the exceptions thereto are discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”.

Tax Redemption

In the event of various tax law changes that require us, Rio Tinto plc or Rio Tinto Limited to pay additional amounts and other limited circumstances, as described above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the relevant series of notes for redemption. This means we may repay that series of notes early. Our ability to redeem the notes is discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Optional Tax Redemption.” If we call a series of notes as a result of such tax law changes, we must pay 100% of their principal amount (including any additional amounts). We will also pay the holders accrued interest if we have not otherwise paid interest through the redemption date (including any additional amounts). Notes will stop bearing interest on the redemption date, even if the holders do not collect their money.

Defeasance and Discharge

DESCRIPTION OF GUARANTEED 4.750% NOTES DUE 2042



Issuer	Rio Tinto Finance (USA) plc
Notes Offered	U.S.$500,000,000 4.750% notes due 2042
Guarantees	Full and unconditional guarantees of the principal, interest, premium, if any, and any other additional amounts payable in respect of the notes are given by Rio Tinto plc and Rio Tinto Limited.
Stated Maturity	March 22, 2042
Principal Amount of Notes Being Issued	2042 notes: U.S.$500,000,000
Issue Price	98.599%
Ranking	The notes and guarantees are not secured by any of our or Rio Tinto’s respective property or assets and will rank equally with all other unsecured and unsubordinated indebtedness. Since Rio Tinto plc and Rio Tinto Limited are holding companies and currently conduct their operations through subsidiaries, payments on the guarantees are effectively subordinated to the other liabilities of those subsidiaries.
Interest Rate	4.750%
Date Interest Starts Accruing	March 22, 2012
Interest Payment Dates	Semi-annually in arrears on March 22 and September 22 of each year, commencing September 22, 2012
First Interest Payment Date	September 22, 2012
Optional Redemption	at our option or at the option of Rio Tinto plc and Rio Tinto Limited, in whole or in part, at any time. See “Description of Guaranteed Notes — Optional Redemption”. Upon redemption, we will pay a redemption price equal to (i) the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us or Rio Tinto, the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (excluding any interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus a spread of 25 basis points or (ii) if such redemption occurs on or after September 22, 2041, 100% of the principal amount of the notes to be redeemed, together, in each case, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. The “Comparable Treasury Issue” for purposes of the definition contained in “Description of Guaranteed Notes — Optional Redemption” will be the U.S. Treasury security selected by the quotation agents as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes to be redeemed.
Tax Redemption	In the event of various tax law changes and other limited circumstances that require us to pay additional amounts as described under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes of each series for redemption at 100% of their aggregate principal amount plus accrued interest to the date of redemption.
Form of Notes; Clearance and Settlement	We will issue the notes in fully registered form. The notes will be represented by one or more global securities registered in the name of a nominee of DTC and deposited with The Bank of New York Mellon, as depositary. You will hold a beneficial interest in the notes through DTC in book-entry form. Indirect holders trading their beneficial interest in the notes through DTC must trade in DTC’s same-day funds settlement system and pay in immediately available funds. Secondary market trading through Euroclear and Clearstream, Luxembourg will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg.
Denomination	The notes will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof.
Trustee and Paying Agent	The Bank of New York Mellon
Listing	New York Stock Exchange

General

We offered U.S.$500,000,000 initial aggregate principal amount of 4.750% notes due 2042. Book-entry interests in the notes are issued, as described in “Clearance and Settlement”, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at the applicable rate per annum of 4.750%, payable semi-annually in arrears on March 20 and September 20 of each year, commencing September 22, 2012. The regular record dates for payments of interest is March 7 and September 7. Interest on the notes is computed on the basis of a 360-day year of twelve 30-day months. A “business day” means any day other than a day on which banks are permitted or required to be closed in London and New York, NY. The Indenture, the notes and the guarantees will be governed by New York law.

The notes are unsecured, unsubordinated indebtedness of Rio Tinto Finance (USA) plc and rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

Rio Tinto plc and Rio Tinto Limited each unconditionally guarantee on an unsubordinated basis the due and punctual payment of the principal of and any premium and interest on the notes, when and as any such payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of the notes are unsecured, unsubordinated obligations of Rio Tinto plc and Rio Tinto Limited. The guarantees rank equally with all other unsecured and unsubordinated indebtedness of Rio Tinto plc and Rio Tinto Limited from time to time outstanding. Because Rio Tinto plc and Rio Tinto Limited are holding companies, the notes will effectively be subordinated to any indebtedness of each of their subsidiaries.

The trustee will be The Bank of New York Mellon. See “Description of Guaranteed Debt Securities—Default and Related Matters” for a description of the trustee’s procedures and remedies available in the event of default.

Payment of principal of and interest on the notes, so long as the notes are represented by global securities, as discussed above, will be made in immediately available funds. Beneficial interests in the global securities will trade in the same-day funds settlement system of The Depository Trust Company, referred to as DTC, and secondary market trading activity in such interests will therefore settle in same-day funds.

Optional Redemption

We or Rio Tinto may redeem any series of notes in whole or in part, at our option or at the option of Rio Tinto plc and Rio Tinto Limited at any time and from time to time. In the case of the 2042 notes, upon redemption, we will pay a redemption price equal to (i) if such redemption occurs prior to September 22, 2041, the greater of (x) 100% of the principal amount of the notes to be redeemed and (y) as certified to the trustee by us or Rio Tinto, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus a spread of 25 basis points, or (ii) if such redemption occurs on or after September 22, 2041, 100% of the principal amount of the notes to be redeemed, together, with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply:

•


•	“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the relevant series of notes.


•	“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us to act as the “Independent Investment Banker.”

•

“Reference Treasury Dealer” means each of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, ANZ Securities Inc., Credit Agricole Securities (USA) Inc., Mitsubishi UFJ Securities (USA), Inc., SG Americas Securities, LLC and their respective successors and one other nationally recognized investment banking firm that is a Primary Treasury Dealer specified from time to time by us, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York, NY (a “Primary Treasury Dealer”), we shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

•

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. On and after any redemption date, interest will cease to accrue on the notes or any portion thereof called for redemption. On or before any redemption date, we shall deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued interest on the notes to be redeemed on such date. If less than all of a series of notes is to be redeemed, the notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and appropriate. The redemption price shall be calculated by the Independent Investment Banker and us, and the trustee and any paying agent for the notes shall be entitled to rely on such calculation.

Payment of Additional Amounts

All payments of principal, premium (if any) and interest in respect of the notes or the guarantees will be made free and clear of, and without withholding or deduction for, any taxes, assessments, duties or governmental charges imposed, levied or collected by any jurisdiction in which we, Rio Tinto plc or Rio Tinto Limited, as the case may be, or any successor entity, is organized (or any political subdivision or taxing authority of or in that jurisdiction having power to tax). If withholding or deduction is required by law, we, Rio Tinto plc or Rio Tinto Limited, as the case may be, must, subject to certain exceptions, pay to each holder of the notes additional amounts as may be necessary in order that every net payment of principal of (and premium, if any, on) and interest on the notes after deduction or other withholding for or on account of any present or future tax, assessment, duty or other governmental charge, will not be less than the amount that would have been payable on the notes in the absence of such deduction or withholding. The requirement to pay additional amounts and the exceptions thereto are discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”.

Tax Redemption

In the event of various tax law changes other limited circumstances that require us, Rio Tinto plc or Rio Tinto Limited, to pay additional amounts as described above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, the notes for redemption. This means we may repay the notes early. Our ability to redeem the notes is discussed above under “Description of Guaranteed Debt Securities — Special Situations — Optional Tax Redemption.” If we call the notes as a result of such tax law changes, we must pay 100% of their principal amount (including any additional amounts). We will also pay the holders accrued interest if we have not otherwise paid interest through the redemption date (including any additional amounts). Notes will stop bearing interest on the redemption date, even if the holders do not collect their money.

Defeasance and Discharge

DESCRIPTION OF GUARANTEED 5.20% NOTES DUE 2040



Issuer	Rio Tinto Finance (USA) Limited
Notes Offered	U.S.$500,000,000 5.20% notes due 2040 U.S.$300,000,000 5.20% notes due 2040 U.S.$350,000,000 5.20% notes due 2040
Guarantees	Full and unconditional guarantees of the principal, interest, premium, if any, and any other additional amounts payable in respect of the notes are given by Rio Tinto plc and Rio Tinto Limited.
Stated Maturity	November 2, 2040
Principal Amount of Notes Being Issued	U.S.$1,150,000,000
Issue Price	99.940% (for U.S.$500,000,000) 98.091% plus accrued interest of U.S.$780,000 for the period from May 2, 2011 to, but not including, May 20, 2011 (for U.S.$300,000,000) 102.285% plus accrued interest of U.S.$6,926,111.11 for the period from May 2, 2011 to, but not including, September 19, 2011 (for U.S.$350,000,000)
Ranking	The notes and guarantees are not secured by any of our or Rio Tinto’s respective property or assets and will rank equally with all other unsecured and unsubordinated indebtedness. Since Rio Tinto plc and Rio Tinto Limited are holding companies and currently conduct their operations through subsidiaries, payments on the guarantees are effectively subordinated to the other liabilities of those subsidiaries.
Interest Rate	5.200%
Date Interest Starts Accruing	November 2, 2010 (for U.S.$500,000,000) May 2, 2011 (for U.S.$300,000,000 and U.S.$350,000,000) May 2, 2011 (for U.S.$500,000,000)
Interest Payment Dates	May 2 and November 2 of each year, commencing November 2, 2011
First Interest Payment Date	May 2, 2011 (for U.S.$500,000,000) November 2, 2011 (for U.S.$300,000,000 and U.S.$350,000,000)
Optional Make-Whole Redemption	Each series of notes will be redeemable at our option or at the option of Rio Tinto plc and Rio Tinto Limited, in whole or in part, at any time. See “Description of Guaranteed Notes — Optional Make-Whole Redemption”. Upon redemption, we will pay a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) as certified to the trustee by us or Rio Tinto, the sum of the present values of the remaining scheduled payments of principal and interest on the relevant series of notes (excluding any interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus a spread of 20 basis, together with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. The “Comparable Treasury Issue” for purposes of the definition contained in “Description of Guaranteed Notes — Optional Make-Whole Redemption” will be the U.S. Treasury security selected by the quotation agents as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the notes to be redeemed.
Tax Redemption	In the event of various tax law changes and other limited circumstances that require us to pay additional amounts as described under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes of each series for redemption at 100% of their aggregate principal amount plus accrued interest to the date of redemption.
Form of Notes; Clearance and Settlement	We will issue the notes in fully registered form. The notes will be represented by one or more global securities registered in the name of a nominee of DTC and deposited with The Bank of New York Mellon, as depositary. You will hold a beneficial interest in the notes through DTC in book-entry form. Indirect holders trading their beneficial interest in the notes through DTC must trade in DTC’s same-day funds settlement system and pay in immediately available funds. Secondary market trading through Euroclear and Clearstream, Luxembourg will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg.



Denomination	The notes will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof.
Further Issues	We may from time to time without your consent create and issue further notes having the same terms and conditions as any series of notes so that the further issue is consolidated and forms a single series with such series of notes, provided that such further issue constitutes a “qualified reopening” for U.S. federal income tax purposes or such further notes are issued with not more than a de minimis amount of original issue discount for U.S. federal income tax purposes.
Trustee and Paying Agent	The Bank of New York Mellon
Listing	New York Stock Exchange.

General

We offered U.S.$500,000,000 initial aggregate principal amount of 5.200% notes due 2040. Book-entry interests in the notes are issued, as described in “Clearance and Settlement” above, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at 5.200% per annum, payable semi-annually in arrears on May 2 and November 2 of each year, commencing May 2, 2011. The regular record dates for payments of interest are April 17 and October 17.

We offered U.S.$300,000,000 initial aggregate principal amount of 5.200% notes due 2040. Book-entry interests in the notes are issued, as described in “Clearance and Settlement” above, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at the of 5.200% per annum, payable semi-annually in arrears on May 20 and November 20 of each year, commencing November 2, 2011. The regular record dates for payments of interest are April 17 and November 17.

We offered U.S.$350,000,000 initial aggregate principal amount of 5.200% notes due 2040. Book-entry interests in the notes are issued, as described in “Clearance and Settlement” above, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at the rate of 5.200% per annum, payable semi-annually in arrears on March 20 and September 20 of each year, commencing November 2, 2011. The regular record dates for payments of interest will be April 17 and October 17.

Interest on the notes will be computed on the basis of a 360-day year of twelve 30-day months. A “business day” means any day other than a day on which banks are permitted or required to be closed in London and New York, NY. The Indenture, the notes and the guarantees will be governed by New York law.

The notes are be unsecured, unsubordinated indebtedness of Rio Tinto Finance (USA) Limited and rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

Rio Tinto plc and Rio Tinto Limited each unconditionally guarantee on an unsubordinated basis the due and punctual payment of the principal of and any premium and interest on the notes, when and as any such payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of the notes are unsubordinated obligations of Rio Tinto plc and Rio Tinto Limited. The guarantees rank equally with all other unsecured and unsubordinated indebtedness of Rio Tinto plc and Rio Tinto Limited from time to time outstanding. Because Rio Tinto plc and Rio Tinto Limited are holding companies, the notes are effectively subordinated to any indebtedness of each of their subsidiaries.

The trustee will be The Bank of New York Mellon. See “Description of Guaranteed Debt Securities— Default and Related Matters” above for a description of the trustee’s procedures and remedies available in the event of default.

Payment of principal of and interest on the notes, so long as the notes are represented by global securities, as discussed above, are made in immediately available funds. Beneficial interests in the global securities are traded in the same-day funds settlement system of The Depository Trust Company, referred to as DTC, and secondary market trading activity in such interests are therefore settled in same-day funds.

Optional Make-Whole Redemption

We may redeem any series of notes in whole or in part, at our option or at the option of Rio Tinto plc and Rio Tinto Limited at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) as certified to the trustee by us or Rio Tinto, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at

the Treasury Rate plus a spread of 20 basis points, together with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply:

•

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi- annual equivalent yield to maturity (computed as of the third business day immediately preceding that redemption date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date.


•	“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the relevant series of notes.


•	“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us to act as the “Independent Investment Banker.”

•

“Reference Treasury Dealer” means each of J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., RBS Securities Inc., Morgan Stanley & Co. Incorporated, RBC Capital Markets, LLC, SG Americas Securities, LLC and their respective successors and one other nationally recognized investment banking firm that is a Primary Treasury Dealer specified from time to time by us, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York, NY (a “Primary Treasury Dealer”), we shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

•

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. On and after any redemption date, interest will cease to accrue on the notes or any portion thereof called for redemption. On or before any redemption date, we shall deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued interest on the notes to be redeemed on such date. If less than all of a series of notes is to be redeemed, the notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and appropriate. The redemption price shall be calculated by the Independent Investment Banker and us, and the trustee and any paying agent for the notes shall be entitled to rely on such calculation.

Payment of Additional Amounts

All payments of principal, premium (if any) and interest in respect of the notes or the guarantees are made free and clear of, and without withholding or deduction for, any taxes, assessments, duties or governmental charges imposed, levied or collected by any jurisdiction in which we, Rio Tinto plc or Rio Tinto Limited, as the case may be, or any successor entity, is organized (or any political subdivision or taxing authority of or in that jurisdiction having power to tax). If withholding or deduction is required by law, we, Rio Tinto plc or Rio Tinto Limited, as the case may be, must, subject to certain exceptions, pay to each holder of the notes additional amounts as may be necessary in order that every net payment of principal of (and premium, if any, on) and interest on the notes after deduction or other withholding for or on account of any present or future tax, assessment, duty or other governmental charge, will not be less than the amount that would have been payable on the notes in the absence of such deduction or withholding. The requirement to pay additional amounts and the exceptions thereto are discussed in greater detail above under “Description of Guaranteed Debt Securities—Special Situations—Payment of Additional Amounts”.

Tax Redemption

In the event of various tax law changes and other limited circumstances that require us, Rio Tinto plc or Rio Tinto Limited, to pay additional amounts as described under “Description of Guaranteed Debt Securities—Special Situations—Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the relevant series of notes for redemption. This means we may repay that series of notes early. Our ability to redeem the notes is discussed in greater detail under “Description of Guaranteed Debt Securities—Special Situations—Optional Tax Redemption.” If we call a series of notes as a result of such tax law changes, we must pay 100% of their principal amount (including any additional amounts). We will also pay the holders accrued interest if we have not otherwise paid interest through the redemption date (including any additional amounts). Notes will stop bearing interest on the redemption date, even if the holders do not collect their money.

Defeasance and Discharge

We may release ourselves from any payment or other obligations on the notes as described under “Description of Guaranteed Debt Securities—Defeasance and Covenant Defeasance—Defeasance and Discharge”.

Further Issues

We may from time to time without your consent create and issue further notes having the same terms and conditions as the notes so that the further issue is consolidated and forms a single series with such notes, provided that such further issue constitutes a “qualified reopening” for U.S. federal income tax purposes or such further notes are issued with not more than a de minimis amount of original issue discount for U.S. federal income tax purposes.

DESCRIPTION OF GUARANTEED 7.125%NOTES DUE 2028



Issuer	Rio Tinto Finance (USA) Limited
Notes Offered	U.S.$750,000,000 7.125% notes due 2028
Guarantees	Full and unconditional guarantees of the principal, interest, premium, if any, and any other additional amounts payable in respect of the notes are given by Rio Tinto plc and Rio Tinto Limited.
Stated Maturity	July 15, 2028
Principal Amount of Notes Being Issued	U.S.$750,000,000
Issue Price	99.319%
Ranking	The notes and guarantees are not secured by any of our or Rio Tinto’s respective property or assets and will rank equally with all other unsecured and unsubordinated indebtedness. Since Rio Tinto plc and Rio Tinto Limited are holding companies and currently conduct their operations through subsidiaries, payments on the guarantees are effectively subordinated to the other liabilities of those subsidiaries.
Interest Rate	7.125%
Date Interest Starts Accruing	June 27, 2008
Interest Payment Dates	Semi-annually in arrear on January 15 and July 15 of each year, commencing January 15, 2009.
First Interest Payment Date	January 15, 2009
Optional Make-Whole Redemption	The notes will be redeemable at our option or at the option of Rio Tinto plc and Rio Tinto Limited, in whole or in part, at any time. See “Description of Guaranteed Notes — Optional Make-Whole Redemption”. Upon redemption, we will pay a redemption price equal to the greater of (i) 100% of the principal amount of the notes plus accrued interest to the date of redemption and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the relevant series of notes (excluding any interest accrued as of the date of redemption). The present value will be determined by discounting the remaining principal and interest payments to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the Treasury Rate (as defined below) plus a spread of 40 basis points. The “Comparable Treasury Issue” for purposes of the definition contained in “Description of Guaranteed Notes — Optional Make-Whole Redemption” will be the U.S. Treasury security selected by the quotation agents as having a maturity comparable to the remaining term of the relevant series of notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the relevant series of notes.
Tax Redemption	In the event of various tax law changes and other limited circumstances that require us to pay additional amounts as described under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the relevant series of notes for redemption at 100% of their principal amount plus accrued interest to the date of redemption.
Change of Control	If a Change of Control Repurchase Event (as defined in “Description of the Guaranteed Notes — Change of Control Repurchase Event”) occurs, unless the notes are otherwise subject to redemption in accordance with their terms and we have elected to exercise our right to redeem the notes, we will make an offer to each holder comprising that series to repurchase all or any part (in integral multiples of U.S.$1,000) of that holder’s notes at a repurchase price in cash equal to 101% of the aggregate principal amount of notes repurchased plus any accrued and unpaid interest on the notes repurchased to the date of repurchase.
Form of Notes; Clearance and Settlement	We will issue the notes in fully registered form. The notes will be represented by one or more global securities registered in the name of a nominee of DTC and deposited with The Bank of New York Mellon, as depositary. You will hold a beneficial interest in the notes through DTC in book-entry form. Indirect holders trading their beneficial interest in the notes through DTC must trade in DTC’s same-day funds settlement system and pay in immediately available funds. Secondary market trading through Euroclear and Clearstream, Luxembourg will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg.
Denomination	The notes will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof.



Further Issues	We may from time to time without your consent create and issue further notes having the same terms and conditions as any series of notes so that the further issue is consolidated and forms a single series with such series of notes, provided that such further issue constitutes a “qualified reopening” for U.S. federal income tax purposes or such further notes are issued with not more than a de minimis amount of original discount for U.S. federal income tax purposes.
Trustee and Paying Agent	The Bank of New York Mellon
Listing	New York Stock Exchange.

General

We offered U.S.$750,000,000 initial aggregate principal amount of 7.125% notes due 2028. Book-entry interests in the notes are issued, as described in “Clearance and Settlement”, in minimum denominations of U.S.$2,000 and in integral multiples of U.S.$1,000. The notes bear interest at the applicable rate per annum of 7.125%, payable semi-annually in arrears on January 15 and July 15 of each year, commencing January 15, 2009. The regular record dates for payments of interest are January 1 and July 1. Interest on the notes are be computed on the basis of a 360-day year of twelve 30-day months. A “business day” means any day other than a day on which banks are permitted or required to be closed in London and New York, NY. The notes and guarantees will be governed by New York law.

The notes are unsecured, unsubordinated indebtedness of Rio Tinto Finance (USA) Limited and rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding.

The trustee is The Bank of New York (as successor to JP Morgan Chase Bank, formerly The Chase Manhattan Bank). See “Description of Guaranteed Debt Securities — Default and Related Matters” for a description of the trustee’s procedures and remedies available in the event of default.

Optional Make-Whole Redemption

We or Rio Tinto may redeem any series of notes in whole or in part, at our option or at the option of Rio Tinto plc and Rio Tinto Limited at any time and from time to time at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) as certified to the trustee by us or Rio Tinto, the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus a spread of 40 basis points, together with accrued interest on the principal amount of the notes to be redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply:

•

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi- annual equivalent yield to maturity (computed as of the third business day immediately preceding that redemption date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date.


•	“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the relevant series of notes.


•	“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by us to act as the “Independent Investment Banker.”

•

“Reference Treasury Dealer” means each of Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, Credit Suisse Securities (USA) LLC and Greenwich Capital Markets, Inc. and their respective successors and one other nationally recognized investment banking firm that is a Primary Treasury Dealer specified from time to time by us, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York, NY (a “Primary Treasury Dealer”), we shall substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.

•

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. On and after any redemption date, interest will cease to accrue on the relevant series of notes or any portion thereof called for redemption. On or before any redemption date, we shall deposit with a paying agent (or the trustee) money sufficient to pay the redemption price of and accrued interest on the series of notes to be redeemed on such date. If less than all of a series of notes are to be redeemed, the notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and appropriate. The redemption price shall be calculated by the Independent Investment Banker and us, and the trustee and any paying agent for the notes shall be entitled to rely on such calculation.

Payment of Additional Amounts

All payments of principal and interest in respect of the notes or the guarantees are made free and clear of, and without withholding or deduction for, any taxes, assessments, duties or governmental charges. If withholding or deduction is required by law, we, Rio Tinto plc or Rio Tinto Limited, as the case may be, must, subject to certain exceptions, pay to each holder of the notes additional amounts as may be necessary in order that every net payment of principal of and interest on the notes after deduction or other withholding for or on account of any present or future tax, assessment, duty or other governmental charge, will not be less than the amount that would have been payable on the notes in the absence of such deduction or withholding. The requirement to pay additional amounts is discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”.

Tax Redemption

In the event of various tax law changes and other limited circumstances that require us to pay additional amounts as described under “Description of Guaranteed Debt Securities — Special Situations — Payment of Additional Amounts”, we, Rio Tinto plc or Rio Tinto Limited may call all, but not less than all, of the notes for redemption. This means we may repay that series of notes early. Our ability to redeem the notes is discussed in greater detail above under “Description of Guaranteed Debt Securities — Special Situations — Optional Tax Redemption.” If we call a series of notes as a result of such tax law changes, we must pay 100% of their principal amount. We will also pay the holders accrued interest if we have not otherwise paid interest through the redemption date. Notes will stop bearing interest on the redemption date, even if the holders do not collect their money.

Change of Control Repurchase Event

If a Change of Control Repurchase Event (as defined below) occurs, unless the notes are otherwise subject to redemption in accordance with their terms and we have elected to exercise our right to redeem the notes, we will make an offer to each holder comprising that series to repurchase all or any part (in integral multiples of U.S.$1,000) of that holder’s notes at a repurchase price in cash equal to 101% of the aggregate principal amount of notes repurchased plus any accrued and unpaid interest on the notes repurchased to the date of repurchase. Within 30 days following any Change of Control Repurchase Event or, at our option, prior to any Change of Control (as defined below), but after the public announcement of an impending Change of Control, we will mail a notice to each holder, with a copy to the trustee, describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to repurchase is conditional on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice.

We will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the notes, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Repurchase Event provisions of the notes by virtue of such conflict. On the Change of Control Repurchase Event payment date, we will, to the extent lawful:


•	accept for payment all notes or portions of notes (in integral multiples of U.S.$1,000) properly tendered pursuant to our offer;


•	deposit with the trustee an amount equal to the aggregate repurchase price in respect of all notes or portions of notes properly tendered; and


•	deliver or cause to be delivered to the trustee the notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of notes being purchased by us.

The trustee will promptly mail to each holder of notes properly tendered the repurchase price for such notes, provided that it has received such repurchase price from us, and the trustee will promptly at our direction authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of any notes surrendered; provided that each new note will be in a principal amount of U.S.$1,000 or an integral multiple of U.S.$1,000 in excess thereof. We will not be required to make an offer to repurchase the notes upon a Change of Control Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by us, and such third party purchases all notes properly tendered and not withdrawn under its offer.

“Below Investment Grade Rating Event” means the notes are rated below Investment Grade by each of the Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event set out below) if each Rating Agency making the reduction in rating to which this definition would otherwise apply does not announce or publicly confirm or inform us or the trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

“Change of Control” means the occurrence of any of the following:


•	the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Rio Tinto plc or Rio Tinto Limited to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than one or more members of the Rio Tinto Group;

•

the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) at any time directly or indirectly own(s) or acquire(s) such proportion of the issued or allotted ordinary share capital of Rio Tinto plc or Rio Tinto Limited which shall, or, if such transaction involves the conversion or exchange of such share capital for cash, securities or other property, such proportion of share capital of, or other relevant economic interest in, the surviving entity as a result of such transaction as shall, in aggregate, be entitled to exercise or direct the exercise of more than 50% of the rights to vote to elect members of the board of directors of Rio Tinto plc and Rio Tinto Limited or such surviving entity, provided that:

•

for the avoidance of doubt, no Change of Control shall occur solely as a result of either of Rio Tinto plc or Rio Tinto Limited and/or any of its subsidiaries at any time owning or acquiring the relevant proportion of the issued or allotted ordinary share capital of Rio Tinto Limited or Rio Tinto plc, respectively, but in such circumstances whether or not a Change of Control shall occur whether in relation to such event or thereafter shall be determined by reference to:


•	the Collapsed DLC Test; or


•	the test set out in this sub-paragraph immediately preceding this proviso applied solely to whichever of Rio Tinto plc or Rio Tinto Limited owns (whether directly or through one or more of its subsidiaries) the relevant proportion of the issued or allotted ordinary share capital of Rio Tinto Limited or Rio Tinto plc, and

•

no Change of Control shall be deemed to occur if all or substantially all of the holders of the issued or allotted ordinary share capital or other relevant economic interests of the relevant person or, as the case may be, surviving entity immediately after the event which would otherwise have constituted a Change of Control were the holders of the issued or allotted ordinary share capital of each or either of Rio Tinto plc or Rio Tinto Limited with the same (or substantially the same) pro rata economic interests in the share capital or relevant economic interests of the relevant person or, as the case may be, surviving entity, as such shareholders had in the issued or allotted ordinary share capital of each or either of Rio Tinto plc or Rio Tinto Limited, respectively, immediately prior to such event; or


•	the first day on which a majority of the members of the board of directors of either Rio Tinto plc or Rio Tinto Limited are not Continuing Directors.

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

The “Collapsed DLC Test” shall be deemed to be satisfied if any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) at any time directly or indirectly own(s) or acquire(s) more than 50% of the issued or allotted ordinary share capital of whichever of Rio Tinto plc or Rio Tinto Limited owns (whether directly or through one or more of its subsidiaries) the relevant proportion of the issued or allotted ordinary share capital of Rio Tinto Limited or Rio Tinto plc, respectively.

“Continuing Directors” means, as of any date of determination, any member of the board of directors of either of Rio Tinto plc or Rio Tinto Limited who (1) was a member of such board on the date of the issuance of the guarantee by either entity; or (2) was nominated for election, appointed or elected to such board with the approval of a majority of the Continuing Directors who were members of such board at the time of such nomination, appointment or election.

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) and a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); or the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by us.

“Moody’s” means Moody’s Investors Service Inc. and its successors.

“Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by us as a replacement agency for Moody’s or S&P, as the case may be.

“Rio Tinto Group” means Rio Tinto plc and Rio Tinto Limited and their respective subsidiaries taken as a whole.

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc. and its successors.

Defeasance and Discharge

We may release ourselves from any payment or other obligations on the notes as described under “Description of Guaranteed Debt Securities — Defeasance and Covenant Defeasance — Defeasance and Discharge”.

Exhibit 8.1

List of subsidiary companies

At 31 December 2019

The principal operating subsidiary companies of the Rio Tinto Group are listed in Note 33 to the 2019 Financial statements. The principal intermediate holding companies and group finance companies are as follows:



Company and country of incorporation	Principal activities	Class of shares held	Proportion of class held	Group interest
			%	%
Australia
Australian Coal Holdings Pty. Limited	Holding company	AUD A shares	100	100
Hamersley Holdings Limited	Holding company	AUD Ordinary shares	100	100
North IOC Holdings Pty Ltd	Holding company	AUD Ordinary shares	100	100
North Limited	Holding company	AUD Ordinary shares	100	100
Pacific Aluminium Pty. Limited	Holding company	AUD Ordinary shares	100	100
Peko-Wallsend Pty Ltd	Holding company	AUD Ordinary shares	100	100
Rio Tinto Finance Limited	Finance company	AUD Ordinary shares	100	100
Rio Tinto Finance (USA) Limited	Finance company	AUD Ordinary shares	100	100
Rio Tinto Investments One Pty Limited	Holding company	AUD Ordinary shares	100	100
Rio Tinto Investments Two Pty Limited	Holding company	AUD Ordinary shares	100	100
Robe River Limited	Holding company	AUD Ordinary shares	100	100

Bermuda
North IOC (Bermuda) Holdings Limited	Holding company	US$1.00 Ordinary shares	100	100
North IOC (Bermuda) Limited	Holding company	US$1.00 Ordinary shares	100	100
		US$100,000.00 Preferred shares	100	100
	US$143.64 Class A Ordinary shares (US$143.64126903)		100	100
QIT Madagascar Minerals Ltd.	Holding company	US$1.00 Ordinary shares	100	100

Canada
46117 Yukon Inc.	Holding company	CAD Common shares	100	100
		CAD Preferred shares	100	100
535630 Yukon Inc.	Holding company	CAD Common shares	100	100
		CAD Preferred shares	100	100
7999674 Canada Inc.	Holding company	CAD Common shares	100	100
Rio Tinto Canada Inc	Holding company	CAD Class B shares	100	100
		CAD Class C shares	100	100
		CAD Class D shares	100	100
		CAD Class J shares	100	100
		CAD Class K shares	100	100
Rio Tinto Diamonds and Minerals Canada Holdings Inc.	Holding company	CAD Class A shares	100	100
		CAD Class B shares	100	100
		CAD Class C shares	100	100
		CAD Class P1 Preferred shares	100	100

Netherlands
Rio Tinto Eastern Investments B.V.	Holding company	€453.78 Ordinary shares	100	100

South Africa
Richards Bay Mining Holdings (Proprietary) Limited	Holding company	ZAR1.00 A Ordinary shares	100	100
		ZAR1.00 B Ordinary shares	100	100
Richards Bay Titanium Holdings (Proprietary) Limited	Holding company	ZAR1.00 A Ordinary shares	100	100
		ZAR1.00 B Ordinary shares	100	100

United Kingdom
Rio Tinto European Holdings Limited	Holding company	£1.00 Ordinary shares	100	100

Exhibit 8.1



Rio Tinto Finance plc	Finance company	£1.00 Ordinary shares	100	100
		US$1.00 Ordinary shares	100	100
Rio Tinto Finance (USA) plc	Finance company	£1.00 Ordinary shares	100	100
Rio Tinto International Holdings Limited	Holding company	£1.00 Ordinary shares	100	100
Rio Tinto Simfer UK Limited	Holding company	US$1.00 Ordinary shares	100	100
Rio Tinto Western Holdings Limited	Holding company	£1.00 Ordinary shares	100	100
		US$1.00 Ordinary shares	100	100

United States of America
Rio Tinto America Holdings Inc.	Holding company	US$0.01 Class A Common shares	100	100
		US$100.00 Series A Preferred Stock	100	100
Rio Tinto America Inc.	Holding company	US$100.00 Common shares	100	100
Rio Tinto Minerals Inc.	Holding company	US$0.01 Common shares	100	100
Kennecott Holdings Corporation	Holding company	US$0.01 Common shares	100	100

Exhibit 12.1

CERTIFICATION

I, Jean-Sebastien Jacques, certify that:


1.	I have reviewed this annual report on Form 20-F of Rio Tinto plc (“the Company”);


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;


4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the Company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and


5.	The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Jean-Sebastien Jacques

Chief Executive

Date: 28 February 2020

CERTIFICATION

I, Jakob Stausholm, certify that:


1.	I have reviewed this annual report on Form 20-F of Rio Tinto plc (“the Company”);


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;


4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the Company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and


5.	The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Jakob Stausholm

Chief Financial Officer

Date: 28 February 2020

CERTIFICATION

I, Jean-Sebastien Jacques, certify that:


1.	I have reviewed this annual report on Form 20-F of Rio Tinto Limited (“the Company”);


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;


4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the Company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and


5.	The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Jean-Sebastien Jacques

Chief Executive

Date: 28 February 2020

CERTIFICATION

I, Jakob Stausholm, certify that:


1.	I have reviewed this annual report on Form 20-F of Rio Tinto Limited (“the Company”);


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;


4.	The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the Company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and


5.	The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarise and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Jakob Stausholm

Chief Financial Officer

Date: 28 February 2020

Exhibit 13.1

Certification

Pursuant to Rule 13a-14(b) of the Exchange Act

Pursuant to Rule 13a-14(b) of the Exchange Act and Section 1350 of chapter 63 of Title 18, United States Code, each of the undersigned officers of Rio Tinto plc, registered in England and Wales (the “Company”), hereby certifies, to such officer’s knowledge, that:

The Annual Report on Form 20-F for the year ended 31 December 2019 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.



/s/ Jean-Sebastien Jacques		/s/ Jakob Stausholm

Name:	Jean-Sebastien Jacques	Name:	Jakob Stausholm
Title:	Chief Executive	Title:	Chief Financial Officer

Date:	28 February 2020	Date:	28 February 2020

The foregoing certification is not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference in any filing under the Securities Act.

Certification

Pursuant to Rule 13a-14(b) of the Exchange Act

Pursuant to Rule 13a-14(b) of the Exchange Act, each of the undersigned officers of Rio Tinto Limited, registered in Victoria, Australia, (the “Company”), hereby certifies, to such officer’s knowledge, that:



/s/ Jean-Sebastien Jacques		/s/ Jakob Stausholm

Name:	Jean-Sebastien Jacques	Name:	Jakob Stausholm
Title:	Chief Executive	Title:	Chief Financial Officer

Date:	28 February 2020	Date:	28 February 2020

The foregoing certification is not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference with any filing under the Securities Act.

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

We hereby consent to the incorporation by reference in the Registration Statement on Form F-3 (No 333-217778) and in the Registration Statements on Form S-8 (Nos. 333-184397, 333-147914, 333-156093, 333-224907, 333-202546, 333-202547) of Rio Tinto Plc and Rio Tinto Ltd of our reportdated 28 February 2020 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20‑F.



/s/ PricewaterhouseCoopers LLP	/s/ PricewaterhouseCoopers
PricewaterhouseCoopers LLP	PricewaterhouseCoopers
London, United Kingdom	Melbourne, Australia
28 February 2020	28 February 2020

Annual report 2019

Our purpose As pioneers in mining and metals, we produce materials essential to human progress

Contents Strategic report Our business 2019 at a glance 4 Chairman’s statement 6 Chief Executive’s statement 10 Financial statements Our business model 14 Our values 15 Group income statement 146 Strategic context 16 Group statement of comprehensive income 147 Our stakeholders 18 Group cash flow statement 148 Our strategy 20 Group balance sheet 149 Key performance indicators 22 Group statement of changes in equity 150 Chief Financial Officer’s statement 27 Reconciliation with Australian Accounting Standards 151 Financial review 29 Outline of dual listed companies structure and basis Portfolio management 38 of financial statements 151 Notes to the 2019 financial statements 152 Business reviews Rio Tinto financial information Iron Ore 40 by business unit 252 Aluminium 44 Copper and Diamonds 48 Energy and Minerals 52 Production, reserves and operations Growth and Innovation 56 Commercial 58 Metals and minerals production 270 Ore reserves 273 Sustainability 60 Mines and production facilities 282 Risk report Additional information Risk management 71 Principal risks and uncertainties 74 Independent limited assurance report Five-year review 81 – Sustainability 290 Shareholder information 292 Contact details 299 Directors’ report Cautionary statement about forward-looking statements 300 Governance Board of Directors 84 Executive Committee 86 Chairman’s governance review 88 How the Board works 90 Matters discussed in 2019 91 Our stakeholders 92 For this Annual report on Form 20-F, certain pages have been omitted. Board effectiveness 94 The Form 20-F is consistent with the page numbering of the Evaluating our performance 96 Annual report. Nominations Committee report 98 Audit Committee report 100 Sustainability Committee report 104 Compliance with governance codes and standards 106 Remuneration report Annual statement by the Remuneration Committee Chairman 110 Remuneration at a glance 113 Implementation report 116 Additional statutory disclosure 139

Our strategy is to create superior value for shareholders by meeting our customers’ needs, maximising cash from our world-class assets and allocating capital with discipline. Image to be retouched 2019 financial highlights $21.2bn $7.2bn underlying EBITDA total dividends declared $10.4bn $3.7bn underlying earnings net debt $9.2bn 24% free cash flow return on capital employed (ROCE)

Strategic report Our business Traditional owners near Amrun, 2019 at a glance 4 our newest bauxite mine in Queensland, Australia. Chairman’s statement 6 Chief Executive’s statement 10 Our business model 14 Our values 15 Strategic context 16 Our stakeholders 18 Our strategy 20 Key performance indicators 22 Chief Financial Officer’s statement 27 Financial review 29 Portfolio management 38 Business reviews Iron Ore 40 Aluminium 44 Copper and Diamonds 48 Energy and Minerals 52 Growth and Innovation 56 Commercial 58 Sustainability 60 Risk report Risk management 71 Principal risks and uncertainties 74 Five-year review 81 2 Annual report 2019 | riotinto.com

Image to be retouched Strategic report Strategic Annual report 2019 | riotinto.com 3

Strategic report 2019 at a glance Our business comprises a portfolio of world-class assets that generate strong cash flows through the cycle. Group highlights $14.9bn 50% net cash generated from operating activities total shareholder return (% over five years) (2018: $11.8bn) (2018: 33%) 636 US cents 0.42 underlying earnings per share all injury frequency rate (AIFR) (2018: 512 US cents) (2018: 0.44) 443 US cents 46% total dividend per share reduction in absolute emissions (2018: 550 US cents) (since 2008, managed operations) A train travels through the Pilbara region of Western Australia, home to our iron ore business. 4 Annual report 2019 | riotinto.com

2019 at a glance Strategic report Strategic �ro�� r��n�� Pilbara managed iron ore operations Fe 16 4 1,700 4 Iron Ore km Iron ore is the primary component of steel. In the mines ports rail power Pilbara region of Western Australia, we have a network plants world-class, integrated portfolio of iron ore assets as well as certain salt assets; we are one of the leading contributors to the seaborne market. Our �n��r��in� quality product suite, including our flagship Pilbara Production* (100% basis) �� Blend™of iron ore, is well positioned to benefit from continued demand across China, Japan and 326.7mt other markets. $24.1bn $16.1bn iron ore (2018: $18.7bn) (2018: $11.4bn) (2018: 337.8mt) �ro�� r��n�� Managed and non-managed operations Al 4 14 4 7 Aluminium Aluminium is one of the world’s fastest-growing mines smelters refineries hydro major metals. Lightweight and recyclable, it is found power in everything from jet engines to electric vehicles to plants smartphones. Our vertically integrated aluminium portfolio spans from high-quality bauxite mines to �n��r��in� alumina refineries to smelters which, in Canada, are Production* (our share) �� powered entirely by clean, renewable energy and located in the first decile of the cost curve. 55.1mt 3,171kt $10.3bn $2.3bn bauxite aluminium (2018: $12.2bn) (2018: $3.1bn) (2018: 50.4mt) (2018: 3,231kt) �ro�� r��n�� Managed and non-managed operations Cu 5 1 3 Copper and Diamonds Copper plays a key role in electrification and power mines smelter power generation, including in renewable energy and plants electric vehicles. Our operations span the globe, from Mongolia to the US, and occupy various stages of the mining lifecycle. Our two diamond mines in �n��r��in� Australia and Canada make us one of the largest Production* (our share) �� producers, and our white and coloured diamonds are some of the world’s most sought-after gems. 577kt $5.8bn $2.1bn mined copper (2018: $6.5bn) (2018: $2.8bn) (2018: 608kt) �ro�� r��n�� Managed operations Ti, B, Fe 6 7 5 3 Energy and Minerals Our Energy and Minerals product group comprises mines processing ports projects materials essential to a wide variety of industries, facilities including renewable energy and agriculture. We produce titanium dioxide, borates, high-grade iron ore pellets and concentrate and uranium. Production* (our share) �n��r��in� Our Ventures division is also exploring growth �� opportunities in battery metals. 1,206kt 10.5mt titanium dioxide iron ore pellets and # $5.2bn $1.8bn slag concentrates (2018: $5.5bn) (2018: $2.1bn) (2018: 1,116kt) (2018: 9.0mt) * To allow production numbers to be compared on a like-for-like basis, we have excluded production from asset divestments completed in 2018 from our share of prior year production data. The financial data above includes the results of divested assets up to the date of sale. # Year on year decrease attributable to divestments. Annual report 2019 | riotinto.com 5

Strategic report 6 Annual report 2019 | riotinto.com

“We aim to achieve and 2019 highlights report Strategic maintain industry- Our value over volume strategy, capital discipline, and strong markets leading safety and for some of our key commodities enabled us to deliver a robust financial sustainability performance in 2019. �ota� �i�i�e�� ec�are� ��ear or�i�ar� �i�i�e�� performance, per ��are operational excellence, �� ci�� i�i��n� ��.��n �� capital discipline and �� or�in�r� �i�i��n� the financial strength ��.��n �� to invest throughout �� the cycle, while �� providing superior �� returns to our shareholders.” $7.2bn 382 US cents (2018: $13.5bn) Simon Thompson per share Chairman (2018: 307 US cents per share) 26 February 2020 $10.4bn $45.1bn underlying earnings direct economic contribution Shareholder returns policy Our shareholder returns policy balances We expect total cash returns to shareholders three factors: to be in the range of 40-60% of underlying –– Maintaining a strong balance sheet earnings through the cycle. For our –– Investing for future growth shareholder returns policy, see page 36. –– Directly rewarding shareholders Annual report 2019 | riotinto.com 7

Strategic report Chairman’s statement Rio Tinto produces Mining is a highly competitive, capital- and In order to develop future growth options, including energy-intensive, long-cycle industry that has the Resolution copper project in the US and the materials essential major impacts, both positive and negative, on Winu copper-gold exploration project in Australia, society and the environment. To deliver long-term, in 2019, we boosted exploration and evaluation to human progress. sustainable success, we need to meet or surpass expenditure from $488 million to $624 million. our customers’ expectations; invest in developing There is hardly any the skills and capabilities of our people and the Sustainability productive capacity of our assets; build mutually In parallel with this report, we have published our aspect of modern life beneficial relationships with our suppliers and second report on climate change, which has been technology partners; protect the environment; guided by the recommendations of the Taskforce that our products do bring lasting social and economic benefits to our on Climate-related Financial Disclosure (TCFD). local communities and host governments; and The report includes our new 2030 targets to reduce not touch, and our reward our shareholders. our emissions intensity by 30% and our absolute emissions by 15% from 2018 levels. To deliver these 46,000 employees We aim to achieve and maintain industry-leading targets, we will spend approximately $1 billion over safety and sustainability performance, operational five years in climate-related projects, and research work hard – every excellence, capital discipline and the financial and development. We also report on progress in strength to invest throughout the cycle, while developing a feasible pathway towards our longer shift, every day providing superior returns to our shareholders. term ambition of net zero emissions by 2050. In 2019, I am pleased to report that your company – to safely fulfil has made good progress in all of these areas. The mining and metals value chain includes numerous “hard to abate” sectors, such as our purpose. Performance aluminium smelting, steel making and shipping, Safety is our top priority. In 2019, all of our safety where there are significant technological and performance indicators improved and we had zero economic hurdles to the development of viable fatalities. This is an outstanding achievement that decarbonisation pathways. In order to address reflects years of hard work and commitment by these challenges, we have established a number of the leadership team and all of our employees and technology partnerships that collectively represent suppliers. But we are not complacent, and we know a fundamental pillar of our sustainability strategy. that we now need to sustain this success. However, there are limits to what business can achieve alone. Enabling regulation, such as Overall, the operating performance of the Group carbon pricing, is essential to incentivise the was satisfactory, despite a number of challenges decarbonisation of these sectors, together with during the year, and our value over volume measures to maintain the competitiveness of strategy, capital discipline, and strong markets trade-exposed industries. Urgent, coordinated for some of our key commodities enabled us to government action is therefore needed to deliver a robust financial performance in 2019. encourage such investment within the timeframe required by the Paris Agreement. Underlying earnings increased to $10.4 billion (2018: $8.8 billion), underlying EBITDA rose to We have also made good progress in other areas $21.2 billion (2018: $18.1 billion), representing an of sustainability. For example, we have continued underlying EBITDA margin of 47% (2018: 42%), to promote industry-leading practices in tax and free cash flow amounted to $9.2 billion (2018: transparency by publishing our mineral $7.0 billion). As a result, we were able to maintain development contracts and the beneficial our strong balance sheet, while maintaining our ownership of our managed and non-managed joint track record of superior returns to shareholders. ventures. We believe that such transparency helps The Board has recommended a final ordinary to build trust and will result in better social and dividend of 231 US cents per share, taking total economic outcomes over the long term. dividends declared to shareholders announced this year to $7.2 billion. Tax payments and economic contribution In 2019, we paid $4.5 billion in corporate taxes to We continue to invest in high-return projects to governments around the world, helping our host sustain and grow our production capacity, including governments to provide vital services to their in our iron ore operations in Australia and the citizens and to pursue their development goals. Kennecott copper mine in the US. We also continue Our direct economic contribution to the to make progress with the Oyu Tolgoi underground communities in which we operate – including development in Mongolia, one of the most complex community investment, development capital projects in the world today. contributions and payments to landowners – was $45.1 billion. While the monetary amount is clearly significant, equally important are the opportunities we have created for many thousands of people and local businesses to grow and to prosper. 8 Annual report 2019 | riotinto.com

Chairman’s statement Engagement The Board report Strategic As expectations continue to increase about the This year, the Board bid farewell to Ann Godbehere role of business in society, it is vital that the Board and Dame Moya Greene, who stepped down as hears first hand from stakeholders about their non-executive directors in May and June, perceptions of our performance and the opportunities respectively. I am delighted to welcome Hinda and challenges that lie ahead. This year, we held Gharbi, Jennifer Nason and Ngaire Woods, who join civil society roundtables in Australia, Canada and the Board in 2020. We look forward to benefiting the US. The discussions focused on climate change from their insights and expertise in natural and the environment, industry lobbying and our resources, finance, technology, governance and impact on the communities in which we operate. public policy. We have already acted on much of the valuable feedback that we received at these events – for A look ahead example, by engaging with industry associations in Looking ahead, we continue to face significant Australia and elsewhere on climate change policy; geopolitical uncertainties and we are currently intensifying our focus on delivering our water evaluating the impact of the Covid-19 virus on our monitoring and resettlement compensation business as we enter a new decade, I am pleased commitments to herders in Mongolia; and seeking to say Rio Tinto continues to be well positioned to to improve how we communicate our environmental create long-term, sustainable value for all of performance to the local community and civil our stakeholders. society in Madagascar. We also engaged with customers and suppliers, commissioning a customer attitudes’ survey and inviting a major supplier and technology partner to present their views of Rio Tinto to the Board. Simon Thompson Board members continue to engage with Rio Tinto Chairman employees around the world. Almost 500 people 26 February 2020 attended our second “Employee AGM” in Montreal and individual Board members held smaller town halls in Australia, Madagascar, Singapore, South Africa and the US. The most frequent topics raised by employees in the Q&A sessions at these events related to sustainability, culture and behaviours, and technological change, emphasising the importance that our employees attach to our performance in these critical areas. Some examples of how engagement with our employees has shaped the Board’s thinking and decision- making can be found on pages 92 and 93. Visits to our sites and global hubs are one of the most rewarding parts of my job as Chairman and I am always impressed by the pride and commitment of our employees and the extraordinary scope of the innovations taking place across the Group. I would like to thank J-S, the leadership team and all of our employees for their hard work and dedication over the year, and to congratulate them on their achievements. We look forward to meeting many of our shareholders at our annual general meetings in April and May 2020, in London and Brisbane, respectively. In addition to routine matters, we will be asking shareholders to approve the appointment of KPMG as our new auditors from 1 January 2020. Annual report 2019 | riotinto.com 9

Strategic report 10 Annual report 2019 | riotinto.com

“2019 marked another 2019 highlights report Strategic year of strong financial This year, we continued to invest in our business and to strengthen our performance. With portfolio, aiming to ensure our business remains strong and resilient well a strong balance into the future. sheet and continuing All �n�ur� �re�uen�� rate �A�� n�erl��n� ��A �� investment in high- �� .�� value growth, Rio Tinto �� .�� is well-positioned to be �� .�� resilient and to thrive.” �� .�� J-S Jacques Chief Executive 2019 0��2 �� 26 February 2020 0.42 $21.2bn per 200,000 hours worked (2018: $18.1bn) (2018: 0.44) $10.4bn $9.2bn underlying earnings free cash flow $14.9bn 24% net cash generated from return on capital employed (ROCE) operating activities Annual report 2019 | riotinto.com 11

Strategic report Chief Executive’s statement Over the past years, With a strong balance sheet and our continuing In our Energy and Minerals (E&M) product group, investment in high-value growth, sustainability and a favourable pricing environment, combined with our aim has been workforce capabilities, we are well positioned to be improved operational performance, contributed to resilient, and to thrive, in a new era of complexity. strong results. In 2019, E&M delivered underlying constant: to deliver EBITDA of $1.8 billion, 41% higher than 2018 I am grateful to our employees and partners (excluding divested coal assets). superior shareholder around the world who made our success possible, particularly in safety. As I look back on our Portfolio value and contribute performance in 2019, I am most proud of our teams’ This year, we continued to strengthen our portfolio efforts here. We improved our all injury frequency by increasing investment in high-value growth to society as we rate (AIFR), which was 0.42 this year (down from projects to ensure our business remains strong 0.44 in 2018), reflecting lower severity rates. We and resilient well into the future. produce the materials also ended the year with no fatalities and improved process safety performance. While this is a In December, for example, we announced a essential to modern meaningful achievement, we know we cannot be $1.5 billion investment at our Kennecott copper complacent; we will continue to make safety our mine in Utah, in the US, which will serve to extend life. Our strong focus number one priority, with the aim of sending operations to 2032. In November, we announced everyone home safely at the end of every shift, a $749 million investment in our Greater Tom Price on generating cash every day. operations, in the Pilbara, to help sustain the production capacity of our iron ore business. from our world-class Performance In April, we announced we would sustain current 2019 marked another year of strong financial capacity and extend the life of our Richards Bay assets allows us to do performance for our company, driven by favourable Minerals operation through the investment of iron ore pricing and stronger operational $463 million in the Zulti South project. After a exactly this. performance in the second half of the year. number of security incidents, construction of this project is currently on hold; we will assess We delivered underlying EBITDA of $21.2 billion restarting construction after operations normalise. and an underlying EBITDA margin of 47%. Operating cash flow for the year was $14.9 billion, In April, we committed $302 million of additional free cash flow was $9.2 billion and we ended the expenditure to advance the Resolution Copper year with net debt of $3.7 billion – a strong project in Arizona, in the US, to fund additional 0.42 balance sheet supports our resilience and drilling, orebody studies, infrastructure all injury frequency rate (AIFR) provides optionality. improvements and permitting activities as the project moves to the final stage of permitting. As a result, we were able to announce a record final ordinary dividend of $3.7 billion, or 231 US cents At the Oyu Tolgoi underground copper and gold per share, bringing the full year ordinary dividend mine, in Mongolia, we completed the primary 47% to 382 US cents per share. In total, we announced production shaft – a key milestone – in October Group underlying EBITDA margin $7.2 billion in cash returns to shareholders this 2019. Work continues on the mine design and, year, bringing the total returns declared since 2016 overall, we remain within the cost and schedule to $36 billion. ranges announced in July 2019. We continue to expect to complete the mine design in the first half From an operational perspective, in the first half of 2020 and the definitive estimate of cost and $3.7bn of this year we experienced some challenges in schedule in the second half of 2020. net debt our iron ore business in the Pilbara, in Western Australia, which we proactively addressed, closing To create options for future growth, this year also the year with solid production momentum. Overall, saw us maintain our industry-leading investment shipments for the year were 3% lower than in 2018, in exploration. In 2019, we invested $624 million primarily due to these operational challenges and in 69 programmes in seven commodities across weather-related incidents. Despite this, our Pilbara 17 countries, with copper remaining the focus. For iron ore operations delivered a 72% underlying free example, we were pleased that our Winu copper- on board (FOB) EBITDA margin in 2019. gold exploration project, in Western Australia, had some early success; we ended 2019 with phase 2 In aluminium, this year the market recorded drilling well underway. significant price decreases in alumina and aluminium. Despite these challenges, our We also continued our work to make our portfolio aluminium business maintained its position as the as efficient as possible, in part through the use of sector leader, delivering an EBITDA margin of 26% technology and innovation, including automation. from integrated operations and a 21% increase in We begin 2020 with a fleet of 183 autonomous third-party bauxite sales. trucks, which, in the Pilbara, cost 15% less to operate than an equivalent manned truck. Rio Tinto In copper, our 2019 operational performance was is also home to the world’s largest autonomous affected by lower grades at all operations, which we drill fleet – 26 drills – which this year, in our Pilbara partly offset by higher throughput and productivity iron ore business, unlocked a 25% increase in improvements. Our average realised copper price productivity and a 40% improvement in equipment for the year was down 7% compared to 2018; in utilisation. AutoHaul™, our automated rail network 2019, the London Metal Exchange (LME) recorded a decline of 8%. 12 Annual report 2019 | riotinto.com

Chief Executive’s statement in Western Australia, also continues to play an To continue to improve our performance, we plan With $20 billion of capital expenditure planned report Strategic important role in increasing efficiency; to date, it to spend approximately $1 billion over the next five over the next three years, we will continue has increased capacity by 10mt, a figure we expect years in climate-related projects, research and disciplined investment in our business, renewing to see increase with further optimisation. development, partnerships and other activities to many of our operations through the replacement enhance the climate resilience of our business. For of mines and major equipment and by investing Partners example, in early 2020, we announced a $98 million in growth, notably at Oyu Tolgoi. Once again this year, our focus on partnership investment to build a 34 MW solar plant at our new continued and intensified – we are very clear that Koodaideri iron ore mine in the Pilbara, alongside Sustainability and partnership will remain no business can have sustainable, meaningful a lithium-ion battery energy storage system. The important priorities and indeed, will play an impact on its own. Partnership is a core enabler of plant and battery will limit our annual carbon dioxide increasingly important role across all aspects of our sustainability strategy, and I was very pleased emissions by about 90,000 tonnes (compared to our business. And our promise to our employees with our progress in forming new, innovative conventional gas-powered generation). This is the and contractors – to do everything we can to connections across the value chain. equivalent of taking about 28,000 cars off the road. keep them safe, healthy, and equipped to meet this new era’s challenges and opportunities – For example, recognising that students need the People is as strong as ever. skills to keep pace with a rapidly changing world, This year, I again spent a significant amount of we launched an innovative partnership in Australia time with our employees, visiting 17 assets and And our purpose – to produce materials essential with leading start-up accelerator BlueChilli and each of our global hubs and satellite offices. Over to human progress – will guide our company into Amazon Web Services. Our collective aim is to the course of the year, I held more than 30 town what promises to be an exciting future. fast-track the development of skills needed for halls and small group discussions in 20 locations. the digital future, including critical thinking, I continue to be impressed by our employees’ problem-solving, automation, systems design energy, creativity and ambition, and am proud of and data analytics. Rio Tinto will invest $7 million the efforts we have made to strengthen our culture (A$10 million) in this four-year national and improve innovation, world-class technical J-S Jacques programme, which will crowd-source ideas from talent and commercial capability. All three are Chief Executive other start-ups as well as schools and universities. critical to our success, today and into the future. 26 February 2020 And in Canada, we signed a historic agreement We continued building our innovation culture with the Innu community of Ekuanitshit. Named through initiatives like our Pioneering Pitch “Uauitshitun,” or “mutual support” in the Innu programme, in which our employees are language, the agreement is designed to generate encouraged to come up with new, creative ideas economic development opportunities in a variety of on how to strengthen and improve our business, ways. For example, we will support Innu businesses and then pitch them to a panel of Rio Tinto judges, by providing health and safety training and improving who award up to $250,000 and expert support to their competitiveness in the procurement process. implement the best of them. In 2019, thanks to our $1bn We will also partner in other areas such as environment, employees’ ingenuity, Pioneering Pitch identified to be spent in climate-related projects land stewardship, and traditional practices and $35 million in potential benefit to our business. education, through pre-employment vocational training and school programmes. We also strengthened the technical capability of our employees, including by expanding our Centres We also strengthened our commitment to climate of Excellence (CoEs) from three to eight. Our CoEs change, which has been part of our strategic pool the company’s technical expertise in areas Investing thinking for well over two decades. Since 2008, such as tailings, geotechnical engineering and we have reduced absolute emissions from our process and underground mining safety, allowing managed operations by 46% (18% excluding our experts to collaborate more effectively while A$10m divestments). Today, 76% of our electricity also providing our operations with an easy to in building skills for the digital future consumption at managed operations is supplied access, ready resource. RioExcel, our programme from renewable energy. Most of our operations now for recognising and promoting our technical in Australia have significantly lower carbon intensities than experts, also continued to progress, with 50 sector averages. We announced new climate and employees taking part in 2019. environmental partnerships in 2019, including our initiative with China Baowu Steel Group, our A look ahead customer in China, and Tsinghua University. We As we end one decade and begin another, our believe it is important to work with our customers focus will remain on delivering our value over and suppliers to help support mutual goals to volume strategy, and striving to ensure our reduce emissions and strengthen the resilience company remains strong, resilient and able to of our businesses. deliver superior returns to shareholders in the short, medium and long term. In 2020, we set a new ambition: to reach net zero emissions across our operations by 2050. We also This year, we did significant work on developing set new targets – to reduce our emissions intensity scenarios to help us understand what we need to by 30% and our absolute emissions by 15%, both by do to thrive in this era of increasing complexity. Our 2030 and from 2018 levels. And overall, our growth focus on innovation, operational and commercial between now and 2030 will be carbon neutral. excellence, as well as high-value growth, will be key. Annual report 2019 | riotinto.com 13

Strategic report Our business model Our ability to create value is underpinned by the quality of our assets, the capability of our people, our operational performance, innovative partnerships and disciplined capital allocation. Explore and evaluate Explore We use some of the most advanced exploration technologies in the world to find potential and new sources of minerals and metals. And we consider new products and operations with an understanding of customers’ and communities’ needs. We are also mindful of the future: evaluate our environmental impact as well as the diversity and balance of our portfolio. Develop and innovate We assess each potential operation with a focus on risk, potential returns, and long-term Develop sustainability and value. Once we have approved an investment, we design and build each operation. We aim to develop every potential site to achieve optimal, long-term productivity and while minimising risks. innovate We work in partnership with a growing network of stakeholders – governments, communities, customers and suppliers – who help expand our thinking, understanding, capabilities and, ultimately, our ability to deliver mutual benefit. Mine and process A safe site is a productive site, and advanced technologies are playing a more important Mine role in how we achieve both. We share best practices across our assets to create safe, and environmentally responsible working practices and a high-performing culture that targets process production at lower costs. At the same time, our operations aim to benefit local economies by contributing jobs, taxes and royalties, contracts with local businesses, and social and community investment. By understanding and respecting our business partners, employees, communities and the environment, we can create sustainable value for all our stakeholders. Market Market and deliver Our minerals and metals are used in a vast array of everyday products – from cars to coffee and pods to smartphones. Our commercial team ensure that we manage our products in line deliver with market and customer needs. And our network of rail, ports and ships means that we can control end-to-end logistics to deliver our products safely, efficiently and reliably. Repurpose and renew We aim to design and run our assets to create a positive legacy once our mining activity Repurpose concludes. Applying this approach could entail rehabilitating the land for a nature reserve, for example, or repurposing it for light industrial use. Each of our sites has rehabilitation and renew plans that we review every year. We see this long-term approach – planning and operating with the future in mind – as integral to running a safe, responsible and profitable business. Disciplined capital allocation Disciplined Our business is underpinned by a disciplined approach to capital allocation; we strive to capital allocation use every dollar prudently. Today, our balance sheet is a key strength, providing a resilient platform for strong and consistent shareholder returns, as well as enabling us to invest throughout the commodity cycle. 14 Annual report 2019 | riotinto.com

Our values Strategic report Strategic Our values reflect our commitment to the safety, rights and wellbeing of our employees, the integrity of our business and supply chain, and respect for the environment. Safety Caring for human life and wellbeing above everything else We make the safety and wellbeing of our employees, contractors and communities our number one priority. Always. Safely looking after the environment is an essential part of our care for future generations. Teamwork Collaborating for success We work together with colleagues, partners and communities globally to deliver the products our customers need. We learn from each other to improve our performance and achieve success. Respect Fostering inclusion and embracing diversity We recognise and respect diverse cultures, communities and points of view. We treat each other with fairness and dignity to make the most of everyone’s contributions. Integrity Having the courage and commitment to do the right thing We do the right thing, even when this is challenging. We take ownership of what we do and say. And we are honest and clear with each other, and with everyone we work with. This helps us to build trust. Excellence Being the best we can be for superior performance We challenge ourselves and others to create lasting value and achieve high performance. We adopt a pioneering mindset and aim to do better every day. An employee at our aluminium operations in Quebec, Canada. Annual report 2019 | riotinto.com 15

Strategic report Strategic context The forces shaping the world influence our thinking about our strategy; the actions we take in response will determine the strength and resilience of our business. Our strategy is formulated through the lens of plausible scenarios. We expect to face greater complexity as we move into a new decade, which we believe will be characterised by the interplay between three global forces: geopolitics, society and technology. 16 Annual report 2019 | riotinto.com

Strategic context Strategic report Strategic Technology Society Geopolitics The transition to the fourth stage of Sustainability, including climate change, is Since the middle of the 20th century, geopolitics industrialisation, in which technology becomes becoming an ever more pressing challenge facing has been defined by globalisation – a dominant interwoven into increasing aspects of everyday life, society. Many would argue that the pursuit of force that culminated with the development of continues. This era will be defined by a step change sustainable goals can be constrained by a lack of China, which has been unprecedented in terms of in digital connectivity and ‘intelligent’ systems that accompanying social progress, including efforts to scale and speed. However, while the development can gather and analyse data and communicate with address social and economic inequality. Business gap between countries has narrowed significantly other systems, supported by advanced analytics has an important role to play in addressing each of over the past decade, it is also true that and artificial intelligence. There is no doubt the these challenges – but the private sector cannot globalisation has not benefitted people equally within transition has already been deeply transformative address the unprecedented challenge of climate countries. This is, in turn, fragmenting the social and in some sectors, resulting in a mix of disruption and change alone. It needs to work within strong and political landscape around the world and arguably new opportunity. Whether and how quickly this will predictable policy frameworks and alongside leading to the rise of nationalism and the distrust of a translate to a broader boost in global economic robust local and global institutions promoting political and business establishment that is perceived productivity and growth remains uncertain. inclusive and sustainable growth. by some to be biased towards a global elite. Similarly, while the mining industry has arguably This is certainly the case for our industry. While This change in the geopolitical cycle is further been at the forefront of automating mobile a safe, sustainable approach to mining is critical, accentuated by a marked shift in the relationship equipment over the past decade, the scope of it must also include a strong focus on local between the US and China. Arguably, the world’s digital transformation in the sector has been fairly communities, including jobs and employment, most important relationship stands at a significant limited. Nevertheless, technology and digital will and the effective management of shared resources, juncture as China’s economy reaches maturity and need to play a key role in the industry’s renewed such as air and water, land and waste, through the continues to progress along the New Era roadmap productivity effort, which remains essential after mining life cycle. The mining industry must also be articulated by President Xi Jinping. The interplay a long period of productivity declines during the part of the solution in the global effort to address between geopolitics and technology will be China boom. This effort will require companies climate change. This will require the industry, particularly important as the US and China vie like ours to further develop and strengthen including our business, to work together across the for leadership in the transition to the fourth partnerships – with original equipment full value chain to develop materials with a reduced industrial revolution. This could potentially lead manufacturers, research institutions and environmental footprint and support the transition to divergent technology standards and ecosystems technology providers – to drive and further to a lower-carbon economy. with implications for the structure of global integrate technological innovation in mining. supply chains. Ultimately, addressing societal challenges requires Furthermore, the interplay between technology and broad and deep collaboration, domestically and The mining industry, which is heavily dependent society brings uncertainties related to the future of globally, and the mobilisation of a complex web of on free trade and growth, will need to be resilient in work, as well as the geopolitical and social tensions stakeholders around shared interests. Today, the this new phase of geopolitics. We have already seen that emerge from a greater concentration of wealth international institutions that helped preserve a shift in the industry’s competitive landscape, with and data in large technology companies. On the global stability for much of the 20th century are more acquisitions and minerals development being other hand, innovation and a continued drop in the themselves under pressure, reflecting tensions made by Chinese companies as part of the Chinese cost of low-carbon technologies may lower barriers between segments of society and the established government’s global development strategy known to a faster transition to a more sustainable, geopolitical order. as the Belt and Road Initiative. Ensuring a secure lower-carbon world. supply of critical minerals is also becoming a growing concern for many countries. This points to a potential future in which the market is defined by evolving relationships between host countries of mineral resources and countries, such as China, whose economies generate large demand. Society A world where climate change and the environment, as well as inclusive growth and sustainability, are critical. Technology Geopolitics A world where automation, A world of growing political data and artificial intelligence fragmentation and drive improved performance. nationalism. Annual report 2019 | riotinto.com 17

Strategic report Our stakeholders As a mining and metals company, we recognise the impact our business can have on our many stakeholders and the wider responsibilities this brings. We work hard to understand our stakeholders’ needs and expectations. We want our success to allow us to invest to meet our obligations to our employees, our customers, suppliers, local communities and host governments, as well as to generate superior returns for our shareholders. There is more detailed information on our stakeholder engagement in the Sustainability section on pages 60 to 70 of this Annual report, and we set out how the Board takes account of stakeholder interests (our ‘section 172(1) Statement’) in the Governance section on pages 92 to 93. Students in the Pilbara region of Western Australia, home to our iron ore business. 18 Annual report 2019 | riotinto.com

Our stakeholders Strategic report Strategic Employees Communities and governments Our 46,000 employees in 36 countries are our most important asset. They Trust and partnership with the communities and governments that host our want to work in an environment where they are safe and respected, and have operations is vital. the opportunity to learn, reach their potential and develop successful careers in a company they can be proud of. Each of these groups has a strong interest not only in the employment opportunities our business creates, both directly and indirectly, but also the We know that engaged employees make a productive and innovative business, wider societal benefits that accrue – be it taxes and royalties or the millions and we have a wide range of activities aimed at understanding their views. In we invest in our communities every year. Understandably, these groups are addition to the day-to-day engagement within teams, we hold numerous town also concerned with the potential environmental and cultural impacts our halls with our Chief Executive and other senior leaders, and have regular operations may have. conversations via our Yammer social platform. We regularly engage with our communities and host governments on a wide By listening in this way, we continue to refine how and what we offer to meet range of topics, including employment opportunities, taxes and royalties, the varying needs of our workforce. We do this by, for example, further environmental protection and local procurement. In our Pilbara iron ore investing in leadership development, as we know leaders are key to engaging business, for example, we conduct an annual survey – called Local Voices – and developing employees; by reviewing how we recognise individuals for their that provides real-time insights to inform decision-making. contribution and excellence; and by setting clear expectations for how we treat each other to bring our organisational values to life and give people a voice. We actively engage in dialogue around global social issues and the environment, including climate change. For example, this year we announced We conduct a six-monthly employee engagement survey to help measure a partnership in China to explore ways to improve environmental performance our progress and to further understand how people feel about the company across the entire steel value chain, in which our iron ore business plays an and its direction. important part. Customers and suppliers Investors Our business works with long-term horizons – our investments must often Our investors include global investment funds, pension funds and corporate deliver returns for decades, not years – and both our customers and suppliers bondholders, as well as tens of thousands of individuals, all of whom have have an interest in developing partnerships that allow them to consistently trusted us with their capital and wish to earn a financial return. share the benefits of our work together. This in turn requires trust and transparency: they want to know that we will do what we say we will do. They are interested in understanding how we run our business: our strategy, our focus on operational excellence and sustainability, the views of our We work closely with customers and suppliers, and in doing so, bring their leadership, including on capital allocation – and the performance that results voice, and the needs of a dynamic market, into our operational, investment and from the confluence of these. We are often also asked about the purpose, production decisions. For example, by extending our supply chain into Chinese values and culture of the Group, as well as the threats and opportunities that ports, we have enabled access to new customers, created value through affect delivery of our strategy. product screening and blending, and increased the optionality in our supply chain. In addition, by working closely with our suppliers we have captured We aim to deliver superior returns to our investors throughout the commodity supply chain innovation to deliver improved operational performance. We have cycle, and we have a comprehensive communication and engagement also continued to enhance how we engage with our markets, customers and programme in addition to our annual general meetings (AGMs) in the UK and suppliers, in part by using technology, data and analytics. We are continuing Australia. In 2018, for example, in addition to our usual programme of meetings to pilot the latest technologies, including blockchain and paperless solutions, and engagement, we held two investor seminars focused on sustainability; and to evolve the way we conduct our business and make our transactions more in late 2019, we held a seminar to update investors on our progress against efficient, safe and cost-effective. our strategy. Our suppliers are vital to our business success and we are continuing to work to improve our partnerships with them. We consider a supply chain of strong local suppliers to be good for our business, local communities and the economy. We are continuing to develop local procurement strategies designed to increase opportunities for businesses to be a part of the Rio Tinto supply chain. Annual report 2019 | riotinto.com 19

Strategic report Our strategy Portfolio People Performance Partners Our strategy is to create superior Our portfolio of low-cost, long-life Attracting, developing and retaining Safety is our number one priority. We look Partnerships and collaboration are value for shareholders by meeting assets delivers attractive returns the best people is crucial to our success. to generate value from mine to market essential to the long-term success of customers’ needs, maximising cash through the cycle. After a significant We continue to strengthen our technical and also to prioritise value over volume our business. We work closely with portfolio reshaping, we are invested and commercial capabilities through our in our investment decisions. We work technology partners, local suppliers, from our world-class assets and in commodities with strong, Centres of Excellence, and are committed to maximise value in other ways – for governments, community groups, allocating capital with discipline. long-term fundamentals and to building an inclusive and diverse example, by developing new markets for industry leaders and NGOs at all stages material growth opportunities. workforce across our global business. our materials, including as part of the of the mining lifecycle, from exploration transition to a low-carbon economy. to rehabilitation and closure. We believe Our strategy comprises four key areas: We focus on operational excellence to this gives us a competitive edge and Portfolio improve efficiency. also allows us to work more thoughtfully Low-cost, long-life assets that deliver attractive returns and responsibly, and to deliver real benefits to all our stakeholders. People Building capability to drive performance Performance Investing in our business Recognising and promoting Progressing safety Partnering to address Safety, operational and commercial excellence To sustain the strength and resilience of our technical expertise We ended 2019 with strong performance in safety, climate change drive superior margins and returns business, in 2019 we continued to invest in We launched an initiative – RioExcel – to recognise improving our process safety and recording our We have long recognised the reality of climate high-return projects. For example, in December, the important role our technical experts play in first fatality-free year since we began operations, change and its potential to affect our business, Partners we announced a $1.5 billion investment at our delivering our strategy, including safety, growth almost 147 years ago. While we recognise the our communities and our world. However, we also Working with others for future success Kennecott copper mine in Utah, in the US, which and operational excellence. The programme efforts, Group-wide, that led to this performance, recognise that no business can make a meaningful will serve to extend operations to 2032. In supports the career progression and development we know we cannot be complacent. And we again contribution on its own. To that end, this year we November, we announced a $749 million of technical experts – in fields ranging from geology pledge to do everything we can to continually continued to form partnerships to help address investment in our Greater Tom Price operations, to process engineering to asset management and improve, and send everyone home safe and healthy. the climate change challenge. in the Pilbara region of Western Australia, to help data and optimisation – who wish to remain in sustain the production capacity of our iron ore technical roles, rather than become operational or In 2019, we introduced our safety maturity In September, we signed a memorandum of business. In April, we announced we would sustain line leaders. It provides those recognised as experts model (SMM) to expand on our successful critical understanding (MOU) with China Baowu Steel current capacity and extend the life of our Richards with a platform for further career and development risk management (CRM) programme. SMM Group and Tsinghua University to develop and Bay Minerals (RBM) operation, in South Africa, opportunities and exposure across the Group. incorporates a holistic approach to risk, work implement new methods to reduce carbon through the investment of $463 million in the Zulti planning and execution, as well as learning, emissions and improve environmental South project. Construction is currently on hold In 2019, 50 people across our technical disciplines improvement and leadership engagement, performance across the steel value chain. after a number of security incidents – we will assess were recognised as experts – individuals whose including the continued focus on CRM and learning The MOU will enable the formation of a joint a restart after normalisation of operations at RBM. unique contributions help our company challenge from potentially fatal incidents (PFIs). Our working group tasked with identifying a pathway to the status quo, introduce innovative solutions for operations completed an initial self-assessment reducing carbon emissions across the entire steel Also in April, we committed $302 million of safely managing our technical risks, and deliver to familiarise themselves with the model. This was value chain, which accounts for 7-9% of the world’s additional expenditure to advance the Resolution productivity gains. then followed by a baseline assessment and an carbon emissions. Copper project in Arizona, in the US, to fund end-of-year assessment led by Group HSE, and additional drilling, ore body studies, infrastructure RioExcel delivers a deeper pool of technical supported by an independent operational leader. In November, we partnered with the Natural improvements and permitting activities as the expertise for our business – a source of competitive We were pleased that they demonstrated a strong Sciences and Engineering Research Council of project moves to the final stage of permitting. advantage, a more engaged and collaborative improvement over their baseline assessments, Canada (NSERC) to fund a new Industrial Research And in March, we completed the commissioning technical workforce and safer, more productive particularly in leadership and engagement. Across Chair in Climate Change and Water Security at of our $1.9 billion Amrun bauxite mine on the Cape and future-ready operations. the Group, using a nine-point scale, we saw the University of Northern British Columbia. York Peninsula in Queensland, Australia. The mine improvement to an average maturity of 4.5 The C$1.5 million from NSERC and Rio Tinto and associated processing and port facilities will (classified as evolving) from a baseline of 3.4 support research by Dr. Stephen Déry to quantify replace production from our depleting East Weipa (classified as basic). the roles of climate variability, climate change and mine and increase annual bauxite export capacity 50+ water management in the Nechako River basin’s by around 10 million tonnes. men and women recognised via RioExcel water supply. Our Kitimat aluminium smelter is located in British Columbia, with clean hydropower AIFR 0.42 supplied by the Nechako reservoir. down from 0.44 in 2018, marking a strong $5.5bn performance in safety invested to grow and sustain the strength of our business C$1.5m in research funding from NSERC and Rio Tinto Employees at Oyu Tolgoi, where 93% of our employees are Mongolian. 20 Annual report 2019 | riotinto.com

Our strategy Strategic report Strategic Portfolio People Performance Partners Our portfolio of low-cost, long-life Attracting, developing and retaining Safety is our number one priority. We look Partnerships and collaboration are assets delivers attractive returns the best people is crucial to our success. to generate value from mine to market essential to the long-term success of through the cycle. After a significant We continue to strengthen our technical and also to prioritise value over volume our business. We work closely with portfolio reshaping, we are invested and commercial capabilities through our in our investment decisions. We work technology partners, local suppliers, in commodities with strong, Centres of Excellence, and are committed to maximise value in other ways – for governments, community groups, long-term fundamentals and to building an inclusive and diverse example, by developing new markets for industry leaders and NGOs at all stages material growth opportunities. workforce across our global business. our materials, including as part of the of the mining lifecycle, from exploration transition to a low-carbon economy. to rehabilitation and closure. We believe We focus on operational excellence to this gives us a competitive edge and improve efficiency. also allows us to work more thoughtfully and responsibly, and to deliver real benefits to all our stakeholders. Investing in our business Recognising and promoting Progressing safety Partnering to address To sustain the strength and resilience of our technical expertise We ended 2019 with strong performance in safety, climate change business, in 2019 we continued to invest in We launched an initiative – RioExcel – to recognise improving our process safety and recording our We have long recognised the reality of climate high-return projects. For example, in December, the important role our technical experts play in first fatality-free year since we began operations, change and its potential to affect our business, we announced a $1.5 billion investment at our delivering our strategy, including safety, growth almost 147 years ago. While we recognise the our communities and our world. However, we also Kennecott copper mine in Utah, in the US, which and operational excellence. The programme efforts, Group-wide, that led to this performance, recognise that no business can make a meaningful will serve to extend operations to 2032. In supports the career progression and development we know we cannot be complacent. And we again contribution on its own. To that end, this year we November, we announced a $749 million of technical experts – in fields ranging from geology pledge to do everything we can to continually continued to form partnerships to help address investment in our Greater Tom Price operations, to process engineering to asset management and improve, and send everyone home safe and healthy. the climate change challenge. in the Pilbara region of Western Australia, to help data and optimisation – who wish to remain in sustain the production capacity of our iron ore technical roles, rather than become operational or In 2019, we introduced our safety maturity In September, we signed a memorandum of business. In April, we announced we would sustain line leaders. It provides those recognised as experts model (SMM) to expand on our successful critical understanding (MOU) with China Baowu Steel current capacity and extend the life of our Richards with a platform for further career and development risk management (CRM) programme. SMM Group and Tsinghua University to develop and Bay Minerals (RBM) operation, in South Africa, opportunities and exposure across the Group. incorporates a holistic approach to risk, work implement new methods to reduce carbon through the investment of $463 million in the Zulti planning and execution, as well as learning, emissions and improve environmental South project. Construction is currently on hold In 2019, 50 people across our technical disciplines improvement and leadership engagement, performance across the steel value chain. after a number of security incidents – we will assess were recognised as experts – individuals whose including the continued focus on CRM and learning The MOU will enable the formation of a joint a restart after normalisation of operations at RBM. unique contributions help our company challenge from potentially fatal incidents (PFIs). Our working group tasked with identifying a pathway to the status quo, introduce innovative solutions for operations completed an initial self-assessment reducing carbon emissions across the entire steel Also in April, we committed $302 million of safely managing our technical risks, and deliver to familiarise themselves with the model. This was value chain, which accounts for 7-9% of the world’s additional expenditure to advance the Resolution productivity gains. then followed by a baseline assessment and an carbon emissions. Copper project in Arizona, in the US, to fund end-of-year assessment led by Group HSE, and additional drilling, ore body studies, infrastructure RioExcel delivers a deeper pool of technical supported by an independent operational leader. In November, we partnered with the Natural improvements and permitting activities as the expertise for our business – a source of competitive We were pleased that they demonstrated a strong Sciences and Engineering Research Council of project moves to the final stage of permitting. advantage, a more engaged and collaborative improvement over their baseline assessments, Canada (NSERC) to fund a new Industrial Research And in March, we completed the commissioning technical workforce and safer, more productive particularly in leadership and engagement. Across Chair in Climate Change and Water Security at of our $1.9 billion Amrun bauxite mine on the Cape and future-ready operations. the Group, using a nine-point scale, we saw the University of Northern British Columbia. York Peninsula in Queensland, Australia. The mine improvement to an average maturity of 4.5 The C$1.5 million from NSERC and Rio Tinto and associated processing and port facilities will (classified as evolving) from a baseline of 3.4 support research by Dr. Stephen Déry to quantify replace production from our depleting East Weipa (classified as basic). the roles of climate variability, climate change and mine and increase annual bauxite export capacity 50+ water management in the Nechako River basin’s by around 10 million tonnes. men and women recognised via RioExcel water supply. Our Kitimat aluminium smelter is located in British Columbia, with clean hydropower AIFR 0.42 supplied by the Nechako reservoir. down from 0.44 in 2018, marking a strong $5.5bn performance in safety invested to grow and sustain the strength of our business C$1.5m in research funding from NSERC and Rio Tinto Annual report 2019 | riotinto.com 21

Strategic report Key performance indicators The Board uses a range of financial and non-financial metrics, reported Key performance All injury frequency rate (AIFR) Key performance Total shareholder return (TSR)1 Underlying earnings and underlying EBITDA indicator definition The number of injuries per 200,000 hours worked by employees indicator definition Combination of share price appreciation (using annual average Underlying earnings represent net earnings attributable to the periodically, to measure Group and contractors at operations that we manage. AIFR includes share price) and dividends paid and reinvested to show the total owners of Rio Tinto, adjusted to exclude items which do not medical treatment cases, restricted workday and lost-day injuries. return to the shareholder over the preceding five years. reflect the underlying performance of the Group’s operations. performance against the four key These items are explained in note 2 of the financial statements. areas of our strategy (portfolio, Underlying EBITDA represents profit before tax, net finance people, performance and partners). items, depreciation and amortisation. It excludes the EBITDA impact of the items mentioned above. This year we reviewed our key performance indicators (KPIs) and made the following changes: –– We have added return on capital employed (ROCE). Strategic pillar People Performance Partners Strategic pillar Portfolio Performance Portfolio Performance This measures how efficiently we generate profits from our assets, reflecting our strategy of investing in a portfolio of low-cost, long-life assets that deliver Relevance to strategy Safety is our number one priority, one of our core values and Relevance to strategy Our strategy aims to maximise shareholder returns through the These financial KPIs measure how well we are managing costs, attractive returns throughout the cycle. & executive an essential component of everything we do. Our goals are to & executive commodity cycle, and TSR is a direct measure of that. increasing productivity and generating the most revenue from –– We have added free cash flow, which measures net cash remuneration maintain zero fatalities, prevent catastrophic events and reduce remuneration each of our assets. returned by the business after investment in sustaining injuries. We continually reinforce our safety culture, in part by Link to executive remuneration and growth capital expenditure. improving leadership and simplifying tools and systems. Reflected in long-term incentive plans, measured equally Link to executive remuneration –– We have removed capital expenditure as a standalone key against the EMIX Global Mining Index and the MSCI World Index Underlying earnings is reflected in the short-term incentive plan; performance indicator as this is a component of the new Link to executive remuneration (see page 113). in the longer term, both measures influence TSR, which is the free cash flow metric. Included in the short-term incentive plan (see page 113). primary measure for long-term incentive plans (see page 113). Non-financial metrics for measuring the people strategic pillar have been developed, including the development in Associated risks –– HSE Associated risks –– Market –– Market 2019 of a culture and values scorecard. In 2020, we will –– Operational and people –– Strategic –– Communities and other key stakeholders consider which of these internal metrics will be used as –– Communities and other key stakeholders –– Operational and people published KPIs in future annual reports. Five-year trend All in�ur� �re�uenc� rate �A�� Five-year trend ��r �� o�r� �or�� .�� .�� .�� .�� 2019 0��2 Performance We experienced no fatalities in 2019 and overall delivered strong Performance The share prices of Rio Tinto plc and Rio Tinto Limited reached Underlying earnings of $10.4 billion were $1.6 billion higher than in 2019 safety performance. We reduced our AIFR slightly to 0.42 (from in 2019 new highs in 2019. TSR performance over the five-year period in 2018. Underlying EBITDA of $21.2 billion was $3.1 billion higher 0.44 in 2018) and continued to improve our catastrophic event was driven principally by movements in commodity prices and than 2018. The 17% increase in underlying EBITDA resulted from prevention through a step-change in managing process safety changes in the global macro environment. Rio Tinto significantly higher iron ore prices, partly offset by lower prices for aluminium and more assurance over major hazard risks. Over the past five outperformed the EMIX Global Mining Index over the five-year and copper, higher costs and the absence of contributions from years, our AIFR performance has been strong. period, and slightly outperformed the MSCI World Index. assets divested in 2018. Forward plan We will: Forward plan We will continue to focus on generating the free cash flow from our We will continue to drive superior margins and returns through –– Continue to implement our critical-risk management programme operations that allows us to return cash to shareholders (short-term a focus on operational and commercial excellence and our value and safety maturity model returns) while investing in the business (long-term returns). over volume approach. –– Strengthen our safety leadership and coaching programmes –– Work more closely with contractors and joint-venture partners to improve our safety record –– Continue to implement our major hazard standards, including process safety, water and tailings, with strong assurance processes –– Simplify critical safety tools 1 The TSR calculation for each period is based on the change in the calendar year average share prices for Rio Tinto plc and Rio Tinto Limited over the preceding five years. This is consistent with the methodology used for calculating the vesting outcomes for Performance Share Awards (PSA). The data presented in this chart accounts for the dual corporate structure of Rio Tinto. 22 Annual report 2019 | riotinto.com

Key performance indicators Strategic report Strategic Key performance All injury frequency rate (AIFR) Key performance Total shareholder return (TSR)1 Underlying earnings and underlying EBITDA indicator definition The number of injuries per 200,000 hours worked by employees indicator definition Combination of share price appreciation (using annual average Underlying earnings represent net earnings attributable to the and contractors at operations that we manage. AIFR includes share price) and dividends paid and reinvested to show the total owners of Rio Tinto, adjusted to exclude items which do not medical treatment cases, restricted workday and lost-day injuries. return to the shareholder over the preceding five years. reflect the underlying performance of the Group’s operations. These items are explained in note 2 of the financial statements. Underlying EBITDA represents profit before tax, net finance items, depreciation and amortisation. It excludes the EBITDA impact of the items mentioned above. Strategic pillar People Performance Partners Strategic pillar Portfolio Performance Portfolio Performance Relevance to strategy Safety is our number one priority, one of our core values and Relevance to strategy Our strategy aims to maximise shareholder returns through the These financial KPIs measure how well we are managing costs, & executive an essential component of everything we do. Our goals are to & executive commodity cycle, and TSR is a direct measure of that. increasing productivity and generating the most revenue from remuneration maintain zero fatalities, prevent catastrophic events and reduce remuneration each of our assets. injuries. We continually reinforce our safety culture, in part by Link to executive remuneration improving leadership and simplifying tools and systems. Reflected in long-term incentive plans, measured equally Link to executive remuneration against the EMIX Global Mining Index and the MSCI World Index Underlying earnings is reflected in the short-term incentive plan; Link to executive remuneration (see page 113). in the longer term, both measures influence TSR, which is the Included in the short-term incentive plan (see page 113). primary measure for long-term incentive plans (see page 113). Associated risks –– HSE Associated risks –– Market –– Market –– Operational and people –– Strategic –– Communities and other key stakeholders –– Communities and other key stakeholders –– Operational and people Five-year trend All in�ur� �re�uenc� rate �A�� Five-year trend �ota� ��are�o��er ret�r� ��S�� er��i�g ear�i�g� a�� er��i�g �� r �� o�r� �or�� measured over the preceding ve years � mi��ion� (using annual average share price) �n��r��in� �� n��r��in� ��rnin�� .�� .�� 2015 (18.2%) �� .�� 2016 (40.7%) �� .�� 2017 5.8% �� 2019 0��2 2018 33.4% �� Performance We experienced no fatalities in 2019 and overall delivered strong Performance The share prices of Rio Tinto plc and Rio Tinto Limited reached Underlying earnings of $10.4 billion were $1.6 billion higher than in 2019 safety performance. We reduced our AIFR slightly to 0.42 (from in 2019 new highs in 2019. TSR performance over the five-year period in 2018. Underlying EBITDA of $21.2 billion was $3.1 billion higher 0.44 in 2018) and continued to improve our catastrophic event was driven principally by movements in commodity prices and than 2018. The 17% increase in underlying EBITDA resulted from prevention through a step-change in managing process safety changes in the global macro environment. Rio Tinto significantly higher iron ore prices, partly offset by lower prices for aluminium and more assurance over major hazard risks. Over the past five outperformed the EMIX Global Mining Index over the five-year and copper, higher costs and the absence of contributions from years, our AIFR performance has been strong. period, and slightly outperformed the MSCI World Index. assets divested in 2018. Forward plan We will: Forward plan We will continue to focus on generating the free cash flow from our We will continue to drive superior margins and returns through –– Continue to implement our critical-risk management programme operations that allows us to return cash to shareholders (short-term a focus on operational and commercial excellence and our value and safety maturity model returns) while investing in the business (long-term returns). over volume approach. –– Strengthen our safety leadership and coaching programmes –– Work more closely with contractors and joint-venture partners to improve our safety record –– Continue to implement our major hazard standards, including process safety, water and tailings, with strong assurance processes –– Simplify critical safety tools 1 The TSR calculation for each period is based on the change in the calendar year average share prices for Rio Tinto plc and Rio Tinto Limited over the preceding five years. This is consistent with the methodology used for calculating the vesting outcomes for Performance Share Awards (PSA). The data presented in this chart accounts for the dual corporate structure of Rio Tinto. Annual report 2019 | riotinto.com 23

Strategic report Key performance indicators continued Key performance Return on capital employed (ROCE) Net cash generated from operating activities Key performance Free cash flow Net debt indicator definition Underlying earnings before interest divided by average capital Cash generated by our operations after tax and interest, including indicator definition Net cash generated from operating activities minus purchases of Net borrowings after adjusting for cash and cash equivalents, employed (operating assets before net debt). dividends received from equity accounted units and dividends property, plant and equipment and payments of lease principal, other liquid investments and derivatives related to net debt paid to non-controlling interests in subsidiaries. plus sales of property, plant and equipment. (see note 24 of the financial statements). Strategic pillar Portfolio Performance Portfolio Performance Strategic pillar Portfolio Performance Portfolio Performance Relevance to strategy Our portfolio of low-cost, long-life assets delivers attractive This KPI measures our ability to convert underlying Relevance to strategy This KPI measures the net cash returned by the business after This measures how we are managing our balance sheet and & executive returns throughout the cycle and has been reshaped significantly earnings into cash. & executive the expenditure of sustaining and growth capital. This cash capital structure. A strong balance sheet is essential for giving us remuneration in recent years. ROCE measures how efficiently we generate remuneration can be used for shareholder returns, reducing debt and flexibility to take advantage of opportunities as they arise, and for profits from investment in our portfolio of assets. Link to executive remuneration other investment. returning cash to shareholders. Included in the short-term incentive plan; in the longer term, the Link to executive remuneration measure influences TSR which is included in long-term incentive Link to executive remuneration Link to executive remuneration Underlying earnings, as a component of ROCE, is included in plans (see page 113). Included in the short-term incentive plan; in the longer term, the Net debt is, in part, an outcome of free cash flow, which itself is the short-term incentive plan. In the longer term, ROCE also measure influences TSR which is included in long-term incentive reflected in the short-term incentive plan. In the longer term, net influences TSR, which is included in long-term incentive plans. plans (see page 113). debt influences TSR which is reflected in long-term incentive plans (see page 113). Associated risks –– Market –– Market Associated risks –– Market –– Market –– Strategic –– Communities and other key stakeholders –– Strategic –– Strategic –– Financial –– Operational and people –– Financial –– Financial –– Operational and people –– Communities and other key stakeholders –– Communities and other key stakeholders –– Operational and people –– Operational and people Five-year trend �et�r� o� capita� e�p�o�e� �� et ca�� ge�erate� �ro� operati�g acti�itie� Five-year trend � � mi��ion� �� Performance ROCE increased five percentage points to 24% in 2019, reflecting Net cash generated from operating activities of $14.9 billion Performance Free cash flow increased by $2.2 billion to $9.2 billion in 2019, Net debt increased by $3.9 billion from net cash of $255 million in 2019 the increase in underlying earnings driven by higher iron ore was 26% higher than 2018. This was primarily due to higher iron in 2019 primarily due to the increase in net cash generated from to net debt of $3.7 billion. This reflects $11.9 billion of cash prices combined with the restructuring of our portfolio through ore prices and favourable working capital movements, partly operating activities. This was partially offset by lower proceeds returns to shareholders in 2019 through dividends and share divestments and investment in growth. offset by higher taxes paid in 2019 relating to the 2018 coking from sales of property, plant and equipment. Capital expenditure buy-backs and a $1.2 billion non-cash increase from the coal disposals. was in line with 2018. implementation of IFRS 16 “Leases”, partly offset by free cash flow of $9.2 billion. Forward plan We will continue to focus on maximising returns from our assets We will focus on effectively converting earnings into cash, Forward plan We aim to continue our focus on free cash flow generation We believe that a strong balance sheet is a major competitive over the short, medium and long term. We will also maintain our underpinned by operational and commercial excellence, through the cycle. We expect capital expenditure to be advantage and essential in a cyclical business. We will therefore disciplined and rigorous approach and invest capital only in including our careful management of working capital. approximately $7 billion in 2020 and $6.5 billion in both continue to manage net debt carefully. projects that we believe will deliver returns that are well above 2021 and 2022. our cost of capital. 24 Annual report 2019 | riotinto.com

Key performance indicators Strategic report Strategic Key performance Return on capital employed (ROCE) Net cash generated from operating activities Key performance Free cash flow Net debt indicator definition Underlying earnings before interest divided by average capital Cash generated by our operations after tax and interest, including indicator definition Net cash generated from operating activities minus purchases of Net borrowings after adjusting for cash and cash equivalents, employed (operating assets before net debt). dividends received from equity accounted units and dividends property, plant and equipment and payments of lease principal, other liquid investments and derivatives related to net debt paid to non-controlling interests in subsidiaries. plus sales of property, plant and equipment. (see note 24 of the financial statements). Strategic pillar Portfolio Performance Portfolio Performance Strategic pillar Portfolio Performance Portfolio Performance Relevance to strategy Our portfolio of low-cost, long-life assets delivers attractive This KPI measures our ability to convert underlying Relevance to strategy This KPI measures the net cash returned by the business after This measures how we are managing our balance sheet and & executive returns throughout the cycle and has been reshaped significantly earnings into cash. & executive the expenditure of sustaining and growth capital. This cash capital structure. A strong balance sheet is essential for giving us remuneration in recent years. ROCE measures how efficiently we generate remuneration can be used for shareholder returns, reducing debt and flexibility to take advantage of opportunities as they arise, and for profits from investment in our portfolio of assets. Link to executive remuneration other investment. returning cash to shareholders. Included in the short-term incentive plan; in the longer term, the Link to executive remuneration measure influences TSR which is included in long-term incentive Link to executive remuneration Link to executive remuneration Underlying earnings, as a component of ROCE, is included in plans (see page 113). Included in the short-term incentive plan; in the longer term, the Net debt is, in part, an outcome of free cash flow, which itself is the short-term incentive plan. In the longer term, ROCE also measure influences TSR which is included in long-term incentive reflected in the short-term incentive plan. In the longer term, net influences TSR, which is included in long-term incentive plans. plans (see page 113). debt influences TSR which is reflected in long-term incentive plans (see page 113). Associated risks –– Market –– Market Associated risks –– Market –– Market –– Strategic –– Communities and other key stakeholders –– Strategic –– Strategic –– Financial –– Operational and people –– Financial –– Financial –– Operational and people –– Communities and other key stakeholders –– Communities and other key stakeholders –– Operational and people –– Operational and people Five-year trend Five-year trend Free cash ow �et ca��et �e�t� � mi��ion� � mi��ion� �� 2019 9,158 �� Performance ROCE increased five percentage points to 24% in 2019, reflecting Net cash generated from operating activities of $14.9 billion Performance Free cash flow increased by $2.2 billion to $9.2 billion in 2019, Net debt increased by $3.9 billion from net cash of $255 million in 2019 the increase in underlying earnings driven by higher iron ore was 26% higher than 2018. This was primarily due to higher iron in 2019 primarily due to the increase in net cash generated from to net debt of $3.7 billion. This reflects $11.9 billion of cash prices combined with the restructuring of our portfolio through ore prices and favourable working capital movements, partly operating activities. This was partially offset by lower proceeds returns to shareholders in 2019 through dividends and share divestments and investment in growth. offset by higher taxes paid in 2019 relating to the 2018 coking from sales of property, plant and equipment. Capital expenditure buy-backs and a $1.2 billion non-cash increase from the coal disposals. was in line with 2018. implementation of IFRS 16 “Leases”, partly offset by free cash flow of $9.2 billion. Forward plan We will continue to focus on maximising returns from our assets We will focus on effectively converting earnings into cash, Forward plan We aim to continue our focus on free cash flow generation We believe that a strong balance sheet is a major competitive over the short, medium and long term. We will also maintain our underpinned by operational and commercial excellence, through the cycle. We expect capital expenditure to be advantage and essential in a cyclical business. We will therefore disciplined and rigorous approach and invest capital only in including our careful management of working capital. approximately $7 billion in 2020 and $6.5 billion in both continue to manage net debt carefully. projects that we believe will deliver returns that are well above 2021 and 2022. our cost of capital. Annual report 2019 | riotinto.com 25

Strategic report Key performance indicators continued Climate change is a Key performance Total greenhouse gas (GHG) emissions indicator definition intensity global challenge and will Total GHG emissions from managed operations, expressed in metric tonnes of carbon dioxide equivalent (tCO e), per unit of 2 require action across nations, commodity production relative to the 2008 base year. Emissions include direct emissions, plus emissions from imports of across industries, and by electricity and steam, minus electricity and steam exports. society at large. We want Strategic pillar Performance Partners to play our part. Relevance to strategy Climate risks and opportunities have formed part of our strategic & executive thinking and investment decisions for over two decades. We now remuneration have a portfolio that is well positioned for the transition to a low-carbon economy. Link to executive remuneration Our Chief Executive’s performance objectives are reflected in his short-term incentive plan (STIP), which includes delivery of the Group’s strategy on climate change consistent with the new 2030 targets. These are cascaded down into the annual objectives of relevant members of the Executive Committee and other members of senior management. Associated risks –– Market –– Strategic –– Climate change –– Communities and other key stakeholder –– Operational and people Five-year trend ��i��io�� i�te��it� o� o�r �a�age� operatio�� int�n�it�� .� �� .� �� .� �� .�� Performance In 2019, the emissions intensity of our managed operations fell in 2019 to 70.6 (2008 = 100) and the percentage of our electricity consumption from renewable sources rose from 71% to 76%. We shut our coal power plant and purchased renewable energy certificates at our Kennecott copper operations. This reduces the operation’s annual carbon footprint by as much as 65%, or the equivalent of more than a million tonnes of carbon dioxide. Forward plan Our ambition is to reach net zero emissions by 2050 across our operations. Our 2030 targets are to reduce our emissions intensity by 30% and our absolute emissions by 15%, compared with our 2018 equity baseline. We plan to spend approximately $1 billion over five years on emissions reduction projects, research and development, and activities to enhance the climate resilience of our business. 1 Number adjusted from previous years to ensure comparability over time. 26 Annual report 2019 | riotinto.com

Chief Financial Officer’s statement Our high-quality portfolio of report Strategic long-life, competitive assets has consistently generated superior returns and cash flow. Strong financial results, supported by price We increased our revenues by 7% to $43.2 billion ($45.4 billion including equity accounted units), primarily due to higher iron ore prices. This more than compensated for lower copper and aluminium prices and the absence of revenues from our divestments in 2018, primarily the coking coal assets. Our underlying EBITDA of $21.2 billion increased by 17% compared with 2018, and the underlying EBITDA margin was 47%. Higher prices and weaker local currencies, compared with the US dollar, were the principal drivers of the increase, adding around $4.9 billion in aggregate to EBITDA. Our iron ore shipments were 3% lower in 2019 following weather disruptions and operational challenges in the first half of the year. However, we were able to offset this impact following a strong second half for Iron Ore, higher bauxite volumes, improved aluminium product mix and an increase in by-products from our copper mines, mainly gold and molybdenum. We saw a $0.5 billion increase in cash operating costs, which we present on Underlying EBITDA a unit cost basis. This was primarily comprised of higher Iron Ore unit costs driven by first half challenges in the Pilbara, partly offset by reduced operating $21.2bn costs in aluminium from lower input prices and productivity improvements. 17% increase The movement from 2018 to 2019 underlying EBITDA also reflects the absence of approximately $1.2 billion of contributions from assets divested in 2018, primarily the coking coal business in Australia and the Grasberg copper mine Net cash generated from operating activities in Indonesia. Making disciplined investments for the future $14.9bn Our capital allocation framework is well defined. We will continue to invest in 26% increase safely managing our assets and improving their performance. This means that sustaining capital expenditure is always a priority, reflected in our decision at the half year to lift our sustaining investment to approximately $2.5 billion per Net debt year going forward. Our investment decisions are carried out with considerable rigour and $3.7bn diligence. I believe this provides the best assurance for our shareholders At 2019 year-end that we will only invest in opportunities that create value. In 2019, our capital expenditure was $5.5 billion, reflecting our commitment to invest through the cycle. This comprised $2.6 billion of development capital, of which $1.2 billion was replacement capital, and $2.9 billion of sustaining capital. Our most significant growth project remains the Oyu Tolgoi copper- gold underground project in Mongolia, where we invested $1.3 billion in 2019 on a 100% basis, as we fully consolidate Oyu Tolgoi. And we are ramping up our investments over the coming years with the replacement of iron ore production in the Pilbara, where we have commenced construction of the Koodaideri and Robe River sustaining mines. Annual report 2019 | riotinto.com 27

Strategic report Chief Financial Officer’s statement continued A strong balance sheet creates resilience and optionality We ended 2019 with net debt of $3.7 billion, an increase of $3.9 billion since 2018. This is due to the $4.8 billion of shareholder returns we paid in 2019 from divestment proceeds received in 2018, as well as the adoption of IFRS16 “Leases” on 1 January 2019, which increased net debt by $1.2 billion. Our world-class assets, combined with a strong balance sheet, support our ability to provide superior cash returns to our shareholders. They also enable us to manage the business through the cycle – allowing us to act counter-cyclically and providing us with optionality. Our strong balance sheet is particularly valuable in the current volatile environment, which has been compounded by the Covid-19 virus. We are evaluating the current situation, and all our operations are looking at opportunities to adjust to any changes in market conditions. Our pay-out ratio continues to exceed the returns policy We implemented our returns policy in 2016, committing to total cash returns to shareholders, through the cycle, of 40 - 60% of underlying earnings, on average. Since its implementation, we have consistently paid out well above this range each year. 2019 was no exception – we are returning 70% of underlying earnings to shareholders. This includes the final ordinary dividend of 231 US cents per share which brings total dividends for the year to 443 US cents, or $7.2 billion. As we look to the future, I am confident our high-quality portfolio will continue to generate superior returns over the short, medium and long term. Jakob Stausholm Chief Financial Officer 26 February 2020 Our world-class assets, combined with a very strong balance sheet, support our ability to provide superior cash returns to our shareholders. It also enables us to manage the business through cycles – allowing us to act counter-cyclically and providing us with optionality. 28 Annual report 2019 | riotinto.com

Financial review Non-GAAP measures At year end 2019 2018 Change report Strategic In addition to IFRS measures, management Net cash generated from operating activities (US$ millions) 14,912 11,821 26% uses non-GAAP measures internally to assess Capital expenditure1 (US$ millions) 5,488 5,430 1% performance. Full reconciliations are provided Free cash flow2 (US$ millions) • 9,158 6,977 31% in the notes to the financial statements. These Underlying EBITDA3 (US$ millions) • 21,197 18,136 17% measures are highlighted with the symbol: • Underlying earnings3 (US$ millions) • 10,373 8,808 18% Net earnings (US$ millions) 8,010 13,638 (41)% Underlying earnings3 per share (US cents) • 636.3 512.3 24% Ordinary dividend per share (US cents) 382.0 307.0 24% Total dividend per share (US cents) 443.0 550.0 (19)% Net (debt)/cash4 (US$ millions) • (3,651) 255 Return on capital employed (ROCE)6 • 24% 19% Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS). Footnotes are set out on page 31. –– Strong safety performance in 2019, with no fatalities and a slightly improved all injury frequency rate, coming from a strong base. Continued improvement in prevention of catastrophic events through a step-change in process safety management. –– $14.9 billion operating cash flow was 26% higher than 2018 and $9.2 billion free cash flow2 was 31% higher than 2018. Both are presented after $0.9 billion tax paid in 2019 relating to the 2018 coking coal disposals. –– $5.5 billion capital expenditure1 was consistent with 2018. In late 2019, we announced the approval of two further investments, at Greater Tom Price (iron ore, $0.8 billion) and Kennecott (copper, $1.5 billion). –– $21.2 billion underlying EBITDA3 was 17% above 2018, primarily driven by higher iron ore prices, with an underlying EBITDA margin7 of 47%. –– $10.4 billion underlying earnings were 18% above 2018. Taking exclusions into account, net earnings of $8.0 billion were 41% lower than 2018, mainly reflecting $1.7 billion8 of impairments in 2019, primarily the Oyu Tolgoi underground project, consistent with our 2019 interim results, and the Yarwun alumina refinery. This compared with $4.0 billion of gains on disposals in 2018. –– Strong balance sheet with net debt4 of $3.7 billion, a rise of $3.9 billion, mainly reflected $11.9 billion of cash returns to shareholders in 2019 through dividends and share buy-backs, and a $1.2 billion non-cash increase from the implementation of IFRS 16 “Leases”, partly offset by free cash flow of $9.2 billion. –– $7.2 billion full-year dividend, equivalent to 443 US cents per share and 70% of underlying earnings, includes $3.7 billion record final ordinary dividend (231 US cents per share). Stronger revenues and underlying EBITDA –– $43.2 billion consolidated sales revenue ($45.4 billion including our share of equity accounted units) was 7% higher than 2018, primarily driven by higher iron ore prices. This was partially offset by lower copper and aluminium prices and the absence of revenues from assets divested in 2018. –– $21.2 billion underlying EBITDA3 was 17% higher than 2018, reflecting the higher iron ore price and the recovery from the operational challenges earlier in the year. This more than compensated for higher unit costs and the absence of underlying EBITDA from assets divested in 2018. –– 30% effective tax rate on underlying earnings3 – one percentage point higher than in 2018, primarily reflecting increased profits in Australia. –– $8.0 billion net earnings – 41% lower than 2018, mainly reflecting the impairments of Oyu Tolgoi and Yarwun alumina refinery in 2019, which compared with gains on disposals in 2018. See table on page 34. $7.2 billion of dividends declared for 2019 US$ US cents billion per share Ordinary dividend Interim ordinary dividend paid in September 2019 2.5 151 Final ordinary dividend to be paid in April 2020 3.7 231 Full-year ordinary dividend 6.2 382 Additional returns Special dividend paid in September 2019 1.0 61 Combined total is 70% of 2019 underlying earnings 7.2 443 Annual report 2019 | riotinto.com 29

Strategic report Financial review continued Strong cash flow from operations drives free cash flow 2019 2018 US$m US$m Net cash generated from operating activities 14,912 11,821 Capital expenditure1 (5,488) (5,430) Sales of property, plant and equipment 49 586 Lease principal payments (315) – Free cash flow2 9,158 6,977 Disposals* (80) 7,733 Dividends paid to equity shareholders (10,334) (5,356) Share buy-backs (1,552) (5,386) Non-cash impact from implementation of IFRS 16 “Leases” from 1 January 2019 (1,248) – Other 150 132 (Increase)/decrease in net debt4 (3,906) 4,100 * Net disposal proceeds include a cash outflow representing Rössing’s cash balance at the date of the sale. See page 34. See page 31 for other footnotes. –– $14.9 billion in cash generated from operating activities, after $0.9 billion tax paid relating to the 2018 coking coal disposals. This was 26% higher than 2018 and was driven primarily by higher underlying EBITDA from higher iron ore prices and the ongoing management of working capital. –– $5.5 billion capital expenditure1 comprised of $2.6 billion of development capital, of which $1.2 billion is replacement capital, and $2.9 billion of sustaining capital. –– $10.3 billion of dividends paid in 2019 comprised of the 2018 final and special dividends paid in April 2019 ($6.8 billion) and the 2019 interim and special dividends paid in September 2019 ($3.5 billion). –– $1.6 billion paid for 28.4 million share repurchases under the Rio Tinto plc on-market share buy-backs announced in 2018, with the remaining $0.2 billion purchases to be completed no later than 28 February 2020. –– The implementation of IFRS 16 “Leases” on 1 January 2019 increased net debt by $1.2 billion (non-cash movement). –– As a result of the above, and $0.2 billion of other movements, net debt4 increased by $3.9 billion since the end of 2018 to $3.7 billion. Continued investment in growth projects and development –– Greenfield success with further encouraging drill results released in August 2019 at the Winu project in Western Australia. Extensive drilling and geophysical testing programme completed: geotechnical, hydrology, mining, processing and basic engineering studies are well advanced. Targeting first production in 2023, subject to regulatory approvals and consents. –– $624 million spent on exploration and evaluation. This 28% rise was mostly driven by higher greenfield expenditure to underpin future growth projects, as well as increased activity at the Resolution copper project in Arizona, for which we committed $302 million ($166 million our 55% share) in future expenditure. –– $2.6 billion Koodaideri replacement iron ore mine progressed, with key construction activities on schedule. Koodaideri will have a 43 Mt annual capacity underpinning production of our Pilbara Blend™, with first tonnes in late 2021. –– $1.5 billion investment at Kennecott approved in late 2019. Phase 2 of the south wall pushback is expected to extend copper operations to 2032. –– At the Oyu Tolgoi underground copper/gold mine in Mongolia, we completed the primary production shaft in October 2019, a key milestone. Work continued on the mine design and, overall, we remain within the cost and schedule ranges announced in July 2019. We continue to expect to complete the mine design in the first half of 2020 and the definitive estimate9 of cost and schedule in the second half of 2020. –– $463 million investment in the Zulti South project at Richards Bay Minerals (RBM) in South Africa approved in 2019 to sustain current capacity and extend mine life. Construction is on hold after a number of security incidents – we will assess a restart after normalisation of operations at RBM. 30 Annual report 2019 | riotinto.com

Financial review Total cash returns to shareholders declared report Strategic 2019 2018 US$ US$ billion billion Ordinary dividend Interim 2.5 2.2 Final 3.7 2.9 Full-year dividend 6.2 5.1 Additional returns Share buy-back announced in August 2018, completed by 27 February 2019 n/a 1.0 Special dividend announced in August 2019, paid in September 2019 1.0 n/a Total cash returns from operations 7.2 6.1 Combined total as % of underlying earnings 70% 72% Supplementary returns of post-tax divestment proceeds in 2018 Off-market buy-back in Rio Tinto Limited, completed in November 2018 n/a 2.1 On-market buy-back in Rio Tinto plc from 28 February 2019 to 28 February 2020 n/a 1.1 Special dividend of 243 US cents per share paid in April 2019 n/a 3.9 Total supplementary returns n/a 7.1 Total cash returns to shareholders declared for each year 7.2 13.2 Total dividends paid in 2019 in respect of 2018 differ from the 2018 declaration of $13.5 billion due to the impact of exchange rates and the share buy-back. Total cash returns paid to shareholders 2019 2018 US$ US$ billion billion Previous year’s final ordinary dividend paid in April of each year 2.9 3.2 Special dividend announced in February 2019, paid in April 2019 3.9 n/a Interim ordinary dividend paid in September of each year 2.5 2.1 Special dividend announced in August 2019, paid in September 2019 1.0 n/a Share buy-backs 1.6 5.4 Total cash returns paid to shareholders 11.9 10.7 1 Capital expenditure is presented gross, before taking into account any cash received from disposals of property, plant and equipment (PP&E) and excludes capital expenditure for equity accounted units. The following financial performance indicators – which are non-GAAP measures – are those management uses internally to assess performance. We therefore consider them relevant to readers of this document and present them here to give more clarity around the underlying business performance of our operations. 2 Free cash flow is defined as net cash generated from operating activities less purchase of PP&E, plus sales of PP&E less lease principal payments, following the adoption of IFRS 16 “Leases” in 2019. 3 Net and underlying earnings relate to profit attributable to the owners of Rio Tinto. Underlying EBITDA and earnings are defined on page 254. Underlying earnings is reconciled to net earnings on page 35. 4 Net debt / cash is defined and reconciled to the balance sheet on page 188. 5 Net gearing ratio is defined as net debt divided by the sum of net debt and total equity at the end of each period. 6 Return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed (operating assets before net debt). 7 Underlying EBITDA margin is defined as the Group’s underlying EBITDA divided by Product Group total revenues per the financial information by business unit on page 252. Product Group total revenues is defined as consolidated sales revenue plus share of equity accounted unit sales and intra-subsidiary/equity accounted unit sales. 8 See page 173 for a pre-tax analysis of impairment charge. 9 Refer to the 16 July 2019 market release “Update on Oyu Tolgoi underground project”. Annual report 2019 | riotinto.com 31

Strategic report Financial review continued Underlying EBITDA and underlying earnings by product group 2019 2018 Change US$m US$m Change % Underlying EBITDA Iron Ore 16,098 11,378 4,720 41% Aluminium 2,285 3,095 (810) (26)% Copper & Diamonds 2,073 2,776 (703) (25)% Energy & Minerals 1,762 2,140 (378) (18)% Other operations (77) (70) (7) 10% Reportable segment total 22,141 19,319 2,822 15% Inter-segment transactions (9) – (9) – Product group total 22,132 19,319 2,813 15% Central pension costs, share-based payments and insurance 59 (128) 187 (146)% Restructuring, project and one-off costs (183) (272) 89 (33)% Other central costs (496) (552) 56 (10)% Exploration and evaluation (315) (231) (84) 36% Total 21,197 18,136 3,061 17% Underlying earnings Iron Ore 9,638 6,531 3,107 48% Aluminium 599 1,347 (748) (56)% Copper & Diamonds 554 1,054 (500) (47)% Energy & Minerals 611 995 (384) (39)% Other operations (89) (102) 13 (13)% Reportable segment total 11,313 9,825 1,488 15% Inter-segment transactions (3) – (3) – Product group total 11,310 9,825 1,485 15% Central pension costs, share-based payments and insurance 60 (90) 150 (167)% Restructuring, project and one-off costs (94) (190) 96 (51)% Other central costs (550) (410) (140) 34% Exploration and evaluation (231) (193) (38) 20% Net interest (122) (134) 12 (9)% Total 10,373 8,808 1,565 18% Underlying EBITDA is a key financial indicator which management uses internally to assess performance. It excludes the same items that are excluded in arriving at underlying earnings. See page 252 for more detail and a reconciliation to profit on ordinary activities before finance items and tax. Commentary on financial results To give additional insight into the performance of our business, we report underlying EBITDA and underlying earnings. The principal factors explaining the movements in underlying EBITDA are set out in this table. US$m 2018 underlying EBITDA 18,136 Prices 4,382 Exchange rates 529 Volumes and mix (20) General inflation (303) Energy 75 Operating cash cost movements (523) Higher exploration and evaluation spend (136) One-off items (16) Absence of underlying EBITDA from assets divested in 2018, including coking coal (1,246) Non-cash costs/other 319 2019 underlying EBITDA 21,197 32 Annual report 2019 | riotinto.com

Financial review Significant momentum from higher iron ore prices report Strategic Commodity price movements in 2019 increased underlying EBITDA by $4,382 million compared with 2018. This was primarily driven by the strength in the iron ore price and was partly offset by lower prices for copper and aluminium. We have included a table of prices and exchange rates on page 298. The Platts index for 62% iron fines was 39% higher on average compared with 2018 on a free on board (FOB) basis, driven by supply disruptions in the seaborne market and strong demand following record Chinese steel output. Average London Metal Exchange (LME) prices for copper and aluminium were 8% and 15% lower, respectively, compared with 2018, as global manufacturing activity slowed. The gold price was 10% higher. The 10% tariff on US imports of aluminium from Canada, in place from 1 June 2018, was removed on 19 May 2019, following agreement between the US and Canadian governments. The midwest premium for aluminium in the US averaged $320 per tonne - 24% lower than in 2018. Underlying EBITDA benefits from weaker A$ Compared with 2018, on average the US dollar strengthened by 7% against the Australian dollar, by 3% against the Canadian dollar and by 9% against the South African rand. Currency movements increased underlying EBITDA by $529 million relative to 2018. Volumes flat overall Underlying EBITDA decreased by $20 million compared with 2018 from movements in sales volumes and changes in product mix. A 3% decline in iron ore shipments from the Pilbara, where we experienced weather disruptions and operational challenges at some of our mines in the first half of 2019, were mostly offset by increased bauxite shipments, improved aluminium product mix and higher by-product volumes (gold and molybdenum) from Kennecott and Oyu Tolgoi. Energy prices marginally lower Average movements in energy prices compared with 2018 improved underlying EBITDA by $75 million, mainly due to lower diesel prices. Continued cost pressures Our cash operating costs rose by $523 million compared with 2018 (on a unit cost basis), primarily reflecting an increase in iron ore unit costs, driven by the first half challenges. There was some respite on cost inflation for certain raw materials for Aluminium, in particular caustic soda and petroleum coke. However, this was partly offset by inflationary pressures on other costs. Advancing our options through increased exploration spend We spent $136 million, or 28%, more on exploration and evaluation compared with last year. This went to our highest value projects, particularly on evaluating the Resolution copper project in Arizona, advancing our Winu copper/gold deposit in Australia and progressing our Falcon diamond project in Canada. One-off items One-off items aggregated to be $16 million less than in 2018. 2019 underlying EBITDA includes the impact of a $199 million charge at Escondida to reflect the cancellation of existing coal power contracts, a $68 million impact from the curtailment of operations at Richards Bay Minerals (RBM) and $68 million for operational challenges faced at our ISAL and Kitimat aluminium smelters. In 2018 we suspended operations for two months at Iron Ore Company of Canada before reaching a new labour agreement ($236 million impact). We also suspended production at Rio Tinto Iron & Titanium, following a fatality at our Sorel-Tracy plant and labour disruptions at RBM ($132 million impact). $1.2 billion lower underlying EBITDA following divestments in 2018, primarily coal The significant divestments in 2018 generated $1,246 million of underlying EBITDA in 2018, primarily the coking coal business and the Grasberg copper mine. Movements in our non-cash costs and other items lowered underlying EBITDA by $319 million compared with 2018. Following implementation of IFRS 16 “Leases” on 1 January 2019, a large proportion of our lease expense comprises charges for depreciation and interest and is not included in cash operating costs. In 2019, there was a consequent benefit to underlying EBITDA of approximately $320 million from this change in treatment. Annual report 2019 | riotinto.com 33

Strategic report Financial review continued Net earnings, underlying earnings Net earnings and underlying EBITDA The principal factors explaining the movements in underlying earnings and net earnings are set out here. In order to provide additional insight into the performance of its business, Rio Tinto reports US$m underlying EBITDA and underlying earnings. The 2018 net earnings 13,638 differences between underlying earnings, underlying Total changes in underlying EBITDA 3,061 EBITDA, and net earnings are set out in this table. Increase in depreciation and amortisation (pre-tax) in underlying earnings (366) Decrease in interest and finance items (pre-tax) in underlying earnings 32 Increase in tax on underlying earnings (1,011) Net earnings Increase in underlying earnings attributable to outside interests (151) Total changes in underlying earnings 1,565 $8.0bn Changes in exclusions from underlying earnings: Movement in net impairment charges (1,554) Movement in gains on consolidation and gains on disposals (4,287) Movement in exchange differences and gains/losses on derivatives (904) Other (448) 2019 net earnings 8,010 Depreciation and amortisation, net interest and tax Our depreciation and amortisation charge was $0.4 billion higher than 2018. This was primarily due to the inclusion of depreciation on leases brought on to the balance sheet on adoption of IFRS 16 and completion of the Amrun bauxite mine. The increase was partly offset by the impact of the weaker Australian and Canadian dollars against the US dollar, along with assets divested in 2018. Interest and finance items (pre-tax) were broadly in line with 2018. This was mainly due to the bond tender we completed in 2018, which reduced our gross debt by $1.9 billion equivalent and incurred $0.1 billion in early redemption costs in 2018. In 2019, there was also a lower level of average net debt and an increase in capitalised interest. This was offset by the inclusion of interest expense on leases following adoption of IFRS 16 “Leases” in 2019. The 2019 effective corporate income tax rate on underlying earnings, excluding equity accounted units, was 30%, compared with 29% in 2018. The effective tax rate on underlying earnings in Australia was 31% in 2019 compared with 30% in 2018. We anticipate an effective tax rate on underlying earnings of approximately 30% in 2020. Items excluded from underlying earnings Net impairment charges increased by $1.6 billion compared with 2018, primarily related to the Oyu Tolgoi underground project in Mongolia and the Yarwun alumina refinery in Queensland, Australia. On 16 July 2019, we announced that completion of the definitive estimate for the Oyu Tolgoi underground project would be delayed until the second half of 2020. We also indicated that first sustainable production could be delayed by 16 to 30 months compared with the original feasibility study guidance in 2016 and that development capital spend may increase by $1.2 billion to $1.9 billion over the $5.3 billion previously disclosed. These matters were identified as an impairment trigger, so we carried out an assessment of the recoverable amount of the project as at 30 June 2019. This resulted in an impairment charge of $0.8 billion, after tax and non-controlling interests, which was included in our 2019 interim results. On page 173 there is a detailed explanation of the impairment process. In 2019, we recognised a $0.8 billion impairment charge (after tax) related to the Yarwun alumina refinery. In prior years, for accounting purposes, the value of Yarwun was considered in aggregate with Queensland Alumina and the Weipa bauxite mine. The ramp-up of the Amrun expansion at Weipa resulted in increased bauxite exports to the extent that Weipa is now considered to generate cash inflows largely independent from the downstream alumina operations. In 2018, we recognised $0.1 billion of after tax charges, mainly relating to the carrying value of the ISAL aluminium smelter in Iceland following its reclassification to assets held for sale. In 2019, we recognised a further $0.1 billion post-tax charge as these assets were reclassified back out of assets held for sale. Gains on disposals were $4.3 billion lower than 2018. In 2019, we recognised a $0.3 billion loss (after tax) from the sale of Rössing Uranium, including a non-cash adjustment for historical foreign exchange losses. In 2018, we realised net gains of $4.0 billion (after tax), primarily from the sale of our Hail Creek and Kestrel coking coal businesses in Australia, the sale of our interest in the Grasberg copper mine in Indonesia and the formation of the ELYSIS joint venture in Canada. We created this joint venture in May 2018 with Alcoa, supported by Apple and the governments of Canada and Quebec, to develop a carbon-free aluminium smelting process and recognised a gain of $0.1 billion (post-tax) on forming the joint venture. 34 Annual report 2019 | riotinto.com

Financial review Exchange differences and gains/losses on derivatives were $0.9 billion lower than 2018. In 2019, these report Strategic gave rise to a $0.2 billion after tax loss. This compared with gains of $0.7 billion in 2018 - mainly on US dollar debt in non-US dollar functional currency Group companies, intragroup balances and on the revaluation of certain derivatives which do not qualify for hedge accounting. These exchange gains are largely offset by currency translation losses recognised in equity. The quantum of US dollar debt is largely unaffected and we will repay it from US dollar sales receipts. There were $0.4 billion in other changes in items excluded from underlying earnings. In 2019, we recognised a $0.2 billion loss (after tax) related to provisions for obligations in respect of legacy operations. In 2018, we recognised a $0.6 billion gain on sale of surplus land at Kitimat and a $0.3 billion increase in the closure provision at the Argyle diamond mine. Profit 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 2019 was $8.0 billion (2018: $13.6 billion). We recorded a profit after tax in 2019 of $7.0 billion (2018: $13.9 billion) of which a loss of $1.0 billion (2018 profit: $0.3 billion) was attributable to non-controlling interests. Net earnings, underlying earnings and underlying EBITDA The differences between underlying earnings and net earnings are set out in this table (all numbers are after tax and exclude non-controlling interests). 2019 2018 US$m US$m Underlying earnings 10,373 8,808 Items excluded from underlying earnings Impairment charges (1,658) (104) Net (losses)/gains on consolidation and disposal of interests in businesses (291) 3,996 Foreign exchange and derivative (losses)/gains on net debt and intragroup balances and derivatives not qualifying for hedge accounting (200) 704 Losses from increases to closure estimates (non-operating and fully impaired sites) – (335) Gain relating to surplus land at Kitimat – 569 Other exclusions (214) – Net earnings 8,010 13,638 The explanation of excluded items is on page 170. On page 170 there is a detailed reconciliation from underlying earnings to net earnings, including pre-tax amounts and additional explanatory notes. The differences between underlying EBITDA, EBITDA and net earnings are set out in this table. 2019 2018 US$m US$m Underlying EBITDA 21,197 18,136 Net (losses)/gains on consolidation and disposal of interests in businesses (291) 4,622 (Losses)/gains on embedded commodity derivatives not qualifying for hedge accounting (including exchange) (260) 279 Gain on sale of wharf and land in Kitimat, Canada – 602 Change in closure estimate – (376) Change in other exclusions (171) – EBITDA 20,475 23,263 Depreciation and amortisation in subsidiaries excluding capitalised depreciation (4,272) (3,909) Impairment charges (3,487) (132) Depreciation and amortisation in equity accounted units (653) (650) Finance items in subsidiaries (648) (33) Taxation in subsidiaries (4,147) (4,242) Taxation and finance items in equity accounted units (296) (372) Less loss/(profit) attributable to non-controlling interests 1,038 (287) Net earnings 8,010 13,638 Annual report 2019 | riotinto.com 35

Strategic report Financial review continued Balance sheet Our net debt of $3.7 billion increased by $3.9 billion in 2019, reflecting final, interim and special dividend payments of $10.3 billion and $1.6 billion of share buy-backs, partly offset by our strong free cash flow. It also reflects a non-cash increase of $1.2 billion following the implementation of IFRS 16 “Leases” from 1 January 2019. The introduction of IFRS 16 also resulted in a benefit to underlying EBITDA of approximately $320 million as a large proportion of lease payments are no longer charged to cash operating costs. There was no significant impact on net earnings, after the increase in depreciation and interest on leases. Our net gearing ratio (net debt to total capital) increased to 7% at 31 December 2019 (31 December 2018: negative 1%). Our total financing liabilities at 31 December 2019 (see page 188) were $14.3 billion (31 December 2018: $13.0 billion) and the weighted average maturity was around 10 years. At 31 December 2019, approximately 76% of these liabilities were at floating interest rates (84% excluding leases). The maximum amount within non-current borrowings maturing in any one calendar year was $1.8 billion, which matures in 2025. We had $10.6 billion in cash and cash equivalents plus other short-term cash investments at 31 December 2019 (31 December 2018: $13.3 billion). 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 40-60% 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 dividends with additional returns to shareholders in periods of strong earnings and cash generation. We determine dividends in US dollars. We declare and pay Rio Tinto plc dividends in pounds sterling and Rio Tinto Limited dividends in Australian dollars. The 2019 final dividend was converted at exchange rates applicable on 25 February 2020 (the latest practicable date before the dividend was declared). ADR holders receive dividends at the declared rate in US dollars. 36 Annual report 2019 | riotinto.com

Financial review Ordinary dividend per share declared report Strategic 2019 2018 dividends dividends Rio Tinto Group Interim (US cents) 151.00 127.00 Final (US cents) 231.00 180.00 Full-year (US cents) 382.00 307.00 Rio Tinto plc Interim (UK pence) 123.32 96.82 Final (UK pence) 177.47 135.96 Full-year (UK pence) 300.79 232.78 Rio Tinto Limited Interim (Australian cents) 219.08 170.84 Final (Australian cents) 349.74 250.89 Full-year (Australian cents) 568.82 421.73 Special dividend per share declared 2019 2018 dividends dividends Rio Tinto Group Declared with 2019 interim results (US cents) 61.00 – Declared with 2018 full year results – from divestment income (US cents) 243.00 Rio Tinto plc Declared with 2019 interim results (UK pence) 49.82 – Declared with 2018 full year results – from divestment income (UK pence) 183.55 Rio Tinto Limited Declared with 2019 interim results (Australian cents) 88.50 – Declared with 2018 full year results – from divestment income (Australian cents) 338.70 The 2019 final 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 16 April 2020, we will pay the 2019 final dividend to holders of ordinary shares and holders of ADRs on the register at the close of business on 6 March 2020 (record date). The ex-dividend date is 5 March 2020. Rio Tinto plc shareholders may choose to receive their dividend in Australian dollars, and Rio Tinto Limited shareholders may choose to receive theirs in pounds sterling. Currency conversions will be based on the pound sterling and Australian dollar exchange rates five business days before the dividend payment date. Rio Tinto plc and Rio Tinto Limited shareholders must register their currency elections by 24 March 2020. We will operate our Dividend Reinvestment Plans for the 2019 final dividend – see our website (riotinto.com) for details. Rio Tinto plc and Rio Tinto Limited shareholders’ election notice for the Dividend Reinvestment Plans must be received by 24 March 2020. Purchases under the Dividend Reinvestment Plan are made on or as soon as practicable after the dividend payment date and at prevailing market prices. There is no discount available. Annual report 2019 | riotinto.com 37

Strategic report Portfolio management We have a programme of Capital projects high-quality projects across Total approved a broad range of commodities capital cost (100% unless In 2019, we funded our capital expenditure from Projects (Rio Tinto 100% owned otherwise unless otherwise stated) stated) Status/ Milestones operating activities. We expect to continue funding our capital programme from internal sources, Completed in 2019 except for the Oyu Tolgoi underground Investment in the Compagnie des $0.3bn Approved in 2016. We produced first ore in the fourth development, which is project-financed. Bauxites de Guinée (CBG) bauxite (RT share) quarter of 2018. When the ramp-up is complete the mine in Guinea, West Africa, to project will increase annual capacity from 14.5 to expand capacity 18.5 million tonnes. Ongoing and approved Iron ore Investment in West Angelas and $0.8bn Approved in October 2018, the investments will enable the Robe Valley in the Pilbara region (RT share) us to sustain production of our Pilbara Blend™ and Robe of Western Australia to sustain Valley products. All major environmental approvals have production capacity been received with the exception of the Mesa H approval. All other procurement and construction activities are progressing to plan. First ore is expected in 2021. Investment in Koodaideri, a new $2.6bn Approved in November 2018, the investment incorporates production hub in the Pilbara region of a processing plant and infrastructure including a Western Australia, to sustain existing 166-kilometre rail line connecting the mine to our existing production in our iron ore system network. Key construction activities are on schedule and we expect first production in late 2021. Once complete, the mine will have an annual capacity of 43 million tonnes. Investment in the Greater Tom Price $0.8bn Approved in November 2019, the investment in the operations to help sustain production Western Turner Syncline phase 2 mine will facilitate capacity mining of existing and new deposits. It includes construction of a new crusher and a 13-kilometre conveyor. Pending final government approvals, construction will start in the first half of 2020 with first ore from the crusher expected in 2021. Aluminium Investment in a second tunnel at the $0.5bn Approved in 2017. Project completion is now set for 2021 1000MW Kemano hydropower facility (previously late 2020). Cost forecasts remain on budget. at Kitimat, British Columbia, Canada The project will ensure the long-term reliability of the power supply to the modernised Kitimat smelter and de-risks the hydropower facility. Copper & Diamonds Investment to extend mine life at Rio $0.9bn Funding for the continuation of open pit mining via the Tinto Kennecott, US from 2019 to 2026 push back of the south wall: the project largely consists of simple mine stripping activities and is expected to be complete in 2021. Further investment to extend mine life $1.5bn Approved in December 2019, the investment will further at Rio Tinto Kennecott, US by a further extend strip waste rock mining and support additional six years to 2032 infrastructure development in the second phase of the south wall pushback project. This will allow mining to continue into a new area of the orebody between 2026 and 2032. Development of the Oyu Tolgoi $5.3bn* The project was approved in May 2016. A number of mine underground mine in Mongolia design options are under consideration which have (Rio Tinto 34%) different cost and schedule implications. These options have been defined to a level of accuracy associated with a Conceptual Study or Order of Magnitude Study. First sustainable production could be achieved between May 2022 and June 2023 (includes up to eight months contingency). Preliminary estimates for development capital are $6.5 billion to $7.2 billion. *Subject to the outcomes of the definitive estimate Energy & Minerals Development of the Zulti South project $0.5bn Approved in April 2019, the investment will underpin at Richards Bay Minerals (RBM) in RBM’s supply of zircon and ilmenite over the life of the South Africa (Rio Tinto 74%), to sustain mine. Construction is on hold after a number of security current capacity and extend mine life. incidents – we will assess a restart after normalisation of operations at RBM. 38 Annual report 2019 | riotinto.com

Portfolio management Strategic report Strategic Material acquisitions and divestments Consideration Asset $m Status Divested in 2019 Rössing Uranium 6.5(b) Sold to China National Uranium Corporation Limited Divested in 2018 Hail Creek 1,550(a)(c) Sold to Glencore Kestrel 2,250(a) Sold to a consortium consisting of EMR Capital and PT Adaro Energy TbK Aluminium Dunkerque 500(a) Sold to Liberty House Grasberg 3,500(a)(d) Sold to PT Indonesia Asahan Aluminium (Persero) (Inalum) Divested in 2017 Coal & Allied Industries Limited 2,690(a) Sold to Yancoal Australia Limited (a) Before working capital and completion adjustments. (b) Gross cash sales proceeds, excluding cash held by Rössing included within the transaction and transaction costs. Excludes the contingent payment of up to US$100 million linked to uranium spot prices and Rössing’s net income during the next seven calendar years. (c) Excluding proceeds related to sale of Valeria coal development project of $150m (before working capital adjustments). (d) Including a payment received of $107 million in respect of our share of Grasberg’s copper and gold revenues, net of our capital contribution for the year. Over the last three years, we have made no material acquisitions. Further information on acquisitions and divestments is included in note 37 to the financial statements on page 212. Annual report 2019 | riotinto.com 39

Strategic report Shanghai, China. China is the largest market for our iron ore products, which can be found in the steel used in skyscrapers. Iron Ore Fe 40 Annual report 2019 | riotinto.com

Iron Ore Strategic report Strategic Overview Pilbara Iron Ore in figures In the Pilbara region of Western Australia, we operate a fully integrated network of 16 iron ore mines, four port terminals, a 1,700 kilometre rail 16 network and related infrastructure. integrated mines in Western Australia Our Iron Ore product group includes Dampier Salt, our value over volume strategy. Together, these set also in Western Australia; with three solar salt our business apart from others in the industry and 5 operations, we are the world’s largest exporter of allow us to export our products, including our mainstream iron ore products seaborne salt. Our portfolio of quality assets, highly flagship Pilbara Blend™, to our customers safely, valued product suite, fully integrated system and reliably and efficiently. committed people and partners are key pillars of 4 port terminals Snapshots from the year 1,700km automated rail network, including AutoHaulTM 0.66 $24.1bn 72% $11.4bn AIFR gross sales revenue underlying free Net cash generated 11.9% (2018: 0.63) (2018: $18.7bn) on board (FOB) from operating of residential workforce who are Pilbara EBITDA margin activities indigenous people* (2018: 68%) (2018: $8.3bn) 12,300 employees (includes temporary employees Strengthening our nationally recognised qualifications in automation. and 100% of joint venture operations) Alongside other states, Western Australia will iron ore business *Includes all indigenous people who live in the Pilbara We continued to invest in our Pilbara iron ore assets also benefit from the Future Minds Accelerator, and all members of our Traditional Owner groups who in 2019. Projects with a combined value of $4.6 billion our $7 million programme, developed and have signed Rio Tinto’s Regional Framework Deed, are under construction with $450 million spent launched in partnership with leading start-up regardless of where they live. across projects at Koodaideri, West Angelas and accelerator BlueChilli and Amazon Web Services. the Robe Valley. The programme will work with school-age learners across Australia to fast-track the development of Gross sales revenue We also announced a $749 million investment in skills needed for the digital future. �� Western Turner Syncline Phase 2 (WTS2) this year. Part of our existing Greater Tom Price operations, In 2019, we continued to strengthen local WTS2 will produce high-quality Brockman ore, procurement. We awarded our 400th scope of work �� which will support our flagship Pilbara Blend™, the to businesses based in the state; in total, we preferred baseload product for China’s steel mills. partnered with more than 1,900 businesses based With a capital intensity of about $25 per tonne of in Western Australia. For example, we awarded production capacity, the mine is expected to deliver Mondium, a company based in Perth, an an attractive internal rate of return. The haul truck approximate $280 million contract for the design fleet at WTS2 will also use Autonomous Haulage and construction of our WTS2 mine. This contract System (AHS) technology from 2021, which, across is expected to create 450 jobs starting in the first our Pilbara operations, has delivered significant quarter of 2020. safety benefits, enhanced productivity and lowered costs. We also engaged with nearly 50 Pilbara $24.1bn Indigenous-owned businesses, and in 2019, (2018: $18.7bn) Construction of WTS2 will begin in the first quarter awarded more than $42 million to such businesses of 2020, with first ore from the crusher expected in to help develop Koodaideri – our most Net cash generated from operating activities 2021. At its peak, the construction workforce is technologically advanced mine. We also awarded expected to exceed 1,000. a landmark $14 million contract to Yurra Pty Ltd., �� which is majority owned by the Yindjibarndi Aboriginal Our partnership with Corporation, to provide civil maintenance services on and around our Pilbara rail network. Western Australia �� In 2019, to help Western Australians develop the skills they need to succeed in a rapidly changing world, our Iron Ore product group invested $10 million in education programmes at a wide range of universities, schools, governments and non-profits. One of our flagship programmes is our partnership with the government of Western Australia and South Metropolitan TAFE (Technical and Further Education) to develop the first $11.4bn (2018: $8.3bn) Annual report 2019 | riotinto.com 41

Strategic report Iron Ore continued 2019 year end results 2019 2018 Change Pilbara production (million tonnes – 100%) 326.7 337.8 (3)% Pilbara shipments (million tonnes – 100%) 327.4 338.2 (3)% Salt production (million tonnes – Rio Tinto share)1 5.4 6.2 (12)% Gross sales revenue (US$ millions) 24,075 18,731 29% Underlying EBITDA (US$ millions) 16,098 11,378 41% Pilbara underlying FOB EBITDA margin2 72% 68% Underlying earnings (US$ millions) 9,638 6,531 48% Net cash generated from operating activities (US$ millions) 11,420 8,349 37% Capital expenditure (US$ millions)3 (1,741) (1,302) 34% Free cash flow (US$ millions) 9,601 7,045 36% Return on capital employed4 67% 42% 1 To reflect a change in management responsibility, Dampier Salt is now reported within Iron Ore and we have restated prior year numbers accordingly. Iron Ore Company of Canada and the Simandou iron ore project in Guinea continue to be reported within Energy & Minerals. 2 The Pilbara underlying free on board (FOB) EBITDA margin is defined as Pilbara underlying EBITDA divided by Pilbara revenues, 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 Return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed (operating assets before net debt). �n�erl�ing ��A 201� �� 2019 Safety 2019 Pilbara unit cash costs were $14.4 per ($ million) In 2019, our Iron Ore operations experienced no tonne (2018: $13.3 per tonne). The fire and fatalities, and recorded an all injury frequency rate weather-related events in the first half of the year 2018 underlying EBITDA �� (AIFR) of 0.66. While slightly higher than the 2018 reduced shipments by 14 million tonnes (100% Price �� rate of 0.63, the number of significant near miss basis), increasing unit costs by around $0.5 per incidents was approximately 50% lower, year on year. tonne. We incurred approximately $50 million in Exchange rates 247 additional costs in 2019 ($0.2 per tonne) to address Energy 51 Our ongoing commitment to reducing material risk the mine operational challenges. Higher salaries, exposure – including implementing engineering rising fuel prices and cyclical maintenance in 2019 Ination (73) and elimination controls to address vehicle and compared with 2018 were mostly offset by a weaker Flexed 2018 underlying EBITDA �� driving risks – resulted in a significant reduction in Australian dollar. repeat serious incidences. We also continued our Volumes and mix (426) focus on major hazard risk reduction this year, We expect Pilbara unit cash costs to be $14-15 per Cash costs (560) including proactive management of our water tonne in 2020 (assumes a 0.67 Australian dollar storage and tailings facilities in line with the exchange rate). Increased volume efficiency Other 6 Group standard. compared with 2019 is expected to be offset by 2019 underlying EBITDA �� longer haul distances and increased maintenance Our strong commitment to safety includes an activity. Koodaideri is on track for first ore in late emphasis on mental health and wellbeing, with 2021. Once fully ramped up it will provide new a range of initiatives in place, including our volumes at a lower cost. industry-leading peer support programme. We have continued investing in productivity and Financial performance automation, and 50% of our truck fleet in the In 2019, we benefited from robust demand for our Pilbara is now fully autonomous. We have a high-quality products driven by strong demand pathway that will see a large majority of the fleet from China and constrained seaborne supply. being automated by the end of 2022. AutoHaulTM, Iron ore shipments were down 3% on 2018, but the world’s first automated heavy-haul, long- recovered strongly in the second half of 2019 after distance rail network, was fully operational in 2019. disruptions earlier in the year, which included weather events, a screen house fire at one of our Our Pilbara operations delivered an underlying ports and operational challenges. FOB EBITDA margin of 72%, compared with 68% in 2018. Underlying EBITDA of $16.1 billion was 41% higher than 2018, reflecting higher prices which were We price the majority of our iron ore sales (76%) by partially offset by higher unit costs. The Platts reference to the average index price for the month index for 62% iron fines on an FOB basis was 39% of shipment. In 2019, we priced approximately 16% higher, on average, compared with 2018. This of sales by reference to the prior quarter’s average increased underlying EBITDA by $5.4 billion index lagged by one month, with the remainder relative to 2018. sold either on current quarter average, current month average or on the spot market. We made approximately 68% of sales including freight and 32% on an FOB basis. 42 Annual report 2019 | riotinto.com

Iron Ore Underlying FOB EBITDA margin We achieved an average iron ore price of $79.0 per We are also investing $1.55 billion with our joint report Strategic wet metric tonne on an FOB basis (2018: $57.8 per venture partners, Mitsui and Nippon Steel, (our wet metric tonne). This equates to $85.9 per dry 53% share is $820 million) at the Robe Valley and 72% metric tonne (2018: $62.8 per dry metric tonne). West Angelas operations. We have received all (2018: 68%) major environmental approvals, with the exception The gross sales revenue for our Pilbara operations of Mesa H, and procurement and construction Pilbara shipments included freight revenue of $1.7 billion (2018: activities are progressing well. We anticipate first (million tonnes – 100% basis) $1.7 billion). ore from these projects in 2021. �� .� Net cash generated from operating activities of In late 2019, the board approved the $749 million �� .� $11.4 billion was 37% higher than 2018, driven by investment in the Western Turner Syncline Phase 2 the same trends as underlying EBITDA. mine, part of the Greater Tom Price operations. This �� .� will facilitate mining of new deposits and includes �� .� The $9.6 billion of free cash flow was 36% higher construction of a new crusher and a 13-kilometre than 2018, reflecting the strong realised pricing conveyor. Pending final government approvals, 2019 �2�� partly offset by royalties, taxes and higher capital construction will start in the first half of 2020 with spend. This included sustaining capital as well as first ore expected in 2021. the construction of Koodaideri. Greenhouse gas emissions Review of operations In 2019, Iron Ore greenhouse gas emissions intensity Our Pilbara mines in Western Australia produced was ~1% higher than the baseline target set in 327 million tonnes (our share is 271 million tonnes) 2008, a rise driven by increases in diesel emissions in 2019 – 3% lower than 2018. Overall material resulting from longer-than-anticipated haul moved in 2019 was the highest on record. Our distances and increased movement of materials. increased focus on waste material movement and pit development will continue in 2020 to improve We have established strategies for the mine performance and pit sequencing. management of greenhouse gas emissions in our Pilbara operations. Subject to government In the first half of 2019, shipments were affected by approvals, construction of the company’s first solar weather events, a screen house fire at one of our plant at the new Koodaideri mine will start in 2020. ports and mine operational challenges. Our second This 34 megawatt plant will be complemented by half performance was strong, with both production a new 12MW/h battery energy storage system that and shipments exceeding the same period in 2018, will help power our entire Pilbara network. despite a planned, extended rail maintenance shutdown which limited rail capacity for 12 days. In October 2019 we commenced trials of portside trading. We maintain some inventory at Chinese ports and can also handle material from third parties and from Iron Ore Company of Canada. New projects and growth options We are progressing our $2.6 billion Koodaideri iron ore mine, with key construction activities on schedule. This new production hub will be our most technologically advanced, incorporating a processing plant and infrastructure including an airport, camp and a 166-kilometre rail line connecting the mine to our existing network. We continue to expect first ore in late 2021. Once fully commissioned, the initial mine development will have an annual capacity of 43 million tonnes. This will increase the lump to fines ratio of the entire portfolio from an average of 35% to 38% and will increase the annual capacity of our Pilbara system to 360 million tonnes. We have multiple project scopes under study for Koodaideri Phase 2, following board approval for a $44 million pre-feasibility study. Ultimately, the capacity of the Koodaideri hub could be up to 70 million tonnes per year, depending on market conditions. Annual report 2019 | riotinto.com 43

Strategic report Aluminium is used in everything from electric cars to smartphones – and ours is made with a carbon footprint 60% lower than the industry average. Aluminium Al 44 Annual report 2019 | riotinto.com

Aluminium Strategic report Strategic Overview Aluminium in figures We are a global leader in aluminium, with large-scale, high-quality bauxite mines and alumina refineries and, in Canada, Australia and New Zealand, 4 smelters producing aluminium certified as responsible. bauxite mines in Australia, Brazil and Guinea Through our integrated portfolio of mines, refineries certified, responsible aluminium through a “chain and smelters, we produce bauxite, alumina and of custody” spanning the Gove bauxite mine in 4 aluminium. Managing the process from start to Australia to our alumina refinery, aluminium alumina refineries in Australia, Brazil and Canada finish allows us to deliver quality products to our smelters and casthouses in Quebec, Canada. In customers efficiently. These are carefully calibrated 2019, we received further ASI certifications for our to meet their specific and changing needs – from BC Works and Kemano sites in Canada, our Amrun 14 aluminium smelters in Canada, Australia, high-grade bauxite for the global seaborne trade and Weipa bauxite mines, Yarwun alumina refinery, New Zealand, Iceland and Oman to sustainably sourced aluminium to new, lighter and our Bell Bay and NZAS smelters in Australia alloys for the automotive industry. and New Zealand. 7 Our Canadian operations are in the first decile of We also established ELYSIS, a partnership with hydropower plants in Canada supplying the industry cost-curve and produce aluminium Alcoa supported by Apple and the governments of 100% of the electricity we use there using clean, renewable hydropower. In 2016, we Canada and Quebec, to develop smelting technology launched RenewAl™, the world’s first certified low free of direct carbon emissions. Across our aluminium carbon aluminium. We were the first producer to operations, our greenhouse gas emissions intensity 3 offer Aluminium Stewardship Initiative (ASI) is 60% lower than the industry average. research and development centres in Canada, France and Australia Snapshots from the year 22 sites certified responsible by the Aluminium Stewardship Initiative (ASI) 0.46 $10.3bn 26% $2.2bn AIFR gross sales revenue underlying EBITDA net cash generated 14,000 (2018: 0.40) (2018: $12.2bn) margin from integrated from operating employees operations activities (2018: 32%) (2018: $2.3bn) Gross sales revenue �� 2019 A step-change in productivity for An alloy with customer needs our Australian operations in mind In 2017, to strengthen productivity across RTA, we Through discussions with our customers, we are launched an initiative to operate our bauxite mines seeing increasing demand for specialised alloys and our Pacific assets in a more integrated way. We offering improved mechanical properties. We have first put this programme to the test at our Weipa a long and successful track record of developing mine and, in September 2019, achieved a key such products, and our three research and milestone with the commissioning of our development centres have always played a key role. Brisbane-based Bauxite Integrated Operations Centre (BIOC). Today, the BIOC runs 24 hours per In 2019, we launched Revolution-Al™, a new day, seven days a week, and allows us to remotely aluminium alloy that unlocks design potential for $10.3bn monitor, control and operate our Weipa, Gove and car wheels. Created by our team at the Arvida (2018: $12.2bn) Amrun mines. Research & Development Centre in Canada, Revolution-Al™ is 15-20% stronger than a Net cash generated from operating activities Our vision is to have our people and our business traditional alloy, enabling a 7% weight reduction operate to their full potential, to plan with the best versus standard wheels. This new product provides �� 2019 information available and to exceed our customers’ opportunities to reduce carbon emissions and tyre needs. To this end, the BIOC team collects large wear as well as improve vehicle performance, amounts of data from every mine, enabling us to handling and visual appeal. gain a complete view across the mine’s entire supply chain. Then, using new technologies and Our tests also show that Revolution-Al™ can real-time reporting, we can make quicker, more increase our customers’ productivity. It can be cast accurate and agile decisions to optimise operations. in existing facilities, reduces production time and can be easily recycled. Key to this step change was leveraging experience from our aluminium and iron ore operations’ centres We received our first order in September 2019 and, in Canada and Western Australia, respectively. In as manufacturers compete to make lighter, more 2019, the BIOC delivered over $50 million of efficient cars, this alloy could soon be used to additional value through grade optimisation, better reduce the weight of other car parts, such as $2.2bn resource allocation and quality improvements. chassis parts or suspension components. (2018: $2.3bn) Annual report 2019 | riotinto.com 45

Strategic report Aluminium continued 2019 year end results 2019 2018 Change Bauxite production (000 tonnes – Rio Tinto share) 55,105 50,421 9% Alumina production (000 tonnes – Rio Tinto share) 7,744 7,980 (3)% Aluminium production (000 tonnes – Rio Tinto share)1 3,171 3,231 (2)% Gross sales revenue (US$ millions) 10,340 12,191 (15)% Underlying EBITDA (US$ millions) 2,285 3,095 (26)% Underlying EBITDA margin (integrated operations) 26% 32% Underlying earnings (US$ millions) 599 1,347 (56)% Net cash generated from operating activities (US$ millions) 2,183 2,331 (6)% Capital expenditure – excluding EAUs2 (US$ millions) (1,316) (1,683) (22)% Free cash flow (US$ millions) 821 638 29% Return on capital employed3 4% 8% 1 To allow production numbers to be compared on a like-for-like basis, we have excluded production from asset divestments completed in 2018 from our share of prior year production data. The financial data above includes the results of divested assets up to the date of sale. 2 Capital expenditure is the net cash outflow on purchases less sales of property, plant and equipment, capitalised evaluation costs and purchases less sales of other intangible assets. It excludes equity accounted units (EAUs). 3 Return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed (operating assets before net debt). Safety improved by $0.3 billion through productivity gains, 2019 marked a fifth consecutive fatality-free year including raw material efficiencies at the refineries �n�erl�ing ��A 201� �� 2019 for Rio Tinto Aluminium (RTA), and we finished the and lower input prices, primarily for caustic soda ($ million) year with an AIFR of 0.46, a slight increase and petroleum coke. We also benefited from $0.2 compared to 2018 (0.40). billion of gains from increased bauxite volumes and 2018 underlying EBITDA �� grade optimisation, supported by the successful Price �� We continued improving the safety maturity across ramp-up of our new Amrun mine in Queensland our sites with a strong emphasis on leadership following its completion in late 2018. Exchange rates 153 safety coaching and critical risk management, Energy 16 completing over 232,000 verifications on We achieved an average realised aluminium price fatality-risk critical controls. We also initiated a of $2,132 per tonne (2018: $2,470 per tonne). This Ination (110) project to increase vehicle-pedestrian segregation, comprised the LME price, a market premium and Flexed 2018 underlying EBITDA �� including the introduction of a pedestrian detection a value-added product (VAP) premium. The cash system in our smelters. LME price averaged $1,791 per tonne, 15% lower Volumes and mix 316 than 2018. In our key US market, the midwest Cash costs 315 We further enhanced our management of major premium dropped 24% to $320 per tonne on hazards, reducing the number of process safety average in 2019. VAP represented 51% of the Other (212) incidents and strengthening the way we manage primary metal we sold (2018: 54%, excluding the 2019 underlying EBITDA �� critical risks in process safety and tailings. This Dunkerque smelter which we sold in 2018) and resulted in a 50% reduction in the number of Tier 1 generated attractive product premiums averaging process safety incidents from 2018 to 2019. $234 per tonne of VAP sold (2018: $227 per tonne). We paid a 10% tariff on our Canadian aluminium Our strong commitment to safety extends to exports to the US under Section 232 until the tariff mental health and wellbeing. We continued to was removed on 19 May 2019. provide training and raise awareness on mental health to better support our employees and Although we are broadly balanced in alumina, their families. approximately 2.2 million tonnes of our legacy alumina sales contracts are exposed to a fixed Financial performance linkage to the LME price. These contracts date In 2019, our aluminium business benefited from back to 2005 or earlier, and the majority expire a 21% increase in third-party bauxite sales, between 2023 and 2030. In 2019, the opportunity productivity improvements and lower raw material loss reduced to $0.2 billion, compared with costs, but was affected by significant price $0.5 billion in 2018 when there was significant declines, particularly for alumina and aluminium escalation in the alumina index caused by metal. Despite the challenging market industry supply disruptions. environment, we maintained our position as the leading business in the sector, with an underlying Despite the significantly weaker market EBITDA margin of 26% from integrated operations. environment, we generated $2.2 billion in net cash from operating activities with free cash flow Underlying EBITDA of $2.3 billion declined by 26% increasing by 29% to $0.8 billion. This was compared with 2018, primarily driven by the weaker underpinned by productivity improvements, lower pricing environment. This reduced underlying costs, favourable movements in working capital EBITDA by $1.3 billion, including the impact of and lower capital expenditure, following completion alumina legacy contracts, and was partly offset by of the Amrun project. $0.5 billion of improvements. Operating costs 46 Annual report 2019 | riotinto.com

Aluminium Underlying EBITDA margin Review of operations New projects and growth options report Strategic (integrated operations) Bauxite production was 9% higher than 2018 at The $1.9 billion Amrun bauxite mine on the Cape 55 million tonnes. In Australia, production at the York Peninsula in north Queensland achieved its Pacific managed mines was up by 11% on 2018, design capacity rate of 22.8 million tonnes a year in 26% underpinned by the successful ramp-up of Amrun. the fourth quarter of 2019, supporting higher third (2018: 32%) Production at the non-managed joint ventures party sales and replacing the depleting Weipa mines. (CBG in Guinea and MRN in Brazil) was 1% higher Third‑party bauxite shipments than 2018, but was constrained by the ramp-up In 2019, production from the Sangaredi bauxite (million tonnes – Rio Tinto share) of the expansion project at CBG being slower mine in Guinea was constrained by a slower than than planned. planned ramp-up of the $0.7 billion expansion �� .� project (our share is $0.3 billion). When this �� .� Our production performance enabled us to increase ramp-up is complete, the annual capacity of shipments of bauxite to third parties by 21% to 40 Compagnie des Bauxites de Guinée (CBG) will �� .� million tonnes. Over the past five years, we have increase from 14.5 to 18.5 million tonnes (100% �� .� increased our third-party bauxite sales by 16 million basis, our share of production is 45%). tonnes (70%), maintaining our position as a leading 2019 �9�� global supplier in the seaborne bauxite trade. At the $0.5 billion Kemano project in Kitimat, British Columbia, where we are constructing Aluminium production a second tunnel to de-risk our 100% owned In 2019, gross revenue for bauxite increased 6% (thousand tonnes – Rio Tinto share) hydropower facility, we had excavated 2.7 to $2.5 billion – this includes freight revenue of kilometres of the tunnel by the end of 2019. $464 million (2018: $371 million). �� Progress has been slower than expected and �� completion is now expected in 2021 (previously At 7.7 million tonnes, our alumina production late 2020). �� was 3% lower than 2018, primarily due to major maintenance activities at the Pacific refineries �� ELYSIS, our joint venture with Alcoa, supported by including a planned five-year maintenance shutdown Apple and the governments of Canada and Quebec, 2019 ��1�1 to service the cogeneration plant at Yarwun. is developing a breakthrough technology that eliminates all direct greenhouse gases from the At 3.2 million tonnes, our aluminium production traditional aluminium smelting process. In 2019, was 2% lower than 2018, primarily due to lower ELYSIS started construction of its new Research volumes at ISAL from a safety-related preventive and Development Centre, which will be located at pot-line outage in the third quarter and at Kitimat, Rio Tinto’s Complexe Jonquière in the Saguenay, due to earlier than planned pot-lining replacement. Quebec. We expect it to be fully operational in the Excluding the non-managed Becancour operation second half of 2020. ELYSIS also announced that where a lock-out constrained operations, the Apple had purchased the first commercial batch Quebec and Pacific smelters performed well, with of aluminium produced using our carbon-free aluminium production for 2019 up 1% on 2018, smelting process. reflecting continued productivity improvements. The restart of Becancour is underway, with full Greenhouse gas emissions ramp-up expected by mid-2020. From 2008 to 2019, RTA’s greenhouse gas emissions intensity has improved by 38%. Using The aluminium industry continues to face our self-generated hydropower, the emissions from challenging conditions in global markets and policy our Canadian smelters are 2.15 tCO2eq. per tonne uncertainty, reflected in low industry profitability. of aluminium, well below the industry average, We continue to actively work on enhancing the while our Vaudreuil alumina refinery has the competitiveness of our smelters, including lowest carbon footprint in the world today. discussing energy pricing with stakeholders, to ensure the sustainability and global competitiveness of our smelters in Australasia and in Iceland. We announced strategic reviews of our interests in the Tiwai Point smelter in New Zealand in October 2019, and in the ISAL smelter in Iceland in February 2020. The strategic reviews will determine the ongoing viability and competitive position of these operations and will consider all options, including curtailment and closure. Annual report 2019 | riotinto.com 47

Strategic report Copper is an essential component in the infrastructure for renewable energy. Copper and Diamonds Cu 48 Annual report 2019 | riotinto.com

Copper and Diamonds Strategic report Strategic Overview Copper and Diamonds in figures Our copper and diamond businesses have rich expertise in underground mining processes and technology. Combined with our strong people focus, this allows 3 us to relentlessly prioritise safety and continue to be a profitable, future-ready, copper operations in the US, Mongolia and Chile sustainability-driven business. Copper Diamonds 2 copper growth projects in the US and Mongolia Global demand for copper is set to grow, driven by In diamonds, we are a global exploration, mining urbanisation, industrialisation, digital communications and sales and marketing business. As one of the and increasing use of renewable energy: copper plays world’s largest producers of rough diamonds 1 million a key role in electrification and power production. from our two mines, Argyle in Australia and tonnes of carbon emissions avoided by Diavik in Canada, we supply a full range of sizes, moving our Kennecott copper mine Our operations around the world are at various qualities and colours to established and emerging to renewable energy certificates stages in the mining lifecycle, from exploration consumer markets. to programme rehabilitation. Alongside copper, we also produce gold, silver, molybdenum and other 2 materials such as rhenium. We supply customers diamond operations in Canada and Australia in China, Japan and the US. 1st mining company to be certified Snapshots from the year by the Responsible Jewellery Council 210,000 0.29 $5.8bn 41% $1.5bn pounds of copper scrap recycled at our AIFR gross sales revenue underlying EBITDA net cash generated from Kennecott copper mine in the US (2018: 0.46) (2018: $6.5bn) margin (product operating activities group operations) (2018: $2.1bn) (2018: 47%) 7,400 employees Gross sales revenue Reducing our carbon footprint Diamonds to wildlife: life after the �� As an essential component in electric vehicles and Argyle closure 2019 in solar, hydro and wind energy, copper is helping Our Argyle diamond mine, located in the Kimberley to build a more sustainable future. And at our region of Western Australia, is due to close at the Kennecott copper mine, in Utah, in the western US, end of 2020. To help our employees plan for their we are taking sustainability one step further. post-Argyle future, we launched a programme to help them find new opportunities at Rio Tinto or In 2019, we permanently shut the coal-fired power beyond. Some employees will remain with the mine plant supplying the mine. Together with our for closure activities like decommissioning and purchase of renewable energy certificates, this will rehabilitation. A number have already transferred to reduce Kennecott’s annual carbon footprint by as our iron ore mines in Western Australia, while others much as 65%. The mine’s electricity needs are looking for a change are preparing for a whole new now paired with 1.5 million megawatt hours of career with targeted training. 1 renewable energy certificates, supplied by Rocky $5.8bn Mountain Power, which will reduce carbon Blair, a safety support officer at Argyle, illustrates (2018: $6.5bn) emissions associated with our operation by over the success of the programme: one million tonnes. Net cash generated from operating activities “I’ve been at Argyle for over a decade now, but Sustainability is not new to Kennecott, however; we’re heading towards closure and so we need to �� since 2005, the mine has been incorporating scrap start thinking about what our life will be like after metal, such as old copper wiring, into its smelting mining finishes. My passion outside of work is process. In 2019, we processed more than 210,000 filming wildlife. I’ve been very lucky to work in the 2019 pounds of copper from this recycled scrap metal – mining industry and be able to travel all over the roughly equivalent to the electrical wiring of 6,500 world: I’ve been to Africa a dozen times, and I’ve been new homes. to some very remote islands diving and filming sharks of all sorts. The beauty of the support I have been given is that it’s allowed me to go out and get my full commercial drone operator certificate. That means that, after Argyle closes, I’m going to be able to 1 have a real crack at filming wildlife as my career. $1.5bn It’s pretty exciting!” (2018: $2.1bn) 1 Includes the results of divested assets up to the date of sale. Annual report 2019 | riotinto.com 49

Strategic report Copper and Diamonds continued 2019 year end results 2019 2018 Change Mined copper production (000 tonnes – Rio Tinto share)1 577.4 607.6 (5)% Refined copper production (000 tonnes – Rio Tinto share) 259.6 274.8 (6)% Diamonds production (000 carats – Rio Tinto share) 17,030 18,427 (8)% Gross sales revenue (US$ millions) 5,815 6,468 (10)% Underlying EBITDA (US$ millions) 2,073 2,776 (25)% Underlying EBITDA margin (product group operations) 41% 47% Underlying earnings (US$ millions) 554 1,054 (47)% Net cash generated from operating activities (US$ millions)2 1,505 2,114 (29)% Capital expenditure – excluding EAUs3 (US$ millions) (1,772) (1,848) (4)% Free cash flow (US$ millions) (284) 266 (207)% Return on capital employed4 5% 9% 1 To allow production numbers to be compared on a like-for-like basis, we have excluded production from asset divestments completed in 2018 from our share of prior year production data. The financial data above, however, includes the results of divested assets up to the date of sale. 2 Net cash generated from operating activities excludes the operating cash flows of equity accounted units (Escondida) but includes dividends from the equity accounted units 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 equity accounted units (EAUs). 4 Return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed (operating assets before net debt). �n�erl�ing ��A 201� �� 2019 Safety partially offsetting the above impacts, resulting in ($ million) This year, we recorded overall improvement in lower overall production costs compared with 2018. safety at our Copper and Diamond operations, Our copper unit costs, at 93 cents per pound in 2018 underlying EBITDA �� driven by an unrelenting focus on safety 2019, were 15% lower than in 2018, with higher fundamentals, including emphasis on caring and by-product credits and cost reduction programmes Price (196) visible leadership and coaching, on embedding offsetting the impact of lower copper grades. Exchange rates 43 existing safety initiatives and on using problem solving techniques and engagement with front-line We generated $1.5 billion in cash from our Energy 22 employees. 2019 was also a year free of fatalities, operating activities in 2019, 29% lower than 2018, Ination (48) permanent disabling injuries and significant driven by the 25% reduction in underlying EBITDA process safety incidents. The all injury frequency described above, as well as $0.1 billion lower Flexed 2018 underlying EBITDA �� rate (AIFR) was 0.29, an improvement from 0.46 in dividends from our 30% equity holding in 2018. Copper & Diamonds met our critical-risk Escondida. Free cash flow of $(0.3) billion reflected 73 Volumes and mix management targets as well as our injury reduction the lower operating cash flow and a sustained level Cash costs (77) targets: the number of injuries declined to 40 in of capital investment ($1.8 billion), mainly relating 2019 (from 65 in 2018). We also saw a significant to activities at the Oyu Tolgoi underground project. Escondida power contract charge (199) reduction in contractor-related incidents as a result of an increased focus on contractor management. Review of operations Grasberg disposal (281) Mined copper production was 5% lower than 2018, Other (40) Financial performance primarily attributable to lower copper grades at all In 2019, our operational performance was affected three operations, partly offset by higher throughput 2019 underlying EBITDA �� by lower grades at all operations, partly offset by and productivity improvements. Refined copper higher throughput and productivity improvements. production, at 6% lower, largely reflected the reduced copper concentrate availability at Our average realised copper price decreased by Escondida and our Kennecott smelter. 7% to 275 US cents per pound, which compared with an 8% decline in the LME price to 273 US cents Kennecott per pound. Mined copper production was 8% lower than 2018, mostly due to increased grade variability, with At $2.1 billion, underlying EBITDA was $0.7 billion grades on average 11% lower. This grade impact (25%) lower than 2018. This was the result of was partially offset by a 4% improvement in ore $0.2 billion in unfavourable pricing impacts, a processed since 2018. Grades will continue to be $0.2 billion non-cash charge at Escondida in 2019 lower through 2020 before increasing from the first relating to the cancellation of existing coal power quarter of 2021, with the transition from east wall to contracts to be replaced with lower cost renewable south wall mining. Refined copper production was power, $0.1 billion from lower volumes at 5% lower than 2018. This reflected the reduced Escondida, and the divestment of Grasberg, which availability of copper concentrate, a planned contributed $0.3 billion to underlying EBITDA in smelter shutdown and additional unplanned 2018. Our operating assets delivered on their maintenance impacting furnace online time. productivity and improvement programmes, 50 Annual report 2019 | riotinto.com

Copper and Diamonds Underlying EBITDA margin Oyu Tolgoi underground project Other new projects and growth options report Strategic During the fourth quarter of 2019, we took the At Kennecott, we continue to progress stripping decision to remove two of the three mid-access activities on the $0.9 billion phase 1 south wall 41% drives at Oyu Tolgoi. We will retain one mid-access pushback project. Grades are expected to increase (2018: 47%) drive on the apex level of the mine design of Panel 0. in 2021 with the transition from east wall to south The removal of these mid-access drives has an wall mining. Mined copper production unfavourable impact on schedule; overall, the (000 tonnes – Rio Tinto share) underground project remains within the range In late 2019, we announced the approval of a announced in July 2019 of a 16 to 30 month delay $1.5 billion investment in Kennecott, extending �� .� in schedule and an increase of $1.2 to $1.9 billion1 operations to 2032. The investment will further �� .� in development capital costs. extend strip waste rock mining and support additional infrastructure development in the �� .� We continue the detailed work on mine design, second phase of the south wall pushback project, �� .� which we still expect to complete in the first half of allowing mining to continue into a new area of the 2020, with a definitive estimate in the second half ore body between 2026 and 2032 and generate 2019 �� of 2020, as previously disclosed. This will include attractive returns. the estimate of development capital costs and schedule for the underground project based on the At our Resolution Copper project in Arizona, Escondida updated design of Panel 0. deepening of the existing shaft 9 continues, as well Copper production at Escondida was 3% lower than as work on the underground characterisation study 2018. This was mainly due to grade declines, which Decisions on other key underground design to increase ore body knowledge. Permitting and were 8% lower than last year, partly offset by higher elements such as the location of the ore handling studies are progressing well, following the release throughput. system and options for panel sequencing will be of the independently prepared draft Environmental taken in the first half of 2020. These will take into Impact Statement (EIS) for the project in August Following the signing of renewable power consideration the consequential impacts on cost, 2019. A plan is in place with the US Forest Service agreements, Escondida has raised a provision schedule and other key variables such as ore to address comments received on the study to related to the cancellation of existing coal contracts. reserves, project ramp-up profile and peak maintain schedule on the final EIS in 2020. The We have recognised a charge of approximately production, together with improvements in Land Exchange title transfer will be completed $0.2 billion against 2019 underlying EBITDA, productivity. within 60 days of final EIS publication. reflecting our 30% share. Productivity improvements resulted in increased In April 2019, we approved $302 million In addition to the renewable power agreements, underground lateral development during the fourth ($166 million our share) of additional expenditure the Escondida water supply expansion project was quarter, to an average monthly rate of 1,607 for Resolution, to fund additional drilling, orebody successfully completed in December 2019 and the equivalent metres (eqm) compared with 1,214 eqm studies, infrastructure improvements and water requirements of the operation are now in the third quarter. Completion of shaft 2, a key permitting activities, as we progress the project fulfilled entirely by desalinated water production. milestone, occurred in October 2019. Construction to the final stage of the permitting phase. is progressing on shafts 3 and 4 to enable Oyu Tolgoi commencement of main sinking operations for Greenhouse gas emissions As anticipated, mined copper production from the both shafts during the first half of 2020. Copper and Diamonds decreased emissions open pit was 8% lower than 2018 as mining activity intensity by 33.3% since 2008. We discontinued the moved to lower grade areas. Grades were 11% lower Under the Power Source Framework Agreement use of a coal-fired power plant at Kennecott and are for the year, and were partly offset by productivity signed in 2018, Oyu Tolgoi continues to work with also working to reduce our environmental footprint improvements. the government of Mongolia to secure a long term at both of our diamonds operations. At Diavik, in power solution for the project. Different power Canada, our windfarm continues to reduce diesel Diamonds sourcing options are currently under evaluation usage through leading-edge cold-climate Diamond production was 8% lower than 2018. At and discussion with the government of Mongolia to technology. At Argyle, in Western Australia, the Argyle, carat production was down by 8% due to a identify the lowest cost and reliable option for Oyu hydropower scheme reduces our diesel usage for lower recovered grade – this was partially offset by Tolgoi. In February 2020, Oyu Tolgoi submitted a electricity. And as a product group, our sustainability record underground mining and processing rates. feasibility study to the government of Mongolia for strategy continues to focus on carbon and water. At Diavik, carats recovered were down by 8% due the Tavan Tolgoi Power Plant. This envisages a 300 to lower ore availability and grade from the MW coal power plant with a project cost estimate 1 As described above, and as disclosed in a Notice to the ASX/LSE on 16 July 2019, and our 2019 interim financial underground operations – this was partly offset by of around $924 million. We are also progressing results, the level of accuracy of these estimates is higher tonnes and grade from the A21 open pit. alternative options to source domestic power, preliminary in nature and subject to a range of variables. including a renewable power component. These estimates are at a confidence level associated with a Conceptual or Order of Magnitude Study; more work is needed between now and the second half of 2020 to refine the mine design options and study them to a level of confidence and accuracy associated with Feasibility Study quality estimates. Annual report 2019 | riotinto.com 51

Strategic report TitaniumOur titanium is used is used in a inwide a wide array variety of applications,of products people including use lightweightevery day, bicycles.including lightweight bicycles. Energy and Minerals Ti, B, Fe 52 Annual report 2019 | riotinto.com

Energy and Minerals Strategic report Strategic Overview Energy and Minerals in figures The products from our diverse portfolio of high-quality mining, refining and marketing operations are part of people’s everyday lives and play an important 6 role in the technology and cutting edge materials of the future. mining sites The Energy and Minerals (E&M) portfolio includes and high-grade concentrate with low levels of titanium dioxide; rutile and zircon; borates; iron ore impurities. We continue our study at the Jadar 7 concentrate and pellets; and uranium. Our lithium-borate project in Serbia. We also own processing plants products are used in everything from touch screens interests in a uranium business – Energy Resources and hearing aids to high-strength steel and of Australia – and a uranium project in Canada. corrosion resistant coatings, and in industries such Operations in as aerospace, healthcare, and low-carbon energy. In 2019, we completed the sale of our entire interest in the Rössing Uranium mine in Namibia, formerly 6 As a key global supplier of borates, we meet part of E&M. countries approximately 25% of global demand – and have mining, processing, commercial and research The Rio Tinto Ventures team, also part of E&M, facilities. Our Iron and Titanium business is a major is exploring partnerships and other opportunities 8,600 global producer of high-grade titanium dioxide that will allow us to expand into metals critical employees feedstock. The Iron Ore Company of Canada (IOC) to a low-carbon economy, with a strong focus is a leading producer of premium iron ore pellets on battery materials. 400,000 trees planted in Madagascar Snapshots from the year Gross sales revenue �� 0.43 $5.2bn 37% $1.4bn 2019 AIFR gross sales revenue underlying EBITDA net cash generated (2018: 0.55) (2018: $5.5bn) margin (product from operating group operations) activities (2018: 41%) (2018: $1.2bn) Pioneering a new source of lithium “Unthinkable” performance As the world moves to electric vehicles, demand improvements for lithium, for the vehicles’ rechargeable batteries, In 2019, the Iron Ore Company of Canada (IOC) is expected to increase to 1.3 million metric tonnes successfully trialled an electric autonomous – over five times today’s levels. drilling system and continued to develop its $5.2bn (2018: $5.5bn) Integrated Operations Centre. In 2019, we announced a $10 million investment to pilot the production of commercial grade lithium In the harsh climate of northern Canada, where Net cash generated from operating activities at our Boron operations in California. The lithium, electrical storms, blizzards and temperatures 2019 discovered in nearly century-old borates tailings, below -30°C are common, autonomous drills creates additional value from existing waste rocks continue to work in all conditions, including those �� and as such, does not need to be mined. unsafe for manned crews. One operator is able to control multiple drill rigs remotely, replacing The pilot could potentially produce 10 tonnes per on-the-ground teams operating a single rig. The year of lithium-carbonate, needed in rechargeable autonomous drill trial demonstrated a 30% batteries for electric vehicles and consumer improvement in productivity over standard rigs. electronics. In the coming year, we will consider an additional $50-million investment to build an The autonomous drilling system is one element of industrial-scale lithium plant with capacity for the mining and production process that has been 5,000 tonnes per year, or enough to make batteries brought together in IOC’s Integrated Operations for approximately 15,000 electric vehicles. Centre. The centre houses control and monitoring systems for the equipment in the five operating The discovery of lithium in borates waste is $1.4bn pits, ore delivery system, concentrator, pellet plant, (2018: $1.2bn) significant, and could one day make our current 418km rail line, and port. Housing these systems boron operation the largest domestic producer together has improved communication and of battery-grade lithium in the US. decision-making, as operators who previously worked in different locations spread over hundreds of kilometres now sit next to each other. At IOC, new technology is enabling performance improvements in ways that would have been “unthinkable” only a few years ago. Annual report 2019 | riotinto.com 53

Strategic report Energy and Minerals continued 2019 year end results 2019 2018 Change Iron ore pellets and concentrates production1 (million tonnes – Rio Tinto share) 10.5 9.0 18% Titanium dioxide slag production (000 tonnes – Rio Tinto share) 1,206 1,116 8% Borates production (000 tonnes – Rio Tinto share) 520 512 2% Uranium production (000 lbs – Rio Tinto share) 4,754 6,764 (30)% Gross sales revenue (US$ millions) 5,150 5,451 (6)% Underlying EBITDA (US$ millions) 1,762 2,140 (18)% Underlying EBITDA margin (product group operations) 37% 41% Underlying earnings (US$ millions) 611 995 (39)% Net cash generated from operating activities (US$ millions) 1,387 1,245 11% Capital expenditure (US$ millions)2 (551) (442) 25% Free cash flow (US$ millions) 817 796 3% Return on capital employed3 15% 20% 1 To reflect a change in management responsibility, Dampier Salt is now reported within Iron Ore and we have restated prior year numbers accordingly. Iron Ore Company of Canada and the Simandou iron ore project in Guinea continue to be reported within Energy & 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 Return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed (operating assets before net debt). �n�erl�ing ��A 201� �� 2019 Safety Financial performance ($ million) Our E&M operations made significant A recovery in volumes at both Rio Tinto Iron & improvements across all key safety metrics this Titanium and Iron Ore Company of Canada (IOC) 2018 underlying EBITDA 2,140 year. The all-injury frequency rate, for example, following the disruptions in 2018, along with higher was down to 0.43 (from 0.55 in 2018), the result of prices for iron ore pellets and concentrate and Price 327 increased rigour and focused implementation of titanium dioxide feedstocks, contributed to our our safety programmes across our operations, strong financial performance in 2019. Exchange rates 72 made possible by the leadership and engagement Ination (75) of our employees. While 2019 was a fatality-free Underlying EBITDA of $1.8 billion was 18% lower year, at our IOC operations, one of our employees than 2018, but was 41% higher excluding the coal Flexed 2018 underlying EBITDA 2,464 experienced a permanent disabling injury. Our assets we divested in 2018. Volumes were boosted thoughts remain with him and his family; we by an improved operational performance at our Volumes and mix 29 continue to share the analysis and resulting titanium dioxide operations, and the return to lessons learned across the Group to ensure normal operations at IOC following a two-month Cash costs (118) everyone takes all possible steps to prevent such strike in 2018. The higher price environment, in Coal disposals (893) incidents in the future. particular for iron ore pellets and concentrate and titanium dioxide feedstocks, added $0.3 billion to One-off items 281 Process safety incidents were also more than underlying EBITDA compared with 2018. halved in 2019 following our implementation of a Other (1) targeted improvement plan. We are particularly We generated net cash of $1.4 billion from our proud of the performance of QMM operations in operating activities and $0.8 billion of free cash 2019 underlying EBITDA 1,762 Madagascar, which had one recordable injury and flow, reflecting the higher volumes and stronger an all-injury frequency rate of 0.04. Four other E&M pricing environment. These were 11% and 3% sites in Havre-Saint-Pierre, Suzhou, Simandou and higher than 2018, respectively, despite there being Jadar ended the year with no recordable injuries. no contribution from the coking coal assets which we divested in 2018. In 2020, we will continue to implement the Rio Tinto safety maturity model, supported by lessons learned and best practices from 2019. The implementation of the process safety standard will also continue to be a key focus in 2020. 54 Annual report 2019 | riotinto.com

Energy and Minerals Review of operations New projects and growth options report Strategic Energy The $463 million Zulti South construction Uranium production was 30% lower than 2018. project at RBM is on hold after a number of While Energy Resources of Australia (ERA) security incidents – we will assess a restart continued to process existing stockpiles, after normalisation of operations. production was 12% lower than 2018, reflecting lower grades. We have reported production from We are continuing our pre-feasibility study at Rössing Uranium up to the date of completion of the Jadar lithium-borate project in Serbia – this divestment to China National Uranium Corporation will establish the economic business case for Limited on 16 July 2019. the project and include environmental and socioeconomic impact assessments. In late 2019, we announced our support for ERA’s plans for a renounceable entitlement offer to raise We continue to work with our joint-venture $324 million for the rehabilitation of the Ranger partners, Chinalco and the government of Guinea, Project Area in Australia’s Northern Territory. to explore ways to optimise, develop and fund the world-class Simandou iron ore deposit and the Iron Ore Company of Canada (IOC) trans-Guinean infrastructure needed to support Iron ore pellets and concentrate production at IOC the mine. We own 45.05%, Chinalco owns 39.95% was 18% higher than 2018, when operations were and the government of Guinea owns a 15% stake impacted by a two-month strike. in this project. Minerals Greenhouse gas emissions Titanium dioxide feedstock production was 8% Compared with 2018, E&M’s absolute GHG higher than 2018, reflecting improved operational emissions were 11% lower, driven by the sale of performance and the restart of furnaces. our uranium asset in Namibia. There was a 5% Underlying EBITDA margin improvement in E&M’s overall GHG intensity Production at the end of 2019 was affected by the compared to the 2008 baseline year. curtailment of operations at Richards Bay Minerals 37% (RBM) in South Africa. Operations were slowed in (2018: 41%) mid-November, following an escalation in violence in the communities surrounding the operations, Iron ore pellets and concentrate production and curtailed at the beginning of December. (million tonnes – Rio Tinto share) A phased restart began at the end of December. �� .� All nine furnaces at Rio Tinto Fer et Titane (RTFT) �� .� are in operation, with three of four furnaces in operation at RBM. We will decide to idle furnaces �� .� or re-start the remaining idled furnace to match �� .� market demand. 2019 10�� Borates production was in line with 2018 and aligned with market conditions. Titanium dioxide slag production (thousand tonnes – Rio Tinto share) �� 2019 1�20� Annual report 2019 | riotinto.com 55

Strategic report The Bauer Cutter rig used for digging vertical trenches at FalCon, Canada. Whether exploring or building assets, we use advanced technology and Growth and Innovation some of the best minds in the business to maximise value across the lifecycle of our operations. Our success, today and in the future, will be predicated upon using cutting- edge technology as well as data and artificial intelligence to establish new and more efficient ways of finding, building, running and closing our operations. This is the mandate of our G&I group. Safety Since G&I’s inception in 2016 there have been no work related fatalities1 and our all-injury frequency rate was 0.28. We have shown safety is our number one priority by continually learning from potentially fatal incidents, focusing on controls to prevent injury and illness, continuing to automate risky manual tasks and preventing catastrophic events, particularly in relation to tailings and process safety. Industry-leading innovation As an industry, we tackle some of the greatest engineering and technical challenges on the planet, and we have a long, proud history of meeting these challenges head on. In exploration, for example, we are using advanced technology to mine data to improve our targeting, which lets us uncover resources that others may have missed – this was true of our Winu copper- gold exploration project, in Western Australia, which was announced in 2019. In studies and construction, innovation and digital design is helping strengthen safety, reduce cost, and find new ways to improve waste and water management. We are also looking at more agile ways to build new mines: starting small, building quickly and safely, and embedding optionality for growth. Technology also has an important role to play in helping us increase productivity and tackle critical industry challenges, such as tailings, energy and carbon reduction initiatives. In 2019, machine learning helped us unlock productivity improvements. For example, at our Kennecott copper mine in Utah, in the US, we used artificial intelligence to optimise the concentrator’s recovery of minerals from the varying types of ore fed into the plant. 1 Health fatality reported in 2017 was reclassified as non-work related. 56 Annual report 2019 | riotinto.com

Growth and Innovation Exploration The underground copper project at Oyu Tolgoi, in report Strategic This year, we explored for seven commodities in Mongolia, achieved a significant milestone with the G&I in figures 17 countries and generated more opportunities completion of construction of Shaft 2, which enables than at any other time in our history. Expenditure the acceleration of work on the underground on exploration and evaluation was $624 million. development. Shaft 2, a 10-metre diameter shaft Of this, $315 million was for the exploration and sunk to approximately 1.3 kilometres, is a critical 0.28 evaluation of greenfield programmes and $309 piece of infrastructure and will enable a step AIFR million was for brownfield programmes in our change in delivering the underground mine. Shaft 2 (2018: 0.19) product groups, mostly copper. can carry 300 people per cage cycle versus a maximum of 60 people per cage cycle through We had some early success in copper exploration at Shaft 1. The 48-tonne capacity cage can now be Winu, Western Australia, and assessment and used to support logistics, transporting supplies and 2,600 interpretation of existing data is ongoing. components for development of the mine. This people shaft also has a production component, which The majority of our projects this year are in the hoists 60 tonnes of rock at about 60 kilometres per early stages of drilling. Projects at a more advanced hour. Completing Shaft 2 provides additional stage are listed in the table below. momentum as we continue to progress detailed work on the mine design, which we expect to +13,400 Projects complete in the first half of 2020, with a definitive contractors In 2019, the projects team in G&I, responsible for estimate for the development of this world-class building our mines and other operations, delivered ore-body in the second half of 2020. Other facilities a significant volume of work safely, on time and on completed in 2019 include the mine dry facility, a budget – or better. We were recognised for our new underground operations control room and the 8 work, winning multiple awards for our Amrun central heating plant expansion. Centres of Excellence – Analytics, bauxite mine in Queensland, Australia, which Asset Management, Automation, officially opened in March, two months ahead of At our Resolution Copper project in Arizona, in US, Energy and Climate Change, Ore schedule and under budget. Amrun achieved its we deepened Shaft 9 further, reaching 1,600 Body Knowledge, Processing, Surface production rate of 22.8 million tonnes in the fourth metres below ground in 2019. Working with our Mining, Underground Mining quarter of 2019, much earlier than planned. Its aluminium business at our Kitimat smelter in Chith Export Facility received the 2019 Australian British Columbia, Canada, we progressed the Exploring for Construction Achievement Award, Institute of construction of a second tunnel to safeguard our Civil Engineers Brunel Medal, and Management hydroelectric power supply. While our tunnel boring Innovation & Excellence Award for Operational machine productivity was lower than expected, 7 Improvement. Our local and Indigenous we reached 2,731 metres at the end of 2019. different commodities in 17 countries participation strategy also received the Best Company Indigenous Procurement Initiative. Introducing Group Technical This year, we introduced Group Technical as the AutoHaul™, the world’s first automated heavy-haul organisation housing G&I’s eight Centres of rail network, was handed over to our Iron Ore Excellence – Analytics, Automation, Asset $2.1bn business in April and received a 2019 Freight Rail Management, Energy and Climate Change, Ore spent on capital projects in 2019 Excellence Award. Construction of Koodaideri, our Body Knowledge, Processing, Surface Mining and intelligent mine in the Pilbara, Western Australia, Underground Mining – representing our most began in 2019: the project remains on budget and critical technical capabilities. Group Technical also In 2019, we delivered a step-change first ore is expected in late 2021. We are leading the provides an added layer of assurance in managing in the way we value data. Our construction of a new crusher and 13 kilometre our major hazard risks and supports the replication Integrated Data Platform, which conveyor at the Western Turner Syncline Phase 2 of best practices in productivity Group-wide. pools operational and external project at our Greater Tom Price iron ore operations. sources of data into a 200 terabyte We completed bulk earthworks for the Robe Valley lake, reduced operating expenses sustaining project’s wetplant area and poured the associated with data sourcing by foundation for the West Angelas Deposit C&D 70-80%. primary crusher facility, both in the Pilbara. G&I worked with our Iron Ore product Advanced stage exploration projects group to award $1.3 billion in contracts to local or Indigenous Project Commodity Country Type Stage businesses for capital projects in the Sudi Mineral Sands Tanzania Greenfield Project of Merit Pilbara, Western Australia. FalCon Diamonds Canada Greenfield Order of Magnitude Pilbara Iron ore Australia Brownfield Project of Merit Oyu Tolgoi Copper Mongolia Brownfield Project of Merit Bingham Canyon Copper US Brownfield Project of Merit Winu Copper Australia Greenfield Order of Magnitude Kalindi Copper Zambia Greenfield Project of Merit Korgantas Copper Kazakhstan Greenfield Project of Merit Janice Lake Copper Canada Greenfield Project of Merit Pribrezhniy Copper Kazakhstan Greenfield Project of Merit Project of Merit – Preliminary evaluation of orebody size, quality and potential. Order of Magnitude – Judging whether an opportunity will be economical to develop. Annual report 2019 | riotinto.com 57

Strategic report We ship more than 300 million tonnes of iron ore every year from our ports in Western Australia. The Commercial group puts the company’s value over volume Commercial approach into practice. Our Commercial group encompasses our global sales and marketing, procurement, and marine and logistics teams. We maximise the value of our physical flows to improve both our business and that of our customers. We link our customers and markets with our operations in a way that informs production and future investment decisions. We ensure that both the amount and the types of products that we produce meet our customers’ needs and manage the trade-off between volumes, quality, cost and capital expenditure. Safety We are committed to the safety, health and wellbeing of our employees and contractors. We face a diverse range of risks across multiple geographies in our global sales and marketing, procurement and activities. Our primary focus has been implementing Group standards and critical-risk management fatality prevention programmes across our areas of greatest exposure, primarily marine and logistics, and procurement. We have also worked closely with our suppliers and contractors to embed safety into the equipment we procure and our approach to contractor management. In 2019, we had zero fatalities and a 0.04 all-injury frequency rate. In 2020, we intend to build on this and share our focus on safety, health and wellbeing through our daily interactions with our customers and suppliers. Commercial strategy Our Commercial strategy is built around four key pillars. First, deepening our understanding of the value chain. We do this by improving the way we collect, organise and monetise information – solving our customer challenges and continuously generating value. Second, building commercial excellence. We are taking what we do today and doing it better. We aim to sell every tonne we produce to the customer that values it the most, and rigorously measure and improve our performance. Third, expanding our commercial activities into new areas. Moving from simple risk avoidance to an approach where we can better identify, quantify, and manage our risks. Fourth, optimising our end-to-end value chain. We have an integrated approach to matching our production to the changing demand patterns of the market that seeks to ensure the real-time needs of the market can inform our decision-making. 58 Annual report 2019 | riotinto.com

Commercial Strategic report Strategic Market insight and outlook Alumina prices declined in 2019 on the back of report Strategic Global economic conditions remained uncertain increased output, weaker demand and lower Commercial in figures throughout 2019 due to escalated trade tensions caustic soda prices. and heightened geopolitical instability. Global GDP growth is estimated to have slowed to 2.6% vs 3.2% China continued to drive strong growth in seaborne in 2018. China’s GDP growth was approximately bauxite demand in 2019, primarily as a result of 0.04 6.1% in 2019 vs 6.6% in 2018. And this gradual the depletion of domestic, inland bauxite reserves AIFR deceleration is expected to continue despite the and declining quality. To date, this demand has (2018: 0.18) near-term challenges and volatility created by the primarily been met by exports from Australia, advent of Covid-19. In the longer term, the trend of Guinea and Indonesia. income growth in emerging markets, including those in ASEAN countries and India, will continue Copper and Diamonds 1,300 to drive global commodity demand. In China, A number of factors reduced the price of copper employees strong commodity demand will be increasingly in the second half of 2019, primarily changing driven by a large and evolving manufacturing macroeconomic growth expectations and volatility sector, the need to modernise commercial and in equity markets. Longer term demand is expected Singapore residential buildings, and the evolving trends of to remain robust as a result of urbanisation, electrification in a low carbon world. industrialisation and electrification in China and Commercial emerging economies. Iron Ore Hub Despite overall weakness in global macro conditions, Mined supply contracted 1% in 2019 amid with satellite offices in Chicago demand for the quality iron ores we produce enhanced supply-side risks. Disruptions in Latin and Frankfurt and offices in remained strong in 2019. This was mainly driven by America and the African copper belt accounted for China, Japan and South Korea a combination of seaborne supply disruptions and over 75% of global disruptions in 2019 as these record Chinese steel output, which drove prices for regions faced environmental, social and Approximately the benchmark 62% iron ore on a free on board governance challenges and regulatory disruptions (FOB) basis up 39% in 2019 from the average 2018 respectively. These, and other challenges, are price. Approximately 90% of our Pilbara products expected to persist in the coming years. 2,000 are priced with reference to the 62% index. customers across 96 countries Weak diamond jewellery sales during late 2018 Global steel production increased by about 1.3% and early 2019 resulted in weak orders by retailers in 2019 compared to 2018. Record Chinese steel in 2019. production of around 970 million tonnes (MT), >230 more than offset lower steel output outside of Energy and Minerals contracted ships managed at any China. Among other major steel-producing regions, Underlying titanium dioxide pigment demand one time India, the world’s second largest steel producer, weakened in 2019 resulting in lower sales volumes experienced a 2% growth in steel production. of paint. Against this, pricing of titanium dioxide Meanwhile, Japan’s output was down 3.7%, due to feedstock strengthened due to structural operational issues, natural disasters and other shortages of rutile supply. In 2020, we anticipate 37,000 weather-related disruptions. a continuation of the demand trends of 2019 suppliers managed in more cushioned by feedstock supply shortages. than 120 locations 2019 seaborne iron ore supply decreased 30MT compared to 2018, with the cumulative impact of Medium to long-term demand for borates is tied lower shipments following the Brumadinho dam to increases in wealth and living standards and failure and significant weather-related disruptions associated requirements for the agricultural sector. in the first quarter affecting Pilbara suppliers. In 2019, stronger demand in China was offset by China’s domestic supply growth helped meet the weaker demand elsewhere, while trade restrictions supply shortfall in 2019, after overcoming improved and tariffs in India and China impacted the market, environmental and safety standards, and financing a situation we expect to moderately improve availability. Scrap use in China increased in 2019, in 2020. and we expect moderate growth to continue, albeit limited by availability, and the economics of Seaborne iron ore pellet demand stayed robust in collection and use. the beginning of 2019 due to tight fundamentals and supply disruptions. In the second half of 2019, Aluminium reduced mill profitability, lower scrap prices outside The market for primary aluminium contracted by China, and deterioration of developed market steel 1% in 2019 due to lower car production, durables demand saw pellet prices fall. However, we expect output, and soft demand from construction. a recovery through 2020. Chinese output growth continued to weaken in 2019, with capacity reductions of around 3.6MT due to lower prices and disruptions. In addition, there were 0.5MT of environmental winter curtailments. China permanently curtailed around 2MT of capacity in 2019. We expect aluminium demand to improve in 2020, as the transport sector recovers, but political and recessionary risks remain. Annual report 2019 | riotinto.com 59

Strategic report Sustainability Our values, experience We must care for our employees, respect and care Our portfolio is also an important part of our for the environment when we explore, build and sustainability strategy. In 2018, we became the only and history tell us we must operate, and repurpose or rehabilitate the land major player in our industry to have a portfolio free work in a way that delivers when our operations come to an end. We must of fossil fuel production. Today, our portfolio contribute our fair share to local and national comprises commodities with solid long-term real, lasting benefits. economies, including through the payment of taxes fundamentals, including those critical for the and royalties. transition to a low-carbon economy. We therefore apply high standards to the sustainability issues that are material to our business, our employees, the communities that host us and the customers that buy and use our products. Our goal is to achieve consistent, high-quality social and environmental performance In 2018, we became the across all of our operations and to increase our stakeholders’ knowledge of how we work through only major player in our meaningful disclosures and transparency. We have also made an effort to better understand, engage industry to have a and partner with our key stakeholders to create sustained, mutual value. We support the 2030 portfolio free of fossil development agenda and contribute to the UN Sustainable Development Goals. fuel production. Our approach to United Nations’ Sustainable Development Goals (SDGs) We continue to examine our approach to the UN SDGs in line with our integrated sustainability strategy. 60 Annual report 2019 | riotinto.com

Sustainability Strategic report Strategic Integrated sustainability strategy Our strategy is expressed in three pillars. Running a safe, responsible Collaborating to enable long- Pioneering materials and profitable business term benefits where we operate for human progress Running a safe, responsible and profitable Building on the first pillar, the second focuses The third pillar encompasses activity that business is the foundation of our approach, on the success of our communities and our contributes to a sustainable, low-carbon future, because safety and profitability allow us not contribution to governments and partners, including the materials we produce and the only to manage risks, but also to invest in the including Indigenous groups. innovations we bring to market. future of our company and our communities – and in partnership with others, pioneer new Agreement-making has always characterised our The materials we produce help support economic ways to have a lasting positive impact. This pillar intent to partner for the long term, while respecting growth and facilitate social development because also includes the responsible, transparent and rights, and it still lies at the heart of our community they are used to build bridges, hospitals, schools reliable management of our operational impacts. engagement. For example, this year we signed a and are used in environmentally friendly solutions, historic agreement in Quebec with the Innu such as wind turbines and electric vehicles. Safety is our top priority. The health and safety of community of Ekuanitshit to generate economic our workers and contractors is fundamental to the development opportunities associated with our For more information about how our materials will way we work. In 2019, we delivered positive safety operation in Havre-St-Pierre. support the transition to a low-carbon economy performance across the business, and had no and our approach to climate change, please see our fatalities. Our performance on safety can still We also began revising our approach to climate change report, developed in line with the improve; we must continually work to improve communities and development this year, in Task Force on Climate-Related Disclosures, on safety across the Group. But we recognise the alignment with the UN Sustainable Development riotinto.com. achievements made by thousands of our Goals and with global technological, economic and employees this year. Safety extends beyond social changes in mind. For example, we are looking Innovation extends to other parts of our aluminium personal safety, so we also have robust standards, at more holistic ways to contribute, including by business. We also continued to look for ways to processes and tools embedded across our business improving our partnerships with the development manage waste. In September, Queensland Alumina to protect the environment and ensure respect for arms of national, state and provincial governments, Limited (QAL) – an independently managed joint the communities in which we operate. as well as international institutions such as the venture between Rio Tinto and Rusal – along with World Bank Group. the University of Queensland’s Sustainable Minerals Institute, received an award for research Other activities that help us meet our obligations We are also investing in skills training for the future into technologies that could turn red mud – a waste also sit in this first pillar: our commitment to our of work. For example, we have partnered with the product created during alumina refining – into soil employees’ rights and wellbeing, the ethics and government of Western Australia and South able to grow plants. integrity of our business and supply chain, and Metropolitan TAFE (Technical and Further respect for the environment. Transparency Education) to develop three nationally recognised The closure of our operations is also critical to underpins all of our efforts, including through our qualifications in automation. the sustainable future of our communities. Today, support of global initiatives like the Extractive we plan the design and construction of our operations Industries Transparency Initiative (EITI). We also recognise that our business is, in many with closure in mind. We progressively rehabilitate of the 36 countries in which we work, a major the land as we mine in places like Richards Bay source of jobs and opportunity – and we take this Minerals, our operations in KwaZulu-Natal, responsibility seriously. However, the employment South Africa, and our bauxite mines in Queensland, opportunities we create go far beyond our own Australia. The Diavik diamond mine, in the business. For example, in 2019, we spent Northwest Territories, Canada, was designed with $17.2 billion with suppliers around the world. closure in mind: the buildings on site can be removed and, when mining ends, the embankments will be reclaimed and the open pits will be filled with lake water. Annual report 2019 | riotinto.com 61

Strategic report Sustainability continued 2019 performance against targets Goals Performance To reach zero fatalities, and to eliminate workplace injuries and Zero fatalities at managed operations catastrophic events –– All injury frequency rate (AIFR) at 0.42 (target: 0.38), reduced 5% from 2018 (0.44) –– 1.42 million CRM verifications All businesses will identify at least one critical health hazard material Reduction: 64.6% (38.5% airborne and to their business and will demonstrate a year on year reduction of exposure to that hazard 26.1% noise) –– Participation: 11 sites (167 exposed employees and contractors) 24% reduction in total greenhouse gas emissions intensity between 29.4% decrease in greenhouse gas 2008 and 2020 emissions intensity since 2008 To reduce the rate of new occupational illnesses each year –– 34% decrease in the rate of new occupational illnesses since 2018 To disclose for all managed operations by 2023, their permitted surface –– Target statements defined and approved by our Sustainability water allocation volumes, their annual allocation usage and the estimated Committee, a sub-committee of our Board. Assurance milestone surface water allocation catchment runoff from average annual rainfall schedules have been developed for the water target period (2019 – 23) and performance against these milestones will be tracked and assured To achieve local water stewardship targets for selected sites by 2023 annually. To demonstrate local economic benefits from employment and 90% of assets are on track to achieve procurement of goods and services by reporting yearly against a locally defined target their 2020 significant complaints target To be effectively capturing and managing community complaints and –– 70% of assets are on track to achieve their 2020 local employment target reducing repeat and significant complaints each year –– 84% of assets are on track to achieve their 2020 local procurement target –– 80% of assets are on track to achieve their 2020 repeat complaints target Note: ‘On track’ means 75% or greater progress towards 2020 targets To improve diversity in our business by: 25% of our Executive Committee were –– Increasing women in senior management1 by 2% each year –– Aiming for 50% women in our graduate intake, with 30% from places women, consistent with 2018 where we are developing new businesses –– 22.6% of senior management1 were women, consistent with 2018 –– 18.4% of our workforce were women, up 0.7% from 2018 –– 54% of our graduate intake were women, 4% above target and up 18% from 2018 –– 11.1% of Board roles were held by women. With the new non-executive director appointments announced in February 2020, this percentage has increased to 33% –– 19% of our graduate intake were from places where we are developing new businesses2 Improving our employee engagement and satisfaction 12-point increase in our employee net promoter score (eNPS³) –– 3-point increase in employee satisfaction score (eSAT4) –– 4-point increase in our recommend score –– 37% of Yammer members engage on a monthly basis, on average 1 We define senior management as general managers, Group advisers and chief advisers as well as employees in leadership roles who report directly to Executive Committee members. 2 Identifying with a nationality is not mandatory. Over 48% of our graduates have not formally reported a nationality. 3 eNPS is a measure of “how likely an employee is to recommend Rio Tinto to a friend or colleague”. It is calculated by subtracting the proportion rating 0-6 from the proportion rating 9 and 10 (on a 0-10 scale). 4 eSat is a measure of “how happy an employee is to work at Rio Tinto”. It is calculated by averaging the responses on the 1-7 scale and expressing this out of 100. 62 Annual report 2019 | riotinto.com

Sustainability Strategic report Strategic Our reporting Safety The assessments gave us valuable insight into the Nothing is more important than the safety and effectiveness of key safety management controls. While we have made progress wellbeing of our employees, contractors and We are committed to zero fatalities and a zero harm across various sustainability areas communities. Safety is also one of our core values, work environment, and have maintained our focus – from water to climate change, and part of who we are and the way we work, every on CRM to verify that critical controls are in place. communities to transparency – shift, every day. We also continue to report, investigate and learn from our potential fatal incidents (PFIs). These stakeholders tell us they are Today, we believe all incidents and work-related processes also form part of our SMM model. most interested in hearing about health risks are preventable, so we concentrate on As part of SMM implementation and focus on certain themes: identifying, understanding, managing and, where leadership, in 2019 we also introduced the possible, eliminating these. In 2019, we had no cascaded coaching framework to build safety fatalities. Still, we know we must do better. leadership capability across leadership. This –– Safety replicates the programme from Boyne Smelters, –– Tailings Over the past ten years, both the severity of injuries Australia, which has been a leader in safety for –– Climate change and our all injury frequency rate have fallen many years due to strong safety capability among –– Communities significantly (from 0.81 in 2009 to 0.42 in 2019). its leadership. –– Water We closely monitor leading indicators of injuries, Managing major hazards incidents, occupational illnesses and fatalities. Running a safe, responsible and profitable business These themes are addressed in the In 2019, we continued to focus on eliminating requires us to manage major hazard risks and do pages that follow. Progress against fatalities from our potential fatal incidents (PFIs) everything we can to prevent catastrophic events, and our critical risk management (CRM) programme. including those involving tailings and water storage our targets is set out on pages 63 facilities, chemicals, underground mining and to 67. Rio Tinto is required to disclose mine safety process safety. We identify major hazard risks (low violations or other regulatory matters in probability, high consequence events) and manage 2019 also saw us progress in other accordance with Sections 1503(a) of the Dodd-Frank them by verifying controls, conducting external Wall Street Reform and Consumer Protections Act. reviews and requiring compliance with standards important areas, many of which They are included in the Exhibit 16.1 to this filing. and procedures – such as our tailings and water are integral to our business as well storage facilities’ management standard. Standards as the way we work. For more Eliminating fatalities and procedures provide a consistent approach that information on these topics, please In an effort to move further towards leading is then implemented across our managed operations indicators, we expanded critical risk management around the world. We audit every operation against see pages 68 to 70. to include the safety maturity model (SMM), also our standards, and require our businesses to meet adding it to the Group’s 2019 short-term incentive their health and safety performance requirements plan. SMM is a tool that captures the key elements and targets. We remain committed to the reduction of our safety management system, including CRM, of our process safety risks and continue to run our and builds a roadmap that describes a fully mature Occupied Buildings Programme, which will safety culture. Our model was introduced in 2019 eliminate, or mitigate, the total process safety and each site was assessed using the tool and given exposure to our people occupying buildings. a baseline score, which averaged 3.4 across the Group, using a 9-point scale. Group performance Using data to improve health and safety measures were then set at 3.4 for threshold, 4.4 for By looking for trends in data, we can help keep our target, and 5.7 for outstanding. At the end of the employees and contractors safe. We track health year the sites were reassessed by our internal and safety performance to identify patterns – for auditors and an operations line leader. All sites example, using additional controls to prevent involved showed strong improvement, and across incidents at times of the day when they are more the Group, the average score advanced from the likely. We have started to look beyond traditional baseline of 3.4 to the end of year 4.5, demonstrating health and safety metrics – bringing factors like SMM helped each site strengthen its focus on weather and workers’ accommodation into the zero proactive actions to improve safety. picture – to identify the leading indicators of injuries, incidents, occupational illnesses and fatalities The SMM was well received across our business fatalities. We are factoring our learnings into both as a roadmap to improve safety performance revised health and safety practices in key parts and as a way to increase employee engagement. of our business. 48% Safety and health performance1 2015-19 reduction in all injury 2019 2018 2017 2016 2015 Fatalities at managed operations 0 3 1 1 4 frequency All injury frequency rate (per 200,000 hours worked) 0.42 0.44 0.42 0.44 0.44 rate over ten years Number of lost-time injuries 230 2282 199 206 220 Lost time injury frequency rate (per 200,000 hours worked) 0.27 0.27 0.25 0.26 0.25 New cases of occupational illness (per 10,000 employees) 20 302 25 47 32 Number of employees3 46,000 47,500 47,000 51,000 55,000 1 Data relating to fatalities, all-injury frequency rate and lost-time injury frequency rate includes all employee and contractor exposure hours and incidents. New cases of occupational illness are reported for employees only. 2 Numbers adjusted from previous years to ensure comparability over time. 3 Includes our share of joint ventures and associates (rounded to the nearest thousand). Annual report 2019 | riotinto.com 63

Strategic report Sustainability continued Tailings Tailings management has been listed on our 95 We manage tailings storage facilities (TSFs) at Group-level risk register since 2010. Since 25 sites around the world, with a further five establishing our Group safety standard for tailings active tailings non-managed operational sites and 12 closed and in 2015 and working with the ICMM storage facilities (TSF) legacy sites. Most of these sites have multiple committee in 2016, we have: storage facilities, so we have a total of 95 active TSFs, with 40 more facilities that are closed or –– Established the Surface Mining Centre of Member of the under rehabilitation. We aim to protect the health Excellence Tailings team to pool and provide and safety of people who live and work near our technical expertise, own the technical content International Council of TSFs as well as safeguard the surrounding of the Group tailings safety standard and act as environment, including water. a second line of assurance, conducting Mining & Metals (ICMM) technical risk reviews of our facilities. tailings working group Of these 95 active TSFs, 22 had the last raise as –– Introduced seven training modules that include upstream construction. And of these 22 facilities, leading practices for safe tailings management since 2016. 15 are managed by our joint-venture partners and as regular training for our tailings facility seven by Rio Tinto. We also operate a number of operators. large water storage facilities. Our website lists –– Implemented internal and independent tailings and water storage facilities reflecting any third-party reviews of all designs and major operational and ownership changes. Our facilities studies for operational tailings facilities. Our have been regulated, permitted and managed for Surface Mining Centre of Excellence completed many years; and they comply with local laws, technical risk reviews at each of our managed regulations, permits, licences and other and non-managed tailings facilities (with the requirements. In 2015, we introduced a Group exception of Mineração Rio do Norte, which will safety standard for all tailings and water storage be completed in the first quarter of 2020). The facilities. Our assurance processes verify that our reviews found that while our tailings facilities managed facilities around the world operate in are well managed, we still have an opportunity accordance with this standard. to improve. We are currently working on implementing improvement plans. For our non-managed operational sites with –– Developed a Group procedure to more tailings facilities, we actively participate in technical consistently implement the safety standard, committees in an advisory capacity with our and updated the procedure and the safety joint-venture partners. Each of the technical standard to reflect learnings from our tailings committees has a Tailings Steering Committee, review. or equivalent, to support the effective management –– Supported the ICMM as a co-convener of the of tailings. independent Global Tailings Review, alongside the UN Environment Programme and the There have been no external wall failures at our Principles for Responsible Investment, and TSFs operations for more than 20 years. We are provided feedback on drafts of the proposed dedicated to continuous improvement in tailings standard. management and seek to enhance our governance –– Joined the Minerals Council of Australia Tailings systems and processes while lifting our operational Working Group. capability and practices. –– Participated in the preparation of the International Commission on Large Dams In 2016, we joined the International Council on Tailings Dam Design – Technology Update Mining & Metals (ICMM) tailings working group, (ICOLD bulletin), and in the Australian National which develops tailings management guidance for Committee on Large Dams – Guidelines on member companies. Our work helped inform its Tailings Dams: Planning, Design, Operation 2016 position statement, identifying the six and Closure Revision 1. elements of TSF governance. Our own Group-wide safety standard is consistent with these six key elements: 1. Accountability, responsibility and competency 2. Planning and resourcing 3. Risk management 4. Change management 5. Emergency preparedness and response 6. Review and assurance 64 Annual report 2019 | riotinto.com

Sustainability Our ambition Climate change to enhance the climate resilience of our business. report Strategic Climate risks and opportunities have formed part For example, in early 2020, we announced a $98 of our strategic thinking and investment decisions million (A$144 million) investment to build a 34MW zero for over two decades. We now have a portfolio well solar plant at our new Koodaideri iron ore mine in net emissions by 2050 positioned for the transition to a low-carbon the Pilbara, alongside a lithium-ion battery energy economy, and we are the only major diversified storage system. The plant and battery will limit our company in the industry not involved in fossil fuel annual carbon dioxide emissions by approximately Our targets extraction. While we are uniquely positioned, like 90,000 tonnes (compared to conventional many other businesses, we still face significant gas-powered generation). challenges in meeting our climate change ambition 15% and delivering tangible outcomes. We support the use of market mechanisms and the reduction in absolute emissions by 2030 establishment of stable regulatory frameworks that In addition, each of the commodities we produce support investment in low-carbon technology. has a role to play in the transition to a low-carbon Effective climate policies must prevent “carbon economy – aluminium for electric vehicles, copper leakage” by avoiding the negative unintended for wind turbines, iron ore for critical infrastructure, consequence of transferring industrial production 30% and minerals for rechargeable batteries, including to countries with weaker regulations. reduction in emissions intensity by 2030 lithium. We also test our portfolio against a range of This year, we have set a new ambition to reach net scenarios mapping the policy and technology underpinned by zero emissions by 2050. While there is no doubt pathways necessary to limit global temperature we will face many challenges in achieving this rises. Our analysis indicates that the diversity of our ambition, and we do not yet have a clear pathway portfolio enhances our resilience, including in a $1bn to get there, we will focus on reducing emissions scenario in which the global average temperature spend on climate-related projects over across our operations, partner with others to increase is below 2°C; consistent with the goals of develop new technology solutions and look for the Paris Agreement. the next five years ways to improve the quality of our products. Climate change will only be successfully addressed In 2019, we looked at our operations in detail to through collective action by governments, identify emission reduction opportunities and business and consumers around the world. We are develop marginal abatement cost curves. This working on innovative partnerships to stimulate comprehensive work informed our 2030 targets action with customers and other partners across for our managed and non-managed operations: our value chain. In September, we signed a to reduce our emissions intensity by 30% and Memorandum of Understanding with China’s absolute emissions by 15% compared to our 2018 largest steel producer, China Baowu Steel Group, baseline (equity basis). And our overall growth and Tsinghua University, one of China’s most between now and 2030 will be carbon neutral. prestigious and influential universities, to develop and implement new methods to reduce carbon This will be underpinned by approximately emissions and improve environmental $1 billion spend over five years on climate-related performance across the steel value chain. projects, research and development, and activities Greenhouse gas and energy performance 2015-2019 Task Force on Climate-related 2019 2018 2017 2016 2015 Financial Disclosures Greenhouse gas emissions intensity We have provided disclosures in line (indexed relative to 2008) 70.6 71.61 72.9 74.4 79.7 with this framework in our climate Total energy use (petajoules) 407 4251 440 458 433 change report, which can be found on riotinto.com. 1 Numbers adjusted from previous years to ensure comparability over time. Commentary Sources of greenhouse gas emissions Net purchases electricity and steam 35.2%; fuel 36.4%; anodes and reductants 24.8%; process gases 3.0%; net land management 0.6% Primary sources of energy used1 Coal 32.2%; hydro 31.1%; natural gas 19.6%; diesel 12.6%; nuclear 0.5%; fuel oil 2.4%; other renewable 1.6%; other 0.0% Sources of electricity used1 Hydro 72%; coal 14.8%; natural gas 8.1%; diesel 0.9%; other 4.2% 1 Due to rounding, the sum may not total 100%. Annual report 2019 | riotinto.com 65

Strategic report Sustainability continued * Communities important stakeholders. In 2019, we supported the $36m We plan our business for the long term and aim to play Uluru Statement from the Heart, which seeks to a positive role in society, as well as in the communities enshrine an Indigenous voice in the Australian in community in which we operate, where many of our employees and Constitution. We won the ‘Best Company investment their families live. We engage communities in ways that Indigenous Procurement Initiative Award’ at the are inclusive, respecting dignity, rights, culture and Queensland Resources Council Indigenous Awards way of life. We aim to maximise social and economic in recognition of our work at our Amrun bauxite development and minimise potential issues, such as mine. When we work with land-connected groups, $5.5 billion noise and dust. Our vision is to strengthen communities we want to understand their physical, spiritual and so they can sustain and drive their own progress. cultural connection with the local environment. spent with Western As such, we seek their active engagement in Australian businesses – As we continue to automate our operations, monitoring and managing cultural heritage including Pilbara we have scaled up our investment in education impacts. For example, at our Cape Lambert Indigenous-owned businesses partnerships that help develop skills for the future. This operation in the Pilbara region of Western Australia, year, for example, we announced a A$10 million, our turtle monitoring programme, a partnership four-year partnership focusing on skills for the digital with the Department of Biodiversity, Conservation future with leaders in Australia’s education and and Attractions, has been expanded to become a innovation sectors, including leading start-up collaboration between operational teams, local accelerator BlueChilli and Amazon Web Services. communities, regulators and the Ngarluma Aboriginal Corporation. This proactive We also recognise that we have a role to play management was acknowledged with an promoting and supporting regional economic Excellence in Environmental Management award development. This requires dialogue and at the 2019 Australian Mining Prospect Awards. coordination with other stakeholders, including governments, international organisations, civil Our impact on communities extends beyond our society, communities and other businesses. In operational sites. For example, we work with Madagascar, for example, our QMM team funds suppliers in more than 120 locations, supporting business skills training to support local agricultural the employment of many thousands of people. cooperatives. In Quebec, Canada, we support local In 2019, we spent $17.2 billion with these suppliers; projects and businesses, including the creation of in Mongolia we spent more than $366 million with the “Centre en entrepreneuriat multi-ressources”. local suppliers. In Western Australia, we awarded Established in 2019, the centre supports our 400th scope of work through our local entrepreneurs in the natural resources sector, procurement portal in 2019, and spent A$5.5bn helping them to run more efficient, sustainable and with over 1,900 Western Australian businesses – profitable businesses. We are also looking at ways including Pilbara Indigenous-owned businesses. to deploy financial tools, including social impact Our direct economic contribution is the total value investments, and to amplify the impact of our own of operating costs, employee wages and benefits, community investments. In 2019, we were pleased payments to providers of capital, payments to to make more than $36 million of community government by country, development investments in health, education, local business contributions, payments to landowners and development, vocational skills training, community investments during the year. In 2019, environment, culture, community infrastructure it was $45.1 billion. and services. We consider Indigenous people to be Direct economic contribution 2015-19 (US$ million) 2019 2018 2017 2016 2015 Value add1 27,841 30,504 27,734 20,065 18,888 Payments to suppliers2 17,245 17,2313 16,4713 15,8123 17,968 3 Community contributions* * 192 176 168 187 *Note: In 2019, we adopted new definitions and data collection processes for reporting discretionary community investments, non-discretionary development contributions, management costs and payments to landowners to align with GRI Reporting Standards. As a result of these changes, 2019 data is not comparable with previous years. 1. Sum of payment to employees, governments and returns on capital invested in operations. 2. Includes our share of joint ventures and associates. 3. Numbers restated from those originally published to ensure comparability over time. 2019 Community investment1 36.4 Development contributions2 13.0 Payment to landowners3 147.3 1. Community investments are voluntary financial commitments, including in-kind donations of assets and employee time, made by Rio Tinto to third parties to address identified community needs or social risks. 2. Development contributions are defined as non-discretionary financial commitments, including in-kind donations of assets and employee time, made by Rio Tinto to a third party to deliver social, economic and/or environmental benefits for a community, which Rio Tinto is mandated to make under a legally binding agreement, by a regulatory authority or otherwise by law. 3. Payment to landowners are non-discretionary compensation payments made by Rio Tinto to third parties under land access, mine development, native title, impact benefit and other legally binding compensation agreements. 66 Annual report 2019 | riotinto.com

Sustainability By 2023, we will Water Our new water targets report Strategic In some regions we work in environments where Water targets remain at the heart of our integrated disclose: water is scarce, like the Gobi Desert in Mongolia, water management approach. To be more transparent and others where rainfall can vary greatly from year about our water usage and our water risk profile, to year, such as Weipa in Queensland, Australia. management and challenges, our new water - permitted surface Many of our sites are also experiencing changes in targets consist of one Group target and six rainfall and water availability due to climate change. site-based targets. These will help us improve the water allocation datasets we need to drive good water stewardship; Whatever the context, we see ourselves as water they will also improve our performance over the volumes stewards. We take this commitment seriously, as next five years through a programme of risk water is essential not just for human life, health, awareness and response. and the environment, but for economic prosperity. - annual allocation Our processing plants, refineries, smelters and mines Our Group target use water to process ore, manage dust and promote By 2023, we will disclose for all managed usage rehabilitation. In some instances, water is used to operations: produce hydroelectricity to power our operations. - estimated catchment In places like Tom Price, one of our Pilbara iron ore –– Permitted surface water allocation volumes mines, we also supply drinking water to the –– Annual allocation usage runoff from average surrounding communities. –– Estimated catchment runoff from average annual rainfall rainfall We aim to balance our operational water needs with those of local communities, Traditional Owners and Our site-based targets, which were developed ecosystems. We avoid degrading water resources in line with our ICMM commitments, will help us like lakes, streams and groundwater aquifers, and to focus on the right issues using appropriate to control the quality and quantity of the water we resources at operational sites where water is a use and return to the environment. We also try to recognised risk. use water as efficiently as possible in the design and operation of our sites. At Oyu Tolgoi, in Mongolia, we will maintain our average water use efficiency at 550L/tonne of ore To this end, we now consider water risk against the at the concentrator. We are focused on optimising following four themes: water resource, quantity and the use of the scarce water resources and taking a quality, dewatering and long-term obligations. This stewardship approach to ensure the long-term framework allows us to identify, assess, manage future of the mine, the environment and the and communicate water risk both internally and to livelihoods of local herders. the communities where we operate. QIT Madagascar Minerals (QMM) operations We support the new ICMM position statement on present a significant risk from a water and broader water stewardship and, from 2020, will report our environmental perspective due to their location, practices against the commitments outlined in the the nature of the surrounding environment and the statement: mining process. So we have committed to reviewing our current practices and infrastructure to develop –– To apply strong and transparent water governance and implement an improved site water –– To manage water at operations effectively management approach by 2023. –– To collaborate to achieve responsible and sustainable water use Fresh water used 2015-19 2019 2018 2017 2016 2015 Fresh water used (billion litres) 448 401 465 467 460 Annual report 2019 | riotinto.com 67

Strategic report Sustainability continued 2019 also saw us Biodiversity and ecosystems With this in mind, in 2019, we intensified both our In 2017, we announced a new approach to ensure closure planning and the resources dedicated to it. progress in other we are able to mitigate specific material risks and For example, today, we have a dedicated team impacts at each of our managed sites. To do this, conducting closure studies as well as a team important areas, many our sites aim to first avoid, then minimise and supporting closure planning at our assets. We also restore impacts, implementing offsets if impacts developed a closure readiness framework this year, of which are integral to remain significant. This is a positive and practical which helps sites nearing closure transition evolution of our approach, based on 15 years of effectively, ensuring that all risks are well our business as well as operational experience and engagement with managed and opportunities realised where possible. external stakeholders, including UN Environment We continue to engage stakeholders of our sites the way we work. Programme World Conservation Monitoring Centre nearing closure – governments, Traditional Owners, (UNEP-WCMC), BirdLife International, the employees and local communities, for example – to International Union for Conservation of Nature, keep them apprised of progress and planning, which Fauna & Flora International, The Biodiversity helps them plan their futures. Such engagement Consultancy, Hardner & Gullison and others. also helps us transfer the land in a way that optimises its use after mining comes to an end. This year, we began auditing the new standard covering biodiversity protection and natural As we consider the growing importance of closure resource management across our operations. Our to our business, we remain focused on first step was to work with experts from the understanding, planning and optimising for any (UNEP-WCMC) to assess and rank the biodiversity long-term management obligations, such as water sensitivity of the footprint of each operation using treatment, and repurposing and/or remediating the the best available global information and data. This land. Over the last year, as we continued our baseline analysis, along with our internal assurance planning and studies, the associated costs, risks framework, will help us implement robust and opportunities related to closure became biodiversity management programmes. It also clearer; at the end of 2019, closure provisions on encourages our sites to find more ways to work with our balance sheet totalled $11.1 billion (compared host communities and conservation organisations with $10 billion in 2018). to ensure long-term stewardship of the lands and waters where we operate. In Queensland, Australia, Ethics and integrity for example, we work with the Australian Wildlife Integrity is one of our five core values. We have clear Conservancy, the University of Queensland and the standards around competition, data privacy, bribery Queensland Department of Environment & Science and corruption, conflicts of interest, benefits, to help protect Australia’s rarest bird of prey – the sponsorships and donations and fraud. Our code of red goshawk. Working with these partners, we have conduct, The way we work, provides clear guidance refined our tracking and trapping techniques to on how we should conduct our business, no matter gain invaluable information which will contribute to where we work or where we are from. We reinforce conserving this threatened species nationally. these standards with ongoing training, reviews and – where necessary – disciplinary action. We progressively rehabilitate our operations. In 2019, our total land holding was 153,287 square Activities during the year in this area included: kilometres (sq km), of which 3,622 sq km has been –– Focusing resources in areas such as enhanced disturbed (2.4%). In 2019, we rehabilitated business integrity risk assessments and 490 sq km. increased on-site compliance reviews to better support our core assets and business activities Closure –– Reaching more than 4,400 people in 15 We operate with closure in mind, incorporating it countries with face-to-face training on how to into the design of every asset and new project. All spot and manage business integrity dilemmas of our existing operations have a closure plan and –– Reviewing 805 incidents reported either align with our asset closure framework, ensuring through Talk to Peggy, our confidential, closure is considered throughout the lifecycle of independently operated whistleblowing the asset. programme, compliance managers or team leaders, up roughly 19% on last year. 34% of We will be transitioning a number of assets into reported incidents were substantiated. closure over the next five years, including our Argyle diamond mine in Western Australia, which is set to close in late 2020, as well as the Ranger uranium mine, in the Northern Territory, Australia, set to close in 2021. 68 Annual report 2019 | riotinto.com

Sustainability Political integrity Human rights community members on a variety of human report Strategic As a company, we do not favour any political party, We respect all internationally recognised human rights issues including security, land access, an group or individual, or involve ourselves in party rights, prioritising action around salient issues open civic space and labour rights including political matters. Nor do we make any payments to where our operations or business relationships modern slavery. This included roundtables with political parties or candidates. could have the most severe impact on people. global civil society organisations These issues include security, land access and –– Publishing our second annual report on We do not offer, pay or accept bribes, no matter resettlement, indigenous people’s rights, implementation of the VPSHR, also available on where we operate, what the situation is, and who is environmental issues (such as access to water), voluntaryprinciples.org, and our third involved. Nor do we allow our agents or labour rights and in-migration (such as access to modern slavery statement intermediaries to do so. We also have strict health services). We have human rights due –– Implementing a modern slavery clause in our guidelines on giving and receiving benefits. diligence processes in place to identify, prevent and global standard contract for suppliers mitigate the adverse effects of our own operations –– Continuing to screen suppliers for human We engage on public policy on issues that affect or and business relationships. This is a core rights-related risks including modern slavery, could affect our business, including by contributing consideration in our social risk analysis and impact and taking action where necessary relevant information and sharing experiences that assessment processes and is embedded in our –– Actively participating in certification schemes help create robust public policy. Our Business human rights policy. (such as the Aluminium Stewardship Initiative) Integrity Standard includes strict guidelines for and other voluntary initiatives to validate dealing with government officials and politicians, Engaging our stakeholders and getting feedback, company performance on human rights including whether they can be appointed to including complaints, is a vital part of our approach to company positions or engaged as consultants. respecting human rights. It helps us to provide People effective remedies where we identify that we have Employee engagement We join industry associations where membership caused or contributed to harm. It also helps us to We aim to create a workplace that is supportive, provides value to our business, investors and other improve the way we run our operations, and is a inclusive, empowering and engaging. This year, our stakeholders. We publish the principles that guide crucial part of our understanding of systemic Chief Executive visited 17 sites, engaged in small our participation in industry associations, and the issues. All of our sites are required to have in place group discussions at more than 20 locations and way we engage them, as well as a list of the top five a complaints, disputes and grievance mechanism, held more than 30 town halls. He also regularly has industry association memberships by fees paid. We in line with the Criteria of Effectiveness for conversations with employees around the world on also track and disclose how we engage on climate Non-Judicial Grievance Mechanisms outlined in the our internal Yammer platform, which more than policy issues, disclosing when industry association UN Guiding Principles on Business and Human Rights 30,000 of us use. positions are significantly different to our own. (UNGPs). We saw a 12-point increase in our employee Net Transparency We have committed to following core business and Promotor Score (eNPS) over the past 12 months. We are founding members of the Extractive human rights-related standards, are members of This measures how employees feel about the Industries Transparency Initiative (EITI) and relevant multi-stakeholder initiatives and also company, its leadership and its future. signatory to the B Team Responsible Tax Principles. support other key international human rights We believe greater transparency leads to greater instruments, including: Inclusion and diversity accountability; both are key to building trust and - Voluntary commitments to the OECD Guidelines We aim to recognise and respect diverse cultures, achieving better social and economic outcomes for Multinational Enterprises, the UN Global communities and points of view, and to treat each over the long term. Compact and the Voluntary Principles on Security other with fairness and dignity. and Human Rights (VPSHR) To that end, where they are not subject to - Supporting and implementing the UN Guiding We employ people on the basis of job requirements confidentiality restrictions, this year we disclosed Principles on Business and Human Rights and do not discriminate on any grounds. We do not our minerals development contracts with Supporting the UN Declaration on the Rights of employ forced, bonded or child labour. We employ governments – and we continue to encourage Indigenous Peoples people with disabilities and make considerable governments to allow such disclosures. We also - Striving to obtain the free, prior and informed efforts to offer suitable alternative employment disclosed information about the beneficial owners consent of Indigenous peoples and other affected and retraining to employees who become disabled of our joint ventures in line with EITI standards and communities to access land and natural resources, and can no longer perform their regular duties. expectations. Both sets of disclosures are available in line with the International Finance Corporation on riotinto.com. Performance Standard 7 and the International Our graduate programme continues to help us Council on Mining and Metals position statement bring new perspectives into the organisation, We are also transparent about our taxes paid and on Indigenous peoples and mining. challenging our current practices with new ways of payments to governments. In 2020, we will publish working. This year’s graduate cohort comes from additional country by country disclosures relating Our actions and achievements on human rights in 29 countries, represents 20 nationalities and most to our taxes paid in 2018. We are also working 2019 include: speak at least two languages. We also increased closely with governments and the Organisation for –– Ranking second overall, and as the top our intake of female graduates by 18%, to 54% of Economic Co-operation and Development (OECD) company within our sector, in the 2019 results the total intake. on new tax reporting codes and policies to ensure for the Corporate Human Rights Benchmark consistency in our reporting procedures. And we –– Supporting Indigenous Australians and the Uluru endorse the B Team Responsible Tax Principles, Statement which support fairer, more sustainable tax systems –– Having open conversations with investors, and global standards of responsible tax practices. global civil society organisations and Land footprint 2015-19 2019 2018 2017 2016 2015 Land footprint – disturbed (square kilometres) 3,622 3,595 3,616 3,696 3,629 Land footprint – rehabilitated (square kilometres) 490 485 497 541 533 Annual report 2019 | riotinto.com 69

Strategic report Sustainability continued At the end of 2019, our equal pay gap was less than Our approach to sustainability Notes on data 2% and our gender pay gap was less than 1%. Governance, materiality and assurance The data summarised in this sustainability section Equal pay is at the core of our approach to pay The Sustainability Committee of our Board of relates to calendar years. Unless stated otherwise, equity. This means making sure that men and directors reviews our approach to ensure parameters are reported for all managed operations women employed by the same company in the consistency with our purpose and values, the without adjustment for equity interests. Where same location and performing work of equal value effective management of material sustainability possible, we include data for operations acquired receive the same pay. Unlike equal pay, the gender risks and our contribution to sustainable development. before 1 October of the reporting period. Divested pay gap is also influenced by the relative seniority operations are included in data collection processes of men and women. It is a measure of the difference We conduct a sustainability materiality assessment up until the transfer of management control. between average earnings across the Group, to ensure that we report on topics that matter most regardless of roles – and is expressed as a to our stakeholders as well as to our business. We report against GRI standards and the percentage of men’s earnings. Materiality in sustainability, as opposed to financial requirements of other select reporting frameworks, In 2019: materiality, is the threshold at which an issue or and reflect the ten principles of the ICMM and the topic becomes important enough to be reported mandatory requirements in the ICMM position –– We partnered with universities to build a diverse externally, taking into account the impact and level statements within our policies, standards and pipeline and, through targeted primary and high of perceived importance from stakeholders. procedures. For more about our data definitions, school programmes, attracted students into our reporting of GRI disclosure requirements and the fields of science, technology, engineering In 2019, we updated our materiality assessment our alignment with the ICMM, see the sustainability and mathematics based on a wider engagement with stakeholders, section of riotinto.com. –– Women in operational roles decreased by 3%, providing us with a richer dialogue and pool to 12% overall of information. –– The overall percentage of female employees increased by 0.7% to 18.4% (7,337 women; We engaged an independent external assurance 32,628 men) organisation, PricewaterhouseCoopers LLP, to provide –– 22.6% of senior management roles were held the directors of Rio Tinto with assurance on selected by women (112 women; 385 men) sustainability subject matters. From 2020, we will –– 11.1% of the Board roles were held by women. be engaging KPMG to complete the independent With the new non-executive director external assurance for future reports. appointments announced in February 2020, this has increased to 33%. PricewaterhouseCoopers LLP’s assurance statement satisfies the requirements of subject We define senior management as general matters 1 to 4 of the ICMM assurance procedure. managers, Group advisers and chief advisers as See page 102 of the Governance report for more well as employees in leadership roles who report information on our external auditors and internal directly to Executive Committee members. The assurance. numbers of employees quoted above excludes contractors. Non-financial information statement This section (pages 60 to 70) provides information as required by regulation in relation to: –– Environmental matters –– Our employees –– Social matters –– Human rights –– Corruption and bribery Other related information can be found as follows: –– Our business model – page 14 –– Principal risks and how they are managed – pages 74 to 80 –– Non-financial key performance indicators – pages 22 and 26 70 Annual report 2019 | riotinto.com

Risk report Risk management At Rio Tinto, creating Effective management of risk provides confidence In the longer term, we see societal expectations report Strategic to all our stakeholders in the Group’s ability to meet around the impact of our business on the local shareholder value strategic objectives in alignment with our values – economy, communities and environment Safety, Teamwork, Respect, Integrity and Excellence. continuing to rise. There has also been an increase is the reward for taking in focus by investment firms on environmental, Risk can manifest as opportunities (upside) or social and governance (ESG) issues when and accepting risk threats (downside) that can affect our business considering their investment criteria. Climate performance. change constitutes an important part of the ESG responsibly. framework. Climate risks and opportunities have At Rio Tinto, creating shareholder value is the formed part of our strategic thinking and reward for taking and accepting risk responsibly investment decisions for over two decades. Our through effective risk management. climate change report explains our approach to governance and risk management in this area and Emerging risks sets out our 2030 targets and our ambition to reach As we enter a new era of complexity, we expect net zero emissions by 2050 across our operations. to experience increasing uncertainty from the We continue to enhance our monitoring and interplay of three global forces: geopolitics, management of greenhouse gas emissions, water technology and society. and land use, and rehabilitation. Additionally, we have established partnerships across our value There remain significant implications for the Group chain to explore solutions to climate change. These that arise from ever-growing geopolitical tensions include the International Council on Mining and impacting market sentiment. Rising trade tensions Metals (ICMM), Climate Smart Mining, Elysis, between global centres of demand and supply, Baowu Steel and Tsinghua University. geopolitical frictions such as the Hong Kong crisis, and deteriorating corporate balance sheets have In 2019, we further improved our controls for the potential to slow global growth and impact managing operational risks. In particular, we have demand for our products. This in turn could affect strengthened how we manage the risks of major Group earnings. Additionally, as not all societies hazards through the introduction of Centre of have benefited equally from globalisation, there Excellence (CoE) teams, in geotechnical, is an increasing focus on resource nationalism. underground, process safety, tailings, energy and Global economic conditions remained uncertain climate change and asset management. Our throughout 2019 due to escalated trade tensions partner-to-operate strategy also supports the and heightened geopolitical instability. This value creation and maintenance of mutually combination created market volatility. beneficial partnerships with key stakeholders, including host governments, communities, Advances in technology bring both opportunities customers and suppliers. and threats in the medium term. Digital connectivity, and intelligent systems supported Assessing our risks by advance analytics and artificial intelligence, With the help of management, the Board has are expected to drive the fourth stage of carried out a robust bottom-up assessment of industrialisation. We are focused on being at the the emerging and principal risks of the business. frontier of mining technology, implementing They have also tested the Group’s financial plans industry-leading innovation to sustain our leading for severe but plausible scenarios related to certain cost positions, tackle critical industry challenges, principal risks materialising. Our principal risks are deploy emerging technologies and deliver discussed on the following pages. economic growth options through exploration and orebody optimisation. As we continue to integrate There remain certain threats, such as natural automation in our operations, we are working to disasters and pandemics where there is limited position and prepare our workforce for the future capacity in the international insurance markets to through regular training programmes. We are also transfer such risks. We monitor closely such investing in closing the skills’ gap in Australia’s threats, and develop business resilience plans. We future workforce through a four-year national are currently closely monitoring the potential short programme that fast-tracks development of skills and medium-term impacts of the Covid-19 virus, needed for the digital future. We are acutely aware including for example supply-chain, mobility, that with increasing reliance on technology comes workforce, market demand and trade flow impacts, a necessity to continue to enhance our cyber as well as the resilience of global financial markets security. In 2019, we implemented monitoring to support recovery. Any longer-term impacts will technology to enable us to identify malicious activity also be considered and monitored, as appropriate. at our most critical operating assets, and we continue to build on these capabilities. We also seek to bring a commensurate level of rigour and discipline to our managed and non-managed joint-ventures as we do to our wholly-owned assets, through engagement and influence, subject to applicable laws. Annual report 2019 | riotinto.com 71

Strategic report Risk management continued How we manage risk –– Embedding risk awareness into all decision- All of our employees and business leaders are Our risk policy and standards commit us to making processes to support leaders in responsible for identifying, evaluating and manage risks in a proactive and effective manner. managing risks proactively and effectively managing risks. Risk management is a key At Rio Tinto, effective risk management requires: to improve business performance by either accountability and performance area for our creating or protecting value leaders. Our Risk team supports the understanding –– Identifying and evaluating risks that matter –– Clearly defined roles and responsibilities and management of risks at all levels of the most in achieving strategic objectives, so for risk management. business. They provide a framework for managing resources can be prioritised in the most and reporting material risks and support the Risk efficient and effective way Our process for identifying, evaluating, planning, Management Committee in escalating key –– Effective communication of risk management communicating, and managing material business issues to the Executive Committee or to the information to decision makers across the risks is designed to manage uncertainty and, where Board, if appropriate. Group, so we can respond at the right level appropriate, to accept a degree of risk to generate of the organisation returns. We have an enterprise-wide risk management information system where all material risks, controls and actions are documented and kept current for managing and reporting purposes. Longer-term viability statement Therefore, our longer-term viability assessment Applying these scenarios, the first three years of Our long-term planning reflects our business examines in detail the first three years (2020-22) of the Group’s business plan is stress tested for the model of running our business in ways that are the business plan, analysing a number of ‘severe impact on the Group’s longer-term viability, safer, smarter and more sustainable. Our business but plausible’ scenarios contemplated within our including whether additional financing facilities will planning processes include preparing a one-year Group’s principal risks and uncertainties. be required. In addition to liquidity and solvency, detailed financial plan and a longer-term life of the assessment also considers a set of metrics over asset outlook. We develop our strategy and make The principal risks and uncertainties included in the period related to financial performance, cash capital investment decisions based on an our longer-term viability assessment are as follows. flows, debt capacity and credit rating, as well as assessment of cash flows and risk over this dividend payments. These metrics are subject multi-decade horizon. We assess our financial Market risk: A global economic crisis triggered by to robust stress tests and reverse stress tests. investment capacity regularly to ensure capital a disrupting factor, such as geopolitical tensions or commitments can be funded in line with our a pandemic event, that could generate global Taken in isolation, the materialisation of each risk disciplined approach to capital allocation. recessionary conditions and lead to an economic does not threaten the viability of the Group’s downturn. Our stress testing includes modelling a business model. The main impact from each risk on Our planning process includes modelling a series of large negative pricing shock assumed in 2021 the Group is a significant decrease in free cash flow, macroeconomic scenarios and using a range of followed by a recovery in most commodities by with consequent reduction in the level of the assumptions considering both internal and external 2024. dividend. The Group has levers to maintain adequate factors. As part of our robust Risk Management levels of liquidity, including reducing discretionary Framework, we closely track, monitor and mitigate Operational risk: A “one-off” catastrophic event capital expenditure and accessing lines of credit. principal risks to our business plan and our resulting from a major operational failure, such as a business model, both in the near and longer term. tailings and water storage event, underground The most ‘severe’ scenario, albeit unlikely, The key assumptions underpinning our long-term event or a geotechnical event, resulting in multiple considers the combination of the financial impact plan include: fatalities, operation cessation and significant of all three risks materialising in a single year. The financial impact. occurrence of this scenario creates an immediate –– Long-term economic growth and commodity severe impact on the Group’s financial performance demand in major markets such as China Stakeholder risk: An adverse action by with an estimated negative free cash flow of $7 –– Continued access and economic viability of stakeholders resulting in a cancellation or billion. The Group has a suite of management resources and reserves to support organic and non-performance in offtake obligations impacting actions available to preserve resilience, including inorganic growth programmes sales revenue for a prolonged period. accessing lines of credit, reducing capital –– Pathways to reduce carbon footprint expenditure, the sale of assets, and raising debt –– No significant industry-wide disruptive The expected financial impact for each risk is while maintaining the shareholder return policy. technology or productivity enhancement to quantified based on our internal macroeconomic Our financial flexibility could potentially be limited unlock very low-cost supply and business analysis, and internal and external during the trough of the crisis. However, the Group’s –– No operational risks materially impacting the benchmarking on similar risks. A probabilistic economic and operational recovery is estimated to be long-term plan approach to quantify risks and impacts is applied within 18 months with business model integrity where relevant. Although the likelihood of more maintained. The viability of the Group under all the Our business plan and macroeconomic forecast than one principal risk materialising in close severe but plausible scenarios tested remained sound. have the greatest level of certainty in the succession is unlikely, the stress test assumes underlying assumptions in the first three years. these risks materialise individually and in Therefore, taking into account the Group’s current This enables a detailed analysis of potential combination to create ‘severe but plausible’ scenarios position and the robust assessment of principal impacts of severe but plausible risks materialising which could threaten the Group’s viability. risks, the directors have assessed the prospects in quick succession, and enables directors to assess of the Group over the next three years (until 31 Rio Tinto’s capacity to exercise financial levers December 2022) and have a reasonable expectation available to maintain the Group’s viability. that we will be able to continue to operate and meet our liabilities as they fall due over that period. 72 Annual report 2019 | riotinto.com

Risk management Roles and responsibilities for risk management in Rio Tinto report Strategic Oversight Board –– Determines the nature and extent of risks that the organisation is willing to take in order to meet our strategic objectives. –– Oversees the risk management process and confirms that management’s strategies are within the Board’s risk appetite and tolerances. Board committees –– Monitor and review the maturity and effectiveness of our risk management framework. –– Review management reports on the strategies and controls applied to any material business risks identified within the committees’ scope. Third line Group Internal Audit –– Provides independent and objective assurance of the effectiveness of the risk management framework. Second line Executive Committee –– Sets and reviews risk management strategies for risks to the Group’s business strategy, planning and (Group investment decisions. level) –– Defines the Group’s risk tolerances around key business objectives and seeks Board endorsement of those tolerances. –– Reviews the Group-level risks at least three times per year and approves material provided to the Board and its committees. –– Approves new or revised Group-level controls (policies, standards and procedures) that support the management of material risks. Risk Management –– Monitors and reviews the effectiveness of the risk management framework across the Group’s Committee operations and functions on behalf of the Executive Committee and Board. –– Provides oversight for the management of material Group-level risks and associated management responses. Risk function –– Coordinates and supports Group-level risk management activity and reporting. –– Embeds risk management into core business processes, such as planning and capital allocation. –– Builds risk management capability and a risk-aware culture throughout the Group. Group’s standard-setters –– Develop, maintain and communicate Group-level controls, including policies, standards and procedures. –– Assure management’s (product groups and Group functions) compliance to Group-level controls and the control effectiveness in managing risk. First line Senior leadership in –– Manage material risks and critical controls within their business activities, escalating when appropriate. (Operational level) product groups and –– Embed risk analysis and management into their business strategy, planning and investment decisions. functions –– Provide oversight of performance in their area of accountability through Risk, Assurance and Compliance forums. Operational –– Identifies, assesses and manages risks in areas in which management is accountable. management –– Executes line and functional management responsibilities for implementing and monitoring performance of actions and controls. Risk community –– Supports alignment, consistency and continuous improvement of risk management. of practice Our risk management framework sets out the The framework also defines the oversight –– Second line assurance is provided by our organisational foundations for designing, responsibilities of the Board and the Executive central support functions and technical Centre implementing, monitoring, reviewing and Committee, supported by Group Internal Audit, the of Excellence teams eg Underground Mining. continually improving risk management Risk Management Committee and central support As our Group standard-setters, their assurance throughout the organisation. functions across our business. activities are planned and managed by the Integrated Assurance Office (IAO). A key element of this framework is our Risk The risk management framework lays out Management oversight of this assurance over Management Standard. Together with the Group’s a “three lines of defence” approach to managing material Group-level risks is supported by Risk Policy, the standard outlines the expected risks and controls: a quarterly Risk Management Committee outcomes from risk management, the roles and meeting chaired by the Rio Tinto Group Chief responsibilities associated with implementing risk –– First line assurance is the role of risk owners Executive. analysis and management effectively, and the and business leaders. Oversight by senior –– Third line assurance is conducted by Group minimum requirements that must be met. leadership teams through the Risk, Assurance Internal Audit (GIA) to provide independent and Compliance forums chaired by product assurance that the risk management and group chief executives and heads of functions. internal controls are effective to the Board and its sub-committees. Annual report 2019 | riotinto.com 73

Strategic report Principal risks and uncertainties The principal risks and uncertainties outlined Risk impact and trend assessment in this section reflect the risks that could materially affect Rio Tinto, or its ability to meet its strategic objectives, either directly or by triggering a succession of events that in aggregate become material to the Group. Our business units and functions assess the potential economic and non-economic Resource consequences of their respective risks using risks the framework defined by the Group’s Risk Climate HSE & change security Management Standard. Once identified, each risks risks principal risk is reviewed and monitored by the relevant internal experts and by the Risk Strategic Operational risks & people Management Committee and, as appropriate, by risks the relevant Board committees and the Board. We deliver our strategy through The way we work, Communities Market & other key risks which focuses on the “4Ps”: portfolio, people, stakeholder performance and partners. The principal risks, risks uncertainties and trends outlined in this report Very high should be considered as forward-looking Governance impact Financial risks risks statements, and are made subject to the cautionary statement on page 300. High impact Moderate impact Risk trend assessment: Increasing Decreasing Unchanged Market risks We operate in global markets and accept the value impact of exchange rate movements and market-driven prices for our commodities, and pursue a value over volume approach. Commodity prices: risk and uncertainty Opportunities Commodity prices, driven by demand for and supply of the Group’s A rise in commodity prices, or favourable exchange rate movements, generates products, vary and may not be as expected over time. Exchange rate more cash flow from operations, enabling the Group to pursue growth options variations and geopolitical issues may offset or exacerbate this risk. or capital expansions, pay down debt and/or increase returns to shareholders. Potential impact Capturing above-planned returns from commercial insights relating to market –– Business model value movements would deliver additional cash flow to the Group. –– Future financial performance –– Solvency Threats –– Liquidity Falling commodity prices, or adverse exchange rate movements, reduce cash –– Group reputation flow, limiting profitability and shareholder returns. These may trigger impairments and/or impact rating agency metrics. Extended subdued prices Strategy delivery: may reflect a longer-term fall in demand for the Group’s products, and the reduced earnings and cash flow streams resulting from this may limit Portfolio People investment and/or growth opportunities. Failure to deliver planned returns from commercial insights would negatively impact cash flows for the Group. 74 Annual report 2019 | riotinto.com

Principal risks and uncertainties Market risks continued report Strategic China development pathway: risk and uncertainty Opportunities China’s growth pathway could impact demand for the Group’s products Strong growth, positive policy decisions and reforms drive demand for outside of expectations. China is the largest market for our products. commodities, resulting in rising commodity prices that may justify capital expansion and increased shareholder returns in the short to medium term. Potential impact –– Business model value Threats –– Future financial performance An economic slowdown in China, and/or a material change in policy, could –– Solvency result in a slowdown in demand for our products and reduced earnings and –– Liquidity cash flow for the Group. –– Partnerships Strategic delivery: Portfolio People Mitigating actions include: –– Pursue low-cost production, allowing profitable supply throughout the –– Leverage market-facing sales, marketing and trading resources in the Group. commodity price cycle. –– Apply strong governance reflecting relevant regulatory frameworks and –– Maintain a diverse portfolio of commodities across a number of geographies. jurisdictions. –– Maintain a global portfolio of customers and contracts. –– Comply with the Group’s financial risk management practices outlined in –– Monitor multiple leading indicators and undertake detailed industry the Group’s Treasury policy and standard. analysis to inform our forecasting assumptions. Strategic risks Rio Tinto enforces disciplined capital and risk allocation to the best opportunities (organic and inorganic) for shareholders returns. Execution of acquisitions and divestments: risk and uncertainty Opportunities Our ability to secure planned value by successfully executing Proceeds realised from divested assets are greater than planned, allowing divestments and acquisitions may vary. more capital to be returned to shareholders or redeployed into higher-returning or more productive uses. The Group is successful in acquiring and integrating Potential impact businesses on acceptable terms that provide sustainable future cash flow and/ –– Business model value or future growth optionality. –– Future financial performance –– Solvency Threats –– Liquidity Divestment and acquisition activity incurs transaction costs that cannot be –– Group reputation recouped. Such activity may result in value destruction by realising less than fair value for divestments, or paying more than fair value or failing to integrate Strategy delivery: successfully for acquisitions. The Group may also be liable for the past acts or omissions of assets it has acquired that were unforeseen or greater than Portfolio People Partners anticipated at the time of acquisition. The Group may also face liabilities for divested entities if the buyer fails to honour commitments or the Group agrees to retain certain liabilities. Annual report 2019 | riotinto.com 75

Strategic report Principal risks and uncertainties continued Strategic risks continued Capital project development: risk and uncertainty Opportunities Large capital investments require multi-year execution plans and are An ability to develop projects safely, on time and within budget enhances the complex. The Group’s ability to deliver projects to baseline plan, principally Group’s cash flows, its licence to operate and investor confidence. Effective in terms of safety, cost and schedule, may vary due to changes in technical implementation of optimisation programmes reduces cost and accelerates requirements, law and regulation, government or community development schedules resulting in higher returns earlier. expectations, or through commercial or economic assumptions proving inaccurate through the execution phase. Threats A delay or overrun in a project schedule and/or a significant safety or process Potential impact safety incident could negatively impact the Group’s profitability, cash flows, –– Future financial and operational performance ability to repay project-specific debt, asset carrying values, growth aspirations –– Health, safety, environment and security (HSE&S) and relationships with key stakeholders. –– Solvency –– Liquidity –– Group reputation Strategic delivery: Portfolio Performance Strategic partnerships: risk and uncertainty Opportunities Strategic partnerships play a material role in delivering the Group’s Joint ventures and partnerships offer opportunities to access resources, growth, production, cash and market positioning, and these may not increase shareholder returns, and reduce political, portfolio and operational always develop as planned. risks. We seek to bring a commensurate level of rigour and discipline to our managed and non-managed joint-ventures as we do to our wholly-owned Potential impact assets, through engagement and influence subject to applicable laws. –– Business model value –– Future financial and operational performance Threats –– HSE&S The capacity or financial circumstance or business disposition of our joint –– Group reputation venture partners may present barriers to investment decisions and/or to the realisation of full value for the joint venture(s). For non-managed operations, Strategic delivery: the decisions of the controlling partners may cause adverse impacts to the value of the Group’s interest in the operation, or to its reputation, and may Portfolio Performance Partners expose it to unexpected financial liability. Mitigating actions include: –– Complete detailed, objective due diligence on all material divestments –– Follow rigorous project approval and stage-gating process, including and acquisitions. monitoring and status evaluation, as articulated in the Project Evaluation –– Undertake rigorous third-party due diligence and assurance. Standard and Guidance. –– Involve business unit leaders early in process to recognise integration –– Ensure effective stakeholder management in project development. planning and synergies, or separation of threats and opportunities. –– Approach investments and partnerships with a view to long-term –– Undertake post-investment reviews on divestments and acquisitions to development of relationships rather than short-term transactional advantage. identify key learnings to embed into future initiatives. –– Maintain strong focus on contractor management. –– Consistently approach development of large-scale capital projects –– Actively participate within the governance structures of joint ventures to through a specialised projects division. promote, where possible, alignment with the Group’s policies and strategic priorities. 76 Annual report 2019 | riotinto.com

Principal risks and uncertainties Financial risk report Strategic We maintain a strong balance sheet and liquidity position to preserve financial flexibility through the cycle. Liquidity: risk and uncertainty Opportunities External events and internal capital discipline may impact Group liquidity. Favourable market conditions and strong internal capital discipline could increase Group liquidity and/or balance sheet strength and allow the Group Potential impact to pursue investment or growth opportunities, pay down debt and/or enhance –– Future financial performance returns to shareholders. –– Solvency –– Liquidity Threats –– Group reputation The Group’s ability to raise sufficient funds for planned expenditure, such as capital growth and/or mergers and acquisitions, as well as the ability to Strategic delivery: weather a major economic downturn, could be compromised by a weak balance sheet and/or inadequate access to liquidity. Performance Mitigating actions include: –– Comply with the Group’s Treasury policy and standard, which outlines –– Maintain accurate financial reporting and tracking of our the fundamental principles that govern the Group’s financial risk business performance. management practices. –– Report financial performance monthly to senior management –– Maintain a prudent gearing ratio and other financial metrics and the Board. commensurate with a strong investment-grade credit rating. –– Seek Board approval of the financial strategy, long-term planning and –– Manage the liquidity and financing structure of the Group using forecasts cash flow forecasting. and sensitivity analysis tools to actively monitor, determine and enable –– Apply a shareholder returns policy which allows shareholder returns to access to the appropriate level, sources and types of financing required. adjust with the cycle. –– Subject funds invested by the Group to credit limits and maturity profiles based on Board-approved frameworks to promote diversification and maintain appropriate liquidity. Resources risks We invest to accurately identify new deposits and develop orebody knowledge accurately, which underpin our operations and projects, as well as our projections for the financial performance of the business. Exploration and resources: risk and uncertainty Opportunities The success of the Group’s exploration activity and estimates of Ore The discovery of a new viable orebody can significantly improve future reserves and resources may vary. growth options. Potential impact The volume of ore in reported reserves/resources numbers is based on the –– Business model value geological, commercial and technical information available at the date of the –– Future financial and operational performance report and is, by its nature, incomplete. As new information comes to light, the –– Group reputation economic viability of some Ore reserves and mine plans can be restated upwards. As a result, projects may be more successful and of longer duration Strategy delivery: than initially anticipated. Portfolio Performance Threats A failure to discover new viable orebodies could undermine future growth prospects. If new information comes to light, or operating conditions change, the economic viability of some Ore reserves and mine plans can be restated downwards. As a result, projects may be less successful and of shorter duration than initially anticipated, and/or the asset value may be impaired. Mitigating actions include: –– Comply with the Group’s resources and reserves standard. –– Continually review the prospects of opportunities in the exploration –– Establishment of the Orebody Knowledge Centre of Excellence, as portfolio, and prioritise spend accordingly. part of Group Technical. –– Utilise new technologies where appropriate for exploration and evaluation –– Recruit and retain skilled and experienced exploration and of reserves/resources. evaluation personnel. –– Develop, leverage and manage third-party partnerships. –– Provide stable funding for exploration activities. Annual report 2019 | riotinto.com 77

Strategic report Principal risks and uncertainties continued Health, safety, environment and security risks Our operations are inherently hazardous. We seek to achieve operational excellence to ensure that our employees and contractors go home safe and healthy, and that there are no adverse impacts on the communities and the environment where we operate. Health, safety, environment and security: risk and uncertainty Opportunities Our operations and projects are inherently hazardous, with the potential Delivering leading performance in health, safety, environment and to cause illness or injury, damage to the environment, disruption to a communities is essential to our business model and our success as a Group. community or a threat to personal security. Meeting or exceeding our commitments in these areas contributes to sustainable development for both Rio Tinto and our partners, and underpins Potential impact our continued access to resources, capital and a diverse workforce to sustain –– Future financial performance the organisation. –– HSE&S –– Communities and social performance Good performance in closure and legacy management of closed sites can –– Group reputation enhance our reputation with stakeholders and enable us to maintain access to land, resources, people and capital, so we can continue to establish new Strategic delivery: projects with the support of local communities. Portfolio People Performance Partners Threats Failure to manage our health, safety, environment or community risks could result in a catastrophic event or other long-term damage that could in turn harm the Group’s financial performance and licence to operate. Mitigating actions include: –– Continued focus on HSE&S as a core priority at all operations and –– Monitor monthly HSE&S performance at the Group level. projects, overseen by the Sustainability Committee and supported by the –– Report, investigate, and share learnings from HSE&S incidents. Group’s Risk Management Committee, as well as second and third line –– Build safety targets into personal performance metrics to incentivise safe assurance activities. behaviour and effective risk management (see Remuneration report). –– The second line assurance is provided by our central support functions –– Develop mutually beneficial partnerships with local communities and and technical Centre of Excellence (CoE) teams to verify compliance with establish appropriate social performance targets. Group HSE&S strategy, policy and performance standards. –– Report annually on performance on greenhouse gas emissions, water, –– Regularly review and audit HSE&S processes, training and controls to and land use and rehabilitation, among others. promote and improve effectiveness at managed and (where practicable) –– Focus on fatality elimination through implementation of a programme non-managed operations. to verify safety risk controls. Climate change We provide essential materials for human progress and a low-carbon future. By collaborating with our partners across the value chain, we aim to do this in a sustainable way and help address climate change challenges. Climate change: risk and uncertainty Opportunities Climate change is a systemic challenge and will require coordinated Climate change has formed part of our strategic thinking and investment actions between nations, between industries and by society at large. It decisions for over two decades. Each of the commodities we produce has a role requires a long-term perspective to address both physical climate change to play in the transition to a low-carbon economy – aluminium in electric and low-carbon transition risks and uncertainties. vehicles, copper in wind turbines, iron ore for critical infrastructure and minerals for rechargeable batteries, such as lithium. Potential impact –– Business model value Threats –– Future financial and operational performance Current and emerging climate regulations have the potential to result in increased –– Group reputation costs, change supply and demand dynamics for our products and create legal compliance issues and litigation, all of which could impact the Group’s financial Strategic delivery: performance and reputation. Our operations also face risk due to physical impacts of climate change, including extreme weather. Portfolio Partners Mitigating actions include: –– Partnering to reduce the carbon footprint across the value chain. This –– Implementation of a series of controls to manage the threat of extreme includes the development of new partnerships to explore pathways with weather, including structural integrity programmes across all critical our customers to improve the environmental performance of our product assets, emergency response plans and flood management plans. These value chains. controls keep our people safe and help our operations return to normal –– Enhancing our resilience to physical climate impacts. We consider capacity as quickly as possible. climate risks over the life of our operations, from the way we design and –– Increasing the supply of the materials essential to building a low-carbon develop new projects through to closure and beyond. Supported by the economy. new Energy and Climate Change Centre of Excellence (CoE), we use –– Setting targets to reduce our emissions (on an absolute and intensity basis) scenarios to assess further medium- and long-term risks. over the short, medium and long term. 78 Annual report 2019 | riotinto.com

Principal risks and uncertainties Communities and other key stakeholder risks report Strategic We recognise the value of positive engagement with a range of stakeholders, and seek to develop collaborative and mutually-beneficial partnerships though our partner-to-operate strategy. Sovereign: risk and uncertainty Opportunities The Group’s operations are located across a number of jurisdictions, Proactive engagement with governments, communities and other which exposes the Group to a wide range of economic, political, societal stakeholders can increase access to new resources, support stable and and regulatory environments. predictable investment frameworks and operational environments, and shape mutually-beneficial policies and legal/regulatory frameworks. Potential impact –– Business model value Threats –– Future financial and operational performance Adverse actions by governments and other stakeholders can result in –– Group reputation operational/project delays or loss of licence to operate. Other potential –– Communities and social performance actions can include expropriation, changes in taxation, and export or foreign investment restrictions, which may threaten the investment Strategic delivery: proposition, title, or carrying value of assets. Legal frameworks with respect to policies such as energy, climate change and mineral law may Portfolio Performance Partners also change in a way that increases costs. Closure, reclamation and rehabilitation: risk and uncertainty Opportunities Planning for the future of our sites after they cease their operating life is We are actively assessing opportunities to find solutions to repurpose and a core business function governed by our Closure Steering Committee. reuse sites for future economic or social benefit through working Estimated costs and liabilities are provided for, and updated annually, collaboratively with our stakeholders. For all new asset developments, we over the life of each operation. However, estimates may vary due to a incorporate closure into the design of our assets, as well as how to optimise number of factors that either create opportunities or challenges. decommissioning, remediation and any long-term management obligations. For existing operations, where possible, we progressively rehabilitate land Potential impact throughout the life of the operations. Business model value Future financial and operational performance Threats Group reputation Plans and provisions for closure, reclamation and rehabilitation may vary over time due to changes in stakeholders’ expectations, legislation, standards, Strategic delivery: technical understanding and techniques. In addition, the expected timing of expenditure could change significantly due to changes in the business Portfolio Performance Partners environment and orebody knowledge that might vary the life of an operation. Mitigating actions include: –– Comply with Group policies and standards which provide guidance –– Develop long-term relationships with a range of international concerning risk management, communities and social performance. and national stakeholders. This is overseen by our Sustainability Committee, and Closure –– In relation to sovereign risk, maintain geographically diverse portfolio Steering Committee. to reduce concentration of exposure to changes in particular locations. –– Collaborate with key stakeholders, and participate in strategic –– Monitor jurisdictional risks, including sovereign risks, and take partnerships and/or governance structures to create opportunities appropriate action. and mitigate threats. Annual report 2019 | riotinto.com 79

Strategic report Principal risks and uncertainties continued Governance risks Our employees operate in compliance with The way we work (our global code of business conduct), Group delegation of authorities, and all other Group policies, standards and procedures. Regulation and regulatory intervention: risk and uncertainty Opportunities The Group’s reputation and regulatory licences are dependent Good corporate citizens are acknowledged to operate to a high ethical upon appropriate business conduct and are threatened by actual standard, thus attracting talent and securing access to resources and or perceived breaches of law, reputation and our code of conduct. investment opportunities. Potential impact Threats –– Potential impact Fines may be imposed on Group companies for breaching anti-trust rules, –– Business model value anti-corruption legislation, or sanctions or for human rights violations, or for –– Future financial performance other inappropriate business conduct. –– Group reputation A serious allegation or formal investigation by regulatory authorities Strategic delivery: (regardless of ultimate finding) could result in a loss in share price value and/or assets or loss of business. Other consequences could include the criminal People Partners prosecution of individuals and/or Group companies, imprisonment, fines, legal liabilities and reputational damage to the Group. Mitigating actions include: –– Comply with Group policies, standards and procedures that provide –– Dedicate legal and compliance teams to assist Group businesses in complying guidance to our businesses and drive compliance with regulatory obligations and internal standards and procedures. with regulatory obligations. –– Maintain appropriate oversight and reporting, supported by training and –– Identify and meet our regulatory obligations and respond to awareness, to drive compliance with regulatory obligations. emerging requirements. –– Continue to develop and deploy training across relevant sectors of the workforce. Operational and people risks We seek to achieve operational and commercial excellence through the engagement of our workforce and the deployment of effective standards, processes and systems. Operational and commercial excellence: risk and uncertainty Opportunities Accessing, developing and retaining talent as Rio Tinto and our industry Enhance productivity and business resilience through building operational evolves presents a constant challenge. The Group’s ability to maintain its and commercial excellence. competitive position is dependent on the services of a wide range of internal and external skilled and experienced personnel and contracting partners. Threats Business interruption or underperformance may arise from a lack of capability Potential impact in people, standards, processes or systems to prevent, mitigate or recover –– Future financial and operational performance from an interruption (for example, a significant weather event), which results –– Liquidity in a material loss to the Group. –– HSE&S –– Communities and social performance –– Group reputation Strategic delivery: People Performance Mitigating actions include: –– Development of Centres of Excellence for key technical capability –– Comply with the Acceptable Use of Information and Electronic Resources in major hazard and asset management. standard, supported by periodic reviews of IT infrastructure and security –– Continue to provide leadership, technical and commercial controls by dedicated cyber-security team. development opportunities. –– Undertake business resilience planning and execution exercises for –– Comply with slope geotechnical, tailings management, underground plausible and severe scenarios. mining and process safety technical and safety standards, supported by subject-matter experts and audit protocols, reducing the risk of operational failure. 80 Annual report 2019 | riotinto.com

Five-year review Selected financial data report Strategic The selected consolidated financial information below has been derived from the historical audited consolidated financial statements of the Rio Tinto Group. The selected consolidated financial data should be read in conjunction with, and qualified in their entirety by reference to, the 2019 financial statements and notes thereto. The financial statements as included on pages 146 to 246 have been prepared in accordance with IFRS as defined in note 1. Rio Tinto Group Income statement data For the years ending 31 December 2019 2018 2017 2016 2015 Amounts in accordance with IFRS US$m US$m US$m US$m US$m Consolidated sales revenue 43,165 40,522 40,030 33,781 34,829 Group operating profit(a) 11,466 17,687 14,135 6,795 3,615 Profit/(loss) for the year 6,972 13,925 8,851 4,776 (1,719) Basic earnings/(losses) for the year per share (US cents) 491.4 793.2 490.4 256.9 (47.5) Diluted earnings/(losses) for the year per share (US cents)(b) 487.8 787.6 486.9 255.3 (47.5) Dividends per share Dividends declared during the year US cents –– interim 151.0 127.0 110.0 45.0 107.5 –– interim special 61.0 –– final 231.0 180.0 180.0 125.0 107.5 –– special 243.0 UK pence –– interim 123.32 96.82 83.13 33.80 68.92 –– interim special 49.82 –– final 177.47 135.96 129.43 100.56 74.21 –– special 183.55 Australian cents –– interim 219.08 –– interim special 88.50 170.84 137.7 59.13 144.91 –– final 349.74 250.89 228.5 163.62 151.89 –– special 338.70 Dividends paid during the year (US cents) –– ordinary 635.0 307.0 235 152.5 226.5 Weighted average number of shares basic (millions) 1,630.1 1,719.3 1,786.7 1,797.3 1,824.7 Weighted average number of shares diluted (millions)(b) 1,642.1 1,731.7 1,799.5 1,808.6 1,824.7 Balance sheet data Total assets 87,802 90,949 95,726 89,263 91,564 Share capital/premium 7,968 8,000 8,666 8,443 8,474 Total equity/Net assets 45,242 49,823 51,115 45,730 44,128 Equity attributable to owners of Rio Tinto 40,532 43,686 44,711 39,290 37,349 (a) Group operating profit or loss includes the effects of charges and reversals resulting from impairments (other than impairments of equity accounted units) and profit and loss on disposals of interests in businesses. Group operating profit or loss amounts shown above excludes equity accounted operations, finance items, tax and discontinued operations. (b) The effects of dilutive securities has not been taken into account when calculating diluted loss per share for the year ended 31 December 2015, in accordance with IAS 33 “Earnings Per Share”. Directors’ approval statement This Strategic report is delivered in accordance with a resolution of the board, and has been signed on behalf of the board by: Simon Thompson Chairman 26 February 2020 Annual report 2019 | riotinto.com 81

Directors’ report Governance Board of Directors 84 Executive Committee 86 Chairman’s governance review 88 How the Board works 90 Matters discussed in 2019 91 Our stakeholders 92 Board effectiveness 94 Evaluating our performance 96 Nominations Committee report 98 Audit Committee report 100 Sustainability Committee report 104 Compliance with governance codes and standards 106 Remuneration report Annual statement by the Remuneration Committee Chairman 110 Remuneration at a glance 113 Implementation report 116 Additional statutory disclosure 139 Employees at the Oyu Tolgoi copper mine in Mongolia 82 Annual report 2019 | riotinto.com

Governance 83 | riotinto.com | Annual reportAnnual 2019

Governance Board of directors Rio Tinto plc and Rio Tinto Limited have a common board of directors. The directors are collectively responsible for the stewardship and long-term sustainable success of the Group. Chairman, executive and non-executive directors Simon Thompson Jean-Sébastien Jacques Jakob Stausholm Megan Clark AC Chairman, MA, PhD. Age 60. Appointed April Chief Executive, MSc. Age 48. Appointed Chief Financial Officer, Ms Economics. Independent non-executive director, 2014; chairman from March 2018 March 2016; Chief Executive from July Age 51. Appointed September 2018 BSc, PhD. Age 61. Appointed 2016 November 2014 Skills and experience: Simon has Skills and experience: Jakob has over 20 significant global experience in mining and Skills and experience: J-S has driven years’ experience in senior finance roles in Skills and experience: Megan combines metals, finance and corporate governance. significant transformation projects at Rio Europe, Latin America and Asia, including expertise in the mining and metals Among a wide range of board Tinto, including the strengthening of our in capital-intensive, long-cycle industry with strong leadership experience appointments, Simon was an executive portfolio, and the development of growth businesses, as well as in innovative in science, research and technology, and director of Anglo American plc, where projects and options, such as Koodaideri technology and supply chain optimisation. brings valuable insights on sustainable he held the roles of Chairman and Chief and Winu in Australia and Resolution in Jakob spent six years with the Maersk development and innovation to the Board. Executive Officer of the Base Metals Arizona. Since 2016, Rio Tinto has declared Group, where his roles included group She was Chief Executive of the Division. He also served as chairman of a record $36 billion in cash returns to Chief Financial Officer and executive Commonwealth Scientific and Industrial Tarmac, and chairman of the Exploration shareholders while reducing net debt by director of the Group’s integrated Research Organisation (CSIRO) from Division. Earlier in his career he held $10.1 billion. J-S has cultivated transport and logistics business. He was 2009-14. Following roles with Western various investment banking positions at ground-breaking partnerships such as the previously with Royal Dutch Shell plc, Mining Corporation, Megan was a director S. G. Warburg and N M Rothschild. one with China Baowu Steel Group and holding a range of finance positions, at N M Rothschild and Sons (Australia), Tsinghua University to improve environmental including chief internal auditor. In 2019, and a vice president at BHP Billiton. Megan Simon has chaired two FTSE companies: performance across the steel value chain. Jakob visited our operations, projects and received the Australian Academy of 3i plc and Tullow Oil plc. His experience as people in 13 countries, across four Science Medal in 2019. a non-executive director includes serving J-S has over 25 years of experience in continents. This allowed him to identify on the boards of AngloGold Ashanti Limited heavy industry and has worked across Current external appointments: and better understand the opportunities and Newmont Mining Corporation. multiple commodities including Non-executive director of CSL Limited that lie across our operations and to assist aluminium, copper and steel. since 2016 and CARE Australia since 2015. Current external appointments: in evaluating the capital requirements at Head of the Australian Space Agency. Chairman of 3i Group plc since 2015. Current external appointments: each business. Member of the International Council on Current external appointments: Mining and Metals, Global CEO Council – None. Beijing, Business Council of Australia and US Business Council. Former directors who served for part of the year Dame Moya Greene Moya stepped down from the board on 26 June 2019. Ann Godbehere Ann stepped down from the board on 9 May 2019. David Constable Simon Henry Independent non-executive director, Independent non-executive director, Past external appointments over BSc. Engineering. Age 58. Appointed MA, FCMA. Age 58. Appointed April 2017 the last three years February 2017 For details of each director’s past Skills and experience: Simon has appointments, see the Directors’ report on Skills and experience: David has strong significant experience in global finance, page 140. corporate governance, board and corporate governance, mergers and leadership credentials. His international acquisitions, international relations and experience in the engineering, strategy. He draws on over 30 years’ Board committee membership key construction, energy, mining and chemical experience at Royal Dutch Shell plc, where Committee chairman sectors includes the execution of major his roles included Chief Financial Officer Audit Committee capital projects. David was Chief Executive from 2009-17. officer of Sasol Limited from 2011-16, and Remuneration Committee Current external appointments: held various roles at Fluor Corporation Non-executive director of Lloyds Banking Nominations Committee from 1982 to 2011, including Group Group plc since June 2014. Independent Sustainability Committee president, Operations. director of PetroChina Company Limited Current external appointments: since June 2017. Member of the UK Non-executive director of ABB Ltd since Defence Board. Member of the Advisory 2015 and Fluor Corporation since Board of the Centre for European Reform September 2019. Senior advisor, Cerberus and the Advisory Panel of CIMA. Capital Management. Member of U.S. Council of Chief Executive Officers. 84 Annual report 2019 | riotinto.com

Board of directors Chairman, executive and non-executive directors Director appointment after Company secretaries 31 December 2019 Governance Sam Laidlaw Michael L’Estrange AO Hinda Gharbi Steve Allen Independent non-executive director, Independent non-executive director, Independent non-executive director, Group Company Secretary, BA MA, MBA. Age 64. Appointed February BA (Sydney), MA (Oxon). Age 67. Age 49. Appointment effective (Modern Languages and European 2017, May 2019 (senior independent Appointed September 2014 1 March 2020. Studies), Solicitor (England and Wales). director) Age 48. Appointed January 2017 Skills and experience: Michael’s Skills and experience: Hinda is executive Skills and experience: Sam has more distinguished public service career gives vice president of Reservoir & Infrastructure Skills and experience: Steve is company than 30 years’ experience of long-cycle, him practical experience of the at Schlumberger Limited and has some 24 secretary of Rio Tinto plc and joint company capital intensive industries in which safety geopolitical and societal trends which years’ experience for Schlumberger secretary of Rio Tinto Limited. Before joining and stakeholder management are critical. affect Rio Tinto. Michael served in senior working in various engineering, functional Rio Tinto, Steve was deputy general counsel Previous executive roles include: president roles for the Australian government, and line management positions, including at BG Group plc. He served as company and chief operating officer, Amerada Hess including head of the Cabinet Policy Unit health and safety, human resources, secretary of BG Group from 2011-16, Corporation; CEO, Enterprise Oil plc; and secretary of the Department of technology development and operations having previously been chief counsel, executive vice president, Chevron Foreign Affairs and Trade. He was High across France, Malaysia, Nigeria, Thailand, corporate, from 2008-11. Before joining BG Corporation; CEO, Centrica plc; and Commissioner to the United Kingdom. the United Kingdom and the United States. Group in 2005, Steve was a corporate membership of the UK Prime Minister’s Michael chairs our Australia Forum, lawyer for Herbert Smith LLP in London. Current external appointments: Business Advisory Group. which meets twice a year. None. Current external appointments: Current external appointments: Current external appointments: Vice-Chair of the Association of General Chairman of Neptune Energy Group Director and deputy chancellor of the Counsel and Company Secretaries working Holdings Ltd. Chairman, National Centre of University of Notre Dame, Australia. in FTSE-100 companies and a member of Universities & Business. Board member, Non-executive director of Qantas Airways the Corporate Governance Council. Oxford Saïd Business School. Council Limited since April 2016. member, Radley College. Director appointment after Director appointment after 31 December 2019 31 December 2019 Simon McKeon AO Jennifer Nason Ngaire Woods CBE Tim Paine Independent non-executive director, Independent non-executive director, Independent non-executive director, Joint Company Secretary, Rio Tinto BCom, LLB, FAICD. Age 64. Age 59. Appointment effective Age 57. Appointment effective Limited BEc, LLB, FGIA, FCIS. Age 56. Appointed January 2019 1 March 2020. 1 September 2020. Appointed January 2013 Skills and experience: Simon brings Skills and experience: Jennifer has over Skills and experience: Ngaire is the Skills and experience: Tim joined Rio insights into sectors including financial 30 years’ of experience in corporate founding Dean of the Blavatnik School of Tinto in 2012 and became joint company services, the law, government and finance and capital markets. For the past Government, Professor of Global secretary of Rio Tinto Limited in 2013. He charities. He practised as a solicitor before 17 years, she has led the Technology, Economic Governance and the Founder has over 25 years’ experience in corporate serving at Macquarie Group for 30 years, Media and Telecommunications global and Director of the Global Economic counsel and company secretary roles, including as executive chairman of its client practice at JP Morgan, based in the Governance Programme at Oxford including as general counsel and company business in Victoria, Australia. Simon USA. During her time at JP Morgan, she University. As a recognised expert in secretary at Mayne Group, Symbion served as chairman of AMP Limited, MYOB has also worked in the metals and mining public policy, international development Health and Skilled Group. Tim spent 12 Limited and of the Australian government’s sector team in Australia. and governance, she has served as an years at ANZ Bank, including as acting research and development body, CSIRO. adviser to the African Development Bank, general counsel and company secretary. Current external appointments: He was the first president of the Australian the Asian Infrastructure Investment Bank, Director of the American Australian Current external appointments: Takeovers Panel. the Center for Global Development, the Association. Company secretary for the Foundation for International Monetary Fund and the Current external appointments: Australia-Japan Studies. Member of the European Union Chancellor of Monash University. Governance Institute of Australia’s Chairman of the Australian Industry Current external appointments: Legislation Review Committee. Energy Transitions Initiative Steering Board member of the Stephen A. Group. Non-executive director of Spotless Schwarzman Education Foundation and Group Holdings Limited since December Trustee of the Rhodes Trust. 2016 and National Australia Bank Limited since February 2020. Annual report 2019 | riotinto.com 85

Governance Executive Committee Day-to-day management of the business is delegated by the Board to the Chief Executive and, through him, to other members of the Executive Committee and to certain management committees. Executive Committee The Executive Committee is responsible for The following management committees support the Chief Executive the delivery of strategy, annual plans and in the performance of his duties: commercial objectives. It manages the financial Investment Committee Reviews proposals on investments, acquisitions and disposals. Approves and operational performance of the Group. capital decisions within delegated authority limits, and otherwise recommends matters for approval to the Board, where appropriate. Risk Management Committee Oversees the management and mitigation of the principal risks that could materially impact the Group’s business objectives and exceed its risk tolerances. Ore Reserves Steering Committee Responsible for standards and control procedures in the ore reserves estimation and disclosure process. Ensures that these are effective in meeting internal objectives and regulatory requirements. Disclosure Committee Oversees the identification of inside information and its public disclosure, including processes to ensure such disclosure is accurate and timely. Closure Steering Committee Oversees the process and controls designed to manage the material risks related to rehabilitation, closure and legacy operations. Jean-Sébastien Jacques Jakob Stausholm Bold Baatar Alf Barrios Chief Executive Chief Financial Officer Chief Executive, Energy and Minerals Chief Executive, Aluminium Bold has been Chief Executive of our Alf became Chief Executive of Rio Tinto Energy & Minerals (E&M) product group Aluminium (RTA) in 2014. He has overseen Executive Committee members since 2016. Through the development of a significant improvement in safety and The two executive directors, Jean-Sébastien Jacques (Chief Executive) and new products and markets and a financial performance, along with major Jakob Stausholm (Chief Financial Officer), are members of the Executive Committee. responsive market approach, he has growth projects such as the Amrun Their biographies can be found on page 84. helped drive the optimisation of Rio Tinto’s bauxite mine. Alf has championed RTA’s portfolio and generated significant leadership of the industry in sustainability, shareholder value. Bold also has launching the first certified low-carbon responsibility for the Group’s Ventures aluminium and helping it become the first M&A team that explores opportunities in company certified by the Aluminium the battery metals space, alongside other Stewardship Initiative for responsible growth avenues. He has also re-energised production. RTA has also helped to the Group’s focus on Africa and overseen establish ELYSYS, a partnership with Alcoa the development of innovative new supported by Apple and the governments processes, including the extraction of of Canada and Quebec, to further develop lithium from waste rock at our boron mine the world’s first carbon-free smelting in California. Bold has led the Group’s technology. commitment to the rehabilitation and closure of Ranger mine at Energy Resources Australia. 86 Annual report 2019 | riotinto.com

Executive Committee Executive Committee Group Executive appointment after 31 December 2019 Governance Vera Kirikova Steve McIntosh Simone Niven Barbara Levi Group Executive, Human Resources Group Executive, Growth and Innovation Group Executive, Corporate Relations Group Executive, Group General Vera was appointed Group executive, and Health, Safety and Environment Simone was appointed Group executive, Counsel Human Resources, in 2017. Vera brings a Steve became Group executive of Growth Corporate Relations, in 2017. Simone has Barbara was appointed Group executive, people-centric approach to the business & Innovation (G&I) in 2016. In 2019, his played an important role in developing our Group General Counsel in January 2020. and is focused on building a culture that is remit grew to include Health, Safety & vision of partnership aimed at delivering Alongside leading our legal teams around performance driven, inclusive and in which Environment (HSE), bringing our HSE and sustained value to Rio Tinto and to society the world, Barbara oversees a range of everyone can excel. She has been technical experts together to deliver both at large. In 2019, she led the development governance functions including Company responsible for our strategy of shaping a safety and operational excellence. He of our sustainability strategy and supports Secretariat, Ethics & Integrity and the strong workforce for Rio Tinto’s future: oversees the safety and effectiveness of the Group’s efforts on climate change, Technical Evaluation Group. Barbara has this includes the development of a Rio Tinto’s assets throughout their lifecycle. communities and human rights, extensive experience across corporate, technical career framework, a strong Under his leadership, G&I has applied government and other stakeholder commercial and compliance matters. Over talent pipeline, and a new Group-wide innovative, leading-edge technical expertise engagement. Simone also leads the the last 20 years, she has held a number of approach to performance. In 2019, Vera to discover new ore deposits and develop development of our core integrated senior legal roles across Europe and in the helped lead the significant improvement them into assets. He leads our efforts to market and regional country strategies US and was most recently the Group Legal in employee engagement. digitise operations, including the use of and teams, aligned with our commercial Head, M&A and Strategic Transactions automation, artificial intelligence and business priorities. for Novartis. and data science. Chris Salisbury Arnaud Soirat Simon Trott Chief Executive, Iron Ore Chief Executive, Copper and Diamonds Chief Commercial Officer Chris has been Chief Executive of our Iron Arnaud was appointed Chief Executive of Simon became chief commercial officer in Ore product group since 2016, overseeing our Copper & Diamonds (C&D) product 2018 and oversees the selling and marketing consistent strong performance and group in 2016. Under Arnaud’s leadership, of our products, procurement of our goods innovation, including the development of C&D has progressed its growth projects and services and management of our marine the world’s first automated, long-distance, and focused on operational excellence, and logistics activities. Our Commercial heavy haul rail network – AutoHaul™ – and productivity improvement and cost team puts the company’s value over volume the construction of Koodaideri, our most reduction, deploying lean manufacturing approach into practice, bringing market technologically advanced mine. The 2019 to help achieve its strong results, and insights generated from our customer and launch of Australia’s first nationally embedding sustainability in the way the supplier interactions into our operational, recognised qualifications in automation is product group operates. Rio Tinto investment and production decisions. Under an example of his leadership in ensuring diamonds are among the world’s most Simon’s leadership, we have enhanced our our workforce has the skills for the future. coveted and most responsibly sourced; commercial capabilities and implemented Chris places great value on working closely and our copper is part of the sustainability measures to allow the business to better with external partners to create benefit for solution, being essential for clean energy respond to changing market conditions, in the communities in which we operate. technologies, such as electric vehicles part by using new technology and and wind turbines, that help address digitisation to simplify interactions. climate change. Annual report 2019 | riotinto.com 87

Governance Chairman’s governance review As politics has polarised in many countries, trust in institutions has declined, and the rules-based international order has come under increasing strain. The role of business in Many people have turned instead to business to address these and other society continues to be the pressing environmental and social issues. subject of intense debate. To some extent, this is familiar territory for responsible mining companies. Developing solutions to Mining has profound impacts on the environment and society, both positive and negative. Rio Tinto provides materials that are essential for human many of the great challenges progress; we create jobs, pay taxes, and our activities can be a catalyst for facing humanity today, such economic development. But mining can also have negative environmental and social impacts. At a local level, these may include land disturbance (which can as climate change, the affect biodiversity), noise, dust, air and water emissions; at a regional level, biodiversity crisis or rising significant water consumption (sometimes in water-stressed areas); and on a inequality, would have been global scale, climate change. regarded in the past as Mining also has an impact on local communities, particularly in remote regions, where the creation of well-paid jobs may trigger inward migration, primarily the responsibility increasing inequality and other social changes in communities that have had of national governments, in little contact with industrialised society. some cases working through At Rio Tinto, we have long recognised that mining companies exist at the will of supranational institutions. society, and that we must earn our ‘licence to operate’ by minimising our environmental impact and maximising the long-term social and economic benefits that we bring to our host communities and governments. We are also clear that our long-term, sustainable success depends upon attracting and developing the best employees to manage the ever-increasing complexity of our business, and forming long-term relationships with our customers, suppliers and technology partners to improve productivity and to take full advantage of the technological changes that are sweeping through our industry. Whilst there is always more that we can and should do, I believe that we are making good progress at a local level. But many of the challenges that we face today, such as climate change, are global in scale and cannot be solved by individual company actions alone. As we set out in our climate change report, Rio Tinto is determined to be part of the solution to climate change, supplying essential materials for the energy transition and reducing our direct greenhouse gas (GHG) emissions. But the decarbonisation of the full value chain, from mine to end product, requires systems to change on a global scale, involving multiple stakeholders and jurisdictions. Governments around the world, including in the UK, are setting ambitious targets to reach net zero emissions. To achieve this, enabling regulation, such as carbon pricing, is essential to incentivise the private sector to invest in decarbonising ‘hard to abate’ sectors, such as aluminium smelting, steel making and shipping. Since the costs of the energy transition will fall unevenly, governments also need to ensure that adversely-affected communities and regions are adequately supported. So, while business has a vital role to play, we will only succeed in addressing the unprecedented challenge of climate change through the collaborative action of governments, companies and consumers. Perhaps the most significant challenge facing responsible boards today is to Landscape in the Kimberley region of balance short-term efficiency with long-term effectiveness, including Western Australia, home to our Argyle diamond mine. sustaining the ecosystems that support our activities. In some companies and sectors, it is clear that the balance has shifted too far towards short-term gains – cutting costs (and corners) to boost short-term profits. At Rio Tinto, our objective is to maximise long-term sustainable profits to maintain the financial strength to invest in the future and to meet our obligations to wider society. We believe that this focus on long-term sustainable profit also delivers better risk-adjusted returns for our shareholders. 88 Annual report 2019 | riotinto.com

Chairman’s governance review Stakeholder engagement Board evaluation and priorities for 2020 To maintain our long-term effectiveness, it is essential that we engage with In 2019, we appointed Lintstock Limited to undertake an independent, formal a broad range of stakeholders, including employees, customers, suppliers, and rigorous evaluation of the effectiveness of the Board and its committees. local communities, governments and civil society, to ensure that we A questionnaire was completed by directors, the Group Company Secretary understand their perceptions of our activities and identify opportunities to and certain members of the Executive Committee, who gave their views on the improve our future performance. Over the past year, Board members have met performance of the Board. I held one-to-one discussions with all involved and, representatives from each of these stakeholder groups, across four continents. separately, the senior independent director met with the other directors to assess my performance. In 2019, in view of the provisions of the new UK Corporate Governance Code, we have built on the extensive activities that were already in place for engaging our There was good alignment between the Board and the Executive on the workforce. The mechanisms we have established are set out on page 92 and we strategic risks and opportunities, and the top priorities for the Board in 2020. continue to enhance these to ensure that the views of our workforce are Further details can be found on pages 96 and 97. incorporated into relevant decision-making processes. Governance Shareholder engagement As a Board, we have also placed a greater focus on, and oversight of, our We look forward to meeting more of our shareholders and investors at our customer and supplier relationships. We have received two separate surveys AGMs in April and May 2020, in London and Brisbane respectively. In addition and enjoyed an insightful presentation from one of our major suppliers and to routine matters, we will be asking our shareholders to approve the technology partners. Further details are set out on page 93. appointment of KPMG as our new auditors, for the 2020 financial year. During the year, Board members joined senior executives at roundtable Finally, I am grateful to Jean-Sébastien Jacques, the executive team, our discussions with civil society organisations in Australia, Canada and the US to employees and my colleagues on the Board for all of their hard work, their discuss support for communities locally and global advocacy on issues such as commitment to Rio Tinto and for the exciting future that we are seeking to human rights and indigenous peoples’ rights, climate change and extractives’ create for the company and our stakeholders. transparency. Culture, diversity and the Board Our purpose and strategy encapsulate our longer-term aims and ambitions. The hard part is to establish the right systems and processes and, critically, to Simon Thompson embed the right culture and behaviours to achieve these objectives. As a Chairman Board, we recognise the important role we play in modelling the values and 26 February 2020 behaviours that we wish to see embedded across Rio Tinto and in promoting a culture of openness, inclusion and diversity. This year, the Board began to review how we live those values in our everyday activities and we established a baseline for how those values can be measured as we move forward. You will find more about this on page 91. “We have long recognised that mining In our succession planning, we aim to bring a diverse and complementary companies exist at the will of society and range of skills, knowledge and experience to the Board, so that we are equipped to navigate the operational, social, environmental, regulatory and geopolitical that we must earn our ‘licence to operate’ complexity in which our business operates. Achieving the right blend of skills to by minimising our environmental impact support effective decision-making is a continuing process. Further details of our succession planning are set out in the Nominations Committee report on and maximising the long-term social and pages 98 and 99. economic benefits that we bring to our I would like to express my thanks to Ann Godbehere who stepped down as host communities and governments.” Senior Independent Director and chair of the Audit Committee at the AGM in May 2019. We are grateful for Ann’s wise counsel and for her outstanding stewardship of the Audit Committee. Sam Laidlaw succeeded Ann as senior independent director, while Simon Henry has taken over as chair of the Audit Committee. I would also like to thank Moya Greene, who stepped down as a Non-Executive Director in June 2019, for her contribution to Rio Tinto. On 21 February 2020, we announced the appointment of three new non- executive directors to the Board. Hinda Gharbi, Executive Vice President of Reservoir & Infrastructure at Schlumberger Limited, and Jennifer Nason, a Global Chairman at JP Morgan Chase & Co, will join with effect from 1 March 2020. Ngaire Woods CBE, Professor of International Political Economy at Oxford University, will join with effect from 1 September 2020. The new directors will broaden the experience of the Board, bringing complementary skills and international expertise across diverse backgrounds in natural resources, finance, technology, governance and public policy. Annual report 2019 | riotinto.com 89

Governance How the Board works Good governance is, fundamentally, about considering the right things, at the right time, with the right people and insights. We have tried to structure the way the Board works to support that objective, to strengthen our strategic focus, and to improve both the challenge and the support that the Board provides to the executive team. Considering the The principal responsibilities of the Board are to: –– Set the Group’s purpose, values and strategy, and ensure that the Group’s culture is aligned with these. right things… –– Appoint the executive team (including the executive directors), who are responsible for fulfilling our purpose, We want to make sure upholding our values, and developing and delivering the strategy. the Board is working in –– Monitor the Group’s performance in delivering its strategy, including ensuring that the necessary resources are in place ways that add the for the Group to meet its objectives. –– Analyse external trends, and assess the opportunities and risks that they may present. most value to the –– Establish a framework of prudent and effective controls that enables these risks to be assessed and managed. business. –– Engage with shareholders and other stakeholders to ensure that their views and concerns are taken into account. Much of our work over the year has been focused on strategy. This has included considering the Group’s climate change strategy framework, as well as potential growth options and future partnerships. At the same time, the Board has increased its engagement with the workforce, with customers and with suppliers as part of a new programme of stakeholder initiatives. We have also considered Group culture and behaviours, while maintaining a disciplined oversight of the operational performance of our core assets and significant investment decisions. … at the right time… To ensure that we are maintaining the right balance between monitoring past performance and thinking about the future, we have developed a detailed rolling agenda for the Board and its committees. We consider matters under four We have reduced the key pillars: the performance of the business; priority items relating to the Group’s strategy and risk profile; items number of Board requiring a Board decision, such as prospective investments; and governance, which includes items relating to our meetings, but various stakeholders, teach-ins and the monitoring of the Group’s ongoing regulatory matters, as well as important increased their length developments in corporate governance. and effectiveness. We have reduced the number of Board meetings, but increased their length and effectiveness. Committee meetings now run consecutively, rather than concurrently, so that Board members can attend all meetings if they wish. We have also added two dedicated strategy meetings to the annual cycle – the first to review the external environment and to identify priorities for the executive team to evaluate, and the second to make decisions for the Group in that macro context. … with the right Recognising that no Board can possess all the necessary skills and experience, we aim to become more effective “conveners of expertise”, arranging site visits, presentations by internal and external experts, and other education people and insights. programmes ahead of critical strategic or investment decisions. These initiatives are underpinned by an improved We want to make sure understanding of the capabilities of the current Board. We have developed a skills and competencies’ matrix for the that we are making the Board (summarised on page 99) which has helped us to identify potential gaps and make informed decisions on new decisions and appointments. judgments that matter, Within the wider organisation, we recognise the need to augment our existing technical strengths by developing or with the skills and recruiting new skills and talent, in some cases from non-traditional sources. This in turn means that we have to adapt our information we need. culture, building on the great strengths that have served Rio Tinto well, while embracing new ideas and fresh approaches. We continue to step up our engagement with a wide range of stakeholders to ensure that their ideas and concerns are better reflected in our operational and strategic decision-making. Some of these activities are described on the following pages. 90 Annual report 2019 | riotinto.com

Matters discussed in 2019 We set out below some of the matters which the Board has considered during 2019, grouped under the headings that we use to structure our agendas. Subject area Matters considered Performance At every Board meeting, the Chief Executive and Chief Financial Officer report on the safety, operating and business performance of the Group against our Key Performance Indicators (KPIs), as well as how certain material stakeholder issues are being managed. The Board also discusses detailed reports relating to progress on major capital projects, updates on specific operations Governance and functions, and the wider geopolitical and commodity market developments relevant to our business. Examples in 2019 included: –– In May and July, the Board considered updates on progress at the Oyu Tolgoi Underground Project. –– In September, the Board discussed plans to address mine operational challenges in the Pilbara iron ore system in Western Australia, particularly at the Greater Brockman Hub. –– In November, the Board reviewed an assessment of the current state of the Information Systems and Technology (IS&T) function, and its vision for the next three to five years. The Board also reviewed and approved the Group’s annual and multi-year business plans and financial results announcements. Strategy and risk The Board discussed and confirmed the Group’s strategy in two separate two-day sessions, in June and September. Topics discussed included: the strategic context for our business, China’s new era, social and people trends, growth and portfolio choices for the business, climate change, energy transition and new commodities, technology and innovation, our people and culture. The Board conducted deep dive reviews of various strategic priorities and risks. In 2019, these included: –– A review, in February, of the Group’s evolving people strategy and culture. –– In April, a detailed briefing on underground mining. –– In July, into the Group’s Commercial function and its strategy and priorities. –– In October, an overview of the Group’s principal risks and mitigating actions. –– In November, the Group’s climate change strategy and new GHG emissions reduction targets as well as a focus on productivity and asset integrity. Decisions Over the course of 2019, the Board discussed and approved over $4 billion of funding in respect of sustaining capital expenditure, new growth projects and mine closures costs. Important investment decisions in 2019 included: –– In April, the Board approved a $463 million investment in the Zulti South mine development project in South Africa. –– In November, the Board approved $749 million of funding to further develop the Tom Price iron ore mine in the Pilbara, Australia. –– Also in November, the Board approved a $1.5 billion investment at Kennecott Copper to extend the life of that mine to 2032. Governance As part of its oversight of governance, the Board also considers its own constitution, composition and performance. At every meeting the Board reviews a rolling forward agenda of matters to be discussed. The Board also reviews and approves any new, or revised, Group policies. In addition, during 2019, the Board considered the following governance- related matters: –– In July, the updates on the views of key stakeholder groups in the form of survey results on the Group’s reputation and brand health, an externally-facilitated investor perception study, and the results of the latest six-monthly employee engagement survey. –– In November, the results of the externally-facilitated evaluation of the Board and its committees (the results of which are detailed on pages 96 and 97). –– In November, a first culture and values scorecard was discussed. This seeks to establish a baseline for the Board to measure the internal and external perception of how, as an organisation, we are increasingly living our values and that our work on culture and values is having a demonstrable impact. Annual report 2019 | riotinto.com 91

Governance Our stakeholders We are acutely aware that the decisions we make affect the lives of many people. We try very hard to understand the interests of our wide range of stakeholders, and to reflect them in the choices we make in creating long-term sustainable success for our business. In the following section, we detail our key stakeholders and summarise their interests, how the Board has engaged with them, and how what the Board has heard has influenced our decision making. This section serves as our “section 172(1) statement”. Employees1 Introduction How the Board has taken account of these interests Our 46,000 people in 36 countries make Rio Tinto what it is. –– It is clear that the workforce has appreciated the open and transparent way We believe they want to work in a positive environment, where they are safe in which the Board has stepped up its engagement in 2019. This has begun and respected, and have the opportunity to learn, reach their potential and to foster greater trust in, and understanding of, the Board, and has develop successful careers in a company they can be proud of. increased the workforce’s accessibility to Board members. –– In response to feedback received during 2019, we will refocus our How we engage and communicate engagements in 2020 so that the workforce can gain greater insight into the –– We held our first employee ‘AGM’ in Australia in 2018 and, in 2019, almost role and workings of the Board and its committees. The Board will also 500 employees attended our second AGM in Montreal, Canada. The event, structure its engagements to spend more time understanding what is on which was webcast across the Group, featured a panel discussion with employees’ minds. More informal networking opportunities will be directors during which employees asked a range of questions on matters organised and a regular standing item will be introduced at Board meetings such as the Board’s oversight of safety and climate change, and “pop-up” for directors to report back on their engagements. As part of these stalls showcasing various innovations across the Group’s North American engagement activities, the Board intends to spend more time specifically operations. hearing from female employees to better understand their perspectives as –– Our Chief Executive held over 30 town halls and small group discussions in we continue to enhance the diversity of our workplace. 20 locations during 2019, and the main themes and issues were reported –– The Board was pleased to see a continued improving trend in overall regularly to the Board. The Chairman visited nine Rio Tinto mines and employee satisfaction through employee survey results, but the real value offices during the year and had regular townhalls and lunch and breakfast is in those scores that offer room for improvement, and in the ideas and briefings with the workforce as part of these visits. comments that employees submit. These suggest that we can still do –– The Board has begun a series of informal workforce engagements better at explaining our strategy, and at breaking down silos and working whenever it visits sites or attends Rio Tinto offices for meetings. Examples collaboratively. The Board will focus on these areas in 2020. in 2019 include meeting employees running our 4.0 Pioneer Lab in Brisbane, and informal Q&A sessions with sections of senior management Given the Group’s size and complexity, and its geographical spread, the Board and our graduate population in Brisbane, Salt Lake (Kennecott) and in the proposes to continue with a multi-faceted approach to workforce engagement Group’s aluminium business in the Saguenay. that is not led by any one director or group of directors. The Board considers –– We conduct a six-monthly employee engagement survey to measure how that this approach is appropriate, but will continue to keep engagement people feel about the company and its direction. The Board reviews the mechanisms under review to ensure they remain effective. results and a cross-section of the comments. Communities and governments Introduction How the Board has taken account of these interests Trust and partnership between us and the communities and governments that –– In 2019, directors and senior executives attended structured roundtables host our operations is vital. with civil society organisations in Canada and Australia to discuss support for communities locally, and global advocacy on issues such as human Their interest in the potential impacts of our business both positive and rights and Indigenous peoples’ rights, climate change and extractives negative, spans a wide range of issues. These include the taxes we pay and the transparency. jobs we create, as well as how our operations affect the local environment. –– The Board maintains a regular discussion on social issues and the Communities and governments seek our commitment to high standards in environment and, in October 2019, we announced a partnership with managing our operational footprint and respecting community and human Chinese partners to explore ways to improve environmental performance rights. More recently, global trade, the transition to a low-carbon economy, across the entire steel value chain. renewables and energy, disclosure of mining contracts and taxes paid, the –– When approving the $463 million Zulti South Project at Richards Bay in future of work, gender inclusion and Indigenous rights have been themes of South Africa, the Board carefully considered the relationships with focus. provincial government, municipalities and host communities that will be critical to the success of the project. How we engage and communicate –– During 2019, following government and community concern in the wake of –– Our approach to communities is based on regular dialogue and the tailings dam disaster at Vale S.A’s Feijão mine in Brumadinho, Brazil, Rio engagement at every stage of the life of our assets. We openly discuss all Tinto disclosed additional information relating to its global tailings facilities. impacts and seek community feedback and participation. This included information regarding the construction, management and –– The Board has engaged civil society organisations who support monitoring of facilities, and independent reviews. The Sustainability communities locally or through global advocacy. Committee oversaw these updates on the certification and assurance –– We have a regular dialogue with host governments at the national and processes for both tailings and water storage facilities at all current and provincial levels, and with international organisations such as the World legacy sites. A tailings validation taskforce was established which Bank, the International Finance Corporation and multi-stakeholder groups conducted a programme of technical risk reviews of the Group’s facilities, like the Extractive Industries Transparency Initiative. and reported its findings to the Sustainability Committee. –– The Board has agreed to step up its direct engagement with local communities when visiting Rio Tinto sites in 2020. 1 See note 32 on page 206 for the definition of our workforce 92 Annual report 2019 | riotinto.com

Our stakeholders Investors Introduction How the Board has taken account of these interests Our investors include global fund managers, pension funds and bondholders, –– In response to investor feedback, the Board has continued to focus as well as tens of thousands of individuals, all of whom have put their capital at on a strategy of maximising shareholder returns, while allocating capital risk and need to earn a financial return. to invest for future growth and retaining the financial and operational resilience to position the business strongly through the macro and They are interested in understanding the purpose, values and culture of the commodity cycles. Group, as well as the threats and opportunities that affect our strategy and –– Investors are interested in the theme of renewables (including electric performance. They also want to understand how capital is allocated. vehicles) and how this will translate into future demand for commodities such as lithium, copper, nickel and cobalt. In response, the Board dedicated How we engage and communicate time at its strategy session to assess the portfolio decisions that support –– We hold two AGMs each year, in Australia and in the UK, where investors the transition to a lower-carbon economy. Governance have the opportunity to question and engage with the Board. –– Investors have requested more access to senior executives via conferences, –– We maintain a regular and comprehensive programme of engagement with marketing, site visits and social events. In response, members of the Group investors and research analysts, providing current and potential new executive team participated in the investor seminar in October and this will investors with an opportunity to meet executives, the Chairman and the also be considered further in 2020. senior independent director. –– We held an investor seminar in London in October, where the executive directors and other members of the executive team provided an update on performance and business developments. –– The Board also commissioned an independent perception study in May, seeking the views of institutional investors representing some 40% of the active Rio Tinto register in the US, the UK and Australia. Customers and suppliers Introduction How the Board has taken account of these interests Mining is a long-term business, and both our customers and our suppliers In July 2019, the Board received a detailed teach-in from Simon Trott, our Chief have an interest in developing mutually beneficial partnerships built on trust Commercial Officer, to deepen our understanding of the supply chain and our and transparency; they want to know that we will do what we say we will do. customers’ needs. The Board heard how the Commercial team aims to enhance its activities and the optionality in our portfolio to respond more The impact of changes in technology, geo-political and economic power and dynamically to changes in the supply of and demand for of our products. increasing societal demands to address climate change are creating potential structural shifts in the market. Our Commercial group, working hand-in-hand At that same meeting, the Board heard from Denise Johnson, Group President, with our product groups, works closely with customers and suppliers, and in Resource Industries at one of Rio Tinto’s largest suppliers, Caterpillar, which is doing so, brings their voice, and the needs of a dynamic market, into our the world’s leading manufacturer of construction and mining equipment, diesel operational, investment and production decisions. and natural gas engines, industrial gas turbines and diesel-electric locomotives. Denise focused on three key areas: partnership, environmental How we engage and communicate and social trends and technology and innovation. –– By extending our supply chain optionality into Chinese ports, we have enabled just-in-time deliveries, inventory management solutions and To strengthen its understanding of customers’ needs, Commercial undertook a value-added services to our customers. survey across its key commodities targeting 266 customer companies in 25 –– In Bauxite, we combined the strong technical skills in our refineries with our markets. The survey built on previous ad hoc customer surveys in some deep customer relationships and insights to build a new market for our product groups. The results were presented to the Board in November 2019, products in China. and will form a baseline for the Board to measure future customer surveys. Key –– We are working with industry partners on the Aluminium Stewardship insights included that technical knowledge of our customers’ needs is a Initiative, leveraging the low-carbon emissions of our Canadian assets to strength, and there is an opportunity to partner further to understand the deliver a product that is valued by our customers, such as the auto industry. technical changes in customer operations to inform our product offerings. –– Our Commercial group has continued to enhance how we engage with our There is also an opportunity to further simplify our customer interactions as markets and customers, in part by using technology, data and analytics. We part of our own technology agenda, particularly related to documentation, and are continuing to pilot the latest technologies, including blockchain and shipping and logistics management. paperless solutions, to innovate the way we conduct our business and make our transactions more efficient, safe and cost-effective. A dedicated survey of suppliers will be conducted in 2020 and the Board intends to visit major customers in Asia. “The AGM gave people the opportunity to ask the hard questions. I loved the clarity and simplicity with which they gave their answers… Great initiative” Employee feedback on the AGM with the Board September 2019, Montreal, Canada. Annual report 2019 | riotinto.com 93

Governance Board effectiveness Deepening Board members’ skills and knowledge We continue to build our Board members’ understanding of the business and local operating conditions with a programme of teach-ins, deep dives and site visits. We tailor these activities so they are more relevant to directors’ committee responsibilities, and time them to inform upcoming Board decisions. Examples of how this worked in practice in 2019 are set out below. Teach-ins Richards Bay Minerals We had a teach-in in advance of the Board’s consideration and approval of the $463 million investment to develop the Zulti South project at Richards Bay Minerals (RBM) in South Africa. RBM sells three main products: TiO2 slag, zircon and high purity ductile iron. The teach-in provided the Board with industry, customer and demand and supply context for TiO2. The teach-in also covered potential regulatory policy changes in key customer markets such as China. The presentation examined key risks and opportunities facing the next phase of the Zulti South project, including issues relating to local communities, security, local procurement and employment expectations and contractor management. The Board noted that mitigating the local socio-political (and security) environment had been a key priority during 2018 and were briefed on a recent security threat assessment that confirmed the key potential security risks to operational stability. Deep dives Block caving (Oyu Tolgoi) As the Group’s development of the Oyu Tolgoi underground project has continued in 2019, the Board received a number of detailed briefings on the block cave mining method. The presentations provided historical background and context on the method and explained Rio Tinto’s approach to managing major hazard risks and improving the design, construction and operation of all of our underground mines. Rio Tinto has been involved with four major block cave mining projects over the past 24 years and the deep dive covered how, from this experience, the Group has developed: (i) a global underground safety standard for all our underground mines; (ii) an Underground Centre of Excellence – a centralised function of underground mining experts; (iii) a methodology to apply lessons learned to new projects and operations; (iv) oversight of the construction and caving process by subject matter experts; and (v) ongoing monitoring of peer caving operations. In subsequent presentations during the year, the Board received a detailed teach-in on the three main components of the underground project (the above ground infrastructure; the shafts and below ground supporting infrastructure; and mine development and mine footprint infrastructure), and the governance arrangements in place to support delivery of the project. Site visits Kennecott In advance of the Board’s approval in November 2019 of $1.5 billion of funding to execute Slice 2 of the South Pushback at Rio Tinto Kennecott in Salt Lake, Utah, certain members of the Board visited the fully integrated mining operation in September. The Board visited Bingham Canyon mine and learned about the pending Slice 2 growth option, the crusher relocation, geo-technical risk mitigation and management. Other aspects of the visit included briefings at Barney’s Canyon mine on the status of the closure pre-feasibility study, a walk around the site refinery and briefings on the management of the tailings facility. “There was good, open discussion about the role of copper and diamonds in the Rio portfolio, the future of Kennecott, community engagement and the ESG issues facing the asset… At lunch in the mine administration offices, we were joined by a highly engaged and diverse group of graduates and had a lively Q&A session. Notably, the main subject for questioning was around sustainability and environmental stewardship strategy. Great energy in the room.” Sam Laidlaw Senior independent director 94 Annual report 2019 | riotinto.com

Board effectiveness Case study: the depth of our Board’s engagement on climate change Context Outcomes Climate change represents an unprecedented challenge for the world and for The Board has considered the impact of climate change over the short-term, Rio Tinto. We believe that feasible pathways exist to develop a successful medium-term and long‑term time horizons (see below). The key uncertainties low-carbon economy and, as producers of the materials vital to this transition, are changes in the regulatory response and the speed of development and we want to be part of the solution. adoption of new technologies. 1. Short‑term (1 year): this is the timeframe for our annual financial planning Governance 2. Medium‑term (2-10 years): our annual strategic planning cycle looks Climate change is regularly discussed at the most senior levels of management 10 years ahead and by the Board. The Rio Tinto Board is ultimately accountable for our 3. Long‑term (beyond 10 years): this is the timeframe for our long‑term approach to climate change, which is part of our overall sustainability strategy outlook and scenario planning and is embedded in the strategy for the business. Governance The Board approves our climate policy and sets the Group’s ambition and –– 76% of our electricity consumption at our managed operations is emissions targets. The Sustainability Committee is responsible for monitoring supplied from renewable sources. 29% reduction in intensity performance against the targets and ensuring operational-level resilience. The of our operations since 2008. Sustainability Committee also has oversight of key sustainability risk areas that –– Ambition of net zero emissions by 2050. may be related to climate change in areas such as biodiversity and water and of –– Our new 2030 targets for scope 1 and 2 emissions for our managed the effectiveness of associated controls. and non-managed operations (on an equity share basis) are to reduce our emissions intensity by 30% and our absolute emissions by 15%, The Board met seven times in 2019 and covered climate change on five both from 2018 levels. separate occasions. The Board aims to become more effective as “conveners of –– In addition, our overall growth between now and 2030 will be carbon expertise”. In February 2019, we invited Lord Adair Turner, Chairman of the neutral. Energy Transitions Commission, to speak to the Board. Simon Thompson is –– Underpinned by approximately $1 billion estimated spend on also a Commissioner on the Energy Transition Commission. climate-related projects over five years. –– Our partnerships to address emissions in the value chain (see below). At the two strategy meetings (in June and September 2019), the Board discussed: –– The Group’s long-term climate change ambition Future priorities –– Options for our 2030 carbon emissions targets following detailed analysis of As we look to the future, we will continue to take action in four areas: abatement options and offsets 1. Producing the materials essential for a low-carbon future –– A potential approach with regard to the emissions from our value chains 2. Reducing the carbon footprint of our operations –– The Group’s capabilities to pursue the various components of the climate 3. Partnering to reduce the carbon footprint across our value chain change strategy framework (see opposite). 4. Enhancing our resilience to physical climate risks. The Board also discussed industry association memberships and approved the Highlights of our recent progress disclosure of our review of associations’ climate policy positions. In November 2019, the Board considered and agreed in principle the long-term ambition, 2018 Completed the sale of Rio Tinto’s remaining coal 2030 targets and financing of our climate change initiatives, which are set out businesses in our climate change report. 2019, February Rio Tinto joined Energy Transitions Commission April Published the annual update of our review of the role of In addition, in November 2019, Simon Thompson and Megan Clark hosted industry associations discussions focusing on climate change with civil society organisations and May Supported World Bank launch of Climate-Smart investors. Mining facility September –– Established our Energy & Climate Centre of Excellence –– Carbon Pricing Leadership Coalition published report on carbon pricing and competitiveness –– Signed Memorandum of Understanding with Baowu Steel and Tsinghua University December Apple purchased the first commercial batch of aluminium from Elysis made without any direct CO2 emissions in the smelting process 2020, February Board approval of our 2030 targets for our operational emissions and our long-term ambition to be net zero “One of our important decisions was to by 2050 move the responsibility for climate change to the corporate strategy and business development team, which puts the issue at the heart of our business” Simon Thompson Chairman Annual report 2019 | riotinto.com 95

Governance Evaluating our performance shorter form questionnaire and conducting an interview. Lintstock is a An effective board depends on the personal specialist corporate advisory firm with no other connection to Rio Tinto. development of individual directors and The Board reviewed the evaluation outcome at its November 2019 meeting in continuous improvement in the operation Brisbane and agreed an action plan, summarised below. Overall, respondents of the Board as a whole. agreed that the performance of the Board had improved since the last review, and observed a steady improvement in Board dynamics. We measure our performance each year by carrying out a formal annual review of the Board, its committees and the chairman. Individual assessments The Chairman is responsible for evaluating the performance of non-executive In 2019, we engaged Lintstock to conduct an externally facilitated, independent directors. In 2019, he met each non-executive director to review their views on evaluation. The evaluation was based on a questionnaire and interview process and contribution to the Board, as well as their training requirements. and covered: Board composition and dynamics; oversight of key stakeholders, strategy and culture; understanding of the external environment; management The non-executive directors, led by the senior independent director, are responsible of meetings, including time allocation and Board support; quality of for the performance evaluation of the Chairman. The senior independent management information on performance and investment decisions; risk director met with the non-executive directors and, separately, the executive management; effectiveness of succession planning and human resource directors to gather feedback to provide to the Chairman on his performance. management; and priorities for change. All Board members and the Group Company Secretary participated in the review. In addition, certain members of the Group Executive were requested to contribute to the review by answering a Topic 2019 progress on 2018 actions Actions for 2020 Board The appointments of Hinda Gharbi, Jennifer Nason and Ngaire Preserve more time for informal debate, for example during Board dinners. composition / Woods bring expertise in natural resources, finance, dynamics technology, governance and public policy to the Board. Prudent planning was undertaken to begin identifying internal successors for the roles of Chief Executive and Chief Financial Officer. Strategy The involvement of the Board in strategy, the clarity of the The Board will continue to focus on the following strategic priorities in 2020: Group’s strategy and the communication of strategy –– Risk appetite, particularly in the context of growth opportunities in new countries externally were positively rated, as was the Board’s –– China oversight of strategic implementation. –– Continued focus on Commercial and markets –– People, culture and the Group’s operating model –– Technology –– Resource nationalism –– ESG factors including climate change –– The Group’s licence to operate in key jurisdictions. The Chief Financial Officer will continue to consider an enhanced framework of financial metrics against which the Board can analyse and stress test strategic options, new investments and business plan scenarios. Further involvement of the executive team in strategic discussions. Board Overall, the quality of Board documentation received –– Create a template for Board and committee papers to provide greater reporting a positive rating, with papers generally viewed as well brevity, clarity and consistency. written and clear. –– Continue to combine and enhance Chief Executive/ Chief Financial Officer reports. –– Short presentations to allow more time for discussions of key issues and risks –– On key investment decisions, improve discussion of upside / downside risks and alternative strategies –– Focused ‘teach-ins’ on key issues –– Shift agendas to focus more on external factors affecting the business. Stakeholders The Board’s understanding of stakeholders was rated –– Engage with customers/suppliers during a Board visit to China positively overall, although a greater understanding of China –– Increase Board engagement with top talent and senior management was considered desirable. –– Increase engagement with US investors –– Increase Board awareness of government views in key countries of operation The Board’s understanding and oversight of workforce views –– Increase engagement with local communities on Board site visits was assessed as good through the various mechanisms that have been established. The Board and its committees will continue to utilise external speakers and subject-matter experts to enhance understanding, including of China, climate Oversight of culture was also rated positively, although the change and the energy transition. need to ensure that a supportive culture amongst senior management was stressed. Further workforce engagement initiatives will seek to build understanding, across different jurisdictions, of employee attitudes to work practices and to the company in general. 96 Annual report 2019 | riotinto.com

Evaluating our performance Directors’ attendance at scheduled Board and committee meetings during 20191 Committee appointments Board Audit Nominations Remuneration Sustainability Chairman and executive directors Simon Thompson 7/7 5/5 4/4 Jean-Sébastien Jacques 7/7 Jakob Stausholm 7/7 Non-executive directors Governance Megan Clark 7/7 5/5 4/4 4/4 David Constable 7/7 6/6 5/5 Ann Godbehere- retired 9 May 2019 3/3 2/2 2/2 2/2 Moya Greene- retired 26 June 2019 3/3 2/2 2/2 2/2 Simon Henry 7/7 6/6 5/5 4/4 Sam Laidlaw 7/7 5/5 4/4 4/4 Michael L’Estrange 7/7 5/5 4/4 Simon McKeon- appointed 1 January 2019 7/7 6/6 5/5 4/4 1 Outside of the scheduled meetings of the Board and committees for 2019, certain ad hoc meetings took place to consider more urgent matters. Our plans and priorities for 2020 The Board has identified the following focus areas for 2020: Focusing on strategy and growth options Culture, capacity and capability –– Continue to consider the Group’s three- to five-year strategy –– Continue to enhance the Board’s oversight of culture and behaviours against a number of different external scenarios and a maturing –– Ensure that the Group has the organisational capacity and capabilities to financial framework deliver its strategic objectives –– Seek to identify appropriate growth options for the business, while –– Review the executive and senior management talent pipeline and maintaining the Group’s disciplined approach to capital allocation. succession plans –– Consider the Group’s employee value proposition. Operational excellence and efficiency Stakeholder engagement –– Monitor the Group’s operational performance –– Improve the Board’s understanding of key customers and suppliers –– Review the Group’s technology roadmaps. –– Continue to formalise mechanisms to hear the views of the Group’s workforce, and to shape decision-making accordingly. Supporting Board dynamics Training and development –– Support the on-boarding of the newly appointed non‑executive directors –– Continue to enhance the Board’s knowledge of Asia, and China in particular –– Continue to enhance relations between executive and non-executive –– Conduct deep dives into the Group’s commercial (marketing, logistics and members of the Board, creating an informal, challenging but procurement) activities and our Aluminium product group supportive environment –– Teach ins will be organised in 2020 in relation to technology, exploration –– Provide support and advice on Group initiatives and emerging issues, and closure (with a programme of deep dives into each of the Group’s major including community engagement models, strategic scenario planning, closure projects). digitalisation and the Group’s technology strategy –– Increase Executive Committee involvement in strategic discussions. Annual report 2019 | riotinto.com 97

Governance Nominations Committee report Achieving and maintaining greater female representation on the Board Last year, we reported that 27% of our Board members were women. This was a The Nominations Committee seeks significant step towards achieving the recommendations of the Hampton Alexander to ensure that the Board has the right review that 33% of the Board is comprised of female directors, and our succession mixture of skills, experience and planning at this time last year was structured to deliver on this recommendation. background to enable it to identify and In 2019, we had planned for the recruitment of an additional non-executive director to replace Ann Godbehere, who stood down from the Board in May respond appropriately to current and 2019. In June 2019, Moya Green resigned unexpectedly from the Board, future opportunities and challenges. having underestimated the time commitment involved. As a result, we re-doubled our search efforts, appointing two separate search firms, Russell It reviews the composition of the Board and leads the process for Reynolds Associates and Spencer Stuart to conduct a parallel search for the appointments, making recommendations to the Board as part of vacant positions. Neither firm has any other connection with Rio Tinto. As at succession planning for both non-executive and executive directors. the end of 2019, there were eight men and one woman on the Board. It oversees the development of a diverse pipeline for succession. It approves proposals for appointments to the Executive Committee On 21 February 2020, we announced the appointment of three new and monitors the succession plans and talent pipeline for Executive independent non-executive directors to the Board. Hinda Gharbi and Jennifer Committee members and their direct reports. Nason will join with effect from 1 March 2020. Ngaire Woods CBE will join with effect from 1 September 2020. Hinda Gharbi is Executive Vice President of Reservoir & Infrastructure at Schlumberger, a position she assumed in February, 2019. She has been on the Simon Thompson Schlumberger executive committee for the last three years and has been with Nominations Committee chairman the company for 24 years, working in various engineering, functional and line 26 February 2020 management positions, including health and safety, human resources, technology development and operations across France, Malaysia, Nigeria, Thailand, the United Kingdom and the United States. Hinda has dual Building an inclusive culture Australian-Tunisian nationality. Rio Tinto is committed to promoting behaviours that support an inclusive and diverse workplace and that reflect our values of safety, teamwork, respect, Jennifer Nason is a Global Chairman at JP Morgan, with over 30 years’ integrity and excellence. This commitment is set out in our global code of experience of corporate finance and capital markets. For the past 17 years, she conduct, The way we work. has led the Technology, Media and Telecommunications global client practice, based in the USA. During her time at JP Morgan, she has also worked in the The Board leads by example and recognises that it has an important role to metals and mining sector team in Australia. Jennifer has dual Australian-US play in creating an environment in which all contributions are valued, different nationality and is a current director and former chair of the American Australian perspectives are embraced, and biases are acknowledged and overcome. The Association. Board shares ownership with the Executive Committee of the Group’s inclusion and diversity policy, which can be found on the Group’s website. Ngaire Woods is the founding Dean of the Blavatnik School of Government, Professor of Global Economic Governance and the Founder and Director of the Membership of the Committee Global Economic Governance Programme at Oxford University. She has been a All non-executive directors are members of the Nominations Committee. Fellow of University College, Oxford for the past 17 years. She has also been a The Chief Executive and the Human Resources Group Executive are invited visiting lecturer at Harvard University and the Central European University. As a to attend all or part of most meetings. The Committee is chaired by the recognised expert in public policy, international development and governance, Chairman of the Board, unless the matter under consideration relates to the she has served as an adviser to the African Development Bank, the Asian role of the Chairman. Infrastructure Investment Bank, the Center for Global Development, the International Monetary Fund and the European Union. She serves on the board Appointments to the Board – our policy of the Stephen A. Schwarzman Education Foundation and as a Rhodes Trustee. We base our appointments to the Board on merit, and on objective selection Ngaire is a dual New Zealand and British citizen. criteria, with the aim of bringing a range of skills, knowledge, and experience to Rio Tinto. This involves a formal and rigorous process to source strong candidates The new directors will broaden the experience of the Board, bringing from diverse backgrounds, and conducting appropriate background and complementary skills and international expertise from diverse backgrounds reference checks on the shortlisted candidates. We aim to appoint people who in natural resources, finance, technology, governance and public policy. will help us address the operational and strategic challenges and opportunities facing the company now and in the future, and ensure that our Board is diverse Once the appointments all take effect later this year, we will have achieved the in terms of gender, nationality, social background and cognitive style. Hampton Alexander recommendation that one third of our Board members are female. We believe that an effective Board provides a range of perspectives, combining the experience of directors who have developed a deep understanding of our The Group has continued to set measurable gender diversity objectives for business over several years, with the fresh insights of newer appointees. the composition of senior management and graduate intake. As part of the We aim for our Board composition to reflect the global nature of Rio Tinto’s Chief Executive’s individual objectives for 2020 there is a commitment to business: currently seven different nationalities are represented, including improving gender diversity in senior management and operational roles, and from our major countries of operation. The key skills and experience of our to continuing to build an inclusive culture. This forms part of his short-term Board are set out on the table on the opposite page. incentive plan and is cascaded down to the Executive Committee and senior management. Performance by the Chief Executive against his individual We only engage recruitment agencies that are signed up to the Voluntary Code objectives is reviewed and agreed by the Board. In 2019, female representation of Conduct on diversity best practice and this commitment has underpinned within senior management remained at 22.6% (112 women and 385 men), the search criteria for the three new appointments to the Board that we against a target of 24.4%. We made a significant improvement in the gender announced in February 2020. diversity of graduates, and the female graduate intake was 54% (against a 98 Annual report 2019 | riotinto.com

Nominations Committee report target of 50%). For the total workforce population, gender balance improved Executive Committee succession planning from 17.7% to 18.4% (7,332 women and 32,628 men). As a Committee, we have During 2019, the Committee received regular presentations from the Chief reviewed and endorsed the gender diversity objectives for 2020 and we will Executive on the composition and performance of the Executive Committee. monitor progress on the programmes and initiatives designed to achieve them. These updates included detailed consideration of the performance and Further information with regard to the performance against the targets set for development requirements of individual members of the Executive Committee, 2019 and on our 2020 objectives can be found on page 62. and a review of their direct reports and other high-potential individuals who could become members of the Executive Committee in due course. The discussions Our Executive Committee is currently 27% female and includes nine different included a review of the diversity of the senior management pipeline, and how nationalities. the approach taken at all levels of seniority can support increased diversity. Year in review Changes to our committees Succession planning Following the resignation of Ann Godbehere in May 2019, the Committee The Committee, on behalf of the Board, regularly assesses the balance agreed to the following appointments: Governance of executive and non-executive directors, and the composition of the Board –– Sam Laidlaw was appointed to the role of senior independent director in terms of skills, experience, diversity and capacity. We have recently –– Simon Henry was appointed as chair of the Audit Committee. increased to 30 the number of days that we expect non-executive directors to commit to the role. The Committee undertook a review of committee appointments following the new appointments of Hinda, Jennifer and Ngaire as non-executive directors The way in which we look at succession planning is as follows: and made the following recommendations to the Board: –– Long‑term Board succession – planning for the refreshment of the Board –– Hinda will be appointed to the Audit and Sustainability Committees and its committees –– Jennifer will be appointed to the Remuneration and Sustainability –– Ensuring that the Board is sufficiently resilient to take account of Committees unexpected changes –– Ngaire will be appointed to the Remuneration and Sustainability Committees. –– Executive director succession planning – including internal ‘ready-now’ candidates from amongst the Executive Committee Board re-election and Board composition –– The internal pipeline and external candidates for positions on the Directors are accountable to shareholders. Each director is subject to election Executive Committee by shareholders at the first AGMs after their appointment, and is then required –– Succession of the Chairman, senior independent director and committee to seek re-election at each year’s AGMs. chairs, taking into account the requirement to be able to demonstrate sufficient experience and time commitment for these roles, and our In planning the composition of the non-executive part of the Board, a balance aim to achieve diversity must be struck between retaining a collective understanding of the company –– Engagement with key stakeholders on our succession plans. and its business with a progressive refresh of the Board’s composition. The tenure of the current non-executive directors (including the Chairman) is Our recent Board evaluation exercise considered our succession planning shown in the chart below: process. As we move forward we will continue to consider the balance of experience and skills on the Board, and ensure that over the longer term there �on�e�ec��ve ��rec�or �en�re is sufficient mining experience and knowledge of our key jurisdictions. Further ��n�r� � n�m��r o� �ir�ctor� details of the Board evaluation are on pages 96 and 97. �� r� � �� r� � �� r� � Skills and experience of the Chairman and non-executive directors Subject -matter Key Significant expert strength experience Total Business leadership Sustainable success in business at a senior executive level. – 2 6 8 Capital projects Experience working in an industry with projects involving large-scale long-cycle capital outlays. 1 3 2 6 Proficiency in financial accounting and reporting, corporate finance and internal controls, corporate Financial funding, and associated risks. 1 2 3 6 Mergers & acquisitions Experience in corporate transactions and actions and joint ventures. 2 3 –─ 5 Experience in multiple global locations, exposed to a range of political, cultural, regulatory and Global experience business environments. – 8 1 9 Corporate governance Experience with a major organisation that demonstrates rigorous governance standards. – 6 1 7 Government and International relations Interaction with government and regulators and involvement in public policy decisions. 2 – 2 4 Familiarity with issues associated with workplace health and safety, asset integrity, environment HSSE/ESG and social responsibility, and communities. – 5 2 7 Senior executive experience in marketing, and the development of product and/or customer Marketing management strategies. – – 2 2 Senior executive experience in a large, global mining organisation involved in the discovery, Mining acquisition, development and marketing of natural resources. – 3 – 3 HR/Remuneration Understanding the link between strategy, performance and remuneration outcomes. – 1 4 5 A strong understanding of technology and innovation, and the development and implementation of Technology/Digital initiatives to enhance production. – 3 – 3 This data takes account of the appointments of Hinda Gharbi, Jennifer Nason and Ngaire Woods announced on 21 February 2020. Annual report 2019 | riotinto.com 99

Governance Audit Committee report Membership The members of the Committee are all non-executive directors. Each was, I am pleased to present my first report at all times, independent and free of any relationship that would affect their on the activities of our Audit Committee impartiality. You can find biographies of the current Committee members on pages 84 and 85. The Chairman of the Board is not a member of the having succeeded Ann Godbehere, who Committee. stepped down as the chair of the As Rio Tinto’s securities are listed in Australia, the UK and the US, we follow Committee after the 2019 AGM. the regulatory requirements and best practice governance recommendations 2019 was a busy year for the Committee. In addition to our continued for audit committees in each of these markets. focus on financial reporting and the framework for internal control and risk management, we spent considerable time on the accounting Australian listing requirements treatment and external disclosures related to our Oyu Tolgoi In Australia, the members, and the Committee as a whole, meet the independence underground project in Mongolia. requirements of the ASX Principles. Specifically, the Committee members between them have the accounting and financial expertise and a sufficient understanding of the industry in which the company operates to be able In July 2019, we announced an impairment charge to the carrying to discharge the Committee’s mandate effectively. value of the project, reflecting potential changes in the project cost and schedule. Oyu Tolgoi is set to become one of the largest copper UK listing requirements mines in the world, and is a huge and highly complex development In the UK, the members meet the requirements of the FCA’s Disclosure project. The Committee held three additional meetings in the first Guidance and Transparency Rules, and the provisions of the Code relating half of 2019 to ensure we sufficiently understood the geotechnical to audit committee composition. Simon Henry, the chair of the Committee, is complexity of the project in order to reach our accounting judgement considered by the Board to have recent and relevant financial experience. on the impairment assessment and disclosures. I am grateful to my Simon Henry and David Constable both have extensive prior experience of the Committee colleagues for their time and diligence on this important natural resources sector. Simon McKeon has gained experience of the mining matter, and to management for the quality of analysis provided to sector by serving on the Board and on the Committee, and through regular site support the assessment. visits, reports and presentations. The Committee as a whole has competence relevant to the sector in which the company operates. We announced in 2018 that KPMG would succeed PwC as the Group’s auditors following completion of the 2019 audit. The US listing requirements Committee has carefully monitored the orderly transition as KPMG In the US, the requirements for the Committee’s composition and role are set have shadowed the half-year and year-end audits during 2019. I out in SEC and NYSE rules. The Board has designated Simon Henry as an would like to record my thanks to PwC for the high quality audit “audit committee financial expert”. The Board also believes that the other service they have provided to Rio Tinto over the years. members of the Committee are financially literate by virtue of their wide business experience. The Committee has also continued to closely follow regulatory developments in the UK audit market, in particular in relation to the Induction for new members Kingman, Brydon and CMA reviews. While the three reviews address New members receive a tailored induction. As part of his induction, Simon different questions, they share a common aim in promoting high McKeon met the Group Financial Controller, the heads of Group Internal Audit, quality audits and restoring public trust and confidence in the Ethics & Integrity and Investor Relations, as well as the lead audit engagement statutory audit function. We support that objective, and will continue partners in the UK and Australia. He also took part, with other Committee to engage with the review processes to try to ensure that any members, in teach-ins on new accounting standards, and on the process for recommended changes help to achieve it. measuring and reporting on mineral resources and ore reserves. I would like to record my sincere thanks to Ann Godbehere for her Committee remit excellent stewardship of this Committee, and also to Moya Greene The Committee’s objectives and responsibilities are set out in our terms of who stepped down as a director, and member of the Committee, in reference (see the Rio Tinto website). These follow the relevant best practice June 2019. I am also extremely grateful to David Constable and recommendations in Australia, the UK and the US. Simon McKeon for the support they have given me in this, my first year as chair of the Committee. Our main duties are: –– Financial reporting – we review the key judgments needed to apply accounting standards and to prepare the Group’s financial statements. We also review the narrative reporting that goes with these, with the aim of maintaining integrity in the Group’s financial reporting. Finally, we monitor any exclusions made in deriving alternative (non-GAAP) performance Simon Henry measures such as underlying earnings. Audit Committee chairman –– External audit – we oversee the relationship with the external auditors and 26 February 2020 review all the non-audit services they provide, and the fees for these, to safeguard the auditors’ independence and objectivity. We also assess the effectiveness of the external audit and, when necessary, carry out a formal tender process to select new auditors. –– Framework for internal control and risk management – we monitor the effectiveness of the Group’s internal controls, including those over financial reporting. We also oversee the Group’s risk management framework. –– Group Internal Audit (GIA) – we oversee the work of GIA, and its head, who reports functionally to our Committee chair. –– Ethics and integrity – we oversee the work of the Group’s Ethics & Integrity function. 100 Annual report 2019 | riotinto.com

These duties feed into an annual work plan that ensures we consider issues on a Use of Committee meeting time in 209 timely basis. The Committee has authority to investigate any matters within our remit. We have the power to use any Group resources we may reasonably require, �in�nci�� r��ortin� �� and we have direct access to the external auditors. We can also obtain ��t�rn�� it �� independent professional advice at the Group’s expense, where we deem �nt�rn�� contro� �n� ri�� m�n��m�nt �� necessary. No such advice was required during 2019. �nt�rn�� it �� t�ic� �n� int��rit� �� The Committee chairman reports to the Board after each meeting on the main �o��rn�nc� �� items discussed, and the minutes of our meetings are circulated to the Board. We had six regular meetings in 2019, plus four additional meetings. Of the additional meetings, three related to the Oyu Tolgoi underground project, and one to the transition of external auditor. Attendance at these meetings is Governance included in the table on page 97. The Committee has met twice to date in 2020. Other focus areas in 2019 In addition to our scheduled workload, the Committee also considered: The Chairman of the Board, the Chief Financial Officer, the Group financial –– An annual review and benchmarking of Rio Tinto’s accounting policies and controller and the heads of GIA, Ethics & Integrity and Risk regularly attend our an overview of newly issued IFRS standards and interpretations meetings, as do the Group General Counsel and the Group Company Secretary. –– An independent third party review of Rio Tinto’s cyber security posture and We invite other senior executives and subject-matter experts as needed. resilience and the management response to the key findings and recommendations The external auditors were present at all of the scheduled Committee meetings –– A summary of the key financial measures relating to the Group’s pension during the year, and at all but one of the additional meetings. The auditors plans and the factors affecting those figures review all materials on accounting or tax matters in advance of each meeting, –– A ‘teach-in’ on the process for measuring Mineral Resources and Ore and their comments are included in the papers circulated to Committee Reserves and for their public reporting under the Joint Ore Reserves members. The audit partners also meet with our Committee chair ahead of Committee Code (described on page 94) each meeting to discuss key issues and raise any concerns. –– After a robust process, in early 2020 the Committee recommended to the Board that the draft 2019 Annual report is, taken as a whole, fair, balanced The Committee meets regularly in private session. We also hold regular private and understandable. discussions with the Chief Financial Officer, the heads of GIA and Ethics & Integrity, and the external auditors. Management do not attend these sessions. We also reviewed the quality and effectiveness of the Group’s internal control The Committee chair also has regular contact and discussions with these and risk management systems with members of the Sustainability Committee, stakeholders outside the formal meetings. who oversee a number of key corporate risks. This review included the effectiveness of the Group’s internal controls over financial reporting, and the Group’s disclosure controls and procedures in accordance with sections 404 and 302 of the US Sarbanes-Oxley Act 2002. The Committee also considered reports from GIA and PwC on their work in reviewing and auditing the control environment. Significant issues relating to the financial statements There were four significant issues considered by the Committee in relation to the financial statements: Matters considered Conclusion Review of carrying value of The Committee assessed management’s determination of cash-generating units, review of impairment triggers and cash-generating units and consideration of potential impairment charges and reversals over the course of the year. For cash-generating units impairment charges/reversals where impairment indicators were identified (Oyu Tolgoi and Yarwun alumina refinery), the Committee considered the key judgments made by management in relation to discount rates, forecasted commodity prices and specifically for Oyu Tolgoi the range of mine design options. The Committee reviewed disclosures related to impairment reviews in note 6 and the impairment charges of $1.7 billion. Application of the policy for The Committee reviewed the Group’s policy for exclusion of certain items from underlying earnings and confirmed the items excluded from consistent application of this policy year on year. The items excluded from underlying earnings comprised income of underlying earnings $0.1 billion and expenses of $2.5 billion. A reconciliation of underlying earnings to net earnings is presented in note 2. Estimate of provision for The Committee reviewed the significant changes in the estimated provision for closure, restoration and environmental closure, restoration and obligations by product group and legacy management. The Committee received an update on the closure cost environmental obligations estimate for Rio Tinto Kennecott, where this major pre-feasibility study has been ongoing for more than three years. At 31 December 2019, the Group’s balance sheet included provision for close-down, restoration and environmental obligations of $11.1 billion as described in note 26. The Group’s tax exposures The Committee considered management’s assessment of the Group’s tax exposures, including the recoverability of deferred tax assets which are uncertain due to the timing of expiry of tax loss carry-forwards in certain jurisdictions. The Committee received updates on the status of ongoing discussions with the Australian Tax Office relating to the transfer pricing of certain transactions with the Group’s commercial centre in Singapore and considered the appropriateness of provisions for uncertain tax positions. Annual report 2019 | riotinto.com 101

Governance Audit Committee report continued Contact with regulators The Chief Financial Officer can approve other services that are not During the year, the Company engaged with the FRC’s Corporate Reporting “pre-approved” up to the value of $50,000 and an aggregate value of no more Review team in relation to disclosures made in respect of the Oyu Tolgoi than $100,000. Fees exceeding $100,000 in aggregate require approval from cash-generating unit in previous years. Management’s written responses were the Committee or the Committee chair. reviewed by the Committee chairman and discussed with the external auditors. In reporting the Oyu Tolgoi impairment charge in the interim financial At the half-year and year-ends, the Chief Financial Officer and the external statements to 30 June 2019, we considered this feedback and extended the auditors report to the Committee on non-audit services performed and the fees disclosure to include description of the mineral resources contributing to the payable. assessment of recoverable amount. In August 2019, the FRC wrote again to the Company confirming that their enquiries, based on a limited scope review of All of the non-audit services provided by PwC in 2019 were either within the the Annual report and Accounts on this matter, had been satisfactorily predetermined approval levels or approved by the Committee. We are satisfied concluded. that the provision of non-audit services by PwC in accordance with this procedure is compatible with the general standard of independence for auditors and the External auditors other requirements of the relevant Australian, UK and US regulations. Engagement of the external auditors For the current financial year, PwC remain our auditors. The UK entity of PwC Fees for audit and non-audit services audits Rio Tinto plc, and the Australian entity audits Rio Tinto Limited. The UK The amounts payable to the external auditors, PwC, in each of the past audit engagement partner, Paul Barkus, was appointed in 2016, and the two years were: Australian partner, Debbie Smith, was appointed in 2017. 2019 2018 This year, as usual, we agreed the scope of the auditors’ review of the half-year $m $m accounts, and of their audit of the full-year accounts taking into consideration Audit fees 16.4 16.7 the key risks and areas of material judgment for the Group. We also approved Non-audit fees: the fees for this work and the engagement letters for the auditors. Assurance services 2.7 4.2 Safeguarding independence and objectivity, and maintaining Taxation services 0.1 0.0 effectiveness All other fees 0.0 0.2 In our relationship with the external auditor we need to ensure that they retain Total non-audit fees 2.8 4.4 their independence and objectivity, and to be effective in performing the Non-audit: audit fees (in-year) 17% 26% statutory audit. For further analysis of these fees, please see note 39. Use of the external auditors for non-audit services The external auditors have significant knowledge of our business and of how None of the individual non-audit assignments was significant, either in terms of we apply our accounting policies. That means it is sometimes cost-efficient for the work done or the fees payable. We have reviewed the non-audit work in them to provide non-audit services. There may also be confidentiality reasons aggregate. We are satisfied that neither the work done, nor the fees payable, that make the external auditors the preferred choice for a particular task. compromised the independence or objectivity of PwC as our external auditors. However, safeguarding the external auditor’s objectivity and independence is Independence of the external auditors an overriding priority. For this reason, and in line with the FRC’s Ethical PwC are required to provide a declaration to the directors in relation to their Standard, the Committee ensures that the external auditors do not perform compliance with the independence requirements of the Australian Corporations any functions of management, undertake any work which they may later need Act 2001 and the professional code of conduct for external auditors. A copy of to audit or rely upon in the audit, or serve in an advocacy role for the Group. this is on page 257. We have a policy governing the use of the auditors to provide non-audit services. No person who served as an officer of Rio Tinto during 2019 was a director The cap on the total fees that may be paid to the external auditors for non-audit or partner of PwC at a time when they conducted an audit of the Group. services in any given year is 70% of the average of the audit fees for the preceding three years. This is in line with the FRC’s Ethical Standard. Non-audit assignments Effectiveness of the external auditors fall into two broad categories: We reviewed the effectiveness of PwC as auditors at our meeting in June 2019. –– Audit, audit-related or other “pre-approved” services where we believe We considered the results of a survey containing questions on PwC’s objectivity, there is no threat to auditors’ independence and objectivity, other than quality and efficiency. It was completed by a range of operational and corporate through the fees payable. executives across the business, and by Committee members. The overall rating –– Other services that have not been “pre-approved”. of PwC’s effectiveness was positive. We apply different approval regimes to these areas of work. Approval of Appointment of the auditors “pre-approved” services is as follows: As announced in June 2018, subject to shareholder approval, KPMG LLP will be –– Up to $50,000 – subject to prior notification to management, this work can appointed as Rio Tinto plc’s external auditors and KPMG will be appointed as be awarded. Rio Tinto Limited’s external auditors with effect from the 2020 financial year. –– From $50,001 to $100,000 – requires the Chief Financial Officer’s approval. These appointments will be proposed as a joint resolution at the 2020 AGMs, –– Over $100,000 and with a tender process – if the external auditors are with a separate resolution seeking authority for the Committee to determine successful in the tender, the appointment requires the Chief Financial the external auditors’ remuneration. Officer’s approval. –– From $100,001 to $250,000 without a tender process – requires the Chief Financial Officer’s approval. –– Over $250,000, without a tender process – requires the Committee’s or Committee chair’s approval. In each case, the nature of the assignment and the fees payable are reported to the Committee. 102 Annual report 2019 | riotinto.com

Audit Committee report Risk management and internal controls Governance of the annual plan We review Rio Tinto’s internal control systems and the risk management Each year’s internal audit plan is approved by the Audit Committee and the framework. We also monitor risks falling within our remit, especially those Sustainability Committee. The plan is focused on higher-risk areas and any relating to the integrity of financial reporting. A summary of the business’s specific areas or processes chosen by the Committees. It is also aligned with internal control and risk management systems, and of the principal risks and any risks identified by the external auditors. Both committees are given regular uncertainties we face, is in the Strategic report on pages 74 to 80. updates on progress, including any material findings, and can refine the plans as needed. Importantly, responsibility for operating and maintaining the internal control environment and risk management systems sits at asset level. Leaders of our Effectiveness of the internal audit programme businesses and functions are required to confirm annually: that adequate The Audit Committee monitors the effectiveness of the GIA function throughout internal controls are in place; that these are operating effectively and are the year, with updates on performance at every meeting. designed to identify any failings and weaknesses that may exist; and that any required actions are taken promptly. We are satisfied that the quality, experience and expertise of GIA is appropriate Governance for the business and that GIA was objective and performed its role effectively. Two management committees, the Executive Committee and the Disclosure We also monitored management’s response to internal audits during the year. Committee, review reports on the Group’s control framework. The work they do We are satisfied that improvements are being implemented promptly in satisfies the relevant requirements of the Code, the ASX Principles, the NYSE response to internal audit findings, and believe that management supports the Standards and section 404 of the US Sarbanes-Oxley Act 2002. effective working of the internal audit function. GIA runs an annual testing programme on the internal control environment, Ethics, integrity and the whistleblowing programme and presents its findings to the Audit Committee, Sustainability Committee The business has a long-established ethics programme, known as The way we and the Executive Committee. work, supported by a whistleblowing programme branded as “Talk to Peggy”. The whistleblowing programme enables employees, in confidence, to raise The Audit Committee also regularly monitors our risk management and concerns about possible improprieties. internal control systems (including internal financial controls). We aim to have appropriate policies, standards and procedures in place, and ensure that they The head of Ethics & Integrity attended two of our Committee meetings during operate effectively. 2019. His reports covered a broad range of areas, including ethics, regulatory and compliance issues. As part of considering the risk management framework, the Committee receives regular reports from the Group financial controller, the General Committee effectiveness Counsel and the head of Group Tax on material developments in the legal, The Committee reviews its effectiveness annually, In 2019, this was regulatory and fiscal landscape in which the Group operates. accomplished through an independent, externally facilitated evaluation of the Board and its Committees. The Board, supported by the Audit Committee, has completed its formal annual review of the effectiveness of our risk management and internal control The performance of the Audit Committee was highly rated, with no areas of systems. This review included consideration of our material financial, concern raised. In terms of improvements, it was agreed that the Committee’s operational and compliance controls. The Board concluded that the Group has programme should continue to develop to ensure an appropriate focus on risk an effective system of risk management and internal control. management and risk appetite. While the current composition of the Committee was found to be good, it was felt an additional member would be beneficial. Internal control over financial reporting The main features of our internal control and risk management systems in relation to financial reporting are explained on pages 142 and 143. Audit transition Internal audit Following a tender process in the first half of 2018, the Committee Programme structure recommended the appointment of KPMG to replace PwC as our external GIA provides independent and objective assurance of the adequacy and auditors with effect from the 2020 financial year. Their appointment will effectiveness of risk management and internal control systems. It also may be subject to the approval of shareholders at our upcoming AGMs. recommend improvements.  In July 2019, KPMG confirmed to the Committee that they had exited all While the head of GIA reports administratively to the Chief Executive, prohibited services with the Group and formally declared their appointment to, or removal from, this role requires the consent of the Audit independence. Committee Chair. The head of GIA is accountable to the chairs of both the Audit and Sustainability Committees, communicates regularly with both, and During 2019, the Committee has overseen activities to prepare and plan attends all regular committee meetings. Our GIA team therefore operates for the transition in time for the 2020 half year review. This has included independently of management. Their mandate is set out in a written charter, extensive interaction between management and the KPMG team to help approved by the Audit Committee. GIA uses a formal internal audit them build their knowledge of the group and develop their audit plan. methodology, which is consistent with the Institute of Internal Auditors (IIAs) KPMG partners and teams have visited a number of operations and group internationally- recognised standards. locations and held a two day global planning workshop in London. In parallel, KPMG have shadowed PwC through the 2019 half year review When needed, the team brings in external partners to help achieve its goals. and 2019 audit and begun their review of PwC’s audit files. They have also There is a clear policy to address any conflicts of interest, which complies with attended a number of Audit Committee meetings. Detailed planning and the IIA’s standards on independence. This policy identifies a list of services preparation work will continue through 2020. which need prior approval from the head of GIA. Annual report 2019 | riotinto.com 103

Governance Sustainability Committee report Other areas of focus for the Committee in its monitoring of Rio Tinto’s Our business’s long-term future is impacts on the local environments in which we operate have been the inextricably linked to our responsibility development of Rio Tinto’s closure strategy and risk framework, and oversight of the next phase of our water stewardship targets. The to our people, our communities and the Committee also reviewed progress on the Group’s Communities and Social global environment in which we operate. Performance strategy implementation, and our approach to understanding and monitoring the impacts our operations have on our communities. The role of the Sustainability Committee is to support the board in promoting and monitoring Rio Tinto’s fulfilment of this responsibility. I We are committed to being part of the solution on climate change and the thank the members of the Committee, Sam Laidlaw, Simon Henry and transition to a low-carbon future. The bushfires in Australia this year have Michael L’Estrange, for their support. been a stark reminder of the impact that human actions are having on the climate. The Committee supports the Board in its strategic response to The Committee oversees the Group’s integrated approach to sustainability. climate change and in monitoring the Group’s performance against our This approach has three pillars: running a safe, responsible and profitable targets and aspirations. We have made good progress, with 76% of the business; collaborating with others to enable long-term benefits where Group’s electricity coming from renewable energy sources in 2019 and our we operate; and helping to pioneer a more sustainable future. We do this portfolio repositioned to focus on the resources of the future. However, we by monitoring the Group’s performance on health, safety, environment, recognise there are significant challenges, such as the long-term energy asset security, and communities, including human rights. We set the supply in parts of our business, and the pathways for low-carbon steel governance framework for the oversight of these important areas, and we production. We are committed to being open about our own performance and monitor management’s progress on each of them. We review how strategies in addressing these challenges. To that end, in 2019 the Committee management assesses the Group’s most material sustainability risks, and oversaw the publication of our climate change report and the completion of the associated controls and mitigating actions deployed by management abatement curves for each of our assets to guide investments that will for those risks. support a transition to a low‑carbon future, and to inform our targets. Following completion of this work, the Board has approved a new ambition to In this way, the Committee helps support the sustainable development reach net zero emissions by 2050. We have also set new emissions targets: to of Rio Tinto’s businesses, as well as Rio Tinto’s contribution to both local reduce absolute emissions by 15% by 2030 and emissions intensity by 30% and global sustainable development. over the same period. Rio Tinto will spend around $1 billion over five years in emissions reduction projects, research and development, and activities to Safety of our people remains our first priority. In 2019, this commitment enhance the climate resilience of our business. saw a continued improvement across key safety metrics, most importantly delivering a year where we experienced zero fatalities. In 2019, your directors visited our Kennecott Copper Mine in Utah, our However, the Committee recognises that there is no room for complacency. Aluminium operations in the Saguenay in Quebec, and the Yarwun alumina Our teams at every site are dedicated to eliminating fatalities in our business. operations and Boyne smelters in Gladstone, Queensland. These visits This has meant over one million verifications to check that controls were gave directors valuable insights into how the Group’s focus on safety and in place to address our critical risks and prevent an incident or injury the local environments in which we operate is implemented in practice. occurring. I commend our teams and thank them on behalf of the Committee for their efforts and dedication. The Committee also We listen to our stakeholders to understand their evolving priorities. recognises that we must continue to embed critical risk management, and Simon Thompson and I met with various non-government and civil learn from both actual and potential significant incidents to prevent them society organisations in Australia to ascertain their priorities and happening again. concerns. This work has assisted us in developing our sustainability strategies, and in enhancing our disclosure on Rio Tinto’s sustainability This year we have prioritised deep dives into our control frameworks for practices and key risks. the management of the risks of underground safety, process safety and health risks in the business. The Committee has maintained a vigilant oversight of our controls in place for tailings dams and water storage. We received further updates on our certification and assurance processes for our tailings and waste water facilities at all current and legacy sites. Megan Clark A tailings validation taskforce was established, which oversaw a Sustainability Committee chairman programme of technical risk reviews of the Group’s facilities. 26 February 2020 Our key responsibilities The Committee has the authority and access to resources to investigate all The purpose of the Sustainability Committee is to promote, support and matters falling within its terms of reference. These terms of reference are monitor the sustainable development of Rio Tinto’s businesses, as well as published on the Rio Tinto website, and feature a full list of our responsibilities, Rio Tinto’s contribution to the sustainable development of the communities which include: and countries in which we operate, and to global sustainable development. –– Reviewing the Group’s relevant policies, and overseeing the management processes designed to ensure compliance with them. The Committee does this by overseeing, on behalf of the Board, key –– Monitoring management’s commitment to the behaviours required by sustainable development areas including in particular health, safety, those policies and standards. environment (including climate change, and closure and legacy management), –– Assessing the Group’s health, safety, security, environment and asset security, and relationships with communities (including human rights of communities framework. communities, employees, and contractors; and sustainable development –– Reviewing reports from management on fatalities and other serious issues as they relate to suppliers and supply chains). In relation to these incidents, considering recommendations for improvement, and receiving important areas we oversee Rio Tinto’s performance, monitor Rio Tinto’s follow-up reports on their implementation. compliance with its responsibilities and commitments, and review the –– Reviewing the measures for the safety component of the short-term effectiveness of controls designed to manage the associated risks. incentive plans for the executive team, and assessing performance against them, making recommendations to the Remuneration Committee as a result. 104 Annual report 2019 | riotinto.com

Sustainability Committee report –– Reviewing and approving the proposed annual plan for independent audit We supported the Board in its review of our 2018 modern slavery statement. and assurance projects within our scope, and reviewing their outcomes and recommendations. Some of the initiatives we have overseen in relation to human rights, –– Carrying out a formal review each year of the role and responsibilities of our and the work being done to contribute to our local communities, is set out Committee, its organisation and effectiveness, and its terms of reference. in the Sustainability section on pages 60 to 70 of this report. Our year in review Closure and remediation We met four times in 2019, covering a wide range of activities, which are We received an overview of the development and execution of Rio Tinto’s summarised below. strategy and risk framework for closure, and received an update on important works being progressed at selected closure assets. Health and safety Recognising that we must continue to learn from both actual and potential Governance, assurance and disclosure significant incidents to prevent them happening again, the Committee Each year, we review the Group’s key risks associated with health, safety, Governance examined the circumstances leading to, and key learnings from, the following security, environment, and community and social performance. incidents in 2019: –– A fire in January at the screen house at our Cape Lambert A port facility We reviewed and approved the Group’s assessment of its most material in the Pilbara sustainability topics, a process which combines feedback from internal leaders –– An incident in March on the railway mainline of the Iron Ore Company of and subject-matter experts, and considers stakeholder expectations as well Canada in which a rail maintenance worker suffered a permanent disabling as an analysis of the external environment. injury –– A potentially fatal incident in March in which two technicians were trapped The Committee sees transparency as an important part of Rio Tinto’s approach inside a reactor at a gas treatment centre at the Kitimat aluminium smelter to sustainability, and we encourage disclosure of sustainability related in British Columbia, Canada. information both proactively and in response to regulatory requirements. Other work relating to health and safety undertaken by the Committee this Our other work included: year included: –– Reviewing the 2018 Sustainable development report, the Sustainable development sections of the 2018 Annual report, and Rio Tinto’s 2018 –– Overseeing a review of the control framework for the management of the slavery and human trafficking statement. risk of a major underground safety event –– Overseeing implementation of changes to Rio Tinto’s operating model –– Overseeing the expansion of critical risk management implementation for the health, safety, environment and security functions. through the introduction of the Safety Maturity Model –– Receiving a report on the annual review of Rio Tinto’s whistleblowing –– Reviewing strategies to manage and minimise exposure to per- and programme and, in particular, an examination of the data on claims related poly-fluroroakyl substances (PFAS) at Rio Tinto sites to issues directly concerned with sustainability. –– Receiving a report on the safety improvement efforts within the Copper –– Evaluating the Committee’s performance and reviewing its scope and Diamonds product group and responsibilities as reflected in its terms of reference. –– Monitoring the progress of an independent study undertaken by the University of Manchester at the request of Rio Tinto to investigate concerns about a Use of Committee meeting time in 209 potential increased risk of cancer in the Rössing Uranium Mine mine workforce –– Reviewing the implementation of key recommendations from the 2018 ��t� �n� ��t� �� review of the process safety control environment �n�ironm�nt� inc��in� c�im�t� c��n�� –– Reviewing the outcomes of the Group’s 2018 short-term incentive plan in �o��rn�nc�� r�nc� �n� �i�c�o��r� �� relation to safety, and the design for the 2019 targets. �omm�niti�� n� �oci�� r�orm�nc� �� o��r� �n� r�m��i�tion �� We also assessed Rio Tinto’s safety and health performance compared with �t��r �inc��in� ��t ��c�rit�� mining industry peers within the ICMM, and peers with comparable risk profiles across other industries. This demonstrated that safety strategy is aligned with industry best practice and our performance on occupational illness rates is on a par with our ICMM peers. Environment, including climate change This illustration does not include time spent by the Committee In addition to the work the Committee has done in monitoring the progress on administrative items or attending site visits. of our tailings validation taskforce, our work supporting the Board on environmental and climate change issues has included the following: Our process –– We received an update on the development of Rio Tinto’s water stewardship The Chairman of the Board, the Chief Executive, the Global Head of HSES, the targets for 2019-2023, being the third set of global water targets for Rio Corporate Relations Group Executive and the Group General Counsel regularly Tinto, since reporting against water targets commenced in 2008. We also attend our meetings. reviewed our water disclosures. –– We monitored progress against our climate change targets, commissioned The Committee chair reports to the Board after each meeting, and our minutes reports on investor trends, and reviewed and oversaw the publication of Rio are tabled before the Board. All directors have access to the Committee’s Tinto’s first climate change report. papers. –– We received a presentation on the long-term implications of climate change for the mining sector. Our sustainable development strategy and performance are described in detail on pages 60 to 70 of this report as well as in our climate change report, which Communities and social performance can be found on our website. We continued to provide oversight of the Group’s communities and social performance strategy, with a particular focus on relationships with communities and human rights, including in our supply chains. Annual report 2019 | riotinto.com 105

Governance Compliance with governance codes and standards Application of and compliance with governance codes and standards facilitated effectiveness review and details of this are provided on pages 96 to This section sets out our compliance with the applicable governance codes 97 of the Governance report. and standards. As our shares are listed on both the Australian and London Securities/Stock Exchanges, we set out how we have complied with the B. The company’s purpose, values and strategy and alignment with culture codes and standards governing those bodies on the following pages: Through our The way we work framework, the board sets the company’s purpose, –– London Stock Exchange – UK Corporate Governance Code (2018 values, and standards for the Group’s employees. The board is committed to version) (the UK Code), see pages 106 to 108. acting in accordance with these values, championing, and embedding these in the –– Australian Securities Exchange – ASX Corporate Governance Council’s organisation. The board considers how the culture of the company is aligned with Corporate Governance Principles and Recommendations (3rd edition) these values and standards. How this is achieved is explained in detail on pages 8 (the ASX Principles), see pages 108 to 109. to 9, 88 to 89 and 92 to 93. In addition, as explained within the Chairman’s governance review, as a foreign private issuer (FPI) with American Depository Receipts (ADRs) C. Company performance and risk management listed on the New York Stock Exchange (NYSE), we need to report any The board leads the development of long-term investment plans for significant corporate governance differences from the NYSE listing the company. It aims to make good quality decisions at the right time, to standards. achieve the company’s objectives, in alignment with our purpose, values and strategy. The role of the board in establishing and monitoring the internal Statement of compliance with the Code and ASX Principles control environment is set out in the Audit Committee report on pages 100 to Throughout 2019 and as at the date of this report, the Group has applied 103. The way in which the company manages risk is set out on pages 71 to 73. the Principles of the UK Code and the ASX Principles. The UK Code is available For information on the delegation of business to management please refer to at www.frc.org.uk, and the ASX Principles at www.asx.com/au. For the pages 86 to 87. purposes of ASX Listing Rule 4.10.3 and the ASX Principles, pages 84 to 109 of this report form our “Corporate Governance Statement”. This statement The formal schedule of matters reserved for the board’s decision, available is current as at 26 February 2020, unless otherwise indicated, and has been on our website, covers areas including: setting the Group’s purpose and approved by the board. Corporate governance documents and policies strategic vision; monitoring performance of the delivery of the approved referenced can be found at riotinto.com/invest/corporategovernance. strategy; approving major investments, acquisitions and divestments; the oversight of risk and the setting of the Group’s risk appetite; and reviewing We have complied with all relevant provisions of the UK Code throughout 2019. the Group’s governance framework. Difference from NYSE listing standards D. Stakeholder engagement We have reviewed the NYSE Standards and consider that our practices are The Chairman undertakes regular engagement with our major shareholders, broadly consistent with them, with the following exceptions where the literal in addition to that carried out by the Chief Executive, the Chief Financial Officer requirements of the NYSE Standards are not met due to differences in and investor relations team. The committee chairs also engage with their corporate governance between the US, UK and Australia: relevant stakeholders and details of this engagement is provided in each of –– The NYSE Standards state that companies must have a nominating/ the committee reports. We have mapped our key stakeholders and continually corporate governance committee composed entirely of independent work to understand their views and we take account of our responsibilities to directors which, in addition to identifying individuals qualified to become our stakeholders when making business decisions. We explain more about this board members, develops and recommends to the board a set of corporate in our section 172 (1) statement, set out on on page 92 to 93. governance principles applicable to the company. Our Nominations Committee comprises the Chairman and independent non-executive Details of how the board undertakes workforce engagement are set out on directors, information about which is set out on pages 98 to 99. This page 92. The board as a whole is responsible for workforce engagement. Committee does not develop corporate governance principles for the Information on workforce engagement is therefore reported to the board and board’s approval. The board itself develops such principles. engagement activities are undertaken either by the full board (such as employee –– Under US securities law and the NYSE Standards, the company is required town halls or AGMs) or by individual directors. Our directors are geographically to have an audit committee that is directly responsible for the appointment, diverse and this allows us to engage with a greater number of employees on an compensation, retention and oversight of the work of external auditors. ongoing basis. As we have not selected one of the methods in the UK Code, While our Audit Committee makes recommendations to the board on these we have explained on page 92 why our arrangements are effective and matters, and is subject to legal and regulatory requirements on oversight appropriate for Rio Tinto. We will continue to review that they are effective. of audit tenders, the ultimate responsibility for the compensation of the external auditors and the appointment of the external auditors of Rio Tinto At the 2019 AGM Resolution 19 ‘Authority to purchase Rio Tinto plc shares’ rests with the shareholders. was passed with less than 80% of votes in favour and Shining Prospect (a –– Under US securities law and the NYSE Standards, an audit committee is subsidiary of the Aluminium Corporation of China (“Chinalco”)) voted against. required to establish procedures for the receipt, retention and treatment Chinalco has not sold any Rio Tinto plc shares and now has a holding of over of complaints regarding accounting, internal accounting controls and audit 14% given its non-participation in Rio Tinto’s significant share buy-back matters. The whistleblowing programme enables employees to raise any programmes over the last three years. This places Chinalco close to the 14.99% concerns confidentially or anonymously. The board has responsibility to threshold agreed with the Australian government at the time of Chinalco’s ensure that the programme is in place and to review the reports arising original investment in 2008. An update was given in the Interim financial from its operations. statement provided on 1 August 2019, which was within the six month period. The UK Code E. Our workforce policies and practices Board leadership and company purpose Workforce Group policies are approved by the board. All the policies relating to A. Making the board effective our workforce take account of the global nature of our company. Our Our board provides effective and entrepreneurial leadership. It is collectively whistleblowing process is overseen by the board and every member of the responsible for the stewardship and long-term success of the Group. There workforce has access to the ‘Talk to Peggy’ programme and details of this is a framework of prudent and effective controls that enable risk to be assessed programme are on page 68. The Treasury Laws Amendment (Enhancing and managed. The Chairman’s governance statement on pages 88 to 89 sets Whistleblower Protections) Bill 2018 came into effect in Australia in July 2019 out how we assess our impact on wider society. See page 91 for the key and given the global nature of the company, the whistleblowing processes were activities undertaken by the board during the year and the factors that were reviewed to ensure compliance. Additional training was given to the relevant considered when making decisions. In 2019, the board undertook an externally members of the workforce. 106 Annual report 2019 | riotinto.com

Compliance with governance codes and standards Division of responsibilities The Group company secretary is the trusted interlocutor within the board F. The role of the Chairman and its committees, and between senior management and the non-executive The Chairman leads the board and is responsible for its overall effectiveness. directors. He is responsible for advising the board, through the Chairman, He was independent on the date of his appointment. He recognises the on all governance matters. He supports the Chairman in ensuring that the importance of creating a boardroom culture which encourages openness and information provided to the board is of sufficient quality and appropriate detail debate and ensures constructive relations between executive and non-executive in order for the board to function effectively and efficiently. directors. Further information on how this influences the board’s decision- making, can be found in How the board works on page 90. Composition, Succession and Evaluation J. Appointments to the board The Chairman is responsible for: the management of the board and its The Nominations Committee ensures a formal, rigorous and transparent committees; director performance; induction; training and development; procedure for the appointment of new directors. It is also responsible for board succession planning; engagement with external stakeholders and attendance succession planning, regularly assessing the balance of skills, experience, by the board at shareholder meetings. The Chairman is supported by the senior diversity and capacity required to oversee the delivery of Rio Tinto’s strategy. Governance independent director, the Group company secretary and the Chief Executive. It reviews proposals for appointments to the Executive Committee, and The senior independent director is responsible for acting as a sounding board monitors executive succession planning. All non-executive directors are for the Chairman and engages with shareholders to develop a balanced members of the Nominations Committee. The committee is chaired by the understanding of their interests and concerns. For further details, please see Chairman, apart from when the committee is dealing with the appointment our Board Charter which sets out the role, responsibilities, structure, of his or her successor. The Nominations Committee report on pages 98 to 99 compositions and conduct of the board, as well as the role of the Chairman, the sets out the board’s approach to succession planning and how this supports senior independent director and the Chief Executive – the development of a diverse pipeline, at all levels. All directors are subject to riotinto.com/en/invest/corporate-governance/board-governance. annual re-election at the AGM. G. Composition of the board Details of external search consultancies used for board appointments can be As at the date of this report, the board comprises of 9 members: 6 independent found in the Nominations Committee report on pages 98 to 99. NEDs, the Chairman, the Chief Executive and the Chief Financial Officer. On 21 February 2020, we announced the appointment of three additional non- K. Skills, experience and knowledge of the board and its committees executive directors: Hinda Gharbi, Jennifer Nason and Ngaire Woods. Once the In our succession planning, we aim to bring a diverse and complementary appointments are effective, the board will comprise 12 members and 9 range of skills, knowledge and experience to the board, so that we are equipped independent NEDs. This is considered to be an appropriate size for the to navigate the operational, social, regulatory and geopolitical complexity in business, and to provide the right balance of executive and non-executive which our business operates. Achieving the right blend of skills and diversity directors. It allows for sufficient diversity of experience on the board, and to support effective decision-making is a continuing process. Further details ensures that we can also have individuals with specific expertise. The on tenure and experience of the board are set out in the Nominations Nominations Committee report considers appointments, succession planning Committee report on pages 98 to 99. and the mix of skills and experience of the board on pages 98-99. The board is satisfied that it has the appropriate balance of skills, experience, independence, L. Board evaluation and knowledge of the company to enable its members to discharge their A board and committee effectiveness evaluation is carried out each year. respective duties and responsibilities effectively, and that no individual or The evaluation considers (but is not limited to): the balance of board members’ group can dominate the board’s decision-making. Only the Chairman and skills and experience; independence; diversity; the running of the board; and committee members have the right to attend the meetings of the Nominations, directors’ knowledge of the company. Every third year, the board evaluation is Audit and Remuneration Committees. Attendance by all other individuals is by externally facilitated. An externally facilitated board evaluation was carried out invitation only. in 2019. The terms of reference for this review and the outcomes are discussed on pages 96 to 97. There is a clear division of responsibilities between the leadership of the board and the executive leadership of our business. The Chief Executive is Audit, risk and internal control responsible for the day-to-day management of the business and, under a M. Internal and external audit Group delegation of authority framework, delegates to other members of the The Audit Committee monitors the independence and effectiveness of the Executive Committee. internal audit function and external auditors. Following an audit tender process in 2018, the board endorsed the appointment of KPMG as external auditor for H. Role of non-executive directors the 2020 financial year. PwC will step down as auditors in 2020. The We list all of the non-executive directors that we consider to be independent appointment of KPMG is subject to the approval of shareholders at our AGMs on page 84 to 85 of this report. Over 50% of the board (excluding the chair) are in 2020. The Audit Committee is responsible for reviewing key judgements non-executive directors. The non-executive directors constructively challenge within the Group’s financial statements and narrative reporting, with the aim and help develop proposals on strategy. They are also responsible for of maintaining the integrity of the Group’s financial reporting. For further detail, scrutinising management performance and ensuring that financial information, please refer to the Audit Committee report on pages 100 to 103. risks and controls, and systems of risk management are robust. Sam Laidlaw was appointed as the senior independent director (SID) during 2019. The board N. Fair, balanced and understandable assessment met once without the chair present and a full assessment of the chair’s The board is responsible for the presentation of a fair, balanced and capability was carried out as part of the externally facilitated board evaluation understandable assessment of the company’s position and prospects, not only process, details of which are on pages 96 to 97. Each director has undertaken to in the Annual report. We have a robust process in place including through the allocate sufficient time to the Group in order to discharge their responsibilities Disclosure Committee, to ensure that this is the case. effectively, and this is kept under review by the Nominations Committee. The directors’ other appointments are listed on pages 84 to 85. O. Risk management and internal control framework The board is ultimately responsible for aligning the risk appetite of the I. Board processes and role of the Company Secretary company with our long-term strategic objectives, taking into account the How the board works on page 90 explains the decision-making process of the principal and emerging risks faced by the company. Please refer to pages 71 board and the steps it takes to function efficiently, including how it considers to 73 for further details on our business planning cycle and risk management stakeholders in this process. framework and how these support our longer-term viability statement. For further details on our approach to risk, please refer to the Group’s Risk policy. Annual report 2019 | riotinto.com 107

Governance Compliance with governance codes and standards continued Remuneration Recommendation 1.5 P. Remuneration policies and practices Rio Tinto has a Group-wide, board-endorsed Inclusion and diversity policy. A The Remuneration Committee supports the board by setting our summary of the policy is available on our website. The board sets objectives Remuneration Policy. Through long-term and short-term incentives, our for achieving diversity for the board and the Group and states that the board Remuneration Policy is designed to help drive a performance culture which and Executive Committee will annually review the Group’s performance against incentivises executives to deliver the Group’s long-term strategy and create them. Page 62 of the Annual report sets out the measurable objectives and our superior shareholder value over the short, medium and long term. The overarching performance against them. The respective proportions of men and women on aim is to ensure our remuneration structure and policies reward fairly and the board, in senior executive positions and across the whole organisation responsibly with a clear link to corporate and individual performance, and to is reported on pages 62 and 98 to 99 of the Annual report. the company’s long-term strategy and values. We have worked to ensure that we have a clear policy that can be understood by shareholders and stakeholders. Recommendation 1.6 The performance of the board, and of each of its committees and individual Q. Procedure for developing Remuneration Policy directors, was reviewed in 2019, as it is each year. Detailed information on We have a formal and transparent procedure for developing our Remuneration the board and committee evaluation and the evaluation of the Chairman Policy, and no director is involved in deciding their own remuneration. and the non-executive directors is set out on page 96 to 97 of the Annual Executive remuneration is set with regard to the wider workforce and through report. market benchmarking. For further detail, please refer to the Remuneration Committee report on pages 110 to 138. The Remuneration Committee is Recommendation 1.7 supported by remuneration consultant Deloitte. The board received assurance The performance of Executive Committee members, including executive from the Remuneration Committee and from Deloitte that they did not have directors, is continually evaluated as part of the Group’s performance evaluation any connections with Rio Tinto or the board that would have impaired its cycle. Further details are set out in the Remuneration report on pages 110 to independence. Please refer to page 116 of this Annual report for further detail. 138. R. Exercising independent judgement Principle 2: Structure the board to add value The Remuneration Committee is comprised of 4 non-executive directors Recommendation 2.1 to ensure independent judgement with regard to remuneration outcomes. The Nominations Committee includes all non-executive directors and is chaired The Remuneration Committee considers remuneration on an annual basis by the Chairman of the board. The board is satisfied that all non-executive and determines outcomes by assessing executive performance against directors, including the Chairman (as appropriate), continue to meet the test for performance criteria, details of which can be found on pages 110 to 138 of this independence under the UK Code, the ASX Principles and the NYSE Standards. Annual report. This states how our Remuneration Policy has been applied and The Nominations Committee’s terms of reference are available on our website. sets out details of any adjustments made or discretions exercised. The Nominations Committee report on pages 98 to 99 provides further details on its role and responsibilities. Details on membership, the number of times ASX Principles the Committee met, and the attendance of members are set out on page 97. Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 Recommendation 2.2 Rio Tinto plc and Rio Tinto Limited have a common board of directors. The A board skills matrix showing key attributes in terms of skills, experience and principal role of the board is to set the Group’s strategy and to review its strategic diversity that are relevant to the board is set out on page 99 of the Annual report. direction regularly. The board also has responsibility for corporate governance. A formal schedule of matters reserved for the board is available on our website. Recommendations 2.3, 2.4, 2.5 The Nominations Committee is responsible for assessing the independence The board delegates responsibility for day-to-day management of the business of each non-executive director against an independence framework which to the Chief Executive and other members of the Executive Committee. A combines the requirements of the Code, the ASX Principles and NYSE Standards. number of management committees support the Chief Executive and the The Nominations Committee reviews and approves this framework each year. Executive Committee. The structure of these committees is set out on page 86. The board is satisfied that all of its non-executive directors are independent Recommendation 1.2 in character and judgment and are free from any relationships (material The Nominations Committee, on behalf of the board, ensures a formal, or otherwise) or circumstances that could create a conflict of interest. rigorous and transparent procedure for the appointment of new directors. Further information on the appointment approach is set out on pages 98 to 99. The Chairman was considered independent upon his appointment and, in the board’s view, he continues to satisfy the tests for independence under The Notice of annual general meeting includes a statement that the board the ASX Principles and the NYSE Standards. considers that all directors continue to perform effectively and demonstrate appropriate levels of commitment. It also provides reasons why each director The name, skills and experience of each director, together with their terms is recommended for re-election, highlighting the director’s relevant skills and in office, are shown in the biographical details on pages 84 to 85. experience. Further information on the skills and experience of each director is set out on pages 84 to 85 of the Annual report. Recommendation 2.6 On joining Rio Tinto, all directors receive a full, formal induction programme. Recommendation 1.3 It is delivered over a number of months, and tailored to their specific The company has written agreements setting out the terms of appointment requirements, taking into account their prospective committee responsibilities. for each director and senior executive. Non-executive directors are appointed Further details are set out on pages 100 and 107 of the Annual report. by letters of appointment. Executive directors and other senior executives are employed through employment service contracts. Further information is set All directors are expected to commit to continuing their development during out on pages 123 and 128 of the Annual report. their tenure. This is supported through a combination of: site visits; internal business; and operational briefings provided in or around scheduled board Recommendation 1.4 and committee meetings. In addition, the Group company secretary provides The Group company secretary is accountable to the board and advises the regular updates on corporate governance developments in the UK, Australia Chairman, and, through the Chairman, the board on all governance matters. and the US. Further details are set out on page 94 of the Annual report. The appointment and removal of the Group company secretary is a matter reserved for the board. 108 Annual report 2019 | riotinto.com

Compliance with governance codes and standards Principle 3: Act ethically and responsibly Recommendation 6.2 Recommendation 3.1 Our main channels of communication with the investment community are Rio Tinto’s commitment to integrity and compliance is set out in The way we work, through the Chairman, Chief Executive and Chief Financial Officer, who have a global code of conduct for all employees. This is available on our website. regular meetings with the Group’s major shareholders. The senior independent director has a specific responsibility to be available to shareholders who have Principle 4: Safeguard integrity in corporate reporting concerns which have not been resolved through contact with the Chairman, Chief Recommendation 4.1 Executive or Chief Financial Officer, or for whom such contact is inappropriate. The Audit Committee report on pages 100 to 103 provides details on the role We have a number of processes and initiatives to ensure that members of the and responsibilities of the Committee. The Audit Committee’s terms of board understand the views of major shareholders. The Chief Financial Officer reference are available on our website. Further details on membership, the reports to the board at each meeting, and provides regular investor updates. number of times the Committee met during 2019 and the attendance of In addition, the head of investor relations reports regularly to the board, and members are set out on page 97. an annual survey of major shareholders’ opinions is presented to the board by the Group’s investor relations advisers. Further information on engagement Governance Recommendation 4.2 with shareholders and investors during 2019 is set out on pages 92 to 93 of the Details on compliance with the financial reporting requirements Annual report. contemplated under this recommendation are set out on pages 142 and 143 of the Annual report. Recommendation 6.3 The AGMs present an opportunity to provide a summary business Recommendation 4.3 presentation, to inform shareholders of recent developments, and to give them Rio Tinto’s external auditors, PwC, attend Rio Tinto’s AGMs and are available the opportunity to ask questions. Generally, the chairs of all board committees to answer questions about the conduct of the external audit and the are available to answer questions raised by shareholders, and all directors are preparation and content of the independent auditors’ report. expected to attend where possible. In 2019, all the directors attended the AGMs. The AGMs are webcast and transcripts of the Chairman’s and Chief Principle 5: Make timely and balanced disclosure Executive’s speeches are made available on our website. A summary of the Recommendation 5.1 proceedings at the meetings, and the results of voting on resolutions, are made Rio Tinto recognises the importance of effective and timely communication available as soon as practicable after the meetings. with shareholders and the wider investment community.   Recommendation 6.4 It is our policy to make sure that all information disclosed or released by Shareholders can choose to communicate electronically with the companies the Group is accurate, complete and timely and complies with all continuous and the share registrars. The contact details for the registrars are on page 299 and other disclosure obligations under applicable Listing Rules and other and on our website. relevant legislation. Principle 7: Recognise and manage risk To ensure that trading in our securities takes place in an informed and orderly Recommendations 7.1, 7.2 market, we have established a Disclosure Committee to oversee compliance with The board is ultimately responsible for risk management and internal controls our continuous disclosure obligations. The group disclosure and communications and for ensuring that the systems in place are robust and take into account the policy, terms of reference of our Disclosure Committee, together with our principal risks faced by the Group. The board delegates certain matters relating adopted procedures in relation to disclosure and management of relevant to the Group’s risk management framework to the Audit Committee, and the information, support compliance with our disclosure obligations. A copy of the Audit Committee provides updates to the board on matters discussed at each group disclosure and communications policy is available on our website. meeting. Further details on the Group’s governance framework for risk management and internal control are set out on pages 71 to 73 of the annual The Group’s Disclosure Committee is responsible for determining whether report. information relating to Rio Tinto may require disclosure to the markets under the continuous disclosure requirements in the jurisdictions in which Rio Tinto is listed. Recommendation 7.3 In accordance with its terms of reference, the specific focus of the Disclosure Further information on Rio Tinto’s Group Internal Audit function is set out on Committee is to consider and determine on a timely basis whether information page 103 of the annual report. would, to the extent that the information is not public and relates directly or indirectly to Rio Tinto, be likely to have a material effect on the price of Rio Tinto Recommendation 7.4 securities if that information was generally available. A description of the principal risks and uncertainties that could affect Rio Tinto (including economic, environmental and social sustainability risks), and of the The members of the Committee are the Chief Executive; Chief Financial Officer; Group’s governance framework for risk management and internal control, are Group company secretary; the Group general counsel; the head of investor on pages 74 to 80 of the Annual report. relations and the Corporate relations Group executive. Principle 8: Remunerate fairly and responsibly Principle 6: Respect the rights of security holders Recommendation 8.1 Recommendation 6.1 The Remuneration report on pages 110 to 138 provides details on the role and Our website includes pages dedicated to corporate governance, providing responsibilities of the committee. The Remuneration Committee’s terms information on compliance with governance codes and standards (the Code, ASX of reference are available on our website. Further details on membership, Principles and the NYSE Standards); the terms of reference of the committees; the number of times the Committee met during 2019 and the attendance of risk management and financial reporting; and board governance including members are set out on page 97. selection, appointment and re-election of directors, director’s independence and board performance evaluation. Recommendation 8.2 Rio Tinto’s policies and practices regarding remuneration of non-executive All information released to the markets is posted in the media section directors, executive directors and senior executives are set out on pages 110 to of our website. Our website also provides general investor information. 138 in the Remuneration report. Annual and half-year results, as well as any major presentations, are webcast and the materials are available on our website, which also contains Recommendation 8.3 presentation material from investor seminars. Rio Tinto’s approach on participating in equity based remuneration schemes is set out on pages 110 to 138 and page 142 of the Annual report. Annual report 2019 | riotinto.com 109

Governance Annual Statement by the Remuneration Committee Chairman On behalf of the Board, I am pleased to introduce our 2019 directors’ The Committee’s overarching remuneration report (Remuneration report). purpose is to ensure the This year we have further simplified the format of our Remuneration report by using more charts and tables. The Remuneration report is in two parts. Our remuneration structure and “Remuneration At a glance” section provides a summary of our Remuneration policies reward fairly and Policy (Policy), which was approved by shareholders in 2018, and other key information and performance highlights from 2019. Our full Policy remains responsibly. available on the company website. The main part of the Remuneration report sets out how the Policy was applied in 2019 and related remuneration outcomes (Implementation report) for which we seek your support at our Annual General Meetings (AGMs). We will also be seeking shareholder approval for a resolution relating to potential termination benefits that may apply to a departing executive. This resolution seeks to renew existing approvals previously granted by shareholders in accordance with Australian requirements. We are not proposing any material changes to the previously granted approvals, nor any increase in the amounts we pay on termination to any departing executive. Remuneration Policy The Committee’s overarching purpose is to ensure the remuneration structure and policies reward fairly and responsibly with a clear link to corporate and individual performance, aligning remuneration outcomes with the delivery of long-term strategy and value. We aim to provide competitive rewards that attract, retain and motivate executives based on policies which are competitive in the market and are appropriately stretching and incentivise the right behaviours. We also ensure that there is alignment between executive remuneration and wider company pay policies, with a particular focus on gender pay differential and general pay equity. During 2019, I met with several shareholders and institutions for discussions related to governance and broader executive remuneration. In preparation for our Policy review in 2020, I took this opportunity to explore initial views on what role alternative pay models such as restricted stock might play in the compensation mix as we seek to balance the challenges associated with a cyclical business with the need to provide long-term incentives for our senior executive team. It is quite clear that shareholder perspectives on directors’ remuneration continue to vary not only by investor but also geographically between our UK and Australian investor bases. I look forward to continuing this dialogue in preparation for an updated Policy for approval at the 2021 AGMs. The Committee continues to monitor closely the evolving governance landscape and investor views. From a UK perspective, we recognise shareholder sentiment around aligning executive pension contributions with those of the broader employee population. Current contribution levels for our UK-based Executive Directors are slightly below 25% and are broadly consistent with the majority of our UK employees. We will consider this aspect further as part of a holistic review of the arrangements as we develop our next Policy. Climate change represents perhaps the greatest long-term threat to our business and we are determined to be part of the solution. The Committee will be including climate change-related objectives for our Executive Directors in the 2020 Short-Term Incentive Plan (STIP). With respect to post-employment shareholding, our current long term incentive plans ensure that our Executive Directors are materially aligned and exposed to the shareholder experience for a number of years after leaving the company. A five-year vesting period applies under the Long-Term Incentive Plan (LTIP) and a three-year vesting period under our bonus deferral plan. Vesting is not accelerated for eligible leavers whilst awards lapse for ineligible leavers. In addition, effective from 1 January 2020, Executive Directors will be required to continue to meet their shareholding requirement for a period of A train runs along the Iron Ore of Canada two years after ceasing employment. Further details are set out on pages (IOC) rail line, taking some of the world’s 114 and 117. highest-quality iron ore to market. 110 Annual report 2019 | riotinto.com

Remuneration report / Annual statement by the Remuneration Committee Chairman 2019 remuneration outcomes in the context of broader business The maximum opportunity for our executives under the STIP remains performance unchanged. For the 2020 safety measures, the weighting of SMM and all injury In 2019 we had zero fatalities. The implementation of critical risk management frequency rate (AIFR) will become 40% and 20% respectively (30% and 30% in (CRM) across all our operations and increased sharing and deeper analysis of 2019). The adjustment in weighting strengthens the holistic focus on improving incidents that have the potential to result in a fatality has been the foundation our safety culture and performance. The applicable targets are disclosed on of this. page 126. We expect to disclose the 2020 financial and individual targets retrospectively in the 2020 Implementation report. The level of PSAs, as a In an effort to move towards leading indicators, the safety maturity model percentage of base salary, to be granted in March 2020, is unchanged from (SMM) framework included in the 2019 STIP expands on CRM to include a more 2019 for the Chief Executive and will be 410% for the Chief Financial Officer. holistic inclusion of our safety management system. In 2019, all of our safety Awards to other Executive Committee members vary from between 375% and performance indicators improved, resulting in a Group STIP safety result above 410% of base salary. target at 64% of maximum. Pay in the broader context Governance Despite a number of challenges on the operational side, our value over volume During 2019, the Committee materially expanded its review of reward structures strategy, good capital discipline, and strong markets for some of our key and outcomes across the Group covering all elements of pay. In addition, as commodities enabled us to deliver a robust financial performance in 2019. This part of the broader employee engagement at board level, we visited a range of resulted in a combined adjusted earnings and cash flow result of above target. operational sites across three continents, and held our 2019 employee AGM in Significant adjustments related to the unbudgeted early cancellation of a Montreal. These are valuable channels of engagement between the Board, the power purchase agreement at Escondida, which was replaced with a lower cost Committee and our employees on a broad range of topics including pay. As we and carbon footprint energy source, and an increase in remediation provisions review our Policy this year, we will remain sensitive to and cognisant of this for water management at Kennecott in the US. During the year, iron ore broader context to ensure the Policy we put forward in 2021 continues to have shipments were impacted by several tropical cyclones across north West all the desired attributes of fairness, transparency, simplicity, proportionality, Australia which significantly exceeded previous experience and 2019 plan alignment to culture and a robust risk adjustment framework. assumptions. Using the standard methodology for calculating the weather adjustment (which has in the past resulted in both upward and downward The CEO pay ratio of 66:1 is primarily driven by the percentage of total adjustments), the outcome would have been 56%. The Committee agreed that remuneration for the Chief Executive that is performance related and reflects the impact of these weather events could not have been further mitigated in the slightly higher STIP pay-out and the estimated 24 percentage point 2019. Nevertheless, in view of the rising frequency of extreme weather events increase in the LTIP vesting outcome for 2019 compared to 2018. As most of and the need to increase resilience to climate change, the Committee exercised the variable compensation for the Chief Executive is delivered in company downward discretion, reducing the post-adjustment outcome to 51%. shares, the ratio is also impacted by changes in the share price which provides alignment to the shareholder experience. The Committee continues to be From a shareholder perspective, over the five-year performance period of the mindful of the relationship between executive remuneration and that of our 2015 performance share award (PSA), Rio Tinto outperformed both the EMIX broader employee population. Global Mining Index and the MSCI World Index. Over the same period, the share price for Rio Tinto plc increased by 50% and for Rio Tinto Limited by over 70%, During 2019 and as part of the 2020 remuneration review, gender pay reaching its highest ever level during 2019. The estimated vesting for the 2015 continued to be a key focus at all levels of the organisation. The Committee award, combining the two TSR and EBIT margin portions is 67.9% of maximum. monitors both equal pay and the gender pay gap across our employee This includes an estimate for the EBIT margin measure as the reported data for all population, and maintains a focus on the gender diversity in senior management the comparator companies is not currently available. roles as a means to address the gender pay gap across the Group. We are pleased with the broader initiatives being implemented across the Group in this In the context of the Group’s overall performance during the five-year area and note that the Group-wide equal pay and gender pay gaps remain at performance period and the shareholder experience over that timeframe, the less than 2% and 1% respectively. Further details, together with the steps we Committee concluded that the vesting of awards was justified. Accordingly, the are taking in this area, are provided on page 69 of this report. portion of the award relating to TSR will vest on 27 February 2020. The Committee will make a final determination of the relative improvement in EBIT As always, I welcome shareholder feedback and comments on the 2019 margin measure when the final EBIT margin performance of the comparator Remuneration report. I look forward to engaging further with shareholders group companies becomes available in May 2020. If applicable, this portion of during the course of 2020 for the review of our next Policy. the award will vest on 31 May 2020. Yours sincerely 2020 remuneration decisions With effect from 1 March 2020, the annual base salary for Executive Directors has been increased by 2.11%. This is in line with the UK consumer price index (CPI) and below the salary increase budget applied to UK employees which was in excess of 3%. The increases reflected country CPI for half of the Executive Sam Laidlaw Committee, and a modest market adjustment for the remaining half. The Remuneration Committee Chairman approach used by the Committee to assess the level and appropriateness of 26 February 2020 these increases was consistent with that applied to the broader employee population taking account of, among other factors, an assessment of market competitiveness against relevant peer companies and pay equity, in particular gender pay, considerations. Annual report 2019 | riotinto.com 111

Governance Annual statement by the Remuneration Committee Chairman continued About our reporting Our regulatory responsibilities impact the volume of information we provide, As our shares are listed on both the Australian and as well as the complexity. In Australia, we need to report on a wider group of London Stock Exchanges, the information provided executives, as described in the following paragraph. In addition, as set out in our visual below, the two reporting regimes follow different methodologies for within our Remuneration report must comply with calculating remuneration. the reporting requirements of both countries. In the UK, we need to report remuneration for the Board, including the Executive Directors. The Australian legislation requires disclosures in respect of “key management personnel”, being those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel are, in addition to the directors, all members of the Executive Committee. Throughout this Remuneration report, the members of the Executive Committee are collectively referred to as “executives”. They are listed on page 86, with details of the positions held during the year and dates of appointment to those roles. Structure of our Remuneration report The differing approaches explained We have included an At a glance section that summarises key information As well as the difference in methodology for measuring remuneration, in one place, resulting in our Remuneration report being organised into the there are also key differences in how remuneration is reported in the UK following parts: and Australia. Annual statement by the Remuneration Committee Chairman 110 UK –– For reporting purposes, remuneration is divided into fixed and Remuneration At a glance including a summary of the Remuneration 113 variable elements. Policy –– We report remuneration in the currency it is paid, eg, where a UK executive is Implementation report, which shows how the Policy has been 116 paid in pound sterling, remuneration is reported in pound sterling. applied as required under the legislation including Tables 1a-3a incorporating additional disclosures required under the Australia Australian regulations –– For reporting purposes, remuneration is divided into short and long term elements. Shareholder voting –– All remuneration is reported in US dollars, so using the previous example, As required under UK legislation, the full Remuneration Policy section of the the UK executives’ remuneration would be converted to US dollars using the 2017 report was subject to a binding vote at our 2018 AGMs on 11 April 2018 in average exchange rate for the financial year (except STIP, which is converted London, and 2 May 2018 in Melbourne. It passed with votes for the Policy of at the year end exchange rate). 95.6%, and will apply for three years, until a new Policy is presented at the 2021 –– The visual below summarises the elements of each component of AGMs. A summary of our Policy is provided in this report, and the full Policy can be remuneration, as well as the significant differences in the approaches found at: https://www.riotinto.com/invest/reports/annual-report. to measurement. The Implementation report, together with the annual statement by the UK Australia Remuneration Committee Chairman, is subject to an advisory vote each year as �i�� ort�t�rm required by UK legislation. Under Australian legislation, the Remuneration report Base salary Base salary as a whole is subject to an advisory vote. All remuneration-related resolutions will be voted on at the AGMs as Joint Decision Matters by Rio Tinto plc and Benets STIP – cash element Rio Tinto Limited shareholders. Pension Cash benets �� o� t�� n�ion contri��tion �n� ��m�nt in �i�� o� ��n�ion ��i� ��rin� t�� r. Non-monetary benets ��ri�� on��t�rm STIP – cash element STIP - deferred share element �� on t�� morti�� ir �� o� ��rr�� r�� t t�� tim� o� �r�nt. STIP – deferred share element LTIP LTIP ��r�� t �oint o� ��tin�. �� on t�� morti�� ir �� o� t�� t tim� o� �r�nt. Pension and superannuation �cco�ntin� ��i�. �ot�� r�m�n�r�tion 112 Annual report 2019 | riotinto.com

Remuneration at a glance Base salary Short-Term Incentive Plan Long-Term Incentive Plan Share ownership guidelines This section sets out key elements of our Policy, performance and remuneration outcomes for 2019. Remuneration Policy: at a glance Our Remuneration Policy applies to our Executive and non-executive directors and to the Chairman. In accordance with Australian law, it also sets out the broad policy principles that apply to members of the Executive Committee who are not directors. Our full Policy as approved at our 2018 AGMs can be found at: https:// www.riotinto.com/invest/reports/annual-report. Our five priorities: Safety People Cash Partnerships Growth Governance Element Purpose and link to strategy Operation and opportunity Base salary We pay competitive salaries to hire, –– Base salaries are reviewed annually by the Committee. motivate and retain highly –– Any increase is normally aligned with the wider workforce. competent people. –– Maximum individual increase of 9%, or inflation if higher, per annum. –– An increase above the maximum for executives who are not directors may be made in the event of internal promotion or increase in responsibility or where the executive’s base salary is significantly below market positioning. Pension or We provide locally competitive Rio Tinto may choose to offer: superannuation post-employment benefits in a –– Participation in a pension plan, superannuation fund; or cost-efficient manner in order to –– Cash payments in lieu of pension contributions. hire and retain. –– For appointments made from 1 June 2018, the maximum level of company contribution to an Executive Director’s scheme annually is 25% of base salary. –– For appointments prior to 1 June 2018 the maximum was 35%. Other benefits We provide competitive benefits in a –– Executives are eligible to receive benefits which may include healthcare, allowance for cost-efficient manner in order to professional tax services, company car or car allowance, and international relocation hire and retain. allowance and benefits. Short-Term Incentive STIP focuses participants on –– At least 50% of the measures will relate to financial performance and a significant Plan (STIP) including achieving demanding annual component will relate to safety performance. Bonus Deferral performance goals, which are based –– 25% of maximum is awarded for threshold performance; 50% for target; and 100% for Award (BDA) on the Group’s five priorities, in outstanding. Between threshold and target, and between target and outstanding, the pursuit of the creation of sustainable award is pro-rated on a straight-line basis. In the case of the Executive Directors, the shareholder value. We demand that percentage award is multiplied by 1.2 subject to the 200% cap. sustainable business practices are –– The Committee retains the right to exercise discretion, both upwards and downwards, to adhered to, particularly in the ensure that the level of award payable is appropriate. context of safety. –– 50% of the STIP is delivered in shares that are deferred for three years as a BDA with the remainder of the STIP delivered in cash with no deferral. –– Maximum opportunity is capped at 200% of salary for each executive. –– Malus, claw‑back and suspension provisions apply to the STIP and BDA. Performance Share PSA are designed to provide a simple All executives are eligible to participate in the LTIP. Performance is measured against TSR Awards (PSA) under and transparent mechanism for relative to the EMIX Global Mining Index (50%) and to the MSCI World Index (50%). the Long-Term aligning executive reward with the –– For PSAs granted from 2013 until 2017, there was an additional performance condition of Incentive Plan (LTIP) execution of an effective business improvement in EBIT margin relative to the global mining comparators. This condition strategy that delivers superior is not applicable on awards granted in 2018 and beyond. long-term shareholder returns. –– Awards have a maximum face value of 438% of base salary (excluding dividend equivalents). –– The awards have an expected value of approximately 50% of face value. –– The maximum expected value of PSA is 219% of base salary (ie 438% x 50%). The maximum threshold value is 98.6% of base salary (ie 438% x 22.5%). –– Award levels are set to incentivise long-term performance and to contribute towards the competitiveness of the overall remuneration package. –– How performance is generated is as important as what level of performance is delivered. Before vesting, the Committee will satisfy itself that relative TSR is an appropriate measure of the underlying performance of the business, and may adjust vesting accordingly. –– Malus, claw‑back and suspension provisions apply to LTIP awards. Annual report 2019 | riotinto.com 113

Governance Element Purpose and link to strategy Operation and opportunity Shareholding Aligning executives’ interests with –– Over a five-year period, executives should aim to reach a share ownership in Rio Tinto guidelines those of shareholders through the shares equivalent in value to: requirement to build up and maintain –– Chief Executive: four times base salary a material shareholding in the company. –– Other Executives: three times base salary –– From 1 January 2020, Executive Directors will be expected to retain a holding for two years after leaving the Group. Termination policy Appropriately reward eligible and –– Notice period is normally 12 months, during which executives will receive their base ineligible leavers. salary, STIP and other benefits. –– An eligible leaver may be awarded a discretionary STIP award on a pro rata basis, payable on the normal STIP payment date in cash. –– Any unvested BDA from prior year awards will normally vest on the scheduled vesting date. –– Unvested LTIPs will normally be retained by eligible leavers and vest on the scheduled vesting date, subject to performance conditions where applicable. –– PSA and Management Share Awards (MSA), where applicable, will be reduced where the executive leaves within 36 months of grant. –– PSA granted prior to 2018 are subject to malus and claw‑back following termination, and all LTIP awards granted from 2018 are subject to malus, claw‑back and suspension following termination. Malus, claw‑back and Enables the Committee to use its Under both the malus and claw‑back provisions, where the Committee determines that suspension discretion to reduce awards where an exceptional circumstance has occurred, it may at its discretion, reduce the number of actions could lead to reputational shares to be received on vesting of an award, or, for a period of two years after the vesting damage to the Group. of an award, the Committee can claw‑back value from a participant. The circumstances under which the Committee exercises such discretion may include, inter alia: –– fraud or misconduct; –– an error in the Group’s financial statements which requires a material downward restatement; –– personal performance of a participant, of their product group or of the Group does not justify vesting or where the participant’s conduct or performance has been in breach of their employment contract, any laws, rules or codes of conduct applicable to them or the standards reasonably expected of a person in their position; –– misstatement or misrepresentation of performance; –– where any team, business area, member of the Group or profit centre in which the participant works or worked has been found guilty in connection with any regulatory investigation or has been in breach of any laws, rules or codes of conduct applicable to it or the standards reasonably expected of it; or –– a catastrophic safety or environmental event. Under the suspension provisions, the Committee may suspend the vesting of an award (for up to five years) until the outcome of any internal or external investigation is concluded and may then reduce or lapse the participant’s award based on the outcome of that investigation. Note that where suspension applies, the 24-month claw‑back period will not extend beyond the period commencing from the original vesting date. Remuneration mix We provide an appropriate balance For the Chief Executive: between fixed and variable –– 83% of the maximum remuneration and 55% of threshold remuneration is components with a focus on performance-based (STIP and LTIP). long-term variable pay which reflects –– 70% of maximum performance-based pay and 44% of threshold performance-based the long-term nature of the business. pay is delivered as deferred shares. For the other Executives: –– 82% of the maximum remuneration and 52% of threshold remuneration is performance-based (STIP and LTIP). –– 69% of maximum performance-based pay and 43% of threshold performance-based pay is delivered as deferred shares. 114 Annual report 2019 | riotinto.com

Remuneration report / Remuneration at a glance 2019 performance 2019 remuneration outcomes STIP Executive Director remuneration (£’000) 70% of the STIP award for executives is determined based on safety (20%) and The charts below set out the maximum and actual executive remuneration, financial performance (50%). as calculated under the UK regulations. As explained on page 112, there are differences in both reporting and methodology for measuring remuneration Safety under the Australian regulations. Safety performance is assessed in three areas: –– All injury frequency rate (AIFR) �ean��a�t�en �ac�ue� –– Binary fatality measure ��i�� c�ti�� –– Implementation of safety maturity model (SMM) 2019 Actual remuneration (percentage of maximum) For 2019, the total assessment for the Group’s safety performance was above �� Governance target, at 64% of maximum. �� .�� .�� Fixed STIP LTIP �� Financial Two measures are used to assess financial performance, with both unflexed 209 Threshold remuneration (percentage of maximum) and flexed targets (adjusted for commodity prices) for each measure. We also �� adjust for exceptional and non-controllable items. Overall, the net impact of all �� .�� .�� adjustments was a Group financial STIP outcome of 51% of maximum. Actual Fixed STIP LTIP �� performance against threshold, target, and outstanding performance for each measure is set out in the charts below: 209 Maximum remuneration �� Underlying earnings target range (threshold to outstanding) – US$ Fixed STIP LTIP �� .��n ��.��n Target: 9.3bn Unexed �a�o� �tau��ol� �.��n ��.��n Chief Financial Ofcer Target: 12.1bn Flexed 2019 Actual remuneration (percentage of maximum) �ct�� .��n £1,009 £873 (100%) (56.3%) STIP free cash ow target range (threshold to outstanding) – US$ Fixed STIP £1,882 �.��n ��.��n Target: 11.2bn Unexed 209 Threshold remuneration (percentage of maximum) £1,009 £388 ��.��n ��.��n (100%) (25.0%) Target: 15.2bn Flexed Fixed STIP £1,397 �ct�� .��n 209 Maximum remuneration LTIP £1,009 £1,550 Rio Tinto outperformed against the EMIX Global Mining Index and the MSCI Fixed STIP £2,559 World Index, resulting in a vesting of 45.6% under these two components, out of a maximum of 66.7%. This outcome reflects the design intention that Share ownership requirements executives should not unduly benefit from windfall gains when commodity prices are high, nor suffer when prices are low. Jean-Sébastien Jacques meets his share ownership requirement and Jakob Stausholm is on target to reach his share ownership requirements within five The estimated performance against the EBIT margin measure is that Rio Tinto years of appointment as an Executive Director. is ranked 4th against a comparator group of 11, which would result in a vesting of 22.3% out of a maximum 33.3% for this measure. The estimated performance �ean��a�t�en �ac�ue� will be recalculated following the vesting of the EBIT margin measure in May 2020. ��oint�� ro�� r� Total shareholder return �io �into �ro�� .�� o�� inin� �n�� ar�et ��0� �� or�� n�� 150 �a�o� �tau��ol� 100 ��oint�� t�m��r �� ro�� r� �� .�� 50 �� .�� ar�et ��0� 0 2014 2015 2016 2017 2018 209 Annual report 2019 | riotinto.com 115

Governance Implementation report This Implementation report is presented How we work The Group Company Secretary attends meetings as secretary to the to shareholders for approval at our AGMs. Committee. The Chief Executive, Group Executive Human Resources and Head It outlines how our Remuneration Policy of Reward attend appropriate parts of the meetings at the invitation of the Chairman of the Committee. No individual is in attendance during discussions was implemented in 2019, and how we about their own remuneration. intend to operate it in 2020. Independent advisers Introduction Until October 2019, the Committee engaged Willis Towers Watson as The single total figure of remuneration tables on page 118 shows remuneration independent advisers; from October 2019, the Committee appointed Deloitte for our Executive Directors, gross of tax and in the relevant currency of award or as independent advisers, following a competitive tender. Willis Towers Watson payment. and Deloitte were the only remuneration consultants that provided advice to the Committee during 2019. In table 1a on page 130, we report information regarding executives in accordance with Australian statutory disclosure requirements. The information The Committee has a protocol for engaging and working with remuneration is shown gross of tax and in US dollars. The remuneration details in table 1a consultants to ensure that “remuneration recommendations” (being advice include accounting values relating to various parts of the remuneration relating to the elements of remuneration for key management personnel, as package, most notably PSAs granted under the Group’s LTIP arrangements, defined under the Australian Corporations Act) are made free from undue and require a different methodology for calculating the pension value. The influence by key management personnel to whom they may relate. We figures in the single total figure of remuneration table on page 118 are therefore monitored compliance with these requirements throughout 2019. Willis Towers not directly comparable with those in table 1a. Where applicable, amounts have Watson and Deloitte gave declarations to the effect that any remuneration been converted using the relevant average exchange rates included in the recommendations were made free from undue influence by key management notes to table 1a. personnel to whom they related, and the Board has received assurance from the Committee and is satisfied that this was the case. In table 1b on page 132, we report the remuneration of the Chairman and the non-executive directors. Willis Towers Watson and Deloitte are members of the Remuneration Consultants’ Group, and voluntarily operate under its Code of Conduct (the Certain information contained within the Remuneration report is audited, as Code) in relation to executive remuneration consulting in the UK. The Code is outlined on page 138. based upon principles of transparency, integrity, objectivity, competence, due care and confidentiality. Willis Towers Watson and Deloitte have confirmed Remuneration Committee responsibilities that they adhered to the Code throughout 2019 for all remuneration services The Committee’s responsibilities are set out in our terms of reference, which we provided to Rio Tinto. The Code is available online at review each year and are published in the corporate governance section of the remunerationconsultantsgroup.com. Rio Tinto website. Our responsibilities include: –– determining the Group’s remuneration structure and policies, and assessing The Committee are satisfied that the Willis Towers Watson and Deloitte their cost, including pension and superannuation arrangements for engagement partners and advisory teams that provided remuneration advice executives; to the Committee, do not have any connections with the company or individual –– determining the mix and use of short and long term incentive plans directors that may impair their independence. During 2019, Willis Towers for executives; Watson and Deloitte’s services also included attending Committee meetings –– overseeing the operation of the Group’s short and long term incentive plans and giving advice in relation to management proposals. Willis Towers Watson for executives, including approving awards, setting performance criteria, and was paid US$160,131 (2018: US$259,919) and Deloitte was paid US$53,164 for determining any vesting; these services. Fees were charged on the basis of time and expenses incurred. –– determining contractual notice periods and termination commitments, and setting retention and termination arrangements for executives; In addition to remuneration recommendations, Willis Towers Watson also –– determining awards under the Group’s all-employee share plan; provided general and technical executive remuneration services. These –– monitoring gender pay; and services included advice about remuneration of employees other than key –– determining the terms of service upon appointment for the chairman and management personnel. We received other services and publications relating executives, and any subsequent changes. to remuneration data from a range of sources. During the year Deloitte also provided internal audit, tax compliance and other non-audit advisory services. We consider the level of pay and conditions for all employees across the Group These services were provided under separate engagement terms and the when determining executive remuneration. Committee is satisfied that there were no conflicts of interest. Committee membership The members of the Committee during the year and to the date of this report were: Sam Laidlaw (Chairman) Megan Clark Ann Godbehere (to 9 May 2019) Moya Greene (to 26 June 2019) Simon McKeon (from 1 January 2019) Simon Thompson 116 Annual report 2019 | riotinto.com

Remuneration report / Implementation report How the Committee spent its time in 2019 Share ownership policy for executives During 2019, the Committee met four times. We fulfilled our responsibilities The Group understands the importance of aligning executives’ interests as set out in our terms of reference. with those of shareholders and expects executives to build up and maintain a material shareholding. Executives should aim to reach a share ownership Our work in 2019 and in the early part of 2020 included: (defined below) in Rio Tinto shares equivalent in value to: –– reviewing and determining any base salary adjustments for executives; Share ownership requirement –– reviewing and determining “threshold”, “target” and “outstanding” targets for the safety and financial components of the 2019 STIP; Chief Executive 4 x base salary –– reviewing actual performance against the targets for the 2019 STIP and Other Executives 3 x base salary assessing applicable adjustments; –– reviewing and determining the final EBIT margin outcome for PSA with a The Committee expects executives to build up their shareholding over a performance period ending 31 December 2018; five-year period by holding shares that vest under the LTIPs. We may accept –– reviewing and determining the total shareholder return (TSR) outcome and longer periods for new hires, given the five-year vesting periods for PSA. Governance the estimated EBIT margin outcome for PSA with a performance period ending 31 December 2019; Shares are treated as “owned” if they are not subject to restriction, which includes –– reviewing and determining LTIP grants for executives in 2020; shares directly held by an executive and any shares where there is a beneficial –– determining the terms of appointment for the new Group Executive, Group interest. A beneficial interest includes any shares for which an executive receives General Counsel, Barbara Levi; the benefit of ownership (such as a right to receive dividends) without directly –– determining the terms of retirement for the outgoing Group Executive, owning the shares. Given its mandatory nature and the absence of performance Health Safety & Environment, Joanne Farrell, and the outgoing Group conditions, a value for unvested BDA is included with a 50% discount for the Executive, Group General Counsel, Philip Richards; likely effects of taxation. –– acting in accordance with the terms of the deferral agreement for the former Chief Executive, Sam Walsh and other impacted executives; We also have shareholding requirements for senior management who are not –– reviewing the strategy and annual reports on the Group’s global benefit members of the Executive Committee. plans; –– considering the Group’s response to the changes in UK legislation, including From 1 January 2020, Executive Directors will be expected to continue to meet the UK Corporate Governance Code, in respect of executive remuneration; the share ownership policy (or if the holding requirement is not met at this date, –– reviewing progress towards the Group’s share ownership requirements the relevant holding at the time) for two years after stepping down from the –– determining the 2020 STIP targets; Board. When considered alongside the existing leaver provisions for share –– appointing Deloitte as the new independent advisers to the Committee; and awards, the Committee believes that the policy will ensure that executives will –– preparing the Remuneration report (including this Implementation report). remain aligned with shareholders for an extended period after ceasing employment. Performance review process for executives Rio Tinto conducts annual performance reviews for all its executives. We set out details of executives’ beneficial interests in Rio Tinto shares in table Our key objectives for the performance review process are to: 2 on page 133. Awards of shares under long term incentive plans are shown in –– improve organisational effectiveness by creating alignment between the tables 3 and 3a on pages 134 to 137. executive’s objectives and Rio Tinto’s strategy; and –– provide a consistent, transparent and balanced approach to measure, Executives’ external and other appointments recognise and reward executive performance. Our executives may be invited to become non-executive directors of other companies. Our policy is that such appointments can bring benefits to the Group The Chief Executive conducts the review for members of the Executive by broadening the experience and knowledge of executives. Therefore where Committee, and recommends the performance outcomes to the Committee. there is no likelihood of a conflict of interest, the Board will normally consent. The Chief Executive’s performance is assessed by the Chairman of the Board. Our policy limits each executive’s external appointment to one FTSE 100 Performance reviews for all executives took place in 2019 or early 2020. company directorship or equivalent. The executive typically retains any fees earned. Neither of the Executive Directors currently has an external directorship. UK Corporate Governance Code During the year and when determining Executive Director remuneration the Committee took into account the relevant requirements of the UK Corporate Governance Code. As set out throughout the Remuneration report we consider that our arrangements are clear, simple, predictable, proportionate and aligned to our culture. The Committee also takes steps to ensure that risks associated with excessive rewards are identified and mitigated. Annual report 2019 | riotinto.com 117

Governance Implementation report continued Base salary Short-Term Incentive Plan Long-Term Incentive Plan Single total figure of remuneration (£’000) Value of Bonus – STIP payment LTIP awards vesting Single Base Total Deferred Face Share price Total total % Executive Director (£’000) Year salary Benefits Pension fixed Cash shares value appreciation variable figure change Jean-Sébastien Jacques 2019 1,133 71 280 1,484 850 851 1,984 627 4,312 5,796 27.4% (Chief Executive) 2018 1,105 68 274 1,447 778 778 1,114 434 3,104 4,551 - 2019 775 62 172 1,009 436 437 0 0 873 1,882 86.9% Jakob Stausholm(a) (Chief Financial Officer) 2018 258 440 57 755 126 126 0 0 252 1,007 - (a) The details for 2018 reflect remuneration for the period 3 September to 31 December 2018 At the end of the performance period, LTIP values are based on estimates of both the number of shares that will ultimately vest, as well as share price. These estimates are restated in the following year, once actual values are known. See LTIP section for further detail. �ean��a��en �ac��e� �a�o� ��a��o�� e�� Percentage of total remuneration earned as: ��.�� on��r�orm�nc� r��t�� r�orm�nc� r��t�� Base salary, STIP LTIP �� .�� .�� .�� 2018 �� benets and pension ��.�� Base salary (2019) Consistent with prior practice, annual salary increases for executives Annual base Annual base Annual base salary at salary at Total base salary at are generally in line with the base pay increases applying to the broader 1 January 1 March salary paid 1 March employee population. Salaries are reviewed with effect from 1 March. 2019 2019 in 2019 2020 % Executive Director £’000 £’000 £’000 £’000 change Jean-Sébastien Jacques 1,110 1,138 1,133 1,162 2.11 Jakob Stausholm 775 775 775 791 2.11 Benefits (2019) Includes healthcare, allowance for professional tax compliance services, car and fuel allowances, and non-performance based awards under the all-employee share plans. Pension Pension benefits can either be paid as contributions to Rio Tinto’s company pension fund or as a cash allowance. In line with the applicable policy, cash allowances may be reduced by the value of the employer’s national insurance payable on cash allowances. In addition to the payments set out in the accompanying table, under Australian Superannuation Guarantee legislation the company pays superannuation contributions to an Australian superannuation fund in respect of Jean-Sébastien Jacques’ working days in Australia. The pound sterling equivalent of these superannuation contributions is offset against the cash allowance paid to Jean-Sébastien Jacques. Pension contributions paid to the Cash in lieu of pension Rio Tinto pension fund contributions paid Total Pension provision as Executive Director £’000 £’000 £’000 percentage of base pay Jean-Sébastien Jacques 10 270 280 24.8% Jakob Stausholm 12 160 172 22.2% 118 Annual report 2019 | riotinto.com

Remuneration report / Implementation report STIP Outcome for 2019 For an individual executive’s STIP outcome, the weighted safety, financial and individual STIP result are added to determine the total result. The resultant STIP is delivered equally in cash and deferred shares. Weighted result Delivered in: Percentage of: Total STIP Deferred Maximum Maximum Safety Financial Individual Apply 1.2 (% of Base pay Total STIP Cash shares STIP STIP Target STIP Executive Director (20%) (50%) (30%) Total multiplier base pay) £’000 £’000 £’000 £’000 awarded forfeited awarded Jean-Sébastien Jacques 12.8 25.5 24.0 62.3 74.8 149.5 1,138 1,701 850 851 74.8% 25.2% 124.6% Jakob Governance Stausholm 12.8 25.5 18.0 56.3 56.3 112.6 775 873 436 437 56.3% 43.7% 112.6% Maximum STIP is capped at 200% of base salary with awards of: –– 25% of maximum for threshold –– 50% of maximum for target –– 100% of maximum for outstanding performance –– In the case of the Chief Executive, the percentage award is multiplied by 1.2, subject to a 200% cap, in accordance with his contractual terms and the 2018 Remuneration Policy. Under the recruitment terms for the Chief Financial Officer, the percentage award is not multiplied by 1.2. Half of the STIP award will be paid in cash in March 2020, and the remainder will be delievered in deferred shares as a BDA, vesting in December 2022. If the executive resigns or is dismissed for misconduct, or for any other reason that the Committee decides, the deferred shares will lapse. Safety and financial measures for 2019 Performance categories Weighting Commentary Safety 20% Our goal is zero harm, including, above all, the elimination of workplace fatalities, so we consider safety as a key performance measure. We include Group safety measures alongside Group financial measures in the STIP for Executive Directors and other executives. The STIP measures for Product Group Chief Executive Officers (PGCEOs) include product group financial and safety measures in addition to Group financial measures. Safety measures for all executives in 2019 included a standalone binary fatality measure (40%), with the remainder split between all injury frequency rate (AIFR) (30%) and measures relating to our safety maturity model (SMM) (30%). Financial 50% Our current financial measures are based on KPIs that are used in managing the business. The first, underlying earnings, gives insight to cost management, production growth and performance efficiency on a like-for-like basis. This reflects the fact that Rio Tinto is focused on reducing operating costs, increasing productivity and generating maximum revenue from each of our assets. A reconciliation of net earnings/(losses) to underlying earnings is provided in note 2 (Operating segments) on page 167. The second, STIP free cash flow, is also an important measure to the business. It demonstrates how we convert underlying earnings to cash, and provides further insight into how we are managing costs and increasing efficiency and productivity. STIP free cash flow comprises net cash generated from operating activities, less purchases of property, plant and equipment and intangible assets, plus sales of property, plant and equipment and intangible assets, adjusted to exclude dividends paid to holders of non-controlling interests in subsidiaries and development capital expenditure. When we measure financial performance against the annual plan, half is measured against the original plan, and half is “flexed” to exclude factors that are outside management’s control, such as the impact of fluctuations in exchange rates, or quoted metal and other prices. “Flexed” financial targets are typically higher than the “unflexed” targets set by the Board when commodity prices rise, as was the case in 2019, and lower when commodity prices fall. Actual underlying earnings and STIP free cash flow results are compared against equally weighted “flexed” and “unflexed” targets. Annual report 2019 | riotinto.com 119

Governance Implementation report continued Actual performance Calculation of total STIP award The following tables summarise the calculation of STIP award for the Executive Directors. Below threshold (25% relative performance) payout is zero on the Group safety and financial measures. Group safety measures Weight Result (out of (% of Weighted 100%) 2019 performance maximum) result Commentary Maximum In 2019 there were zero fatalities across the Group. �c��a� � Performance against the binary fatality measure was therefore Binary fatality 8.0 ��im�m � 100.0 8.0 maximum for all executives. Threshold Target Maximum AIFR target performance was set at 0.38 with threshold at 0.42 and maximum at 0.30. In line with normal procedures, the Committee All injury frequency rate �� sought guidance from the Sustainability Committee on safety (AIFR) 6.0 �.�� 25.0 1.5 performance for 2019. Injury rates as measured by AIFR remained similar to 2018, with the AIFR in 2019 at 0.42, compared to 0.44 in 2018. Safety maturity model �� (SMM) 6.0 ��r��t��.� 55.0 3.3 In 2019 the SMM framework was introduced to include a more holistic inclusion of our safety management system. Target performance was set at 4.4 with threshold at 3.4 and maximum at 5.7. All sites showed strong improvement over their baseline assessments, particularly in leadership and engagement. We saw an improvement across the Group to an average maturity of 4.5 (evolving) from a baseline of 3.4 Total group safety 20.0 64.0 12.8 (basic). See page 63 for more detail on the measurement of SMM. Group financial measures Weight Result (out of (% of Weighted 100%) 2019 performance ($bn) maximum) result Commentary on financial measures Threshold Target Maximum The “flexed” earnings and “flexed” cash flow results were below target, and the “unflexed” earnings and “unflexed” cash flow results were between target and outstanding. This resulted in an overall �� adjusted financial outcome of 51% of maximum compared to the Underlying earnings 12.5 �.� 78.0 9.8 unadjusted financial outcome of 42% of maximum. The performance targets for financial measures are disclosed on page 115. The most significant adjustments related to the early cancellation of Underlying earnings – �� a power purchase agreement at Escondida, which was replaced with flexed 12.5 ��.� 33.0 4.0 a lower cost and carbon footprint energy source, and an increase in remediation provisions for water management at Kennecott in the US. During the year, iron ore shipments were impacted by several tropical cyclones across northern Western Australia which significantly exceeded prior experience and 2019 plan assumptions. Using the �� standard methodology for calculating the weather adjustment (which STIP free cash flow 12.5 ��.� 70.0 8.8 has in the past resulted in both upward and downward adjustments), the outcome would have been 56%. The Committee agreed that the impact of these weather events could not have been further mitigated in 2019. Nevertheless, in view of the rising frequency of STIP free cash flow – �� extreme weather events and the need to increase resilience to flexed 12.5 ��.� 25.0 3.0 climate change, the Committee exercised downward discretion, reducing the post-adjustment outcome to 51%. The Committee considers the final adjusted result to reflect the appropriate balance between underlying business performance, a strong market for key commodities and recognition of events Total group financial 50.0 51.0 25.5 outside of management’s control. Individual objectives Result Weight (out (% of Weighted of 100%) maximum) result Commentary Jean-Sébastien Jacques 30.0 80.0 24.0 Refer to page 121. Jakob Stausholm 30.0 60.0 18.0 Refer to page 121. 120 Annual report 2019 | riotinto.com

Remuneration report / Implementation report Commentary on individual performance against personal objectives. Jean-Sébastien Jacques Jakob Stausholm Safety –– Zero fatalities during the year. –– Zero fatalities during the year. –– Reduction in Tier 1 process safety and environmental –– Demonstrated leadership and commitment to the safety incidents and further strengthening the Group’s critical risk agenda through visits to multiple sites. management process. –– Strong leadership of climate change strategy, including preparation of the TCFD2 Report and revised emissions- reduction targets for 2030. –– Construction and commissioning of Elysis pilot plant to test new technology for decarbonisation of the aluminium smelting Governance process. –– Strong leadership response to the Brumadinho disaster in Brazil, initiating an in-depth audit of tailing management facilities worldwide, industry-leading disclosure, and strong advocacy for higher industry-wide standards through the ICMM. People –– Improved employee engagement, achieving positive eNPS –– Contributed to improved employee engagement in the scores for the first time, and eSAT scores at benchmark levels. achievement of positive eNPS scores for the first time, Yammer participation across the Group is best in class at > and eSAT scores at benchmark levels. 30,000 users. –– Actively led succession planning and leadership –– Recognition through employee engagement survey of development across the Finance function. continued improvement in wellbeing across the Group. –– Progress made towards diversity and gender targets, –– Strong leadership of our Purpose (‘Pioneering Human but further improvement needed. Progress’) and values, enhanced by the roll-out of a critical –– Clear demonstration of personal commitment to ‘The way Behaviours framework across the organisation. we work’ and our ethics and integrity priorities. –– Improved Executive Committee succession planning and –– Embedded the Group’s Operating Model and continued leadership development, including the recruitment of several to pursue efficencies. high-potential, diverse, senior operational and functional leaders. –– Embedded the Group’s Operating Model, including Centres of Excellence. Cash –– TSR of 41%, reflecting record average annual share price –– Maintained our strong balance sheet and improved our performance. credit rating. –– Good shareholder understanding of performance and strategic –– Strong engagement across the investor portfolio, with priorities confirmed by third party investor survey. improvement in risk exposure to enhance our economic –– M2M productivity target missed (for a variety of reasons), but interests. management of asset integrity strengthened to drive future –– Achieved working capital targets for 2019. performance. –– Developed management information system enhancing –– Led strong response to operational challenges in Iron Ore visibility of data in the organisation. in H1. –– Commercial activities developing in accordance with plan to support future productivity objectives. Partnership –– Strong engagement with key stakeholders in Australia, –– Continued to strengthen critical relationships with Canada, China and the USA. shareholders. –– Launched a range of innovative partnerships, including with –– Led our investor relations engagement strategies to FutureSkills in Australia (technical education), and with Baowu reinforce our presence in key markets. and Tsinghua University in China (climate change). –– Maintained strong ranking on reputation indices, including Alva, IPSOS MORI and Alva ESG. Growth –– Good project management performance at Koodaideri –– Contribution to growth pipeline, primarily through the (Australia) and Resolution Shaft 9 (USA). Cost overrun and Evaluation Committee and Investment Committee delay at Oyu Tolgoi in Mongolia largely due to unforeseeable processes, with a clear focus on Tier 1 potential projects. geotechnical conditions. Delay at Zulti South in South Africa as a result of community unrest. –– Good progress with the Winu copper deposit in Australia, including fast-track process to accelerate appraisal. –– Ventures presented several options for inorganic growth, but none considered to be value-accretive on a risk-adjusted basis. Annual report 2019 | riotinto.com 121

Governance Implementation report continued LTIP PSAs granted in 2015 were based on three performance conditions, all measured over a five-year performance period: –– TSR relative to the EMIX Global Mining Index – one-third –– TSR relative to the MSCI World Index – one-third –– Improvements in EBIT margin relative to global mining comparators – one-third Performance against the improvement in the EBIT margin measure cannot be finalised until May in the year following the end of the five-year performance period. This is due to the reporting timeframes for companies in the EBIT margin comparator group and the time taken for the external source (currently S&P Capital IQ) to report the relevant data. Accordingly, the value of the shares vesting included in the single total figure of remuneration table for 2019 is an estimate, which is then adjusted once the actual figures are known. The original estimate is based on: –– the TSR portion of the award (with estimated associated dividend equivalent shares) which vest in February following the end of the five-year performance period –– an estimate of vesting of the EBIT margin portion of the award (with estimated associated dividend equivalent shares) based on latest available EBIT margin ranking as at the date of this report –– the average share prices for Rio Tinto plc and Rio Tinto Limited over the last quarter of the relevant year, as the market value price of shares at the date on which all shares vest is not ascertainable by the date on which the Remuneration report is approved by the directors The actual values associated with the LTIP vesting is then recalculated following the vesting of the EBIT margin portion of the award at the end of the following May based on the actual share prices on the date of vesting. The estimated LTIP values are then restated, if applicable, in the following Remuneration report, as shown below: Estimated Actual Year Shares, included EBIT margin (including LTIP EBIT margin LTIP in single Granted rank out Overall dividend Share outcome rank out Overall Share outcome Executive Director figure Award shares of 11(a) vesting % equivalents) price (£’000) of 11(b) vesting % price (£’000) Jean-Sébastien 2019 2015 PSA 72,768 4th rank 67.9% 62,117 £42.04 2,611 Will be determined in May 2020 Jacques (12,691) 2018 2014 PSA 70,057 5th rank 41.3% 34,537 £37.44 1,293 5th rank 42.98% £43.27 for 1,548 (5,581) TSR element £45.103 for EBIT element (a) Estimated vesting of the EBIT margin portion in 2019 is 67.07% (2018 estimate: 24%). (b) Actual vesting of the EBIT margin portion of the 2014 PSA was 28.93%. Jakob Stausholm’s first LTIP award was made in September 2018, with a performance period ending 31 December 2022. Calculation of 2015 PSA vesting Our remuneration consultants, Deloitte, calculated performance against the TSR measures. The dual TSR measures recognise that the company competes in the global market for investors as well as within the mining sector, and aligns to the philosophy of rewarding executives for stable returns over the long-term relative to the broader market and the mining sector. Weighted 2019 vesting Performance Vesting Weighting achievement TSR relative to EMIX Global Mining index Threshold Equal to index 22.5% Maximum Outperformance of the index by 6% per annum 100.0% One third Actual 7.5% per annum 100.0% 33.33% TSR relative to MSCI World index Threshold Performance equal to index 22.5% One third Maximum Outperformance of the index by 6% per annum 100.0% Actual 1.1% per annum 36.7% 12.23% Improvement in EBIT margin Threshold Above the sixth ranked company Nil Estimate 4th 67.07% One third Maximum Rank of 1st or 2nd 100.0% 22.36% Overall vesting 67.92% 122 Annual report 2019 | riotinto.com

Remuneration report / Implementation report PSAs granted in 2019 End of the period over % which the Face value of Face value of of vesting performance award (% of award at threshold Average share Conditional conditions have Executive Director Type of award Grant date base salary) (£’000) performance price over 2018 shares awarded Vesting month to be fulfilled Jean-Sébastien Jacques PSA 18 March 2019 430% 4,893 22.5% £38.94 125,665 Feb 2024 31 Dec 2023 Jakob Stausholm PSA 18 March 2019 400% 3,100 22.5% £38.94 79,609 Feb 2024 31 Dec 2023 PSAs to be granted in March 2020 Governance End of the period over % which the Face value of Face value of of vesting Conditional performance award (% of award at threshold Average share shares to be conditions have Executive Director Type of award base salary) (£’000) performance price over 2019 awarded Vesting month to be fulfilled Jean-Sébastien Jacques PSA 430% 4,997 22.5% £43.43 115,049 Feb 2025 31 Dec 2024 Jakob Stausholm PSA 410% 3,245 22.5% £43.43 74,711 Feb 2025 31 Dec 2024 Executive Directors’ shareholding In line with our share ownership policy, Executive Directors’ shareholdings are calculated using the closing price of Rio Tinto shares on the latest practicable date each year before the report is published. For the purposes of this 2019 report, the closing price on 14 February 2020 has been applied. Multiple of base salary Holding of ordinary shares Year guideline needs Executive Director 31 December 2019 31 December 2018 Guidelines to be met On target 31 December 2019 31 December 2018 Jean-Sébastien Jacques 4.3 3.3 4.0 2021 Meets 97,578 64,740 Jakob Stausholm 0.9 0.8 3.0 2023 Yes 15,078 15,000 The multiple of base salary shown above includes the value of 50% unvested Bonus Deferred Awards (BDA). Service contracts Chief Executive’s pay and employee pay In the table below we compare the changes from 2018 to 2019 in salary, benefits Date of appointment and annual incentives of the Chief Executive to that of the Australian employee Executive Director Position held during 2019 to position Notice period population (chosen because approximately 40% of our employees are Jean-Sébastien Jacques Chief Executive 2 July 2016 12 months employed in Australia, more than in any other country). Jakob Stausholm Chief Financial Officer 3 September 2018 12 months Changes to the Chief Executive’s base salary, benefits and annual incentive are Either party can terminate their contract with notice in writing, or immediately explained in the single total figure of remuneration table on page 118. by paying the base salary only in lieu of any unexpired notice. Percentage Chief Executive pay ratio Percentage Percentage change in change in change in other annual The ratio of the total remuneration of the Chief Executive to the median total salary paid benefits paid incentive(a) remuneration of all Rio Tinto employees for 2019 was 66:1 (2018: 48:1, restated Chief Executive 2.5% 4.4% 9.3% for actual 2014 PSA vesting). This has been calculated using the single total figure of remuneration for the Chief Executive and the median employee in the Australian employees 4.3% 1.5% 7.1% Group. (a) The percentage change in annual incentive compares the incentive outcomes for the 2018 performance year, to that for the 2019 performance year. The ratio is primarily driven by the percentage of total remuneration that is performance related, and reflects the increased STIP and LTIP vesting outcomes for 2019 compared to 2018. This further demonstrates the alignment to the shareholder experience as measured by total shareholder return. The Committee continues to be mindful of the relationship between executive remuneration and that of our broader employee population. The Committee’s decision making will continue to be supported by regular and detailed reporting on these matters. As the company employs fewer than 250 employees in the UK, the analysis has been provided on a voluntary basis. Annual report 2019 | riotinto.com 123

Governance Implementation report continued Chief Executive’s remuneration over time: summary The graph below shows Rio Tinto’s TSR performance for awards granted under the 2015 PSA. It uses the same methodology as that used to calculate the Long-term Long-term vesting for the PSA granted in 2015 with a performance period that ended incentive incentive vesting vesting on 31 December 2019. Single total Annual STIP against against figure of award against maximum maximum TSR (US$) – Rio Tinto Group vs EMIX �io �into �ro�� remuneration maximum opportunity opportunity (a) (b)(c) (c) �� o�� inin� �n�� Year Chief Executive (’000) opportunity (SOP) (PSA) Global Mining and MSCI World Indices �� or�� n�� 2010 Tom Albanese £4,512 87.8% 0.0% 24.3% �ot�� r�t�rn ��i� �� c�m��r �� 2011 Tom Albanese £4,256 0.0% 100.0% 0.0% 200 2012 Tom Albanese £4,040 0.0% 100.0% 61.7% 2013 Tom Albanese £53 0.0% – 150 Sam Walsh A$9,993 72.1% 50.0% 2014 Sam Walsh A$10,476 88.4% 49.0% 100 2015 Sam Walsh A$9,141 81.9% 43.6% 2016 Sam Walsh A$1,657 – – 50 Jean-Sébastien Jacques £3,116 82.4% 50.5% 2017 Jean-Sébastien Jacques £3,821 73.4% 66.7% 0 2014 2015 2016 2017 2018 2019 (d) 2018 Jean-Sébastien Jacques £4,551 70.1% 43.0% (a) TSR for the MSCI and EMIX indices has been calcualted using 12 month average Return 2019 Jean-Sébastien Jacques £5,796 74.8% 67.9% Index data for the year sourced from DataStream. (b) Rio Tinto’s Group TSR has been calculated using a weighted average for Rio Tinto plc and (a) Tom Albanese held the role of Chief Executive until 17 January 2013, and left the Group on Rio Tinto Limited. The weighting is based on the free-float market capitalisation of each 16 July 2013. The single total figure of remuneration for Tom Albanese for 2013 is for the entity as at the start of the period. period up until 17 January 2013. Sam Walsh took over as Chief Executive from 17 January 2013, having previously been Chief Executive, Iron Ore and Australia. The single total figure The following graph illustrates the TSR performance of the Group against the of remuneration for Sam Walsh for 2016 is for the period up until 1 July 2016. Jean- Sébastien Jacques took over as Chief Executive on 2 July 2016, having previously been EMIX Global Mining Index and the MSCI World Index over the ten years to the Chief Executive, Copper & Coal. end of 2019. (b) In 2011 and 2012, Sam Walsh elected to receive his full LTIP awards under the PSP and as a result he has no options granted in 2011 or 2012 under the SOP and which had performance periods that ended on 31 December 2013 and 31 December 2014 respectively. The SOP The graph meets the requirements of Schedule 8 of the UK Large and Medium- ceased operation from 2013 and LTIP awards from 2013 have been made as PSA. sized Companies and Groups (Accounts and Reports) Regulations 2008 (as (c) All outstanding but unvested LTIP awards earned in previous years lapsed and were amended) and is not an indication of the likely vesting of PSA granted in 2015. forfeited when Tom Albanese left the Group. (d) The 2018 single total figure of remuneration for Jean-Sébastien Jacques reported in the 2018 Annual report was £4,289 based on the estimated vesting of the 2014 PSA of 41.3%. TSR (US$) – Rio Tinto Group vs EMIX �io �into �ro�� The restated 2018 single total figure of remuneration is £4,551 based on the actual vesting Global Mining and MSCI World Indices �� o�� inin� �n�� of the 2014 PSA of 43.0% �ot�� r�t�rn ��i� �� c�m��r �� or�� n�� TSR 250 We use relative TSR against the EMIX Global Mining Index and the MSCI World Index as two-thirds of our performance measures when we determine the 200 vesting of PSA granted in 2015. The remaining third is based on the improvement in EBIT margin relative to the comparator group. 150 The effect of this performance on the value of shareholdings, as measured by 100 TSR delivered over the past five years, based on the sum of dividends paid and share price movements during each calendar year, is detailed in the table 50 below. 0 Total 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dividends paid Share price – Share price – shareholder (a) TSR has been calculated using spot Return Index data as at the last trading day for the during the year Rio Tinto plc pence Rio Tinto Limited A$ return (TSR) year sourced from DataStream. The indices chosen are those used for measuring PSA US cents per performance. Year share 1 Jan 31 Dec 1 Jan 31 Dec Group % (b) Rio Tinto’s Group TSR has been calculated using a weighted average for Rio Tinto plc and Rio Tinto Limited. The weighting is based on the free-float market capitalisation of each 2015 226.5 3,000 1,980 58.00 44.71 (32.5%) entity as at the start of the period. 2016 152.5 1,980 3,159 44.71 59.90 41.4% 2017 235.0 3,159 3,942 59.90 75.81 43.8% The following table summarises the average vesting of performance shares for Executive Directors since 2016. The estimated outcome for the 2014-2018 2018 307.0 3,942 3,730 75.81 78.47 (4.4%) performance period, reported in the 2018 Annual report of 41.3%, has been restated 2019 635.0 3,730 4,503 78.47 100.40 38.5% with the actual outcome of 42.98%. The overall vesting level for the 2015-2019 performance period is an estimate based on the estimated EBIT margin outcome. The data presented in this table reflects the dual corporate structure of Rio Tinto. We weight the two Rio Tinto listings to produce a Group TSR figure in line % of maximum shares with the methodology used for the 2015 PSA. Performance period Vesting year vested 2012-15 2016 43.6 The performance conditions for PSA are provided in the notes to table 3 on pages 136 2013-16 2017 50.5 and 137. 2013-17 2018 66.7 2014-18 2019 43.0 2015-19 2020 67.9 Average vesting – 54.3 124 Annual report 2019 | riotinto.com

Remuneration report / Implementation report The Chairman’s Committee conducted a review of non-executive director fees The Share Option Plan (SOP) ended for new awards from 2013. No awards of in November 2019. Following this review, it was determined that all fees and share options have been made since 2012 and no executives hold any vested travel allowances remain unchanged effective from 1 January 2020. and unexercised options. The additional £10,000 allowance for eligible Australian directors is to Past-director payments compensate them for additional UK National Insurance contributions which, As disclosed previously, a deed of deferral was entered into with the former unlike directors based in other jurisdictions, they are not able to offset against Chief Executive, Sam Walsh. This was in connection to the investigations their local tax payments. concerning the Simandou project. We set out details of each element of remuneration, and the single total figure At the date of this report, regulatory investigations are still not complete. The of remuneration, paid to the Chairman and non-executive directors during 2019 Committee remains of the view that the further deferral of amounts that would and 2018 in US dollars in table 1b on page 132. No post-employment, otherwise have been payable on 31 December 2018 is appropriate. termination or share-based payments were made. Statutory minimum Governance superannuation contributions for non-executive directors are deducted from What we paid our Chairman and non-executive directors the director’s overall fee entitlements when these are required by Australian Positions held superannuation law. We list the non-executive directors who held office during 2019 below. Each held office for the whole of 2019 unless otherwise indicated. Their years of The total fee and allowance payments made to the Chairman and appointment are reported in “Board of directors” on pages 84 to 85. non‑executive directors in 2019 are within the maximum aggregate annual Name Title amount of £3 million set out in the Group’s constitutional documents, Simon Thompson Chairman approved by shareholders at the 2009 AGMs. Megan Clark Non-executive director Share ownership policy for non-executive directors David Constable Non-executive director Rio Tinto has a policy that encourages non-executive directors to build up a Ann Godbehere Non-executive director to 9 May 2019 shareholding equal in value to one year’s base fee within three years of their Moya Greene Non-executive director to 26 June 2019 appointment. Details of non-executive directors’ share interests in the Group, including total holdings, as set out in table 2 on page 133. Simon Henry Non-executive director Sam Laidlaw Non-executive director Non-executive directors’ share ownership Michael L’Estrange Non-executive director The non-executive directors’ shareholdings are calculated using the market price Simon McKeon Non-executive director of Rio Tinto shares on the latest practicable date before this report is published: Annual fees payable Share ownership level at 31 December 2019 as a Share ownership level at 31 The table below shows the annual fees paid in 2019 and payable in 2020, to the multiple of base fee (or December 2018 as a multiple of Chairman and non-executive directors. Director Chairman’s fee) base fee (or Chairman’s fee) Simon Thompson(a) 3.3 (0.4) 3.4 (0.4) 2020 2019 Megan Clark 2.9 2.6 Director fees David Constable 1.1 1.1 Chairman’s fee £730,000 £730,000 Simon Henry 0.2 0.2 Non-executive director base fee £95,000 £95,000 Sam Laidlaw 3.3 3.4 Non-executive director base fee for Australian residents £105,000 £105,000 Michael L’Estrange 1.5 1.5 Senior independent director £45,000 £45,000 Simon McKeon 5.0 – Committee fees (a) The multiple of Chairman’s fee is represented in brackets following Simon Thompson’s Audit Committee Chairman £40,000 £40,000 appointment as Chairman from 5 March 2018 Audit Committee Member £25,000 £25,000 In some cases, the value of the shares and the multiple of base fee as at 31 Remuneration Committee Chairman £35,000 £35,000 December 2019 is higher than the multiple reported as at 31 December 2018 Remuneration Committee Member £20,000 £20,000 as a result of higher share prices. Sustainability Committee Chairman £35,000 £35,000 Sustainability Committee Member £20,000 £20,000 Nominations Committee Member £7,500 £7,500 Meeting allowances Long distance (flights over 10 hours per journey) £10,000 £10,000 Medium distance (flights of 5-10 hours per journey) £5,000 £5,000 The Chairman’s fee is determined by the Committee, and was last increased on 1 July 2013. All other fees are subject to review by the Board on the recommendation of the Chairman’s Committee. Annual report 2019 | riotinto.com 125

Governance Implementation report continued The 2019 STIP awards are detailed in the table below. Base salary We reviewed the base salaries for the Executive Committee and the resulting Percentage of: adjustments are set out below. The approach used to assess the level and appropriateness of any adjustments was consistent with that applied to the 2019 STIP Maximum award (% of 2019 STIP Maximum STIP Target STIP broader employee population. This included an assessment of market (000’s) salary)(a) award STIP awarded forfeited awarded competiveness against relevant peer companies, a focus on gender pay equity Bold Baatar 112.6% £605 56.3% 43.7% 112.6% and maintaining purchasing power with country consumer price index used as a proxy. Alfredo Barrios 97.8% C$1,001 48.9% 51.1% 97.8% Joanne Farrell 106.6% A$925 53.3% 46.7% 106.6% (Stated in ’000) 2020 2019 % change Vera Kirikova 112.6% £475 56.3% 43.7% 112.6% Bold Baatar £564 £537 5.00% Stephen McIntosh 114.2% A$1,183 57.1% 42.9% 114.2% Alfredo Barrios C$1,044 C$1,024 1.99% Simone Niven 124.6% £525 62.3% 37.7% 124.6% Vera Kirkova £451 £422 7.00% Philip Richards 106.6% £505 53.3% 46.7% 106.6% Barbara Levi £440 – – Chris Salisbury 106.8% A$1,106 53.4% 46.6% 106.8% Stephen McIntosh A$1,055 A$1,036 1.85% Arnaud Soirat 131.8% £708 65.9% 34.1% 131.8% Simone Niven £451 £422 7.00% Simon Trott 118.6% S$1,122 59.3% 40.7% 118.6% Chris Salisbury A$1,055 A$1,036 1.85% Arnaud Soirat £564 £537 5.00% (a) Results out of 100% have been rounded to one decimal place and STIP awards have been rounded to the nearest thousand units. As the actual STIP awards do not use rounding Simon Trott S$ 975 S$946 3.00% conventions, small rounding variances may occur. STIP measures, weightings and targets for 2020 STIP As in 2019, the STIP measures and weightings for executives will be 50% for Overview of STIP weightings and measures for 2019 financial, 30% for individual and 20% for safety measures. The individual The following table shows the measures and weightings used to determine targets include objectives relating to safety, people, cash, partnership and growth. STIP awards for executives in 2019. For the Executive Directors these will include climate change-related objectives. Weighting for Executive Directors and Group Weighting for The financial and individual targets that have been set for 2020 are considered Executives PGCEOs by the Board to be commercially sensitive. As such, the specific targets for Safety – split between standalone binary these measures, and the performance against them, are expected to be measure for fatality, AIFR and SMM 20% 20% described retrospectively in the 2020 Implementation report. The Group Financial measures split equally between financial targets relate to underlying earnings and STIP free cash flow. underlying earnings and STIP free cash flow for the Group 50% 20% 2020 safety measures, weightings and targets Financial measures split equally between Rio Tinto had a fatality free year in 2019. Our primary objective in 2020 is to underlying earnings and STIP free cash flow maintain this focus on fatality prevention. for the relevant product group 0% 30% Individual measures based on key strategic In 2019, SMM was introduced to provide a roadmap to improve safety culture initiatives of each role and contribution to and performance. The SMM builds on the CRM approach by including overall company performance 30% 30% leadership, overall risk management, work planning and execution, and learning and improvement. Strong improvement was observed across all The Group safety result was 64% of maximum and the average performance elements, with the greatest improvement in site leadership and coaching. The against safety goals for executives was above “target”. 2019 year-end SMM assessments provided the business with valuable insight on the effectiveness of key safety management controls which enable targeted Detailed commentary on the performance of each product group is on pages support and areas of focus. 40 to 59. Average performance against the individual product group financial goals was below “target”. Safety maturity in this context has resulted in a change to the weighting of our safety remuneration measures for all executives in 2020. This will include an The Committee reviewed the individual performance of executives who are not increase in the weighting of our measure relating to SMM (40%), with the Executive Directors and, on average, considered them above “target”. This remainder split between the standalone binary fatality measure (40%) and reflected performance against our safety, people, cash, partnership and growth AIFR (20%). objectives. The standalone measure for fatality will continue to be assessed as follows: –– If a fatality occurs, there is no payment made in relation to this measure. –– An outcome of outstanding is paid if no fatality occurs. –– The metric will apply equally across all executives, regardless of the location of any fatality. For the SMM measure, “target” performance for the Group has been set at 5.5. The “threshold” number for calculation purposes is 4.5 and “outstanding” performance has been set at 6.5. For the AIFR measure, “target” performance for the Group has been set at 0.37. The “threshold” number for calculation purposes is 0.42, and “outstanding” performance has been set at 0.31. 126 Annual report 2019 | riotinto.com

Remuneration report / Implementation report LTIP The performance conditions for the PSAs granted since 2019 are set out below. Outcomes for the period ended 31 December 2019 TSR performance is measured equally against the EMIX Global Mining Index Eligible executives will receive shares in Rio Tinto plc or Rio Tinto Limited in 2020 and the MSCI World Index. from the vesting of PSA granted in 2015. All executives who were granted these awards will also receive additional shares equal to the dividends that would Outperformance of the index by 6% per annum 100% of award vests have been paid on the PSA shares that vest had they owned them during the Performance between equal to the index and 6% Proportionate vesting between five-year performance period. No dividends will be paid in respect of the share outperformance 22.5% and 100% vesting awards that lapse. Performance equal to the index 22.5% of award vests Performance less than the index Nil vesting An estimate of the total value of PSA that will vest is included in the single total figure of remuneration. The actual PSA values will be recalculated following Management Share Awards (MSA) the vesting of the EBIT margin portion of the award, based on the actual share Executives are not eligible to receive MSA after their appointment. However, Governance prices on the date of vesting (31 May 2020). The estimated PSA values will be Bold Baatar, Joanne Farrell, Vera Kirikova, Stephen McIntosh, Simone Niven, restated, if applicable, in the 2020 Annual report. Chris Salisbury, Arnaud Soirat and Simon Trott received grants prior to their appointments as executives that vested during the year.  LTIP awards granted in 2019 The maximum potential value of PSA granted in 2019 was 438% of base salary. Plan period Plan period that ended 28 February 2019 The Committee decided that the PSA granted in 2019 would have a face value Vesting period 11 March 2016 – 28 February 2019 as shown in the table below. The eventual value received will depend on the Group’s relative TSR performance during the years 2019-2023 and the share % of shares vested 100% price at vesting. The 2019 PSA may vest after five years in 2024. The % of shares forfeited – performance conditions for the awards granted in 2019 are consistent with the performance conditions for awards to be granted in 2020 as set out on this page. Share ownership The following table shows the share ownership level for members of the LTIP awards for 2020 Executive Committee as a multiple of base salary. The Committee sets award levels to incentivise executives to meet the Share ownership level at long-term strategic goals of the Group, to support retention and to contribute 31 December 2019 as a multiple towards the competitiveness of the overall remuneration package. With this in of base salary mind, we determined that LTIP awards consist of conditional shares in 2020 Bold Baatar 2.8 and will have the face values shown in the table below. Alfredo Barrios 3.3 Consistent with prior years, we calculated the awards using the average share Vera Kirikova 1.2 price over the previous calendar year to mitigate the impact of short-term Stephen McIntosh 3.6 volatility in the share price. The awards granted in 2020 will therefore be Simone Niven 1.6 calculated using the 2019 average share prices for Rio Tinto plc and Rio Tinto Limited of £43.43 and A$94.22 respectively. Chris Salisbury 4.2 Arnaud Soirat 3.4 Simon Trott 2.1 Maximum value (% of 1 March base salary) 2020 2019 Share ownership level is calculated using the market price of Rio Tinto shares Bold Baatar 410 375 on the latest practicable date before this report was published (14 February Alfredo Barrios 375 375 2020), and we define “share ownership” on page 117. Vera Kirikova 410 375 All current executives who were employed as at 31 December 2018 have Barbara Levi 375 – increased their holding of ordinary shares during 2019, and are making progress Stephen McIntosh 375 375 towards their share ownership requirements. The value of the shares has also Simone Niven 410 410 increased due to higher share prices. Chris Salisbury 375 375 Post-employment benefits Arnaud Soirat 410 410 Executives may participate in the pension, superannuation, and post-employment Simon Trott 410 375 medical and life insurance benefits which are typically offered to employees in Average 394 384 similar locations. The expected value of the awards is equal to 50% of the face value. The Departures from the Executive Committee percentage vesting at “threshold” performance is 22.5%. The 2020 award will Joanne Farrell left the Executive Committee on 30 September 2019 and will vest after five-years in 2025, subject to the Group’s performance against the leave the Group on 31 March 2020. She will receive her normal base salary and relative TSR measures. other contractual benefits until 31 March 2020. She remained eligible to receive a STIP award for the period 1 January 2019 to 31 December 2019, which has been calculated on actual business and individual performance and will be paid fully in cash in March 2020. Joanne is ineligible for a base salary review or LTIP grant in March 2020. Outstanding LTIP awards will be treated, where required, in accordance with eligible leaver provisions of each plan with pro-rating, where applicable, up to 31 March 2020. Joanne will receive a payment of A$217,694 for unused and accrued annual leave and long-service leave as at her termination date in line with Australian legislation and policy. Annual report 2019 | riotinto.com 127

Governance Implementation report continued Philip Richards left the Executive Committee and the Group on 31 December Other share plans 2019. He received his normal base salary and contractual benefits until All employee share plans 31 December 2019. He remained eligible to receive a STIP award for the period The Committee believes that all employees should be given the opportunity to 1 January 2019 to 31 December 2019, which has been calculated based on become shareholders in our business, and that share plans help engage, retain actual business and individual performance and will be paid fully in cash in and motivate employees over the long-term. Rio Tinto’s share plans are March 2020. He received a payment equivalent to 6 months’ base salary, paid therefore part of its standard remuneration practice, to encourage alignment in December 2019, to remain available to assist with transitional arrangements with the performance of the Group. Executives may participate in broad-based for a period of up to 12 months following his termination. Outstanding LTIP share plans that are available to Group employees generally and to which awards were treated, where required, in accordance with eligible leaver provisions performance conditions do not apply. of each plan with pro‑rating, where applicable, up to 31 December 2019. Philip received a payment of £ 937 for unused and accrued annual leave as at his A global employee share purchase plan is normally offered to all eligible termination date in line with UK legislation and policy. employees unless there are local jurisdictional restrictions. Under the plan, employees may acquire shares up to the value of US$5,000 (or equivalent in Service contracts other currencies) per year, or capped at 10% of their base salary if lower. Each All executives have service contracts which can be terminated by the company share purchased will be matched by the company, providing the participant with 12 months’ notice in writing, or by the employee with six months’ notice in holds the shares, and is still employed, at the end of the three-year vesting writing, or immediately by the company by paying base salary only in lieu of period. any unexpired notice. Approximately 19,000 (44%) of our employees are shareholders as a result of Positions held and date of appointment participating in this plan. In the UK, these arrangements are partially delivered Date of through the Share Ownership Plan which is a UK tax approved arrangement. appointment Under this plan, eligible participants may also receive an annual award of Free Name Position(s) held during 2019 to position Shares up to the limits prescribed under UK tax legislation. Other executives Bold Baatar Chief Executive, Energy & Minerals 1 December 2016 Management Share Awards (MSA) Alfredo Barrios Chief Executive, Aluminium 1 June 2014 The MSA are designed to help the Group attract the best staff in an increasingly competitive labour market, and to retain key individuals as we deliver our Vera Kirikova Group Executive, Human Resources 1 January 2017 long-term strategy. MSA are conditional awards that are not subject to a Stephen McIntosh Group Executive, Growth & Innovation 2 July 2016 performance condition. They vest at the end of three years subject to Simone Niven Group Executive, Corporate Relations 1 January 2017 continued employment, to act as a retention tool. Shares to satisfy the awards Chris Salisbury Chief Executive, Iron Ore 2 July 2016 are bought in the market, and no new shares are issued. Executives are not Arnaud Soirat Chief Executive, Copper & Diamonds 2 July 2016 eligible for the MSA after appointment. Simon Trott Chief Commercial Officer 1 January 2018 ��en re��nera��on �� e��vere� �� o��o�in� c��rt �ro�i�� tim��in� o� ��n tot�� r�m�n�r�tion i� ��i��r�� in� �� n ��m��. �� n� �� r�orm�nc� �� r� ��ro��tin� o� t�� m��r�m�nt comm�nc�� ortion o� t�� r ��r�orm�nc� ��rio�� tin� o� t�� ortion o� t�� c�� i�� r ��r�orm�nc� ��rio�� rr�� r�� oc�t�� r�� tin� o� t�� m�r�in �� tin� o� t�� m�r�in �ortion o� t�� oc�t�� r �ortion o� t�� r ��r�orm�nc� ��rio�� r�orm�nc� ��rio�� tin� o� �� ear� ��r�orm�nc� m��r�� r�orm�nc� m��r�� rr�� r�� ear� �a�e �a�ar� ��n �� r �� c �� r �� 128 Annual report 2019 | riotinto.com

Remuneration report / Implementation report Dilution Relative spend on remuneration Awards under the Share Option Plan, the 2013 Performance Share Plan, the To show our relative spend on remuneration, the directors have shown other 2018 EIP and all employee plans may be satisfied by, in the case of Rio Tinto significant disbursements of the company’s funds for comparison. plc, treasury shares or the issue of new shares or the purchase of shares in the market. In the case of Rio Tinto Limited, the plans are satisfied by the purchase Difference in Stated in US$m 2019 2018 spend of shares in the market and can be satisfied by the issue of new shares. Remuneration paid(a) 4,522 4,765 (243) In the UK, the Investment Association has issued corporate governance Distributions to shareholders(b) 11,886 6,333 5,553 guidelines in relation to the amount of new shares that may be issued having Purchase of property, plant and regard to the total issued share capital. Under the guidelines, the rules of a equipment and intangible assets(c) 5,488 4,482 1,006 scheme must provide that commitments to issue new shares or reissue Corporate income tax paid(c) 4,549 2,307 2,242 treasury shares, when aggregated with awards under all of a company’s other schemes, must not exceed 10% of the issued ordinary share capital (adjusted (a) Total employment costs for the financial year as per note 5 to the financial statements. Governance (b) Distributions to shareholders include equity dividends paid to owners of Rio Tinto and own for share issuance and cancellation) in any rolling ten-year period. shares purchased from owners of Rio Tinto as per the Group cash flow statement. (c) Purchase of property, plant and equipment and intangible assets, and corporate income tax Furthermore, commitments to issue new shares or reissue treasury shares paid during the financial year are as per the Group cash flow statement and are calculated as per note 1 to the financial statements. under executive (discretionary) schemes should not exceed 5% of the issued ordinary share capital of a company (adjusted for share issuance and Gender pay cancellation) in any rolling ten-year period. This may be exceeded where Rio Tinto is committed to ensuring that employees with similar skills, vesting is dependent on the achievement of significantly more stretching knowledge, qualifications, experience and performance are paid equally performance criteria. Rio Tinto plc is in compliance with these guidelines. for the same or comparable work. As at 31 December 2019 these limits had not been exceeded. The company’s statement on pay equity, and our approach to inclusion and In Australia, as a condition of relief from prospectus requirements, the diversity, are set out on pages 69 to 70, and on the company’s website. Australian Securities and Investments Commission has imposed a cap on the issue of shares to employees of 5% of issued capital during a three-year period. An additional voluntary disclosure on UK gender pay reporting is set out on the As Rio Tinto Limited satisfies awards by market purchase, Rio Tinto Limited is company’s website. in compliance with this requirement. All other share awards are satisfied by shares that are purchased in the market. Further information in respect of the share plan arrangements and outstanding balances under each plan can be found in note 43 to the financial statements. Shareholder voting In the table below, we set out the results of the remuneration-related resolutions approved at the Group’s 2019 AGMs. Our meetings with shareholders in 2019 were well attended and provided an opportunity for the Committee chairman to discuss remuneration-related topics with shareholders. Resolution Total votes cast Votes for Votes against Votes withheld(a) Approval of the Directors’ remuneration report: Implementation report 1,143,455,162 1,070,321,199 73,133,963 24,817,450 93.6% 6.4% Approval of the Directors’ remuneration report 1,151,989,943 1,069,822,503 82,167,440 16,285,082 92.9% 7.1% (a) A vote “withheld” is not a vote in law, and is not counted in the calculation of the proportion of votes for and against the resolution. Annual report 2019 | riotinto.com 129

Governance Implementation report continued Table 1a – Executives’ remuneration Short-term benefits Other cash-based Non-monetary Total short-term Stated in US$‘000(a) Base salary Cash bonus(b) benefits(c) benefits(d)(e) benefits Executive Directors 2019 1,447 1,118 350 64 2,979 Jean-Sébastien Jacques 2018 1,476 989 350 62 2,877 2019 989 573 223 57 1,842 Jakob Stausholm 2018 345 160 518 138 1,161 Other Executives 2019 683 398 148 56 1,285 Bold Baatar 2018 697 275 152 33 1,157 2019 769 383 247 123 1,522 Alfredo Barrios(f) 2018 773 361 249 146 1,529 2019 450 486 19 43 998 Joanne Farrell(g) 2018 630 276 27 38 971 2019 536 312 129 19 996 Vera Kirikova 2018 547 242 132 19 940 2019 717 414 150 81 1,362 Stephen McIntosh 2018 752 415 95 79 1,341 2019 536 345 124 17 1,022 Simone Niven 2018 547 305 112 5 969 2019 603 664 143 40 1,450 Philip Richards 2018 615 290 146 28 1,079 2019 717 387 179 53 1,336 Chris Salisbury 2018 752 335 181 48 1,316 2019 683 465 148 61 1,357 Arnaud Soirat 2018 697 472 152 109 1,430 2019 691 416 26 23 1,156 Simon Trott 2018 686 334 734 75 1,829 Notes to table 1a – Executives’ remuneration (a) “Table 1a – Executives’ remuneration” is reported in US$ using A$1 = US$0.69531; £1 = US$1.27661; C$1 = US$0.75370; S$1 = US$0.73307 (2019 average rates), except for cash bonuses which use A$1 = US$0.70033; £1 = US$1.31397; C$1 = US$0.76578; S$1 = US$0.74167 (2019 year-end rates). (b) “Cash bonus” relates to the cash portion of the 2019 STIP award to be paid in March 2020. (c) “Other cash-based benefits” typically include cash in lieu of a car and fuel and, where applicable, cash in lieu of company pension or superannuation contributions. (d) “Non-monetary benefits” for executives include healthcare coverage, provision of a car, professional tax compliance services/advice and flexible perquisites. (e) “Non-monetary benefits” for executives living outside their home country include international assignment benefits comprising, where applicable, housing, education, relocation expenses, tax equalisation and related compliance services, assignee and family home leave trips and international assignment payments made to and on their behalf. (f) Other cash-based benefits for Alf Barrios for 2018 have been restated as pension cash supplement of C$15,000 (US$12,000) was omitted. The previous figure disclosed for 2018 was US$237,000. (g) The details for 2019 reflect remuneration for the period 1 January to 30 September 2019. 130 Annual report 2019 | riotinto.com

Remuneration report / Implementation report Table 1a – Executives’ remuneration continued Long-term benefits: Value of shared-based awards(h) Post-employment benefits(k) Other post- Currency of Pension and employment Termination Total actual Stated in US$’000(a) BDA(i) PSA MSA Others(j) superannuation benefits benefits renumeration(l) payment Executive Directors 2019 1,047 3,028 – 8 27 – – 7,089 £ Jean-Sébastien Jacques 2018 947 2,270 – 9 36 – – 6,139 £ 2019 174 491 – 1 15 – – 2,523 £ Jakob Stausholm 2018 39 50 – – 8 – – 1,258 £ Governance Other Executives 2019 327 1,071 6 8 13 – – 2,710 £ Bold Baatar 2018 258 732 51 7 13 – – 2,218 £ 2019 472 1,675 – 4 21 – – 3,694 C$ Alfredo Barrios 2018 507 1,195 – 4 20 – – 3,255 C$ 2019 179 656 5 3 128 – – 1,969 A$ Joanne Farrell 2018 270 610 64 4 164 – – 2,083 A$ 2019 242 713 3 8 13 – – 1,975 £ Vera Kirikova 2018 176 483 20 7 13 – – 1,639 £ 2019 398 1,070 7 4 47 – – 2,888 A$ Stephen McIntosh 2018 338 739 64 4 112 – – 2,598 A$ 2019 270 794 3 5 18 – – 2,112 £ Simone Niven 2018 204 534 25 5 36 – – 1,773 £ 2019 148 772 – 5 – – 310 2,685 £ Philip Richards 2018 146 504 – 4 – – – 1,733 £ 2019 389 1,149 8 – 17 – – 2,899 A$ Chris Salisbury 2018 341 775 68 – 19 – – 2,519 A$ 2019 402 1,117 8 5 13 – – 2,902 £ Arnaud Soirat 2018 323 797 75 5 13 – – 2,643 £ 2019 211 694 48 4 165 – – 2,278 S$ Simon Trott 2018 132 335 76 4 141 – – 2,517 S$ (h) The value of share-based awards has been determined in accordance with the recognition and measurement requirements of IFRS2 “Share-based Payment”. The fair value of awards granted under the Management Share Awards (MSA), the Bonus Deferral Awards (BDA) and the Performance Share Awards (PSA) have been calculated at their dates of grant using valuation models provided by external consultants, Lane Clark and Peacock LLP, including an independent lattice-based option valuation model and a Monte Carlo valuation model which take into account the constraints on vesting and exercise attached to these awards. Further details of the valuation methods and assumptions used for these awards are included in note 43 (Share-based Payments) in the financial statements. The fair value of other share-based awards is measured at the purchase cost of the shares from the market. The non-executive directors do not participate in the long term incentive share plans. (i) “BDA” represents the portion of the 2016 – 2019 STIP awards deferred into Rio Tinto shares. (j) “Others” includes the Global Employee Share Plan (myShare) and the Share Ownership Plan. (k) The costs shown for defined benefit pension plans and post-retirement medical benefits are the service costs attributable to the individual, calculated in accordance with IAS 19. The cost for defined contribution plans is the amount contributed in the year by the company. (l) “Total remuneration” represents the disclosure of total emoluments and compensation required under the Australian Corporations Act 2001 and applicable accounting standards. Further details in relation to aggregate compensation for executives, including directors, are included in note 38 (Directors’ and key management remuneration). Annual report 2019 | riotinto.com 131

Governance Implementation report continued Table 1b – Non-executive directors’ remuneration Single total Fees and Non-monetary figure of Currency of Stated in US$‘000(a) allowances(b) benefits(c) remuneration(d) actual payment Chairman 2019 932 2 934 £ Simon Thompson(e) 2018 844 8 852 £ Non-executive directors 2019 263 21 284 A$ Megan Clark 2018 303 29 332 A$ 2019 252 23 275 £ David Constable 2018 289 34 323 £ 2019 108 9 117 £ Ann Godbehere(f) 2018 304 12 316 £ 2019 107 3 110 £ Moya Greene(g) 2018 70 – 70 £ 2019 241 4 245 £ Simon Henry 2018 215 9 224 £ 2019 270 3 273 £ Sam Laidlaw 2018 229 8 237 £ 2019 188 13 201 A$ Michael L’Estrange 2018 256 19 275 A$ Simon McKeon 2019 250 14 264 A$ Notes to table 1b – Non-executive directors’ remuneration (a) The remuneration is reported in US$. The amounts have been converted using the relevant 2019 average exchange rates of £1 = US$1.27661 and A$1 = US$0.69531 (1 January to 31 December 2019 average). (b) “Fees and allowances” comprises the total fees for the Chairman and all non-executive directors, and travel allowances for the non-executive directors (other than the Chairman). The payment of statutory minimum superannuation contributions for Australian non-executive directors is required by Australian superannuation law. These contributions are included in the “Fees and allowances” amount disclosed for Australian non-executive directors. (c) “Non-monetary benefits” include, as in previous years, amounts which are deemed by the UK tax authorities to be benefits in kind relating largely to the costs of non-executive directors’ expenses in attending board meetings held at the company’s UK registered office (including associated hotel and subsistence expenses) and professional tax compliance services/advice. Given these expenses are incurred by directors in the fulfilment of their duties, the company pays the tax on them. (d) Represents disclosure of the single total figure of remuneration under Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and total remuneration under the Australian Corporations Act 2001 and applicable accounting standards. (e) The amounts reported for Simon Thompson in 2018 reflect the period when he was a non-executive director from 1 January to 4 March 2018 and then Chairman of the Board from 5 March to 31 December 2018. (f) The amounts reported for Ann Godbehere reflect the period when she was an active member of the Board from 1 January to 9 May 2019. (g) The amounts reported for Moya Greene reflect the periods when she was an active member of the Board from 1 January to 26 June in 2019 and 17 September to 31 December in 2018. Further details in relation to aggregate compensation for executives, including directors, are included in note 38 (Directors’ and key management remuneration). 132 Annual report 2019 | riotinto.com

Remuneration report / Implementation report Table 2 – Directors’ and executives’ beneficial interests in Rio Tinto shares Rio Tinto plc(a) Rio Tinto Limited Movements 1 Jan 31 Dec 14 Feb 1 Jan 31 Dec 14 Feb Exercise of 2019(b) 2019(c) 2020(d) 2019(b) 2019(c) 2020(d) options(e) Compensation(f) Other(g) Directors Megan Clark – – – 5,245 5,770 5,770 – – 525 David Constable 2,547 2,547 2,547 – – – – – – Ann Godbehere (h) 3,100 3,100 – – – – – – – Moya Greene (h) 2,618 2,618 – – – – – – – Simon Henry 500 500 500 – – – – – – Governance Jean-Sébastien Jacques 64,740 97,578 97,603 – – – – 62,082 (29,219) Sam Laidlaw 7,500 7,500 7,500 – – – – – – Michael L'Estrange – – – 3,103 3,103 3,103 – – – Simon McKeon – – – 10,000 10,000 10,000 – – – Jakob Stausholm 15,000 15,078 15,102 – – – – 93 9 Simon Thompson 7,458 7,458 7,458 – – – – – – Executives Bold Baatar 17,231 28,920 28,952 – – – – 15,725 (4,004) Alfredo Barrios 17,906 38,812 38,843 – – – – 38,977 (18,040) Joanne Farrell (h) 3,175 3,528 – 41,001 50,234 – – 16,382 (6,796) Vera Kirikova 3,768 6,788 6,825 – – – – 4,564 (1,507) Barbara Levi (h) – – – – – – – – Stephen McIntosh 8,478 2,673 2,673 17,784 28,748 28,775 – 17,331 (12,145) Simone Niven 5,895 10,077 10,077 – – – – 6,459 (2,277) Philip Richards (h) 68 200 – – – – – 121 11 Christopher Salisbury – – – 27,837 38,188 38,188 – 17,873 (7,522) Arnaud Soirat 155 2,380 2,404 20,626 27,393 27,393 – 23,225 (14,209) Simon Trott 74 169 169 11,536 18,391 18,417 – 6,853 123 Notes to table 2 – Directors’ and executives’ beneficial interests in Rio Tinto shares (a) Rio Tinto plc ordinary shares or American Depositary Shares. (b) Or date of appointment, if later. (c) Or date of retirement / date stepped down from the Executive Committee, if earlier. (d) Latest practicable date prior to the publication of the 2019 Annual report. (e) Shares obtained through the exercise of options under the Rio Tinto Share Savings Plan or the Share Option Plan. The number of shares retained may differ from the number of options exercised. (f) Shares obtained through awards under the Rio Tinto Share Ownership Plan, the Global Employee Share Plan and/or vesting of the Performance Share Awards (PSA), Management Share Awards (MSA) and Bonus Deferral Awards (BDA) granted under the Group’s Long Term Incentive Plan (LTIP) arrangements. (g) Share movements due to the sale or purchase of shares, or shares received under dividend reinvestment plans. (h) Ann Godbehere and Moya Greene retired as directors on 9 May 2019 and 26 June 2019 respectively. Joanne Farrell and Philip Richards retired from the Executive Committee on 30 September 2019 and 31 December 2019 respectively. Barbara Levi joined the Executive Committee on 1 January 2020. Interests in outstanding awards under LTIPs and option plans are set out in table 3. Annual report 2019 | riotinto.com 133

Governance Implementation report continued Table 3 – Plan interests (awards of shares under long term incentive plans) Market value of Award/ Market 31 14 Market award at grant price 1 January Lapsed/ Dividend December February Vesting period Date of price at release Name date at award(a)(b) 2019 Awarded cancelled units Vested 2019 2020 concludes release release US$(d) Bonus Deferral Awards 9 Mar 2017 £32.03 5,703 – – 1,079 6,782 – – - 2 Dec 2019 £42.26 365,886 Bold 15 May 2018 £42.30 7,389 – – – – 7,389 7,389 1 Dec 2020 – – – Baatar 18 Mar 2019 £42.67 – 5,205 – – – 5,205 5,205 1 Dec 2021 – – – 9 Mar 2017 £32.03 14,230 – – 2,692 16,922 – – - 2 Dec 2019 £42.26 912,934 Alfredo 15 May 2018 £42.30 10,097 – – – – 10,097 10,097 1 Dec 2020 – – – Barrios 18 Mar 2019 £42.67 – 6,715 – – – 6,715 6,715 1 Dec 2021 – – – 9 Mar 2017 A$60.14 6,511 – – 966 7,477 – – - 2 Dec 2019 A$97.92 509,070 Joanne 15 May 2018 A$83.61 6,478 – – – – 6,478 6,478 1 Dec 2020 – – – Farrell 18 Mar 2019 A$93.17 – 4,307 – – – 4,307 4,307 1 Dec 2021 – – – Jean- 9 Mar 2017 £32.03 22,163 – – 4,194 26,357 – – - 2 Dec 2019 £42.26 1,421,948 Sébastien 15 May 2018 £42.30 21,401 – – – – 21,401 21,401 1 Dec 2020 – – – Jacques 18 Mar 2019 £42.67 – 18,681 – – – 18,681 18,681 1 Dec 2021 – – – 9 Mar 2017 £32.03 1,811 – – 342 2,153 – – - 2 Dec 2019 £42.26 116,153 Vera 15 May 2018 £42.30 6,308 – – – – 6,308 6,308 1 Dec 2020 – – – Kirikova 18 Mar 2019 £42.67 – 4,581 – – – 4,581 4,581 1 Dec 2021 – – – 9 Mar 2017 A$60.14 7,526 – – 1,116 8,642 – – 2 Dec 2019 A$97.92 588,388 Stephen 15 May 2018 A$83.61 7,569 – – – – 7,569 7,569 1 Dec 2020 – – – McIntosh 18 Mar 2019 A$93.17 – 6,467 – – – 6,467 6,467 1 Dec 2021 – – – 9 Mar 2017 £32.03 1,704 – – 322 2,026 – – - 2 Dec 2019 £42.26 109,302 Simone 15 May 2018 £42.30 6,713 – – – – 6,713 6,713 1 Dec 2020 – – – Niven 18 Mar 2019 £42.67 – 5,766 – – – 5,766 5,766 1 Dec 2021 – – – Philip 15 May 2018 £42.30 5,327 – – – – 5,327 5,327 1 Dec 2020 – – – Richards 18 Mar 2019 £42.67 – 5,487 – – – 5,487 5,487 1 Dec 2021 – – – 9 Mar 2017 A$60.14 7,772 – – 1,153 8,925 – – - 2 Dec 2019 A$97.92 607,656 Chris 15 May 2018 A$83.61 8,525 – – – – 8,525 8,525 1 Dec 2020 – – – Salisbury 18 Mar 2019 A$93.17 – 5,214 – – – 5,214 5,214 1 Dec 2021 – – – 9 Mar 2017 £32.03 8,051 – – 1,523 9,574 – – - 2 Dec 2019 £42.26 516,513 Arnaud 15 May 2018 £42.30 6,328 – – – – 6,328 6,328 1 Dec 2020 – – – Soirat 18 Mar 2019 £42.67 – 8,913 – – – 8,913 8,913 1 Dec 2021 – – – Jakob Stausholm 18 Mar 2019 £42.67 – 3,022 – – – 3,022 3,022 1 Dec 2021 – – – 9 Mar 2017 A$60.14 1,335 – – 198 1,533 – – - 2 Dec 2019 A$97.92 104,374 Simon 15 May 2018 £42.30 1,313 – – – – 1,313 1,313 1 Dec 2020 – – – Trott 18 Mar 2019 £42.67 – 6,140 – – – 6,140 6,140 1 Dec 2021 – – – 134 Annual report 2019 | riotinto.com

Remuneration report / Implementation report Table 3 – Plan interests (awards of shares under long term incentive plans) continued Market Performance / value of Award/ Market 31 14 vesting (MSA) Market award at grant price 1 January Lapsed/ Dividend December February period Date of price at release Name date at award(a)(b) 2019 Awarded cancelled units Vested 2019 2020 concludes(c) release release US$(d) Management Share Awards Bold Baatar 11 Mar 2016 £20.00 4,317 – – 433 4,750 – – – 28 Feb 2019 £43.27 262,385 Joanne Farrell 11 Mar 2016 A$44.57 4,318 – – 345 4,663 – – – 28 Feb 2019 A$96.68 313,459 Vera Governance Kirikova 11 Mar 2016 £20.00 1,878 – – 188 2,066 – – – 28 Feb 2019 £43.27 114,124 Stephen McIntosh 11 Mar 2016 A$44.57 4,364 – – 349 4,713 – – – 28 Feb 2019 A$96.68 316,820 Simone Niven 11 Mar 2016 £20.00 2,277 – – 228 2,505 – – – 28 Feb 2019 £43.27 138,373 Chris Salisbury 11 Mar 2016 A$44.57 4,632 – – 371 5,003 – – – 28 Feb 2019 A$96.68 336,315 Arnaud Soirat 11 Mar 2016 A$44.57 5,057 – – 405 5,462 – – – 28 Feb 2019 A$96.68 367,170 Simon 11 Mar 2016 A$44.57 2,353 – – 188 2,541 – – – 28 Feb 2019 A$96.68 170,813 Trott 9 Mar 2017 A$60.14 2,695 – – – – 2,695 2,695 27 Feb 2020 – – – Performance Share Awards 28 Feb 2019/ £43.27/ 166,269/ 17 Mar 2014 £31.80 7,765 – (4,429) 589 3,925 – – 31 Dec 2018 3 Jun 2019 £45.38 53,002 23 Mar 2015 £29.43 14,954 – – – – 14,954 14,954 31 Dec 2019 – – – Bold 11 Mar 2016 £20.00 17,270 – – – – 17,270 17,270 31 Dec 2020 – – – Baatar 9 Mar 2017 £32.03 85,174 – – – – 85,174 85,174 31 Dec 2021 – – – 15 May 2018 £42.30 63,039 – – – – 63,039 63,039 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 51,752 – – – 51,752 51,752 31 Dec 2023 – – – 28 Feb 2019/ £43.27/ 922,932/ 15 Sep 2014 £32.35 43,568 – (24,844) 3,072 21,796 – – 31 Dec 2018 31 May 2019 £45.10 292,964 23 Mar 2015 £29.43 66,390 – – – – 66,390 66,390 31 Dec 2019 – – – Alfredo 11 Mar 2016 £20.00 73,140 – – – – 73,140 73,140 31 Dec 2020 – – – Barrios 9 Mar 2017 £32.03 91,721 – – – – 91,721 91,721 31 Dec 2021 – – – 15 May 2018 £42.30 66,050 – – – – 66,050 66,050 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 57,011 – – – 57,011 57,011 31 Dec 2023 – – – 28 Feb 2019/ A$96.68/ 189,971/ 17 Mar 2014 A$61.28 7,448 – (4,247) 475 3,676 – – 31 Dec 2018 31 May 2019 A$100.43 59,355 23 Mar 2015 A$58.21 7,539 – – – – 7,539 7,539 31 Dec 2019 – – – Joanne 11 Mar 2016 A$44.57 8,637 – – – – 8,637 8,637 31 Dec 2020 – – – Farrell 9 Mar 2017 A$60.14 66,295 – – – – 66,295 66,295 31 Dec 2021 – – – 15 May 2018 A$83.61 48,612 – – – – 48,612 48,612 31 Dec 2022 – – – 18 Mar 2019 A$93.17 - 41,620 – – – 41,620 41,620 31 Dec 2023 – – – 28 Feb 2019/ £43.27/ 1,500,620/ 17 Mar 2014 £31.80 70,057 – (39,950) 5,323 35,430 – – 31 Dec 2018 31 May 2019 £45.10 475,836 23 Mar 2015 £29.43 72,768 – – – – 72,768 72,768 31 Dec 2019 – – – Jean- 11 Mar 2016 £20.00 84,005 – – – – 84,005 84,005 31 Dec 2020 – – – Sébastien 12 Sep 2016 £22.95 79,966 – – – – 79,966 79,966 31 Dec 2020 – – – Jacques 9 Mar 2017 £32.03 184,994 – – – – 184,994 184,994 31 Dec 2021 – – – 15 May 2018 £42.30 139,995 – – – – 139,995 139,995 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 125,665 – – – 125,665 125,665 31 Dec 2023 – – – 14 Sep 2015 £23.98 1,758 – – – – 1,758 1,758 31 Dec 2019 – – – 11 Mar 2016 £20.00 5,636 – – – – 5,636 5,636 31 Dec 2020 – – – Vera 9 Mar 2017 £32.03 66,803 – – – – 66,803 66,803 31 Dec 2021 – – – Kirikova 15 May 2018 £42.30 45,219 – – – – 45,219 45,219 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 40,591 – – – 40,591 40,591 31 Dec 2023 – – – Annual report 2019 | riotinto.com 135

Governance Implementation report continued Table 3 – Plan interests (awards of shares and options under long term incentive plans) continued Market value of Award/ Market 31 14 Performance Market award at grant price 1 January Lapsed/ Dividend December February period Date of price at release Name date at award(a)(b) 2019 Awarded cancelled units Vested 2019 2020 concludes(c) release release US$(d) 28 Feb 2019/ A$96.68/ 193,265/ 17 Mar 2014 A$61.28 7,578 – (4,322) 483 3,739 – – 31 Dec 2018 31 May 2019 A$100.43 60,333 23 Mar 2015 A$58.21 11,429 – – – – 11,429 11,429 31 Dec 2019 – – – Stephen 11 Mar 2016 A$44.57 13,093 – – – – 13,093 13,093 31 Dec 2020 – – – McIntosh 9 Mar 2017 A$60.14 79,152 – – – – 79,152 79,152 31 Dec 2021 – – – 15 May 2018 A$83.61 58,040 – – – – 58,040 58,040 31 Dec 2022 – – – 18 Mar 2019 A$93.17 - 49,689 – – – 49,689 49,689 31 Dec 2023 – – – 28 Feb 2019/ £43.27/ 78,384/ 17 Mar 2014 £31.80 3,660 – (2,088) 277 1,849 – – 31 Dec 2018 31 May 2019 £45.10 24,759 23 Mar 2015 £29.43 5,041 – – – – 5,041 5,041 31 Dec 2019 – – – Simone 11 Mar 2016 £20.00 9,109 – – – – 9,109 9,109 31 Dec 2020 – – – Niven 9 Mar 2017 £32.03 66,803 – – – – 66,803 66,803 31 Dec 2021 – – – 15 May 2018 £42.30 49,440 – – – – 49,440 49,440 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 44,379 – – – 44,379 44,379 31 Dec 2023 – – – 11 Sep 2017 £36.78 57,810 – – – – 57,810 57,810 31 Dec 2021 – – – Philip 15 May 2018 £42.30 50,872 – – – – 50,872 50,872 31 Dec 2022 – – – Richards 18 Mar 2019 £42.67 - 45,666 – – – 45,666 45,666 31 Dec 2023 – – – 28 Feb 2019/ A$96.68/ 203,886/ 17 Mar 2014 A$61.28 7,994 – (4,559) 510 3,945 – – 31 Dec 2018 31 May 2019 A$100.43 63,685 23 Mar 2015 A$58.21 16,175 – – – – 16,175 16,175 31 Dec 2019 – – – Chris 11 Mar 2016 A$44.57 13,898 – – – – 13,898 13,898 31 Dec 2020 – – – Salisbury 9 Mar 2017 A$60.14 79,152 – – – – 79,152 79,152 31 Dec 2021 – – – 15 May 2018 A$83.61 63,457 – – – – 63,457 63,457 31 Dec 2022 – – – 18 Mar 2019 A$93.17 - 49,689 – – – 49,689 49,689 31 Dec 2023 – – – 28 Feb 2019/ A$96.68/ 416,444/ 17 Mar 2014 A$61.28 16,326 – (9,310) 1,043 8,059 – – 31 Dec 2018 3 Jun 2019 A$98.70 127,921 23 Mar 2015 A$58.21 17,658 – – – – 17,658 17,658 31 Dec 2019 – – – Arnaud 11 Mar 2016 A$44.57 20,230 – – – – 20,230 20,230 31 Dec 2020 – – – Soirat 9 Mar 2017 £32.03 85,174 – – – – 85,174 85,174 31 Dec 2021 – – – 15 May 2018 £42.30 57,657 – – – – 57,657 57,657 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 56,582 – – – 56,582 56,582 31 Dec 2023 – – – Jakob 10 Sep 2018 £35.16 29,886 – – – – 29,886 29,886 31 Dec 2022 – – – Stausholm 18 Mar 2019 £42.67 - 79,609 – – – 79,609 79,609 31 Dec 2023 – – – 28 Feb 2019/ A$96.68/ 130,950/ 17 Mar 2014 A$61.28 5,135 – (2,929) 327 2,533 – – 31 Dec 2018 31 May 2019 A$100.43 40,851 23 Mar 2015 A$58.21 8,216 – – – – 8,216 8,216 31 Dec 2019 – – – Simon Trott 11 Mar 2016 A$44.57 9,412 – – – – 9,412 9,412 31 Dec 2020 – – – 9 Mar 2017 A$60.14 8,085 – – – – 8,085 8,085 31 Dec 2021 – – – 15 May 2018 £42.30 57,188 – – – – 57,188 57,188 31 Dec 2022 – – – 18 Mar 2019 £42.67 - 50,598 – – – 50,598 50,598 31 Dec 2023 – – – (a) Awards denominated in pound sterling were for Rio Tinto plc ordinary shares of 10 pence each and awards denominated in Australian dollars were for Rio Tinto Limited shares. All awards are granted over ordinary shares. (b) The weighted fair value per share of Bonus Deferral Awards granted in 2019 was £41.51 for Rio Tinto plc and A$91.65 for Rio Tinto Limited and for Performance Share Awards was £24.68 for Rio Tinto plc and A$54.55 for Rio Tinto Limited. Conditional awards are awarded at no cost to the recipient and no amount remains unpaid on any shares awarded. (c) Details of performance conditions for the PSA are provided below. For awards granted from 2013, for the TSR component (constituting two-thirds of the award for awards granted until 2017 and constituting 100% for awards granted from 2018), where TSR performance is measured against both the EMIX Global Mining Index and the MSCI World Index, the award will vest as follows: –– Out-performance of the index by 6% per annum –– 100% award vests –– Performance between equal to the index and 6% per annum –– Proportionate vesting between 22.5% and 100% vesting out-performance –– Performance equal to the index –– 22.5% award vests –– Performance less than index –– Nil vesting 136 Annual report 2019 | riotinto.com

Remuneration report / Implementation report For awards granted from 2013 to 2017, one-third of the award is subject to an EBIT margin condition measuring the change in the EBIT margin of Rio Tinto and each of the comparator companies (measured on a “point-to-point” basis using the last financial year in the performance period and the financial year prior to the start of the performance period). This will be calculated using independent third-party data. Vesting will be subject to Rio Tinto’s interpolated ranking position using the following schedule. –– Equal to or greater than 2nd ranked company –– 100% award vests –– Between the 5th and 2nd ranked companies –– Proportionate vesting between 22.5% and 100% vesting –– Above the 6th ranked company –– 22.5% award vests –– Equal to the 6th ranked company or below –– Nil vesting The TSR performance condition (two thirds of the award) vests in February with the EBIT performance condition (one third of the award) vesting in May. Due to the phased vesting nature of the award, details of each vest are displayed separately side by side within the table. For awards granted from 2018 the EBIT performance condition will not apply. Instead the award is subject to the TSR measures described above, with each applied to 50% of the award Governance If vesting is achieved, participants will be entitled to receive a number of additional shares whose market value reflects the aggregate cash amount of dividends that would have been received had the number of shares which have vested at the end of the performance period been held throughout the period. (d) The amount in US dollars has been converted at the rate of US$1.27661 = £1 and US$0.69531 = A$1, being the average exchange rates for 2019. (e) For the Performance Share Awards granted on 23 March 2015 with a performance period that concluded on 31 December 2019, 45.56% of the award vested in relation to the TSR portion of the award. The remaining performance condition of relative EBIT margin will be assessed later in 2020. (f) The closing price at 31 December 2019 was £45.03 for Rio Tinto plc ordinary shares and was A$100.40 for Rio Tinto Limited ordinary shares. The high and low prices during 2019 of Rio Tinto plc and Rio Tinto Limited shares were £49.765 and £36.43 and A$107.05 and A$76.65 respectively. As of 14 February 2020, executives held 2,671,784 shares awarded and not vested under long term incentive plans. No executive held any options. Table 3a – Plan interests (award of shares under all-employee share arrangements) myShare Share Ownership Plan Total activity in 2019 Value of Value of Value of Value of Matching Matching Matching Matching Value of Free Value of Plan shares shares shares shares shares Free shares Plan interests interests at awarded in vested in awarded in vested in awarded in vested in Grants Vesting at 31 1 January year(b) year(c) year(b) year(c) year(d) year(d) in year in year December 2019(a) ('000) ('000) ('000) ('000) ('000) ('000) ('000) ('000) 2019(a) Bold Baatar 311.31 4 5 0 0 5 0 9 5 392.86 Alfredo Barrios 291.28 4 8 0 0 0 0 4 8 235.95 Joanne Farrell 278.66 4 9 0 0 0 0 4 9 219.03 Jean-Sébastien Jacques 664.70 2 4 2 4 5 9 9 17 520.29 Vera Kirikova 547.15 2 6 2 0 5 5 9 11 508.24 Stephen McIntosh 278.66 4 9 0 0 0 0 4 9 219.03 Simone Niven 363.00 0 0 0 0 5 9 5 9 286.00 Philip Richards 67.00 1 0 1 0 5 0 7 0 174.52 Chris Salisbury 0.00 0 0 0 0 0 0 0 0 0.00 Arnaud Soirat 148.00 1 0 1 0 5 0 7 0 250.96 Jakob Stausholm 0.00 1 0 1 0 1 0 3 0 60.09 Simon Trott 298.11 5 9 0 0 0 0 5 9 260.09 (a) All shares shown are Rio Tinto plc shares except in the cases of Joanne Farrell and Stephen McIntosh which are Rio Tinto Limited shares and Simon Trott who holds a combination of Rio Tinto plc and Rio Tinto Limited shares. (b) myShare and Share Ownership Plan Matching share awards are granted on a quarterly basis (January, April, July and October) throughout the year. (c) The vesting of a Matching share is dependent on continued employment with Rio Tinto and the retention of the associated Investment share purchased by the participant for 3 years. (d) Share Ownership Plan Free Shares vest after 3 years. (e) Share Ownership Plan awards shown above and the vested Matching shares under myShare are included, where relevant, in the Executive’s share interests in Table 2. (f) All currency figures are shown in USD and rounded. Annual report 2019 | riotinto.com 137

Governance Implementation report continued Audited information Under Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), the following information is auditable: –– the 2019 performance for the purposes of the STIP on page 115; –– the single total figure of remuneration for each director, as set out on page 118 and table 1b on page 132; –– details of the directors’ total pension entitlements, as set out on page 118; –– details of taxable benefits on page 118; –– details of scheme interests awarded to the directors during the financial year, as set out on pages 123 and table 3 and 3a on pages 134 to 137; –– details of payments to past directors as set out on page 125; –– details of shareholding ownership policy and directors’ share ownership on pages 123 and 125; –– statement of the directors’ shareholdings and share interests, as set out in tables 2, 3 and 3a on pages 133 to 137 of the Implementation report; –– STIP objectives and outcomes for 2019 as set out on pages 119 to 121 and LTIP outcome and award granted for 2019 as set out on pages 122 to 123. The Australian Securities and Investments Commission issued an order dated 14 December 2015, under which the Remuneration report must be prepared and audited in accordance with the requirements of the Australian Corporations Act 2001 applied on the basis of certain modifications set out in the order (as detailed on page 255). The information provided in the Remuneration report has been audited as required by section 308 (3C) of the Australian Corporations Act 2001. Directors’ approval statement This Directors’ Remuneration report is delivered in accordance with a resolution of the Board, and has been signed on behalf of the Board by: Sam Laidlaw Chairman of the Remuneration Committee 26 February 2020 138 Annual report 2019 | riotinto.com

Additional statutory disclosure The directors present their report and audited consolidated financial statements –– On 19 June 2019 Rio Tinto announced that Rio Tinto Iron Ore was for the year ended 31 December 2019. experiencing operational challenges, particularly in the Greater Brockman hub in the Pilbara. In light of these challenges Pilbara shipments for 2019 Scope of this report were revised to between 320 million tonnes and 330 million tonnes For the purposes of UK company law and the Australian Corporations Act 2001: (previously between 333 million tonnes and 343 million tonnes). –– the additional disclosures under the heading “Shareholder information” –– On 26 June 2019, Dame Moya Greene retired from the board as a non- on pages 292 to 298 are hereby incorporated by reference to, and form part executive director. of, this Directors’ report; –– In July 2019 Rio Tinto completed the sale of its entire interest in the Rössing –– the Strategic report on pages 4 to 81 provides a comprehensive review of uranium mine in Namibia to China National Uranium Corporation Limited Rio Tinto’s operations, its financial position and its business strategies and (CNUC) for an initial cash payment of $6.5 million plus a contingent prospects, and is incorporated by reference into, and forms part of this payment of up to $100 million. Directors’ report; certain items that would ordinarily need to be included in –– In July 2019 Rio Tinto provided an update on the schedule and cost of the this Directors’ report (including an indication of likely future developments Oyu Tolgoi underground project in Mongolia. Preliminary estimates for Governance in the business of the company and the Group) have, as permitted, instead the development capital spend were revised to $6.5 billion to $7.2 billion, been discussed in the Strategic report, while details of the Group’s policy on an increase of $1.2 billion to $1.9 billion from the $5.3 billion previously addressing financial risks and details about financial instruments are shown disclosed. Achievement of first sustainable production was revised to in note 30 to the Group financial statements; and between May 2022 and June 2023, a delay of 16 to 30 months compared –– taken together, the Strategic report and this Directors’ report are intended to the original feasibility study guidance in 2016. to provide a fair, balanced and understandable assessment of: the –– On 25 September 2019 Rio Tinto signed a Memorandum of Understanding development and performance of the Group’s business during the year with China’s largest steel producer, China Baowu Steel Group and Tsinghua and its position at the end of the year; its strategy; likely developments; University, one of China’s most prestigious and influential universities, to and any principal or emerging risks and uncertainties associated with the develop and implement new methods to reduce carbon emissions and Group’s business. improve environmental performance across the steel value chain. –– The Directors’ declaration on page 256 is also incorporated into this –– In October 2019 Rio Tinto announced it would conduct a strategic review of Directors’ report. its interest in New Zealand’s Aluminium Smelter (NZAS) at Tiwai Point, to determine the operation’s ongoing viability and competitive position. For the purposes of compliance with DTR 4.1.5R(2) and DTR 4.1.8R, the required –– On 4 November 2019 Rio Tinto announced it achieved a significant content of the “Management report” can be found in the Strategic report or this milestone at the Oyu Tolgoi mine in Mongolia with the completion of Shaft 2, Directors’ report, including the material incorporated by reference. which enabled the acceleration of work on the underground development. –– In November 2019 Rio Tinto announced that it would support Energy A full report on director and executive remuneration and shareholdings can be Resources of Australia Limited’s (ERA) plans for a renounceable entitlement found in the Remuneration report on pages 110 to 138 which for the purposes of offer to raise $324 million (A$476 million) for the rehabilitation of the Ranger the Australian Corporations Act 2001, forms part of this Directors’ report. Project Area in Australia’s Northern Territory. –– In November 2019 Rio Tinto approved a $749 million (A$1 billion) investment Dual listed structure and constitutional documents in its existing Greater Tom Price operations (100% owned) to help sustain The dual listed companies (DLC) structure of Rio Tinto plc and Rio Tinto the production capacity of its world-class iron ore business in the Pilbara Limited, their constitutional provisions and voting arrangements – including of Western Australia. restrictions that may apply to the shares of either company under specified –– In December 2019 Rio Tinto approved a $1.5 billion investment (100 per cent circumstances – are described on pages 292 and 293. basis) to continue production at its Kennecott copper operations in the United States. The investment extended operations at Kennecott to 2032. Operating and financial review –– In February 2020 Rio Tinto announced it would conduct a strategic review Rio Tinto’s principal activities during 2019 were minerals and metals of the ISAL smelter in Iceland, to determine the operation’s ongoing viability exploration, development, production and processing and marketing. and explore options to improve its competitive position. –– In February 2020, Rio Tinto’s subsidiary Energy Resources of Australia Ltd Subsidiary and associated undertakings principally affecting the profits or net assets (ERA) announced the completion of an entitlement offer, which was of the Group in the year are listed in notes 33 to 36 to the financial statements. underwritten by the Group. As a result of the issue of new shares to the Group, our interest in ERA has increased from 68.39% to 86.33%. The following significant changes and events affected the Group during 2019 –– In February 2020, Rio Tinto announced the appointment of three new and up to the date of this report: independent non-executive directors to the board. They were Hinda Gharbi, Jennifer Nason and Ngaire Woods. –– In February 2019 Rio Tinto announced that it had discovered copper-gold –– In February 2020, Rio Tinto announced that it expected Pilbara iron ore mineralisation at the Winu Project in the Yeneena Basin of the Paterson shipments in 2020 to be between 324 million tonnes and 334 million tonnes Province in Western Australia. (100% basis) versus previous guidance of between 330 million tonnes and –– In March 2019 Rio Tinto announced it had completed the commisioning of 343 million tonnes. the $1.9 billion Amrun bauxite mine on the Cape York Peninsula in Queensland, Australia. Details of events that took place after the balance sheet date are further described –– In April 2019 Rio Tinto announced the next stage in the development of in note 42 to the financial statements. Richards Bay Minerals in South Africa through the construction of the Zulti South project. The $463 million (Rio Tinto share $343 million) investment Risk identification, assessment and management will sustain RBM’s current capacity and extend its mine life. Construction is The Group’s principal risks and uncertainties are listed on pages 74 to 80. on hold after a number of security incidents. The Group’s approach to risk management is discussed on pages 71 to 73. –– In April 2019 Rio Tinto committed $302 million of additional capital to advance its Resolution Copper project in the US state of Arizona. The Share capital investment funded additional drilling, ore-body studies, infrastructure Details of the Group’s share capital as at 31 December 2019 are described in improvements and permitting activities. notes 27 and 28 to the financial statements. Details of the rights and obligations attached to each class of shares are covered on pages 292 to 293, under the heading “Voting arrangements”. Annual report 2019 | riotinto.com 139

Governance Additional statutory disclosure continued In situations where an employee share plan operated by the company and plan Directors’ and executives’ beneficial interests participants are the beneficial owners of shares but not the registered owners, A table of directors’ and executives’ beneficial interests in Rio Tinto shares voting rights are normally exercised by the registered owner at the direction of is on page 133. the participant. Secretaries Details of certain restrictions on holding shares in Rio Tinto and certain Steve Allen is company secretary of Rio Tinto plc and joint company secretary, consequences triggered by a change of control are described on page 293 together with Tim Paine, of Rio Tinto Limited. Steve’s and Tim’s qualifications under the heading “Limitations on ownership of shares and merger obligations”. and experience are described on page 85. There are no other restrictions on the transfer of ordinary Rio Tinto shares save for: –– restrictions that may from time to time be imposed by laws, regulations Indemnities and insurance or Rio Tinto policy (for example relating to market abuse, insider dealing, The Articles of Association of Rio Tinto plc and the Constitution of Rio Tinto share trading or an Australian foreign investment); Limited provide for them to indemnify, to the extent permitted by law, directors –– restrictions on the transfer of shares that may be imposed following and officers of the companies, including officers of certain subsidiaries, against a failure to supply information required to be disclosed, or where registration liabilities arising from the conduct of the Group’s business. The directors, of the transfer may breach a court order or a law, or in relation to unmarketable Group company secretary and joint company secretary of Rio Tinto Limited, parcels of shares; together with employees serving as directors of eligible subsidiaries at the –– restrictions on the transfer of shares held under certain employee share Group’s request, have also received similar direct indemnities. Former directors plans while they remain subject to the plan. also received indemnities for the period in which they were directors.These are qualifying third-party indemnity provisions for the purposes of the UK At the AGMs held in 2019, shareholders authorised: Companies Act 2006, in force during the financial year ended 31 December –– the on-market purchase by Rio Tinto plc or Rio Tinto Limited or its 2019 and up to the date of this report. No amount has been paid under any subsidiaries, of up to 126,772,263 Rio Tinto plc shares (representing of these indemnities during the year. approximately 10% of Rio Tinto plc’s issued share capital, excluding Rio Tinto plc shares held in Treasury at that time); Qualifying pension scheme indemnity provisions (as defined by section 235 –– the off-market purchase by Rio Tinto plc of up to 126,772,263 Rio Tinto plc of the UK Companies Act 2006) were in force during the course of the financial shares acquired by Rio Tinto Limited or its subsidiaries under the above year ended 31 December 2019 and up to the date of this Directors’ report, authority; and for the benefit of trustees of the Rio Tinto Group pension and superannuation –– the off-market and/or on-market buy-back by Rio Tinto Limited of funds across various jurisdictions. No amount has been paid under any up to 55.6 million Rio Tinto Limited shares (representing approximately of these indemnities during the year. 15% of Rio Tinto Limited’s issued share capital at that time). The Group purchased directors’ and officers’ insurance during the year. Substantial shareholders In broad terms, this cover indemnifies individual directors and officers Details of substantial shareholders are included on page 294. against certain personal legal liability and legal defence costs for claims arising out of actions connected with Group business. Dividends Details of dividends paid and declared for payment, together with Employment of disabled persons the company’s shareholder returns policy are explained on page 36. Our statement on the employment of disabled persons is on page 69. Directors Engagement with UK employees The names of directors who served during or since the end of the year and Our statement on engagement with UK employees is on page 92. their period of appointment are listed on pages 84 and 85, together with details of each directors qualifications, experience and special responsibilities, and Engagement with suppliers, customers and others in a business current directorships. relationship with the company Our statement on engagement with suppliers, customers and others A table of directors’ attendance at board and committee meetings during 2019 in a business relationship with the company is on page 93. is on page 97. Statutory Audit Services Order At the 2020 AGMs, Hinda Gharbi and Jennifer Nason will stand for election, The Group has fully complied with the Statutory Audit Services Order. Ngaire Woods will stand for election with effect from 1 September, 2020, and all other directors will stand for re-election. Previous listed directorships Details of each director’s previous directorships of other listed companies (where relevant) held in the past three years are set out below: David Constable –– Anadarko Petroleum Company (July 2016 to August 2019) Sam Laidlaw –– HSBC Holdings plc (January 2008 to April 2017) Jakob Stausholm –– A P Moller-Maersk A/s (December 2016 to March 2018) Simon Thompson –– Tullow Oil plc (May 2011 to April 2017) 140 Annual report 2019 | riotinto.com

Additional statutory disclosure Purchases Rio Tinto plc shares(a) and Rio Tinto plc American Depositary Receipts (ADRs) Total number of shares Maximum number Total number of shares purchased as part of of shares that may Average purchased to satisfy Total number of shares publicly announced be purchased Total number of price per company dividend purchased to satisfy plans or under plans or shares purchased(b) share US$(c) reinvestment plans employee share plans programmes(d)(k) programmes 2019 1 to 31 Jan 6,253,189 49.71 – – 6,253,189 76,033,612(f) 1 to 28 Feb 5,401,268 56.38 – – 5,401,268 70,632,344(f) (f) 1 to 31 Mar 1,866,278 56.46 – – 1,866,278 68,766,066 Governance 1 to 30 Apr 2,816,717 59.88 1,023,851 319,702 1,473,164 125,299,099(g) 1 to 31 May 1,596,086 58.14 – – 1,596,086 123,703,013(g) 1 to 30 Jun 1,514,392 59.18 – 149,435 1,364,957 122,338,056(g) 1 to 31 Jul 1,953,181 59.53 – – 1,953,181 120,384,875(g) 1 to 31 Aug 2,803,415 51.33 – – 2,803,415 117,581,460 (g) 1 to 30 Sep 1,738,314 52.71 528,356 168,712 1,041,246 116,540,214 (g) 1 to 31 Oct 1,682,872 51.00 – – 1,682,872 114,857,342(g) 1 to 30 Nov 1,677,420 53.62 – – 1,677,420 113,179,922(g) 1 to 31 Dec 1,827,773 57.34 – 584,815 1,242,958 111,936,964 (g) 31,130,905(e) 54.74 1,552,207 1,222,664 28,356,034 – 2020 1 to 31 Jan 1,962,815 58.41 – – 1,962,815 109,974,149(g) 1 to 14 Feb 840,082 54.22 – – 840,082 109,134,067(g) Rio Tinto Limited shares Total number of shares Maximum number Total number of shares Total number of purchased as part of of shares that may Average purchased to satisfy shares purchased to publicly announced be purchased Total number of price per company dividend satisfy employee plans or under plans or shares purchased(b) share US$(c) reinvestment plans share plans(h) programmes(d)(k) programmes 2019 1 to 31 Jan – – – – – 1,866(i) 1 to 28 Feb – – – – – 1,866(i) 1 to 31 Mar – – – – – 1,866(i) 1 to 30 Apr 1,623,567 69.49 1,397,150 226,417 – 1,866(i) 1 to 31 May – – – – – 55,600,000(j) 1 to 30 Jun – – – – – 55,600,000(j) 1 to 31 Jul – – – – – 55,600,000(j) 1 to 31 Aug – – – – – 55,600,000(j) 1 to 30 Sep 910,307 63.17 788,265 122,042 – 55,600,000(j) 1 to 31 Oct – – – – – 55,600,000(j) 1 to 30 Nov – – – – – 55,600,000(j) 1 to 31 Dec 791,445 71.49 – 791,445 – 55,600,000(j) 3,325,319 68.24 2,185,415 1,139,904 – – 2020 1 to 31 Jan 21,555 70.02 – 21,555 – 55,600,000(j) 1 to 14 Feb – – – – – 55,600,000(j) (a) Rio Tinto plc shares have a nominal value of 10 pence each. (b) Monthly totals of purchases are based on the settlement date. (c) The shares were purchased in the currency of the stock exchange on which the purchases took place and the sale price has been converted into US dollars at the exchange rate on the date of settlement. (d) Shares purchased in connection with the dividend reinvestment plans and employee share plans are not deemed to form any part of any publicly announced plan or programme. (e) This figure represents 2.5% of Rio Tinto plc issued share capital at 31 December 2019. (f) At the Rio Tinto plc AGM held in 2018, shareholders authorised the on-market purchase by Rio Tinto plc, Rio Tinto Limited and its subsidiaries of up to 133,746,522 Rio Tinto plc shares. This authorisation expired on 11 July 2019. (g) At the Rio Tinto plc AGM held in 2019, shareholders authorised the on-market purchase by Rio Tinto plc, Rio Tinto Limited and its subsidiaries of up to 126,772,263 Rio Tinto plc shares. This authorisation will expire on the later of 10 July 2020 or the date of the 2020 AGM. (h) The average price of shares purchased on-market by the trustee of Rio Tinto Limited’s employee share trust during 2019 was $70.18. (i) At the Rio Tinto Limited AGM held in 2018 shareholders authorised the off-market and/or on-market buy-back of up to 41.2 million Rio Tinto Limited shares. (j) At the Rio Tinto Limited AGM held in 2019 shareholders authorised the off-market and/or on-market buy-back of up to 55.6 million Rio Tinto Limited shares. (k) Rio Tinto purchased US$1.6 billion of shares through an on-market purchase of Rio Tinto plc shares during 2019 which comprised a return of US$0.7 billion of the US$1.0 billion programme announced on 1 August 2018 and US$0.9 billion of the US$3.2 billion programme announced on 20 September 2018, returning the post-tax proceeds of the coal assets to shareholders. The US$3.2 billion programme comprised the A$2.9 billion off-market share buy-back of Rio Tinto Limited shares which was completed on 12 November 2018 and US$1.1 billion on market buy-back of Rio Tinto plc shares of which the remaining US$0.2 billion will be completed no later than 28 February 2020. Annual report 2019 | riotinto.com 141

Governance Additional statutory disclosure continued Political donations Greenhouse gas emissions (a)(b) The Group made no political donations (as defined by the UK Companies Act (in million tCO2-e) 2006) in the EU, Australia or elsewhere during 2019. 2019 2018(g) Scope 1(c) 17.1 17.8 Government regulations Scope 2(d) 9.7 10.9 Our operations around the world are subject to extensive laws and regulations Total greenhouse gas emissions(e) 26.4 28.2 imposed by local, state, provincial and federal governments. These regulations govern many aspects of our work – from how we explore, mine and process ore, Ratios (f) to conditions of land tenure and health, safety and environmental requirements. Greenhouse gas emissions intensity index 70.6 71.6 They also govern how we operate as a company in relation to securities, taxation, Greenhouse gas emissions intensity (tCO -e/t of product) 0.062 0.065 intellectual property, competition and foreign investment, provisions to protect 2 data privacy, conditions of trade and export and infrastructure access. In addition (a) Rio Tinto’s greenhouse gas emission for managed operations are reported in accordance to these laws, several of our operations are governed by specific agreements with the requirements under Part 7 of the UK Companies Act 2006 (Strategic report made with governments, some of which are enshrined in legislation. and Directors’ report) Regulations 2013. Our approach and methodology used forthe The geographic and product diversity of our operations reduces determination of these emissions are available at: https://www.riotinto.com/sustainability/sustainability-reporting. the likelihood of any single law or government regulation having (b) Rio Tinto’s greenhouse gas emissions inventory is based on definitions provided by a material effect on the Group’s business as a whole. The World Resource Institute/World Business Council for Sustainable Development Greenhouse Gas Protocol: A Carbon Reporting and Accounting Standard, March 2004. (c) Scope 1 emissions include “emissions from combustion of fuel and operation of manage Environmental regulations facilities. These include emissions from land management and livestock management Rio Tinto is subject to various environmental laws and regulations in the at those facilities. countries where it has operations. Rio Tinto measures its performance against (d) Scope 2 emissions include “emissions from the purchase of electricity, heat, steam or cooling. (e) Total emissions is the sum of scope 1 and scope 2 emissions, minus emissions that are environmental regulation by tracking and rating incidents according to their associated with the generation of electricity, heat, steam or cooling supplied to others. actual environmental and compliance impacts using five severity categories These emissions exclude indirect emissions associated with transportation and use of our (minor, medium, serious, major or catastrophic). Incidents with a consequence products reported at https://www.riotinto.com/sustainability/sustainability-reporting. (f) Rio Tinto greenhouse gas intensity index is the weighted emissions intensity for each of rating of major or catastrophic are of a severity that require notification Rio Tinto’s main commodities relative to the commodity intensities in the 2008 base year to the relevant product group Chief Executive and the Rio Tinto Chief Executive (set to 100). This index includes approximately 97 (97.18%)% of Rio Tinto’s emissions from immediately after the incident occurring. In 2019, there were no environmental managed operations. (g) All numbers are restated to ensure comparability over time. Amendments are due to changes incidents at managed operations with a major or catastrophic impact. in measurement and calculation methodologies including the adoption of updated global warming potentials from the IPCC fourth assessment report or immaterial updates to data. During 2019, three managed operations incurred fines amounting to US$ 18,964 (2018: US$284,684). Details of these fines are reported Exploration, research and development in the performance section of the sustainability report at: The Group carries out exploration, research and development, described https://www.riotinto.com/sustainability/sustainability-reporting. in the Growth and Innovation section on pages 56 to 57. Exploration and evaluation costs, net of any gains and losses on disposal, generated a net loss Australian corporations that exceed specific greenhouse gas emissions before tax of $614 million (2018: $210 million). Research and development or energy use thresholds have obligations under the Australian National costs were $45 million (2018: $45 million). Greenhouse and Energy Reporting Act 2007 (NGER). All Rio Tinto entities covered under this Act have submitted their annual NGER reports by the Financial instruments required 31 October 2019 deadline. Details of the Group’s financial risk management objectives and policies, and exposure to risk, are described in note 30 to the financial statements. Further information on the Group’s environmental performance is included in the Sustainability section of this Annual report, on pages 60 to 70, and on Dealing in Rio Tinto securities the website. Rio Tinto operates rules which restrict the dealing in Rio Tinto securities by directors and employees who may be in possession of “inside information”. These individuals must seek clearance before any proposed dealing takes place. Our rules also prohibit such persons from engaging in hedging or other arrangements which limit the economic risk in connection to Rio Tinto securities issued, or otherwise allocated, as remuneration that are either unvested, or that have vested, but remain subject to a holding period. We also impose restrictions on a broader group of employees, requiring them to seek clearance before engaging in similar arrangements over any Rio Tinto securities. Financial reporting Financial statements The directors are required to prepare financial statements for each financial period that give a true and fair view of the state of the Group at the end of the financial period, together with profit or loss and cash flows for that period. This includes preparing financial statements in accordance with UK company law that give a true and fair view of the state of the company’s affairs, and preparing a Remuneration report that includes the information required by Regulation 11, Schedule 8 of the Large- and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and the Australian Corporations Act 2001. 142 Annual report 2019 | riotinto.com

Additional statutory disclosure In addition, the UK Corporate Governance Code recommends that the board The Group’s internal controls over financial reporting include policies provides a fair, balanced and understandable assessment of the company’s and procedures designed to ensure the maintenance of records that: position and prospects in its external reporting. –– accurately and fairly reflect transactions and dispositions of assets; –– provide reasonable assurances that transactions are recorded as necessary, Rio Tinto’s management conducts extensive review and challenge in support enabling the preparation of financial statements in accordance with IFRS, of the board’s obligations, aiming to strike a balance between positive and and that receipts and expenditures are made with the authorisation of negative statements and provide good linkages throughout the Annual report. management and directors of each of the companies; and –– provide reasonable assurance regarding the prevention or timely detection The directors were responsible for the preparation and approval of the Annual of unauthorised acquisition, use or disposition of the Group’s assets that report for the year ended 31 December 2019. They consider the Annual report, could have a material effect on its financial statements. taken as a whole, to be fair, balanced and understandable, and that it provides the information necessary for shareholders to assess the Group’s position, Due to inherent limitations, internal controls over financial reporting cannot performance, business model and strategy. provide absolute assurance. Similarly, these controls may not prevent or detect Governance all misstatements, whether caused by error or fraud within each of Rio Tinto plc The directors are responsible for maintaining proper accounting records, in and Rio Tinto Limited. accordance with UK and Australian legislation. They have a general responsibility to safeguard the assets of the Group, and to prevent and detect fraud and other There were no changes to internal controls over financial reporting during irregularities. The directors are also responsible for ensuring that appropriate the relevant period that have materially affected, or are reasonably likely to systems are in place to maintain and preserve the integrity of the Group’s website. materially affect, the financial reporting of Rio Tinto plc and Rio Tinto Limited. Legislation in the UK governing the preparation and dissemination of financial Management’s evaluation of the effectiveness of the company’s internal statements may differ from current and future legislation in other jurisdictions. controls over financial reporting was based on criteria established in The work carried out by the Group’s external auditors does not take into Internal Control-Integrated Framework (2013), issued by the Committee account such legislation and, accordingly, the external auditors accept no of Sponsoring Organisations of the Treadway Commission. Following this responsibility for any changes to the financial statements after they are made evaluation, management concluded that our internal controls over financial available on the Group’s website. reporting were effective as at 31 December 2019. The directors, senior executives, senior financial managers and other members of staff who are required to exercise judgment while preparing the Group’s financial Directors’ declaration statements, are required to conduct themselves with integrity and honesty and The directors’ statement of responsibilities in relation to the Group’s financial in accordance with the highest ethical standards, as are all Group employees. statements is set out on page 256. The directors consider that the 2019 Annual report presents a true and Non-audit services and auditor independence fair view and has been prepared in accordance with applicable accounting Details of the non-audit services and a statement of independence regarding standards, using the most appropriate accounting policies for Rio Tinto’s the provision of non-audit services undertaken by our external auditor, including business, and supported by reasonable judgments and estimates. The the amounts paid for non-audit services, are set out on page 102 of the accounting policies have been consistently applied as described on pages 152 Directors’ report. to 166, and directors have received a written statement from the Chief Executive and the Chief Financial Officer to this effect. In accordance with the Going concern internal control requirements of the Code and the ASX Principles, this written The directors, having made appropriate enquiries, have satisfied themselves statement confirms that the declarations in the statement are founded on a that it is appropriate to adopt the going concern basis of accounting in sound system of risk management and internal controls, and that the system preparing the financial statements. Additionally, the directors have considered is operating effectively in all material respects in relation to financial reporting longer-term viability, as described in their statement on page 72. risks. Further information on directors’ responsibilities in the light of UK Disclosure and Transparency Rules is included on page 256. 2020 AGMs The 2020 AGMs will be held on 8 April in London and 7 May in Brisbane. Separate Disclosure controls and procedures notices of the 2020 AGMs will be produced for the shareholders of each company. The Group maintains disclosure controls and procedures, as defined in US Exchange Act Rule 13a-15(e). Management, with the participation of the Chief Directors’ approval statement Executive and Chief Financial Officer, has evaluated the effectiveness of the The Directors’ report is delivered in accordance with a resolution of the board. Group’s disclosure controls and procedures in relation to US Exchange Act Rule 13a-15 (b), as of the end of the period covered by this report, and has concluded that the Group’s disclosure controls and procedures were effective at a reasonable assurance level. Simon Thompson Management’s report on internal control over financial reporting Chairman Management is responsible for establishing and maintaining adequate internal 26 February 2020 controls over financial reporting. These controls, designed under the supervision of the Chief Executive and Chief Financial Officer, provide reasonable assurance regarding the reliability of the Group’s financial reporting and the preparation and presentation of financial statements for external reporting purposes, in accordance with International Financial Reporting Standards (IFRS) as defined on page 152. Annual report 2019 | riotinto.com 143



	2019 Financial statements

	Primary financial statements		Capital and reserves
	Group income statement	146	Note 27 Share capital - Rio Tinto plc	190
	Group statement of comprehensive income	147	Note 28 Share capital - Rio Tinto Limited	190
	Group cash flow statement	147	Note 29 Other reserves and retained earnings	191
	Group balance sheet	148
	Group statement of changes in equity	149
			Additional disclosures
	Reconciliation with Australian	150	Note 30 Financial instruments and	193
	Accounting Standards	150	risk management	193
	Outline of dual listed companies	150	Note 31 Contingencies and commitments	203
	structure and basis of financial statements	150	Note 32 Average number of employees	206
			Note 33 Principal subsidiaries	207
	Notes to the 2019 financial statements		Note 34 Principal joint operations	209
	Group income statement and		Note 35 Principal joint ventures	210
	cash flow statement		Note 36 Principal associates	211
	Note 1 Principal accounting policies	152	Note 37 Purchases and sales of	212
	Note 2 Operating segments	167	subsidiaries,joint ventures, associates
	Note 3 Operating segments -	171	and other interests in businesses
	additional information	171	Note 38 Directors’ and key	213
	Note 4 Net operating costs	172	management remuneration	213
	(excluding items shown separately)	172	Note 39 Auditors’ remuneration	214
	Note 5 Employment costs	173	Note 40 Related-party transactions	214
	Note 6 Impairment charges	173	Note 41 Exchange rates in US$	215
	Note 7 Share of profit after tax of	175	Note 42 Events after the balance sheet date	215
	equity accounted units	175	Note 43 Share-based payments	215
	Note 8 Finance income and finance costs	175	Note 44 Post-retirement benefits	218
	Note 9 Taxation	176	Note 45 New standards and interpretations	223
	Note 10 Earnings per ordinary share	177	adopted in the current year	223
	Note 11 Dividends	175	Rio Tinto financial information by business unit	252

	Group balance sheet
	Note 12 Goodwill	178
	Note 13 Intangible assets	179
	Note 14 Property, plant and equipment	180
	Note 15 Investments in equity	182
	accounted units	182
	Note 16 Inventories	183
	Note 17 Deferred taxation	183
	Note 18 Trade and other receivables	185
	Note 19 Assets and liabilities held for sale	185
	Note 20 Other financial assets	186
	Note 21 Cash and cash equivalents	186
	Note 22 Borrowings and other	187
	financial liabilities	187
	Note 23 Capitalised finance leases	187
	Note 24 Consolidated net cash/(debt)	188
	Note 25 Trade and other payables	189
	Note 26 Provisions (including post-	189
	retirement benefits)	189

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Table of Contents

Financial statements

Group income statement

Years ended 31 December



	Note	2019 US$m		2018 US$m		2017 US$m
Consolidated operations
Consolidated sales revenue	2,3	43,165		40,522		40,030
Net operating costs (excluding items shown separately)	4	(27,307	)	(27,115	)	(26,983	)
Impairment charges	6	(3,487	)	(132	)	(796	)
Net (losses)/gains on consolidation and disposal of interests in businesses	2,37	(291	)	4,622		2,344
Exploration and evaluation costs	13	(624	)	(488	)	(445	)
Profit/(loss) relating to interests in undeveloped projects	13	10		278		(15	)
Operating profit		11,466		17,687		14,135
Share of profit after tax of equity accounted units	7	301		513		339
Profit before finance items and taxation		11,767		18,200		14,474
Finance items
Net exchange gains/(losses) on net external and intragroup debt balances		58		704		(601	)
Net (losses)/gains on derivatives not qualifying for hedge accounting		(68	)	(57	)	33
Finance income	8	300		249		141
Finance costs	8	(554	)	(552	)	(848	)
Amortisation of discount		(384	)	(377	)	(383	)
		(648	)	(33	)	(1,658	)
Profit before taxation		11,119		18,167		12,816
Taxation	9	(4,147	)	(4,242	)	(3,965	)
Profit after tax for the year		6,972		13,925		8,851
– attributable to owners of Rio Tinto (net earnings)		8,010		13,638		8,762
– attributable to non-controlling interests		(1,038	)	287		89

Basic earnings per share	10	491.4	c	793.2	c	490.4	c
Diluted earnings per share	10	487.8	c	787.6	c	486.9	c

The notes on pages 152 to 246 are an integral part of these consolidated financial statements.



146	Annual report 2019 \| riotinto.com

Table of Contents

Financial statements continued

Group statement of comprehensive income

Years ended 31 December



	Note	2019 US$m		2018 US$m		2017 US$m
Profit after tax for the year		6,972		13,925		8,851

Other comprehensive (loss)/income
Items that will not be reclassified to profit or loss:
Actuarial (losses)/gains on post-retirement benefit plans	44	(262	)	907		6
Changes in the fair value of equity investments held at fair value through other comprehensive income (FVOCI)		(5	)	(13	)	—
Tax relating to these components of other comprehensive income	9	83		(271	)	(12	)
Share of other comprehensive losses of equity accounted units, net of tax		(6	)	(1	)	—
Adjustments to deferred tax on post-retirement benefit plans due to changes in corporate tax rates in the US and France	9	—		—		(140	)
		(190	)	622		(146	)

Items that have been/may be subsequently reclassified to profit or loss:
Currency translation adjustment^(a)		343		(3,830	)	3,096
Currency translation on companies disposed of, transferred to the income statement		215		14		78
Fair value movements:
– Cash flow hedge gains		12		156		62
– Cash flow hedge (gains)/losses transferred to the income statement		(41	)	40		(62	)
– Gains on revaluation of available for sale securities		—		—		19
– Losses on revaluation of available for sale securities transferred to the income statement		—		—		8
Net change in costs of hedging^(b)		3		(39	)	—
Tax relating to these components of other comprehensive income	9	(6	)	(54	)	(1	)
Share of other comprehensive income/(loss) of equity accounted units, net of tax		10		(48	)	34
Other comprehensive income/(loss) for the year, net of tax		346		(3,139	)	3,088
Total comprehensive income for the year		7,318		10,786		11,939
– attributable to owners of Rio Tinto		8,351		10,663		11,691
– attributable to non-controlling interests		(1,033	)	123		248


(a)	Excludes a currency translation charge of US$29 million (2018: charge of US$382 million; 2017: gain of US$310 million) arising on Rio Tinto Limited’s share capital for the year ended 31 December 2019, which is recognised in the Group statement of changes in equity. Refer to Group statement of changes in equity on page 150.


(b)	As part of the 2018 bond buy-back programme, cross currency interest rate swaps hedging the bonds repurchased were closed out. This resulted in the reclassification of US$3 million from the cost of hedging reserve to finance costs in the income statement in 2018. There was no bond buy-back programme in 2019.

The notes on pages 152 to 246 are an integral part of these consolidated financial statements.



	Note	2019 US$m		2018 US$m		2017 US$m
Cash flows from consolidated operations^(a)		19,705		15,655		16,670
Dividends from equity accounted units		669		800		817
Cash flows from operations		20,374		16,455		17,487

Net interest paid^(b)		(537	)	(612	)	(897	)
Dividends paid to holders of non-controlling interests in subsidiaries		(376	)	(420	)	(399	)
Tax paid		(4,549	)	(3,602	)	(2,307	)
Net cash generated from operating activities		14,912		11,821		13,884

Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets	2	(5,488	)	(5,430	)	(4,482	)
Disposals of subsidiaries, joint ventures, unincorporated joint operations and associates	37	(80	)	7,733		2,675
Purchases of financial assets^(c)		(43	)	(1,572	)	(723	)
Sales of financial assets		83		19		40
Sales of property, plant and equipment and intangible assets		49		586		138
Net funding of equity accounted units		(33	)	(9	)	(3	)
Acquisitions of subsidiaries, joint ventures and associates	37	—		(5	)	—
Other investing cash flows		11		(1	)	(18	)
Net cash (used)/generated in investing activities		(5,501	)	1,321		(2,373	)

Cash flows before financing activities		9,411		13,142		11,511

Cash flows from financing activities
Equity dividends paid to owners of Rio Tinto	11	(10,334	)	(5,356	)	(4,250	)
Proceeds from additional borrowings		80		54		18
Repayment of borrowings^(b)		(203	)	(2,300	)	(2,795	)
Lease principal payments	23,45	(315	)	—		—
Proceeds from issue of equity to non-controlling interests		101		85		170
Own shares purchased from owners of Rio Tinto		(1,552	)	(5,386	)	(2,083	)
Purchase of non-controlling interests	37	—		—		(194	)
Other financing cash flows		4		(48	)	(7	)
Net cash flows used in financing activities		(12,219	)	(12,951	)	(9,141	)
Effects of exchange rates on cash and cash equivalents		(54	)	151		(12	)
Net (decrease)/increase in cash and cash equivalents		(2,862	)	342		2,358
Opening cash and cash equivalents less overdrafts		10,889		10,547		8,189
Closing cash and cash equivalents less overdrafts	21	8,027		10,889		10,547

(a) Cash flows from consolidated operations
Profit after tax for the year		6,972		13,925		8,851
Adjustments for:
– Taxation		4,147		4,242		3,965
– Finance items		648		33		1,658
– Share of profit after tax of equity accounted units		(301	)	(513	)	(339	)
– Net losses/(gains) on consolidation and disposal of interests in businesses	37	291		(4,622	)	(2,344	)
– Impairment charges	6	3,487		132		796
– Depreciation and amortisation		4,384		4,015		4,375
– Provisions (including exchange differences on provisions)		753		1,011		535
Utilisation of provisions		(539	)	(620	)	(714	)
Utilisation of provision for post-retirement benefits	26	(205	)	(219	)	(339	)
Change in inventories		28		(587	)	(482	)
Change in trade and other receivables		163		(421	)	(138	)
Change in trade and other payables		(191	)	476		421
Other items^(d)		68		(1,197	)	425
		19,705		15,655		16,670


(b)	In 2018 and 2017 we completed bond buy-back programmes of US$1.9 billion (nominal value) and US$2.5 billion (nominal value) respectively. Net interest paid included the payment of the premiums and the accelerated interest associated with the bond redemptions (2018: US$80 million, 2017: US$259 million). There was no bond buy-back programme in 2019.


(c)	In 2019, we invested a further US$28 million in a separately managed portfolio of fixed income instruments (refer to note 20) (2018: US$1.6 billion, 2017: US$0.7 billion). As there is significant turnover in this portfolio, we have elected to report the purchases and sales of these securities on a net cash flow basis within “Purchases of financial assets”.

(d)

In 2019, other items includes the settlement of currency forward contracts relating to tax and dividend payments offset by other non-cash items. In 2018 other items included adjustments to add back mark-to-market gains of US$288 million relating to derivative contracts transacted for operational purposes and not designated in a hedge relationship, a gain of US$549 million on the sale of surplus land at Kitimat and a gain of US$167 million on the revaluation of a financial asset arising from the disposal of the Mount Pleasant coal project in 2016. In 2017, other items included adjustments to add back losses of US$501 million relating to derivative contracts transacted for operational purposes and not designated in a hedge relationship.

The notes on pages 152 to 246 are an integral part of these consolidated financial statements.



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Table of Contents

Financial statements continued

Group balance sheet

At 31 December



	Note	2019 US$m		2018 US$m
Non-current assets
Goodwill	12	922		912
Intangible assets	13	2,637		2,779
Property, plant and equipment	14	57,372		56,361
Investments in equity accounted units	15	3,971		4,299
Inventories	16	139		152
Deferred tax assets	17	3,102		3,137
Trade and other receivables	18	1,716		1,585
Tax recoverable		5		8
Other financial assets	20	635		814
		70,499		70,047
Current assets
Inventories	16	3,463		3,447
Trade and other receivables	18	3,027		3,179
Tax recoverable		116		77
Other financial assets	20	2,670		2,692
Cash and cash equivalents	21	8,027		10,773
		17,303		20,168
Assets of disposal groups held for sale	19	—		734
Total assets		87,802		90,949

Current liabilities
Borrowings and other financial liabilities	22	(1,372	)	(1,073	)
Trade and other payables	25	(6,480	)	(6,600	)
Tax payable		(1,874	)	(1,842	)
Provisions including post-retirement benefits	26	(1,399	)	(1,056	)
		(11,125	)	(10,571	)
Non-current liabilities
Borrowings and other financial liabilities	22	(13,341	)	(12,847	)
Trade and other payables	25	(794	)	(841	)
Tax payable		(376	)	(348	)
Deferred tax liabilities	17	(3,220	)	(3,673	)
Provisions including post-retirement benefits	26	(13,704	)	(12,552	)
		(31,435	)	(30,261	)
Liabilities of disposal groups held for sale	19	—		(294	)
Total liabilities		(42,560	)	(41,126	)
Net assets		45,242		49,823

Capital and reserves
Share capital
– Rio Tinto plc	27	207		211
– Rio Tinto Limited	28	3,448		3,477
Share premium account		4,313		4,312
Other reserves	29	9,177		8,661
Retained earnings	29	23,387		27,025
Equity attributable to owners of Rio Tinto		40,532		43,686
Attributable to non-controlling interests		4,710		6,137
Total equity		45,242		49,823

The notes on pages 152 to 246 are an integral part of these consolidated financial statements.

The financial statements on pages 144 to 246 were approved by the directors on 26 February 2020 and signed on their behalf by




Simon Thompson Chairman	Jean-Sébastien Jacques Chief executive	Jakob Stausholm Chief financial officer



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Table of Contents

Financial statements

Group statement of changes in equity



Year ended 31 December 2019	Attributable to owners of Rio Tinto
Year ended 31 December 2019	Share capital (notes 27 and 28) US$m		Share premium account US$m	Other reserves (note 29) US$m		Retained earnings (note 29) US$m		Total US$m		Non-controlling interests US$m		Total equity US$m
Opening balance	3,688		4,312	8,661		27,025		43,686		6,137		49,823
Adjustment for transition to new accounting pronouncements^(a)	—		—	—		(113	)	(113	)	(2	)	(115	)
Restated opening balance	3,688		4,312	8,661		26,912		43,573		6,135		49,708
Total comprehensive income for the year^(b)	—		—	519		7,832		8,351		(1,033	)	7,318
Currency translation arising on Rio Tinto Limited's share capital^(c)	(29	)	—	—		—		(29	)	—		(29	)
Dividends (note 11)	—		—	—		(10,334	)	(10,334	)	(376	)	(10,710	)
Share buy-back^(d)	(4	)	—	4		(1,135	)	(1,135	)	—		(1,135	)
Companies no longer consolidated	—		—	—		—		—		(32	)	(32	)
Own shares purchased from Rio Tinto shareholders to satisfy share options^(e)	—		—	(63	)	(43	)	(106	)	—		(106	)
Change in equity interest held by Rio Tinto	—		—	—		85		85		(85	)	—
Treasury shares reissued and other movements	—		1	—		—		1		—		1
Equity issued to holders of non-controlling interests	—		—	—		—		—		101		101
Employee share options and other IFRS 2 charges to the income statement	—		—	56		70		126		—		126
Closing balance	3,655		4,313	9,177		23,387		40,532		4,710		45,242

Year ended 31 December 2018	Attributable to owners of Rio Tinto
Year ended 31 December 2018	Share capital (notes 27 and 28) US$m		Share premium account US$m	Other reserves (note 29) US$m		Retained earnings (note 29) US$m		Total US$m		Non-controlling interests US$m		Total equity US$m
Opening balance	4,360		4,306	12,284		23,761		44,711		6,404		51,115
Adjustment for transition to new accounting pronouncements	—		—	10		(179	)	(169	)	—		(169	)
Restated opening balance	4,360		4,306	12,294		23,582		44,542		6,404		50,946
Total comprehensive income for the year^(b)	—		—	(3,600	)	14,263		10,663		123		10,786
Currency translation arising on Rio Tinto Limited's share capital^(c)	(382	)	—	—		—		(382	)	—		(382	)
Dividends (note 11)	—		—	—		(5,356	)	(5,356	)	(415	)	(5,771	)
Share buy-back^(d)	(290	)	—	9		(5,423	)	(5,704	)	—		(5,704	)
Own shares purchased from Rio Tinto shareholders to satisfy share options^(e)	—		—	(114	)	(140	)	(254	)	—		(254	)
Change in equity interest held by Rio Tinto	—		—	—		60		60		(60	)	—
Treasury shares reissued and other movements	—		6	—		—		6		—		6
Equity issued to holders of non-controlling interests	—		—	—		—		—		85		85
Employee share options and other IFRS 2 charges to the income statement	—		—	50		61		111		—		111
Transfers and other movements	—		—	22		(22	)	—		—		—
Closing balance	3,688		4,312	8,661		27,025		43,686		6,137		49,823

Year ended 31 December 2017	Attributable to owners of Rio Tinto
Year ended 31 December 2017	Share capital (notes 27 and 28) US$m		Share premium account US$m	Other reserves (note 29) US$m		Retained earnings (note 29) US$m		Total US$m		Non-controlling interests US$m		Total equity US$m
Opening balance	4,139		4,304	9,216		21,631		39,290		6,440		45,730
Total comprehensive income for the year^(b)	—		—	3,078		8,613		11,691		248		11,939
Currency translation arising on Rio Tinto Limited's share capital^(c)	310		—	—		—		310		—		310
Dividends (note 11)	—		—	—		(4,250	)	(4,250	)	(403	)	(4,653	)
Share buy-back^(d)	(89	)	—	4		(2,312	)	(2,397	)	—		(2,397	)
Companies no longer consolidated	—		—	(124	)	130		6		(8	)	(2	)
Own shares purchased from Rio Tinto shareholders to satisfy share options^(e)	—		—	(64	)	(18	)	(82	)	—		(82	)
Change in equity interest held by Rio Tinto	—		—	—		43		43		(43	)	—
Treasury shares reissued and other movements	—		2	—		—		2		—		2
Equity issued to holders of non-controlling interests	—		—	—		—		—		170		170
Employee share options and other IFRS 2 charges to the income statement	—		—	41		57		98		—		98
Transfers and other movements	—		—	133		(133	)	—		—		—
Closing balance	4,360		4,306	12,284		23,761		44,711		6,404		51,115


(a)	The impact of the transition to new accounting pronouncements; IFRS 16 “Leases” and IFRIC 23 "Uncertainty over income tax treatments" on 1 January 2019 is discussed in note 45.


(b)	Refer to Group statement of comprehensive income for further details. Adjustments to other reserves include currency translation attributable to owners of Rio Tinto, other than that arising on Rio Tinto Limited’s share capital.


(c)	Refer to note 1(d).

(d)

In 2019, the total amount of US$1,135 million (2018: US$5,704 million, 2017: US$2,397 million) includes own shares purchased from the owners of Rio Tinto as per the cash flow statement of US$1,552 million (2018: US$5,386 million, 2017: US$2,083 million) and a financial liability recognised in respect of an irrevocable contract in place as at the reporting date to cover the share buy-back programme, less amounts paid during the year in respect of a similar irrevocable contract in place at the beginning of the year.


(e)	Net of contributions received from employees for share options.



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Financial statements continued

Reconciliation with Australian Accounting Standards

The Group’s financial statements have been prepared in accordance with IFRS, as defined in note 1, which differs in certain respects from the version of International Financial Reporting Standards that is applicable in Australia, referred to as Australian Accounting Standards (AAS).

Prior to 1 January 2004, the Group’s financial statements were prepared in accordance with UK GAAP. Under IFRS, as defined in note 1, 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$379 million at 31 December 2019 (2018: US$379 million).

Save for the exception described above, the Group’s financial statements drawn up in accordance with IFRS are consistent with the requirements of AAS.

Outline of dual listed companies structure and basis of financial statements

The Rio Tinto Group

These are the financial statements of the Group formed through the merger of economic interests of Rio Tinto plc and Rio Tinto Limited (“Merger”), and presented by both Rio Tinto plc and Rio Tinto Limited as their consolidated financial statements in accordance with both UK and Australian legislation and regulations.

Merger terms

On 21 December 1995, Rio Tinto plc and Rio Tinto Limited entered into a dual listed companies (DLC) merger. Rio Tinto plc is incorporated in the UK and listed on the London and New York Stock Exchanges and Rio Tinto Limited is incorporated in Australia and listed on the Australian Securities Exchange. The Merger was effected by contractual arrangements between the companies and amendments to Rio Tinto plc’s Memorandum and Articles of Association and Rio Tinto Limited’s Constitution.

As a result, Rio Tinto plc and Rio Tinto Limited and their respective groups operate together as a single economic enterprise, with neither assuming a dominant role. In particular, the arrangements:


–	confer upon the shareholders of Rio Tinto plc and Rio Tinto Limited a common economic interest in both groups;


–	provide for common boards of directors and a unified management structure;


–	provide for equalised dividends and capital distributions; and


–	provide for the shareholders of Rio Tinto plc and Rio Tinto Limited to take key decisions, including the election of directors, through an electoral procedure in which the public shareholders of the two companies in effect vote on a joint basis.

The Merger involved no change in the legal ownership of any assets of Rio Tinto plc or Rio Tinto Limited, nor any change in the ownership of any existing shares or securities of Rio Tinto plc or Rio Tinto Limited, nor the issue of any shares, securities or payment by way of consideration, save for the issue by each company of one special voting share to a trustee company which facilitates the joint electoral procedure for public shareholders. During 2002, each of the parent companies issued a DLC Dividend Share to facilitate the efficient management of funds within the DLC structure.

Accounting standards

The financial statements have been drawn up in accordance with IFRS as defined in note 1. The Merger was accounted for as a merger under UK GAAP. As permitted under the rules governing the transition to IFRS, which are set out in IFRS 1, the Group did not restate business combinations that occurred before the transition date of 1 January 2004. As a result, the DLC Merger of economic interests described above continues to be accounted for as a merger under IFRS as defined in note 1.

The main consequence of adopting merger rather than acquisition accounting is that the balance sheet of the merged Group includes the assets and liabilities of Rio Tinto plc and Rio Tinto Limited at their carrying values prior to the Merger, subject to adjustments to achieve uniformity of accounting policies, rather than at their fair values at the date of the Merger. For accounting purposes Rio Tinto plc and Rio Tinto Limited are viewed as a single public parent company (with their respective public shareholders being the shareholders in that single company). As a result, the amounts attributable to both Rio Tinto plc and Rio Tinto Limited public shareholders are included in the amounts attributed to owners of Rio Tinto on the balance sheet, income statement and statement of comprehensive income.

Australian Corporations Act

The financial statements are drawn up in accordance with an order, under section 340 of the Australian Corporations Act 2001, issued by the Australian Securities and Investments Commission (ASIC) on 14 December 2015. The main effect of the order is that the financial statements are prepared on the basis that Rio Tinto Limited, Rio Tinto plc and their respective controlled entities are treated as a single economic entity, and in accordance with the principles and requirements of International Financial Reporting Standards as adopted by the European Union (EU IFRS) and include a reconciliation from EU IFRS to the Australian equivalent of IFRS (see above).

For further details of the ASIC Class Order relief see page 255.



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Financial statements

Notes to the 2019 financial statements



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Financial statements continued

1 Principal accounting policies

Corporate information

Rio Tinto’s business is finding, mining and processing mineral resources. Major products are aluminium, copper, diamonds, gold, industrial minerals (borates, titanium dioxide and salt), iron ore and uranium. Activities span the world and are strongly represented in Australia and North America, with significant businesses also in Asia, Europe, Africa and South America.

Rio Tinto plc is incorporated in the UK and listed on the London and New York Stock Exchanges and Rio Tinto Limited is incorporated in Australia and listed on the Australian Stock Exchange. Rio Tinto plc’s registered office is at 6 St James’s Square, London SW1Y 4AD, UK. Rio Tinto Limited’s registered office is at Level 7, 360 Collins Street, Melbourne, Victoria 3000, Australia.

As described in the “Outline of dual listed companies structure and basis of financial statements” on page 151, for the purposes of preparing the IFRS compliant consolidated financial statements of the Rio Tinto Group, both the DLC companies, Rio Tinto plc and Rio Tinto Limited, are viewed as a single economic entity, and the interests of shareholders of both companies are presented as the equity interests of shareholders in the Rio Tinto Group.

These financial statements consolidate the accounts of Rio Tinto plc and Rio Tinto Limited (together “the Companies”) and their respective subsidiaries (together “the Group”) and include the Group’s share of joint arrangements and associates as explained in note 1(b) below. The Group’s financial statements for the year ended 31 December 2019 were authorised for issue in accordance with a directors’ resolution on 26 February 2020.

Notes 33 to 36 provide more information on the Group’s subsidiaries, joint arrangements and associates and note 40 provides information on the Group’s transactions with other related parties.

The 2019 Annual report satisfies 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 14 December 2015. The 2019 financial statements disclose on page 151 the effect of the adjustments to the Group’s consolidated profit/(loss), consolidated total comprehensive income/(loss) and consolidated shareholders’ funds as prepared under IFRS as defined below that would be required under the version of IFRS that is applicable in Australia, referred to as Australian Accounting Standards (AAS).

The US dollar is the presentation currency used in these financial statements, as it most reliably reflects the Group’s global business performance.

Basis of preparation of the financial statements

The basis of preparation and the accounting policies used in preparing the Group’s 2019 financial statements are set out below.

The financial statements have been prepared on a going concern basis in accordance with the Companies Act 2006 applicable to companies reporting under IFRS and in accordance with applicable UK law, applicable Australian law as amended by the Australian Securities and Investments Commission Order dated 14 December 2015, Article 4 of the European Union IAS regulation and also with:


–	International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and interpretations issued from time to time by the IFRS Interpretations Committee (IFRS IC) both as adopted by the European Union (EU) and which are mandatory for EU reporting as at 31 December 2019; and


–	International Financial Reporting Standards as issued by the IASB and interpretations issued from time to time by the IFRS IC which are mandatory as at 31 December 2019.

The above accounting standards and interpretations are collectively referred to as “IFRS” in this report. With the exception of "Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform" (see below), the Group has not early adopted any amendments, standards or interpretations that have been issued but are not yet mandatory.

Further detail on the going concern basis of accounting is included on page 143.

The Group’s financial statements have been prepared on the basis of accounting policies consistent with those applied in the financial statements for the year ended 31 December 2018, except for the change in accounting requirements set out below, all of which were effective as at 1 January 2019 without restatement of prior years.

The Group adopted IFRS 16 “Leases”, IFRIC 23 “Uncertainty over income tax treatments”, “Amendments to IAS 19 - Plan Amendment, Curtailment or Settlement” and a number of other minor amendments to IFRS on 1 January 2019. All of these pronouncements have been endorsed by the EU.

The Group has also early adopted "Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform", which was endorsed by the EU in January 2020, for the year ended 31 December 2019. This pronouncement allows temporary relief from applying specific hedge accounting requirements to hedging arrangements directly impacted by reform of the London Interbank Offered Rate (LIBOR) and other benchmark interest rates.

Information on the transition impact of these new pronouncements is included in note 45.

Mandatory in 2020

Accounting pronouncements that are mandatory in 2020 are listed below. The impact on the Group of transition to these pronouncements is currently expected to be immaterial.

Conceptual Framework for Financial Reporting (Endorsed by the EU and mandatory in 2020)

The IASB revised its Conceptual Framework in April 2018. Where specific accounting policies are not covered by IFRS they must be in accordance with the principles in the Framework by 2020. The 2018 Conceptual Framework for Financial Reporting is effective in 2020 for preparers that develop an accounting policy based on the Framework.

The 2018 Conceptual Framework describes the objective of, and the concepts for, general purpose financial reporting. The purpose of the Conceptual Framework is to:


(a)	Assist the International Accounting Standards Board (“Board”) to develop IFRS Standards (“Standards”) that are based on consistent concepts;


(b)	Assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy; and


(c)	Assist all parties to understand and interpret the Standards.

The Conceptual Framework is not a Standard. Nothing in the Conceptual Framework overrides any Standard or any requirement in a Standard.



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Financial statements

Notes to the 2019 financial statements continued

"Definition of a business - amendments to IFRS 3" (Mandatory in 2020 and not yet endorsed by the EU)

IFRS 3 "Business Combinations" has been amended to update the definition of a business. In essence, to be considered a business, an acquired arrangement has to have an input and substantive process which together significantly contribute to the ability to create outputs.

These changes to the definition of a business may result in future investment in new operations being accounted for as asset acquisitions rather than as business combinations. The Group will evaluate such transactions from 1 January 2020 onwards in accordance with this pronouncement.

"Amendments to IAS 1 and IAS 8 on the definition of materiality" (Endorsed by the EU and mandatory in 2020)

Amendments to IAS 1 "Presentation of financial statements" and IAS 8 "Accounting policies, changes in accounting estimates and errors" and consequent amendments to other IFRSs require entities to apply and disclose a consistent definition of materiality in the financial statements. The amendments also provide guidance on the identification of immaterial information.

The Group is currently evaluating the impact of this pronouncement on presentation and disclosure in the financial statements for the year ended 31 December 2020 and the condensed consolidated interim financial statements for the six months to 30 June 2020.

Mandatory in 2021

IFRS 17 “Insurance Contracts” (Mandatory in 2021 and not yet endorsed by the EU)

The Standard provides consistent principles for all aspects of accounting for insurance contracts. The Group is currently evaluating the impact of this pronouncement.

Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to use judgment in applying accounting policies and in making critical accounting estimates.

These judgments and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. Areas of judgment in the application of accounting policies that have the most significant effect on the amounts recognised in the financial statements and key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are noted below and further information is contained in the accounting policies and/or the notes to the financial statements.

These areas of judgment and estimation are discussed further in critical accounting policies and estimates on pages 163 to 166. The quantum of ore reserves and mineral resources impacts many of these areas and the basis of calculation is explained below. Information on less material judgments and sources of estimation uncertainty has been incorporated into the relevant accounting policy notes.

Areas of judgment in the application of accounting policies that have the most significant effect on the amounts recognised in the financial statements are:


–	Impairment of non-current assets – determination of Cash Generating Units (CGUs) and assessment of indicators of impairment – note 1(e) and (i), note 6, note 12 and note 13.


–	Estimation of asset lives – whether certain assets are indefinite lived – note 1(e) and (i).


–	Provision for onerous contracts – determination of assets dedicated to a contract – note 1(i).


–	Close-down, restoration and environmental obligations – determining when an estimate is sufficiently reliable to update – note 1(l).


–	Deferral of stripping costs – judgment on components/strip ratios and separate or integrated multiple pit mines – note 1(h).


–	Uncertain tax positions – technical interpretation of tax law and evaluation of outcomes in the determination of whether multiple or binary scenarios are the appropriate basis for provision measurement – note 1(n), note 9 and note 31.


–	Recoverability of potential deferred tax assets – recognition of deferred tax assets for loss making operations – note 17(c), (e) and (f).


–	Identification of functional currencies – different companies may make different judgments based on similar facts – note 1(d).


–	Basis of consolidation – judgment as to when the Group has control, joint control or significant influence – notes 33-36.


–	Contingencies – assessing the probability of any loss and whether it is possible to quantify any loss – note 31.


–	Exclusions from underlying earnings – judgment on items to be excluded on grounds of nature or size – note 2.


–	Accounting for the Pilbara Iron Arrangements – treatment of payments made over a contractually specified period for network infrastructure capacity – critical policies note (xiii).

Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:


–	Impairment of non-current assets – review of asset carrying values, impairment charges and reversals and the recoverability of goodwill – determination of discounted cash flows – note1(e) and (i), note 6, note 12 and note 13.


–	Close-down, restoration and environmental cost obligations – estimation of costs and the timing of expenditure – note 1(l) and note 26.


–	Uncertain tax positions – estimating the potential exposures for each possible scenario – note 1(n), note 9 and note 31.


–	Recoverability of potential deferred tax assets – determination of cash flows – note 1(n), note 17(c), (e) and (f).


–	Estimation of obligations for post-employment costs – note 1(o) and note 44.


–	Contingencies – estimate of possible liability – note 31.

Ore reserves and mineral resources

Estimates of ore reserves and, in some cases, mineral resources can impact: depreciation and amortisation rates; the carrying values of intangible assets and property, plant and equipment; deferred stripping costs; provisions for close-down and restoration costs; and the recovery of deferred tax assets.

The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in accordance with the Joint Ore Reserves Committee (JORC) code (see note 1(j)).

The estimation of ore reserves and mineral resources requires judgment to interpret available geological data and subsequently to select an appropriate mining method and then to establish an extraction schedule. Estimation requires assumptions about future commodity prices and demand, exchange rates, production costs, transport costs, close-down and restoration costs, recovery rates and discount rates and, in some instances, the renewal of mining licences.

There are many uncertainties in the estimation process and assumptions that are valid at the time of estimation may change significantly when new information becomes available. New geological or economic data, or unforeseen operational issues, may change estimates of ore reserves and mineral resources.

The Group uses judgment as to when to include mineral resources in accounting estimates, for example, the use of mineral resources in the Group’s depreciation policy is described in note 1(i) below and in the determination of the date of closure as described in note 1(l). The unaudited statement of ore reserves is included on page 273 and of mineral resources on page 277.

For the purposes of disclosure only with this combined Annual report on Form 20-F estimates of ore reserves have been computed in accordance with the SEC’s Industry Guide 7, rather than in accordance with the JORC code, and are shown on pages 273 to 280. Ore reserves presented in accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices were to be in line with the average of historical prices for the three years to 30 June 2019, or contracted prices where applicable. For this purpose, contracted prices are applied only to future sales volumes for which the price is predetermined by an existing contract; and the average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore reserve estimates have not been increased above the levels expected to be economic based on Rio Tinto’s own long-term price assumptions. Therefore, a reduction in commodity prices from the three-year average historical price levels would not necessarily give rise to a reduction in reported ore reserves.



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Financial statements continued

1 Principal accounting policies continued

(a) Accounting convention

The financial information included in the financial statements for the year ended 31 December 2019, and for the related comparative periods, has been prepared under the historical cost convention, as modified by the revaluation of certain derivative contracts and financial assets, the impact of fair value hedge accounting on the hedged item and the accounting for post-employment assets and obligations. The Group’s policy in respect of these items is set out in the notes below.

All financial statement values are rounded to the nearest million (US$m) unless otherwise stated.

Where applicable, comparatives have been adjusted to measure or present them on the same basis as current period figures.

(b) Basis of consolidation (notes 33-36)

All intragroup transactions and balances have been eliminated on consolidation.

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 those used by the Group.

Subsidiaries

Subsidiaries are entities controlled by either of the Companies. Control exists where either of the Companies has: power over the entities, that is, existing rights that give it the current ability to direct the relevant activities of the entities (those that significantly affect the Companies’ returns); exposure, or rights, to variable returns from its involvement with the entities; and the ability to use its power to affect those returns. Subsidiaries are fully consolidated from the date on which the Group obtains control. They are deconsolidated from the date that control ceases.

Joint arrangements

A joint arrangement is an arrangement in which two or more parties have joint control. Joint control is the contractually agreed sharing of control such that decisions about the relevant activities of the arrangement (those that significantly affect the Companies’ returns) require the unanimous consent of the parties sharing control. The Group has two types of joint arrangements:

Joint operations (JO)

A JO is a joint arrangement in which the parties that share joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement. This includes situations where the parties benefit from the joint activity through a share of the output, rather than by receiving a share of the results of trading. In relation to its interest in a JO, the Group recognises: its share of assets and liabilities; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the output by the JO; and its share of expenses. All such amounts are measured in accordance with the terms of the arrangement, which is usually in proportion to the Group’s interest in the JO. These amounts are recorded in the Group’s financial statements on the appropriate lines.

Joint ventures (JV)

A JV is a joint arrangement in which the parties that share joint control have rights to the net assets of the arrangement. JVs are accounted for using the equity accounting method.

Other unincorporated arrangements

In some cases, the Group participates in unincorporated arrangements and has rights to its share of the assets and obligations for its share of the liabilities of the arrangement rather than a right to a net return, but does not share joint control. In such cases, the Group recognises: its share of assets and liabilities; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the output by the unincorporated arrangement; and its share of expenses. All such amounts are measured in accordance with the terms of the arrangement, which is usually in proportion to the Group’s interest in the arrangement. These amounts are recorded in the Group’s financial statements on the appropriate lines.

Associates

An associate is an entity that is neither a subsidiary nor a joint arrangement, over which the Group has significant influence. Significant influence is presumed to exist where there is neither control nor joint control and the Group has over 20% of the voting rights, unless it can be clearly demonstrated that this is not the case. Significant influence can arise where the Group holds less than 20% of the voting rights if it has the

power to participate in the financial and operating policy decisions affecting the entity. Investments in associates are accounted for using the equity accounting method.

The Group uses the term “equity accounted units” (EAUs) to refer to associates and JVs collectively. Under the equity accounting method the investment is recorded initially at cost to the Group, including any goodwill on acquisition. In subsequent periods the carrying amount of the investment is adjusted to reflect the Group’s share of the EAUs’ retained post-acquisition profit or loss and other comprehensive income. Long-term loans to EAUs that in substance form part of the Group’s net investment (quasi equity loans) are financial assets but are included in the line “Investments in equity accounted units” on the face of the balance sheet. When the Group’s share of losses in an EAU equals or exceeds its interest in the EAU, including such long-term loans and any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations to continue to make payments on behalf of the EAU.

Acquisitions (note 37)

Under the “acquisition” method of accounting for business combinations, the purchase consideration is allocated to the identifiable assets acquired and liabilities and contingent liabilities assumed (the identifiable net assets) on the basis of their fair value at the date of acquisition, which is the date on which control is obtained.

The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree, the fair value of any asset or liability resulting from a contingent consideration arrangement and any equity interests issued by the Group. Costs related to the acquisition of a subsidiary are expensed as incurred.

The excess of the consideration transferred, the amount of any non- controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. Any shortfall is immediately recognised in the income statement.

Non-controlling interests in the acquiree, that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation, are recognised by the Group in one of two ways with the choice being available on an acquisition-by-acquisition basis. They can be measured at either the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets or at fair value. In some cases, non-controlling interests may be treated as equity options and valued on that basis. Goodwill (see note 1(e)) and amounts attributable to non-controlling interests will differ depending on the basis used.



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Financial statements

Notes to the 2019 financial statements continued

Where the Group previously held a non-controlling interest in the acquiree, this is remeasured to fair value at the date control is obtained with any gain or loss recognised in the income statement. The cash cost of the share purchase that gives rise to control is included within “investing activities” in the cash flow statement.

Where the Group increases its ownership interest in a subsidiary, the difference between the purchase price and the carrying value of the share of net assets acquired is recorded in equity. The cash cost of such purchases is included within “financing activities” in the cash flow statement.

Provisional fair values allocated at a reporting date are finalised within 12 months of the acquisition date.

The results of businesses acquired during the year are included in the consolidated financial statements from the date on which control, joint control or significant influence is obtained.

Disposals (note 37)

Individual non-current assets or “disposal groups” (that is, groups of assets and liabilities) to be disposed of by sale or otherwise in a single transaction are classified as “held for sale” if the following criteria are met at the period end:


–	The carrying amount will be recovered principally through a sale transaction rather than through continuing use; and


–	The disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for such sales; and


–	The sale is highly probable.

Disposal groups held for sale are carried at the lower of their carrying amount and fair value less costs to sell. The comparative balance sheet is not restated. Disposal groups acquired with a view to resale are held at the fair value determined at the acquisition date. For these assets acquired for resale no profits or losses are recognised between the acquisition date and the disposal date, unless there is a subsequent impairment.

On classification as held for sale, the assets are no longer depreciated and, if applicable, equity accounting ceases.

If control is lost, any interest in the entity retained by the Group is remeasured to its fair value and the change in carrying amount is recognised in the income statement. The retained interest may be subsequently accounted for as a joint venture, joint operation, associate or financial asset depending on the facts. Certain amounts previously recognised in other comprehensive income in respect of the entity disposed of, or for which control, joint control or significant influence has ceased, may be recycled to the income statement. The cash proceeds of disposals are included within “Investing activities” in the cash flow statement.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for in equity. The cash proceeds of such disposals are included within “Financing activities” in the cash flow statement.

Recognition and measurement

The Group recognises sales revenue related to the transfer of promised goods or services when control of the goods or services passes to the customer. The amount of revenue recognised reflects the consideration to which the Group is or expects to be entitled in exchange for those goods or services.

Sales revenue is recognised on individual sales when control transfers to the customer. In most instances, control passes and sales revenue is recognised when the product is delivered to the vessel or vehicle on which it will be transported once loaded, the destination port or the customer’s premises. There may be circumstances when judgment is required based on the five indicators of control below.


–	The customer has the significant risks and rewards of ownership and has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the good or service.


–	The customer has a present obligation to pay in accordance with the terms of the sales contract. For shipments under the Incoterms Cost, Insurance and Freight (CIF)/Carriage Paid to (CPT)/Cost and Freight (CFR) this is generally when the ship is loaded, at which time the obligation for payment is for both product and freight.


–	The customer has accepted the asset. Sales revenue may be subject to adjustment if the product specification does not conform to the terms specified in the sales contract but this does not impact the passing of control. Assay and specification adjustments have been immaterial historically.


–	The customer has legal title to the asset. The Group usually retains legal title until payment is received for credit risk purposes only.


–	The customer has physical possession of the asset. This indicator may be less important as the customer may obtain control of an asset prior to obtaining physical possession, which may be the case for goods in transit.

The Group sells a significant proportion of its products on CFR or CIF Incoterms. This means that the Group is responsible (acts as principal) for providing shipping services and, in some instances, insurance after the date at which control of goods passes to the customer at the loading port.

The Group therefore has separate performance obligations for freight and insurance services that are provided solely to facilitate sale of the commodities it produces. Other Incoterms commonly used by the Group are Free on Board (FOB), where the Group has no responsibility for freight or insurance once control of the goods has passed at the loading port, and Delivered at Place (DAP) where control of the goods passes when the product is delivered to the agreed destination. For these Incoterms there is only one performance obligation, being for provision of product at the point where control passes.

The Group’s products are sold to customers under contracts which vary in tenure and pricing mechanisms, including some volumes sold in the spot market. Pricing for iron ore is on a range of terms, the majority being either monthly or quarterly average pricing mechanisms, with a smaller proportion of iron ore volumes being sold on the spot market.

Within each sales contract, each unit of product shipped is a separate performance obligation. Revenue is generally recognised at the contracted price as this reflects the stand-alone selling price. Sales revenue excludes any applicable sales taxes. Mining royalties payable are presented as an operating cost or, where they are in substance a profit-based tax, within taxation.

Sales of copper concentrate are stated net of the treatment and refining charges which will be required to convert it to an end product.

Certain of the Group’s products may be provisionally priced at the date revenue is recognised; however, substantially all iron ore and aluminium sales are reflected at final prices in the results for the period. The final selling price for all provisionally priced products is based on the price for the quotational period stipulated in the contract. Final prices for copper concentrate are normally determined between 30-180 days after delivery to the customer. The change in value of the provisionally priced receivable is based on relevant forward market prices and is included in sales revenue.



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Financial statements continued

1 Principal accounting policies continued

Rio Tinto has a number of long-term contracts to supply product to customers in future periods. Generally, revenues are recognised on an as invoiced basis; hence, the right to consideration from a customer corresponds directly with the entity’s performance completed to date.

A number of the Group’s businesses provide volume discounts in certain circumstances. The impact of constraining such variable consideration under IFRS 15 was immaterial at both 31 December 2019 and 31 December 2018.

The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information on the transaction price allocated to performance obligations that are unsatisfied.

Presentation and disclosures

Consolidated sales revenue as reported in the income statement comprises sales to third parties. Certain of the Group’s products may be provisionally priced at the date revenue is recognised. Sales revenue includes revenue from contracts with customers, which is accounted for under IFRS 15 “Revenue from Contracts with Customers” and subsequent movements in provisionally priced receivables which are accounted for under IFRS 9 “Financial Instruments”. A breakdown of sales revenue between these two amounts is disclosed in the product analysis in note 3 and further detail on provisional pricing in note 3. Sales revenue includes revenue from movements in provisionally priced receivables, consistent with the treatment in prior periods.

The Group considers that the impact of economic factors on its sales revenue, particularly pricing and volumes, is best understood by reference to the disclosure of sales revenue by product group and sales destination in note 3. The analysis of provisional pricing adjustments by commodity in the product analysis in note 3 shows which products are subject to price volatility post the transfer of control. With the exception of Oyu Tolgoi, which sells copper concentrate to China, this price uncertainty is largely resolved at the period end.

Typically, the Group has a right to payment before or at the point that control of the goods passes including a right, where applicable, to payment for provisionally priced products and unperformed freight and insurance services. Cash received before control passes is recognised as a contract liability. The amount of consideration does not contain a significant financing component as payment terms are less than one year.

Revenues from the sale of significant by-products, such as gold, are included in sales revenue. Sundry revenue (eg sales of surplus power) incidental to the main revenue-generating activities of the operations, is treated as a credit to operating costs.

The Group does not disclose sales revenue from freight and insurance services separately as it does not consider that this is necessary in order to understand the impact of economic factors on the Group; the Group’s chief executive, the chief operating decision maker, as defined under IFRS 8, “Operating Segments”, does not review information specifically relating to these sources of revenue in order to evaluate the performance of business segments and Group information on these sources of revenue is not provided externally.

The Group does provide information on freight revenue for the iron ore and bauxite businesses on pages 43 and 47 to help stakeholders understand FOB operating margins for those products.

Third-party commodity swap arrangements principally for delivery and receipt of smelter-grade alumina are offset within operating costs.

Presentation of comparative consolidated sales revenue for the year ended 31 December 2017 is in accordance with the previous standard IAS 18 “Revenue”. No material measurement or recognition differences on comparative information were identified between IAS 18 and the current standard IFRS 15 "Revenue from contracts with customers".

(d) Currency translation

The functional currency for each entity in the Group, and for joint arrangements and associates, is the currency of the primary economic environment in which that entity operates. For many of these entities, this is the currency of the country in which they are located. Transactions denominated in other currencies are converted to the functional currency at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at period-end exchange rates.

The Group’s financial statements are presented in US dollars, as that presentation currency most reliably reflects the global business performance of the Group as a whole. On consolidation, income statement items for each entity are translated from the functional currency into US dollars at average rates of exchange, except for material one-off transactions, which are translated at the rate prevailing on the transaction date. Balance sheet items are translated into US dollars at period-end exchange rates.

Exchange differences arising on the translation of the net assets of entities with functional currencies other than the US dollar are recognised directly in the currency translation reserve. These translation differences are shown in the statement of comprehensive income, with the exception of translation adjustments relating to Rio Tinto Limited’s share capital which are shown in the statement of changes in equity.

Where an intragroup balance is, in substance, part of the Group’s net investment in an entity, exchange gains and losses on that balance are taken to the currency translation reserve.

Except as noted above, or in note 1(q) relating to derivative contracts, all other exchange differences are charged or credited to the income statement in the year in which they arise.

(e) Goodwill and intangible assets (excluding exploration and evaluation expenditure) (notes 12 and 13)

Goodwill is not amortised; it is tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment. Investments in EAUs, including any goodwill, are tested for impairment as a single asset when a trigger for impairment has been identified. The Group’s impairment policy is explained in note 1(i).

Purchased intangible assets are initially recorded at cost. Finite-life intangible assets are amortised over their useful economic lives on a straight line or units of production basis, as appropriate. Intangible assets that are deemed to have indefinite lives and intangible assets that are not yet ready for use are not amortised; they are reviewed annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment in accordance with accounting policy note 1(i).

The Group considers that intangible assets have indefinite lives when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate cash flows for the Group. The factors considered in making this judgment include the existence of contractual rights for unlimited terms or evidence that renewal of the contractual rights without significant incremental cost can be expected for indefinite future periods in view of the Group’s investment intentions. The life cycles of the products and processes that depend on the asset are also considered.



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Financial statements

Notes to the 2019 financial statements continued

(f) Exploration and evaluation (note 13)

Exploration and evaluation expenditure comprises costs that are directly attributable to:


–	Researching and analysing existing exploration data;


–	Conducting geological studies, exploratory drilling and sampling;


–	Examining and testing extraction and treatment methods; and/or


–	Compiling various studies (order of magnitude, pre-feasibility and feasibility).

Exploration expenditure relates to the initial search for deposits with economic potential. Expenditure on exploration activity undertaken by the Group is not capitalised.

Evaluation expenditure relates to a detailed assessment of deposits or other projects (including smelter and refinery projects) that have been identified as having economic potential. Capitalisation of evaluation expenditure commences when there is a high degree of confidence that the Group will determine that a project is commercially viable, that is the project will provide a satisfactory return relative to its perceived risks, and therefore it is considered probable that future economic benefits will flow to the Group. The Group’s view is that a high degree of confidence is greater than “more likely than not” (that is, greater than 50% certainty) and less than “virtually certain” (that is, less than 90% certainty).

Assessing whether there is a high degree of confidence that the Group will ultimately determine that an evaluation project is commercially viable requires judgment and consideration of all relevant factors such as the nature and objective of the project; the project’s current stage; project timeline; current estimates of the project’s net present value, including sensitivity analyses for the key assumptions; and the main risks of the project. Development expenditure incurred prior to the decision to proceed is subject to the same criteria for capitalisation, being a high degree of confidence that the Group will ultimately determine that a project is commercially viable.

In some cases, undeveloped projects are regarded as successors to orebodies, smelters or refineries currently in production. Where this is the case, it is intended that these will be developed and go into production when the current source of ore is exhausted or when existing smelters or refineries are closed.

Ore reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined. Evaluation costs may continue to be capitalised during the period between declaration of ore reserves and approval to mine as further work is undertaken in order to refine the development case to maximise the project’s returns.

In accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources”, the criteria for the capitalisation of evaluation costs are applied consistently from period to period.

In the case of undeveloped mining projects which have arisen through acquisition, the allocation of the purchase price consideration may result in undeveloped properties being recognised at an earlier stage of project evaluation compared with projects arising from the Group’s exploration and evaluation programme. Subsequent expenditure on acquired undeveloped projects is only capitalised if it meets the high degree of confidence threshold discussed above.

The carrying values of capitalised evaluation expenditure for undeveloped mining projects (projects for which the decision to mine has not yet been approved at the appropriate authorisation level within the Group) are reviewed at each reporting date for indicators of impairment in accordance with IFRS 6, and when indicators are identified are tested in accordance with IAS 36. Evaluation expenditure for non-mining projects is reviewed and tested under IAS 36.

The impairment review is based on a status report summarising the Group’s intentions to recover value through development, sale or other partnering arrangements. If a project does not prove viable and is cancelled, all irrecoverable costs associated with the project net of any previously recorded impairment provisions are charged to the income statement.

(g) Property, plant and equipment (note 14)

Once an undeveloped mining project has been determined as commercially viable and approval to mine has been given, expenditure other than that on land, buildings, plant, equipment and capital work in progress is capitalised under “Mining properties and leases” together with any amount transferred from “Exploration and evaluation”.

Costs which are necessarily incurred whilst commissioning new assets, in the period before they are capable of operating in the manner intended by management, are capitalised. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. Interest on borrowings related to construction or development projects is capitalised, at the rate payable on project-specific debt if applicable or at the Group or subsidiary’s cost of borrowing if not, until the point when substantially all the activities that are necessary to make the asset ready for its intended use are complete. It may be appropriate to use a subsidiary’s cost of borrowing when the debt was negotiated based on the financing requirements of that subsidiary.

Property, plant and equipment is stated at cost, as defined in IAS 16, less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment includes, where applicable, the estimated close-down and restoration costs associated with the asset.

Property, plant and equipment includes Right of Use assets (note 14) arising from leasing arrangements, shown separately from owned and leasehold assets.

(h) Deferred stripping (note 14)

In open pit mining operations, overburden and other waste materials must be removed to access ore from which minerals can be extracted economically. The process of removing overburden and waste materials is referred to as stripping. During the development of a mine (or, in some instances, pit; see below), before production commences, stripping costs related to a component of an orebody are capitalised as part of the cost of construction of the mine (or pit) and are subsequently amortised over the life of the mine (or pit) on a units of production basis.

Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, initial stripping costs are accounted for separately by reference to the ore from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for stripping costs. In such cases, the initial stripping (i.e. overburden and other waste removal) of the second and subsequent pits is considered to be production phase stripping (see page 158). The Group’s judgment as to whether multiple pit mines are considered separate or integrated operations depends on each mine’s specific circumstances.



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Financial statements continued

1 Principal accounting policies continued

The following factors would point towards the initial stripping costs for the individual pits being accounted for separately:


–	If mining of the second and subsequent pits is conducted consecutively following that of the first pit, rather than concurrently;


–	If separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset;


–	If the pits are operated as separate units in terms of mine planning and the sequencing of overburden removal and ore mining, rather than as an integrated unit;


–	If expenditures for additional infrastructure to support the second and subsequent pits are relatively large; and


–	If the pits extract ore from separate and distinct orebodies, rather than from a single orebody.

If the designs of the second and subsequent pits are significantly influenced by opportunities to optimise output from several pits combined, including the co-treatment or blending of the output from the pits, then this would point to treatment as an integrated operation for the purposes of accounting for initial stripping costs. The relative importance of each of the above factors is considered in each case.

In order for production phase stripping costs to qualify for capitalisation as a stripping activity asset, three criteria must be met:


–	It must be probable that there will be an economic benefit in a future accounting period because the stripping activity has improved access to the orebody;


–	It must be possible to identify the “component” of the orebody for which access has been improved; and


–	It must be possible to reliably measure the costs that relate to the stripping activity.

A “component” is a specific section of the orebody that is made more accessible by the stripping activity. It will typically be a subset of the larger orebody that is distinguished by a separate useful economic life (for example, a pushback).

Production phase stripping can give rise to two benefits: the extraction of ore in the current period and improved access to ore which will be extracted in future periods. When the cost of stripping which has a future benefit is not distinguishable from the cost of producing current inventories, the stripping cost is allocated to each of these activities based on a relevant production measure using a life-of-component strip ratio. The ratio divides the tonnage of waste mined for the component for the period either by the quantity of ore mined for the component or by the quantity of minerals contained in the ore mined for the component. In some operations, the quantity of ore is a more appropriate basis for allocating costs, particularly where there are significant by-products. Stripping costs for the component are deferred to the extent that the current period ratio exceeds the life of component ratio. The stripping activity asset is depreciated on a “units of production” basis based on expected production of either ore or minerals contained in the ore over the life of the component unless another method is more appropriate.

The life-of-component ratios are based on the ore reserves of the mine (and for some mines, other mineral resources) and the annual mine plan; they are a function of the mine design and, therefore, changes to that design will generally result in changes to the ratios. Changes in other technical or economic parameters that impact the ore reserves (and for some mines, other mineral resources) may also have an impact on the life-of-component ratios even if they do not affect the mine design. Changes to the ratios are accounted for prospectively.

It may be the case that subsequent phases of stripping will access additional ore and that these subsequent phases are only possible after the first phase has taken place. Where applicable, the Group considers this on a mine-by-mine basis. Generally, the only ore attributed to the stripping activity asset for the purposes of calculating a life-of-component ratio, and for the purposes of amortisation, is the ore to be extracted from the originally identified component.

Deferred stripping costs are included in “Mining properties and leases” within “Property, plant and equipment” or within “Investments in equity accounted units”, as appropriate. Amortisation of deferred stripping costs is included in “Depreciation of property, plant and equipment” within “Net operating costs” or in “Share of profit after tax of equity accounted units”, as appropriate.

(i) Depreciation and impairment (notes 13 and 14)

Depreciation of non-current assets

Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine or smelter or refinery if that is shorter and there is no reasonable alternative use for the asset by the Group.

The useful lives of the major assets of a cash-generating unit are often dependent on the life of the orebody to which they relate. Where this is the case, the lives of mining properties, and their associated refineries, concentrators and other long-lived processing equipment are generally limited to the expected life of the orebody. The life of the orebody, in turn, is estimated on the basis of the life-of-mine plan. Where the major assets of a cash-generating unit are not dependent on the life of a related orebody, management applies judgment in estimating the remaining service potential of long-lived assets. Factors affecting the remaining service potential of smelters include, for example, smelter technology and electricity purchase contracts when power is not sourced from the company’s, or in some cases a local government’s, renewably sourced electricity generating capacity.

The useful lives and residual values for material assets and categories of assets are reviewed annually and changes are reflected prospectively.

Depreciation commences when an asset is available for use. The major categories of property, plant and equipment are depreciated on a units of production and/or straight-line basis as follows:

Units of production basis

For mining properties and leases and certain mining equipment, consumption of the economic benefits of the asset is linked to production. Except as noted below, these assets are depreciated on the units of production basis.

In applying the units of production method, depreciation is normally calculated based on production in the period as a percentage of total expected production in current and future periods based on ore reserves and, for some mines, other mineral resources. Other mineral resources may be included in the calculations of total expected production in limited circumstances where there are very large areas of contiguous mineralisation, for which the economic viability is not sensitive to likely variations in grade, as may be the case for certain iron ore, bauxite and industrial minerals deposits and where there is a high degree of confidence that the other mineral resources can be extracted economically. This would be the case when the other mineral resources do not yet have the status of ore reserves merely because the necessary detailed evaluation work has not yet been performed and the responsible technical personnel agree that inclusion of a proportion of measured and indicated resources in the calculation of total expected production is appropriate based on historical reserve conversion rates.

The required level of confidence is unlikely to exist for minerals that are typically found in low-grade ore (as compared with the above), such as copper or gold. In these cases, specific areas of mineralisation have to be evaluated in detail before their economic status can be predicted with confidence.



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Financial statements

Notes to the 2019 financial statements continued

Where measured and indicated resources are used in the calculation of depreciation for infrastructure, primarily rail and port, which will benefit current and future mines, then the measured and indicated resources may relate to mines which are currently in production or to mines where there is a high degree of confidence that they will be brought into production in the future. The quantum of mineral resources is determined taking into account future capital costs as required by the JORC code. The depreciation calculation, however, applies to current mines only and does not take into account future development costs for mines which are not yet in production. Measured and indicated resources are currently incorporated into depreciation calculations in the Group’s Australian iron ore business.

Straight line basis

Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight line basis.

Impairment charges/reversals of non-current assets

Impairment charges and reversals are assessed at the level of cash- generating units which, in accordance with IAS 36 “Impairment of Assets”, are identified as the smallest identifiable asset or group of assets that generate cash inflows which are largely independent of the cash inflows from other assets. Separate cash-generating units are identified where an active market exists for intermediate products, even if the majority of those products are further processed internally. Impairment of financial assets is evaluated in accordance with IFRS 9.

In some cases, individual business units consist of several operations with independent cash-generating streams which constitute separate cash- generating units.

Goodwill acquired through business combinations is allocated to the cash-generating unit or groups of cash-generating units that are expected to benefit from the related business combination, and tested for impairment at the lowest level within the Group at which goodwill is monitored for internal management purposes. All goodwill, intangible assets that have an indefinite life and intangible assets that are not ready for use are tested annually for impairment as at 30 September, regardless of whether there has been an impairment trigger, or more frequently if events or changes in circumstances indicate a potential impairment.

Property, plant and equipment and intangible assets with finite lives are reviewed for impairment if there is an indication that the carrying amount may not be recoverable. Right of use assets recognised under IFRS 16 "Leases" are included in the review. The Group conducts an internal review of the asset values annually as at 30 September which is used as a source of information to assess for indications of impairment or reversal of previously recognised impairment losses. External factors, such as changes in forecasted commodity prices, costs and other market factors as well as internal factors such as cancellation of a project or reduced project scope, are also monitored to assess for indications of impairment or reversal of previously recognised impairment losses. If any such indication exists then an impairment review is undertaken; the recoverable amount is assessed by reference to the higher of value in use (being the net present value of expected future cash flows of the relevant cash-generating unit in its current condition) and fair value less costs of disposal (FVLCD).

When the recoverable amount of the cash-generating unit is measured by reference to FVLCD, this amount is further classified in accordance with the fair value hierarchy for observable market data that is consistent with the unit of account for the cash-generating unit being tested. The Group considers that the best evidence of FVLCD is the value obtained from an active market or binding sale agreement and, in this case, the recoverable amount is classified in the fair value hierarchy as level 1. When FVLCD is based on quoted prices for equity instruments but adjusted to reflect factors such as a lack of liquidity in the market, the recoverable amount is classified as level 2 in the fair value hierarchy. No cash-generating units are currently assessed for impairment by reference to a recoverable amount based on FVLCD classified as level 1 or level 2.

Where unobservable inputs are material to the measurement of the recoverable amount, FVLCD is based on the best information available to reflect the amount the Group could receive for the cash-generating unit in an orderly transaction between market participants at the measurement date. This is often estimated using discounted cash flow techniques and is classified as level 3 in the fair value hierarchy.

Where the recoverable amount is assessed using FVLCD based on discounted cash flow techniques, the resulting estimates are based on detailed life-of-mine and/or long-term production plans. These may include anticipated expansions which are at the evaluation stage of study.

The cash flow forecasts for FVLCD purposes are based on management’s best estimates of expected future revenues and costs, including the future cash costs of production, capital expenditure, and closure, restoration and environmental costs. For the purposes of determining FVLCD from a market participant’s perspective, the cash flows incorporate management’s price and cost assumptions in the short and medium term. In the longer term, operating margins are assumed to remain constant where appropriate, as it is considered unlikely that a market participant would prepare detailed forecasts over a longer term. The cash flow forecasts may include net cash flows expected to be realised from the extraction, processing and sale of material that does not currently qualify for inclusion in ore reserves. Such non-reserve material is only included when there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and sampling of areas of mineralisation that are contiguous with existing ore reserves. Typically, the additional evaluation required to achieve reserves status for such material has not yet been done because this would involve incurring evaluation costs earlier than is required for the efficient planning and operation of the mine.

As noted above, cost levels incorporated in the cash flow forecasts for FVLCD purposes are based on the current life-of-mine plan or long-term production plan for the cash-generating unit. This differs from value in use which requires future cash flows to be estimated for the asset in its current condition and therefore does not include future cash flows associated with improving or enhancing an asset’s performance. Anticipated enhancements to assets may be included in FVLCD calculations and, therefore, generally result in a higher value.

Where the recoverable amount of a cash-generating unit is dependent on the life of its associated orebody, expected future cash flows reflect the current life of mine and/or long-term production plans, which are based on detailed research, analysis and iterative modelling to optimise the level of return from investment, output and sequence of extraction. The mine plan takes account of all relevant characteristics of the orebody, including waste-to-ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore impacting process recoveries and capacities of processing equipment that can be used. The life-of-mine plan and/or long-term production plans are, therefore, the basis for forecasting production output and production costs in each future year.

Forecast cash flows for ore reserve estimation for JORC purposes are generally based on Rio Tinto’s commodity price forecasts, which assume short-term market prices will revert to the Group’s assessment of the long-term price, generally over a period of three to five years. For most commodities, these forecast commodity prices are derived from a combination of analyses of the marginal costs of the producers and of the incentive price of these commodities. These assessments often differ from current price levels and are updated periodically. The Group does not believe that published medium- and long-term forward prices necessarily provide a good indication of future levels because they tend to be strongly influenced by spot prices. The price forecasts used for ore reserve estimation are generally consistent with those used for impairment testing unless management deems that in certain economic environments, a market participant would not assume Rio Tinto’s view on prices, in which case in preparing FVLCD impairment calculations management estimates the assumptions that a market participant would be expected to use.



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Financial statements continued

1 Principal accounting policies continued

Forecast future cash flows of a cash-generating unit take into account the sales prices under existing sales contracts.

The discount rates applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The Group’s weighted average cost of capital is generally used as a starting point for determining the discount rates, with appropriate adjustments for the risk profile of the countries in which the individual cash-generating units operate. For final feasibility studies and ore reserve estimation, internal hurdle rates, which are generally higher than the Group’s weighted average cost of capital, are used. For developments funded with project finance, the debt component of the weighted average cost of capital may be calculated by reference to the specific interest rate of the project finance and anticipated leverage of the project.

For operations with a functional currency other than the US dollar, the impairment review is undertaken in the relevant functional currency. In estimating FVLCD, internal forecasts of exchange rates take into account spot exchange rates, historical data and external forecasts, and are kept constant in real terms after five years. The great majority of the Group’s sales are based on prices denominated in US dollars. To the extent that the currencies of countries in which the Group produces commodities strengthen against the US dollar without an increase in commodity prices, cash flows and, therefore, net present values are reduced. Management considers that over the long term, there is a tendency for movements in commodity prices to compensate to some extent for movements in the value of the US dollar, particularly against the Australian dollar and Canadian dollar, and vice versa. However, such compensating changes are not synchronised and do not fully offset each other. In estimating value in use, the present value of future cash flows in foreign currencies is translated at the spot exchange rate on the testing date.

Non-current assets (excluding goodwill) that have suffered impairment are reviewed using the same basis for valuation as explained above whenever events or changes in circumstances indicate that the impairment loss may no longer exist, or may have decreased. If appropriate, an impairment reversal will be recognised. The carrying amount of the cash-generating unit after reversal must be the lower of (a) the recoverable amount, as calculated above, and (b) the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the cash-generating unit in prior periods.

An onerous contract is defined under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” as a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. Provision is made when the assets dedicated to the contract are fully impaired or the contract becomes stranded as a result of a business decision.

(j) Determination of ore reserve and mineral resource estimates

The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in accordance with the JORC code.

Ore reserves and, for certain mines, other mineral resources, determined in this way are used in the calculation of depreciation, amortisation and impairment charges and for forecasting the timing of the payment of close-down and restoration costs and the recovery of deferred tax assets. The depreciation and impairment policy above notes instances in which mineral resources are taken into account for accounting purposes. In addition, value may be attributed to mineral resources in purchase price allocations undertaken for the purposes of business combination accounting.

reported ore reserve estimates have not been increased above the levels expected to be economic based on Rio Tinto’s own long-term price assumptions. Therefore, a reduction in commodity prices from the three-year average historical price levels would not necessarily give rise to a reduction in reported ore reserves.

(k) Leases (notes 14, 22, 23 and 45)

IFRS 16 “Leases” applies to the recognition, measurement, presentation and disclosure of leases. Certain leases are exempt from the standard, including leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources. The Group does not apply IFRS 16 to arrangements which fall within the scope of IAS 38 “Intangible Assets”.

A significant proportion by value of the Group’s lease arrangements relate to dry bulk vessels and offices. Other leases include land and non-mining rights, warehouses, equipment and vehicles. The majority of lease terms are negotiated through the Group’s procurement function, although agreements contain a wide range of different terms and conditions.

The Group recognises all lease liabilities and corresponding right of use assets, with the exception of short-term (12 months or fewer) and low value leases, on the balance sheet. Lease liabilities are recorded at the present value of: fixed payments; variable lease payments that depend on an index or rate; amounts payable under residual value guarantees; and extension options expected to be exercised. Where a lease contains an extension option which the Group can exercise without negotiation, lease payments for the extension period are included in the liability if the Group is reasonably certain that it will exercise the option. Variable lease payments not dependent on an index or rate are excluded from the calculation of lease liabilities. Payments are discounted at the incremental borrowing rate of the lessee, unless the interest rate implicit in the lease can be readily determined. For lease agreements relating to vessels and properties, non-lease components are excluded from the projection of future lease payments and recorded separately within operating costs on a straight line basis. The right of use asset arising from a lease arrangement at initial recognition reflects the lease liability, initial direct costs, lease payments made before the commencement date of the lease, and capitalised provision for dismantling and restoration, less any lease incentives.

The Group recognises depreciation of right of use assets and interest on lease liabilities in the income statement over the lease term. Repayments of lease liabilities are separated into a principal portion (presented within financing activities) and interest portion (which the Group presents in operating activities) in the cash flow statement. Payments made before the commencement date are included within financing activities unless they in substance represent investing cash flows, for example where pre-commencement cash flows are significant relative to aggregate cash flows of the leasing arrangement.

Presentation of comparative financial information relating to leases is in accordance with the previous standard IAS 17 "Leases". For further understanding of the impact of the transition to IFRS 16, refer to note 45.

(l) Close-down, restoration and environmental obligations (note 26)

The Group has provisions for close-down and restoration costs which include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines and certain refineries and smelters. These provisions are based on all regulatory requirements and any other commitments made to stakeholders.

Closure provisions are not made for those operations that have no known restrictions on their lives as the closure dates cannot be reliably estimated. This applies primarily to certain Canadian smelters which have indefinite- lived water rights or power agreements for renewably sourced power with local governments.

Close-down and restoration costs are a normal consequence of mining or production, and the majority of close-down and restoration expenditure is incurred in the years following closure of the mine, refinery or smelter. Although the ultimate cost to be incurred is uncertain, the Group’s businesses estimate their costs using current restoration standards and techniques.



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Financial statements

Notes to the 2019 financial statements continued

Close-down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs, based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure. Where appropriate, the provision is estimated using probability weighting of the different remediation and closure scenarios. The obligation may occur during development or during the production phase of a facility.

Provisions for close-down and restoration costs do not include any additional obligations which are expected to arise from future disturbance.

The costs are estimated on the basis of a closure plan, and are reviewed at each reporting period during the life of the operation to reflect known developments. The estimates are also subject to formal review, with appropriate external support, at regular intervals.

The initial close-down and restoration provision is capitalised within “Property, plant and equipment”. Subsequent movements in the close- down and restoration provisions for ongoing operations, including those resulting from new disturbance related to expansions or other activities qualifying for capitalisation, updated cost estimates, changes to the estimated lives of operations, changes to the timing of closure activities and revisions to discount rates are also capitalised within “Property, plant and equipment”. These costs are then depreciated over the lives of the assets to which they relate.

Changes in closure provisions relating to closed operations are charged/credited to “Net operating costs” in the income statement.

Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the estimated outstanding continuous rehabilitation work at each balance sheet date and the cost is charged to the income statement.

The amortisation or “unwinding” of the discount applied in establishing the provisions is charged to the income statement in each accounting period. The amortisation of the discount is shown within “Finance items” in the income statement.

Environmental costs result from environmental damage that was not a necessary consequence of operations, and may include remediation, compensation and penalties. Provision is made for the estimated present value of such costs at the balance sheet date. These costs are charged to “Net operating costs”, except for the unwinding of the discount which is shown within “Finance items”.

Remediation procedures may commence soon after the time the disturbance, remediation process and estimated remediation costs become known, but can continue for many years depending on the nature of the disturbance and the remediation techniques used.

(m) Inventories (note 16)

Inventories are valued at the lower of cost and net realisable value, primarily on a weighted average cost basis. Average costs are calculated by reference to the cost levels experienced in the relevant month together with those in opening inventory. The cost of raw materials and consumable stores is the purchase price. The cost of partly-processed and saleable products is generally the cost of production, including:


–	Labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore or the production of alumina and aluminium;


–	The depreciation of mining properties and leases and of property, plant and equipment used in the extraction and processing of ore or the production of alumina and aluminium; and


–	Production overheads.

Work in progress includes ore stockpiles and other partly processed material. Stockpiles represent ore that has been extracted and is available for further processing. If there is significant uncertainty as to if and/or when the stockpiled ore will be processed, the ore is expensed as mined. If the ore will not be processed within 12 months after the balance sheet date, it is included within non-current assets and net realisable value is calculated on a discounted cash flow basis. Quantities of stockpiled ore are assessed primarily through surveys and assays. Certain estimates, including expected metal recoveries, are calculated using available industry, engineering and scientific data, and are periodically reassessed taking into account technical analysis and historical performance.

(n) Taxation (note 9 and note 17)

Current tax is the tax expected to be payable on the taxable income for the year calculated using rates that have been enacted or substantively enacted at the balance sheet date. It includes adjustments for tax expected to be payable or recoverable in respect of previous periods. Where the amount of tax payable or recoverable is uncertain, Rio Tinto establishes provisions based on either: the Group’s judgment of the most likely amount of the liability or recovery; or, when there is a wide range of possible outcomes, a probability weighted average approach.

Deferred tax is calculated in accordance with IAS 12. The Group provides for deferred tax in respect of fair value adjustments on acquisitions including mining rights that, in general, are not eligible for income tax allowances. Provision for deferred tax is based on the difference between the carrying value of the asset and its income tax base (which may be nil). Even when there is no income tax base, the existence of a tax base for capital gains tax purposes is not usually taken into account in determining the deferred tax provision for the assets, unless they are classified as held for sale or it is determined for other reasons that the carrying amount is expected to be recovered primarily through disposal and not through use of the assets.

(o) Post-employment benefits (note 44)

The Group operates a number of defined benefit plans which provide lump sums, pensions, medical benefits and life insurance to retirees. In accordance with IAS 19, for post-employment defined benefit plans, the difference between the fair value of any plan assets and the present value of the plan obligations is recognised as an asset or liability in the balance sheet.

Where appropriate, the recognition of assets may be restricted to the present value of any amounts the Group expects to recover by way of refunds from the plan or reductions in future contributions. In determining the extent to which a refund will be available the Group considers whether any third party, such as a trustee or pension committee, has the power to enhance benefits or to wind up a pension plan without the Group’s consent.

The most significant assumptions used in accounting for pension plans are the discount rate, the inflation rate and mortality rates. The discount rate is used to determine the net present value of the obligations, the interest cost on the obligations and the interest income on plan assets. The discount rate used is the yield on high-quality corporate bonds with maturities and terms that match those of the post-employment obligations as closely as possible. Where there is no developed corporate bond market in a currency, the rate on government bonds is used. The inflation rate is used to project increases in future benefit payments for those plans that have benefits linked to inflation. The mortality rates are used to project the period over which benefits will be paid, which is then discounted to arrive at the net present value of the obligations.

The current service cost, any past service cost and the effect of any curtailment or settlements are recognised in the income statement. The interest cost less interest income on assets held in the plans is also charged to the income statement. All amounts charged to the income statement in respect of these plans are included within “Net operating costs” or in “Share of profit after tax of equity accounted units”, as appropriate.



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Financial statements continued

1 Principal accounting policies continued

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate. These are included within “Net operating costs” or in “Share of profit after tax of equity accounted units”, as appropriate.

(p) Cash and cash equivalents (note 21)

For the purpose of the balance sheet, cash and cash equivalents comprise: cash on hand, deposits held with banks, and short-term, highly liquid investments (mainly money market funds) that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Bank overdrafts are shown as current liabilities in the balance sheet.

Further detail on cash and cash equivalents, including restricted cash, is shown in note 21.

For the purposes of the cash flow statement, cash and cash equivalents are net of bank overdrafts that are repayable on demand.

(q) Financial instruments (note 30)

(i) Financial assets

Classification and measurement

The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL)) and those to be held at amortised cost.

Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.

Management determines the classification of financial assets at initial recognition. The Group’s policy with regard to financial risk management is set out in note 30. Generally, the Group does not acquire financial assets for the purpose of selling in the short term.

The Group’s business model is primarily that of “hold to collect” (where assets are held in order to collect contractual cash flows). When the Group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.

(a) Financial assets held at amortised cost

This classification applies to debt instruments which are held under a hold to collect business model and which have cash flows that meet the “solely payments of principal and interest” (SPPI) criteria.

At initial recognition, trade receivables that do not have a significant financing component are recognised at their transaction price. Other financial assets are initially recognised at fair value plus related transaction costs; they are subsequently measured at amortised cost using the effective interest method. Any gain or loss on de-recognition or modification of a financial asset held at amortised cost is recognised in the income statement.


(b)	Financial assets held at fair value through other comprehensive income (FVOCI)

This classification applies to the following financial assets:


–	Debt instruments that are held under a business model where they are held for the collection of contractual cash flows and also for sale (“collect and sell”) and which have cash flows that meet the SPPI criteria. An example would be where trade receivable invoices for certain customers were factored from time to time.

All movements in the fair value of these financial assets are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest revenue (including transaction costs by applying the effective interest method), gains or losses arising on de-recognition and foreign exchange gains and losses which are recognised in the income statement. When the financial asset is derecognised, the cumulative fair value gain or loss previously recognised in other comprehensive income is reclassified to the income statement.


–	Equity investments where the Group has irrevocably elected to present fair value gains and losses on revaluation in other comprehensive income. The election can be made for each individual investment; however it is not applicable to equity investments held for trading.

Fair value gains or losses on revaluation of such equity investments, including any foreign exchange component, are recognised in other comprehensive income. When the equity investment is derecognised, there is no reclassification of fair value gains or losses previously

recognised in other comprehensive income to the income statement. Dividends are recognised in the income statement when the right to receive payment is established.

This classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the income statement.

–

Debt instruments that do not meet the criteria of amortised cost or fair value through other comprehensive income. The Group has a significant proportion of trade receivables with embedded derivatives for provisional pricing. These receivables are generally held to collect but do not meet the SPPI criteria and as a result must be held at FVPL. Subsequent fair value gains or losses are taken to the income statement.


–	Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains or losses and related dividend income are recognised in the income statement.


–	Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised in the income statement.

(ii) Financial liabilities

Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost.

The Group participates in supply chain finance arrangements whereby vendors may elect to receive early payment of their invoice from a third party bank by factoring their receivable from Rio Tinto. These arrangements do not modify the terms of the original liability with respect to either counterparty terms, settlement date or amount due. Utilisation of the early settlement facility is voluntary and at the vendors' discretion on an invoice-by-invoice basis. Financial liabilities subject to supply chain finance therefore continue to be classified as trade payables. At 31 December 2019, trade payables included US$573 million (2018:US$632 million) subject to early settlement election by vendors.



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Financial statements

Notes to the 2019 financial statements continued

(iii) Impairment of financial assets

A forward looking expected credit loss (ECL) review is required for: debt instruments measured at amortised cost or held at fair value through other comprehensive income; loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.

As permitted by IFRS 9, the Group applies the “simplified approach” to trade receivable balances and receivables relating to net investment in finance leases and the “general approach” to all other financial assets. The general approach incorporates a review for any significant increase in counterparty credit risk since inception. The ECL reviews include assumptions about the risk of default and expected loss rates. For trade receivables and receivables relating to net investment in finance leases, the assessment takes into account the use of credit enhancements, for example, letters of credit. Impairments for undrawn loan commitments are reflected as a provision.

(iv) Derivatives and hedge accounting

The Group applies the hedge accounting requirements under IFRS 9 and its hedging activities are discussed in note 30 with movements on hedging reserves disclosed in note 29. Where applicable, the Group may defer the costs of hedging including currency basis spreads, forward points and the time value of options.

(r) Share-based payments (note 43)

The fair value of the Group’s share plans is recognised as an expense over the expected vesting period with an offset to retained earnings for Rio Tinto plc plans and to other reserves for Rio Tinto Limited plans.

The Group uses fair values provided by independent actuaries calculated using either a lattice-based option valuation model or a Monte Carlo simulation model.

The terms of each plan are considered at the balance sheet date to determine whether the plan should be accounted for as equity-settled or cash-settled. The Group does not operate any plans as cash-settled. However, the Performance Share Plan can, at the discretion of the directors, offer employees an equivalent amount in cash. This is not standard practice. In some jurisdictions, employees are granted cash- settled awards where equity-settled awards are prohibited by local laws and regulations. The value of these awards is immaterial.

The Group’s equity-settled share plans are settled either by: the issuance of shares by the relevant parent company; the purchase of shares on market; or the use of shares held in treasury which were previously acquired as part of a share buy-back. If the cost of shares acquired to satisfy the plans differs from the expense charged, the difference is taken to retained earnings or other reserves, as appropriate.

(s) Share capital (notes 27 and 28)

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Group’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to owners of Rio Tinto. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental costs and the related income tax effects, is included in equity attributable to owners of Rio Tinto. If purchased Rio Tinto plc shares are cancelled, an amount equal to the nominal value of the cancelled share is credited to the capital redemption reserve.

(t) Segment reporting (notes 2 and 3)

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The Group considers that Rio Tinto’s chief executive is the CODM, who is responsible for allocating resources and assessing performance of the operating segments.

Critical accounting policies and estimates

(i) Determination of CGUs, assessment of indicators of impairment, review of asset carrying values, impairment charges and reversals and the recoverability of goodwill (notes 6, 12 and 13)

Impairment is assessed at the cash-generating unit (CGU) level. A CGU is the smallest identifiable asset or group of assets that generates

independent cash inflows. Judgment is applied to identify the Group’s CGUs, particularly when assets belong to integrated operations, and changes in CGUs could impact impairment charges and reversals. The most significant examples of this judgment are: disaggregation, in 2019, of the Weipa bauxite mine and the downstream Gladstone alumina refineries (Yarwun and QAL) in Queensland, Australia into three separate CGUs on the basis of the ramp-up of the Amrun expansion at Weipa which increased bauxite exports such that the mine is now considered to generate largely independent cash inflows; and the continued grouping of Rio Tinto Fer et Titane in Quebec, Canada and QIT Madagascar Minerals (QMM) into a single CGU on the basis that they are vertically integrated operations with no active market for ilmenite. Prior to 2019, the Weipa mine and Gladstone refineries were grouped into a single CGU. Management reviews these judgments on an annual basis as part of the annual internal review of asset values as described in note (i) above.

External and internal factors are monitored for indicators of impairment and include an annual internal review of asset values as described in note (i) above. Judgment is required to determine whether the impact of adverse spot commodity price movements is significant and structural in nature. There were no material instances of this judgment resulting in an indicator of impairment as at 31 December 2019.

Generally, discounted cash flow models are used to determine the recoverable amount of CGUs. In this case, significant judgment is required to determine the appropriate estimates and assumptions used and there is significant estimation uncertainty. In particular, for fair value less costs of disposal valuations, judgment is required to determine the estimates a market participant would use. The discounted cash flow model is most sensitive to the following estimates: the timing of project expansions; the cost to complete assets under construction; long-term commodity prices; production timing and recovery rates; exchange rates; operating costs; reserve and resource estimates; closure costs; discount rates; allocation of long-term contract revenues between CGUs and, in some instances, the renewal of mining licences. Some of these variables are unique to an individual CGU. Future changes in these variables may differ from management’s expectations and may materially alter the recoverable amounts of the CGUs.

Note (i) above also describes the Group’s methodology for estimating long-term commodity prices, exchange rates and discount rates for impairment testing purposes. Note 6 outlines the significant judgments, assumptions and sensitivities made for both measuring the impairments recorded and for determining whether reversal of part or all of a previous impairment was appropriate. Judgments, assumptions and sensitivities in relation to the testing of CGUs containing goodwill and indefinite-lived intangible assets are outlined in notes 12 and 13 respectively.



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Financial statements continued

1 Principal accounting policies continued

(ii) Estimation of asset lives

Intangible assets are considered to have indefinite lives (and therefore no related depreciation or amortisation charge) if, in the Group’s judgment, there is no foreseeable limit to the period over which the asset is expected to generate cash flows. Factors that are considered in making this judgment include the existence of contractual rights for unlimited terms or evidence that renewal of the contractual rights without significant incremental costs can be expected for indefinite periods into the future in view of the Group’s investment intentions. The most significant assessment of indefinite life applicable to Intangible assets relates to contract based water rights in Canada acquired with Alcan, described further in note 13.

The useful lives of the major assets of a CGU are often dependent on the life of the orebody to which they relate. The life of the orebody will be determined on the basis of the life-of-mine plan which is based on the estimates of ore reserves as described on page 273.

(iii) Provision for onerous contracts

Provision for an onerous contract is made only when the assets dedicated to that contract are fully impaired or the contract becomes stranded as a result of a business decision. Judgment is required in determining which assets are considered dedicated to a contract when there is optionality as to how the contract obligations can be settled. Key estimates are the cash flows associated with the contract and the discount rate assumption. The Group completed the disposal of its remaining coking coal assets in 2018 and has retained the onerous provisions made in past periods for rail infrastructure “take or pay” contracts which were considered stranded. Refer to note 37. As at 31 December 2019, the balance of the provision was US$284 million. In 2019, the Group's investment in the Escondida Joint Venture reduced by US$138 million relating to contractual payments under a power purchase agreement which became stranded and was judged to be onerous upon early cancellation in favour of renewable energy sources.

(iv) Close-down, restoration and environmental obligations (note 26)

Provision is made for close-down, restoration and environmental costs when the obligation occurs, based on the net present value of estimated future costs required to satisfy the obligation. Management uses its judgment and experience to determine the potential scope of closure rehabilitation work required to meet the Group’s legal, statutory and constructive obligations, and any other commitments made to stakeholders, and the options and techniques available to meet those obligations and estimate the associated costs and the likely timing of those costs. Significant judgment is also required to determine both the costs associated with that work and the other assumptions used to calculate the provision. External experts support the cost estimation process where appropriate but there remains significant estimation uncertainty.

The key judgment in applying this accounting policy is determining when an estimate is sufficiently reliable to make or adjust a closure provision.

Cost estimates are updated throughout the life of the operation; generally cost estimates must comply with the Group’s Capital Project Framework once the operation is ten years from expected closure. This means, for example, that where an Order of Magnitude (OoM) study is required for closure it must be of the same standard as an OoM study for a new mine, smelter or refinery. As at 31 December 2019, there are 13 operations with remaining lives of under 10 years before taking into account unapproved extensions. The largest continuing closure study is at Rio Tinto Kennecott; information available from this study at 31 December 2019 resulted in an increase to closure and environmental liabilities of US$444 million. Adjustments are made to provisions when the range of possible outcomes becomes sufficiently narrow to permit reliable estimation. Depending on the materiality of the change, adjustments may require review and endorsement by the Group’s Closure Steering Committee before the provision is updated.

In some cases, the closure study may indicate that monitoring and, potentially, remediation will be required indefinitely - for example ground water treatment. In these cases the underlying cash flows for the provision may be restricted to a period for which the costs can be reliably estimated, which on average is around 30 years. Where an alternative commercial arrangement to meet our obligations can be predicted with confidence, this period may be shorter.

The most significant assumptions and estimates used in calculating the provision are:


–	Closure timeframes. The weighted average remaining lives of operations is shown in note 26 (c). Some expenditure may be incurred before closure whilst the operation as a whole is in production.

–

The length of any post-closure monitoring period. This will depend on the specific site requirements and the availability of alternative commercial arrangements; some expenditure can continue into perpetuity. The Rio Tinto Kennecott closure and environmental remediation provision includes an allowance for ongoing monitoring and remediation costs, including ground water treatment, of approximately US$0.7 billion.


–	The probability weighting of possible closure scenarios. The most significant impact of probability weighting is at the Pilbara operations (Iron Ore) relating to infrastructure and incorporates the possibility that some infrastructure may be retained by the relevant State authorities post closure. The assignment of probabilities to this scenario reduces the closure provision by US$0.8 billion.


–	Appropriate sources on which to base the calculation of the risk-free discount rate. At 31 December 2019 the carrying value of the close-down, restoration and environmental provision was US$11.1 billion. The change in carrying value of the provision which would result if the real discount rate was 0.5% lower than that assumed by management is shown in note 26.

There is significant estimation uncertainty in the calculation of the provision and cost estimates can vary in response to many factors including:


–	Changes to the relevant legal or local/national government requirements and any other commitments made to stakeholders;


–	Review of remediation and relinquishment options;


–	Additional remediation requirements identified during the rehabilitation;


–	The emergence of new restoration techniques;


–	Change in the expected closure date;


–	Change in the discount rate; and


–	The effects of inflation.



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Financial statements

Notes to the 2019 financial statements continued

Experience gained at other mine or production sites may also change expected methods or costs of closure, although elements of the restoration and rehabilitation of each site are relatively unique to a site. Generally, there is relatively limited restoration and rehabilitation activity and historical precedent elsewhere in the Group, or in the industry as a whole, against which to benchmark cost estimates.

The expected timing of expenditure can also change for other reasons, for example because of changes to expectations around ore reserves and mineral resources, production rates, renewal of operating licences or economic conditions.

As noted in note (l) above, changes in closure and restoration provisions for ongoing operations (other than the impact relating to current year production) are capitalised and therefore will impact assets and liabilities but have no impact on equity at the time the change is made. However, these changes will impact depreciation and the unwind of discount in future years. Changes in closure estimates at the Group’s ongoing operations could result in a material adjustment to assets and liabilities in the next 12 months.

Changes to closure cost estimates for closed operations, and changes to environmental cost estimates at any operation, would impact equity; however, the Group does not consider that there is significant risk of a change in estimates for these liabilities causing a material adjustment to equity in the next 12 months. Any new environmental incidents may require a material provision but cannot be predicted.

Cash flow estimates must be discounted at the risk-free interest rate if this has a material effect on the provision. The selection of appropriate sources on which to base the calculation of the risk-free discount rate requires judgment. The 2% real rate currently used by the Group is based on a number of inputs including observable historical yields on 30 year US Treasury Inflation Protected Securities (TIPS), and recommendations by independent valuation experts.

(v) Deferral of stripping costs (note 14)

Stripping of waste materials takes place throughout the production phase of a surface mine or pit. The identification of components within a mine and of the life of component strip ratios requires judgment and is dependent on an individual mine’s design and the estimates inherent within that. Changes to that design may introduce new components and/or change the life of component strip ratios. Changes in other technical or economic parameters that impact ore reserves may also have an impact on the life of component strip ratios, even if they do not affect the mine’s design. Changes to the life of component strip ratios are accounted for prospectively.

The Group’s judgment as to whether multiple pit mines are considered separate or integrated operations determines whether initial stripping of a pit is deemed to be pre-production or production phase stripping and, therefore, the amortisation base for those costs. The analysis depends on each mine’s specific circumstances and requires judgment: another mining company could make a different judgment even when the fact pattern appears to be similar.

(vi) Uncertain tax positions

The Group operates across a large number of jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business, including transfer pricing, indirect taxes and transaction related issues. Where the amount of tax payable or recoverable is uncertain, Rio Tinto establishes provisions based on either: the Group’s judgment of the most likely amount of the liability or recovery; or, when there is a wide range of possible outcomes, a probability weighted average approach. The most significant of these judgments are in relation to transfer pricing matters, including issues under discussion with the Australian Tax Office (ATO) on certain transactions between Rio Tinto entities based in Australia and the Group's commercial centre in Singapore for the period since 2009.

(vii) Recoverability of potential deferred tax assets (note 17)

The Group has tax losses and other deductible temporary differences, mainly in Australian, Canadian, French, US and Mongolian taxable entities, that have the potential to reduce tax payments in future years. Deferred tax assets have been recognised to the extent that their recovery is probable, having regard to the availability of sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity, the estimates of projected future taxable income of these taxable entities and after taking account of specific risk factors that are expected to affect the recovery of these assets including the risk of expiry of losses. Further information on deferred tax assets is given in note 17.

In addition to the risk of expiry of losses the projections on which recovery of tax losses are based are subject to the same estimation uncertainty as noted in (i) above in relation to impairment. The key judgment in the application of this accounting policy is the recognition of deferred tax assets for losses where the operation is not currently profitable for tax purposes.

(viii) Identification of functional currencies

The functional currency for each subsidiary, unincorporated arrangement, joint operation and equity accounted unit, is the currency of the primary economic environment in which it operates. Determination of functional currency involves significant judgment and other companies may make different judgments based on similar facts. For many of Rio Tinto’s businesses, their functional currency is the currency of the country in which they operate. The Group reconsiders the functional currency of its businesses if there is a change in the underlying transactions, events or conditions which determine their primary economic environment.

The determination of functional currency is a key judgment which affects the measurement of non-current assets included in the balance sheet and, as a consequence, the depreciation and amortisation of those assets included in the income statement. It also impacts exchange gains and losses included in the income statement and in equity. The Group applies judgment in determining whether settlement of certain intragroup loans is neither planned nor likely in the foreseeable future and therefore whether the associated exchange gains and losses can be taken to equity. During 2019, A$14 billion of intragroup loans continued to meet these criteria; associated exchange gains and losses are taken to equity.

(ix) Estimation of obligations for post-employment costs (note 44)

The value of the Group’s obligations for post-employment benefits is dependent on the amount of benefits that are expected to be paid out, discounted to the balance sheet date. The discount rate is a key assumption and is based upon the yields on high quality corporate bonds in the relevant currency which have durations consistent with the term of the obligations. The discount rate will vary from one period to another in line with movements in corporate bond yields, but at any given measurement date there is relatively little estimation uncertainty. This rate is also used to calculate the interest cost on obligations and interest income on plan assets.

The following key assumptions are used to calculate the estimated benefit: future pay increases to be received by members of final pay plans, the level of inflation (for those benefits that are subject to some form of inflation protection), current mortality rates and future improvements in mortality rates. The assumption regarding future inflation is based on market yields on inflation linked instruments, where possible, combined with consensus views. The Group reviews the actual mortality rates of retirees in its major pension plans on a regular basis and uses these rates to set its current mortality assumptions. It also uses its judgment with respect to allowances for future improvements in longevity having regard to standard improvement scales in each relevant country and after taking external actuarial advice.



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Financial statements continued

1 Principal accounting policies continued

Most of the Group’s defined benefit pension plans are closed to new entrants and the majority of the obligations relate to former employees. The carrying value of the Group’s post-employment obligations is therefore less sensitive to assumptions about future salary increases than it is to assumptions regarding future inflation.

Details of the key assumptions, how they have moved since the previous balance sheet date and the sensitivity of the carrying value to changes in the assumptions are set out in note 44.

(x) Contingencies (note 31)

Disclosure is made of material contingent liabilities unless the possibility of any loss arising is considered remote based on the Group’s judgment and legal advice. Contingent liabilities are quantified unless, in the Group’s judgment, the amount cannot be reliably estimated.

(xi) Basis of consolidation (notes 33-36)

Judgment is sometimes required to determine whether after considering all relevant factors, the Group has control, joint control or significant influence over an entity or arrangement. Significant influence includes situations of collective control (see note 36 (a)). Other companies may make different judgments regarding the same entity or arrangement. The most significant instance of such a judgment by the Group is in the determination that Escondida is a joint venture, based on the nature of significant commercial decisions, including capital expenditure, which require approval by both Rio Tinto and its partner BHP.

(xii) Exclusions from underlying earnings (note 2)

As set out in note 2, certain items are excluded from net earnings/(loss) in arriving at underlying earnings in each period irrespective of materiality. 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.

The exclusion of provisions for obligations in respect of legacy operations and the reversal of an inventory provision at Oyu Tolgoi were the only judgments in this respect in 2019.

(xiii) Pilbara Iron Arrangements

The arrangements described in note 34 (c) to the accounts permit each of the partners to the joint operation to request the other to construct assets on their tenure to widen the capacity of the network. The requesting partner’s (Asset User’s) share of the capacity of the network will increase by the capacity of the newly constructed asset but, generally, that capacity may be provided from any of the network assets. The Asset User will pay an annual charge (Committed Use Charge – “CUC”) over a contractually specified period irrespective of usage of the network. The constructing partner (Asset Owner) has an ongoing obligation to make available capacity from those assets and to maintain the assets in good working order as required under relevant State Agreements and associated tenure.

The Group considered whether the CUC arrangements give rise to a lease between the Asset Owner and the Asset User under the previous lease accounting standards IAS 17 “Leases” and IFRIC 4 “Determining whether an arrangement contains a lease”. The conclusion that they do not is because there is no specified asset; rather the Asset User has a first priority right to the capacity in the CUC asset. This treatment has been grandfathered on adoption of IFRS 16. Management considers that these arrangements are unique and has used judgment to apply the principles of IFRS to the accounting for the arrangements as described above. The obligation of the Asset Owner to make capacity available is fulfilled over time and not at a point in time. The CUC arrangement is therefore an executory contract as defined under IAS 37 “Provisions, contingent liabilities and contingent assets” whereby neither party has performed any of its obligations, or both parties have partially performed their obligations to an equal extent, and so the CUC payments are expensed as incurred. An alternative treatment would have resulted in a gross presentation in the Group’s balance sheet with an asset and a corresponding liability to reflect the present value of the CUC payments. The Asset User is a wholly owned subsidiary of Rio Tinto, whereas the Asset Owner is a joint operation. This impact would be some US$2 billion (calculated on the basis of grossing up the written down value of the CUC assets). Other methods of calculating the gross up might give rise to different numbers.



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Financial statements

Notes to the 2019 financial statements continued

2 Operating segments

Rio Tinto’s management structure is based on the principal product groups in the tables below together with the global functions that support the business, which include Growth & Innovation and Commercial. The chief executive of each product group reports to the chief executive of Rio Tinto. The chief executive of Rio Tinto monitors the performance of each product group based on a number of measures, including underlying earnings, underlying EBITDA, capital expenditure, net cash generated from operating activities and free cash flow. Finance costs and net debt are managed on a Group basis.

Effective from the first half of 2019, Dampier Salt has moved from the Energy & Minerals Product Group to the Iron Ore Product Group. The comparatives below have been adjusted to ensure comparability with the current year.

Generally, business units are allocated to product groups based on their primary product. The Energy & Minerals product group includes businesses with products such as uranium, borates, titanium dioxide feedstock together with Iron Ore Company of Canada and the Simandou iron ore project, which are the responsibility of the Energy & Minerals product group chief executive. The group’s coal operations were also included in Energy & Minerals until the divestment of these assets, which was completed during 2018. The Copper & Diamonds product group also produces gold, silver, molybdenum and other by-products.

The financial information by business unit provided on pages 252 to 254 of these financial statements provides additional voluntary disclosure which the Group considers useful to the users of the financial statements.



Gross sales revenue	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	24,075		18,731		18,466
Aluminium	10,340		12,191		11,005
Copper & Diamonds	5,815		6,468		4,842
Energy & Minerals - adjusted	5,150		5,451		7,549
Other Operations	18		9		10
Reportable segments total	45,398		42,850		41,872
Inter-segment transactions	(31	)	(15	)	(15	)
Product group total	45,367		42,835		41,857
Items excluded from underlying earnings	—		—		10
Gross sales revenue	45,367		42,835		41,867
Share of equity accounted unit sales and adjustments for intra-subsidiary/equity accounted units sales	(2,202	)	(2,313	)	(1,837	)
Consolidated sales revenue per income statement	43,165		40,522		40,030

Gross sales revenue includes the Group’s proportionate share of sales revenue of equity accounted units (after adjusting for sales to subsidiaries) of US$2,234 million (2018: US$2,354 million; 2017: US$1,859 million) which are not included in consolidated sales revenue. Consolidated sales revenue includes subsidiary sales of US$32 million (2018: US$41 million; 2017: US$22 million) to equity accounted units which are not included in gross sales revenue.



Capital expenditure	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	1,741		1,302		1,214
Aluminium	1,456		1,373		1,436
Copper & Diamonds	2,087		2,150		1,622
Energy & Minerals - adjusted	551		442		454
Other Operations	(4	)	12		(35	)
Reportable segments total	5,831		5,279		4,691
Other items	64		65		70
Less: capital expenditure of equity accounted units	(456	)	(500	)	(417	)
Capital expenditure per financial information by business unit	5,439		4,844		4,344
Add back: proceeds from disposal of property, plant and equipment^(a)	49		586		138
Capital expenditure per cash flow statement	5,488		5,430		4,482


(a)	In 2018, proceeds from disposal of property, plant and equipment included US$508 million received on the sale of surplus land at Kitimat.

Capital expenditure for reportable segments comprises 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 and equity accounted units.



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2 Operating segments continued



Depreciation and amortisation	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	1,723		1,702		1,667
Aluminium	1,312		1,122		1,199
Copper & Diamonds	1,320		1,317		1,452
Energy & Minerals - adjusted	428		455		630
Other Operations	177		26		32
Reportable segments total	4,960		4,622		4,980
Other items	77		43		42
Less: depreciation and amortisation of equity accounted units	(653	)	(650	)	(647	)
Depreciation and amortisation per note 4	4,384		4,015		4,375

Product group depreciation and amortisation for reportable segments totals include 100% of subsidiaries’ depreciation and amortisation and Rio Tinto’s share of the depreciation and amortisation of equity accounted units. Rio Tinto’s share of the depreciation and amortisation charge of equity accounted units is deducted to arrive at depreciation and amortisation, excluding equity accounted units, as shown in note 4. These figures exclude impairment charges and reversals, which are excluded from underlying earnings.



Tax charge/(credit)	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	4,198		2,830		2,872
Aluminium	211		532		543
Copper & Diamonds	65		118		48
Energy & Minerals - adjusted	411		500		651
Other Operations	(51	)	(51	)	(84	)
Reportable segments total	4,834		3,929		4,030
Inter-segment transactions	(2	)	—		—
Product group total	4,832		3,929		4,030
Other items	(67	)	(276	)	(261	)
Exploration and evaluation not attributed to product groups	(83	)	(38	)	(36	)
Net finance costs	(144	)	(174	)	(364	)
	4,538		3,441		3,369
Tax (credit)/charge excluded from underlying earnings	(391	)	801		596
Tax charge per income statement	4,147		4,242		3,965

Tax charge/(credit) excludes amounts relating to equity accounted units. Further information on the tax charge/(credit) excluded from underlying earnings is provided in the section “Underlying earnings”, below.



Underlying EBITDA	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	16,098		11,378		11,547
Aluminium	2,285		3,095		3,423
Copper & Diamonds	2,073		2,776		1,904
Energy & Minerals - adjusted	1,762		2,140		2,776
Other Operations	(77	)	(70	)	(116	)
Reportable segments total	22,141		19,319		19,534
Inter-segment transactions	(9	)	—		—
Product group total	22,132		19,319		19,534
Central pension costs, share-based payments and insurance	59		(128	)	(68	)
Restructuring, project and one-off costs	(183	)	(272	)	(177	)
Central costs	(496	)	(552	)	(491	)
Exploration and evaluation not attributed to product groups	(315	)	(231	)	(218	)
Underlying EBITDA	21,197		18,136		18,580
Items excluded from underlying EBITDA	(722	)	5,127		1,912
EBITDA	20,475		23,263		20,492
Depreciation, amortisation and impairment charges in subsidiaries and equity accounted units	(8,412	)	(4,691	)	(5,746	)
Taxation and finance items in equity accounted units	(296	)	(372	)	(272	)
Profit on ordinary activities before finance items and tax	11,767		18,200		14,474



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Financial statements

Notes to the 2019 financial statements continued



Underlying earnings	2019 US$m		2018 US$m		2017 US$m
Iron Ore - adjusted	9,638		6,531		6,695
Aluminium	599		1,347		1,583
Copper & Diamonds	554		1,054		263
Energy & Minerals - adjusted	611		995		1,239
Other Operations	(89	)	(102	)	(138	)
Reportable segments total	11,313		9,825		9,642
Inter-segment transactions	(3	)	—		—
Product group total	11,310		9,825		9,642
Central pension costs, share-based payments and insurance	60		(90	)	(48	)
Restructuring, project and one-off costs	(94	)	(190	)	(124	)
Central costs	(550	)	(410	)	(311	)
Exploration and evaluation not attributed to product groups	(231	)	(193	)	(178	)
Net finance costs	(122	)	(134	)	(354	)
Underlying earnings	10,373		8,808		8,627
Items excluded from underlying earnings	(2,363	)	4,830		135
Net earnings attributable to owners of Rio Tinto per income statement	8,010		13,638		8,762

Underlying EBITDA and underlying earnings are reported by Rio Tinto to provide greater understanding of the underlying business performance of its operations and to enhance comparability of reporting periods.

The measures of underlying EBITDA and underlying earnings, in conjunction with net cash generated from operating activities and capital expenditure (net of proceeds on disposals), are used by the chief executive of Rio Tinto to assess the performance of the product groups. Underlying earnings and net earnings both represent amounts net of tax attributable to owners of Rio Tinto.

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 businesses.


–	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.

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.

Underlying EBITDA excludes the EBITDA impact of the same items that are excluded from underlying earnings.

Product group earnings include the Group's share of the underlying earnings of subsidiaries and equity accounted units stated before finance items but after the amortisation of discount on provisions.

Rio Tinto’s share of the underlying earnings of equity accounted units amounted to US$302 million in 2019 (2018: US$513 million; 2017: US$332 million). This amount is attributable as follows: US$292 million profit to the Copper & Diamonds product group and US$10 million profit to other product groups (2018: US$476 million profit to the Copper & Diamonds product group and US$37 million profit to other product groups; 2017: US$295 million profit to the Copper & Diamonds product group and US$37 million profit to other product groups). These amounts are included in underlying earnings and include the underlying earnings of the Group’s tolling entities which process alumina. Tolling entities recharge the majority of their costs and generally have minimal earnings.



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Financial statements continued

2 Operating segments continued

Reconciliation of net earnings/(losses) to underlying earnings



Exclusions from underlying earnings	Pre-tax^(k)2019 US$m		Taxation 2019 US$m		Non-controlling interests 2019 US$m		Net amount 2019 US$m		Net amount 2018 US$m		Net amount 2017 US$m
Impairment charges (note 6)	(3,487	)	323		1,506		(1,658	)	(104	)	(481	)
Net (losses)/gains on consolidation and disposal of interests in businesses^(a)	(291	)	—		—		(291	)	3,996		2,022
Exchange and derivative gains/(losses):
– Exchange gains/(losses) on external net debt, intragroup balances and derivatives^(b)	52		(6	)	5		51		550		(488	)
– (Losses)/gains on currency and interest rate derivatives not qualifying for hedge accounting^(c)	(72	)	15		(2	)	(59	)	(48	)	30
– (Losses)/gains on embedded commodity derivatives not qualifying for hedge accounting^(d)	(253	)	65		(4	)	(192	)	202		(352	)
Losses from increases to closure estimates (non-operating and fully impaired sites)^(e)	—		—		—		—		(335	)	—
Gain relating to surplus land at Kitimat^(f)	—		—		—		—		569		—
Changes in corporate tax rates in the US and France^(g)	—		—		—		—		—		(439	)
Rio Tinto Kennecott insurance settlement^(h)	—		—		—		—		—		45
Tax charge relating to expected divestments⁽ⁱ⁾	—		—		—		—		—		(202	)
Other exclusions^(j)	(171	)	(6	)	(37	)	(214	)	—		—
Total excluded from underlying earnings	(4,222	)	391		1,468		(2,363	)	4,830		135
Net earnings	11,119		(4,147	)	1,038		8,010		13,638		8,762
Underlying earnings	15,341		(4,538	)	(430	)	10,373		8,808		8,627


(a)	In 2019, the net loss mainly relates to disposal of our entire 68.62% stake in Rössing Uranium on 16 July 2019 for which we recorded a pre-tax loss of US$289 million (US$289 million net of tax).

In 2018, the net gain related mainly to the sales of the Hail Creek coal mine and the Kestrel underground coal mine, which both completed on 1 August 2018, the sale of the Dunkerque aluminium smelter on 14 December 2018 and the sale of Grasberg on 21 December 2018. The net gain in 2018 also includes a gain on consolidation recognised on the formation on 10 May 2018 of ELYSIS, a new joint venture to develop a carbon-free smelting process.

In 2017, the net gain related mainly to the sale of Coal & Allied Industries Limited, which completed on 1 September 2017.

Refer to note 37 for further details in respect of these transactions.

(b)

Exchange gains/(losses) on external net debt and intragroup balances comprise post-tax foreign exchange gains on net debt of US$60 million and post-tax losses of US$9 million on intragroup balances, primarily as a result of the Canadian dollar strengthening against the US dollar. From 1 January 2019, all foreign exchange gains and losses relating to net debt are excluded from underlying earnings. In 2018 and previous years, foreign exchange gains and losses on non-US dollar cash held in US dollar functional currency entities was included within underlying earnings. The impact of this change on the reported comparatives is insignificant, and therefore the comparatives have not been restated. In 2018 the net exchange gains comprise post-tax foreign exchange losses of US$386 million on US dollar denominated net debt, and US$936 million gains on intragroup balances. Net exchange loss in 2017 comprise post-tax foreign exchange gains of US$420 million on US dollar denominated net debt, and US$908 million losses on intragroup balances.


(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. From 1 January 2018, all 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. In 2017, valuation changes on this type of commodity derivative were excluded from underlying earnings. The impact of this change on the reported comparatives is insignificant, and therefore the comparatives have not been restated.

(e)

In 2018, the pre-feasibility study for the Argyle mine closure was completed, resulting in an increase to the closure provision. As the assets at Argyle had previously been fully impaired, this increase was not capitalised and was instead recognised in the income statement. The impairment charge in respect of Argyle recognised in 2017 (see note 6) was based on preliminary findings from the pre-feasibility study and therefore the charge arising from the finalisation of this study has been excluded from underlying earnings. Also in 2018, the feasibility study for the closure of the Ranger Project Area at Energy Resources of Australia (ERA) was finalised, resulting in an increase to the closure provision. As the assets of ERA had been fully impaired, this increase was recognised in the income statement. The charge was excluded from underlying earnings.


(f)	In November 2018, Rio Tinto completed the lease and sale of a wharf and land in Kitimat. The resulting gain on disposal of Property, plant and equipment and Other income were both excluded from underlying earnings on the grounds of materiality.


(g)	In 2017, deferred tax assets were re-measured to reflect lower corporate income tax rates in the US and France as a result of tax legislation changes substantively enacted in December 2017.


(h)	In 2017, Rio Tinto received the final settlement on the insurance claims related to the 2013 slide at Rio Tinto Kennecott’s Bingham Canyon mine. The amounts excluded from underlying earnings were consistent with the previous excluded losses to which they related, in line with the treatment of the 2013 and 2015 settlement payments.


(i)	In 2017, deferred tax assets were derecognised as a result of revised profit forecasts in France due to the expected divestments of Dunkerque and ISAL. The Dunkerque divestment completed in 2018.

(j)

Other exclusions include provisions for obligations in respect of legacy operations of US$246 million (loss of US$233 million after tax), partially offset by the write-back of a net realisable value provision in respect of low value stockpile inventories at Oyu Tolgoi of US$75 million (gain of US$19 million after tax and non-controlling interests). As a result of increased uncertainty over timing of production from the Oyu Tolgoi underground project (refer to note 6), we now expect to utilise low value stockpiles sooner than previously expected. This was excluded from underlying earnings, consistent with the related impairment charge recognised in the period.


(k)	Exclusions from underlying earnings relating to equity accounted units are stated after tax and are included in the column “Pre-tax”.



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Financial statements

Notes to the 2019 financial statements continued

3 Operating segments – additional information

Consolidated sales revenue by destination^(a)



	2019 %	Adjusted^(b)2018 %	Adjusted^(b)2017 %	2019 US$m	Adjusted^(b)2018 US$m	Adjusted^(b)2017 US$m
China	51.3	44.6	44.2	22,135	18,061	17,706
Asia (excluding China and Japan)	10.6	11.5	12.8	4,558	4,665	5,108
United States of America	14.2	15.6	14.3	6,125	6,337	5,705
Japan	8.9	9.6	11.7	3,855	3,873	4,701
Europe (excluding UK)	6.0	9.3	7.8	2,610	3,788	3,140
Canada	3.3	3.3	2.8	1,478	1,330	1,114
Australia	1.7	1.8	1.8	737	720	710
UK	0.6	0.7	0.8	248	264	325
Other countries	3.4	3.6	3.8	1,419	1,484	1,521
Consolidated sales revenue	100	100	100	43,165	40,522	40,030


(a)	Consolidated sales revenue by geographical destination is based on the ultimate country of destination of the product, if known. If the eventual destination of the product sold through traders is not known then revenue is allocated to the location of the product at the time when control is transferred. Rio Tinto is domiciled in both the UK and Australia.

(b)

The 2018 and 2017 comparatives have been amended to correct the allocation of sales revenue by destination. This resulted in an increase in sales to the United States of America (2018: US$59 million, decrease in 2017: US$11 million); and to Europe (excluding UK) (2018: US$82 million; 2017: US$125 million) with a corresponding decrease in sales to the UK (2018: US$122 million, 2017: US$124 million), Canada (2018: US$10 million, increase in 2017: US$3 million) and Other countries (2018: US$9 million, increase in 2017: US$7 million).

Consolidated sales revenue by product

Consolidated sales revenues of the Group are derived from the following products sold to external customers:



	Revenue from contracts with customers 2019 US$m	Other revenue^(a)2019 US$m		Consolidated sales revenue 2019 US$m
Iron ore	25,516	229		25,745
Aluminium	10,207	(32	)	10,175
Copper	2,030	(7	)	2,023
Coal	—	—		—
Industrial minerals	2,251	(12	)	2,239
Gold	667	2		669
Diamonds	619	—		619
Other	1,697	(2	)	1,695
Consolidated sales revenue	42,987	178		43,165
Share of equity accounted unit sales and intra-subsidiary/equity accounted unit sales				2,202
Gross sales revenue				45,367



	Adjusted^(b) revenue from contracts with customers 2018 US$m	Other revenue^(a)2018 US$m		Adjusted^(b) Consolidated sales revenue 2018 US$m	Adjusted^(b) Consolidated sales revenue 2017 US$m
Iron ore	19,888	(21	)	19,867	20,010
Aluminium	12,041	(22	)	12,019	10,864
Copper	2,420	(32	)	2,388	1,760
Coal	986	3		989	2,822
Industrial minerals	2,168	—		2,168	2,085
Gold	869	—		869	378
Diamonds	695	—		695	706
Other	1,527	—		1,527	1,405
Consolidated sales revenue	40,594	(72	)	40,522	40,030
Share of equity accounted unit sales and intra-subsidiary/equity accounted unit sales				2,313	1,837
Gross sales revenue				42,835	41,867


(a)	Certain of the Group's products may be provisionally priced at the date revenue is recognised. The change in value of the provisionally priced receivables is based on relevant forward market prices and is included in “Other revenue” above. In 2017 there was no equivalent requirement under IAS 18 to separate out such provisional price movements and therefore this was not disclosed.


(b)	The 2018 and 2017 comparatives have been amended to correct the allocation of sales revenue by product. The most significant impacts are a decrease in Other product revenues (2018: US$75 million, 2017: US$25 million) and an increase in Industrial minerals revenues (2018: US$75 million, 2017: US$25 million).



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Financial statements continued

3 Operating segments – additional information continued

Non-current assets other than excluded items^(a)

The total of non-current assets other than items excluded is shown by location below.



	2019 US$m	2018 US$m
Australia	27,944	28,592
Canada	14,644	13,775
Mongolia	9,187	9,912
United States of America	5,459	4,815
Africa	3,583	3,476
South America	2,652	3,047
Europe (excluding France and the UK)	193	50
UK	158	59
France	64	79
Other countries	1,314	850
Total non-current assets other than excluded items	65,198	64,655

Non-current assets excluded from analysis above:
Deferred tax assets	3,102	3,137
Other financial assets^(b)	635	814
Quasi equity loans to equity accounted units^(b)	113	129
Tax recoverable	5	8
Trade and other receivables	1,446	1,304
Total non-current assets per balance sheet	70,499	70,047


(a)	Allocation of non-current assets by country is based on the location of the business units holding the assets. It includes investments in equity accounted units totalling US$3,858 million (2018: US$4,170 million) which represents the Group’s share of net assets excluding quasi equity loans shown separately above.


(b)	Loans to equity accounted units comprise quasi equity loans of US$113 million (2018: US$129 million) included in “Investments in equity accounted units” on the face of the balance sheet and non-current non-quasi equity loans of US$39 million (2018: US$38 million) shown within “Other financial assets”.

4 Net operating costs (excluding items shown separately)



	Note	2019 US$m		2018 US$m		2017 US$m
Raw materials, consumables, repairs and maintenance		9,485		10,613		9,286
Amortisation of intangible assets	13	133		133		177
Depreciation of property, plant and equipment	14	4,251		3,882		4,198
Employment costs	5	4,522		4,728		4,765
Shipping and other freight costs^(a)		2,257		2,580		2,338
Decrease/(increase) in finished goods and work in progress		42		(186	)	(82	)
Royalties		2,501		2,117		2,228
Amounts charged by equity accounted units^(b)		1,136		1,200		980
Net foreign exchange (gains)/losses		(52	)	(56	)	61
Other external costs^(a)(c)		3,627		3,184		3,967
Gain on sale of property, plant and equipment^(d)		31		(506	)	(32	)
Provisions (including exchange differences on provisions)	26	753		1,011		527
Research and development		45		45		58
Costs included above qualifying for capitalisation		(651	)	(589	)	(486	)
Other operating income		(773	)	(1,041	)	(1,002	)
Net operating costs (excluding items shown separately)		27,307		27,115		26,983

(a)

In 2019, other external costs include US$327 million of short term lease costs and US$15 million of variable lease costs recognised in the income statement in accordance with IFRS 16 “Leases”. Refer to note 23. In 2018 and 2017, net operating costs included US$787 million and US$555 million respectively of operating lease expenses under IAS 17 “Leases”. Costs for leases of dry bulk vessels (which included costs for crewing services) were included within “Shipping and other freight costs” and other lease costs were included within “Other external costs”.

(b)

Amounts charged by equity accounted units relate to toll processing and also include purchases from equity accounted units of bauxite and aluminium which are then processed by the product group or sold to third parties. Generally, purchases are in proportion to the Group’s share of the equity accounted unit but in 2019, US$291 million (2018: US$332 million; 2017: US$229 million) related to purchases of the other investors’ share of production.


(c)	In 2017, other external costs include a financial penalty of £27.4 million (US$36.4 million) paid to the United Kingdom’s Financial Conduct Authority (FCA) in relation to the timing of the impairment of the Group’s former coal operations in Mozambique.


(d)	In 2018, includes a US$549 million pre-tax gain on the sale of property, plant and equipment at Kitimat. Refer to note 2.



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Financial statements

Notes to the 2019 financial statements continued

5 Employment costs



	Note	2019 US$m		2018 US$m		2017 US$m
Total employment costs
– Wages and salaries		3,923		4,154		4,129
– Social security costs		328		336		337
– Net post-retirement charge	44	384		532		500
– Share-based payment charge	43	123		122		91
		4,758		5,144		5,057
Less: charged within provisions (a)	26	(236	)	(416	)	(292	)
Total employment costs	4	4,522		4,728		4,765


(a)	Amounts included above relate to provisions for pensions, post-retirement healthcare, long service leave and other employee entitlements. These are included in “Provisions (including exchange differences on provisions)” in note 4.

6 Impairment charges



	Note	Pre-tax amount 2019 US$m		Taxation 2019 US$m		Non-controlling interest 2019 US$m	Net amount 2019 US$m		Pre-tax amount 2018 US$m		Pre-tax amount 2017 US$m
Copper & Diamonds – Oyu Tolgoi		(2,240	)	(39	)	1,506	(773	)	—		—
Aluminium – Yarwun alumina refinery		(1,138	)	339		—	(799	)	—		—
Aluminium – ISAL Smelter		(109	)	23		—	(86	)	(123	)	—
Energy & Minerals – Rössing		—		—		—	—		(9	)	(267	)
Energy & Minerals – Roughrider		—		—		—	—		—		(357	)
Copper & Diamonds – Argyle		—		—		—	—		—		(172	)
Total impairment charge		(3,487	)	323		1,506	(1,658	)	(132	)	(796	)

Allocated as:
Intangible assets	13	(1	)						(2	)	(357	)
Property, plant and equipment	14	(3,486	)						(130	)	(435	)
Other assets and liabilities		—							—		(4	)
Total impairment charge		(3,487	)						(132	)	(796	)
Comprising:
Total impairment charges in the financial information by business unit (page 252)							(3,487	)	(132	)	(796	)
Taxation (including related to EAUs)							323		25		141
Non-controlling interests							1,506		3		174
Total impairment in the income statement							(1,658	)	(104	)	(481	)

Copper & Diamonds – Oyu Tolgoi, Mongolia

On 16 July 2019 we announced that the first sustainable production from the Oyu Tolgoi underground project could be delayed by 16 to 30 months compared with the original feasibility study guidance in 2016. We also announced that development capital spend for the project may increase by between US$1.2 billion and US$1.9 billion in excess of the US$5.3 billion previously disclosed.

We identified these matters as an impairment trigger and prepared an assessment of the recoverable amount for the cash-generating unit (CGU) at 30 June 2019 using a fair value less cost of disposal (FVLCD) model, as prescribed by IAS 36 “Impairment of assets”.

In arriving at a recoverable amount, as at 30 June 2019, we estimated post-tax cash flows expressed in real terms over the current life of mine plus anticipated future expansions, utilising mineral resources. The mineral resources incorporate almost two billion tonnes of ore, which contributes approximately 20% to the total recoverable amount. We discounted the cash flows using a post-tax discount rate of 8.3% expressed in real terms. Due to the inputs used, the recoverable amount of the Oyu Tolgoi CGU was classified as level 3 under the fair value hierarchy.

At 30 June 2019 we determined the recoverable amount to be US$8.3 billion on a post-tax basis which resulted in a pre-tax impairment charge of US$2.2 billion (100% basis). This was allocated to mining properties and the underground development assets under construction. The net adjustment to tax represented an increase to deferred tax assets of US$320 million for the temporary difference corresponding to the impairment and a decrease in deferred tax assets of US$359 million for tax losses that are now expected to expire without utilisation.

The post-tax impairment charge of US$2.3 billion was allocated 66% to non-controlling interests with the remaining 34% to Rio Tinto shareholders (US$0.8 billion) in proportion to the equity ownership interest in the project.

We calculated the recoverable amount taking into account a number of mine design options. As studies progress, this will lead to the selection of a preferred development option with detailed cost scheduling and production assumptions, which may lead to a change in recoverable amount. The recoverable amount also includes high-level risk adjustments to net cash flows to reflect the inherent uncertainty of assumptions for development capital, schedule and mineral resources.



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6 Impairment charges continued

Copper & Diamonds – Oyu Tolgoi, Mongolia continued

Together with development capital, scheduling and production assumptions, other critical assumptions in the determination of recoverable amount include discount rate and commodity prices. To illustrate the sensitivity of the recoverable amount to movements in these assumptions, an increase to the post-tax real terms discount rate of one percentage point with all other inputs remaining constant would reduce the recoverable amount by US$1.5 billion. A decrease in forecast copper prices by 10% throughout the life of the mine would reduce the recoverable amount by US$2.2 billion while an increase of 10% would increase the recoverable amount by US$2.1 billion.

We have continued to monitor developments in the project through the second half of the year. No further adjustment has been recorded to the impairment charge recognised at 30 June.

Aluminium – Yarwun alumina refinery, Australia

In previous years, the Yarwun alumina refinery has been part of a single cash-generating unit (CGU) with Queensland Alumina and the Weipa bauxite mine due to the integrated nature of these operations in Queensland, Australia. During 2019, the ramp-up of the Amrun expansion at Weipa resulted in increased bauxite export levels to the extent that Weipa is now considered to generate cash inflows largely independent from the downstream alumina operations. This change in circumstance has resulted in the previous CGU being split in 2019 into three CGUs: Weipa bauxite mine, Yarwun alumina refinery and Queensland Alumina.

In 2019, our annual impairment assessment of the Yarwun CGU resulted in a pre-tax impairment charge of US$1,138 million to property, plant and equipment as a result of this CGU being assessed on a stand-alone basis and a 30 per cent year-on-year reduction in the spot price of alumina.

The recoverable amount of US$911 million for the Yarwun CGU was determined by reference to a fair value less cost of disposal (FVLCD) model in line with the accounting policy set out in note 1(i). The recoverable amount of the Yarwun CGU is classified as level 3 under the fair value hierarchy. In arriving at FVLCD, post-tax cash flows expressed in real terms have been estimated over the expected useful economic life of the refinery and discounted using a post-tax discount rate of 6.6% expressed in real terms.

The individual assumptions subject to the most estimation uncertainty for the FVLCD calculation are the alumina price and the discount rate. To illustrate these sensitivities, a 5% reduction in the alumina price, equivalent to a US$17 per tonne decrease in the long run, would have reduced the recoverable amount by approximately US$505 million with all other inputs remaining constant. A one percentage point increase in the post-tax real-terms discount rate would have resulted in a lower recoverable amount by approximately US$160 million.

Aluminium – ISAL Smelter, Iceland

In 2018, we reached agreement with Hydro to sell the ISAL Smelter in Iceland, our 53.3% interest in the Aluchemie anode plant in the Netherlands and our 50% share in the Aluminium fluoride plant in Sweden (ISAL). The anticipated headline sales price of US$345 million was lower than the carrying value of these assets, leading us to recognise an impairment charge of US$123 million. This was based on a fair value less cost of disposal (FVLCD) model, against property, plant and equipment and acquired software. Subsequently, Hydro withdrew its offer.

At 30 June 2019, these assets no longer met the accounting criteria to be classified as assets held for sale. Accordingly these non-current assets were tested for impairment. We calculated the recoverable amount for the cash-generating units based on the IAS 36 value-in-use methodology by reference to the net present value of post-tax cash flows expressed in real terms and discounted at 6.9%. These were US$302 million for the cash-generating unit comprising ISAL and Aluchemie and US$46 million for Alufluor. This resulted in a pre-tax impairment charge of US$109 million allocated to property, plant and equipment and intangibles in the ISAL and Aluchemie cash-generating unit. At 31 December 2019, there were no further indicators of impairment or impairment reversals.

Energy & Minerals – Rössing, Namibia

In 2017, our annual impairment trigger assessment at the Rössing Uranium cash-generating unit identified a drop in forecast prices for uranium due to oversupply in the market. When we assessed the recoverable amount of the assets, we determined that the property, plant and equipment and certain other non-current assets should be fully impaired, resulting in a pre-tax impairment charge of US$267 million.

In 2018, we agreed to sell our share of Rössing Uranium to China National Uranium Corporation Limited. Based on the expected disposal proceeds, we recognised a pre-tax impairment charge of US$9 million on transfer to assets held for sale to write off the property, plant and equipment purchased during 2018. We completed the sale on 16 July 2019 – refer to note 37.

Energy & Minerals – Roughrider, Canada

In 2017, after reassessing our planned exploration spend, we decided not to plan or budget for evaluating the Roughrider deposit. We identified this as an impairment indicator under IFRS 6, and, due to uncertainty around whether there are viable quantities of uranium there, set a recoverable amount of US$nil for the evaluation and exploration assets. In light of this, we recorded an impairment charge of US$357 million to write off the mineral interests recognised when we acquired Roughrider.

Copper & Diamonds – Argyle Diamond Mine, Australia

In 2017, our annual impairment trigger assessment at the Argyle cash-generating unit identified impairment indicators because of lower production volumes compared with forecast, a smaller than expected contribution from productivity improvements and lower realised prices. In assessing the recoverable amount of the assets, we determined that the property, plant and equipment, including an updated closure asset, was fully impaired, resulting in a pre-tax impairment charge of US$172 million. The impairment charge resulted in the recognition of deferred tax assets of US$34 million which will be recovered by other business units in the same tax group.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

7 Share of profit after tax of equity accounted units



	2019 US$m		2018 US$m		2017 US$m
Sales revenue: Rio Tinto share^(a)	2,358		2,497		1,960
Operating costs	(1,812	)	(1,656	)	(1,400	)
Profit before finance items and taxation	546		841		560
Finance items	(65	)	(69	)	(47	)
Share of profit after tax of equity accounted units	10		14		17
Profit before taxation	491		786		530
Taxation	(190	)	(273	)	(191	)
Profit for the year (Rio Tinto share)	301		513		339

(a) Sales revenue of equity accounted units includes sales by equity accounted units to Group subsidiaries.

Further information relating to the Group’s interests in joint ventures and associates is given in notes 35 and 36.

8 Finance income and finance costs



	Note	2019 US$m		2018 US$m		2017 US$m
Finance income from equity accounted units		4		7		4
Other finance income (including bank deposits, net investment in leases, and other financial assets)		296		242		137
Total finance income		300		249		141

Interest on:
– Financial liabilities at amortised cost (excluding lease liabilities) and associated derivatives		(816	)	(775	)	(819	)
– Lease liabilities		(55	)	(2	)	(3	)
Fair value movements:
– Bonds designated as hedged items in fair value hedges		(185	)	96		28
– Derivatives designated as hedging instruments in fair value hedges		181		(73	)	(22	)
Loss on early redemption of bonds^(a)		—		(94	)	(256	)
Amounts capitalised	14	321		296		224
Total finance costs		(554	)	(552	)	(848	)

(a)

In 2018, loss on early redemption of bonds included a premium charge of US$72 million; unamortised debt issuance costs and fees of US$9 million, the write-off of the fair value hedge adjustment of US$16 million and the reclassification of a gain out of the cost of hedging reserve of US$3 million. In 2017, loss of early redemption of bonds included a premium charge of US$238 million; unamortised debt issuance costs and fees of US$14 million and the write-off of the fair value hedge adjustment of US$4 million. We did not buy back any bonds in 2019. See note 30.



175	Annual report 2019 \| riotinto.com

9 Taxation

Taxation charge



	Note	2019 US$m		2018 US$m	2017 US$m
– Current		4,436		3,726	3,270
– Deferred	17	(289	)	516	695
Total taxation charge		4,147		4,242	3,965

Prima facie tax reconciliation



	2019 US$m		2018 US$m		2017 US$m
Profit before taxation	11,119		18,167		12,816
Deduct: share of profit after tax of equity accounted units	(301	)	(513	)	(339	)
Parent companies' and subsidiaries' profit before tax	10,818		17,654		12,477

Prima facie tax payable at UK rate of 19% (2018: 19%; 2017: 19%)	2,055		3,354		2,371
Higher rate of taxation on Australian underlying earnings	1,495		1,106		1,069
Impact of items excluded in arriving at underlying earnings^(a):
– Impairment charges^(b)	340		—		10
– Net gains and losses on consolidation and disposal of interests in businesses	55		(251	)	(123	)
– Exchange and gains/losses on derivatives	(22	)	32		(48	)
– Losses from increases to closure estimates (non-operating and fully impaired sites)	—		30		—
– Gain relating to surplus land at Kitimat	—		(81	)	—
– Changes in corporate tax rates in the US and France^(c)	—		—		439
– Tax charge relating to expected divestments^(d)	—		—		202
– Other exclusions	38		—		14
Impact of changes in tax rates and laws	1		47		21
Other tax rates applicable outside the UK and Australia on underlying earnings	(110	)	(47	)	(92	)
Resource depletion and other depreciation allowances	(57	)	(46	)	(33	)
Recognition of previously unrecognised deferred tax assets	—		—		(40	)
Write-down of previously recognised deferred tax assets^(e)	42		13		160
Other items^(f)	310		85		15
Total taxation charge^(g)	4,147		4,242		3,965


(a)	The impact for each item includes the effect of tax rates applicable outside the UK.


(b)	The tax impact of impairment includes the write-down of deferred tax assets in respect of prior year tax losses in Mongolia and recognition of deferred tax on impaired assets. Refer to note 6.


(c)	In 2017, deferred tax assets were re-measured to reflect lower corporate income tax rates in the US and France as a result of tax legislation changes substantively enacted in December 2017.


(d)	In 2017, deferred tax assets were derecognised as a result of revised profit forecasts in France due to expected divestments of Dunkerque and ISAL. The Dunkerque divestment completed in 2018.


(e)	The write-down of previously recognised deferred tax assets in 2017 primarily relates to a reduction in recognised deferred tax assets on brought forward losses in Grasberg.


(f)	Other items include non-deductible costs and withholding taxes, and various adjustments to provisions for taxation of current and prior periods, the most significant of which relate to transfer pricing matters, including issues under discussion with the Australian Tax Office.


(g)	This tax reconciliation relates to the Group’s parent companies, subsidiaries and joint operations. The Group’s share of profit of equity accounted units is net of tax charges of US$190 million (2018: US$273 million; 2017: US$191 million).



	2019 US$m		2018 US$m		2017 US$m
Tax on fair value movements:
– Cash flow hedge fair value gains	(6	)	(54	)	(1	)
Tax credit/(charge) on actuarial gains and losses on post-retirement benefit plans	83		(271	)	(12	)
Adjustments to deferred tax on post-retirement benefit plans due to changes in corporate tax rates in the US and France	—		—		(140	)
Tax relating to components of other comprehensive income/(loss) for the year^(a)	77		(325	)	(153	)


(a)	This comprises a deferred tax credit of US$77 million (2018: charge of US$325 million; 2017: charge of US$153 million) and a current tax charge of US$nil (2018: US$nil 2017: US$nil (see note 17).



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

10 Earnings per ordinary share



	2019 Earnings US$m	2019 Weighted average number of shares (millions)	2019 Per share amount (cents)	2018 Earnings US$m	2018 Weighted average number of shares (millions)	2018 Per share amount (cents)
Basic earnings per share attributable to ordinary shareholders of Rio Tinto^(a)	8,010	1,630.1	491.4	13,638	1,719.3	793.2
Diluted earnings per share attributable to ordinary shareholders of Rio Tinto^(b)	8,010	1,642.1	487.8	13,638	1,731.7	787.6



	2017 Earnings US$m	2017 Weighted average number of shares (millions)	2017 Per share amount (cents)
Basic earnings per share attributable to ordinary shareholders of Rio Tinto^(a)	8,762	1,786.7	490.4
Diluted earnings per share attributable to ordinary shareholders of Rio Tinto^(b)	8,762	1,799.5	486.9

(a)

The weighted average number of shares is calculated as the average number of Rio Tinto plc shares outstanding not held as treasury shares of 1,259.4 million (2018: 1,312.7 million; 2017: 1,364.5 million) plus the average number of Rio Tinto Limited shares outstanding of 370.7 million (2018: 406.6 million; 2017: 422.3 million) over the relevant period. No Rio Tinto Limited ordinary shares were held by Rio Tinto plc in any of the periods presented.

(b)

For the purposes of calculating diluted earnings per share, the effect of dilutive securities of 12.0 million shares in 2019 (2018: 12.4 million; 2017: 12.8 million) is added to the weighted average number of shares described in (a) above. This effect is calculated under the treasury stock method, in accordance with IAS 33 “Earnings per share”. The Group’s only potential dilutive ordinary shares are share options for which terms and conditions are described in note 43.

11 Dividends



	2019 US$m		2018 US$m		2017 US$m
Rio Tinto plc previous year final dividend paid	2,245		2,446		1,725
Rio Tinto plc previous year special dividend paid	3,032		—		—
Rio Tinto plc interim dividend paid	1,930		1,666		1,530
Rio Tinto plc interim special dividend paid	780		—		—
Rio Tinto Limited previous year final dividend paid	666		731		523
Rio Tinto Limited previous year special dividend paid	900		—		—
Rio Tinto Limited interim dividend paid	556		513		472
Rio Tinto Limited interim special dividend paid	225		—		—
Dividends paid during the year	10,334		5,356		4,250

Dividends per share: paid during the year	635.0	c	307.0	c	235.0	c
Final dividends per share: proposed in the announcement of the results for the year	231.0	c	180.0	c	180.0	c
Special dividends per share: proposed in the announcement of the results for the year	—		243.0	c	—



	Dividends per share 2019		Dividends per share 2018		Dividends per share 2017
Rio Tinto plc previous year final (pence)	135.96	p	129.43	p	100.56	p
Rio Tinto plc previous year special (pence)	183.55	p	—		—
Rio Tinto plc interim (pence)	123.32	p	96.82	p	83.13	p
Rio Tinto plc interim special (pence)	49.82	p	—		—
Rio Tinto Limited previous year final – fully franked at 30% (Australian cents)	250.89	c	228.53	c	163.62	c
Rio Tinto Limited previous year special – fully franked at 30% (Australian cents)	338.70	c	—		—
Rio Tinto Limited interim – fully franked at 30% (Australian cents)	219.08	c	170.84	c	137.72	c
Rio Tinto Limited interim special – fully franked at 30% (Australian cents)	88.50	c	—		—



	Number of shares 2019 (millions)	Number of shares 2018 (millions)	Number of shares 2017 (millions)
Rio Tinto plc previous year final	1,265.0	1,334.8	1,374.6
Rio Tinto plc previous year special	1,265.0	N/A	N/A
Rio Tinto plc interim	1,256.4	1,308.4	1,366.1
Rio Tinto plc interim special	1,256.4	N/A	N/A
Rio Tinto Limited previous year final	371.2	412.4	424.0
Rio Tinto Limited previous year special	371.2	N/A	N/A
Rio Tinto Limited interim	371.2	412.4	424.0
Rio Tinto Limited interim special	371.2	N/A	N/A



177	Annual report 2019 \| riotinto.com

11 Dividends continued

The dividends paid in 2019 are based on the following US cents per share amounts: 2018 final – 180.0 cents, 2018 special – 243.0 cents, 2019 interim – 151.0 cents, 2019 interim special 61.0 cents (2018 dividends paid: 2017 final – 180.0 cents, 2018 interim – 127.0 cents; 2017 dividends paid: 2016 final – 125.0 cents, 2017 interim – 110.0 cents).

The number of shares on which Rio Tinto plc dividends are based excludes those held as treasury shares and those held by employee share trusts which waived the right to dividends. Employee share trusts waived dividends on 852,283 Rio Tinto plc ordinary shares and 37,678 American Depository Receipts (ADRs) for the 2018 final and special dividend and on 564,099 Rio Tinto plc ordinary shares and 47,674 ADRs for the 2019 interim and special dividend (2018: on 132,294 Rio Tinto plc ordinary shares and 22,824 ADRs for the 2017 final dividend and on 314,529 Rio Tinto plc ordinary shares and 36,321 ADRs for the 2018 interim dividend; 2017: on 277,946 Rio Tinto plc ordinary shares and 22,021 ADRs for the 2016 final dividend and on 173,297 Rio Tinto plc ordinary shares and 24,377 ADRs for the 2017 interim dividend). In 2019, 2018 and 2017, no Rio Tinto Limited shares were held by Rio Tinto plc.

The number of shares on which Rio Tinto Limited dividends are based excludes those held by shareholders who have waived the rights to dividends. Employee share trusts waived dividends on 628,566 Rio Tinto Limited ordinary shares for the 2018 final dividend and on 342,062 shares for the 2019 interim dividend (2018: on 130,129 shares for the 2017 final dividend and 251,394 shares for the 2018 interim dividend; 2017: on 214,278 shares for the 2016 final dividend and 274,899 shares for the 2017 interim dividend).

In addition, the directors of Rio Tinto announced a final dividend of 231 cents per share on 26 February 2020. This is expected to result in payments of US$3.7 billion. The dividend will be paid on 16 April 2020 to Rio Tinto plc and Rio Tinto Limited shareholders on the register at the close of business on 6 March 2020.

The proposed Rio Tinto Limited dividends will be franked out of existing franking credits or out of franking credits arising from the payment of income tax during 2020.

The approximate amount of the Rio Tinto Limited consolidated tax group’s retained profits and reserves that could be distributed as dividends and franked out of available credits that arose from net payments of income tax in respect of periods up to 31 December 2019 (after deducting franking credits expected to be utilised on the 2019 final dividend declared) is US$8,599 million (2018: US$6,178 million; 2017: US$8,542 million).

12 Goodwill



	2019 US$m		2018 US$m
Net book value
At 1 January	912		1,037
Adjustment on currency translation	10		(125	)
At 31 December	922		912
– cost	16,926		15,861
– accumulated impairment	(16,004	)	(14,949	)

At 1 January
– cost	15,861		17,942
– accumulated impairment	(14,949	)	(16,905	)

At 31 December, goodwill has been allocated as follows:



	2019 US$m	2018 US$m
Net book value
Richards Bay Minerals	487	474
Pilbara	349	351
Dampier Salt	86	87
	922	912



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

12 Goodwill continued

Impairment tests for goodwill

Richards Bay Minerals

Richards Bay Minerals’ annual impairment review resulted in no impairment charge for 2019 (2018: no impairment charge). The recoverable amount has been assessed by reference to fair value less cost of disposal (FVLCD), in line with the policy set out in note 1(i) and classified as level 3 under the fair value hierarchy. FVLCD was determined by estimating cash flows until the end of the life-of-mine plan including anticipated expansions. In arriving at FVLCD, a post-tax discount rate of 8.6% (2018: 8.8%) has been applied to the post-tax cash flows expressed in real terms.

The key assumptions to which the calculation of FVLCD for Richards Bay Minerals is most sensitive and the corresponding decrease in FVLCD are set out below:



	US$m
5% decrease in the titanium slag price	230
1% increase in the discount rate applied to post-tax cash flows	237
10% strengthening of the South African rand	762

Other assumptions include the long-term pig iron and zircon prices and operating costs. Future selling prices and operating costs have been estimated in line with the policy set out in note 1(i). The recoverable amount of the cash-generating unit (CGU) exceeds the carrying value when each of these sensitivities are applied whilst keeping all other assumptions constant.

Pilbara

The annual impairment review of the Pilbara CGU has been assessed by reference to FVLCD using discounted cash flows, which is in line with the policy set out in note 1(i) and is classified as level 3 under the fair value hierarchy. In arriving at FVLCD, a post-tax discount rate of 6.6% (2018: 6.8%) has been applied to the post-tax cash flows expressed in real terms. The recoverable amount was determined to be significantly in excess of carrying value, and there are no reasonably possible changes in key assumptions that would cause the remaining goodwill to be impaired.

13 Intangible assets



Year ended 31 December 2019	Exploration and evaluation^(a)US$m		Trademarks, patented and non-patented technology US$m		Contract based intangible assets^(b)US$m		Other intangible assets US$m		Total US$m
Net book value
At 1 January 2019	233		59		1,982		505		2,779
Adjustment on currency translation	(1	)	(1	)	74		(1	)	71
Expenditure during the year	57		—		—		34		91
Amortisation for the year^(c)	—		(14	)	(8	)	(111	)	(133	)
Impairment charges^(d)	—		—		—		(1	)	(1	)
Disposals, transfers and other movements^(e)	(116	)	—		(101	)	47		(170	)
At 31 December 2019	173		44		1,947		473		2,637
– cost	2,306		214		3,002		1,516		7,038
– accumulated amortisation and impairment	(2,133	)	(170	)	(1,055	)	(1,043	)	(4,401	)



Year ended 31 December 2018	Exploration and evaluation^(a)US$m		Trademarks, patented and non-patented technology US$m		Contract based intangible assets^(b)US$m		Other intangible assets US$m		Total US$m
Net book value
At 1 January 2018	393		75		2,188		463		3,119
Adjustment on currency translation	(25	)	(3	)	(171	)	(46	)	(245	)
Expenditure during the year	90		1		—		83		174
Amortisation for the year^(c)	—		(14	)	(23	)	(96	)	(133	)
Impairment charges^(d)	—		—		—		(2	)	(2	)
Disposals, transfers and other movements^(e)	(225	)	—		(12	)	103		(134	)
At 31 December 2018	233		59		1,982		505		2,779
– cost	2,346		217		3,114		1,538		7,215
– accumulated amortisation and impairment	(2,113	)	(158	)	(1,132	)	(1,033	)	(4,436	)



179	Annual report 2019 \| riotinto.com


(a)	Exploration and evaluation assets’ useful lives are not determined until transferred to property, plant and equipment.

(b)

The Group benefits from certain intangible assets acquired with Alcan, including power supply contracts, customer contracts and water rights. The water rights are expected to contribute to the efficiency and cost effectiveness of operations for the foreseeable future: accordingly, these rights are considered to have indefinite lives and are not subject to amortisation but are tested annually for impairment. These water rights constitute the majority of the amounts in “Contract based intangible assets”.

The remaining carrying value of the water rights (US$1,759 million) as at 31 December 2019 (31 December 2018: US$1,684 million) relates wholly to the Quebec smelters cash-generating unit (CGU). The Quebec smelters CGU was tested for impairment by reference to fair value less cost of disposal (FVLCD) using discounted cash flows, which is in line with the policy set out in note 1(i). The recoverable amount of the Quebec smelters is classified as level 3 under the fair value hierarchy. In arriving at FVLCD, post-tax cash flows expressed in real terms have been estimated over the expected useful economic lives of the underlying smelting assets and discounted using a real post-tax discount rate of 6.6% (2018: 6.8%).

The recoverable amounts were determined to be significantly in excess of carrying value, and there are no reasonably possible changes in key assumptions that would cause the remaining water rights to be impaired.


(c)	Finite life intangible assets are amortised over their useful economic lives on a straight line or units of production basis, as appropriate. Where amortisation is calculated on a straight line basis, the following useful lives have been determined:

Trademarks, patented and non-patented technology

Trademarks: 14 to 20 years

Patented and non-patented technology: ten to 20 years

Contract-based intangible assets

Power contracts/water rights: two to 45 years

Other purchase and customer contracts: five to 15 years

Other intangible assets

Internally generated intangible assets and computer software: two to five years

Other intangible assets: two to 20 years


(d)	Impairment charges in 2019 relate to the ISAL Smelter. Impairment charges in 2018 relate to the ISAL Smelter. See note 6.

(e)

Disposals, transfers and other movements includes the transfer from exploration and evaluation of the Zulti South project at Richards Bay Minerals to construction in progress following approval in April 2019 and reclassification of certain mineral rights from contract based intangibles to property, plant and equipment. In 2018, disposals, transfers and other movements included transfers to assets held for sale relating to Rössing Uranium and ISAL assets and transfers to Mining properties and leases in relation to the Koodaideri mine from Exploration and evaluation, offset by transfers into other intangibles as part of the Autohaul project.

Exploration and evaluation expenditure

The charge for the year and the net amount of intangible assets capitalised during the year are as follows:



	2019 US$m		2018 US$m		2017 US$m
Net expenditure in the year (net of cash proceeds of US$10 million (2018: US$233 million; 2017: US$3 million) on disposal of undeveloped projects)	(671	)	(345	)	(493	)
Non-cash movements and non-cash proceeds on disposal of undeveloped projects	—		45		(24	)
Amount capitalised during the year	57		90		57
Net charge for the year	(614	)	(210	)	(460	)
Reconciliation to income statement
Exploration and evaluation costs	(624	)	(488	)	(445	)
Profit/(loss) relating to interests in undeveloped projects^(a)	10		278		(15	)
Net charge for the year	(614	)	(210	)	(460	)


(a)	During 2018, profit relating to interests in undeveloped properties related to the gains on the sales of Valeria (US$83 million) and Winchester South (US$195 million) undeveloped properties which were included within underlying earnings.

At 31 December 2019, a total of US$173 million had been capitalised related to projects which had not yet been approved to proceed (31 December 2018: US$233 million).

14 Property, plant and equipment

Property, plant and equipment comprises owned and leased assets. Refer to note 45 for additional information relating to the Group’s implementation of IFRS 16 “Leases” on 1 January 2019.



	2019 US$m	2018 US$m
Property, plant and equipment – owned	56,307	56,330
Right of use assets – leased	1,065	—
Finance leases under IAS 17	—	31
Net book value	57,372	56,361



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

Property, plant and equipment - Owned



Year ended 31 December 2019	Note	Mining properties and leases^(a)US$m		Land and buildings^(b)US$m		Plant and equipment US$m		Capital works in progress US$m		Total US$m
Net book value
At 1 January 2019		11,063		6,263		32,019		7,016		56,361
Adjustment for transition to new accounting standard	45	—		—		(31	)	—		(31	)
Restated opening balance		11,063		6,263		31,988		7,016		56,330
Adjustment on currency translation^(c)		27		72		286		41		426
Adjustments to capitalised closure costs	26	840		—		—		—		840
Interest capitalised^(d)	8	—		—		—		321		321
Additions		433		46		616		4,435		5,530
Depreciation for the year^(a)(e)		(729	)	(381	)	(2,869	)	—		(3,979	)
Impairment charges^(f)		(1,339	)	(96	)	(1,115	)	(926	)	(3,476	)
Disposals		—		(9	)	(44	)	(19	)	(72	)
Transfers and other movements^(h)		107		508		2,629		(2,857	)	387
At 31 December 2019		10,402		6,403		31,491		8,011		56,307
– cost		24,875		11,517		66,705		9,188		112,285
– accumulated depreciation and impairment		(14,473	)	(5,114	)	(35,214	)	(1,177	)	(55,978	)
Non-current assets pledged as security⁽ⁱ⁾		1,805		571		5,111		5,271		12,758



Year ended 31 December 2018	Note	Mining properties and leases^(a)US$m		Land and buildings^(b)US$m		Plant and equipment US$m		Capital works in progress US$m		Total US$m
Net book value
At 1 January 2018		11,488		7,376		36,285		6,944		62,093
Adjustment on currency translation^(c)		(689	)	(548	)	(2,671	)	(249	)	(4,157	)
Adjustments to capitalised closure costs	26	486		—		—		—		486
Interest capitalised^(d)	8	—		—		—		296		296
Additions		403		80		459		4,359		5,301
Depreciation for the year^(a)(e)		(664	)	(382	)	(2,836	)	—		(3,882	)
Impairment charges^(f)		(3	)	(20	)	(101	)	(6	)	(130	)
Disposals		(1	)	(54	)	(71	)	(4	)	(130	)
Subsidiaries no longer consolidated^(g)		(1,103	)	(377	)	(1,392	)	(514	)	(3,386	)
Transfers and other movements^(h)		1,146		188		2,346		(3,810	)	(130	)
At 31 December 2018		11,063		6,263		32,019		7,016		56,361
– cost		23,318		10,601		63,051		7,324		104,294
– accumulated depreciation and impairment		(12,255	)	(4,338	)	(31,032	)	(308	)	(47,933	)
Non-current assets held under finance leases		—		—		31		—		31
Non-current assets pledged as security⁽ⁱ⁾		3,054		385		5,194		4,588		13,221

(a)

At 31 December 2019, the net book value of capitalised production phase stripping costs totalled US$2,276 million, with US$1,833 million within Property, plant and equipment and a further US$443 million within Investments in equity accounted units (2018: total of US$2,050 million, with US$1,572 million in Property, plant and equipment and a further US$478 million within Investments in equity accounted units). During the year capitalisation of US$536 million was partly offset by depreciation of US$316 million (including amounts recorded within equity accounted units). Depreciation of deferred stripping costs in respect of subsidiaries of US$139 million (2018: US$134 million; 2017: US$194 million) is included within “Depreciation for the year”.


(b)	At 31 December 2019, the net book value amount for land and buildings includes freehold US$6,377 million (2018: US$6,240 million) and long leasehold US$26 million (2018: US$23 million).

(c)

Adjustment on currency translation represents the impact of exchange differences arising on the translation of the assets of entities with functional currencies other than the US dollar, recognised directly in the currency translation reserve. The adjustment in 2019 arose from the strengthening of the Canadian dollar against US dollar partially offset by weakening of other currencies against US dollar.


(d)	Interest is capitalised at a rate based on the Group or relevant subsidiary’s cost of borrowing or at the rate on project specific debt, where applicable. The Group’s average borrowing rate used for capitalisation of interest is 5.30% (2018: 4.90%).


(e)	Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight line basis as follows:

Land and buildings

Land: not depreciated

Buildings: five to 50 years

Plant and equipment

Other plant and equipment: three to 50 years

Power assets: 25 to 50 years

Capital work in progress: not depreciated


(f)	During 2019, impairment charges relate to the Oyu Tolgoi underground project, Yarwun alumina refinery and the ISAL Smelter (see note 6). During 2018, impairment charges primarily related to the ISAL smelter (see note 6).


(g)	During 2018, “Subsidiaries no longer consolidated” related primarily to the disposal of Kestrel and Hail Creek, which completed on 1 August 2018 and the disposal of Grasberg on 21 December 2018. Refer to note 37.


(h)	“Transfers and other movements” includes reclassifications between categories and the transfer from assets held for sale of ISAL assets at 30 June 2019 as these assets no longer met the criteria to be classified as assets held for sale (see note 19). In 2018, the movement included transfers to assets held for sale relating to Rössing Uranium and ISAL assets.


(i)	Excludes assets held under capitalised lease arrangements. Non-current assets pledged as security represent amounts pledged as collateral against US$4,540 million (2018: US$4,562 million) of loans, which are included in note 22.



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14 Property, plant and equipment continued

Right-of-use assets - Leased



	Land and buildings US$m		Plant and equipment US$m		Total US$m
Net book value
31 December 2019	507		558		1,065
1 January 2019^(a)	463		559		1,022

Additions for the year
31 December 2019	89		212		301

Depreciation for the year (included within operating costs)
31 December 2019	(69	)	(203	)	(272	)

Impairment charges^(b)
31 December 2019	(6	)	(4	)	(10	)


(a)	The net book value of right of use assets at 1 January 2019 was US$1,022 million, comprising an adjustment upon transition to IFRS 16 of US$991 million, and assets previously held under finance leases under IAS 17 of US$31 million. Refer to note 45 for additional information relating to the Group's implementation of IFRS 16 "Leases".


(b)	Impairment charges related to the ISAL smelter (see note 6).

The leased assets of the Group comprise land and buildings (mainly office buildings) and plant and equipment, the majority of which are vessels. Lease terms are negotiated on an individual basis and contain a wide range of terms and conditions. Right of use assets are depreciated on a straight line basis over the life of the lease, taking into account any extensions that are likely to be enacted.

15 Investments in equity accounted units

Summary balance sheet (Rio Tinto share)



	2019 US$m		2018 US$m
Rio Tinto's share of assets
– Non-current assets	5,820		6,000
– Current assets	831		887
	6,651		6,887
Rio Tinto's share of liabilities
– Current liabilities	(675	)	(607	)
– Non-current liabilities	(2,005	)	(1,981	)
	(2,680	)	(2,588	)
Rio Tinto's share of net assets	3,971		4,299

Further details of investments in equity accounted units are set out in notes 35 and 36.

At 31 December 2019 and 2018, the Group had no investments in equity accounted units with shares listed on recognised stock exchanges.

At 31 December 2019, net debt of equity accounted units, excluding amounts due to Rio Tinto, was US$1,248 million (2018: US$1,158 million).



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Financial statements

Notes to the 2019 financial statements continued

16 Inventories



	2019 US$m	2018 US$m
Raw materials and purchased components	675	734
Consumable stores	925	862
Work in progress	1,066	1,026
Finished goods and goods for resale	936	977
Total inventories	3,602	3,599
Comprising:
Expected to be used within one year	3,463	3,447
Expected to be used after more than one year	139	152
Total inventories	3,602	3,599

During 2019, the Group recognised a net inventory write-downs of US$42 million. This comprised inventory write-offs of US$134 million partly offset by write-back of previously written down inventory due to an increase in realisable values amounting to US$92 million. In 2018, the Group recognised inventory write-downs, net of reversals, amounting to US$48 million.

At 31 December 2019, US$611 million (2018: US$566 million) of inventories were pledged as security for liabilities.

17 Deferred taxation



	2019 US$m		2018 US$m
At 1 January – deferred tax liability	536		233
Adjustment to opening balance on transition to new accounting standards	(4	)	(71	)
At 1 January – restated opening balance	532		162
Adjustment on currency translation	77		(172	)
(Credited)/charged to the income statement	(289	)	516
(Credited)/charged to statement of comprehensive income^(a)	(77	)	325
Disposals	—		(263	)
Other movements^(b)	(125	)	(32	)
At 31 December – deferred tax liability	118		536

Comprising:
– deferred tax liabilities^(c)(d)	3,220		3,673
– deferred tax assets^(c)(e)(f)	(3,102	)	(3,137	)



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17 Deferred taxation continued

Deferred tax balances for which there is a right of offset within the same tax jurisdiction are presented net on the face of the balance sheet as permitted by IAS 12. The closing deferred tax liabilities and assets, prior to this offsetting of balances, are shown below.

Analysis of deferred tax



	Total 2019 US$m		Total 2018 US$m
Deferred tax liabilities arising from:
Capital allowances	4,742		4,408
Unremitted earnings^(d)	411		454
Capitalised interest	387		259
Unrealised exchange gains	3		5
Other temporary differences	289		309
Total	5,832		5,435
Deferred tax assets arising from:
Tax losses^(e)	(1,847	)	(1,894	)
Provisions	(1,810	)	(1,585	)
Capital allowances	(604	)	(154	)
Post-retirement benefits	(346	)	(293	)
Unrealised exchange losses	(176	)	(187	)
Other temporary differences	(931	)	(786	)
Total	(5,714	)	(4,899	)

Charged/(credited) to the income statement
Unrealised exchange losses	21		57
Tax losses	164		(30	)
Provisions	(175	)	(19	)
Capital allowances	(181	)	461
Tax on unremitted earnings	5		(33	)
Post-retirement benefits	18		30
Other temporary differences	(141	)	50
Total	(289	)	516


(a)	The amounts (credited)/charged directly to the Statement of comprehensive income include provisions for tax on exchange differences on intragroup loans qualifying for reporting as part of the net investment in subsidiaries, on cash flow hedges and on actuarial gains and losses on pension schemes and on post-retirement healthcare plans.


(b)	“Other movements” include deferred tax relating to tax payable recognised by subsidiary holding companies on the profits of the equity accounted units to which it relates.


(c)	The deferred tax liability of US$3,220 million (2018: US$3,673 million) includes US$3,202 million (2018: US$3,658 million) due in more than one year. The deferred tax asset of US$3,102 million (2018: US$3,137 million) includes US$3,087 million (2018: US$3,133 million) receivable in more than one year. All amounts are shown as non-current on the face of the balance sheet as required by IAS 12.


(d)	Deferred tax is not recognised on the unremitted earnings of subsidiaries and joint ventures totalling US$3,861 million (2018: US$3,726 million) where the Group is able to control the timing of the remittance and it is probable that there will be no remittance in the foreseeable future. If these earnings were remitted, tax of US$164 million (2018: US$157 million) would be payable.


(e)	There is a limited time period, the shortest of which is six years, for the recovery of US$1,186 million (2018: US$1,519 million) of tax losses and other tax assets which have been recognised as deferred tax assets in the financial statements.


(f)	Recognised and unrecognised deferred tax assets are shown in the table below and totalled US$6,264 million at 31 December 2019 (2018: US$5,647 million). Of this total, US$3,102 million has been recognised as deferred tax assets (2018: US$3,137 million), leaving US$3,162 million (2018: US$2,510 million) unrecognised, as recovery is not considered probable.

The recognised amounts do not include deferred tax assets that have been netted off against deferred tax liabilities.

Analysis of deferred tax assets



	Recognised		Unrecognised
At 31 December	2019 US$m	2018 US$m	2019 US$m	2018 US$m
France	—	—	1,111	1,122
Canada	492	545	566	559
US	920	932	51	12
Australia	698	796	316	289
Mongolia^(a)	704	703	721	87
Other^(b)	288	161	397	441
Total	3,102	3,137	3,162	2,510

(a)

Deferred tax assets in Mongolia include US$130 million (2018: US$469 million) from tax losses that expire if not recovered against taxable profits within eight years. Tax losses have been calculated in accordance with the provisions of the Oyu Tolgoi Investment Agreement and Mongolian laws. Recovery of the recognised deferred tax assets is expected to commence from 2025 based on projected cash flows, consistent with the mine design options used in the impairment test described in note 6. Tax law in Mongolia and its interpretation by the tax authority has been, and is expected to continue to be, subject to change. Such future changes could have a material impact on the amount and period of recovery of these deferred tax assets. During 2019, an impairment charge of US$359 million was recognised for tax losses that are now expected to expire without utilisation. Refer to note 6.


(b)	US$695 million (2018: US$684 million) of the unrecognised assets relate to realised or unrealised capital losses, the recovery of which depends on the existence of capital gains in future years. There are time limits, the shortest of which is three years, for the recovery of US$491 million of these unrecognised assets (2018: US$96 million).



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

18 Trade and other receivables



	Non-current 2019 US$m	Current 2019 US$m	Total 2019 US$m	Non-current 2018 US$m	Current 2018 US$m	Total 2018 US$m
Trade receivables^(a)	1	2,097	2,098	—	2,167	2,167
Other financial receivables^(a)	286	453	739	240	550	790
Receivables relating to net investment in finance leases^(a)	52	11	63	—	—	—
Amounts due from equity accounted units^(a)	—	38	38	—	50	50
Other receivables	123	209	332	129	226	355
Prepayment of tolling charges to jointly controlled entities^(b)	221	—	221	228	—	228
Pension surpluses (note 44)	984	—	984	935	—	935
Other prepayments	49	219	268	53	186	239
Total	1,716	3,027	4,743	1,585	3,179	4,764


(a)	At 31 December 2019, trade and other financial receivables, receivables relating to net investment in finance leases and amounts due from equity accounted units are stated net of allowances for expected credit losses of US$54 million (2018: US$15 million).


(b)	These prepayments will be charged to Group operating costs as processing takes place.

There is no material element of trade and other receivables that is interest-bearing or financing in nature.

The fair value of current trade and other receivables and the majority of amounts classified as non-current trade and other receivables approximates to their carrying value.

19 Assets and liabilities held for sale

At 31 December 2019, no assets or liabilities were held for sale.

At 31 December 2018, assets and liabilities held for sale included Rio Tinto’s interest in the Rössing Uranium mine (US$106 million) and the ISAL Smelter, the Aluchemie anode plant and the Alufluor aluminium fluoride plant (“the ISAL assets”) (US$334 million).

During 2019, following the withdrawal in 2018 of the offer by Hydro to acquire the ISAL assets, these assets no longer met the accounting criteria to be classified as assets held for sale and were transferred back to the relevant balance sheet accounts.

On 16 July 2019, we announced the completion of the sale of our entire 68.62% stake in Rössing Uranium to China National Uranium Corporation Limited (see note 37).

The major classes of assets and liabilities of those entities classified as held for sale at 31 December 2018, were:



	2018 US$m
Assets
Intangible assets	4
Property, plant and equipment	238
Investments in equity accounted units	5
Inventories	186
Deferred tax assets	66
Trade and other receivables	58
Other financial assets (including loans to equity accounted units)	60
Cash and cash equivalents	117
Assets of disposal groups held for sale	734

Liabilities
Trade and other payables	(134	)
Provisions including post-retirement benefits	(160	)
Liabilities of disposal groups held for sale	(294	)
Net assets associated with disposal groups	440



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20 Other financial assets



	Non-current 2019 US$m	Current 2019 US$m	Total 2019 US$m	Non-current 2018 US$m	Current 2018 US$m	Total 2018 US$m
Derivative financial instruments	308	58	366	468	88	556
Equity shares and quoted funds	52	9	61	53	77	130
Other investments, including loans^(a)	236	2,603	2,839	255	2,527	2,782
Loans to equity accounted units	39	—	39	38	—	38
Total	635	2,670	3,305	814	2,692	3,506


(a)	Current “Other investments, including loans” includes US$2,584 million (2018: US$2,522 million) of highly liquid financial assets held in managed investment funds classified as held for trading.

Detailed information relating to other financial assets is given in note 30.

21 Cash and cash equivalents



	Note	2019 US$m	2018 US$m
Cash at bank and in hand		978	740
Money market funds and other cash equivalents		7,049	10,033
Balance per Group balance sheet		8,027	10,773
Bank overdrafts repayable on demand (unsecured)	22	—	(1	)
Cash and cash equivalents included in Assets held for sale	19	—	117
Balance per Group cash flow statement		8,027	10,889

Restricted cash and cash equivalent analysis

Cash and cash equivalents of US$315 million (2018: US$186 million) are held in countries where there are restrictions on remittances. Of this balance, US$245 million (2018: US$142 million) could be used to repay subsidiaries’ third-party borrowings.

There are also restrictions on a further US$1,644 million (2018: US$1,090 million) of cash and cash equivalents, the majority of which is held by partially owned subsidiaries and is not available for use in the wider Group due to legal and contractual restrictions currently in place. Of this balance US$1,442 million (2018: US$864 million) could be used to repay subsidiaries’ third-party borrowings.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

22 Borrowings and other financial liabilities

Borrowings at 31 December



	Note	Non-current 2019 US$m	Current 2019 US$m	Total 2019 US$m	Non-current 2018 US$m	Current 2018 US$m	Total 2018 US$m
Rio Tinto Finance plc Euro Bonds 2.0% due 2020^(a)(b)		—	455	455	468	—	468
Rio Tinto Finance plc Euro Bonds 2.875% due 2024^(a)(b)		508	—	508	514	—	514
Rio Tinto Finance (USA) Limited Bonds 3.75% 2025^(a)		1,229	—	1,229	1,170	—	1,170
Rio Tinto Finance (USA) Limited Bonds 7.125% 2028^(a)		958	—	958	927	—	927
Alcan Inc. Debentures 7.25% due 2028^(a)		104	—	104	104	—	104
Rio Tinto Finance plc Sterling Bonds 4.0% due 2029^(a)(b)		647	—	647	633	—	633
Alcan Inc. Debentures 7.25% due 2031		419	—	419	421	—	421
Alcan Inc. Global Notes 6.125% due 2033		742	—	742	741	—	741
Alcan Inc. Global Notes 5.75% due 2035		289	—	289	288	—	288
Rio Tinto Finance (USA) Limited Bonds 5.2% 2040^(a)		1,137	—	1,137	1,095	—	1,095
Rio Tinto Finance (USA) plc Bonds 4.75% 2042^(a)		483	—	483	462	—	462
Rio Tinto Finance (USA) plc Bonds 4.125% 2042^(a)		716	—	716	685	—	685
Oyu Tolgoi LLC MIGA Insured Loan LIBOR plus 2.65% due 2027^(c)		676	3	679	676	—	676
Oyu Tolgoi LLC Commercial Banks "B Loan" LIBOR plus 3.4% due 2027^(c)		1,581	8	1,589	1,588	—	1,588
Oyu Tolgoi LLC Export Credit Agencies Loan 2.3% due 2028^(c)		273	3	276	272	—	272
Oyu Tolgoi LLC Export Credit Agencies Loan LIBOR plus 3.65% due 2029^(c)		869	5	874	871	—	871
Oyu Tolgoi LLC International Financial Institutions "A Loan" LIBOR plus 3.78% due 2030^(c)		771	4	775	768	—	768
Other secured loans		302	45	347	345	42	387
Other unsecured loans		382	197	579	373	264	637
Lease liabilities	23	1,007	302	1,309	39	5	44
Bank overdrafts	21	—	—	—	—	1	1
Total borrowings including overdrafts^(d)		13,093	1,022	14,115	12,440	312	12,752


(a)	These borrowings are subject to hedging arrangements and are summarised in the interest rate risk section of note 30.


(b)	Rio Tinto has a US$10 billion (2018: US$10 billion) European Debt Issuance Programme against which the cumulative amount utilised was US$1.6 billion equivalent at 31 December 2019 (2018: US$1.6 billion). The carrying value of these bonds after hedge accounting adjustments amounted to US$1.6 billion (2018: US$1.6 billion) in aggregate.

(c)

These borrowings relate to the Oyu Tolgoi LLC project finance facility. The project finance facility provides for interest-only payments for the first five years from 2016 followed by minimum repayments according to a stepped amortisation schedule for the remaining life of the facility. The due dates stated represent the final repayment date. The interest rates stated are pre-completion and will increase by 1% post-completion.


(d)	The Group’s borrowings of US$14.1 billion (2018: US$12.8 billion) include US$4.5 billion (2018: US$4.6 billion) of subsidiary entity borrowings that are subject to various financial and general covenants with which the respective borrowers were in compliance as at 31 December 2019.

Other financial liabilities



	Non-current 2019 US$m	Current 2019 US$m	Total 2019 US$m	Non-current 2018 US$m	Current 2018 US$m	Total 2018 US$m
Derivative financial instruments	248	103	351	407	95	502
Other financial liabilities	—	247	247	—	666	666
Total other financial liabilities	248	350	598	407	761	1,168
Total borrowings including overdrafts (as above)	13,093	1,022	14,115	12,440	312	12,752
Total borrowings and other financial liabilities	13,341	1,372	14,713	12,847	1,073	13,920

23 Leases

Transition

Refer to note 45 for additional information relating to our implementation of IFRS 16 “Leases” at 1 January 2019.

Lessee arrangements

We have made the following payments associated with leases during 2019:



Description of payment	2019 US$m	Included within
Principal lease payments	315	Cash flows from financing activities
Interest payments on leases	53	Cash flows from operating activities
Payments for short-term leases	327	Net operating costs
Payments for variable lease components	15	Net operating costs
Payments for low value leases (>12 months in duration)	1	Net operating costs
Total lease payments	711



187	Annual report 2019 \| riotinto.com

23 Leases continued

Lease liabilities

The maturity profile of lease liabilities recognised at the balance sheet is:



	Note	2019 US$m		2018 US$m
Lease liabilities^(a)
Due within 1 year		349		5
Between 1 and 3 years		424		10
Between 3 and 5 years		226		18
More than 5 years		671		12
Total undiscounted cash payments expected to be made		1,670		45
Effect of discounting		(361	)	(1	)
Present value of minimum lease payments	22	1,309		44


(a)	Amounts for 2018 represent finance lease liabilities under IAS 17 “Leases”.

At 31 December 2019, commitments for leases not yet commenced were US$119 million; commitments relating to short-term leases which had already commenced at 31 December 2019 were US$108 million. As permitted by IFRS 16, short-term and low-value leases are not recognised on the balance sheet as a lease liability and are expensed as incurred.

Lessor arrangements

We sub-lease owned and right-of-use assets in cases where we no longer require the assets for our own use. At 31 December 2019 the Group recognised a net investment asset of US$63 million relating to the discounted value of cash expected to be received from assets leased out under finance leases (refer to note 18). During the year, we also recognised sub-lease income of US$5 million within net operating costs. This represents the income received in the year relating to assets subject to operating leases.

24 Consolidated net (debt)/cash



	Financing liabilities^(b)						Other assets
Year ended 31 December 2019	Borrowings excluding overdrafts^(a) US$m		Lease liabilities^(e)US$m		Debt-related derivatives (included in Other financial assets/liabilities)^(c) US$m		Cash and cash equivalents^(b) US$m		Other investments^(d) US$m	Net (debt)/cash US$m
Analysis of changes in consolidated net (debt)/cash
Opening balance	(12,707	)	(44	)	(288	)	10,772		2,522	255
Adjustment for transition to new accounting standard (see note 45)	—		(1,248	)	—		—		—	(1,248	)
Foreign exchange adjustment	(5	)	(9	)	3		(54	)	—	(65	)
Cash movements excluding exchange movements	123		315		—		(2,808	)	28	(2,342	)
Other non-cash movements	(217	)	(323	)	138		117		34	(251	)
Closing balance	(12,806	)	(1,309	)	(147	)	8,027		2,584	(3,651	)



Year ended 31 December 2018	Financing liabilities^(b)						Other assets
Year ended 31 December 2018	Borrowings excluding overdrafts^(a)US$m		Finance leases US$m		Debt-related derivatives (included in Other financial assets/ liabilities)^(c)US$m		Cash and cash equivalents^(b)US$m		Other investments^(d)US$m	Net (debt)/cash US$m
Analysis of changes in consolidated net (debt)/cash
Opening balance	(15,120)		(53)		(177	)	10,547		958	(3,845	)
Foreign exchange adjustment	123		3		(64	)	151		—	213
Cash movements excluding exchange movements	2,240		6		51		191		1,557	4,045
Other non-cash movements	50		—		(98	)	(117	)	7	(158	)
Closing balance	(12,707	)	(44	)	(288	)	10,772		2,522	255

(a)

Borrowings excluding overdrafts and including lease liabilities at 31 December 2019 of US$14,115 million (2018: US$12,751 million) differ from total borrowings and other financial liabilities of US$14,713 million (2018: US$13,920 million) on the balance sheet as they exclude other current financial liabilities of US$350 million (31 December 2018: US$761 million); other non-current financial liabilities of US$248 million (31 December 2018: US$407 million) and, at 31 December 2018, overdrafts of US$1 million.

(b)

Closing cash and cash equivalents at 31 December 2018 differ from cash and cash equivalents on the balance sheet as they include overdrafts of US$1 million which have been classified as a financial liability; there were no overdrafts at 31 December 2019. Other non-cash movements at 31 December 2019 of US$117 million represents the elimination of cash movements during the year in respect of assets held for sale which are included in the cash flow statement. In 2018, this represents the reclassification of cash and cash equivalents in disposal groups to assets held for sale (US$117 million).


(c)	Included within "Debt-related derivatives" are interest rate and cross currency interest rate swaps that are in hedge relationships with the Group's debt.


(d)	Other investments comprise US$2,584 million (2018: US$2,522 million) of highly liquid financial assets held in managed investment funds classified as held for trading.


(e)	Other movements in lease liabilities include the net impact of additions, modifications and terminations during the year.

Further information relating to the currency and interest rate exposures arising from net debt and related derivatives is given in note 30.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

25 Trade and other payables



	Non-current 2019 US$m	Current 2019 US$m	Total 2019 US$m	Non-current 2018 US$m	Current 2018 US$m	Total 2018 US$m
Trade payables	—	2,855	2,855	—	3,180	3,180
Other financial payables	272	668	940	256	653	909
Other payables	110	97	207	165	114	279
Deferred income^(a)	143	200	343	176	234	410
Accruals	27	1,305	1,332	11	1,229	1,240
Employee entitlements	—	650	650	—	630	630
Royalties and mining taxes	4	596	600	1	487	488
Amounts owed to equity accounted units	167	104	271	156	67	223
Government grants deferred	71	5	76	76	6	82
Total	794	6,480	7,274	841	6,600	7,441


(a)	Deferred income includes contract liabilities of US$158 million (2018: US$198 million).

The fair value of trade payables and financial instruments within other payables approximates their carrying value.

26 Provisions (including post-retirement benefits)



	Note	Pensions and post-retirement healthcare^(a)US$m		Other employee entitlements^(b)US$m		Close-down and restoration/ environmental^(c)US$m		Other US$m		Total 2019 US$m		Total 2018 US$m
At 1 January		2,486		360		9,975		787		13,608		14,642
Adjustment to opening balance on transition to new accounting standard	45	—		—		—		(66	)	(66	)	—
Restated opening balance		2,486		360		9,975		721		13,542		14,642
Adjustment on currency translation		51		(1	)	17		(2	)	65		(898	)
Adjustments to mining properties:	14
– changes in estimate		—		—		840		—		840		486
Charged/(credited) to profit:
– increases to existing and new provisions		166		90		171		423		850		1,137
– unused amounts reversed		—		(20	)	(19	)	(61	)	(100	)	(144	)
– exchange losses on provisions		—		—		3		—		3		16
– amortisation of discount		—		—		383		4		387		381
Utilised in year		(205	)	(78	)	(330	)	(131	)	(744	)	(837	)
Actuarial losses/(gains) recognised in equity		235		—		—		—		235		(781	)
Subsidiaries no longer consolidated^(d)		—		—		—		—		—		(318	)
Transfers and other movements^(e)		(19	)	3		50		(9	)	25		(76	)
At 31 December		2,714		354		11,090		945		15,103		13,608
Balance sheet analysis:
Current		73		260		541		525		1,399		1,056
Non-current		2,641		94		10,549		420		13,704		12,552
Total		2,714		354		11,090		945		15,103		13,608


(a)	The main assumptions used to determine the provision for pensions and post-retirement healthcare, and other information, including the expected level of future funding payments in respect of those arrangements, are given in note 44.


(b)	The provision for other employee entitlements includes a provision for long service leave of US$248 million (2018: US$242 million), based on the relevant entitlements in certain Group operations and includes US$30 million (2018: US$46 million) of provision for redundancy and severance payments.


(c)	The Group’s policy on close-down and restoration costs is described in note 1(l) and in paragraph (iv) under “Critical accounting policies and estimates” on pages 160 and 164. Close-down

and restoration costs are a normal consequence of mining, and the majority of close-down and restoration expenditure is incurred in the years following closure of the mine, refinery or smelter. Remaining lives of operations and infrastructure range from one to over 60 years with an average for all sites, weighted by present closure obligation, of around 18 years (2018: 17 years). Although the ultimate cost to be incurred is uncertain, the Group’s businesses estimate their respective costs based on current restoration standards and techniques. Provisions of US$11,090 million (2018: US$9,975 million) for close-down and restoration costs and environmental clean-up obligations are based on risk-adjusted cash flows. These estimates have been discounted to their present value at a real risk-free rate of 2% per annum, based on an estimate of the long-term, risk-free, pre-tax cost of borrowing. If the risk-free rate was decreased by 0.5% then the provision would be US$979 million higher.

Non-current provisions for close-down and restoration/environmental expenditure include amounts relating to environmental clean-up of US$382 million (2018: US$535 million) expected to take place between one and five years from the balance sheet date, and US$883 million (2018: US$683 million) expected to take place later than five years after the balance sheet date. Close-down and restoration/environmental liabilities at 31 December 2019 have not been adjusted for amounts of US$113 million (2018: US$110 million) arising from closure related receivables from the co-owners of the Diavik Joint Venture and insurance recoveries and other financial assets held for the purposes of meeting these obligations.


(d)	In 2018 Subsidiaries no longer consolidated related primarily to the disposal of Kestrel and Hail Creek, which completed on 1 August 2018 and the disposal of Grasberg on 21 December 2018. Refer to note 37.


(e)	Transfers and other movements includes the transfer of ISAL's provisions from Liabilities held for sale at 30 June 2019. In 2018, it included transfers to Liabilities held for sale relating to provisions recognised by Rössing Uranium and ISAL.



189	Annual report 2019 \| riotinto.com

27 Share capital – Rio Tinto plc



	2019 Number (million)		2018 Number (million)		2017 Number (million)		2019 US$m		2018 US$m		2017 US$m
Issued and fully paid up share capital of 10p each
At 1 January	1,287.660		1,351.609		1,384.520		211		220		224
Ordinary shares issued^(a)(c)	0.041		0.035		0.026		—		—		—
Shares purchased and cancelled^(b)	(28.356	)	(63.984	)	(32.937	)	(4	)	(9	)	(4	)
At 31 December	1,259.345		1,287.660		1,351.609		207		211		220
Shares held by public
At 1 January	1,278.215		1,342.058		1,374.822
Shares reissued from treasury^(a)	0.024		0.106		0.147
Ordinary shares issued(a)(c)	0.041		0.035		0.026
Shares purchased and cancelled^(b)	(28.356	)	(63.984	)	(32.937	)
At 31 December	1,249.924		1,278.215		1,342.058
Shares held in treasury	9.421		9.445		9.551
Shares held by public	1,249.924		1,278.215		1,342.058
Total share capital	1,259.345		1,287.660		1,351.609
Other share classes
Special Voting Share of 10p each^(d)	1 only		1 only		1 only
DLC Dividend Share of 10p each^(d)	1 only		1 only		1 only
Equalisation Share of 10p each^(d)	1 only		1 only		1 only

(a)

40,974 ordinary shares were issued in 2019 under the Global Employee Share Plan (GESP). 23,659 ordinary shares were reissued from treasury during the year resulting from the vesting of awards and the exercise of options under Rio Tinto plc employee share-based payment plans, with exercise prices and market values between £36.33 and £49.74 per share (2018: 35,380 ordinary shares were issued under the GESP and 106,045 ordinary shares were reissued from treasury with exercise prices and market values between £16.53 and £43.79 per share; 2017: 26,241 ordinary shares were issued under the GESP and 147,126 ordinary shares reissued from treasury with exercise prices and market values between £28.63 and £37.78 per share).


(b)	The authority for the company to buy back its ordinary shares was renewed at the 2019 annual general meeting. 28,356,034 shares were bought back and cancelled in 2019 under the on-market buy-back programme. 63,984,287 shares were bought back and cancelled in 2018 under the on-market buy-back programme. 32,937,109 shares were bought back in 2017 under the on-market buy-back programme.

(c)

The aggregate consideration for new shares issued under the GESP was US$1.1 million (2018: US$1.0 million; 2017: US$1.0 million). The difference between the nominal value and the issue price of the shares issued was credited to the share premium account. The aggregate consideration received for treasury shares reissued was US$1 million (2018: US$6 million; 2017: US$2 million). No new shares were issued as a result of the exercise of options under Rio Tinto plc employee share-based payment plans in 2019, 2018 and 2017.

(d)

The “Special Voting Share” was issued to facilitate the joint voting by shareholders of Rio Tinto plc and Rio Tinto Limited on Joint Decisions, following the DLC Merger. The “DLC Dividend Share” was issued to facilitate the efficient management of funds within the DLC structure. Directors have the ability to issue an Equalisation Share if that is required under the terms of the DLC Merger Sharing Agreement.

During 2019, US$43 million of shares and ADRs (2018: US$140 million; 2017: US$39 million) were purchased by employee share ownership trusts on behalf of Rio Tinto plc to satisfy future share options and awards as they vest. At 31 December 2019, 821,589 shares and 44,666 ADRs were held in the employee share ownership trusts on behalf of Rio Tinto plc.

Information relating to share options and other share-based incentive schemes is given in note 43.

Subsequent to 31 December 2019, 3,233,874 number of shares were bought back and cancelled under the on-market buy-back programme.

28 Share capital – Rio Tinto Limited



	2019 Number (million)	2018 Number (million)	2017 Number (million)	2019 US$m		2018 US$m		2017 US$m
Issued and fully paid up share capital
At 1 January	371.21	412.41	424.19	3,477		4,140		3,915
Adjustment on currency translation				(29	)	(382	)	310
Ordinary shares purchased and cancelled^(a)(b)	—	(41.20)	(11.78)	—		(281	)	(85	)
At 31 December	371.21	371.21	412.41	3,448		3,477		4,140
– Special Voting Share^(c)	1 only	1 only	1 only
– DLC Dividend Share^(c)	1 only	1 only	1 only
Total share capital	371.21	371.21	412.41


(a)	In November 2018, 41,198,134 Rio Tinto Limited ordinary shares were purchased at A$69.69 per share and cancelled under an off-market share buy-back programme carried out pursuant to the shareholder approval granted at Rio Tinto Limited’s 2018 annual general meeting for off-market and on-market buy-backs of up to 41.2 million Rio Tinto Limited ordinary shares.


(b)	In November 2017, 11,778,064 Rio Tinto Limited ordinary shares were purchased at A$63.67 per share and cancelled under an off-market share buy-back programme carried out pursuant to the shareholder approval granted at Rio Tinto Limited’s 2017 annual general meeting for off-market and on-market buy-backs of up to 42.4 million Rio Tinto Limited ordinary shares.

(c)

The “Special Voting Share” was issued to facilitate the joint voting by shareholders of Rio Tinto Limited and Rio Tinto plc on Joint Decisions following the DLC Merger. The “DLC Dividend Share” was issued to facilitate the efficient management of funds within the DLC structure. Directors have the ability to issue an Equalisation Share if that is required under the terms of the DLC Merger Sharing Agreement.

During 2019, US$63 million of shares (2018: US$114 million; 2017: US$38 million) were purchased by employee share ownership trusts on behalf of Rio Tinto Limited to satisfy future share options and awards as they vest. At 31 December 2019, 944,467 shares were held in the employee share ownership trusts on behalf of Rio Tinto Limited.

Information relating to share options and other share-based incentive schemes is given in note 43.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

29 Other reserves and retained earnings



	2019 US$m		2018 US$m		2017 US$m
Capital redemption reserve^(a)
At 1 January	47		38		34
Own shares purchased and cancelled	4		9		4
At 31 December	51		47		38
Cash flow hedge reserve
At 1 January	195		32		32
Adjustment for transition to new accounting pronouncements at 1 January 2018 (note 45)	—		(4	)	—
Cash flow hedge gains	12		156		62
Cash flow hedge (gains)/losses transferred to the income statement	(41	)	40		(62	)
Tax on the above	(6	)	(54	)	—
Transfers and other movements	—		25		—
At 31 December	160		195		32
Available for sale revaluation reserves
At 1 January	—		20		(126	)
Adjustment for transition to new accounting pronouncements at 1 January 2018 (note 45)	—		(20	)	—
Gains on available for sale securities	—		—		19
Losses on available for sale securities transferred to the income statement	—		—		6
Tax on the above	—		—		(1	)
Transfers and other movements	—		—		122
At 31 December	—		—		20
Fair value through other comprehensive income reserve
At 1 January	(6	)	—		—
Adjustment for transition to new accounting pronouncements at 1 January 2018 (note 45)	—		8		—
Losses on equity investments	(5	)	(11	)	—
Transfers to retained earnings	—		(3	)	—
At 31 December	(11	)	(6	)	—
Cost of hedging reserve
At 1 January	(13	)	—		—
Adjustment for transition to new accounting pronouncements at 1 January 2018 (note 45)	—		26		—
Cost of hedging deferred to reserves during the year	3		(36	)	—
Transfer of cost of hedging to the income statement	—		(3	)	—
At 31 December	(10	)	(13	)	—
Other reserves^(b)
At 1 January	11,650		11,714		11,861
Own shares purchased from Rio Tinto Limited shareholders to satisfy share options	(63	)	(114	)	(64	)
Employee share options: value of services	52		52		31
Deferred tax on share options	4		(2	)	10
Companies no longer consolidated	—		—		(124	)
At 31 December	11,643		11,650		11,714
Foreign currency translation reserve^(c)
At 1 January	(3,212	)	480		(2,585	)
Parent and subsidiaries currency translation and exchange adjustments	331		(3,658	)	2,942
Equity accounted units currency translation adjustments	10		(48	)	34
Currency translation reclassified on disposal	215		14		78
Transfers and other movements	—		—		11
At 31 December	(2,656	)	(3,212	)	480

Total other reserves per balance sheet	9,177		8,661		12,284



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Financial statements continued

29 Other reserves and retained earnings continued



	2019 US$m		2018 US$m		2017 US$m
Retained earnings^(d)
At 1 January	27,025		23,761		21,631
Adjustment for transition to new accounting pronouncements at 1 January (note 45)	(113	)	(179	)	—
Parent and subsidiaries' profit for the year	7,709		13,125		8,423
Equity accounted units' profit after tax for the year	301		513		339
Actuarial (losses)/gains^(e)	(259	)	894		1
Tax relating to components of other comprehensive income	81		(269	)	(150	)
Total comprehensive income for the year	7,832		14,263		8,613
Share buy-back programme	(1,135	)	(5,423	)	(2,312	)
Dividends paid	(10,334	)	(5,356	)	(4,250	)
Change in equity interest held by Rio Tinto	85		60		43
Companies no longer consolidated	—		—		130
Own shares purchased/treasury shares reissued for share options and other movements	(43	)	(140	)	(18	)
Employee share options and other IFRS 2 charges taken to the income statement	70		61		57
Transfer from FVOCI reserve	—		3		—
Transfers and other movements	—		(25	)	(133	)
At 31 December	23,387		27,025		23,761


(a)	The capital redemption reserve was set up to comply with section 733 of the UK Companies Act 2006 (previously section 170 of the UK Companies Act 1985) when shares of a company are redeemed or purchased wholly out of the company’s profits. Balances reflect the amount by which the company’s issued share capital is diminished in accordance with this section.


(b)	Other reserves includes US$11,936 million which represents the difference between the nominal value and issue price of the shares issued arising from Rio Tinto plc’s rights issue completed in July 2009. No share premium was recorded in the Rio Tinto plc financial statements through the operation of the merger relief provisions of the UK Companies Act 1985.

Other reserves also include the cumulative amount recognised under IFRS 2 in respect of options granted but not exercised to acquire shares in Rio Tinto Limited, less, where applicable, the cost of shares purchased to satisfy share options exercised. The cumulative amount recognised under IFRS 2 in respect of options granted but not exercised to acquire shares in Rio Tinto plc is recorded in retained earnings.


(c)	Exchange differences arising on the translation of the Group’s net investment in foreign controlled companies are taken to the foreign currency translation reserve, as described in note 1(d). The cumulative differences relating to an investment are transferred to the income statement when the investment is disposed of.


(d)	Retained earnings and movements in reserves of subsidiaries include those arising from the Group’s share of joint operations.


(e)	There were US$7 million actuarial losses relating to equity accounted units in 2019 (31 December 2018: nil; 31 December 2017: nil).



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Financial statements

Notes to the 2019 financial statements continued

30 Financial instruments and risk management

In this note, except where stated, the information relates to the financial instruments of the parent companies and their subsidiaries and joint operations, and excludes those of equity accounted units. We have grouped the information in the following sections:

A – Financial assets and liabilities by categories

B – Derivative financial instruments

C – Fair values

A (a) Financial assets and liabilities by categories



At 31 December 2019	Note	Total US$m		Amortised cost US$m		Fair value through other comprehensive income US$m	Fair value through profit and loss US$m
Financial assets
Cash and cash equivalents	21	8,027		2,707		—	5,320
Trade and other financial receivables^(a)(b)	18	2,938		1,801		—	1,137
Equity shares and quoted funds	20	61		—		50	11
Other investments, including loans^(c)	20	2,839		21		—	2,818
Derivatives related to net debt: designated as hedges^(d)	20, 24	151		—		—	151
Derivatives and embedded derivatives not related to net debt: not designated as hedges^(d)	20	149		—		—	149
Embedded derivatives not related to net debt: designated as hedges^(d)	20	66		—		—	66
Loans to equity accounted units including quasi equity loans		152		152		—	—
Total financial assets		14,383		4,681		50	9,652

Financial liabilities
Trade and other financial payables^(e)	25	(5,398	)	(5,341	)		(57	)
Short-term borrowings and bank overdrafts	22	(1,022	)	(1,022	)		—
Medium-term and long-term borrowings	22	(13,093	)	(13,093	)		—
Derivatives related to net debt: designated as hedges^(d)	22, 24	(298	)	—			(298	)
Derivatives and embedded derivatives not related to net debt: not designated as hedges^(d)	22	(29	)	—			(29	)
Embedded derivatives not related to net debt: designated as hedges^(d)	22	(24	)	—			(24	)
Other financial liabilities	22	(247	)	(247	)		—
Total financial liabilities		(20,111	)	(19,703	)		(408	)



At 31 December 2018	Note	Total US$m		Amortised cost US$m		Fair value through other comprehensive income US$m	Fair value through profit and loss US$m
Financial assets
Cash and cash equivalents	21	10,773		2,779		—	7,994
Trade and other financial receivables^(a)(b)	18	3,007		2,015		—	992
Equity shares and quoted funds	20	130		—		53	77
Other investments, including loans^(c)	20	2,782		6		—	2,776
Derivatives related to net debt: designated as hedges^(d)	20, 24	70		—		—	70
Derivatives and embedded derivatives not related to net debt: not designated as hedges^(d)	20	432		—		—	432
Embedded derivatives not related to net debt: designated as hedges^(d)	20	54		—		—	54
Loans to equity accounted units including quasi equity loans		167		167		—	—
Total financial assets		17,415		4,967		53	12,395

Financial liabilities
Trade and other financial payables^(e)	25	(5,552	)	(5,513	)		(39	)
Short-term borrowings and bank overdrafts	22	(312	)	(312	)		—
Medium-term and long-term borrowings	22	(12,440	)	(12,440	)		—
Derivatives related to net debt: designated as hedges^(d)	22, 24	(358	)	—			(358	)
Derivatives and embedded derivatives not related to net debt: not designated as hedges^(d)	22	(98	)	—			(98	)
Embedded derivatives not related to net debt: designated as hedges^(d)	22	(46	)	—			(46	)
Other financial liabilities	22	(666	)	(666	)		—
Total financial liabilities		(19,472	)	(18,931	)		(541	)


(a)	Trade and other financial receivables comprise trade receivables, other financial receivables, receivables relating to net investments in finance leases and amounts due from equity accounted units within note 18.


(b)	Provisionally priced receivables are fair valued.


(c)	Other investments, including loans, include US$2,584 million (2018: US$2,522 million) of highly liquid financial assets in managed investment funds classified as held for trading.


(d)	These financial assets and liabilities in aggregate agree to the total derivative financial instruments disclosed in notes 20 and 22.


(e)	Trade and other financial payables comprise trade payables, other financial payables, accruals and amounts due to equity accounted units within note 25. The trade and other payables held at fair value are valued using Level 2 inputs.



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Financial statements continued

30 Financial instruments and risk management continued

A (b) Financial risk management

Objectives and policy

Our financial risk management objectives are:


–	to have in place a robust capital structure to manage the organisation through the commodity cycle; and


–	to allow our financial exposures to float with the market.

Any exceptions to these require formal approval by the board.

The Group operates a floating prices and rates policy for the management of our key economic exposure to commodity price, foreign exchange and interest rates risks. We do not seek to hedge this floating exposure and will re-float, where possible, any material price or rates that are fixed. Where this is impossible (or sub-optimal) any non-floating price risks are managed within defined market risk tolerances. Derivatives are used as and when required in order to manage our exposure in accordance with this underlying financial risk management principle.

In the paragraphs below, we summarise the risks that we are exposed to, and outline how our Treasury and Commercial teams manage these risks in accordance with agreed policies. These teams operate under a strong control environment, within approved limits. Our board reviews and approves limits at least annually.

(i) Capital and liquidity risk

Our overriding objective when managing capital and liquidity is to safeguard the business as a going concern. Capital is allocated in a consistent and disciplined manner, prioritising sustaining capital expenditure, followed by the ordinary dividend and then an iterative allocation between investing in compelling growth opportunities, maintaining balance sheet strength and delivering further returns to shareholders.

Our board and senior management regularly review the capital structure and liquidity of the Group. They take into account our strategic priorities, the economic and business conditions, and any identified investment opportunities, along with the expected returns to shareholders. We expect total cash returns to shareholders over the longer term to be in a range of 40–60% of underlying earnings in aggregate throughout the commodity cycle.

We consider various financial metrics when managing our risk, including net debt, gearing, the overall level of borrowings and their maturity profile, liquidity levels, total capital, future cash flows, EBITDA and interest cover ratios.

Our total capital as at 31 December was:



Total capital	Note	2019 US$m	2018 US$m
Equity attributable to owners of Rio Tinto (see Group balance sheet)		40,532	43,686
Equity attributable to non-controlling interests (see Group balance sheet)		4,710	6,137
Net debt/(cash)	24	3,651	(255	)
Total capital		48,893	49,568

Our net debt increased to US$3.7 billion at 31 December 2019 from a net cash position of US$0.3 billion at 31 December 2018. This mainly reflects cash returns to shareholders during the year, capital expenditure and a non-cash increase of US$1.2 billion following the implementation of IFRS 16 "Leases" on 1 January 2019, partially offset by operating cash flows. At 31 December 2019 net gearing was 7% (2018: (1)%) and interest cover was 28 times (2018: 22 times).

We have access to various forms of financing including our US Shelf Programme, European Debt Issuance Programme, Commercial Paper and credit facilities. We did not issue any debt in 2019 or 2018 under these programmes.

In 2018, as part of our liability management programme, we redeemed bonds, issued by Rio Tinto Finance (USA) plc, Rio Tinto Finance plc and Rio Tinto Finance (USA) Limited, with a notional principal value of US$1.9 billion. We also closed out interest rate swaps, with the same notional value which were in a fair value hedge relationship with the bonds. The aggregate cash outflow on the bond redemptions amounted to US$2.0 billion before fees, including early redemption costs. The close out of the swaps generated a net cash outflow of US$51 million, including accrued interest of US$11 million. We did not buy back any bonds in 2019.

We have a US$1.9 billion facility, which we extended in 2019 to November 2022 and a US$5.6 billion facility, which includes a US$ denominated same day access swing-line facility. This also expires in November 2022. The funds available can be used for general corporate purposes. At 31 December 2019 the facilities were undrawn. Advances under these revolving facilities bear an interest rate per annum based on LIBOR (or EURIBOR, CDOR or BBSW in relation to any euro, Canadian dollar or Australian dollar loans respectively) plus a margin (which is dependent on our long-term credit rating as determined by Moody’s and Standard & Poor’s and the level of drawdown). The facility agreements contain no financial covenants.

Our credit ratings, as provided by Standard & Poor’s and Moody’s investor services, as at 31 December were:



	2019	2018
Long-term rating	A/A2	A/A3
Short-term rating	A-1/P-1	A-1/P-2
Outlook	Stable/Stable	Stable/Stable

Our unified credit status is maintained through cross guarantees, which mean the contractual obligations of Rio Tinto plc and Rio Tinto Limited are automatically guaranteed by the other.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

In the table below, we summarise the maturity profile of our financial liabilities based on contractual undiscounted payments, which will therefore not necessarily agree with the amounts disclosed in the balance sheet.

Financial liability analysis



At 31 December 2019 (Outflows)/Inflows	Within 1 year or on demand US$m		Between 1 and 2 years US$m		Between 2 and 3 years US$m		Between 3 and 4 years US$m		Between 4 and 5 years US$m		After 5 years US$m		Total US$m
Non-derivative financial liabilities
Trade and other financial payables^(a)	(4,841	)	(45	)	(12	)	(14	)	(15	)	(380	)	(5,307	)
Expected lease liability payments^(b)	(349	)	(267	)	(157	)	(133	)	(93	)	(671	)	(1,670	)
Borrowings before swaps	(723	)	(171	)	(665	)	(741	)	(1,209	)	(9,320	)	(12,829	)
Expected future interest payments^(a)	(607	)	(594	)	(590	)	(551	)	(514	)	(3,518	)	(6,374	)
Other financial liabilities	(247	)	—		—		—		—		—		(247	)
Derivative financial liabilities^(c)
Derivatives related to net debt – net settled	(16	)	(16	)	(16	)	9		(3	)	3		(39	)
Derivatives related to net debt – gross settled^(a):
– gross inflows	495		40		40		40		507		788		1,910
– gross outflows	(588	)	(53	)	(53	)	(53	)	(599	)	(977	)	(2,323	)
Derivatives not related to net debt – net settled	(31	)	—		—		(2	)	(4	)	(23	)	(60	)
Derivatives not related to net debt – gross settled:
– gross inflows	699		—		—		—		—		—		699
– gross outflows	(703	)	—		—		—		—		—		(703	)
Total	(6,911	)	(1,106	)	(1,453	)	(1,445	)	(1,930	)	(14,098	)	(26,943	)



At 31 December 2018 (Outflows)/Inflows	Within 1 year or on demand US$m		Between 1 and 2 years US$m		Between 2 and 3 years US$m		Between 3 and 4 years US$m		Between 4 and 5 years US$m		After 5 years US$m		Total US$m
Non-derivative financial liabilities
Trade and other financial payables	(5,129	)	(423	)	—		—		—		—		(5,552	)
Borrowings before swaps	(312	)	(562	)	(166	)	(660	)	(741	)	(10,476	)	(12,917	)
Expected future interest payments^(a)	(651	)	(653	)	(636	)	(630	)	(586	)	(4,082	)	(7,238	)
Other financial liabilities	(666	)	—		—		—		—		—		(666	)
Derivative financial liabilities^(c)
Derivatives related to net debt – net settled	(36	)	(36	)	(36	)	(36	)	4		(8	)	(148	)
Derivatives related to net debt – gross settled^(a):
– gross inflows	48		508		39		39		39		1,278		1,951
– gross outflows	(79	)	(595	)	(58	)	(58	)	(58	)	(1,581	)	(2,429	)
Derivatives not related to net debt – net settled	(27	)	(13	)	(5	)	(5	)	(5	)	(28	)	(83	)
Derivatives not related to net debt – gross settled:
– gross inflows	1,664		—		—		—		—		—		1,664
– gross outflows	(1,733	)	—		—		—		—		—		(1,733	)
Total	(6,921	)	(1,774	)	(862	)	(1,350	)	(1,347	)	(14,897	)	(27,151	)


(a)	The interest payable at year end was removed from trade and other financial payables and is shown within expected future interest payments. Interest payments have been projected using interest rates applicable at the end of the applicable financial year. Where debt is subject to variable interest rates, future interest payments are subject to change in line with market rates.


(b)	In 2019 we have included expected future lease payments following adoption of IFRS 16 "Leases". Refer to note 45 for further information.


(c)	The maturity grouping is based on the earliest payment date.

Offsetting and enforceable master netting agreements

When we have a legally enforceable right to offset our financial assets and liabilities and an intention to settle on a net basis, or realise the asset and settle the liability simultaneously, we report the net amount in the consolidated balance sheet. During the year, there were no material amounts offset in the balance sheet, and no material enforceable master netting agreements were identified.

(ii) Commodity price risk

Our broad commodity base means our exposure to commodity prices is diversified. Our normal policy is to sell our products at prevailing market prices. Exceptions to this rule are subject to strict limits laid down by the board, and to defined market risk tolerances and internal controls.

We sell our products to customers under contracts which vary in tenure and pricing mechanisms, including some volumes sold in the spot market. Sales revenue may be subject to adjustment if product specifications do not conform to the terms specified in a sales contract.

Pricing for iron ore is on a range of terms, the majority being either monthly or quarterly average pricing mechanisms. We sell a smaller proportion of iron ore volumes on the spot market.



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30 Financial instruments and risk management continued

(ii) Commodity price risk (continued)

We generally sell copper and aluminium under contracts which vary in tenure and pricing mechanisms, with some volumes sold in the spot market. The prices are determined by reference to prevailing market prices on terminal markets, such as the London Metal Exchange (LME) and the Commodities Exchange (COMEX) in New York. Prices fluctuate widely in response to changing levels of supply and demand but, in the long run, prices are related to the marginal cost of supply. Gold is also priced in an active market in which prices respond to daily changes in quantities offered and sought. Newly mined gold is only one source of supply; investment and disinvestment can be important elements of supply and demand.

At the date revenue is recognised, certain of our products are provisionally priced, based on the amount we expect to receive in the future. After initial recognition of revenue, we record any change in revenue relating to market prices separately in Other revenue (refer to note 3). Substantially all iron ore and aluminium sales are reflected at final prices at each reporting period. Final prices for copper concentrate, however, are normally determined between 30 and 180 days after delivery to our customer.

At 31 December 2019, we had 220 million pounds of copper sales (31 December 2018: 240 million pounds) that were provisionally priced at US 271 cents per pound (2018: US 277 cents per pound). The final price of these sales will be determined during the first half of 2020. A 10% change in the price of copper realised on the provisionally priced sales, all other factors held constant, would increase or reduce net earnings by US$38 million (2018: US$37 million).

For some products, particularly aluminium, we are also exposed to fluctuations in power prices.

Hedging strategy

We do not generally consider that using derivatives to fix commodity prices would provide a long-term benefit to our shareholders. However, for certain physical commodity transactions for which the price was fixed at the contract date, we enter into derivatives to achieve the prevailing market prices at the point of revenue recognition.

To mitigate our exposure to changes in the relationship between aluminium prices and power prices, we have a number of electricity purchase contracts which are directly linked to the daily official LME cash ask price for high grade aluminium (“LME price”) and to the US Midwest Transaction Premium (“Midwest premium”).

In 2018, on transition to IFRS 9, we elected to apply hedge accounting to two existing embedded derivatives within our power contracts. The embedded derivatives (notional aluminium forward sales) have been designated as the hedging instrument. The forecasted aluminium sales, priced using the LME price and the Midwest premium, represent the hedged item.

The hedging ratio is 1:1, as the quantity of sales designated as being hedged matches the notional amount of the hedging instrument. The hedging instrument’s notional amount, expressed in equivalent metric tonnes of aluminium, is derived from our expected electricity consumption under the power contracts as well as other relevant contract parameters.

When we designate such embedded derivatives as the hedging instrument in a cash flow hedge, we recognise the effective portion of the change in the fair value of the hedging instrument in other comprehensive income, and it is accumulated in the cash flow hedge reserve. The amount that is recognised in other comprehensive income is limited to the lesser of the cumulative change in the fair value of the hedging instrument and the cumulative change in the fair value of the hedged item, in absolute terms.

We recognise any ineffectiveness relating to the hedging relationship immediately in the income statement.

Sources of ineffectiveness include: differences in the timing of the cash flows between the hedged item and the hedging instrument, non-zero initial fair value of the hedging instrument, the existence of a cap on the Midwest premium in the hedging instrument and counterparty credit risk.

We held the following notional aluminium forward sales contracts embedded in the power contracts:



At 31 December 2019	Total	Within 1 year	Between 1 and 5 years	Between 5 and 10 years	After 10 years
Notional amount (in tonnes)	704,370	65,226	286,617	352,527	—
Notional amount (in US$ millions)	1,656	138	647	871	—
Average hedged rate (in US$ per tonne)	2,351	2,114	2,257	2,471	—



At 31 December 2018	Total	Within 1 year	Between 1 and 5 years	Between 5 and 10 years	After 10 years
Notional amount (in tonnes)	767,111	56,481	286,666	358,416	65,548
Notional amount (in US$ millions)	1,786	114	634	870	168
Average hedged rate (in US$ per tonne)	2,328	2,013	2,210	2,426	2,562



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Financial statements

Notes to the 2019 financial statements continued

The impact on our financial statements of these hedging instruments and hedging items are:



	Aluminium embedded derivatives separated from the power contract (Hedging instrument)^(a)			Highly probable forecast aluminium sales (Hedged item)
	Nominal US$m	Carrying amount US$m	Change in fair value in the period US$m	Cash flow hedge reserve^(b)US$m	Change in fair value in the period US$m		Total hedging gain/(loss) recognised in reserves US$m	Hedge ineffective-ness in the period^(c)US$m		Amount reclassified from reserves to income statement^(d)US$m
2019	1,656	42	29	196	(50	)	36	(7	)	19
2018	1,786	8	205	179	(182	)	181	24		2


(a)	Aluminium embedded derivatives (forward contracts and options) are contained within certain aluminium smelter electricity purchase contracts. US$66 million (2018: US$54 million) of the carrying value is shown within Other financial assets and US$24 million (2018: US$46 million) shown within other financial liabilities.


(b)	The difference between this amount and the total cash flow hedge reserve of the Group (shown in note 29) relates to our cash flow hedge on the sterling bond (refer to interest rate risk section).


(c)	Hedge ineffectiveness is included in net operating costs (raw material, consumables, repairs and maintenance) in the income statement.


(d)	On realisation of the hedge, realised amounts are reclassified from reserves to consolidated sales revenue in the income statement.

There was no cost of hedging recognised in 2019 or 2018 relating to this hedge relationship.

We set out details of our commodity derivatives that are not designated as hedges in section B.

Sensitivities

Our commodity derivatives are impacted by changes in market prices. The table below summarises the impact that changes in aluminium market prices have on aluminium forward and option contracts embedded in power supply agreements outstanding at 31 December 2019. Any change in price will result in an offsetting change in our future earnings.



	Change in market prices		2019 US$m		2018 US$m
Effect on net earnings	+10	%	(28	)	(102	)
Effect on net earnings	(10	)%	27		35
Effect on equity	+10	%	(97	)	(101	)
Effect on equity	(10	)%	101		103

We exclude our “own use contracts” from this sensitivity analysis as they are outside the scope of IFRS 9. Our business units continue to hold these types of contracts to satisfy their expected purchase, sale or usage requirements.

(iii) Credit risk

We are exposed to credit risk in our operating activities (primarily from customer receivables); and from our investing activities (primarily investments in separately managed funds). We are also exposed to credit risk arising from our deposits in treasury and liquidity funds, deposits with banks and financial institutions and from our interest rate and currency derivative contracts.

Credit risks related to receivables

Our Commercial team manages customer credit risk subject to our established policy, procedures and controls. The team establishes credit limits for all of our customers. Where customers are rated by an independent credit rating agency, these ratings are used to set credit limits. Where there are no independent credit ratings available, we assess the credit quality of the customer through a credit rating scorecard. The Commercial team monitor outstanding customer receivables regularly and highlight any credit concerns to senior management. Shipments to major customers are often covered by letters of credit or other forms of credit insurance.

At 31 December 2019, we had 78 customers (2018: 113 customers) owing more than US$5 million each and accounting for approximately 90% (2018: 84%) of all trade receivables. There were 22 customers (2018: 17 customers) owing more than US$20 million and accounting for approximately 55% (2018: 34%) of all trade receivables.

The expected credit loss on our trade receivable portfolio is insignificant (see note 18).

Credit risk related to financial instruments and cash deposits

Our Treasury team manages credit risk from investments in government securities (primarily US Government), corporate and asset-backed securities, reverse re-purchase agreements, money market funds, and balances with banks and financial institutions in accordance with a board-approved credit risk framework which sets the risk appetite. Our board reviews this annually. We make investments of surplus funds only with approved investment grade (BBB- and above) counterparties who have been assigned specific credit limits. The limits are set to minimise the concentration of credit risk and therefore mitigate the potential for financial loss through counterparty failure.



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Financial statements continued

30 Financial instruments and risk management continued

The maximum credit risk exposure arising on our financial assets at the balance sheet date is as follows:



	Note	2019 US$m	2018 US$m
Cash and cash equivalents	21	8,027	10,773
Trade and other financial receivables	18	2,938	3,007
Investments	20	2,839	2,782
Derivative assets	20	366	556
Loans to equity accounted units		39	38
Total		14,209	17,156

(iv) Foreign exchange risk

The broad geographic spread of our sales and operations means that our earnings, cash flows and shareholders’ equity are influenced by a wide variety of currencies.

The majority of our sales are denominated in the US dollar.

Our operating costs are influenced by the currencies of those countries where our mines and processing plants are located, and by those currencies in which we buy imported equipment and services. The US dollar, the Australian dollar and the Canadian dollar are the most important currencies influencing our costs. In any particular year, currency fluctuations may have a significant impact on our financial results. A strengthening of the US dollar against the currencies in which our costs are partly denominated has a positive effect on our underlying earnings. However, a strengthening of the US dollar reduces the value of non-US dollar-denominated net assets, and therefore total equity.

Our external borrowings and cash are mainly denominated in US dollars, either directly or through the use of derivatives, as we consider the US dollar the most appropriate currency for financing our operations.

In most cases our debt and other financial assets and liabilities, including intragroup balances, is held in the functional currency of the relevant subsidiary. There are instances where these balances are held in currencies other than the functional currency of the relevant subsidiary. This means we recognise exchange gains and losses in our income statement (except where they can be taken to equity) as these balances are translated into the functional currency of the relevant subsidiary. Our income statement also includes exchange gains and losses arising on US dollar net debt and intragroup balances. On consolidation, these balances are retranslated to our US dollar presentation currency and there is a corresponding and offsetting exchange difference recognised directly in the currency translation reserve. There is no impact on total equity.

The table below summarises, by currency, our net debt, after taking into account relevant cross currency interest rate swaps and foreign exchange contracts:



Net (debt)/cash by currency	Total borrowings excluding overdrafts US$m		Lease liabilities US$m		Derivatives related to net debt US$m		Cash and cash equivalents US$m	Other investments US$m	Net (debt)/cash 2019 US$m		Net (debt)/ cash 2018 US$m
US dollar	(12,233	)	(503	)	(147	)	7,456	2,584	(2,843	)	464
Australian dollar	(382	)	(349	)	—		170	—	(561	)	(255	)
Euro	(4	)	(23	)	—		37	—	10		(22	)
South African rand	—		(2	)	—		173	—	171		95
Canadian dollar	(185	)	(154	)	—		17	—	(322	)	(134	)
Other	(2	)	(278	)	—		174	—	(106	)	107
Total	(12,806	)	(1,309	)	(147	)	8,027	2,584	(3,651	)	255

Hedging strategy

Under normal market conditions, we do not consider that active currency hedging of transactions would provide long-term benefits to shareholders. We review our exposure on a regular basis and will undertake hedging if deemed appropriate. We may deem currency protection measures appropriate in specific commercial circumstances. Capital expenditures and other significant financial items such as acquisitions, disposals, tax and dividend cash flows may be economically hedged subject to strict limits laid down by the board. Details of the cross-currency interest rate swaps and the currency forward contracts used to manage our currency risk exposures at 31 December 2019 are in section B.



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Financial statements

Notes to the 2019 financial statements continued

Sensitivities

The table below shows the estimated retranslation effect on financial assets and financial liabilities, including intragroup balances, of a 10% strengthening in the closing exchange rate of the US dollar against significant currencies. We deem 10% to be the annual exchange rate movement that is reasonably probable (on an annual basis over the long run) for any of our significant currencies and therefore an appropriate representation.

We calculate sensitivities in relation to the functional currencies of our individual entities. We translate the impact of these on net earnings and underlying earnings into US dollars at the exchange rates on which the sensitivities are based. The impact to net earnings associated with a 10% weakening of a particular currency, shown below, is broadly offset within equity through movements in the currency translation reserve and therefore generally has no impact on our net assets. The impact is expressed in terms of the effect on net earnings, underlying earnings, and equity, assuming that each exchange rate moves in isolation. The sensitivities are based on financial assets and financial liabilities held at 31 December 2019, where balances are not denominated in the functional currency of the subsidiary or joint operation, and exclude financial assets and liabilities held by equity accounted units. These balances will not remain constant throughout 2020, and therefore the following information should be used with care.

At 31 December 2019

Gains/(losses) associated with 10% strengthening of the US dollar



Currency exposure	Closing exchange rate US cents	Effect on net earnings US$m		Of which amount impacting underlying earnings U$m		Impact directly on equity US$m
Australian dollar	70	453		(4	)	(1,002	)
Canadian dollar	77	(143	)	7		—
Euro	112	178		4		—

At 31 December 2018

Gains/(losses) associated with 10% strengthening of the US dollar



Currency exposure	Closing exchange rate US cents	Effect on net earnings US$m		Of which amount impacting underlying earnings US$m	Impact directly on equity US$m
Australian dollar	70	346		1	(993	)
Canadian dollar	73	(82	)	7	—
Euro	114	202		5	—

(v) Interest rate risk

Our interest rate management policy is generally to borrow and invest at floating interest rates. This approach is based on the historically lower cost of borrowing at floating rates, and the historical correlation between interest rates and commodity prices. It does mean, however, that movements in market interest rates impact our earnings. In certain circumstances, we may elect to maintain a higher proportion of fixed-rate funding.

Hedging strategy

Because we aim to borrow and invest at floating interest rates, we enter into interest rate swaps and review these positions on a regular basis. During 2019, we entered into new swaps to convert the remaining US$75 million of the Rio Tinto Finance (USA) Limited Bonds (7.125% maturing in 2028) to floating interest rates and to swap US$100 million Alcan debentures (7.250% maturing in 2028) to floating interest rates.

At 31 December 2019, US$4.5 billion (2018: US$4.3 billion) US dollar notional fixed-rate US dollar borrowings continue to be swapped to floating US dollar rates and €818 million (2018: €818 million) euro notional fixed-rate borrowings continue to be fully swapped to floating US dollar interest rates at an effective exchange rate of 1.3105. These swaps are in fair value hedge relationships.

Since 2012, we have also held cross-currency interest rate swaps to convert the principal and annual interest coupons, of the Rio Tinto Finance plc £500m Sterling Bond to a US dollar notional with fixed US dollar annual interest coupons. We applied cash flow hedge accounting to this relationship to limit our US dollar cash flow exposure on the principal and interest payments. The hedge was fully effective in the 2019 and 2018 financial years as the notional amount, maturity, payment and reset dates match.



							2019			2018
Nominal amount of the bond		Nominal amount of the hedging instrument			Maturity	Effective exchange rate	Loss in fair value of the hedging instrument US$m		Gain in fair value of the hedged item US$m	Loss in fair value of the hedging instrument US$m		Gain in fair value of the hedged item US$m
£500	million		US$807	million	November 2029	1.6132	(24	)	24	(25	)	25

In 2019, we decided to further swap the resulting fixed US dollar annual interest coupon payments to floating rates. Fair value hedge accounting has been applied to this relationship in addition to the pre-existing cash flow hedge.



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Financial statements continued

30 Financial instruments and risk management continued

The effective interest rate of our borrowings, impacted by swaps, are summarised below. All nominal values are fully hedged unless otherwise stated:



Borrowings in a hedge relationship	Nominal value US$m	Weighted average interest rate after swaps	Swap maturity	Carrying Value 2019 US$m	Carrying Value 2018 US$m
Rio Tinto Finance plc Euro Bonds 2.0% due 2020	526	3 month LIBOR +1.35%	2020	455	468
Rio Tinto Finance plc Euro Bonds 2.875% due 2024	546	3 month LIBOR +1.64%	2024	508	514
Rio Tinto Finance (USA) Limited Bonds 3.75% 2025	1200	3 month LIBOR +1.39%	2025	1,229	1,170
Rio Tinto Finance (USA) Limited Bonds 7.125% 2028(a)	750	3 month LIBOR +3.27%	2028	958	927
Alcan Inc. Debentures 7.25% due 2028(b)	100	3 month LIBOR +5.43%	2024	104	104
Rio Tinto Finance plc Sterling Bonds 4.0% due 2029(b)	807	3 month LIBOR +2.65%	2024	647	633
Rio Tinto Finance (USA) Limited Bonds 5.2% 2040	1150	3 month LIBOR +3.79%	2022	1,137	1,095
Rio Tinto Finance (USA) plc Bonds 4.75% 2042	500	3 month LIBOR +3.42%	2023	483	462
Rio Tinto Finance (USA) plc Bonds 4.125% 2042	750	3 month LIBOR +2.83%	2023	716	685


(a)	In 2018 US$675 million US dollar notional of this bond was swapped to floating rates. The weighted average interest rate after swaps relating to the swapped portion of this bond was 3 month LIBOR +3.02%


(b)	In 2019 we entered into new swaps to convert these bonds from having fixed interest rate terms in 2018 (as stated in note 22) to floating rates in the current period.

The fair value of interest rate and cross currency interest rate swaps at 31 December 2019 was US$151 million (2018: US$70 million) asset and US$298 million (2018: US$358 million) liability, respectively. These are included within “Other financial assets” and “Other financial liabilities” in the balance sheet.

The main sources of ineffectiveness of the fair value hedges include changes in the timing of the cash flows of the hedging instrument compared to the underlying hedged item, and changes in the credit risk of parties to the hedging relationships. Refer to note 8 for the changes in fair value of the bonds and the swaps as well as the ineffectiveness recognised in the period. For the year ended 31 December 2019, we adopted "Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform". This has allowed us temporary relief from applying specific hedge accounting requirements to our hedging arrangements directly impacted by reform of the London Interbank Offered Rate (LIBOR). Refer to note 45.

Taking into account the interest and currency interest rate swaps and the implementation of IFRS 16 “Leases”, at 31 December 2019, US$10.8 billion (2018: US$10.2 billion) of our adjusted gross borrowings were at floating rates. This has resulted in a floating to fixed debt ratio of 76% floating to 24% fixed (2018: 79% floating to 21% fixed). Our weighted average debt maturity was approximately 10 years (2018: 11 years) based on current interest rates and the carrying value of gross borrowings at the year end.

Sensitivities

Based on our floating rate financial instruments outstanding at 31 December 2019, the effect on our net earnings of a 100 basis point increase in US dollar LIBOR interest rates, with all other variables held constant, would be an expense of US$20 million (2018: income of US$8 million), reflecting the net debt position in 2019 versus the net cash position in 2018. We have an exposure to interest rate volatility within shareholders’ equity arising from fair value movements on derivatives in the cash flow hedge reserve. These derivatives have an underlying exposure to sterling and US dollars. With all factors remaining constant, and based on the composition of derivatives impacting the cash flow reserve at 31 December 2019, the sensitivity of a 100 basis point increase in interest rates in each of the currencies in isolation would impact equity, before tax, by a charge of US$68 million (2018: US$69 million charge) for sterling and a credit of US$78 million (2018: US$78 million credit) for US dollars. A 100 basis point decrease would have broadly the same impact in the opposite direction. These balances will not remain constant throughout 2020, and therefore this information should be used with care.



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Financial statements

Notes to the 2019 financial statements continued

B Derivative financial instruments

In the table below we summarise our derivatives, including embedded derivatives, as at 31 December.



	Total fair value
	2019			2018
	Asset US$m	Liability US$m		Asset US$m	Liability US$m
Derivatives designated as hedges
Interest rate swaps^(a)	151	(38	)	70	(137	)
Cross-currency interest rate swaps^(b)	—	(260	)	—	(221	)
Aluminium embedded derivatives^(c)	66	(24	)	54	(46	)
Total derivatives designated as hedges	217	(322	)	124	(404	)

Derivatives not designated as hedges
Currency forward contracts and swaps	13	(5	)	—	(68	)
Aluminium embedded derivatives^(c)	96	—		346	—
Other embedded derivatives	14	—		6	—
Other commodity contracts^(d)	26	(24	)	80	(30	)
Total derivatives not designated as hedges	149	(29	)	432	(98	)
Total derivative instruments	366	(351	)	556	(502	)

Analysed by maturity:
Less than 1 year	58	(103	)	88	(95	)
Between 1 and 5 years	96	(86	)	153	(205	)
More than 5 years	212	(162	)	315	(202	)
Total	366	(351	)	556	(502	)
Total net derivative instruments	15			54



Reconciliation to balance sheet	Note	2019 US$m		2018 US$m
Non-current assets	20	308		468
Current assets	20	58		88
Current liabilities	22	(103	)	(95	)
Non-current liabilities	22	(248	)	(407	)
Total net derivative instruments		15		54


(a)	The interest rate swaps are used to convert certain fixed rate borrowings to a floating rate.


(b)	The cross-currency interest rate swaps are used to convert non-US dollar denominated borrowings to either fixed or floating US dollar borrowings.


(c)	Aluminium embedded derivatives (forward contracts and options) are contained within certain aluminium smelter electricity purchase contracts. These contracts reduce our margin exposure to movements in the aluminium price.


(d)	Other commodity derivatives mainly relate to forward contracts which we have entered into to swap some of our fixed priced product sales to prevailing market prices at the point of revenue recognition. None of these derivatives is in a hedge relationship.

C Fair values

The following table shows the carrying amounts and fair values of all of our financial instruments which are not carried at an amount which approximates their fair value at 31 December 2019 and 31 December 2018. The fair values of our cash equivalents, loans to equity-accounted units and other financial liabilities approximate their carrying values because of their short maturity, or because they carry floating rates of interest.



		31 December 2019^(a)				31 December 2018
	Note	Carrying value US$m		Fair value US$m		Carrying value US$m		Fair value US$m
Short-term borrowings	22	(720	)	(720	)	(312	)	(312	)
Medium-term and long-term borrowings	22	(12,086	)	(13,958	)	(12,440	)	(13,554	)


(a)	The carrying value and fair value at 31 December 2019 excludes lease liabilities. This reflects the amendments made to IFRS 7 upon implementation of IFRS 16.

Total borrowings with a carrying value of US$7.7 billion (2018: US$7.5 billion) relate to listed bonds with a fair value of US$9.1 billion (2018: US$8.3 billion) and are categorised as level 1 in the fair value hierarchy.

Long-term borrowings with a carrying value of US$4.2 billion (2018: US$4.2 billion) relate to project finance drawn down by Oyu Tolgoi, with a fair value of US$4.7 billion (2018: US$4.6 billion) and are categorised as level 3 in the fair value hierarchy. We have calculated the fair value of these borrowings using level 3 valuation inputs including market yield over the pre-completion period, the variability of which we consider a reasonable indicator of fair value movements on amounts outstanding under the project finance facility. Post-completion, we estimate the fair value with reference to the annual interest rate on each tranche of the facility, and after considering factors that could indicate a change in the credit assessment of Oyu Tolgoi LLC as a counterparty to project finance. These factors include in-country risk relating to the Oyu Tolgoi project, and the assumed date of transition from pre-completion to post-completion. The transition from pre-completion to post-completion is determined by a set of tests for both completion of physical infrastructure and the ability to extract and process ore of defined grades over a defined period. Note 31 describes Rio Tinto's guarantee arrangements with respect to these project finance borrowings.



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Financial statements continued

30 Financial instruments and risk management continued

Our remaining borrowings have a fair value measured by discounting estimated cash flows with an applicable market-quoted yield, and we categorise them as level 2 in the fair value hierarchy.

C (a) Valuation hierarchy

The tables below show the financial instruments by valuation method at 31 December 2019 and 31 December 2018.



				Held at fair value
At 31 December 2019	Note	Total US$m		Level 1^(a)US$m	Level 2^(b)US$m		Level 3^(c)US$m	Held at amortised cost US$m
Assets
Cash and cash equivalents^(d)		8,027		5,320	—		—	2,707
Investments in equity shares and funds		61		26	—		35	—
Other investments, including loans^(e)	20	2,839		2,607	—		211	21
Trade and other financial receivables^(f)	18	2,938		15	1,122		—	1,801

Derivatives (net)
Forward contracts and option contracts: designated as hedges^(g) (Section B)		42		—	—		42	—
Forward contracts and option contracts, not designated as hedges^(g) (Section B)		120		—	25		95	—
Derivatives related to net debt^(h) (Section B)		(147	)	—	(147	)	—	—

Liabilities
Trade and other financial payables	25	(5,398	)	—	(57	)	—	(5,341	)
Total		8,482		7,968	943		383	(812	)



				Held at fair value
At 31 December 2018	Note	Total US$m		Level 1^(a)US$m	Level 2^(b)US$m		Level 3^(c)US$m	Held at amortised costs US$m
Assets
Cash and cash equivalents^(d)		10,773		7,994	—		—	2,779
Investments in equity shares and funds		130		92	—		38	—
Other investments, including loans^(e)	20	2,782		2,544	—		232	6
Trade and other financial receivables^(f)	18	3,007		20	972		—	2,015
		16,692		10,650	972		270	4,800
Derivatives (net)
Forward contracts and option contracts: designated as hedges^(g) (Section B)		8		—	—		8	—
Forward contracts and option contracts, not designated as hedges^(g) (Section B)		334		—	(25	)	359	—
Derivatives related to net debt^(h) (Section B)		(288	)	—	(288	)	—	—

Liabilities
Trade and other financial payables	25	(5,552	)	—	(39	)	—	(5,513	)
Total		11,194		10,650	620		637	(713	)


(a)	Valuation is based on unadjusted quoted prices in active markets for identical financial instruments. This category includes listed equity shares and other quoted funds.


(b)	Valuation is based either on inputs which include quoted prices for similar instruments or identical instruments in markets which are not considered to be active, or on inputs, which are directly or indirectly based on observable market data.


(c)	Valuation is based on inputs that are not based on observable market data (unobservable inputs).


(d)	Cash and cash equivalents include money market funds which are treated as fair value through profit or loss (FVPL) with the fair value movements going into finance income.


(e)	Other investments, including loans, comprise: cash deposits in rehabilitation funds, government bonds, managed investment funds and royalty receivables. The royalty receivables are valued based on future expected output as well as future expected commodity prices.

(f)

Trade receivables include provisionally priced receivables relating to sales contracts where the selling price is determined after delivery to the customer, based on the market price at the relevant quotation point stipulated in the contract. Revenue is recognised on provisionally priced sales based on the forward selling price for the period stipulated in the contract. Provisionally priced receivables at 31 December 2019 were US$1,040 million and were held at fair value (31 December 2018: US$889 million).


(g)	Level 3 derivatives consist of derivatives embedded in electricity purchase contracts linked to the LME with terms expiring between 2025 and 2030 (2018: 2025 and 2030). The embedded derivatives are measured using discounted cash flows and option model valuation techniques.


(h)	Interest rate and currency interest rate swaps are valued using applicable market-quoted swap yield curves adjusted for relevant basis and credit default spreads. Currency interest rate swap valuations also use market-quoted foreign exchange rates. A discounted cash flow approach is applied to the cash flows derived from the inputs to determine fair value.

There were no transfers between level 1 and level 2, or between level 2 and level 3 in the year ended 31 December 2019 or in the year ended 31 December 2018.



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Financial statements

Notes to the 2019 financial statements continued

C (b) Level 3 financial assets and financial liabilities

The table below shows the reconciliation of our level 3 financial assets and financial liabilities.



	2019 Level 3 financial assets and financial liabilities US$m		2018 Level 3 financial assets and financial liabilities US$m
Opening balance	637		(7	)
Adjustment from transition to IFRS 9	—		19
Currency translation adjustments	(1	)	(23	)
Total realised (losses)/gains included in:
– net operating costs	(7	)	9
Total unrealised (losses)/gains included in:
– net operating costs	(254	)	375
Total unrealised gains transferred into other comprehensive income through cash flow hedges	28		181
Additions	1		67
Disposals/maturity of financial instruments	(21	)	(6	)
Transfers	—		22
Closing balance	383		637
Total (losses)/gains for the year included in the income statement for assets and liabilities held at year end	(263	)	346

Sensitivity analysis in respect of level 3 derivatives

To value the long-term aluminium embedded derivatives, which had a fair value of US$120 million at 31 December 2019 (2018: US$338 million), we use unobservable inputs when the term of the derivative extends beyond observable market prices. In 2019, 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. In 2018 our most significant assumption involved flat lining aluminium prices beyond the market forward curve and increasing the price by expected inflation up to the date of expiry of each contract (market prices used in 2018:US$2,426 per metric tonne in 2029 to US$2,507 in 2030). The effect of a 10% increase in this pricing assumption was a US$22 million decrease in carrying value. A 10% decrease in long-term metal pricing assumptions resulted in a US$14 million increase in carrying value.

We also have royalty receivables, with a carrying value of US$124 million (2018: US$158 million), arising from the sale of our coal assets in prior periods. These are classified as 'Other investments, including loans' within the balance sheet. The fair values are determined using level 3 unobservable inputs.

The main unobservable input is the long-term coal price used over the life of the royalty receivable. A 15% increase in the coal spot price would result in a US$214 million increase (2018: US$181 million increase) in the carrying value. A 15% decrease in the coal spot price would result in a US$57 million decrease (2018: US$95 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).

31 Contingencies and commitments



	2019 US$m	2018 US$m
Capital commitments excluding the Group's share of joint venture capital commitments
Within 1 year	3,069	1,742
Between 1 and 3 years	851	439
Between 3 and 5 years	133	66
After 5 years	—	36
Total	4,053	2,283

Group's share of joint venture capital commitments
Within 1 year	92	115
Between 1 and 3 years	1	1
Total	93	116

Our capital commitments include open purchase orders for managed operations and expenditure on major projects already authorised by our Investment Committee for non-managed operations. On a legally enforceable basis, capital commitments would be approximately US$0.9 billion (2018: US$0.4 billion) as many of the contracts relating to the Group’s projects have various cancellation clauses.



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Financial statements continued

31 Contingencies and commitments continued

Unrecognised commitments to contribute funding or resources to joint ventures

We have a commitment to purchase and market a portion (in excess of the Group’s ownership interest) of the output of Sohar Aluminium Company L.L.C., an aluminium smelter in which the Group is a joint venture partner. The Group immediately sells the purchased products to third parties.

Along with the other joint venture partners, we have commitments to provide emergency funding (ie funding required to preserve the life or assets of the company or to comply with applicable laws) if required by Sohar Aluminium Company L.L.C., subject to approved thresholds.

At 31 December 2019, Minera Escondida Ltda held an undrawn shareholder line of credit for US$225 million (Rio Tinto share) (31 December 2018: US$225 million). The current facility has been extended during the year and will mature in September 2022.

Operating leases

Refer to note 45 for details of the Group's transition to IFRS 16 "Leases". Commitments disclosed as non-cancellable operating leases under IAS 17 "Leases" have been recorded as lease liabilities from 1 January 2019, with the exception of short-term and low-value leases. Refer to note 23 for the maturity profile of the Group's lease liabilities, amounts relating to commitments for leases not yet commenced, and short-term leases which had commenced at 31 December 2019.

The aggregate amounts of minimum lease payments under non-cancellable operating leases at 31 December 2018, prepared and reported under IAS 17 “Leases”, were as follows:



	2018 US$m
Within 1 year	475
Between 1 and 3 years	587
Between 3 and 5 years	270
After 5 years	385
Total^(a)	1,717

(a) Operating leases included leases of dry bulk vessels and offices as well as other property, plant and equipment. Leases for dry bulk vessels included costs for crewing services.

Purchase obligations

The aggregate amount of future payment commitments under purchase obligations outstanding at 31 December was:



	2019 US$m	2018 US$m
Within 1 year	2,920	2,804
Between 1 and 2 years	1,705	1,565
Between 2 and 3 years	1,431	1,344
Between 3 and 4 years	1,084	1,097
Between 4 and 5 years	1,082	882
After 5 years	8,697	9,358
Total	16,919	17,050

Purchase obligations are enforceable and legally binding agreements to buy goods or services. They specify all significant terms, including: fixed or minimum quantities to be purchased or consumed; fixed, minimum or variable price provisions; and the approximate timing of the transactions.

Purchase obligations for goods mainly relate to purchases of raw materials and consumables and purchase obligations for services mainly relate to charges for the use of infrastructure, commitments to purchase power and freight contracts. These goods and services are expected to be used in the business. To the extent that this changes, a provision for onerous obligations may be made as described in note 1(iii).

Purchases from joint arrangements or associates are included if the quantity purchased is in excess of our ownership interest in the entity. However, purchase obligations exclude contracted purchases of bauxite, alumina and aluminium from joint arrangements and associates and contracted purchases of alumina from third parties. This is because these purchases are made for commercial reasons and the Group is, overall, a net seller of these commodities.

As described above, we also have a commitment to buy and market a portion (in excess of our ownership interest) of the output of Sohar Aluminium Company L.L.C..

Contingent liabilities (subsidiaries and joint operations)



	2019 US$m	2018 US$m
Indemnities and other performance guarantees^(a)(b)	204	317

(a)

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 in the balance sheet, where the likelihood of the guarantees or indemnities being called is assessed as possible rather than probable or remote.


(b)	There were no material contingent liabilities arising in relation to the Group’s joint ventures and associates.



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Financial statements

Notes to the 2019 financial statements continued

Contingent liabilities

In October 2017, Rio Tinto announced that it had been notified by the U.S. Securities and Exchange Commission (SEC) that the SEC had filed a complaint in relation to Rio Tinto’s disclosures and timing of the impairment of Rio Tinto Coal Mozambique (RTCM). The impairment was reflected in Rio Tinto’s 2012 year-end accounts. The SEC alleges that Rio Tinto, a former chief executive, Tom Albanese, and a former chief financial officer, Guy Elliott, committed violations of the antifraud, reporting, books and records and internal control provisions of the federal securities law by not accurately disclosing the value of RTCM and not impairing it when Rio Tinto published its 2011 year-end accounts in February 2012 or its 2012 interim results in August 2012. In June 2019, the court dismissed an associated US class action on behalf of securities holders. The dismissal is being appealed by the securities holders.

In March 2018, the Australian Securities and Investments Commission (ASIC) filed civil proceedings in the NSW District Registry of the Federal Court of Australia against Rio Tinto Limited, Albanese, and Elliott. On 1 May 2018, ASIC expanded its proceedings. ASIC alleges that Rio Tinto committed violations of the disclosure, accounting, and misleading or deceptive conduct provisions of the Corporations Act by making misleading or deceptive statements related to RTCM in its 2011 Annual report and its 2012 interim financial statements, not complying with accounting standards in respect of its 2012 interim financial statements, and not disclosing an impairment of RTCM in its 2012 interim financial statements. ASIC further alleges Albanese and Elliott breached their duties as directors or officers, and failed to take all reasonable steps to comply with relevant accounting requirements.

Rio Tinto believes that the SEC case and the ASIC proceedings are unwarranted and that, when all the facts are considered by the courts, the claims will be rejected. Rio Tinto will defend the allegations vigorously.

In addition, Rio Tinto continues to co-operate fully with relevant authorities in connection with their investigations in relation to contractual payments totalling US$10.5 million made to a consultant who had provided advisory services in 2011 on the Simandou project in Guinea. In August 2018, the court dismissed a related US class action commenced on behalf of securities holders.

The outcomes of these matters remain uncertain, but they could ultimately expose the Group to material financial cost. The board is giving these matters its full and proper attention and a dedicated board committee continues to monitor the progress of these matters, as appropriate.

The Group continues to monitor developments in relation to the European Commission's (EC) State Aid investigation into the UK’s Controlled Foreign Company (CFC) tax regime. On 25 April 2019, the EC released its decision in relation to the group company finance exemption in the UK’s CFC rules finding that the exemption constitutes unlawful state aid if the exempted profits arise in connection with UK activity. The UK Government disagrees with the findings and has appealed against the decision to the European Court. Rio Tinto has also lodged an appeal to the European Court to protect its rights. Having analysed the EC's decision and applied subsequent HMRC guidance to the Group's facts and circumstances, the Group does not currently consider it has a liability in relation to EU State Aid and therefore does not consider any provision is required.

The Group has 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 Group 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 judgements may at times occur. The Group may incur, in the future, judgements 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.

Guarantees by parent companies

Rio Tinto plc and Rio Tinto Limited have, jointly and severally, fully and unconditionally guaranteed the following securities issued by the following 100% owned finance subsidiaries: US$4.4 billion (31 December 2018: US$4.4 billion) Rio Tinto Finance (USA) Limited and Rio Tinto Finance (USA) plc bonds with maturity dates up to 2042; and US$1.6 billion (31 December 2018: US$1.6 billion) on the European Debt Issuance Programme. In addition, Rio Tinto Finance plc and Rio Tinto Finance Limited have entered into facility arrangements for an aggregate amount of US$7.5 billion (31 December 2018: US$7.5 billion). The facilities are guaranteed by Rio Tinto plc and Rio Tinto Limited.

Rio Tinto plc has provided a guarantee, known as the completion support undertaking (CSU), in favour of the Oyu Tolgoi LLC project finance lenders. At 31 December 2019, US$4.3 billion of project finance debt was outstanding under this facility (2018: US$4.3 billion). Oyu Tolgoi LLC is jointly owned by Erdenes Oyu Tolgoi LLC (34%), which is controlled by the Government of Mongolia, and Turquoise Hill Resources Ltd (66%, of which Rio Tinto owns 51%). The project finance has been raised for development of the underground mine and the CSU will terminate on the completion of the underground mine according to a set of completion tests set out in the project finance facility.

The Rio Tinto guarantee applies to the extent that Turquoise Hill Resources Ltd cannot satisfy Oyu Tolgoi LLC’s project finance debt servicing obligations under its own guarantee to the lenders, called the sponsor debt service undertaking (DSU). Both the CSU and DSU contain a carve-out for certain political risk events.

Contingent assets

The Group has, from time to time, various insurance claims outstanding with reinsurers.



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32 Average number of employees



	Subsidiaries and joint operations			Equity accounted units (Rio Tinto share)			Group total
	2019	2018	2017	2019	2018	2017	2019	2018	2017
Principal locations of employment:
Australia and New Zealand	19,195	19,017	19,041	619	578	602	19,814	19,595	19,643
Canada	11,576	10,620	10,256	—	—	—	11,576	10,620	10,256
UK	190	287	309	—	—	—	190	287	309
Europe	959	1,418	1,505	—	—	—	959	1,418	1,505
Africa	3,121	3,496	3,461	1,250	1,262	1,269	4,371	4,758	4,730
US	3,400	3,792	3,429	—	—	—	3,400	3,792	3,429
Mongolia	3,215	2,886	2,861	—	—	—	3,215	2,886	2,861
Indonesia	—	1,615	1,642	—	—	—	—	1,615	1,642
South America	243	210	197	1,270	1,289	1,237	1,513	1,499	1,434
India	272	288	310	—	—	—	272	288	310
Singapore	430	422	434	—	—	—	430	422	434
Other countries^(a)	267	278	254	—	—	—	267	278	254
Total	42,868	44,329	43,699	3,139	3,129	3,108	46,007	47,458	46,807


(a)	“Other countries” primarily includes employees in the Middle East (excluding Oman which is included in Africa), and other countries in Asia which are not shown separately in the table above.

Employee numbers, which represent the average for the year, include 100% of employees of subsidiary companies. Employee numbers for joint operations and equity accounted units are proportional to the Group’s interest under contractual agreements. Average employee numbers include a part-year effect for companies acquired or disposed of during the year.

Part-time employees are included on a full-time-equivalent basis. Temporary employees are included in employee numbers.

People employed by contractors are not included.



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Financial statements

Notes to the 2019 financial statements continued

33 Principal subsidiaries

At 31 December 2019



Company and country of incorporation/operation	Principal activities	Class of shares held	Proportion of class held (%)	Group interest (%)	Non-controlling interest (%)
Australia
Argyle Diamonds Limited	Mining and processing of diamonds	Ordinary	100	100	—
Dampier Salt Limited	Salt and gypsum production	Ordinary	68.36	68.36	31.64
Energy Resources of Australia Ltd	Uranium processing	Ordinary	68.39	68.39	31.61
Hamersley Iron Pty Limited	Iron ore mining	Ordinary	100	100	—
North Mining Limited^(a)	Iron ore mining	Ordinary	100	100	—
Rio Tinto Aluminium (Holdings) Limited	Bauxite mining; alumina production; primary aluminium smelting	Ordinary	100	100	—
Rio Tinto Aluminium (Holdings) Limited

Robe River Mining Co Pty Ltd^(a)	Iron ore mining	Class A	40	60	40
Robe River Mining Co Pty Ltd^(a)	Iron ore mining	Class B	76.36	60	40

Brazil
Alcan Alumina Ltda.^(b)	Alumina production and bauxite mining	Quota	100	100	—
Canada
Iron Ore Company of Canada^(c)	Iron ore mining; iron ore pellets production	Common	58.72	58.72	41.28
Rio Tinto Fer et Titane Inc.	Titanium dioxide feedstock; high purity iron and steel production	Common	100	100	—
		Class B preference	100	100	—
		CAD 0.01 preferred	100	100	—
Rio Tinto Alcan Inc.	Bauxite mining; alumina refining; aluminium smelting	Common	100	100	—
Rio Tinto Alcan Inc.	Bauxite mining; alumina refining; aluminium smelting
Diavik Diamond Mines (2012) Inc.^(d)	Diamond mining and processing	Common	100	100	—
Guinea
Simfer Jersey Limited^(e)	Iron ore project	Ordinary	53	53	47
Madagascar

QIT Madagascar Minerals SA^(f)	Ilmenite mining	Common	80	80	15
		Investment certificates	100	100	15

		Voting certificates	80	80	20
Mongolia
Turquoise Hill Resources Ltd (including Oyu Tolgoi LLC)^(g)	Copper and gold mining	Common	50.79	50.79	49.21
South Africa

Richards Bay Titanium (Proprietary) Limited^(h)	Titanium dioxide; high purity iron production	B Ordinary	100	74	26
		B preference	100
		Parent Preference	100


Richards Bay Mining (Proprietary) Limited^(h)	Ilmenite, rutile and zircon mining	B Ordinary	100	74	26
		B preference	100
		Parent Preference	100

US
Kennecott Holdings Corporation (including Kennecott Utah Copper and Kennecott Exploration)	Copper and gold mining, smelting and refining and exploration activities	Common US$0.01	100	100	—
U.S. Borax Inc.	Mining, refining and marketing of borates	Common US$0.01	100	100	—

This list includes only those companies that have a more significant impact on the profit or operating assets of the Group. Refer to note 47 for a list of related undertakings.



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Financial statements continued

33 Principal subsidiaries continued

The Group’s principal subsidiaries are mostly held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.

(a)

Robe River Mining Co Pty Ltd (which is 60% owned by the Group) holds a 30% interest in Robe River Iron Associates (Robe River). North Mining Ltd (which is wholly owned by the Group) holds a 35% interest in Robe River. Through these companies the Group recognises a 65% share of the assets, liabilities, revenues and expenses of Robe River, with a 12% non-controlling interest. The Group therefore has a 53% beneficial interest in Robe River.


(b)	Alcan Alumina Ltda holds the Group’s 10% interest in Consórcio De Alumínio Do Maranhão, a joint operation in which the Group participates but is not a joint operator. The Group recognises its share of assets, liabilities, revenues and expenses relating to this arrangement.


(c)	Iron Ore Company of Canada is incorporated in the US, but operates in Canada .

(d)

Diavik Diamond Mines (2012) Inc. (DDMI) is the legal entity that owns the Group’s 60% interest in the Diavik Joint Venture, an unincorporated arrangement. The Group recognises its share of assets, revenue and expenses relating to this arrangement. Liabilities are recognised according to DDMI’s contractual obligations, with a corresponding 40% receivable or contingent asset representing the co-owner’s share where applicable .


(e)	Simfer Jersey Limited, a company incorporated in Jersey in which the Group has a 53% interest, has an 85% interest in Simfer S.A., the company that operates the Simandou mining project in Guinea. The Group therefore has a 45.05% indirect interest in Simfer S.A. These entities are consolidated as subsidiaries and together referred to as the Simandou iron ore project.


(f)	The Group’s shareholding in QIT Madagascar Minerals SA carries an 80% economic interest and 80% of the total voting rights; a further 5% economic interest is held through non-voting investment certificates to give an economic interest of 85%. The non-controlling interests have a 15% economic interest and 20% of the total voting rights.


(g)	The Group has a 50.79% interest in Turquoise Hill Resources Ltd, which holds a 66% interest in Oyu Tolgoi LLC (OT) which is a subsidiary of Turquoise Hill Resources Ltd. The Group therefore has a 33.5% indirect interest in OT. Turquoise Hill Resources Ltd is incorporated in Canada but operates principally in Mongolia.


(h)	Additional classes of shares issued by Richards Bay Titanium (Proprietary) Limited and Richards Bay Mining (Proprietary) Limited representing non-controlling interests are not shown. The Group’s total legal and beneficial interest in Richards Bay Titanium (Proprietary) Limited and Richards Bay Mining (Proprietary) Limited is 74%.

Summary financial information for subsidiaries that have non-controlling interests that are material to the Group

This summarised financial information is shown on a 100% basis. It represents the amounts shown in the subsidiaries’ financial statements prepared in accordance with IFRS under Group accounting policies, including fair value adjustments, and before intercompany eliminations.



	Iron Ore Company of Canada 2019 US$m		Iron Ore Company of Canada 2018 US$m		Energy Resources of Australia 2019 US$m		Energy Resources of Australia 2018 US$m		Turquoise Hill^(a)(b)(c)2019 US$m		Turquoise Hill^(a)(b)(c)2018 US$m
Revenue	2,014		1,561		145		151		1,166		1,180
Profit/(loss) after tax	543		298		5		(241	)	(2,137	)	139
– attributable to non-controlling interests	224		122		2		1		(1,490	)	14
– attributable to Rio Tinto	319		176		3		(242	)	(647	)	125
Other comprehensive income/(loss)	57		(136	)	2		2		—		(4	)
Total comprehensive income/(loss)	600		162		7		(239	)	(2,137	)	135
Non-current assets	2,585		2,376		76		74		9,589		10,375
Current assets	610		459		258		311		2,449		3,813
Current liabilities	(532	)	(351	)	(127	)	(123	)	(493	)	(540	)
Non-current liabilities	(927	)	(791	)	(462	)	(522	)	(4,405	)	(4,367	)
Net assets/(liabilities)	1,736		1,693		(255	)	(260	)	7,140		9,281
– attributable to non-controlling interests	718		699		—		(6	)	2,369		3,936
– attributable to Rio Tinto	1,018		994		(255	)	(254	)	4,771		5,345
Cash flow from operations	1,039		553		(73	)	(64	)	298		357
Dividends paid to non-controlling interests	(228	)	(178	)	—		—		—		—


(a)	Turquoise Hill Resources Ltd holds a controlling interest in Oyu Tolgoi LLC (OT).


(b)	Under the terms of the project finance facility held by OT, there are certain restrictions on the ability of OT to make shareholder distributions.

(c)

Since 2011, Turquoise Hill has funded common share investments in OT on behalf of Erdenes Oyu Tolgoi LLC (“Erdenes”). In accordance with the Amended and Restated Shareholders Agreement dated 8 June 2011, such funded amounts earn interest at an effective annual rate of Libor plus 6.5% and are repayable to them via a pledge over Erdenes’ share of future OT common share dividends. Erdenes also has the right to reduce the outstanding balance by making payments directly to Turquoise Hill. Common share investments funded on behalf of Erdenes are recorded as a reduction to the net carrying value of non-controlling interests. As at 31 December 2019, the cumulative amount of such funding was US$1,241 million (31 December 2018: US$1,021 million), excluding accrued interest of US$655 million (31 December 2018: US$506 million) relating to this funding.



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Financial statements

Notes to the 2019 financial statements continued



	Robe River Mining Co Pty 2019 US$m		Robe River Mining Co Pty 2018 US$m		Other companies and eliminations^(d)2019 US$m		Other companies and eliminations^(d)2018 US$m		Robe River 2019 US$m		Robe River 2018 US$m
Revenue	1,493		1,082		1,743		1,262		3,236		2,344
Profit after tax	808		561		825		543		1,633		1,104
– attributable to non-controlling interests	312		218		—		—		312		218
– attributable to Rio Tinto	496		343		825		543		1,321		886
Other comprehensive loss	(13	)	(313	)	(12	)	(203	)	(25	)	(516	)
Total comprehensive income	795		248		813		340		1,608		588
Non-current assets	2,622		2,610		3,687		3,739		6,309		6,349
Current assets	1,161		710		1,873		2,368		3,034		3,078
Current liabilities	(173	)	(111	)	(303	)	(235	)	(476	)	(346	)
Non-current liabilities	(84	)	(117	)	(3,392	)	(3,977	)	(3,476	)	(4,094	)
Net assets	3,526		3,092		1,865		1,895		5,391		4,987
– attributable to non-controlling interests	1,404		1,237		—		—		1,404		1,237
– attributable to Rio Tinto	2,122		1,855		1,865		1,895		3,987		3,750
Cash flow from operations	1,255		933		1,447		1,151		2,702		2,084
Dividends paid to non-controlling interests	(139	)	(224	)	—		—		(139	)	(224	)


(d)	“Other companies and eliminations” includes North Mining Limited (a wholly owned subsidiary of the Group which accounts for its interest in Robe River) and goodwill of US$349 million (2018: US$351 million) that arose on the Group’s acquisition of its interest in Robe River.

34 Principal joint operations

At 31 December 2019



Company and country of incorporation/operation	Principal activities	Group interest (%)
Australia
Tomago Aluminium Joint Venture	Aluminium smelting	51.6
Gladstone Power Station	Power generation	42.1
Hope Downs Joint Venture	Iron ore mining	50
Queensland Alumina Limited^{(a) (b)}	Alumina production	80
Pilbara Iron arrangement	Infrastructure, corporate and mining services	^(c)
New Zealand
New Zealand Aluminium Smelters Limited^{(a) (b)}	Aluminium smelting	79.4
Canada
Aluminerie Alouette Inc.	Aluminium production	40
US
Pechiney Reynolds Quebec Inc^{(b) (d)}	Aluminium smelting	50.2

This list includes only those joint operations that have a more significant impact on the profit or operating assets of the Group. Refer to note 47 for a list of related undertakings.

The Group’s joint operations are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.


(a)	Although the Group has a 79.4% interest in New Zealand Aluminium Smelters Limited and an 80% interest in Queensland Alumina Limited, decisions about activities that significantly affect the returns that are generated require agreement of both parties to the arrangements, giving rise to joint control.

(b)

Queensland Alumina Limited, New Zealand Aluminium Smelters Limited and Pechiney Reynolds Quebec Inc. are joint arrangements that are primarily designed for the provision of output to the parties sharing joint control; this indicates that the parties have rights to substantially all the economic benefits of the assets. The liabilities of the arrangements are in substance satisfied by cash flows received from the parties; this dependence indicates that the parties in effect have obligations for the liabilities. It is these facts and circumstances that give rise to the classification of these entities as joint operations.

(c)

A number of arrangements are in place between the Australian Iron Ore operations managed by Rio Tinto which allow their respective assets to be operated as a single integrated network across the Pilbara region. The arrangements are managed through two wholly owned subsidiaries: Pilbara Iron (Company) Services Pty Ltd and Pilbara Iron Pty Ltd. In assessing the Pilbara Iron arrangements, it has been concluded that they collectively constitute a joint operation on the basis that decisions about relevant activities require unanimous consent. The resulting efficiencies are shared between Rio Tinto and Robe River Iron Associates (Robe River), and the parties fund all of the cash flow requirements of Pilbara Iron (Company) Services Pty Ltd and Pilbara Iron Pty Ltd.


(d)	Pechiney Reynolds Quebec Inc. has a 50.1% interest in the Aluminerie de Bécancour, Inc. aluminium smelter, which is located in Canada.



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35 Principal joint ventures

At 31 December 2019



Company and country of incorporation/operation	Principal activities	Number of shares held	Class of shares held	Proportion of class held (%)	Group interest (%)
Chile
Minera Escondida Ltda^(a)	Copper mining and refining	—	—	—	30
Oman
Sohar Aluminium Co. L.L.C.^(b)	Aluminium smelting; power generation	37,500	Ordinary	20	20

This list includes only those joint ventures that have a more significant impact on the profit or operating assets of the Group. Refer to note 47 for a list of related undertakings.

The Group’s principal joint ventures are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.

(a)

Although the Group has a 30% interest in Minera Escondida Ltda, participant and management agreements provide for an Owners’ Council whereby significant commercial and operational decisions about the relevant activities that significantly affect the returns that are generated in effect require the joint approval of both Rio Tinto and BHP Billiton (holders of a 57.5% interest). It is therefore determined that Rio Tinto has joint control.

The year end of Minera Escondida Ltda is 30 June. The amounts included in the consolidated financial statements of Rio Tinto are, however, based on accounts of Minera Escondida Limitada that are coterminous with those of the Group.


(b)	Although the Group holds a 20% interest in Sohar Aluminium Co. L.L.C, decisions about relevant activities that significantly affect the returns that are generated require agreement of all parties to the arrangement. It is therefore determined that Rio Tinto has joint control.

Summary information for joint ventures that are material to the Group

This summarised financial information is shown on a 100% basis. It represents the amounts shown in the joint ventures’ financial statements prepared in accordance with IFRS under Group accounting policies, including fair value adjustments and amounts due to and from Rio Tinto.



	Minera Escondida Ltda^(a)2019 US$m		Minera Escondida Ltda^(a)2018 US$m		Sohar Aluminum Co.L.L.C.^(b)2019 US$m		Sohar Aluminum Co.L.L.C.^(b)2018 US$m
Revenue	7,120		7,580		715		810
Depreciation and amortisation	(1,693	)	(1,727	)	(115	)	(120	)
Other operating costs	(3,670	)	(3,230	)	(505	)	(440	)
Operating profit	1,757		2,623		95		250
Finance expense	(157	)	(163	)	(35	)	(35	)
Income tax	(627	)	(873	)	(10	)	(40	)
Profit after tax	973		1,587		50		175
Other comprehensive loss	(17	)	—		—		—
Total comprehensive income	956		1,587		50		175
Non-current assets	12,450		13,027		3,045		3,085
Current assets	2,250		2,413		290		340
Current liabilities	(1,827	)	(1,637	)	(205	)	(230	)
Non-current liabilities	(4,670	)	(4,460	)	(845	)	(955	)
Net assets	8,203		9,343		2,285		2,240
Assets and liabilities above include:
– cash and cash equivalents	603		697		20		15
– current financial liabilities	(807	)	(230	)	(110	)	(100	)
– non-current financial liabilities	(2,380	)	(2,763	)	(675	)	(795	)
Dividends received from joint venture (Rio Tinto share)	666		786		—		—

Reconciliation of the above amounts to the investment recognised in the Group balance sheet



Group interest	30%	30%	20%	20%
Net assets	8,203	9,343	2,285	2,240
Group’s ownership interest	2,461	2,803	457	448
Other adjustments	—	—	—	(1	)
Carrying value of Group’s interest	2,461	2,803	457	447


(a)	In addition to its “Investment in equity accounted units”, the Group recognises deferred tax liabilities of US$362 million (2018: US$413 million) relating to tax on unremitted earnings of equity accounted units.


(b)	Under covenants stipulated in the agreement to Sohar Aluminium Co. L.L.C.’s secured loan facilities, Sohar Aluminium Co. L.L.C. is currently restricted from making any shareholder distributions until 2021 unless a specified amount of the loan facilities is funded.



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Financial statements

Notes to the 2019 financial statements continued

36 Principal associates

At 31 December 2019 -



Company and country of incorporation/operation	Principal activities	Number of shares held	Class of shares held	Proportion of class held (%)	Group interest (%)
Australia
Boyne Smelters Limited^(a)	Aluminium smelting	153,679,560	Ordinary	59.4	59.4
Brazil

Mineração Rio do Norte S.A.^(b)	Bauxite mining	25,000,000,000	Ordinary	12.5	12
Mineração Rio do Norte S.A.^(b)	Bauxite mining	47,000,000,000	Preferred	11.75	12

US
Halco (Mining) Inc.^(c)		4,500	Common	45	45

This list includes only those associates that have a more significant impact on the profit or operating assets of the Group. Refer to note 47 for a list of related undertakings.

The Group’s principal associates are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.


(a)	The parties that collectively control Boyne Smelters Limited do so through decisions that are determined on an aggregate voting interest that can be achieved by several combinations of the parties. Although each combination requires Rio Tinto’s approval, this is not joint control as defined under IFRS 11. Rio Tinto is therefore determined to have significant influence over this company.


(b)	Although the Group holds only 12% of Mineração Rio do Norte S.A., it has representation on its board of directors and a consequent ability to participate in the financial and operating policy decisions. It is therefore determined that Rio Tinto has significant influence.


(c)	Halco (Mining) Inc. has a 51% indirect interest in Compagnie des Bauxites de Guinée, a bauxite mine, the core assets of which are located in Guinea.

Summary information for associates that are material to the Group

This summarised financial information is shown on a 100% basis. It represents the amounts shown in the associate’s financial statements prepared in accordance with IFRS under Group accounting policies, including fair value adjustments and amounts due to and from Rio Tinto.



	Boyne Smelters Limited^(a)2019 US$m		Boyne Smelters Limited^(a)2018 US$m
Revenue	—		—
Loss after tax	(7	)	(12	)
Other comprehensive loss^(b)	(3	)	(68	)
Total comprehensive loss	(10	)	(80	)
Non-current assets	1,229		1,268
Current assets	96		93
Current liabilities	(114	)	(113	)
Non-current liabilities	(814	)	(842	)
Net assets	397		406

Reconciliation of the above amount to the investment recognised in the Group balance sheet



Group interest	59.4%	59.4%
Net assets	397	406
Group's ownership interest	236	241
Loans to equity accounted units	113	129
Carrying value of Group's interest	349	370


(a)	Boyne Smelters Limited is a tolling operation; as such it is dependent on its participants for funding which is provided through cash calls. Rio Tinto has made certain prepayments to Boyne for toll processing of alumina. These are charged to Group operating costs as processing takes place.


(b)	Other comprehensive loss” is net of amounts recognised by subsidiaries in relation to quasi equity loans.



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Financial statements continued

36 Principal associates continued

Summary information for joint ventures and associates that are not individually material to the Group



	Joint Ventures 2019 US$m	Joint Ventures 2018 US$m	Associates 2019 US$m	Associates 2018 US$m
Carrying value of Group's interest	—	—	704	679

Profit after tax	—	—	3	9
Other comprehensive income	—	—	10	(23	)
Total comprehensive income	—	—	13	(14	)

37 Purchases and sales of subsidiaries, joint ventures, associates and other interests in businesses

Acquisitions

We have made no material acquisitions over the last three years.

In 2018, we created a joint venture, ELYSIS, with Alcoa and other partners to develop a carbon-free aluminium smelting process. We treated this as an acquisition and accounted for our interest in ELYSIS using the equity method. We invested cash of US$5 million and contributed patents and licensed intellectual property (IP) to the venture. The patents and IP had no carrying value; however, on formation of the arrangement, they were recorded at fair value to reflect the contributions of the other parties in the joint venture. This value was US$171 million (US$141 million after tax).

Also, in May 2017, our subsidiary, Simfer Jersey Limited (Rio Tinto share: 53%) purchased a 4.25% interest in Simfer SA from International Finance Corporation (IFC) for US$194 million in accordance with a put option exercised by IFC. As a result, we increased our effective share of Simfer SA from 42.80% to 45.05%.

2019 disposals

On 16 July 2019 we disposed of our entire 68.62% interest in Rössing Uranium to China National Uranium Corporation Limited for gross cash proceeds of US$6.5 million. After adjusting for cash held on Rössing's balance sheet at the date of disposal and included in the sale, we reported a net cash outflow of US$118 million and recognised a loss on disposal of US$289 million. This includes cumulative currency translation losses of US$212 million recycled from the currency translation reserve on sale of the business.

2018 disposals

On 1 June 2018 we disposed of our entire 75% interest in the Winchester South coal development project in Queensland, Australia to Whitehaven Coal Limited for US$200 million. This comprised US$150 million cash which was received during 2018 and an unconditional cash payment of US$50 million which was subsequently received in June 2019. Both receipts were recognised within “net cash generated from operating activities” within the cash flow statement. We recognised a gain on disposal of US$195 million within “profit relating to interests in undeveloped projects” in the income statement.

On 1 August 2018 we completed the sale of our entire interest in the Hail Creek coal mine (82.0%) and the Valeria coal development project (71.2%) in Queensland, Australia to Glencore for a total consideration of US$1.7 billion.

We received net proceeds of US$1,545 million after completion adjustments in respect of the Hail Creek component of this transaction, resulting in a pre-tax gain of US$1,141 million. During 2019 we received a further US$26 million relating to working capital adjustments in respect of this sale. We also received cash proceeds in 2018 of US$170 million in respect of Valeria. Of this amount, US$87 million, relating to the sale of land and investments in associates, was included in investing cash flow, resulting in a pre-tax gain of US$18 million. The remaining US$83 million proceeds were recognised in operating cash flow, resulting in a pre-tax gain of US$83 million in “profit relating to interests in undeveloped projects”.

Also on 1 August 2018, we completed the sale of our entire interest in the Kestrel underground coal mine (80.0%) for US$2.25 billion to a consortium comprising EMR Capital (EMR) and PT Adaro Energy Tbk (Adaro). We received net cash proceeds of US$2,270 million, resulting in a pre-tax gain of US$1,010 million.

On 14 December 2018 we completed the sale of the Dunkerque aluminium smelter in northern France to Liberty House for US$500 million, subject to final adjustments. In 2018 we received net cash proceeds of US$385 million. We recognised a pre-tax gain on disposal of US$128 million

On 21 December 2018 we sold our interest in the Grasberg mine for US$3.5 billion as part of a series of transactions involving Inalum (PT Indonesia Asahan Aluminium (Persero)) and Freeport-McMoRan Inc.. Of the US$3.5 billion received, US$107 million related to our attributable share of copper and gold revenues for 2018, net of our capital contribution for the year. The remaining net proceeds of US$3,392 million were included in investing cash flows and gave rise to a gain on disposal of US$2,146 million.

2017 disposals

On 1 September 2017, we disposed of our 100% shareholding in Coal & Allied Industries Limited to Yancoal Australia Limited for a total consideration of US$2.69 billion (before working capital adjustments). This comprised US$2.45 billion in cash paid on the closing date and a further US$240 million of unconditional guaranteed royalty payments. Total net cash proceeds received in 2017, net of working capital adjustments, transaction costs and cash transferred, were US$2.54 billion. This included receipt of US$110 million of the unconditional royalty payments. In 2018 we received a further US$90 million of unconditional royalty payments and in 2019 an additional US$20 million We expect to receive the remaining US$20 million in two equal instalments in 2020 and 2021.



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Financial statements

Notes to the 2019 financial statements continued

38 Directors’ and key management remuneration

Aggregate remuneration, calculated in accordance with the UK Companies Act 2006, of the directors of the parent companies was as follows:



	2019 US$'000	2018 US$'000	2017 US$'000
Emoluments	7,524	9,069	8,339
Long-term incentive plans	4,748	2,923	4,685
	12,272	11,992	13,024
Pension contributions: defined contribution plans	42	80	135
Gains made on exercise of share options	—	107	—

The Group defines key management personnel as the directors and members of the Executive Committee. The Executive Committee comprises the executive directors, product group chief executive officers and Group executives. Details of the directors and members of the Executive Committee are shown in the Directors report on pages 84 to 87.

The aggregate remuneration including pension contributions incurred by Rio Tinto plc in respect of its directors was US$11,565,000 (2018: US$11,465,000; 2017: US$12,624,000). The aggregate pension contribution to defined contribution plans was US$42,000 (2018: US$80,000; 2017: US$135,000). The aggregate remuneration, including pension contributions and other retirement benefits, incurred by Rio Tinto Limited in respect of its directors was US$749,000 (2018: US$607,000; 2017: US$535,000). The aggregate pension contribution to defined contribution plans was US$nil (2018: US$nil; 2017: US$nil).

In 2019, 2018 and 2017, no directors accrued retirement benefits under defined benefit arrangements, and two directors (2018: three; 2017: two) accrued retirement benefits under defined contribution arrangements.

Emoluments included in the table above have been translated from local currency at the average exchange rate for the year with the exception of bonus payments, which have been translated at the year-end rate.

Aggregate compensation, representing the expense recognised under IFRS, as defined in note 1, of the Group’s key management, including directors, was as follows:



	2019 US$'000	2018 US$'000	2017 US$'000
Short-term employee benefits and costs	22,075	23,978	23,095
Post-employment benefits	477	629	415
Employment termination benefits	310	69	—
Share-based payments	17,632	14,916	8,033
Total	40,494	39,592	31,543

The figures shown above include employment costs which comprise social security and accident premiums in Canada, the UK and US and payroll taxes in Australia paid by the employer as a direct additional cost of hire. In total, they amount to US$2,066,000 (2018: US$2,360,000; 2017: US$2,122,000).



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39 Auditors’ remuneration

Group Auditors’ remuneration^(a)



	2019 US$m	2018 US$m	2017 US$m
Audit of the Group	9.6	9.2	6.2
Audit of subsidiaries	6.8	7.5	8.1
Total audit	16.4	16.7	14.3

Audit-related assurance service	0.8	0.9	1.0
Other assurance services^(b)	1.9	3.3	2.3
Total assurance services	2.7	4.2	3.3
Tax compliance^(c)	0.1	—	0.3
Tax advisory services^(c)	—	—	0.2
Other non-audit services not covered above	—	0.2	0.7
Total non-audit services	2.8	4.4	4.5

Total Group auditors’ remuneration	19.2	21.1	18.8

Audit fees payable to other accounting firms
Audit of the financial statements of the Group’s subsidiaries	1.4	1.4	2.0
Fees in respect of pension scheme audits	0.1	0.1	0.5
Total audit fees payable to other accounting firms	1.5	1.5	2.5

(a)

The remuneration payable to PwC, the Group Auditors, is approved by the Audit Committee. The Committee sets the policy for the award of non-audit work to the auditors and approves the nature and extent of such work, and the amount of the related fees, to ensure that independence is maintained. The fees disclosed above consolidate all payments made to member firms of PwC by the companies and their subsidiaries, along with fees in respect of joint operations paid for by the Group. Non-audit services arise largely from assurance and/or regulation related work.


(b)	Other assurance services relates to the review of non-statutory financial information including sustainability reporting.


(c)	Tax compliance involves the review of returns for corporation, income and excise taxes.

40 Related-party transactions

Information about material related-party transactions of the Rio Tinto Group is set out below.

Subsidiary companies and joint operations

Details of investments in principal subsidiary companies are disclosed in note 33. Information relating to joint operations can be found in note 34.

Equity accounted units

Transactions and balances with equity accounted units are summarised below. Purchases, trade and other receivables, and trade and other payables relate largely to amounts charged by equity accounted units for toll processing of alumina and purchasing of bauxite and aluminium. Sales relate largely to sales of alumina to equity accounted units for smelting into aluminium.



	Note	2019 US$m		2018 US$m		2017 US$m
Income statement items
Purchases from equity accounted units		(1,155	)	(1,209	)	(993	)
Sales to equity accounted units		268		493		210

Cash flow statement items
Dividends from equity accounted units		669		800		817
Net funding of equity accounted units		(33	)	(9	)	(3	)

Balance sheet items
Investments in equity accounted units ^(a)	15	3,971		4,299		4,486
Loans to equity accounted units	20	39		38		39
Loans from equity accounted units	22	—		—		(31	)
Trade and other receivables: amounts due from equity accounted units^(b)	18	259		278		299
Trade and other payables: amounts due to equity accounted units	25	(271	)	(223	)	(175	)


(a)	Investments in equity accounted units include quasi equity loans. Further information about investments in equity accounted units is set out in notes 35 and 36.


(b)	This includes prepayments of tolling charges.

Pension funds

Information relating to pension fund arrangements is set out in note 44.

Directors and key management

Details of directors’ and key management’s remuneration are set out in note 38 and in the Remuneration report on pages 110 to 138.



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Financial statements

Notes to the 2019 financial statements continued

41 Exchange rates in US$

The principal exchange rates used in the preparation of the 2019 financial statements were:



	Full-year average			Year-end
	2019	2018	2017	2019	2018	2017
Sterling	1.28	1.34	1.29	1.31	1.27	1.34
Australian dollar	0.70	0.75	0.77	0.70	0.70	0.78
Canadian dollar	0.75	0.77	0.77	0.77	0.73	0.79
Euro	1.12	1.18	1.13	1.12	1.14	1.20
South African rand	0.069	0.076	0.075	0.071	0.069	0.081

42 Events after the balance sheet date

On 12 February 2020, we announced that we will conduct a strategic review of the ISAL smelter in Iceland to determine the operation’s ongoing viability and explore options to improve its competitive position. We expect to complete the review in the first half of 2020.

On 20 February 2020, our subsidiary Energy Resources of Australia Ltd (ERA) announced the completion of an entitlement offer, which was underwritten by the Group. As a result of the issue of new shares to the Group, our interest in ERA has increased from 68.39% to 86.33%.

43 Share-based payments

Rio Tinto plc and Rio Tinto Limited have a number of share-based incentive plans, which are described in detail in the Remuneration report. These plans have been accounted for in accordance with the fair value recognition provisions of IFRS 2 “Share-based Payment”.

The charge that has been recognised in the income statement for Rio Tinto’s share-based incentive plans, and the related liability (for cash-settled plans), is set out in the table below.



	Charge recognised for the year			Liability at the end of the year
	2019 US$m	2018 US$m	2017 US$m	2019 US$m	2018 US$m
Equity-settled plans	118	118	88	—	—
Cash-settled plans	5	4	3	19	16
Total	123	122	91	19	16

The main Rio Tinto plc and Rio Tinto Limited plans are as follows:

UK Share Plan (formerly the Share Ownership Plan)

The fair values of Matching and Free Shares made by Rio Tinto plc are taken to be the market value of the shares on the date of purchase. These awards are settled in equity.

Equity Incentive Plan

In 2018, shareholders approved the introduction of the Rio Tinto 2018 Equity Incentive Plan (the “EIP”). From 2018, all long-term incentive awards have been granted under this umbrella plan which allows for awards in the form of Performance Share Awards (PSA), Management Share Awards (MSA) and Bonus Deferral Awards (BDA) to be granted.

Performance Share Awards (Performance Share Plans prior to 2018)

Participants are generally assigned shares in settlement of their PSA on vesting and therefore the awards are accounted for in accordance with the requirements applying to equity-settled share-based payment transactions, including the dividends accumulated from date of award to vesting.

For the parts of awards with Total Shareholder Return (TSR) performance conditions, the fair value of the awards is calculated using a Monte Carlo simulation model taking into account the TSR performance conditions. One third of the awards granted up to 2017 (inclusive) are subject to an earnings margin performance target relative to ten global mining comparators. As this is a non-market related performance condition, under IFRS 2, the fair value recognised is reviewed at each accounting date based on the directors’ expectations for the proportion vesting. Forfeitures prior to vesting are assumed at 5% per annum of outstanding awards (2018: 5% per annum).

For grants made from 2018, the earnings margin performance target applying to the PSA was removed and instead all of the awards are subject to the TSR performance conditions described above and in the Remuneration report.

Management Share Awards (Management Share Plans prior to 2018)

The vesting of these awards is dependent on service conditions being met. In general, the awards will be settled in equity, including the dividends accumulated from date of award to vesting. The awards are accounted for in accordance with the requirements applying to equity-settled share-based payment transactions.

The fair value of each award on the day of grant is equal to the share price on the day of grant less a small adjustment for the timing of dividends. For awards granted since 2017 this adjustment is negligible and therefore the fair value of each award is equal to the share price on the day of grant. Forfeitures prior to vesting are assumed at 7% per annum of outstanding awards (2018: 7% per annum).



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Financial statements continued

43 Share-based payments continued

Bonus Deferral Awards (Bonus Deferral Plans prior to 2018)

Bonus Deferral Awards (BDA) provide for with the mandatory deferral of 50% of the bonuses for executive directors and Executive Committee members and 25% of the bonuses for other executives.

The vesting of these awards is dependent only on service conditions being met. In general, the awards will be settled in equity including the dividends accumulated from date of award to vesting. The awards are accounted for in accordance with the requirements applying to equity-settled share-based payment transactions. The fair value of each award on the day of grant is equal to the share price on the day of grant less a small adjustment for the timing of dividends. For awards granted since 2017 this adjustment is negligible and therefore the fair value of each award is equal to the share price on the day of grant. Forfeitures prior to vesting are assumed at 3% per annum of outstanding awards (2018: 3% per annum).

Share Option Plans

Awards are no longer granted under the Share Option Plans and all charges have been incurred as the remaining awards all vested before 2018. No awards remained outstanding under these plans at 31 December 2019 as the remaining vested options were exercised during 2019.

Global Employee Share Plans

The Global Employee Share Plans were introduced in 2012. The companies provide a matching share award for each investment share purchased by a participant. The vesting of these matching awards is dependent on service conditions being met and the continued holding of investment shares by the participant until vesting. These awards are settled in equity including the dividends accumulated from date of award to vesting. The fair value of each matching share on the day of grant is equal to the share price on the date of purchase less a deduction of 15% for cancellations (caused by employees electing to withdraw their investment shares before vesting of their matching shares). Forfeitures prior to vesting are assumed at 5% per annum of outstanding awards (2018: 5% per annum).

Summary of options outstanding

As at 31 December 2019 there were no options outstanding under the Rio Tinto Plc or the Rio Tinto Limited Share Option Plan. As at 31 December 2018 there were 40,114 options outstanding with an aggregate intrinsic value of US$1 million.

The Management Share Plans, Performance Share Plans, Bonus Deferral Plans, Equity Incentive Plans, Global Employee Share Plans and UK Share Plan together represent 100% (2018: 100%) of the total IFRS 2 charge for Rio Tinto plc and Rio Tinto Limited plans in 2019.

Performance Share Awards (granted under either the Performance Share Plans or the Equity Incentive Plans)



	Rio Tinto plc awards						Rio Tinto Limited awards
	2019 number		Weighted average fair value at grant date 2019 £	2018 number		Weighted average fair value at grant date 2018 £	2019 number		Weighted average fair value at grant date 2019 A$	2018 number		Weighted average fair value at grant date 2018 A$
Non-vested shares at 1 January	3,845,082		21.86	3,555,274		20.47	1,797,279		43.34	1,609,154		40.13
Awarded	755,735		24.68	801,047		26.87	297,189		54.55	387,298		53.85
Forfeited	(122,961	)	23.95	(188,761	)	21.45	(126,775	)	44.02	(36,530	)	43.83
Failed performance conditions	(384,130	)	23.79	(107,625	)	14.54	(188,956	)	46.42	(54,322	)	27.67
Vested	(290,332	)	21.36	(214,853	)	21.57	(142,220	)	41.72	(108,321	)	40.85
Non-vested shares at 31 December	3,803,394		22.20	3,845,082		21.86	1,636,517		45.11	1,797,279		43.34



	Rio Tinto plc awards				Rio Tinto Limited awards
	2019 number	Weighted average fair value at grant date 2019 £	2018 number	Weighted average fair value at grant date 2018 £	2019 number	Weighted average fair value at grant date 2019 A$	2018 number	Weighted average fair value at grant date 2018 A$
Vested awards settled in shares during the year (including dividend shares applied on vesting)	339,821	45.52	248,965	42.57	151,607	100.30	105,374	82.97
Vested awards settled in cash during the year (including dividend shares applied on vesting)	1,279	43.65	991	42.40	1,347	92.97	9,959	82.08

In addition to the equity-settled awards shown above, there were 49,019 Rio Tinto plc and 276,722 Rio Tinto Limited cash-settled awards outstanding at 31 December 2019 (2018: 40,365 Rio Tinto plc and 276,722 Rio Tinto Limited cash-settled awards outstanding). The total liability for these awards at 31 December 2019 was US$13 million (2018: US$11 million).



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Financial statements

Notes to the 2019 financial statements continued

Management Share Awards, Bonus Deferral Awards (granted under the Management Share Plans, Bonus Deferral Plans or Equity Incentive Plans), Global Employee Share Plans and UK Share Plan (combined)



	Rio Tinto plc awards^(a)						Rio Tinto Limited awards
	2019 number		Weighted average fair value at grant date 2019 £	2018 number		Weighted average fair value at grant date 2018 £	2019 number		Weighted average fair value at grant date 2019 A$	2018 number		Weighted average fair value at grant date 2018 A$
Non-vested awards at 1 January	3,042,020		31.43	3,473,092		27.23	2,613,930		61.71	2,933,237		54.15
Awarded	1,043,817		40.41	1,135,103		39.49	846,008		86.56	943,315		78.36
Forfeited	(224,402	)	39.46	(250,853	)	30.26	(174,025	)	72.18	(185,062	)	64.60
Cancelled	(24,043	)	32.87	(33,563	)	26.52	(35,481	)	60.91	(36,613	)	52.84
Vested	(1,224,379	)	25.40	(1,281,759	)	27.54	(976,763	)	49.39	(1,040,947	)	55.30
Non-vested shares at 31 December	2,613,013		37.14	3,042,020		31.43	2,273,669		75.46	2,613,930		61.71
Comprising:
– Management Share Awards	1,398,039		38.68	1,666,082		32.52	1,363,601		78.67	1,520,292		64.06
– Bonus Deferral Awards	192,878		41.95	203,900		37.86	87,930		87.81	127,423		71.93
– Global Employee Share Plan	982,932		33.98	1,102,322		28.68	822,138		68.82	966,215		56.66
– UK Share Plan	39,164		37.86	69,716		29.90	—		—	—		—



	2019 number	Weighted average fair value at grant date 2019 £	2018 number	Weighted average fair value at grant date 2018 £	2019 number	Weighted average fair value at grant date 2019 A$	2018 number	Weighted average fair value at grant date 2018 A$
Vested awards settled in shares during the year (including dividend shares applied on vesting):
– Management Share Awards	681,242	43.68	669,678	40.03	582,948	93.05	570,173	80.87
– Bonus Deferral Awards	163,076	42.53	221,198	37.69	85,142	97.30	108,001	75.36
– Global Employee Share Plan	543,426	43.04	451,710	39.06	421,614	91.50	473,420	78.78
– UK Share Plan	34,196	42.21	16,968	38.21	—	—	—	—


(a)	Awards of Rio Tinto American Depository Receipts (ADRs) under the Global Employee Share Plan are included within the totals for Rio Tinto plc awards for the purpose of these tables.

In addition to the equity-settled awards shown above, there were 52,881 Rio Tinto plc and 81,050 Rio Tinto Limited cash-settled awards outstanding at 31 December 2019 (2018: 46,543 Rio Tinto plc and 83,092 Rio Tinto Limited cash-settled awards outstanding). The total liability for these awards at 31 December 2019 was US$6 million (2018: US$5 million).



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Financial statements continued

44 Post-retirement benefits

Description of plans

The Group operates a number of pension and post-retirement healthcare plans around the world. Some of these plans are defined contribution and some are defined benefit, with assets held in separate trusts, foundations and similar entities.

Defined benefit pension and post-retirement healthcare plans expose the Group to a number of risks:



Uncertainty in benefit payments	The value of the Group’s liabilities for post-retirement benefits will ultimately depend on the amount of benefits paid out. This in turn will depend on the level of future pay increases, the level of inflation (for those benefits that are subject to some form of inflation protection) and how long individuals live.
Volatility in asset values	The Group is exposed to future movements in the values of assets held in pension plans to meet future benefit payments.
Uncertainty in cash funding	Movements in the values of the obligations or assets may result in the Group being required to provide higher levels of cash funding, although changes in the level of cash required can often be spread over a number of years. In some countries control over the rate of cash funding or over the investment policy for pension assets might rest to some extent with a trustee body or other body that is not under the Group’s direct control. In addition the Group is also exposed to adverse changes in pension regulation.

For these reasons the Group has a policy of moving away from defined benefit pension provisions and towards defined contribution arrangements instead. The defined benefit pension plans for salaried employees are closed to new entrants in almost all countries. For unionised employees, some plans remain open.

The Group does not usually participate in multi-employer plans in which the risks are shared with other companies using those plans. The Group’s participation in such plans is immaterial and consequently no detailed disclosures are provided in this note.

Pension plans

The majority of the Group’s defined benefit pension obligations are in Canada, the UK, the US and Switzerland.

In Canada the benefits for salaried staff are generally linked to final average pay and the plans are generally closed to new entrants. Benefits for bargaining employees are reviewed in negotiation with unions and are typically either linked to final average pay or to a flat monetary amount per year of service. New employees join arrangements which are defined contribution from the Group’s perspective, with any required additional funding being provided by employees. The plans are subject to the regulatory requirements that apply to Canadian pension plans in the relevant provinces and territories (predominantly Quebec). Pension Committees are responsible for ensuring that the plans operate in a manner that is compliant with the relevant regulations. The Pension Committees generally have a number of members appointed by the sponsor and a number appointed by the plan participants. In some cases there is also an independent Committee member.

The defined benefit sections of the UK arrangements are linked to final pay. New employees are admitted to defined contribution sections. The plans are subject to the regulatory requirements that apply to UK pension plans. Trustees are responsible for ensuring that the plans operate in a manner that is compliant with UK regulations. The trustee board governing the main UK plans has a number of directors appointed by the sponsor, a number appointed by the plan participants and an independent trustee director.

A number of defined benefit pension plans are sponsored by the US entities. Benefits for salaried staff are generally linked to final average pay. Benefits for bargaining employees are reviewed in negotiation with unions and are typically a flat monetary amount per year of service. New employees are admitted to defined contribution plans. A Benefits Governance Committee is responsible for ensuring that the plans are compliant with US regulations. Members of that Committee are appointed by the sponsor.

In Europe, there are defined benefit plans in Switzerland, Germany and France. The largest single plan is in Switzerland and provides benefits linked to final average pay. The Swiss plan is overseen by a foundation board which is responsible for ensuring that the plan complies with Swiss regulations. Foundation board members are appointed by the plan sponsor, by employees and by retirees.

In Australia, the main arrangements are principally defined contribution in nature but there are sections providing defined benefits linked to final pay, typically paid in lump sum form. These arrangements are managed by an independent financial institution. Rio Tinto may nominate candidates to be considered for appointment to the governing board, as may other employers. One third of the board positions are nominated by employers, with the remaining positions being filled by independent directors and directors nominated by participants.

The Group also operates a number of unfunded defined benefit plans, which are included in the figures below.

Post-retirement healthcare plans

Certain subsidiaries of the Group, mainly in the US and Canada, provide health and life insurance benefits to retired employees and in some cases to their beneficiaries and covered dependants. Eligibility for cover is dependent upon certain age and service criteria. These arrangements are generally unfunded, and are included in the figures below.

Plan assets

The assets of the pension plans are invested predominantly in a diversified range of equities, bonds and property. Consequently, the funding level of the pension plans is affected by movements in the level of equity markets and also by movements in interest rates. The Group monitors its exposure to changes in interest rates and equity markets and also measures its balance sheet pension risk using a value at risk approach. These measures are considered when deciding whether significant changes in investment strategy are required. Investment strategy reviews are conducted on a periodic basis for the main pension plans to determine the optimal investment mix bearing in mind the Group’s tolerance for risk, the risk tolerance of the local sponsor companies and the views of the Pension Committees and trustee boards who are legally responsible for the investments of the plans. In Canada, the UK and Switzerland, the Group works with the governing bodies to ensure that the investment policy adopted is consistent with the Group’s tolerance for risk. In the US the Group has direct control over the investment policy, subject to local investment regulations.



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Financial statements

Notes to the 2019 financial statements continued

The proportions of the total fair value of assets in the pension plans for each asset class at the balance sheet date were:



	2019				2018
Equities	20.4	%			20.7	%
– Quoted			17.0	%			16.7	%
– Private			3.4	%			4.0	%
Bonds	63.4	%			63.6	%
– Government fixed income			18.4	%			18.0	%
– Government inflation-linked			16.2	%			15.5	%
– Corporate and other publicly quoted			24.1	%			27.1	%
– Private			4.7	%			3.0	%
Property	8.8	%			11.0	%
– Quoted property funds			3.4	%			5.1	%
– Unquoted property funds			5.4	%			5.9	%
Qualifying insurance policies	3.1	%			0.1	%
Cash & other	4.3	%			4.6	%
Total	100.0	%			100.0	%

The assets of the plans are managed on a day-to-day basis by external specialist fund managers. These managers may invest in the Group’s securities subject to limits imposed by the relevant fiduciary committees and local legislation. The approximate total holding of Group securities within the plans is US$3 million (2018: US$3 million).

The holdings of quoted equities are invested either in pooled funds or segregated accounts held in the name of the relevant pension funds. These equity portfolios are well diversified in terms of the geographic distribution and market sectors.

The holdings of government bonds are generally invested in the debt of the country in which a pension plan is situated. Corporate and other quoted bonds are usually of investment grade. Private debt is mainly held in the North American and UK pension funds and is invested in North American and European companies.

The property funds are invested in a diversified range of properties.

The holdings of cash & other are predominantly cash and short-term money market instruments.

Investments in private equity, private debt and property are less liquid than the other investment classes listed above and therefore the Group’s investment in those asset classes is restricted to a level that does not endanger the liquidity of the pension plans.

The Group makes limited use of futures, repurchase agreements and other instruments to manage the interest rate risk in some of its plans in North America. Fund managers may also use derivatives to hedge currency movements within their portfolios and, in the case of bond managers, to take positions that could be taken using direct holdings of bonds but more efficiently.

Maturity of defined benefit obligations

An approximate analysis of the maturity of the obligations is given in the table below:



	Pension benefits		Other benefits		2019 Total		2018 Total		2017 Total
Proportion relating to current employees	20	%	19	%	20	%	19	%	20	%
Proportion relating to former employees not yet retired	12	%	0	%	12	%	11	%	11	%
Proportion relating to retirees	68	%	81	%	68	%	70	%	69	%
Total	100	%	100	%	100	%	100	%	100	%
Average duration of obligations (years)	14.5		13.4		14.4		13.4		13.9

Geographical distribution of defined benefit obligations

An approximate analysis of the geographic distribution of the obligations is given in the table below:



	Pension benefits		Other benefits		2019 Total		2018 Total		2017 Total
Canada	54	%	44	%	53	%	48	%	49	%
UK	30	%	2	%	28	%	28	%	27	%
US	7	%	51	%	10	%	14	%	14	%
Switzerland	5	%	0	%	5	%	5	%	5	%
Other	4	%	3	%	4	%	5	%	5	%
Total	100	%	100	%	100	%	100	%	100	%



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Financial statements continued

44 Post-retirement benefits continued

Total expense recognised in the income statement



	Pension benefits US$m		Other benefits US$m		2019 Total US$m		2018 Total US$m		2017 Total US$m
Current employer service cost for defined benefit plans	(119	)	(6	)	(125	)	(165	)	(155	)
Past service (cost)/income	—		—		—		(36	)	4
Curtailment gains	—		—		—		2		1
Settlement gains	51		—		51		5		1
Net interest on net defined benefit liability	(22	)	(36	)	(58	)	(79	)	(79	)
Non-investment expenses paid from the plans	(14	)	—		(14	)	(15	)	(17	)
Total defined benefit expense	(104	)	(42	)	(146	)	(288	)	(245	)
Current employer service cost for defined contribution and industry-wide plans	(235	)	(3	)	(238	)	(244	)	(255	)
Total expense recognised in the income statement	(339	)	(45	)	(384	)	(532	)	(500	)

The above expense amounts are included as an employee cost within net operating costs. No amounts have been excluded from underlying earnings in 2019, 2018 or 2017.

The settlement gains in 2019 and 2018 were the result of certain US obligations being transferred to external insurance companies and of certain US obligations being settled through a lump sum window exercise being offered to members with a deferred pension. The past service cost in 2018 related primarily to benefit amendments in the US and also included US$9 million to reflect the estimated cost of equalising benefits in the Group's UK schemes, in line with the requirements of the court judgment on 26 October 2018 in the case involving Lloyds Banking Group and relating to Guaranteed Minimum Pensions.

Total amount recognised in other comprehensive income before tax



	2019 US$m		2018 US$m		2017 US$m
Actuarial (losses)/gains	(1,295	)	1,382		(855	)
Return on assets (net of interest on assets)	1,033		(527	)	894
Gain/(loss) on application of asset ceiling	—		52		(33	)
Total (loss)/gain recognised in other comprehensive income	(262	)	907		6

Amounts recognised in the balance sheet

The following amounts were measured in accordance with IAS 19 at 31 December:



	Pension benefits US$m		Other benefits US$m		2019 Total US$m		2018 Total US$m
Total fair value of plan assets	13,923		—		13,923		13,203
Present value of obligations – funded	(14,311	)	—		(14,311	)	(13,482	)
Present value of obligations – unfunded	(443	)	(899	)	(1,342	)	(1,272	)
Present value of obligations – total	(14,754	)	(899	)	(15,653	)	(14,754	)
Effect of asset ceiling	—		—		—		—
Net deficit to be shown in the balance sheet	(831	)	(899	)	(1,730	)	(1,551	)
Comprising:
– Deficits	(1,815	)	(899	)	(2,714	)	(2,486	)
– Surpluses	984		—		984		935
Net deficits on pension plans	(831	)	—		(831	)	(680	)
Unfunded post-retirement healthcare obligation	—		(899	)	(899	)	(871	)

The surplus amounts shown above are included in the balance sheet as Trade and other receivables. See note 18.

Deficits are shown in the balance sheet within Provisions (including post-retirement benefits). See note 26.



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Financial statements

Notes to the 2019 financial statements continued

Funding policy and contributions to plans

The Group reviews the funding position of its major pension plans on a regular basis and considers whether to provide funding above the minimum level required in each country. In Canada and the US the minimum level is prescribed by legislation. In the UK and Switzerland the minimum level is negotiated with the local trustee or foundation in accordance with the funding guidance issued by the local regulators. In deciding whether to provide funding above the minimum level the Group takes into account other possible uses of cash within the Group, the tax situation of the local sponsoring entity and any strategic advantage that the Group might obtain by accelerating contributions. The Group does not generally pre-fund post-retirement healthcare arrangements.



	Pension benefits US$m	Other benefits US$m	2019 Total US$m	2018 Total US$m	2017 Total US$m
Contributions to defined benefit plans	223	34	257	248	404
Contributions to defined contribution plans	232	3	235	244	243
Contributions to industry-wide plans	—	—	—	—	12
Total	455	37	492	492	659

The level of surplus in the Rio Tinto Pension Fund in the UK is now such that it may be used to pay for the employer contributions to the defined contribution section of that Fund, in accordance with the funding arrangements agreed with the Trustee of that Fund. Consequently, the cash paid to defined contribution plans is lower than the defined contribution service cost by $3 million. Contributions to defined benefit pension plans are kept under regular review and actual contributions will be determined in line with the Group’s wider financing strategy, taking into account relevant minimum funding requirements. As contributions to many plans are reviewed on at least an annual basis, the contributions for 2020 and subsequent years cannot be determined precisely in advance. Most of the Group’s largest pension funds are fully funded on their local funding basis and do not require long-term funding commitments at present. Contributions to defined benefit pension plans for 2020 are estimated to be around US$160 million but may be higher or lower than this depending on the evolution of financial markets and voluntary funding decisions taken by the Group. Contributions for subsequent years are expected to be at similar levels to 2020. Healthcare plans are generally unfunded and contributions for future years will be equal to benefit payments net of participant contributions. The Group’s contributions in 2020 are expected to be similar to the amounts paid in 2019.

Movements in the net defined benefit liability

A summary of the movement in the net defined benefit liability is shown in the first table below. The subsequent tables provide a more detailed analysis of the movements in the present value of the obligations, the fair value of assets and the effect of the asset ceiling.

The amounts shown below include, where appropriate, 100% of the costs, contributions, gains and losses in respect of employees who participate in the plans and who are employed in associates and joint arrangements. Consequently, the costs, contributions, gains and losses may not correspond directly to the amounts disclosed above in respect of the Group. Defined contribution plans and industry-wide plans are excluded from the movements below.



	Pension benefits US$m		Other benefits US$m		2019 Total US$m		2018 Total US$m
Change in the net defined benefit liability
Net defined benefit liability at the start of the year	(680	)	(871	)	(1,551	)	(2,499	)
Amounts recognised in Income statement	(104	)	(42	)	(146	)	(288	)
Amounts recognised in Other comprehensive income	(259	)	(3	)	(262	)	907
Employer contributions	223		34		257		248
Arrangements added/divested	(5	)	—		(5	)	(10	)
Assets transferred to defined contribution section	(3	)	—		(3	)	—
Currency exchange rate loss	(3	)	(17	)	(20	)	91
Net defined benefit liability at the end of the year	(831	)	(899	)	(1,730	)	(1,551	)



	Pension benefits US$m		Other benefits US$m		2019 Total US$m		2018 Total US$m
Change in present value of obligation
Present value of obligation at the start of the year	(13,883	)	(871	)	(14,754	)	(17,645	)
Current employer service costs	(119	)	(6	)	(125	)	(165	)
Past service cost	—		—		—		(36	)
Curtailments	—		—		—		2
Settlements	638		—		638		299
Interest on obligation	(440	)	(36	)	(476	)	(503	)
Contributions by plan participants	(23	)	—		(23	)	(24	)
Benefits paid	828		34		862		915
Experience gains	48		63		111		32
Changes in financial assumptions (loss)/gain	(1,355	)	(92	)	(1,447	)	1,349
Changes in demographic assumptions gain	15		26		41		1
Arrangements (added)/divested	(5	)	—		(5	)	94
Currency exchange rate (loss)/gain	(458	)	(17	)	(475	)	927
Present value of obligation at the end of the year	(14,754	)	(899	)	(15,653	)	(14,754	)



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Financial statements continued

44 Post-retirement benefits continued



	Pension benefits US$m		Other benefits US$m		2019 Total US$m		2018 Total US$m
Change in plan assets
Fair value of plan assets at the start of the year	13,203		—		13,203		15,257
Settlements	(587	)	—		(587	)	(294	)
Interest on assets	418		—		418		434
Contributions by plan participants	23		—		23		24
Contributions by employer	223		34		257		248
Benefits paid	(828	)	(34	)	(862	)	(915	)
Non-investment expenses	(14	)	—		(14	)	(15	)
Return on plan assets (net of interest on assets)	1,033		—		1,033		(527	)
Arrangements divested	—		—		—		(161	)
Assets transferred to defined contribution section	(3	)	—		(3	)	—
Currency exchange rate gain/(loss)	455		—		455		(848	)
Fair value of plan assets at the end of the year	13,923		—		13,923		13,203



	Pension benefits US$m	Other benefits US$m	2019 Total US$m	2018 Total US$m
Change in the effect of the asset ceiling
Effect of the asset ceiling at the start of the year	—	—	—	(111	)
Interest on the effect of the asset ceiling	—	—	—	(10	)
Movement in the effect of the asset ceiling	—	—	—	52
Arrangements divested and other transfers	—	—	—	57
Currency exchange rate gain	—	—	—	12
Effect of the asset ceiling at the end of the year	—	—	—	—

Most of the settlement amounts shown above relate to the US, where assets and obligations for some pensions in payment were transferred to insurance companies. Obligations were also settled through a lump sum window exercise being offered to members with a deferred pension in the US.

In determining the extent to which the asset ceiling has an effect, the Group considers the funding legislation in each country and the rules specific to each pension plan. The calculation takes into account any minimum funding requirements that may be applicable to the plan, whether any reduction in future Group contributions is available, and whether a refund of surplus may be available. In considering whether any refund of surplus is available the Group considers the powers of trustee boards and similar bodies to augment benefits or wind up a plan. Where such powers are unilateral, the Group does not consider a refund to be available at the end of the life of a plan. Where the plan rules and legislation both permit the employer to take a refund of surplus, the asset ceiling may have no effect, although it may be the case that a refund will only be available many years in the future.

Main assumptions (rates per annum)

The main assumptions for the valuations of the plans under IAS 19 are set out below.



	Canada		UK		US		Switzerland
At 31 December 2019
Discount rate	3.1	%	2.0	%	3.1	%	0.2	%
Inflation^(a)	1.6	%	2.9	%	2.0	%	1.1	%
Rate of increase in pensions	0.1	%	2.5	%	0.0	%	0.2	%
Rate of increase in salaries	2.8	%	3.5	%	3.5	%	2.1	%

At 31 December 2018
Discount rate	3.9	%	2.8	%	4.2	%	0.7	%
Inflation^(a)	1.6	%	3.3	%	2.0	%	1.2	%
Rate of increase in pensions	0.2	%	2.9	%	0.0	%	0.0	%
Rate of increase in salaries	2.9	%	3.7	%	3.5	%	2.2	%


(a)	The inflation assumption shown for the UK is for the Retail Price Index. The assumption for the Consumer Price Index at 31 December 2019 was 2.0% (2018: 2.2%).

The main financial assumptions used for the healthcare plans, which are predominantly in the US and Canada, were: discount rate: 3.3% (2018: 4.2%); medical trend rate: 6.1% reducing to 4.6% by the year 2029 broadly on a straight line basis (2018: 7.6%, reducing to 4.6% by the year 2029); claims costs based on individual company experience.

For both the pension and healthcare arrangements the post-retirement mortality assumptions allow for future improvements in longevity. The mortality tables used imply that a man aged 60 at the balance sheet date has a weighted average expected future lifetime of 27 years (2018: 27 years) and that a man aged 60 in 2039 would have a weighted average expected future lifetime of 28 years (2018: 28 years).



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Financial statements

Notes to the 2019 financial statements continued

Sensitivity

The values reported for the defined benefit obligations are sensitive to the actuarial assumptions used for projecting future benefit payments and discounting those payments. In order to estimate the sensitivity of the obligations to changes in assumptions, we calculate what the obligations would be if we were to make changes to each of the key assumptions in isolation. The difference between this figure and the figure calculated using our stated assumptions is an indication of the sensitivity to changes in each assumption. The results of this sensitivity analysis are summarised in the table below. Note that this approach is valid for small changes in the assumptions but will be less accurate for larger changes in the assumptions. The sensitivity to inflation includes the impact on pension increases, which are generally linked to inflation where they are granted.



		2019				2018
		Approximate (increase)/decrease in obligations				Approximate (increase)/decrease in obligations
Assumption	Change in assumption	Pensions US$m		Other US$m		Pensions US$m		Other US$m
Discount rate	Increase of 0.5 percentage points	894		56		782		51
Discount rate	Decrease of 0.5 percentage points	(1,057	)	(60	)	(832	)	(55	)
Inflation	Increase of 0.5 percentage points	(447	)	(17	)	(389	)	(17	)
Inflation	Decrease of 0.5 percentage points	422		15		369		15
Salary increases	Increase of 0.5 percentage points	(55	)	(1	)	(46	)	(1	)
Salary increases	Decrease of 0.5 percentage points	54		1		45		1
Demographic – allowance for future improvements in longevity	Participants assumed to have the mortality rates of individuals who are one year older	443		18		381		18
	Participants assumed to have the mortality rates of individuals who are one year younger	(465	)	(18	)	(381	)	(18	)

45 New standards and interpretations adopted in the current year

This note explains the impact of the adoption of IFRS 16 “Leases” and IFRIC 23 “Uncertainty over Income Tax Treatments” on the Group's financial statements. The new accounting policies applied from 1 January 2019 are set out in note 1. Our previous accounting policy on current tax is included below. In addition, the Group early adopted "Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform" and applied it retrospectively; an explanation of our adoption of these amendments is given below. The adoption of “Amendments to IAS 19 - Plan Amendment, Curtailment or Settlement” and other minor changes to IFRS applicable to 2019 did not have a significant impact on the Group's financial statements.

The impact on Equity attributable to owners of Rio Tinto as at 1 January 2019 from the adoption of IFRS 16 and IFRIC 23 is as follows:



	US$m
Equity attributable to owners of Rio Tinto at 31 December 2018	43,686
IFRS 16 net impact from recognising lease liabilities, right of use assets and other items after tax	(69)
IFRIC 23 recognition of provisions for uncertain tax positions on a weighted average basis	(44)
Restated equity attributable to owners of Rio Tinto as at 1 January 2019	43,573

IFRS 16 “Leases”

The Group implemented the standard as at 1 January 2019. For contracts in place at this date, the Group continued to apply its existing definition of leases under the previous standards, IAS 17 “Leases” and IFRIC 4 “Determining Whether an Arrangement Contains a Lease” (“grandfathering”), instead of reassessing whether existing contracts were or contained a lease at the date of application of the new standard.

For transition, as permitted by IFRS 16, the Group applied the modified retrospective approach to existing operating leases which are capitalised under the new standard (i.e. retrospectively, with the cumulative effect recognised at the date of initial application as an adjustment to the opening balance of retained earnings with no restatement of comparative information in the financial statements). For existing finance leases, the carrying amounts before transition represented the 31 December 2018 values assigned to the right of use asset and lease liability.



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Financial statements continued

45 New standards and interpretations adopted in the current year continued

The Group made the following additional choices, as permitted by IFRS 16, for existing operating leases:


–	not to bring leases with 12 months or fewer remaining to run as at 1 January 2019 (including reasonably certain options to extend) on balance sheet. Costs for these items continue to be expensed directly to the income statement.

–

for all leases, the lease liability was measured at 1 January 2019 as the present value of any future lease payments discounted using the appropriate incremental borrowing rate. The carrying value of the right of use asset for property, vessels and certain other leases was generally measured as if the lease had been in place since commencement date. For all other leases the right of use asset was measured as equal to the lease liability and adjusted for any accruals or prepayments already on the balance sheet. The Group also excluded any initial direct costs (eg legal fees) from the measurement of the right of use assets at transition.


–	an impairment review was required on right of use assets at initial application of the standard. The Group elected to rely on its onerous lease assessments under IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, as at 31 December 2018 as permitted by IFRS 16. Any existing onerous lease provisions were adjusted against the right of use asset carrying value upon transition.


–	to apply the use of hindsight when reviewing the lease arrangements for determination of the measurement or term of the lease under the retrospective option.


–	to separate non-lease components from lease components for vessels and properties for the first time as part of the transition adjustment.


–	in some cases, to apply a single discount rate to a portfolio of leases with reasonably similar characteristics.

The impact of transition to IFRS 16 on the Group’s balance sheet at 1 January 2019 is an increase in lease liabilities (debt) of US$1,248 million, an increase in right of use assets and net investments in leases of US$1,067 million, net adjustments to other assets and liabilities of US$110 million, and a charge of US$69 million to retained earnings.

The weighted average incremental borrowing rate applied to the Group’s lease liabilities recognised on the balance sheet at 1 January 2019 is 4.7%.

The most significant differences between the Group’s undiscounted non-cancellable operating lease commitments of US$1,717 million at 31 December 2018 and lease liabilities upon transition of US$1,292 million are set out below:



	US$m
Operating lease commitments reported as at 31 December 2018 under IAS 17	1,717
Exclude/deduct
Leases expiring in 12 months or fewer	(130	)
Committed leases not commenced (undiscounted)	(133	)
Components excluded from the lease liability (undiscounted)	(169	)
Include/add
Cost of reasonably certain extensions (undiscounted)	324
Other	103
Sub total	1,712
Effect of discounting on payments included in the calculation of the lease liability (excluding finance lease balances)	(420	)
Lease liability opening balance reported as at 1 January 2019 under IFRS 16	1,292

The Group’s activities as a lessor are not material and hence there is not a significant impact on the financial statements on adoption of IFRS 16. As the Group has some property sub lease arrangements, these were reassessed for classification purposes as operating or finance leases at transition.

The Group has implemented a lease accounting system which is used for the majority of the Group’s leases. A separate contract-linked system is in use for the Group’s shipping leases.

Contracts signed, or amended, after 1 January 2019 are assessed against the lease identification criteria under IFRS 16. To date, this has not had a significant impact on the number of contracts deemed to be leases compared with assessments of similar arrangements under IAS 17. Practical application of IFRS 16 continues to develop and the Group continues to monitor this.

EBITDA, as disclosed in the Financial Information by Business Unit on page 252, increased as the operating lease cost previously charged against EBITDA under IAS 17 has been replaced under IFRS 16 with charges for depreciation and interest which are excluded from EBITDA (although included in earnings). Short-term, low value and variable leasing costs and non-lease components associated with vessels and property continue to be charged against EBITDA.

Operating cash flows increased under IFRS 16 as the element of cash paid attributable to the repayment of principal is included in financing cash flow. The net increase/decrease in cash and cash equivalents remains unchanged.



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Table of Contents

Financial statements

Notes to the 2019 financial statements continued

IFRIC 23 “Uncertainty over Income Tax Treatments”

IFRIC 23 changed the method of calculating provisions for uncertain tax positions. The Group previously recognised provisions based on the most likely amount of the liability, if any, for each separate uncertain tax position. The interpretation requires a probability weighted average approach to be taken in situations where there is a wide range of possible outcomes. For tax issues with a binary outcome, the most likely amount method remains in use.

The Group has implemented the interpretation retrospectively, with the cumulative impact of application recognised at 1 January 2019 without restatement of comparatives. The effect of this was an increase to provision for uncertain tax positions of US$44 million. Upon implementation of IFRIC 23, the Group changed its accounting policy for current tax to reflect adoption of the probability weighted approach. The current year policy is shown in note 1(n) of the principal accounting policies section. The prior period accounting policy is set out below:

Current tax is the tax expected to be payable on the taxable income for the year calculated using rates that have been enacted or substantively enacted at the balance sheet date. It includes adjustments for tax expected to be payable or recoverable in respect of previous periods. Where the amount of tax payable or recoverable is uncertain, Rio Tinto establishes provisions based on the Group’s judgment of the most likely amount of the liability, or recovery.

Implementation of the interpretation did not result in any changes to the Group’s accounting policy for deferred tax.

Amendments to IFRS 9, IAS 30 and IFRS 7 - Interest rate benchmark reform

These amendments allow temporary relief from applying specific hedge accounting requirements to hedging arrangements directly impacted by reform of the London Interbank Offered Rate (LIBOR) and other benchmark interest rates (collectively “IBOR reform”).

Financial authorities have asked market participants to complete the transition to alternative Risk Free Rates (RFR) by the end of 2021. The Group has established a multidisciplinary working group to prepare and implement Rio Tinto’s IBOR transition plan. This working group is currently assessing the potential impact of IBOR reform by reviewing contracts which reference IBOR; the transition plan includes the updating of policies, systems and processes in order to manage changes required to contracts impacted by IBOR reform within the specified time frame.

Based on our initial assessment we expect that the most significant impact on the Group's hedging arrangements will arise from reform of US LIBOR. It is anticipated that the Secured Overnight Financing Rate (SOFR) benchmark rate, recommended by the Alternative Reference Rates Committee, will be widely adopted by market participants and in practice will replace US LIBOR by the end of 2021.

The main differences between LIBOR and SOFR at present are that:


–	LIBOR is an unsecured rate at which banks borrow from one another, adjusted for bank counterparty credit risk, whereas SOFR is a secured risk free rate based on the repo financing of US treasury securities and,


–	LIBOR has multiple maturities whereas SOFR is an overnight rate. Currently SOFR does not have a term reference rate.

The amendments to IFRS were applied retrospectively to hedging arrangements in place at the start of the reporting period or designated as hedges during the period. Application of the temporary reliefs mean that IBOR reform does not result in termination of hedging relationships referencing an IBOR during the anticipated period of IBOR-related uncertainty.

The principal relief which the Group has applied to its hedging portfolio is in the assumption that:


–	US LIBOR remains a separately identifiable component for the duration of the hedge; and


–	the US LIBOR rates referenced by fixed-to-floating rate swaps in fair value hedge relationships do not change as the result of IBOR reform, preserving the economic relationship and allowing the related hedges to remain effective.

Post 2019, termination of the reliefs may be triggered by a number of factors but is, in the Group’s view, most likely to result from the removal of uncertainty attributable to the reform, namely upon industry and / or regulatory acceptance of an alternative RFR.

The Group’s interest rate risk exposure and hedging strategy, including notional values of fixed-rate borrowings swapped to US dollar rates in fair value hedge relationships, are described further in note 30 B (v); hedge ineffectiveness continues to be recorded in the income statement.

At 31 December 2019, the Group does not have any derivative arrangements designated as cash flow hedges, which are expected to be impacted by IBOR reform.

In addition to the above, the Group has a number of arrangements not in hedge relationships, which reference IBOR benchmarks and extend beyond 2021; these include third party borrowings relating to the Oyu Tolgoi LLC project finance facility and other secured loans (refer to note 22), a number of intragroup balances, and certain commercial contracts. Other arrangements which currently reference IBOR benchmarks include accessible revolving lines of credit (refer to note 30 A (b)), and shareholder loan facilities.

Formal IFRS guidance on accounting for the potential impact of IBOR reform is expected to develop further during 2020 and the Group will continue to monitor this.

Adoption of new standards in 2018 - IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from contracts with customers”

At 1 January 2018 the Group implemented IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from contracts with customers” which impacted the opening balances of the Group's financial statements as at 1 January 2018. Comparative information for the year ended 31 December 2017 has been prepared in accordance with the provisions of IAS 39 “Financial Instruments: Recognition and Measurement” that related to the recognition, classification and measurement of financial assets and financial liabilities; de-recognition of financial instruments; impairment of financial assets; and hedge accounting, and IAS 18 “Revenue”, which IFRS 9 and IFRS 16 respectively replaced.



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Table of Contents

Financial statements

Rio Tinto financial information by business unit



		Gross revenue^(a) for the year ended 31 December						EBITDA^(b) for the year ended 31 December						Net earnings^(c) for the year ended 31 December
Rio Tinto interest %		2019 US$m		2018 US$m		2017 US$m		2019 US$m		2018 US$m		2017 US$m		2019 US$m		2018 US$m		2017 US$m
Iron Ore
Pilbara	(d)	23,681		18,359		18,143		15,936		11,267		11,383		9,619		6,460		6,576
Dampier Salt	68.4	271		246		215		75		56		27		27		18		3
Evaluation projects/other		123		126		108		87		55		137		(8	)	53		116
Total Iron Ore		24,075		18,731		18,466		16,098		11,378		11,547		9,638		6,531		6,695

Aluminium	(e)
Bauxite		2,459		2,324		2,019		969		790		804		441		412		463
Alumina		2,657		3,340		2,661		628		1,137		454		301		634		180
Intrasegment		(825	)	(861	)	(790	)	(10	)	(7	)	(25	)	(7	)	(5	)	(17	)
Bauxite & Alumina		4,291		4,803		3,890		1,587		1,920		1,233		735		1,041		626
Primary Metal		4,940		6,468		5,808		755		1,418		1,762		40		595		778
Pacific Aluminium		2,204		2,541		2,305		(22	)	148		453		(137	)	—		176
Inter-segment and other		(2,256	)	(3,226	)	(2,321	)	36		(88	)	(19	)	26		(67	)	(12	)
Integrated operations		9,179		10,586		9,682		2,356		3,398		3,429		664		1,569		1,568
Other product group items		1,065		1,479		1,214		(202	)	(440	)	(132	)	(161	)	(344	)	(100	)
Product group operations		10,244		12,065		10,896		2,154		2,958		3,297		503		1,225		1,468
Evaluation projects/other		96		126		109		131		137		126		96		122		115
Total Aluminium		10,340		12,191		11,005		2,285		3,095		3,423		599		1,347		1,583

Copper & Diamonds
Rio Tinto Kennecott	100.0	1,879		1,862		1,352		843		785		539		397		293		78
Escondida	30.0	2,136		2,274		1,811		1,034		1,301		1,030		325		506		325
Grasberg joint venture	(g)	—		457		33		—		281		(3	)	—		217		(169	)
Oyu Tolgoi and Turquoise Hill	(h)	1,166		1,180		940		357		375		256		25		69		36
Diamonds	(i)	619		695		706		151		301		287		(21	)	118		92
Product group operations		5,800		6,468		4,842		2,385		3,043		2,109		726		1,203		362
Evaluation projects/other		15		—		—		(312	)	(267	)	(205	)	(172	)	(149	)	(99	)
Total Copper & Diamonds		5,815		6,468		4,842		2,073		2,776		1,904		554		1,054		263

Energy & Minerals
Rio Tinto Coal Australia	(j)	—		989		2,829		—		893		1,223		—		591		716
Iron Ore Company of Canada	58.7	2,189		1,583		1,867		1,024		586		770		332		166		235
Rio Tinto Iron & Titanium	(k)	1,938		1,782		1,763		611		510		546		254		174		201
Rio Tinto Borates	100.0	593		622		630		180		197		244		96		111		126
Uranium	(l)	375		415		417		55		18		15		25		(4	)	(26	)
Product group operations		5,095		5,391		7,506		1,870		2,204		2,798		707		1,038		1,252
Simandou iron ore project	(m)	—		—		—		(12	)	(15	)	(13	)	(5	)	(7	)	(6	)
Evaluation projects/other		55		60		43		(96	)	(49	)	(9	)	(91	)	(36	)	(7	)
Total Energy & Minerals		5,150		5,451		7,549		1,762		2,140		2,776		611		995		1,239

Other operations	(n)	18		9		10		(77	)	(70	)	(116	)	(89	)	(102	)	(138	)

Inter-segment transactions		(31	)	(15	)	(15	)	(9	)	—		—		(3	)	—		—

Product group total		45,367		42,835		41,857		22,132		19,319		19,534		11,310		9,825		9,642

Central pension costs, share-based payments and insurance								59		(128	)	(68	)	60		(90	)	(48	)
Restructuring, project and one-off costs								(183	)	(272	)	(177	)	(94	)	(190	)	(124	)
Central costs								(496	)	(552	)	(491	)	(550	)	(410	)	(311	)
Exploration and evaluation								(315	)	(231	)	(218	)	(231	)	(193	)	(178	)
Net interest														(122	)	(134	)	(354	)
Underlying EBITDA/earnings								21,197		18,136		18,580		10,373		8,808		8,627
Items excluded from underlying EBITDA/earnings		—		—		10		(722	)	5,127		1,912		(2,363	)	4,830		135
EBITDA/net earnings								20,475		23,263		20,492		8,010		13,638		8,762
Reconciliation to Group income statement
Share of equity accounted unit sales and
intra-subsidiary/equity accounted unit sales		(2,202	)	(2,313	)	(1,837	)
Depreciation and amortisation in subsidiaries
excluding capitalised depreciation								(4,272	)	(3,909	)	(4,302	)
Impairment charges								(3,487	)	(132	)	(796	)
Depreciation and amortisation in equity accounted units								(653	)	(650	)	(648	)
Taxation and finance items in equity accounted units								(296	)	(372	)	(272	)
Consolidated sales revenue/profit on ordinary activities before finance items and taxation		43,165		40,522		40,030		11,767		18,200		14,474



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Financial statements continued

Rio Tinto financial information by business unit continued



		Capital expenditure^(o) for the year ended 31 December						Depreciation and amortisation for the year ended 31 December						Operating assets^(p) as at 31 December						Employees for the year ended 31 December
	Rio Tinto interest %	2019 US$m		2018 US$m		2017 US$m		2019 US$m		2018 US$m		2017 US$m		2019 US$m		2018 US$m		2017 US$m		2019	2018	2017
Iron Ore
Pilbara	(d)	1,720		1,288		1,201		1,704		1,682		1,645		13,865		14,486		16,535		10,634	10,422	10,159
Dampier Salt	68.4	21		14		13		19		20		22		152		165		150		347	239	232
Evaluation projects/other		—		—		—		—		—		—		2		2		2		—	—	—
Total Iron Ore		1,741		1,302		1,214		1,723		1,702		1,667		14,019		14,653		16,687		10,981	10,661	10,391

Aluminium	(e)
Bauxite		387		953		825		286		165		123		2,597		2,494		1,897		2,940	2,676	2,534
Alumina		282		218		108		187		194		209		2,009		2,721		2,733		2,269	2,009	2,012
Intrasegment		—		—		—		—		—		—		(27	)	(20	)	(18	)	—	—	—
Bauxite & alumina		669		1,171		933		473		359		332		4,579		5,195		4,612		5,209	4,685	4,546
Primary Metal		658		595		389		682		615		665		9,674		9,306		9,946		6,357	6,497	6,404
Pacific Aluminium		129		115		109		154		149		196		970		1,156		1,016		2,356	2,278	2,173
Inter-segment and other		—		—		5		—		(1	)	6		807		789		772		127	180	222
Integrated operations		1,456		1,881		1,436		1,309		1,122		1,199		16,030		16,446		16,346		14,049	13,640	13,345
Other product group items	(f)	—		(508	)	—		—		—		—		—		—		—		—	—	—
Product group operations		1,456		1,373		1,436		1,309		1,122		1,199		16,030		16,446		16,346		14,049	13,640	13,345
Evaluation projects/other		—		—		—		3		—		—		—		—		—		—	—	—
Total Aluminium		1,456		1,373		1,436		1,312		1,122		1,199		16,030		16,446		16,346		14,049	13,640	13,345

Copper & Diamonds
Rio Tinto Kennecott	100.0	444		318		249		457		427		422		2,012		1,864		1,936		2,066	1,993	1,734
Escondida	30.0	315		302		248		508		518		507		2,871		3,057		3,369		1,068	1,087	1,079
Grasberg joint venture	(g)	—		171		138		—		30		42		—		—		1,137		—	1,615	1,642
Oyu Tolgoi and Turquoise Hill	(h)	1,289		1,284		901		208		219		344		6,780		6,072		4,725		3,152	2,863	2,835
Diamonds	(i)	38		64		85		144		118		132		195		267		441		940	967	922
Product group operations		2,086		2,139		1,621		1,317		1,312		1,447		11,858		11,260		11,608		7,226	8,525	8,212
Evaluation projects/other		1		11		1		3		5		5		152		129		135		150	146	142
Total Copper & Diamonds		2,087		2,150		1,622		1,320		1,317		1,452		12,010		11,389		11,743		7,376	8,671	8,354

Energy & Minerals
Rio Tinto Coal Australia	(j)	—		32		84		—		34		152		—		(837	)	1,040		—	1,005	1,924
Iron Ore Company of Canada	58.7	255		189		202		172		154		157		803		975		988		2,617	2,397	2,382
Rio Tinto Iron & Titanium	(k)	249		169		119		193		201		219		3,507		3,390		3,881		4,115	4,058	4,048
Rio Tinto Borates	100.0	43		44		28		60		62		65		525		518		523		924	980	936
Uranium	(l)	5		8		21		3		4		37		(363	)	(406	)	(327	)	857	1,324	1,307
Product group operations		552		442		454		428		455		630		4,472		3,640		6,105		8,513	9,764	10,597
Simandou iron ore project	(m)	(1	)	—		—		—		—		—		20		15		17		74	70	10
Evaluation projects/other		—		—		—		—		—		—		37		41		41		53	33	25
Total Energy & Minerals		551		442		454		428		455		630		4,529		3,696		6,163		8,640	9,867	10,632

Other operations	(n)	(4	)	12		(35	)	177		26		32		(83	)	(442	)	(328	)	159	187	203

Product group total		5,831		5,279		4,691		4,960		4,622		4,980		46,505		45,742		50,611		41,205	43,026	42,925

Inter-segment transactions														127		129		206
Net assets of disposal groups held for sale	(q)													—		440		370
Other items		64		65		70		77		43		42		(2,449	)	(2,880	)	(2,631	)	4,802	4,432	3,882
Less: equity accounted units		(456	)	(500	)	(417	)	(653	)	(650	)	(647	)	—		—		—		—	—	—
Total		5,439		4,844		4,344		4,384		4,015		4,375		44,183		43,431		48,556		46,007	47,458	46,807
Add back: Proceeds from disposal of property, plant and equipment		49		586		138
Total capital expenditure per cash flow statement		5,488		5,430		4,482
Less: Net (debt)/cash														(3,651	)	255		(3,845	)
Less: EAU funded balances excluded from net debt														—		—		—
Equity attributable to owners of Rio Tinto														40,532		43,686		44,711



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Table of Contents

Financial statements

Notes to financial information by business unit

Business units are classified according to the Group’s management structure. We have adjusted certain comparative amounts to represent changes in management responsibility. Effective from the first half of 2019, Dampier Salt has moved from the Energy & Minerals Product Group to the Iron Ore Product Group.


(a)	Gross sales revenue includes the sales revenue of equity accounted units on a proportionately consolidated basis (after adjusting for sales to subsidiaries) in addition to consolidated sales. Consolidated sales revenue includes subsidiary sales to equity accounted units which are not included in gross sales revenue.


(b)	EBITDA of subsidiaries and the Group’s share of EBITDA relating to equity accounted units represents profit before: tax, net finance items, depreciation and amortisation charged to the income statement in the period. Underlying EBITDA excludes the EBITDA impact of the same items that are excluded from underlying earnings.


(c)	Represents profit after tax for the period attributable to the owners of the Rio Tinto Group. Business unit earnings are stated before finance items but after the amortisation of discount related to provisions. Earnings attributed to business units do not include amounts that are excluded in arriving at underlying earnings.


(d)	Pilbara represents the Group’s 100% holding in Hamersley, 50% holding in Hope Downs Joint Venture and 65% holding in Robe River Iron Associates. The Group’s net beneficial interest in Robe River Iron Associates is 53%, as 30% is held through a 60% owned subsidiary and 35% is held through a 100% owned subsidiary.


(e)	Presented on an integrated operations basis, splitting activities between Bauxite & Alumina, Primary Metal, Pacific Aluminium and other integrated operations (which reflect the results of the integrated production of aluminium) and other product group items which relate to other commercial activities.


(f)	In 2018, Aluminium capital expenditure was reported net of US$508 million proceeds received from the sale of surplus land at Kitimat. These proceeds were not included in Aluminium’s free cash flow and the associated gain was excluded from business unit earnings and EBITDA.


(g)	Through a joint venture agreement with Freeport-McMoRan Inc. (Freeport), we were entitled to 40% of material mined above an agreed threshold as a consequence of expansions and developments of the Grasberg facilities since 1998 (until 21 December 2018). On 21 December 2018, we sold our entire interest in the Grasberg mine to PT Indonesia Asahan Aluminium (Persero) (Inalum).


(h)	Our interest in Oyu Tolgoi is held indirectly through our 50.8% investment in Turquoise Hill Resources Ltd (TRQ), where TRQ’s principal asset is its 66% investment in Oyu Tolgoi LLC, which owns the Oyu Tolgoi copper-gold mine.


(i)	Includes our interests in Argyle (100%) and Diavik (60%).


(j)	Includes our 82% interest in the Hail Creek coal mine (until 1 August 2018), our 80% interest in the Kestrel underground coal mine (until 1 August 2018) and interests in the Winchester South (until 1 June 2018) and Valeria development projects (until 1 August 2018).

On 1 June 2018, we sold our entire 75% interest in the Winchester South coal development project in Queensland, Australia, to Whitehaven Coal Limited for US$200 million.

On 1 August 2018, we sold our entire 82% interest in the Hail Creek coal mine and 71.2% interest in the Valeria coal development project in Queensland, Australia, to Glencore for US$1.7 billion.

On 1 August 2018, we sold our entire 80% interest in the Kestrel underground coal mine in Queensland, Australia, to a consortium comprising private equity manager EMR Capital (EMR) and PT Adaro Energy Tbk (Adaro), an Indonesian listed coal company, for US$2.25 billion.

On 1 September 2017, we sold our 100% shareholding in Coal & Allied Industries Limited to Yancoal Australia Limited for US$2.69 billion (before working capital adjustments).

Rio Tinto Coal Australia’s operating assets of US$(837) million at 31 December 2018 included provisions for onerous contracts in relation to rail infrastructure capacity and capital gains tax payable on the divestments announced in the year, partly offset by financial assets and receivables relating to contingent royalties and disposal proceeds. Following a change in management responsibility, at 31 December 2019, these amounts are now reported within Other operations, with no restatement of comparative amounts.


(k)	Includes our interests in Rio Tinto Fer et Titane (100%), QIT Madagascar Minerals (QMM, 80%) and Richards Bay Minerals (attributable interest of 74%).


(l)	Includes our interests in Energy Resources of Australia (68.4%) and, until 16 July 2019, Rössing Uranium Limited (Rössing) (68.6%). On 16 July 2019, we sold our entire 68.6% interest in Rössing to China National Uranium Corporation Limited (CNUC).


(m)	Simfer Jersey Limited, in which the Group has a 53% interest, has an 85% interest in Simfer S.A., the company that manages the Simandou project in Guinea. The Group therefore has a 45.05% indirect interest in Simfer S.A.. These entities are consolidated as subsidiaries and together referred to as the Simandou iron ore project.

(n)

Other operations include our 100% interest in the Gove alumina refinery, Rio Tinto Marine and, with effect from the first half of 2019, the remaining operating assets of Rio Tinto Coal Australia. As at 31 December 2019, these include provisions for onerous contracts in relation to rail infrastructure capacity, partly offset by deferred tax assets and financial assets and receivables relating to contingent royalties and disposal proceeds. Refer to note (j).


(o)	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. The details provided include 100% of subsidiaries’ capital expenditure and Rio Tinto’s share of the capital expenditure of joint operations and equity accounted units.

(p)

Operating assets of subsidiaries is comprised of net assets excluding post-retirement assets and liabilities, net of tax, and before deducting net debt. Operating assets are stated after the deduction of non- controlling interests – these are calculated by reference to the net assets of the relevant companies (ie inclusive of such companies’ debt and amounts due to or from Rio Tinto Group companies).


(q)	Assets and liabilities held for sale at 31 December 2018 included our interest in Rössing Uranium Limited, the ISAL smelter, the Aluchemie anode plant, and the Alufluor aluminium fluoride plant. At 31 December 2017 it included our interest in the Dunkerque aluminium smelter and certain other separate assets.



254	Annual report 2019 \| riotinto.com

Pages 255 to 267 have been intentionally omitted.

Production, reserves and operations Metals and minerals production 270 Ore reserves 273 Mines and production facilities 282 A train at our Brockman 4 iron ore mine in the Pilbara, Western Australia Christian Sprogue photography 268 Annual report 2019 | riotinto.com

Production, reserves and operations 269 | riotinto.com | Annual reportAnnual 2019

Production, reserves and operations Metals and minerals production 2019 Production 2018 Production 2017 Production Rio Tinto Rio Tinto Rio Tinto Rio Tinto % share(a) Total share Total share Total share Alumina (‘000 tonnes) Jonquière (Vaudreuil) (Canada)(b) 100.0% 1,413 1,413 1,444 1,444 1,448 1,448 Jonquière (Vaudreuil) specialty plant (Canada) 100.0% 109 109 124 124 122 122 Queensland Alumina (Australia) 80.0% 3,454 2,763 3,697 2,958 3,735 2,988 São Luis (Alumar) (Brazil) 10.0% 3,679 368 3,509 351 3,697 370 Yarwun (Australia) 100.0% 3,091 3,091 3,103 3,103 3,203 3,203 Rio Tinto total 7,744 7,980 8,131 Aluminium (‘000 tonnes) Alma (Canada) 100.0% 472 472 465 465 457 457 Alouette (Sept-Îles) (Canada) 40.0% 602 241 584 234 598 239 Arvida (Canada) 100.0% 175 175 173 173 171 171 Arvida AP60 (Canada) 100.0% 60 60 52 52 57 57 Bécancour (Canada) 25.1% 77 19 136 34 438 110 Bell Bay (Australia) 100.0% 189 189 189 189 187 187 Boyne Island (Australia) 59.4% 499 296 497 295 508 302 Dunkerque (France) (c) – – – 227 227 284 284 Grande-Baie (Canada) 100.0% 233 233 233 233 229 229 ISAL (Reykjavik) (Iceland) 100.0% 184 184 212 212 212 212 Kitimat (Canada) 100.0% 385 385 436 436 433 433 Laterrière (Canada) 100.0% 257 257 257 257 249 249 Sohar (Oman) 20.0% 391 78 380 76 253 51 Tiwai Point (New Zealand) 79.4% 351 279 341 270 337 267 Tomago (Australia) 51.6% 588 303 592 305 590 304 Rio Tinto total 3,171 3,458 3,551 Bauxite (‘000 tonnes) Gove (Australia) 100.0% 12,201 12,201 12,540 12,540 11,201 11,201 Porto Trombetas (MRN) (Brazil) 12.0% 11,060 1,327 13,134 1,576 14,698 1,764 Sangaredi (Guinea) 23.0(d) 13,701 6,165 13,039 5,868 15,409 6,934 Weipa (Australia) 100.0% 35,411 35,411 30,437 30,437 30,898 30,898 Rio Tinto total 55,105 50,421 50,796 Borates (‘000 tonnes)(e) Rio Tinto Borates – Boron (US) 100.0% 520 520 512 512 517 517 Coal (hard coking) (‘000 tonnes) Rio Tinto Coal Australia Hail Creek Coal (Australia)(f)(g) – – – 2,700 2,214 5,247 4,303 Kestrel Coal (Australia)(f)(g) – – – 2,217 1,774 4,252 3,402 Rio Tinto total hard coking coal – 3,988 7,704 Coal (semi-soft coking) (‘000 tonnes) Rio Tinto Coal Australia Hunter Valley (Australia)(h) – – – – – 1,529 1,034 Mount Thorley (Australia)(h) – – – – – 876 700 Warkworth (Australia)(h) – – – – – 514 286 Rio Tinto total semi-soft coking coal – – 2,020 Please see note on page 272. 270 Annual report 2019 | riotinto.com

Metals and minerals production 2019 Production 2018 Production 2017 Production Rio Tinto Rio Tinto Rio Tinto Rio Tinto % share(a) Total share Total share Total share Coal (thermal) (‘000 tonnes) Rio Tinto Coal Australia Hail Creek Coal (Australia)(f)(g) – – – 2,760 2,264 4,134 3,390 Hunter Valley (Australia)(h) – – – – – 8,502 5,747 Kestrel Coal (Australia)(f)(g) – – – 329 263 843 674 Mount Thorley (Australia)(h) – – – – – 2,011 1,609 Warkworth (Australia)(h) – – – – – 4,521 2,512 Rio Tinto total thermal coal – 2,527 13,933 Copper (mined) (‘000 tonnes) Bingham Canyon (US) 100.0% 186.8 186.8 203.9 203.9 148.9 148.9 Escondida (Chile) 30.0% 1,138.6 341.6 1,167.9 350.4 902.7 270.8 Grasberg – Joint Venture (Indonesia)(i) – – – 64.8 25.9 14.3 5.7 Oyu Tolgoi (Mongolia)(j) 33.5% 146.3 49.1 159.1 53.3 157.4 52.8 Rio Tinto total 577.4 633.5 478.1 Copper (refined) (‘000 tonnes) Escondida (Chile) 30.0% 250.2 75.0 266.8 80.0 238.0 71.4 Rio Tinto Kennecott (US) 100.0% 184.6 184.6 194.7 194.7 125.8 125.8 Rio Tinto total 259.6 274.8 197.2 Diamonds (‘000 carats) Argyle (Australia) 100.0% 12,999 12,999 14,069 14,069 17,135 17,135 Diavik (Canada) 60.0% 6,719 4,031 7,264 4,358 7,486 4,492 Rio Tinto total 17,030 18,427 21,627 Gold (mined) (‘000 ounces) Bingham Canyon (US) 100.0% 234.7 234.7 196.7 196.7 177.9 177.9 Escondida (Chile) 30.0% 246.7 74.0 265.6 79.7 146.2 43.9 Grasberg – Joint Venture (Indonesia)(i) – – – 666.8 266.7 – – Oyu Tolgoi (Mongolia)(j) 33.5% 241.8 81.1 285.4 95.7 114.3 38.3 Rio Tinto total 389.7 638.8 260.1 Gold (refined) (‘000 ounces) Rio Tinto Kennecott (US) 100.0% 218.7 218.7 198.0 198.0 203.7 203.7 and operations reserves Production, Iron Ore (‘000 tonnes) Hamersley mines (Australia) (k) 209,392 209,392 220,612 220,612 206,760 206,760 Hamersley – Channar (Australia) 60.0% 7,970 4,782 7,173 4,304 10,798 6,479 Hope Downs (Australia) 50.0% 48,264 24,132 45,368 22,684 46,941 23,470 Iron Ore Company of Canada (Canada) 58.7% 17,943 10,536 15,245 8,952 19,016 11,166 Robe River – Robe Valley (Australia) 53.0% 26,951 14,284 31,947 16,932 31,182 16,526 Robe River – West Angelas (Australia) 53.0% 34,086 18,066 32,672 17,316 34,116 18,082 Rio Tinto total 281,192 290,800 282,484 Please see note on page 272. Annual report 2019 | riotinto.com 271

Production, reserves and operations Metals and minerals production continued 2019 Production 2018 Production 2017 Production Rio Tinto Rio Tinto Rio Tinto Rio Tinto % share(a) Total share Total share Total share Molybdenum (‘000 tonnes) Bingham Canyon (US) 100% 11.2 11.2 5.8 5.8 5.0 5.0 Salt (‘000 tonnes) Dampier Salt (Australia) 68.4% 7,931 5,422 9,001 6,153 7,446 5,090 Silver (mined) (‘000 ounces) Bingham Canyon (US) 100.0% 2,815 2,815 2,520 2,520 2,156 2,156 Escondida (Chile) 30.0% 7,687 2,306 9,433 2,830 5,707 1,712 Grasberg – Joint Venture (Indonesia)(i) – – – 634 253 – – Oyu Tolgoi (Mongolia)(j) 33.5% 867 290 914 306 974 326 Rio Tinto total 5,412 5,910 4,194 Silver (refined) (‘000 ounces) Rio Tinto Kennecott (US) 100.0% 2,853 2,853 2,865 2,865 2,378 2,378 Titanium Dioxide Slag (‘000 tonnes) Rio Tinto Iron & Titanium (Canada/South Africa)(l) 100.0% 1,206 1,206 1,116 1,116 1,315 1,315 Uranium (‘000 lbs U3O8) Energy Resources of Australia (Australia)(m) 68.4% 3,860 2,640 4,407 3,014 5,056 3,458 Rössing (Namibia)(m)(n) – 3,080 2,114 5,465 3,750 4,652 3,192 Rio Tinto total 4,754 6,764 6,650 Production data notes: Mine production figures for metals refer to the total quantity of metal produced in concentrates, leach liquor or doré bullion irrespective of whether these products are then refined onsite, except for the data for bauxite and iron ore which can represent production of marketable quantities of ore plus concentrates and pellets. Production figures are sometimes more precise than the rounded numbers shown, hence small differences may result from calculation of Rio Tinto share of production. (a) Rio Tinto percentage share, shown above, is as at the end of 2019. The footnotes below include all ownership changes over the three years. (b) Jonquière's (Vaudreuil's) production shows smelter grade alumina only and excludes hydrate produced and used for specialty alumina. (c) Rio Tinto sold its 100 per cent interest in the Dunkerque aluminium smelter with an effective date of 14 December 2018. Production data are shown up to that date. (d) Rio Tinto has a 22.95 per cent shareholding in the Sangaredi mine but benefits from 45.0 per cent of production. (e) Borate quantities are expressed as B2O3. (f) Kestrel and Hail Creek produced hard coking coal and thermal coal through their mining operations. Both mines blended coal types at ports. (g) On 1 August 2018, Rio Tinto completed the sale of its entire interest in the Hail Creek and Kestrel mines. Production is reported up to the date of completion. (h) On 1 September 2017, Rio Tinto completed the sale of Coal & Allied, a wholly owned subsidiary of Rio Tinto Coal Australia (RTCA) and production from these assets is included to this date. This included Coal & Allied’s 67.6 per cent interest in the Hunter Valley Operations mine, 80 per cent interest in the Mount Thorley mine and 55.6 per cent interest in the Warkworth mine. In an earlier restructuring of the Coal & Allied group completed on 3 February 2016, Rio Tinto had obtained 100 per cent of Coal & Allied and retained a 67.6 per cent interest in the newly created Hunter Valley Operations joint venture. Prior to restructuring, Rio Tinto’s interest in the Hunter Valley Operations, Mount Thorley and Warkworth mines was 80 per cent, 64 per cent and 44.46 per cent respectively. (i) On 21 December 2018, Rio Tinto completed the sale of its entire interest in the Grasberg mine in Indonesia to PT Indonesia Asahan Aluminium (Persero) (Inalum). Production is reported up to 30 November 2018. Through a joint venture agreement with Freeport-McMoRan (FCX), Rio Tinto was entitled to 40 per cent of additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998. Total production reflects the quantities attributable to the joint venture. (j) Rio Tinto owns a 33.52 per cent indirect interest in Oyu Tolgoi through its 50.79 per cent interest in Turquoise Hill Resources Ltd. (k) Includes 100 per cent of production from Paraburdoo, Mt Tom Price, Marandoo, Yandicoogina, Brockman, Nammuldi, Silvergrass and the Eastern Range mines. Whilst Rio Tinto owns 54 per cent of the Eastern Range mine, under the terms of the joint venture agreement, Hamersley Iron manages the operation and is obliged to purchase all mine production from the joint venture and therefore all of the production is included in Rio Tinto's share of production. (l) Quantities comprise 100 per cent of Rio Tinto Fer et Titane and Rio Tinto's 74 per cent share of Richards Bay Minerals' production. Ilmenite mined in Madagascar is processed in Canada. (m) ERA and Rössing report drummed U3O8. (n) On 16 July 2019, Rio Tinto completed the sale of its entire interest in the Rössing uranium mine in Namibia to China National Uranium Corporation Limited. 272 Annual report 2019 | riotinto.com

Ore reserves Ore reserves (under industry guide 7) For the purposes of this combined Annual report on Form 20-F estimates of permits or resolution of legal issues. Reasonable assurance means that, Ore Reserves have been prepared in accordance with the SEC’s Industry Guide based on applicable laws and regulations, the issuance of permits or 7 under the United States Securities Act of 1933 and the following definitions: resolution of legal issues necessary for mining and processing at a –– An ‘Ore Reserve’ means that part of a mineral deposit that can be particular deposit will be accomplished in the ordinary course and in a economically and legally extracted or produced at the time of the reserves timeframe consistent with the Company’s current mine plans. determination. To establish this, studies appropriate to the type of mineral –– The term “Proven Ore Reserves” means reserves for which (1) quantity is deposit involved have been carried out to estimate the quantity, grade and computed from dimensions revealed in outcrops, trenches, workings or drill value of the ore minerals present. In addition, technical studies have been holes; grade and/or quality are computed from the results of detailed completed to determine realistic assumptions for the extraction of the sampling; and (2) the sites for inspection, sampling and measurement are minerals including estimates of mining, processing, economic, marketing, spaced so closely and the geologic character is so well defined that size, legal, environmental, social and governmental factors. The degree of these shape, depth and mineral content of reserves are well established. Proven studies is sufficient to demonstrate the technical and economic feasibility Ore Reserves represent that part of an orebody for which there exists the of the project and depends on whether or not the project is an extension of highest level of confidence in data regarding its geology, physical an existing project or operation. The estimates of minerals to be produced characteristics, chemical composition and probable processing include allowances for ore losses and the treatment of unmineralised requirements. materials which may occur as part of the mining and processing activities. –– The term “Probable Ore Reserves” means reserves for which quantity and Ore Reserves are sub-divided in order of increasing confidence into grade and/or quality are computed from information similar to that used for Probable Ore Reserves and Proven Ore Reserves as defined below. Proven Ore Reserves, but the sites for inspection, sampling and Stockpile tonnages that are over one per cent of total Ore Reserves are measurement are farther apart or are otherwise less adequately spaced. reported separately. The degree of assurance, although lower than that for Proven Ore Reserves, –– The term “economically”, as used in the definition of Ore Reserves, implies is high enough to assume continuity between points of observation. This that profitable extraction or production under defined investment means that Probable Ore Reserves generally have a wider drill hole spacing assumptions has been established through the creation of a mining plan, than for Proven Ore Reserves. processing plan and cash flow model. The assumptions made must be –– The amount of Proven and Probable Ore Reserves shown below does not reasonable, including costs and operating conditions that will prevail during necessarily represent the amount of material currently scheduled for and operations reserves Production, the life of the project. extraction, because the amount scheduled for extraction may be derived –– Ore Reserves presented in accordance with SEC Industry Guide 7 do not from a life of mine plan predicated on prices and other assumptions which exceed the quantities that, it is estimated, could be extracted economically are different to those used in the life of mine plan prepared in accordance if future prices were to be in line with the average of historical prices for the with Industry Guide 7. three years to 30 June 2019, or contracted prices where applicable. For this purpose, contracted prices are applied only to future sales volumes for The estimated Ore Reserve figures in the following tables are as of 31 which the price is predetermined by an existing contract; and the average of December 2019. Metric units are used throughout. The figures used to historical prices is applied to expected sales volumes in excess of such calculate Rio Tinto’s share of Ore Reserves are often more precise than the amounts. Moreover, reported Ore Reserve estimates have not been rounded numbers shown in the tables, hence small differences might result if increased above the levels expected to be economic based on Rio Tinto’s the calculations are repeated using the tabulated figures. Commodity price own long term price assumptions. information is given in footnote (a). –– The term “legally”, as used in the definition of Ore Reserves, does not imply that all permits needed for mining and processing have been obtained or Where operations are not managed by Rio Tinto, the reserves are published as that other legal issues have been completely resolved. However, for Ore received from the managing company. Reserves to exist, there is reasonable assurance of the issuance of these Type of Total ore reserves at end of 2019 Average mill Interest mine(b) Tonnage Grade recovery % % Rio Tinto share Recoverable metal millions millions (c) Bauxite of tonnes % Al2O3 of tonnes Reserves at operating mines Gove (Australia)(d) O/P 131 49.3 100.0 131 Porto Trombetas (MRN) (Brazil)(e) O/P 33 48.3 12.0 4 Sangaredi (Guinea)(f) O/P 428 47.1 23.0 98 Weipa (Australia)(g) –– Amrun(h) O/P 1,253 53.1 100.0 1,253 –– East Weipa and Andoom(i) O/P 146 50.8 100.0 146 Total 1,632 Marketable product millions millions Borates(j) of tonnes of tonnes Reserves at operating mine –– Rio Tinto Borates-Boron (US) O/P 16 100 16 Annual report 2019 | riotinto.com 273

Production, reserves and operations Ore reserves (under industry guide 7) continued Type of Total ore reserves at end of 2019 Average mill Interest mine(b) Tonnage Grade recovery % % Rio Tinto share millions millions Copper of tonnes % Cu of tonnes Reserves at operating mines Bingham Canyon (US) O/P 612 0.43 87 100.0 2.277 Escondida (Chile) –– sulphide mine O/P 5,366 0.65 85 30.0 8.841 –– sulphide leach mine O/P 1,641 0.42 39 30.0 0.793 –– oxide mine O/P 218 0.59 62 30.0 0.237 –– sulphide leach stockpiles(k) 0.8 0.60 35 30.0 0.0005 –– oxide stockpiles(l) 6.1 0.69 65 30.0 0.008 Oyu Tolgoi (Mongolia) –– Oyut mine(m) O/P 752 0.45 78 33.5 0.891 –– Oyut stockpiles 48 0.33 73 33.5 0.038 Total 13.087 Undeveloped reserves(n) Oyu Tolgoi (Mongolia) –– Hugo Dummett North(o) U/G 447 1.64 93 33.5 2.283 –– Hugo Dummett North Extension U/G 32 1.64 93 29.5 0.144 Total 2.428 Recoverable diamonds millions carats millions Diamonds(c) of tonnes per tonne of carats Reserves at operating mines Argyle (Australia)(p) U/G 5.1 1.9 100.0 9.5 Diavik (Canada)(q) O/P + U/G 11 2.4 60.0 14.9 Total 24.4 Recoverable metal millions grammes millions Gold of tonnes per tonne of ounces Reserves at operating mines Bingham Canyon (US) O/P 612 0.16 67 100.0 2.158 Oyu Tolgoi (Mongolia) –– Oyut mine(m) O/P 752 0.30 67 33.5 1.611 –– Oyut stockpiles 48 0.12 44 33.5 0.028 Total 3.796 Undeveloped reserves(n) Oyu Tolgoi (Mongolia) –– Hugo Dummett North(o) U/G 447 0.34 79 33.5 1.287 –– Hugo Dummett North Extension U/G 32 0.57 81 29.5 0.140 Total 1.427 274 Annual report 2019 | riotinto.com

Ore reserves (under industry guide 7) Type of Total ore reserves at end of 2019 Average mill Interest mine(b) Tonnage Grade recovery % % Rio Tinto share Marketable product millions millions Iron Ore(r)(c) of tonnes % Fe of tonnes Reserves at operating mines Hamersley Iron (Australia) –– Greater Brockman 2 Nammuldi (Brockman and Marra Mamba ore)(s) O/P 298 61.1 100.0 298 –– Brockman 4 (Brockman and Marra Mamba ore) –– mine O/P 337 61.9 100.0 337 –– stockpiles(t) 7 60.1 100.0 7 –– Marandoo (Marra Mamba ore) O/P 196 62.5 100.0 196 –– Greater Tom Price (Brockman and Marra Mamba ore) –– mine O/P 297 62.2 100.0 297 –– stockpiles(u) 16 61.4 100.0 16 –– Paraburdoo (Brockman ore)(v) O/P 7 62.2 100.0 7 Yandicoogina (Pisolite ore) O/P 509 58.3 100.0 509 Channar JV (Australia) –– Channar (Brockman ore)(w) O/P 16 61.4 60.0 9 Eastern Range JV (Australia) (x) –– Eastern Range (Brockman ore) O/P 28 61.6 54.0 15 and operations reserves Production, Hope Downs JV (Australia) –– Hope Downs 1 (Marra Mamba ore)(y) O/P 165 61.4 50.0 83 –– Hope Downs 4 (Brockman ore)(z) O/P 116 63.4 50.0 58 Robe River JV (Australia) –– Robe Valley (Pisolite ore) O/P 344 56.4 53.0 182 –– West Angelas (Marra Mamba ore)(aa) O/P 201 61.9 53.0 107 Iron Ore Company of Canada (Canada)(bb) O/P 528 65.0 58.7 310 Total 2,431 Undeveloped reserves(n) Hamersley Iron (Australia) –– Koodaideri (Brockman ore)(cc) O/P 516 61.7 100.0 516 –– Turee Central (Brockman ore) O/P 78 61.9 100.0 78 –– Western Range (Brockman ore)(dd) O/P 201 62.5 100.0 201 Total 795 Recoverable metal millions millions Molybdenum of tonnes % Mo of tonnes Reserves at operating mine Bingham Canyon (US)(ee) O/P 612 0.034 66 100.0 0.136 Recoverable metal millions grammes millions Silver of tonnes per tonne of ounces Reserves at operating mines Bingham Canyon (US) O/P 612 2.04 72 100.0 28.840 Oyu Tolgoi (Mongolia) –– Oyut mine(m) O/P 752 1.22 53 33.5 5.227 –– Oyut stockpiles 48 0.93 47 33.5 0.226 Total 34.292 Undeveloped reserves(n) Oyu Tolgoi (Mongolia) –– Hugo Dummett North(o) U/G 447 3.35 81 33.5 13.078 –– Hugo Dummett North Extension U/G 32 3.84 83 29.5 0.969 Total 14.047 Annual report 2019 | riotinto.com 275

Production, reserves and operations Ore reserves (under industry guide 7) continued Type of Total ore reserves at end of 2019 Average mill Interest mine(b) Tonnage Grade recovery % % Rio Tinto share Marketable product millions millions Titanium Dioxide Feedstock(ff) of tonnes %Ti Minerals of tonnes Reserves at operating mines QMM (Madagascar) D/O+O/P 382 3.5 80.0 5.3 RBM (South Africa) –– mine D/O 1,492 2.4 74.0 11.6 –– stockpiles(gg) 8 1.7 74.0 0.05 RTFT (Canada) (hh) O/P 149 80.3 100.0 47.4 Total 64.4 Marketable product millions millions Zircon(ii) of tonnes % Zircon of tonnes Reserves at operating mines QMM (Madagascar) D/O+O/P 382 0.2 80.0 0.4 RBM (South Africa) –– mine D/O 1,492 0.3 74.0 3.0 –– stockpiles(gg) 8 0.1 74.0 0.004 Total 3.4 276 Annual report 2019 | riotinto.com

Production, reserves and operations Ore reserves (under industry guide 7) continued Type of Proven ore reserves at end of 2019 Drill hole Probable ore reserves at end of 2019 Drill hole mine(a) Tonnage Grade spacing(jj) Tonnage Grade spacing(jj) millions carats millions carats Diamonds(c) of tonnes per tonne of tonnes per tonne Reserves at operating mines Argyle (Australia)(p) U/G 5.1 1.9 25m x 50m Diavik (Canada)(q) O/P + U/G 5.2 2.4 2-39m x 2-62m 5.3 2.4 7-53m x 5-43m millions grammes millions grammes Gold of tonnes per tonne of tonnes per tonne Reserves at operating mines Bingham Canyon (US) O/P 399 0.17 85m x 85m 213 0.15 131m x 131m Oyu Tolgoi (Mongolia) –– Oyut mine(m) O/P 299 0.39 35m x 50m 452 0.23 70m x 70m –– Oyut stockpiles 48 0.12 Undeveloped reserves(n) Oyu Tolgoi (Mongolia) –– Hugo Dummett North(o) U/G 447 0.34 50-70m x 100-125m –– Hugo Dummett North Extension U/G 32 0.57 50-70m x 100-125m millions millions Iron Ore(r)(c) of tonnes % Fe of tonnes % Fe Reserves at operating mines Hamersley Iron (Australia) –– Greater Brockman 2 Nammuldi (Brockman and Marra Mamba ore)(s) O/P 192 61.8 25-50m x 25-50m 105 59.9 25-50m x 25-50m –– Brockman 4 (Brockman and Marra Mamba ore) –– mine O/P 264 62.3 50m x 50m 74 60.5 50-100m x 50m –– stockpiles(t) 7 60.1 –– Marandoo (Marra Mamba ore) O/P 149 63.9 75m x 75m 47 58.2 75m x 75m –– Greater Tom Price (Brockman and Marra Mamba ore) –– mine O/P 194 62.4 30-60m x 30-60m 103 61.7 30-60m x 30-60m –– stockpiles(u) 16 61.4 –– Paraburdoo (Brockman ore)(v) O/P 2 61.6 30-60m x 30-60m 5 62.4 30-60m x 30-60m –– Yandicoogina (Pisolite ore) O/P 509 58.3 100m x 50m Channar JV (Australia) –– Channar (Brockman ore)(w) O/P 10 61.7 30-60m x 30-60m 6 61.0 30-120m x 30-120m Eastern Range JV (Australia) –– Eastern Range (Brockman ore)(x) O/P 23 61.8 30-60m x 30-60m 5 60.8 30-60m x 30-60m Hope Downs JV (Australia) –– Hope Downs 1 (Marra Mamba ore)(y) O/P 85 62.7 25-50m x 50m 81 60.1 25-50m x 50m –– Hope Downs 4 (Brockman ore)(z) O/P 50 63.7 63m x 50m 65 63.2 63m x 50m Robe River JV (Australia) –– Robe Valley (Pisolite ore) O/P 127 56.7 50-70m x 50-70m 217 56.2 50-100m x 50-100m –– West Angelas (Marra Mamba ore)(aa) O/P 128 62.1 25-100m x 25-50m 74 61.4 25-100m x 25-50m Iron Ore Company of Canada (Canada)(bb) O/P 237 65.0 30-60m x 30-120m 291 65.0 60-120m x 60-120m Undeveloped reserves(n) Hamersley Iron (Australia) –– Koodaideri (Brockman ore)(cc) O/P 214 62.4 50-100m x 50m 302 61.2 50-100m x 50m –– Turee Central (Brockman ore) O/P 72 62.0 60-120m x 60-120m 6 61.4 60-120m x 60-120m –– Western Range (Brockman ore)(dd) O/P 171 62.7 60-120m x 60m 29 61.4 60-120m x 60m millions millions Molybdenum of tonnes % Mo of tonnes % Mo Reserves at operating mine Bingham Canyon (US)(ee) O/P 399 0.041 85m x 85m 213 0.020 131m x 131m 278 Annual report 2019 | riotinto.com

Ore reserves (under industry guide 7) Type of Proven ore reserves at end of 2019 Drill hole Probable ore reserves at end of 2019 Drill hole mine(a) Tonnage Grade spacing(jj) Tonnage Grade spacing(jj) millions grammes millions grammes Silver of tonnes per tonne of tonnes per tonne Reserves at operating mines Bingham Canyon (US) O/P 399 2.03 85m x 85m 213 2.04 131m x 131m Oyu Tolgoi (Mongolia) –– Oyut mine(m) O/P 299 1.33 35m x 50m 452 1.15 70m x 70m –– Oyut stockpiles 48 0.93 Undeveloped reserves(n) Oyu Tolgoi (Mongolia) –– Hugo Dummett North(o) U/G 447 3.35 50-70m x 100-125m –– Hugo Dummett North Extension U/G 32 3.84 50-70m x 100-125m millions millions Titanium Dioxide Feedstock(ff) of tonnes %Ti Minerals of tonnes %Ti Minerals Reserves at operating mines QMM (Madagascar) D/O+O/P 369 3.5 100-200m x 100m 13 3.5 200-400m x 100m RBM (South Africa) –– mine D/O 870 2.3 0-100m x 0-200m 622 2.5 100-200m x 200-400m –– stockpiles(gg) 8 1.7 RTFT (Canada)(hh) O/P 149 80.3 60-100m x 60-100m and operations reserves Production, millions millions Zircon(ii) of tonnes % Zircon of tonnes % Zircon Reserves at operating mines QMM (Madagascar) D/O+O/P 369 0.2 100-200m x 100m 13 0.2 200-400m x 100m RBM (South Africa) –– mine D/O 870 0.3 0-100m x 0-200m 622 0.4 100-200m x 200-400m –– stockpiles(gg) 8 0.1 (a) Commodity prices (based on a three year average historical price to 30 June, 2019) used to test whether the reported Ore Reserve estimates could be economically extracted, include the following benchmark prices: Aluminium – 0.88 US$/lb, Copper – 2.79 US$/lb, Gold – 1,279 US$/oz, Iron ore fines 62% Fe, FOB Western Australia – 70.4 US$/dry metric tonne, Molybdenum – 9.1 US$/lb, Silver – 16.3 US$/oz. (b) Type of mine: O/P = open pit, O/C = open cut, U/G = underground, D/O = dredging operation. (c) Reserves of bauxite, diamonds and iron ore are shown as recoverable Reserves of marketable product after accounting for all mining and processing losses. Mill recoveries are therefore not shown. (d) Gove Reserves are stated as dry tonnes and total alumina grade. (e) Porto Trombetas (MRN) Reserves are stated as dry tonnes and available alumina grade. Reserve tonnes decreased following mining depletion and an updated life of mine plan. (f) Sangaredi Reserves tonnes are reported on a three per cent moisture basis and alumina grades are reported as total alumina. (g) Weipa Reserves are stated as dry tonnes and total alumina grade. (h) Amrun Reserves tonnes increased as a result of updated mining cost assumptions and a new geological model incorporating additional drilling. (i) East Weipa and Andoom Reserves tonnes decreased following mining depletion, technical risk assessment and cut-off grade changes. (j) Reserves of borates are expressed in terms of marketable product (B2O3) after all mining and processing losses. (k) Escondida - sulphide leach stockpiles Reserves tonnes decreased and grade increased following processing depletion. (l) Escondida - oxide leach stockpiles Reserves tonnes and grade decreased following processing depletion. (m) Oyut open pit Reserves tonnes decreased following mining depletion and an update to operating cost assumptions. (n) The term ‘Undeveloped Reserves’ is used here to describe (1) Reserves that are economically viable on the basis of technical and economic studies but for which mining and processing permits may have yet to be requested or obtained and there is a reasonable, but not absolute, certainty that the necessary permits will be issued and that mining can proceed when required or (2) Reserves that are in the Development Stage in preparation for commercial extraction, but not yet in the Production Stage. (o) The Hugo Dummett North underground mine is currently under construction. (p) Argyle Reserves are based on a 1.4 millimetre lower cut-off size and a final re-crushing size of 8 millimetres. The decrease in Reserves tonnes and grade follows mining depletion. (q) Diavik Reserves are based on a nominal 1 millimetre lower cut-off size and a final re-crushing size of 5 millimetres. Reserves tonnes decreased following mining depletion. (r) Australian iron ore Reserves tonnes are reported on a dry weight basis. As Rio Tinto only markets blended iron ore products from multiple mine sources, a detailed breakdown of constituent elements by individual deposit is not reported. (s) Greater Brockman 2 Nammuldi (Brockman and Marra Mamba ore) Reserves tonnes decreased due to mining depletion and updates to the geological model, Resource classification and mining recovery factors. The reductions are partially offset by pit design changes. (t) Brockman 4 (Brockman and Marra Mamba ore) stockpiles Reserves tonnes decreased following a change to the cut-off grade. (u) Greater Tom Price (Brockman and Marra Mamba ore) stockpiles Reserves tonnes decreased following processing depletion. (v) Paraburdoo (Brockman ore) Reserves tonnes decreased following mining depletion. (w) Channar (Brockman ore) Reserves tonnes decreased due to mining depletion, updated pit designs and mining recovery factors. (x) Eastern Range (Brockman ore) Reserves tonnes decreased due to mining depletion, updates to the geological model and pit designs, and cut-off grade changes. (y) Hope Downs 1 (Marra Mamba ore) Reserves tonnes decreased following mining depletion. (z) Hope Downs 4 (Brockman ore) Reserves tonnes decreased following mining depletion. (aa) West Angelas (Marra Mamba ore) Reserves tonnes decreased following mining depletion and an updated geological model, partially offset by the addition of a satellite pit. (bb) Reserves at Iron Ore Company of Canada are reported as marketable product (57 per cent pellets and 43 per cent concentrate for sale) at a natural moisture content of two per cent. The marketable product is derived from mined material comprising 560 million dry tonnes at 38.6 per cent iron (Proven) and 693 million dry tonnes at 38.1 per cent iron (Probable) using process recovery factors derived from current IOC concentrating and pellet operations. (cc) The Koodaideri (Brockman ore) mine is currently under construction. (dd) Western Range (Brockman ore) Reserves are reported for the first time following completion of a Pre-Feasibility Study. A JORC Table 1 in support of this change will be released to the market contemporaneously with the release of this Annual report and can be viewed at riotinto.com/invest/financial-news-performance/resources-and-reserves. Discussions about a Joint Venture covering the Western Range mining hub with China Baowu Group are continuing. (ee) Bingham Canyon Reserves molybdenum grades interpolated from exploration drilling assays have been factored based on a long reconciliation history to blast hole and mill samples. (ff) The marketable product (TiO2 slag) is shown after all mining and processing losses. The Reserves are expressed as in situ tonnes. (gg) The decrease in RBM stockpiles Reserves tonnes follows processing depletion. (hh) RTFT Reserves tonnes increased following a decrease in the cut-off grade. (ii) The marketable product (zircon at RBM and zirsil at QMM) is shown after all mining and processing losses. The Reserves are expressed as in situ tonnes. (jj) Drill hole spacings are either average distances, a specified grid distance (a regular pattern of drill holes – the distance between the drill holes along the two axes of the grid will be aligned to test the size, shape and continuity of the mineral deposit; as such there may be different distances between the drill holes along the two axes of a grid) or the maximum drill hole spacing that is sufficient to determine the Reserve category for a particular deposit. As the continuity of mineralisation varies from deposit to deposit, the drill hole spacing required to categorise a Reserve varies between and within deposit types. Annual report 2019 | riotinto.com 279

Production, reserves and operations Mineral resources and ore reserves corporate governance 2019 highlights Mineral Resources and Ore Reserves Group Internal Audit corporate governance The Resource and Reserve internal audit Rio Tinto has well established governance processes programme is conducted by independent external –– Orebody Knowledge Centre of Excellence formed in place to support the generation and publication consulting personnel in a programme managed by –– Dedicated Orebody Knowledge Technical of Mineral Resources and Ore Reserves, which Group Internal Audit with the assistance of the Assurance team includes a series of structures and processes Orebody Knowledge Centre of Excellence and the –– K2fly’s RCubed Mineral Resources and Ore independent of operational reporting through ORSC. In 2019, four internal audits were completed. Reserves reporting solution agreement signed: business units and product groups. Material findings are reported outside of the product Next gen platform for governance and reporting group reporting line to the Audit Committee, and –– Ongoing professional development Audit Committee all reports and action plans are reviewed by the with two Competent Persons workshops The Audit Committee has in its remit the ORSC for alignment to internal and external governance of Resources and Reserves. This reporting standards. includes an annual review of Mineral Resources and Ore Reserves at a Group level, as well as review of JORC compliance findings and progress from the Group Resources Rio Tinto has continued the development of and Reserves internal audit programme within the internal systems and controls in order to meet regular meeting schedule. JORC (2012) compliance in all external reporting including the preparation of all reported data by Ore Reserves Steering Committee Competent Persons as members of The Australasian The Ore Reserves Steering Committee (ORSC) Institute of Mining and Metallurgy (The AusIMM), meets at least quarterly, chaired by the Group Australian Institute of Geoscientists (AIG) or Executive, Growth and Innovation, and comprises recognised professional organisations (RPOs). senior representatives from technical, financial, JORC Table 1 reports for new or materially governance and business groups within the Group. upgraded significant deposits are released to The ORSC role includes oversight of the appointment market by Rio Tinto and are also available on the of Competent Persons nominated by the business Group’s website. JORC Table 1 and NI 43-101 units, review of Exploration Results, Mineral Resource technical reports generated by non-managed units or Ore Reserve data prior to public reporting and or joint venture partners are referenced within the development of Group Resource and Reserves reporting footnotes with the location and initial standards and guidance. reporting date identified. Orebody Knowledge Centre of Excellence Reporting of Ore Reserves to the US market is In 2019, Rio Tinto formed the Orebody Knowledge carried out under the requirements of SEC Industry Centre of Excellence, which contains a dedicated Guide 7 as reported separately in this Annual Orebody Technical Assurance team. Orebody report. Knowledge Technical Assurance in conjunction with the ORSC is the guardian and author of Group Mineral Resources and Ore Reserves from externally Resource and Reserve standards and guidance and managed operations, where Rio Tinto holds a minority is responsible for governance and compilation of share, are reported as received from the managing Group Resource, Reserve and reconciliation entity. Figures from Rio Tinto managed operations reporting. The Technical Assurance team also are the responsibility of the managing directors of monitors the external reporting environment, the business units and estimates are carried out by and facilitates internal audits and monitors actions Competent Persons as defined by JORC. with Group Internal Audit. 280 Annual report 2019 | riotinto.com

Production, reserves and operations reserves Production, This page is intentionally omitted Annual report 2019 | riotinto.com 281

Production, reserves and operations Mines and production facilities Group mines as at 31 December 2019 (Rio Tinto’s interest is 100% unless otherwise shown) Mine Location Access Title/lease History Type of mine Power source Iron Ore Iron Ore Hamersley Iron Pilbara region, Hamersley Iron/Robe Agreements for life of mine with Government of Western Australia, save for the Mount Tom Price began operations in 1966, followed by Paraburdoo in 1974. In the 1990s, Channar, Open pit Hamersley Iron/Robe power network Brockman 2 Western Australia railway and port network Yandicoogina mining lease, which expires in 2039 with an option to extend for Brockman 2, Marandoo and Yandicoogina achieved first ore. Since 2000, Eastern Ranges, Brockman 4 21 years. Nammuldi, Brockman 4, Western Turner Syncline and Silvergrass have joined the network of Marandoo Hamersley Iron mines. Mount Tom Price Nammuldi Paraburdoo Silvergrass Western Turner Syncline Yandicoogina Eastern Range (54%) Pilbara region, Hamersley Iron/Robe Mineral lease expires in 2028 with successive options to extend by 21 years. The Bao-Hi joint venture was established in 2002 and has delivered sales of more than Open pit Hamersley Iron/Robe power network Western Australia railway and port network 180 million tonnes of iron ore to China. The joint venture is 54% owned by Rio Tinto and 46% by China Baowu Group. Channar (60%) Pilbara region, Hamersley Iron/Robe Mining lease expires in 2028 with an option to extend by five years. The Channar Mining Joint Venture, established in 1987, was the first large-scale mining joint Open pit Hamersley Iron/Robe power network Western Australia railway and port network venture between Chinese and Australian companies. The joint venture is 60% owned by Rio Tinto and 40% by Sinosteel Corporation. It has delivered sales of more than 270 million tonnes of iron ore to China. Hope Downs 1 (50%) Pilbara region, Hamersley Iron/Robe Mining lease expires in 2027 with two options to extend of 21 years each. Joint venture between Rio Tinto and Hancock Prospecting. Construction of Stage 1 to 22 million Open pit Hamersley Iron/Robe power network Western Australia railway and port network tonnes per annum commenced 2006 and first production occurred 2007. Stage 2 to 30 million tonnes per annum completed 2009. Hope Downs 4 (50%) Pilbara region, Hamersley iron/Robe Mining lease expires in 2027 with two options to extend of 21 years each. Joint venture between Rio Tinto and Hancock Prospecting. Construction of wet plant processing Open pit Hamersley Iron/Robe power network Western Australia railway and port network to 15 million tonnes per annum commenced 2011 and first production occurred 2013. Robe River Iron Pilbara region, Hamersley Iron/Robe Agreements for life of mine with Government of Western Australia. First shipment in 1972 from Robe Valley. Interest acquired in 2000 through North Limited Open pit Hamersley Iron/Robe power network Associates (53%) Western Australia railway and port network acquisition. First ore was shipped from West Angelas in 2002. Robe Valley (Mesa A, and Mesa J) West Angelas Dampier Salt (68.4%) Dampier, Lake MacLeod Road and port Mining Leases expiring in 2034 at Dampier; 2029 at Port Hedland and 2021 at Lake Solar evaporation Long-term contracts with Hamersley Construction of the Dampier field started in 1969; first shipment in 1972. Lake MacLeod was and Port Hedland, MacLeod. Lake McLeod’s lease renewal until 2031 currently being progressed. of seawater and Iron and Horizon Power and on-site acquired in 1978 as an operating field. Port Hedland was acquired in 2001 as an operating field. Western Australia underground brine; generation extraction of gypsum 282 Annual report 2019 | riotinto.com

Mines and production facilities Group mines as at 31 December 2019 (Rio Tinto’s interest is 100% unless otherwise shown) Mine Location Access Title/lease History Type of mine Power source Iron Ore Iron Ore Hamersley Iron Pilbara region, Hamersley Iron/Robe Agreements for life of mine with Government of Western Australia, save for the Mount Tom Price began operations in 1966, followed by Paraburdoo in 1974. In the 1990s, Channar, Open pit Hamersley Iron/Robe power network Brockman 2 Western Australia railway and port network Yandicoogina mining lease, which expires in 2039 with an option to extend for Brockman 2, Marandoo and Yandicoogina achieved first ore. Since 2000, Eastern Ranges, Brockman 4 21 years. Nammuldi, Brockman 4, Western Turner Syncline and Silvergrass have joined the network of Marandoo Hamersley Iron mines. Mount Tom Price Nammuldi Paraburdoo Silvergrass Western Turner Syncline Yandicoogina Eastern Range (54%) Pilbara region, Hamersley Iron/Robe Mineral lease expires in 2028 with successive options to extend by 21 years. The Bao-Hi joint venture was established in 2002 and has delivered sales of more than Open pit Hamersley Iron/Robe power network Western Australia railway and port network 180 million tonnes of iron ore to China. The joint venture is 54% owned by Rio Tinto and 46% by China Baowu Group. Channar (60%) Pilbara region, Hamersley Iron/Robe Mining lease expires in 2028 with an option to extend by five years. The Channar Mining Joint Venture, established in 1987, was the first large-scale mining joint Open pit Hamersley Iron/Robe power network Western Australia railway and port network venture between Chinese and Australian companies. The joint venture is 60% owned by Rio Tinto and 40% by Sinosteel Corporation. It has delivered sales of more than 270 million tonnes of iron ore to China. Hope Downs 1 (50%) Pilbara region, Hamersley Iron/Robe Mining lease expires in 2027 with two options to extend of 21 years each. Joint venture between Rio Tinto and Hancock Prospecting. Construction of Stage 1 to 22 million Open pit Hamersley Iron/Robe power network Western Australia railway and port network tonnes per annum commenced 2006 and first production occurred 2007. Stage 2 to 30 million tonnes per annum completed 2009. Hope Downs 4 (50%) Pilbara region, Hamersley iron/Robe Mining lease expires in 2027 with two options to extend of 21 years each. Joint venture between Rio Tinto and Hancock Prospecting. Construction of wet plant processing Open pit Hamersley Iron/Robe power network Western Australia railway and port network to 15 million tonnes per annum commenced 2011 and first production occurred 2013. Robe River Iron Pilbara region, Hamersley Iron/Robe Agreements for life of mine with Government of Western Australia. First shipment in 1972 from Robe Valley. Interest acquired in 2000 through North Limited Open pit Hamersley Iron/Robe power network Associates (53%) Western Australia railway and port network acquisition. First ore was shipped from West Angelas in 2002. Robe Valley (Mesa A, and Mesa J) West Angelas Dampier Salt (68.4%) Dampier, Lake MacLeod Road and port Mining Leases expiring in 2034 at Dampier; 2029 at Port Hedland and 2021 at Lake Solar evaporation Long-term contracts with Hamersley Construction of the Dampier field started in 1969; first shipment in 1972. Lake MacLeod was and Port Hedland, MacLeod. Lake McLeod’s lease renewal until 2031 currently being progressed. of seawater and Iron and Horizon Power and on-site acquired in 1978 as an operating field. Port Hedland was acquired in 2001 as an operating field. Western Australia underground brine; generation extraction of gypsum Production, reserves and operations reserves Production, Annual report 2019 | riotinto.com 283

Production, reserves and operations Mines and production facilities continued Group mines as at 31 December 2019 (Rio Tinto’s interest is 100% unless otherwise shown) Mine Location Access Title/lease History Type of mine Power source Copper and Diamonds Copper and Diamonds Copper Copper Escondida (30%) Atacama Desert, Chile Pipeline and road to Rights conferred by Government under Chilean Mining Code. Production started in 1990 and since then capacity has been expanded numerous times. Today, Open pit Supplied from grid under various deep sea port at Coloso; copper concentrate is produced by three concentrator plants, the most recent of which was contracts with local generating road and rail commissioned in 2016. Copper Cathode is produced by both oxide leach and sulphide leach plants. companies. In 2019 Escondida A desalination plant supplies water to the mine site. announced the migration to renewable energy power sources from 2021. Rio Tinto Kennecott Near Salt Lake City, Utah, Pipeline, road and rail Owned. Interest acquired in 1989. In 2012, the pushback of the south wall commenced, extending the mine Open pit Supplied from grid under long-term Bingham Canyon US life to 2032. contracts with Rocky Mountain Power, supplemented by onsite power Oyu Tolgoi (51% of Khanbogd soum, Air and road Three mining licences are held by Oyu Tolgoi LLC and two further licences are held Oyu Tolgoi was first discovered in 1996. Construction began in late 2009 after signing of an Open pit and Grid power from China and Turquoise Hill Resources Umnugovi province, in joint venture with Entrée Gold LLC. The licence term under the Minerals Law of Investment Agreement with the Government of Mongolia, and first concentrate was produced in underground supplementary diesel power Ltd. which owns 66% of Mongolia Mongolia is 30 years with two 20-year extensions. First renewals are due in 2033 and 2012. First sales of concentrate were made to Chinese customers in 2013. In 2015, Underground generation at site. Signed Tavan Tolgoi Oyu Tolgoi LLC) 2039 for the Oyu Tolgoi and Entrée Gold licences respectively. Development Plan was signed with Government of Mongolia. Power Plant Power Source Framework agreement in December 2018. Diamonds Diamonds Argyle Kimberley Ranges, Road and air Interest increased from 59.7% following purchase of Ashton Mining in 2000. Interest increased from 59.7% following purchase of Ashton Mining in 2000. Underground mine Underground (previously Long-term contract with Ord Hydro Western Australia Underground mine project approved in 2005 to extend economic mine life to 2020. project approved in 2005 to extend economic mine life to 2020. open pit) Consortium and on-site generation Diavik (60%) Northwest Territories Air, ice road in winter Mining leases are issued by the NWT Government. One lease was renewed in 2017 Deposits discovered 1994-1995. Construction approved 2000. Diamond production started 2003. Underground (previously On-site diesel generators; installed (NWT), Canada and two leases were renewed in February 2018. The new leases will expire in Fourth pipe commenced production in 2018. Mine life is up to 2025. open pit) and new A21 capacity 44MW and 9.2MW of wind 2038-2039. pipe is open pit capacity Energy and Minerals Energy and Minerals Industrial minerals Industrial minerals Rio Tinto Borates – Boron California, US Road and rail Owned. Deposit discovered in 1925 and acquired by Rio Tinto in 1967. Open pit On-site co-generation units and local power grid Rio Tinto Fer et Titane Havre-Saint-Pierre, Rail and port (St Mining covered by two concessions granted by Province of Quebec in 1949 and Production started 1950; interest acquired in 1989. Open pit Supplied by Hydro Quebec at Lac Tio Province of Quebec, Lawrence River) 1951 which, subject to certain Mining Act restrictions, confer rights and obligations regulated tariff Canada of an owner. QIT Madagascar Minerals Fort-Dauphin, Road and port Mining lease granted by central government. Exploration project started in 1986; construction approved 2005. Ilmenite and zirsil production Mineral sand dredging On-site heavy fuel oil generators (80%) Madagascar started 2008. QMM intends to extract ilmenite and zirsil from heavy mineral sands over an area of about 6,000 hectares along the coast over the next 40 years. Richards Bay Minerals Richards Bay, KwaZulu- Rail, road and port Mineral rights for Reserve 4 and Reserve 10 issued by South African State and Production started 1977; initial interest acquired 1989. Fifth mining plant commissioned in 2000. Dune sand dredging Contract with ESKOM (74%) Natal, South Africa converted to new order mining rights from 9 May 2012. Mining rights run until 8 May One mining plant decommissioned in 2008. In September 2012, Rio Tinto doubled its holding in 2041 for both lease areas. Richards Bay Minerals to 74% following the acquisition of BHP Billiton’s entire interests. Iron ore Iron ore Iron Ore Company of Labrador City, Railway and port facilities Sublease with the Labrador Iron Ore Royalty Corporation, which has lease Interest acquired in 2000 through North. Current operation began in 1962 Open pit Supplied by Newfoundland and Canada (IOC) (58.7%) Province of in Sept-Îles, Quebec agreements with the Government of Newfoundland and Labrador that are due to be and has processed over one billion tonnes of crude ore since. Annual capacity Labrador Hydro Newfoundland and (owned and operated renewed in 2020, 2022, 2025 and 2031. 23 million tonnes of concentrate of which 12.5 million tonnes can be pelletised. Labrador, Canada by IOC) Uranium Uranium Energy Resources of Northern Territory, Road, rail and port Mining tenure granted by Federal Government. Mining commenced 1981. Interest acquired through acquisition of North 2000. Open pit mining Stockpile On-site diesel generation Australia (68.4%) Ranger Australia ended 2012, since then ERA has been processing ore stockpiles. 284 Annual report 2019 | riotinto.com

Mines and production facilities Group mines as at 31 December 2019 (Rio Tinto’s interest is 100% unless otherwise shown) Mine Location Access Title/lease History Type of mine Power source Copper and Diamonds Copper and Diamonds Copper Copper Escondida (30%) Atacama Desert, Chile Pipeline and road to Rights conferred by Government under Chilean Mining Code. Production started in 1990 and since then capacity has been expanded numerous times. Today, Open pit Supplied from grid under various deep sea port at Coloso; copper concentrate is produced by three concentrator plants, the most recent of which was contracts with local generating road and rail commissioned in 2016. Copper Cathode is produced by both oxide leach and sulphide leach plants. companies. In 2019 Escondida A desalination plant supplies water to the mine site. announced the migration to renewable energy power sources from 2021. Rio Tinto Kennecott Near Salt Lake City, Utah, Pipeline, road and rail Owned. Interest acquired in 1989. In 2012, the pushback of the south wall commenced, extending the mine Open pit Supplied from grid under long-term Bingham Canyon US life to 2032. contracts with Rocky Mountain Power, supplemented by onsite power Oyu Tolgoi (51% of Khanbogd soum, Air and road Three mining licences are held by Oyu Tolgoi LLC and two further licences are held Oyu Tolgoi was first discovered in 1996. Construction began in late 2009 after signing of an Open pit and Grid power from China and Turquoise Hill Resources Umnugovi province, in joint venture with Entrée Gold LLC. The licence term under the Minerals Law of Investment Agreement with the Government of Mongolia, and first concentrate was produced in underground supplementary diesel power Ltd. which owns 66% of Mongolia Mongolia is 30 years with two 20-year extensions. First renewals are due in 2033 and 2012. First sales of concentrate were made to Chinese customers in 2013. In 2015, Underground generation at site. Signed Tavan Tolgoi Oyu Tolgoi LLC) 2039 for the Oyu Tolgoi and Entrée Gold licences respectively. Development Plan was signed with Government of Mongolia. Power Plant Power Source Framework agreement in December 2018. Diamonds Diamonds Argyle Kimberley Ranges, Road and air Interest increased from 59.7% following purchase of Ashton Mining in 2000. Interest increased from 59.7% following purchase of Ashton Mining in 2000. Underground mine Underground (previously Long-term contract with Ord Hydro Western Australia Underground mine project approved in 2005 to extend economic mine life to 2020. project approved in 2005 to extend economic mine life to 2020. open pit) Consortium and on-site generation Diavik (60%) Northwest Territories Air, ice road in winter Mining leases are issued by the NWT Government. One lease was renewed in 2017 Deposits discovered 1994-1995. Construction approved 2000. Diamond production started 2003. Underground (previously On-site diesel generators; installed (NWT), Canada and two leases were renewed in February 2018. The new leases will expire in Fourth pipe commenced production in 2018. Mine life is up to 2025. open pit) and new A21 capacity 44MW and 9.2MW of wind 2038-2039. pipe is open pit capacity Energy and Minerals Energy and Minerals Industrial minerals Industrial minerals Rio Tinto Borates – Boron California, US Road and rail Owned. Deposit discovered in 1925 and acquired by Rio Tinto in 1967. Open pit On-site co-generation units and local power grid Rio Tinto Fer et Titane Havre-Saint-Pierre, Rail and port (St Mining covered by two concessions granted by Province of Quebec in 1949 and Production started 1950; interest acquired in 1989. Open pit Supplied by Hydro Quebec at Lac Tio Province of Quebec, Lawrence River) 1951 which, subject to certain Mining Act restrictions, confer rights and obligations regulated tariff Canada of an owner. QIT Madagascar Minerals Fort-Dauphin, Road and port Mining lease granted by central government. Exploration project started in 1986; construction approved 2005. Ilmenite and zirsil production Mineral sand dredging On-site heavy fuel oil generators (80%) Madagascar started 2008. QMM intends to extract ilmenite and zirsil from heavy mineral sands over an area of about 6,000 hectares along the coast over the next 40 years. Richards Bay Minerals Richards Bay, KwaZulu- Rail, road and port Mineral rights for Reserve 4 and Reserve 10 issued by South African State and Production started 1977; initial interest acquired 1989. Fifth mining plant commissioned in 2000. Dune sand dredging Contract with ESKOM and operations reserves Production, (74%) Natal, South Africa converted to new order mining rights from 9 May 2012. Mining rights run until 8 May One mining plant decommissioned in 2008. In September 2012, Rio Tinto doubled its holding in 2041 for both lease areas. Richards Bay Minerals to 74% following the acquisition of BHP Billiton’s entire interests. Iron ore Iron ore Iron Ore Company of Labrador City, Railway and port facilities Sublease with the Labrador Iron Ore Royalty Corporation, which has lease Interest acquired in 2000 through North. Current operation began in 1962 Open pit Supplied by Newfoundland and Canada (IOC) (58.7%) Province of in Sept-Îles, Quebec agreements with the Government of Newfoundland and Labrador that are due to be and has processed over one billion tonnes of crude ore since. Annual capacity Labrador Hydro Newfoundland and (owned and operated renewed in 2020, 2022, 2025 and 2031. 23 million tonnes of concentrate of which 12.5 million tonnes can be pelletised. Labrador, Canada by IOC) Uranium Uranium Energy Resources of Northern Territory, Road, rail and port Mining tenure granted by Federal Government. Mining commenced 1981. Interest acquired through acquisition of North 2000. Open pit mining Stockpile On-site diesel generation Australia (68.4%) Ranger Australia ended 2012, since then ERA has been processing ore stockpiles. Annual report 2019 | riotinto.com 285

Production, reserves and operations Mines and production facilities continued Group smelters and refineries (Rio Tinto’s interest 100% unless otherwise shown) Capacity as of 31 December 2019 (based on 100% Smelter/refinery Location Title/lease Plant type/product ownership) Aluminium Alma Alma, Quebec, Canada 100% freehold Aluminium smelter producing aluminium rod, 471,000 tonnes per year t-foundry, molten metal, high purity, remelt aluminium Alouette (40%) Sept-Îles, Quebec, 100% freehold Aluminium smelter producing aluminium high purity, 606,000 tonnes per year Canada remelt aluminium Arvida Saguenay, Quebec, 100% freehold Aluminium smelter producing aluminium billet, molten 174,000 tonnes per year Canada metal, remelt aluminium Arvida AP60 Saguenay, Quebec, 100% freehold Aluminium smelter producing aluminium high purity, 60,000 tonnes per year Canada remelt aluminium Bécancour (25.1%) Bécancour, Quebec, 100% freehold Aluminium smelter producing aluminium slab, billet, 446,000 tonnes per year Canada t-foundry, remelt, molten metal aluminium Bell Bay Bell Bay, Northern 100% freehold Aluminium smelter producing aluminium slab, molten 195,000 tonnes per year Tasmania, Australia metal, small form and t-foundry, remelt aluminium Boyne Smelters (59.4%) Boyne Island, 100% freehold Aluminium smelter producing aluminium billet, EC 584,000 tonnes per year Queensland, Australia grade, small form and t-foundry, remelt aluminium Grande-Baie Saguenay, Quebec, 100% freehold Aluminium smelter producing aluminium slab, molten 233,000 tonnes per year Canada metal, high purity, remelt aluminium ISAL Reykjavik, Iceland 100% freehold Aluminium smelter producing aluminium remelt, billet 212,000 tonnes per year aluminium Jonquière (Vaudreuil) Jonquière, Quebec, 100% freehold Refinery producing specialty alumina and smelter 1,570,000 tonnes per Canada grade alumina year alumina Kitimat Kitimat, British Columbia, 100% freehold Aluminium smelter producing aluminium slab, remelt, 432,000 tonnes per year Canada high purity aluminium Laterrière Saguenay, Quebec, 100% freehold Aluminium smelter producing aluminium slab, remelt, 257,000 tonnes per year Canada molten metal aluminium Queensland Alumina Gladstone, Queensland, 73.3% freehold; 26.7% Refinery producing alumina 3,950,000 tonnes per (80%) Australia leasehold (of which more year alumina than 80% expires in 2026 and after) São Luis (Alumar) (10%) São Luis, Maranhão, 100% freehold Refinery producing alumina 3,700,000 tonnes per Brazil year alumina Sohar (20%) Sohar, Oman 100% leasehold (expiring Aluminium smelter producing aluminium, high purity, 390,000 tonnes per year 2039) remelt aluminium Tiwai Point (New Zealand Invercargill, Southland, 19.6% freehold; 80.4% Aluminium smelter producing aluminium billet, slab, 373,000 tonnes per year Aluminium Smelters) New Zealand leasehold (expiring in small form foundry, high purity, remelt aluminium (79.4%) 2029 and use of certain Crown land) Tomago (51.6%) Tomago, New South 100% freehold Aluminium smelter producing aluminium billet, slab, 590,000 tonnes per year Wales, Australia remelt aluminium Yarwun Gladstone, Queensland, 97% freehold; 3% Refinery producing alumina 3,200,000 tonnes per Australia leasehold (expiring year alumina 2101 and after) Copper and Diamonds Rio Tinto Kennecott Magna, Salt Lake City, 100% freehold Flash smelting furnace/Flash convertor furnace 335,000 tonnes per year Utah, US copper refinery and precious metals plant refined copper Energy and Minerals Boron California, US 100% freehold Borates refinery 576,000 tonnes per year boric oxide IOC Pellet Plant (58.7%) Labrador City, 100% freehold (asset), Pellet induration furnaces producing multiple iron ore 12.5 million tonnes per Newfoundland and 100% leasehold (land) pellet types year pellet Labrador, Canada under sublease with Labrador Iron Ore Royalty Corporation for life of mine. Rio Tinto Fer et Titane Sorel-Tracy, Quebec, 100% freehold Ilmenite smelter 1,300,000 tonnes per Sorel Plant Canada year titanium dioxide slag, 1,000,000 tonnes per year iron Richards Bay Minerals Richards Bay, South 100% freehold Ilmenite smelter 1,050,000 tonnes per (74%) Africa year titanium dioxide slag, 565,000 tonnes per year iron 286 Annual report 2019 | riotinto.com

Mines and production facilities Information on Group power plants (Rio Tinto’s interest 100% unless otherwise shown) Capacity as of 31 December 2019 (based on 100% Power plant Location Title/lease Plant type/product ownership) Iron Ore Cape Lambert power Cape Lambert, Western Lease Two LM6000PF gas-fired turbines 80MW station Australia, Australia (67%) Paraburdoo power Paraburdoo, Western Lease Three LM6000PC gas-fired turbines 138MW station Australia, Australia One Frame5 dual-fuel turbine Yurralyi Maya Dampier, Western Miscellaneous licence Four LM6000PD gas-fired turbines 200MW power station Australia, Australia One LM6000PF gas-fired turbine (84.2%) (dual-fuel potential) West Angelas power West Angelas, Western Miscellaneous licence Two LM6000PF dual-fuel turbines 80MW station Australia, Australia (67%) Aluminium Gladstone power station Gladstone, Queensland, 100% freehold Thermal power station 1,680MW (42%) Australia Gove power station Nhulunbuy, Northern 100% leasehold Diesel generation 24MW Territory, Australia Kemano power station Kemano, British 100% freehold Hydroelectric power 896MW Columbia, Canada Quebec power stations Saguenay, Quebec, 100% freehold (certain Hydroelectric power 3,147MW Canada (Chute-à-Caron, facilities leased from Chute-à-la-Savane, Quebec Government Chute-des-Passes, until 2058 pursuant to Chute-du-Diable, Peribonka Lease) Isle-Maligne, Shipshaw) Yarwun alumina refinery Gladstone, Queensland, 100% freehold Gas turbine and heat recovery steam generator 160MW co-generation plant Australia Weipa power stations and Lorim Point, Andoom, 100% leasehold Diesel generation supplemented by solar generation 38MW solar generation facility and Weipa, Australia facility Amrun power station Amrun, Australia 100% leasehold Diesel generation 24MW Copper and Diamonds and operations reserves Production, Rio Tinto Kennecott Salt Lake City, Utah, US 100% freehold Thermal power station idled through December 31 75MW power stations 2025, per Rocky Mountain Power supply contract provision 31.8MW Steam turbine running off waste heat boilers at the copper smelter 6.2MW Combined heat and power plant supplying steam to the copper refinery Energy and Minerals Boron co-generation Boron, California, US 100% freehold Co-generation uses natural gas to generate steam and 48MW plant electricity, used to run Boron’s refining operations Energy Resources of Ranger Mine, Jabiru, Lease Five diesel generator sets rated at 5.17MW; one diesel 35.8MW Australia (Rio Tinto: Northern Territory, generator set rated at 2MW; four additional diesel 68.4%) Australia generator sets rated at 2MW IOC power station Sept Îles, Quebec, Statutory grant Hydroelectric power 22MW Canada QMM power plant Fort Dauphin, 100% freehold Diesel generation 24MW Madagascar Annual report 2019 | riotinto.com 287

Additional information Independent limited assurance report – Sustainability 290 Shareholder information 292 Contact details 299 Cautionary statement about forward-looking statements 300 288 Annual report 2019 | riotinto.com

Additional information Students from a community near Weipa, our Bauxite mine in Queensland, Australia Annual report 2019 | riotinto.com 289

Additional information Independent Limited Assurance Report to the Directors of Rio Tinto plc and Rio Tinto Limited The Board of Directors of Rio Tinto plc and Rio Tinto Limited (together Understanding reporting and measurement methodologies “Rio Tinto”) engaged us to provide limited assurance on the selected subject The selected subject matter needs to be read and understood together with matter described below and set out in the Sustainability sections of the the Reporting Criteria, which Rio Tinto is solely responsible for selecting and Rio Tinto Annual Report 2019 and the Rio Tinto Strategic Report 2019 for applying. The absence of a significant body of established practice on which to the year ended 31 December 2019. draw to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability Our conclusion between entities and over time. The Reporting Criteria used for the reporting Based on the procedures we have performed and the evidence we have of the selected subject matter are the ICMM Sustainable Development obtained, nothing has come to our attention that causes us to believe that the Framework: ICMM Principles (Revised 2015) and the definitions and selected subject matter within the Sustainability sections of the Rio Tinto approaches within the Basis of reporting glossary which will be presented Annual Report 2019 and the Rio Tinto Strategic Report 2019 for the year at https://www.riotinto.com/sustainability/sustainability-reporting as at ended 31 December 2019 has not been prepared, in all material respects, 27 February 2020. in accordance with the Reporting Criteria. Professional standards applied and level of assurance This conclusion is to be read in the context of what we say in the remainder We performed a limited assurance engagement in accordance with of our report. International Standard on Assurance Engagements 3000 (Revised) Assurance Engagements other than Audits and Reviews of Historical Financial Information, Selected Subject Matter and, in respect of the greenhouse gas emissions, in accordance with The scope of our work was limited to assurance over the selected subject International Standard on Assurance Engagements 3410 Assurance matter within the Sustainability sections of the Rio Tinto Annual Report 2019 engagements on greenhouse gas statements, issued by the International and the Rio Tinto Strategic Report 2019 for the year ended 31 December 2019 Auditing and Assurance Standards Board. (the “selected subject matter”). A limited assurance engagement is substantially less in scope than a The selected subject matter and the Reporting Criteria against which it was reasonable assurance engagement in relation to both the risk assessment assessed are summarised below. Our assurance does not extend to procedures, including an understanding of internal control, and the procedures information in respect of earlier periods or to any other information included performed in response to the assessed risks. in the Rio Tinto Annual Report 2019 or the Rio Tinto Strategic Report 2019. Our Independence and Quality Control Selected subject matter We applied the Institute of Chartered Accountants in England and Wales –– Rio Tinto’s assertion that it has incorporated the requirements of the (ICAEW) Code of Ethics, which includes independence and other requirements International Council on Mining and Metals (ICMM) 10 Principles for founded on fundamental principles of integrity, objectivity, professional sustainable development, and the mandatory requirements set out in the competence and due care, confidentiality and professional behaviour. ICMM Position Statements, into its own policies, strategies and standards. –– Rio Tinto’s assertions regarding the approach that it has adopted to identify We apply International Standard on Quality Control (UK) 1 and accordingly and prioritise its material sustainable development risks and opportunities maintain a comprehensive system of quality control including documented set out in the Sustainability sections of the Rio Tinto Annual Report 2019 policies and procedures regarding compliance with ethical requirements, and the Rio Tinto Strategic Report 2019. professional standards and applicable legal and regulatory requirements. –– Rio Tinto’s assertions regarding the existence and status of implementation of systems and approaches used to manage the following selected Our work was carried out by an independent and multi-disciplinary team with sustainable development risk areas: experience in sustainability reporting and assurance. –– Safety –– Greenhouse gas emissions Work done –– Energy use We are required to plan and perform our work in order to consider the risk of –– Health material misstatement of the selected subject matter. In doing so, we: –– Business Integrity –– made enquiries of relevant management of Rio Tinto regarding the –– The following Rio Tinto performance data related to the selected processes and controls for capturing, collating and reporting the sustainable development risk areas: performance data within the selected subject matter, and evaluated the –– Number of fatalities design and effectiveness of these processes and controls; –– All injury frequency rate –– validated the operation of controls over the accuracy of injury and illness –– Lost time injury frequency rate classification and assessed the final injury and illness classification applied –– Number of lost time injuries for a sample of injuries and illnesses reported during the year ended –– New cases of occupational illness 31 December 2019; –– Number of incidents reported either through Talk to Peggy, compliance –– tested the arithmetic accuracy of a sample of calculations of performance managers or team leaders data within the selected subject matter; –– Total greenhouse gas emissions –– assessed the appropriateness of the greenhouse gas emission factors –– Greenhouse gas emissions intensity applied in calculating the Total greenhouse gas emissions and Greenhouse –– Total energy use gas emissions intensity; –– tested performance data, on a selective basis, substantively at both an operational and corporate level, which included testing at a selection of 8 operations from across Aluminium, Growth & Innovation, Copper & Diamonds, Energy & Minerals, and Iron Ore; –– undertook analytical procedures over the selected subject matter; and –– made enquiries of relevant management and reviewed a sample of relevant management information and documentation supporting assertions made in the selected subject matter. 290 Annual report 2019 | riotinto.com

Independent Limited Assurance Report Rio Tinto’s responsibilities Restriction on use The Directors of Rio Tinto are responsible for: This report, including our conclusions, has been prepared solely for the Board –– designing, implementing and maintaining internal controls over of Directors of Rio Tinto in accordance with the agreement between us, to information relevant to the preparation of the selected subject matter that assist the Directors in reporting Rio Tinto’s sustainability performance and is free from material misstatement, whether due to fraud or error; activities. We permit this report to be disclosed in the Rio Tinto Annual Report –– establishing objective Reporting Criteria for preparing the selected subject 2019 and the Rio Tinto Strategic Report 2019 for the year ended 31 December matter; 2019, to assist the Directors in responding to their governance responsibilities –– measuring and reporting the selected subject matter based on the by obtaining an independent assurance report in connection with the selected Reporting Criteria; and subject matter. To the fullest extent permitted by law, we do not accept or –– the content of the Rio Tinto Annual Report 2019 and the Rio Tinto Strategic assume responsibility to anyone other than the Board of Directors and Rio Report 2019. Tinto for our work or this report except where terms are expressly agreed between us in writing. Our responsibilities We are responsible for: –– planning and performing the engagement to obtain limited assurance about whether the selected subject matter is free from material misstatement, whether due to fraud or error; –– forming an independent conclusion, based on the procedures we have PricewaterhouseCoopers LLP performed and the evidence we have obtained; and Chartered Accountants –– reporting our conclusion to the Directors of Rio Tinto. 1 Embankment Place, London 26 February 2020 WC2N 6RH, United Kingdom Additional information Annual report 2019 | riotinto.com 291

Additional information Shareholder information Organisational structure To achieve this third objective, the Sharing Agreement fixed the ratio of The Rio Tinto Group consists of Rio Tinto plc (registered in England and Wales dividend, voting and capital distribution rights attached to each Rio Tinto plc as company number 719885 under the UK Companies Act 2006 and listed on share and each Rio Tinto Limited share at an Equalisation Ratio of 1:1. This has the London Stock Exchange), and Rio Tinto Limited (registered in Australia as remained unchanged ever since, although the Sharing Agreement makes clear ABN 96 004 458 404 under the Australian Corporations Act 2001 and listed this can be revised in special circumstances, for example where certain on the Australian Securities Exchange). modifications are made to the share capital of one company (such as rights issues, bonus issues, share splits and share consolidations) but not to the other. Rio Tinto is headquartered in London with a corporate office in Melbourne. Outside the circumstances specified in the Sharing Agreement, the Equalisation Rio Tinto plc has a sponsored American depositary receipts (ADR) facility, Ratio can only be altered with the approval of shareholders under the class with underlying shares registered with the US Securities and Exchange rights action approval procedure, described in the Voting arrangements section Commission and listed on the New York Stock Exchange. below. Any adjustments must be confirmed by the Group’s external auditors. Nomenclature and financial data Consistent with the DLC structure, the directors of both companies aim to act Rio Tinto plc and Rio Tinto Limited operate together and are referred to in this in the best interests of Rio Tinto as a whole. The class rights action approval report as Rio Tinto, the Rio Tinto Group or the Group. These expressions are procedure exists to deal with instances where there may be a conflict of used for convenience, since both companies, and other companies in which interest between the shareholders of the two companies. they directly or indirectly own investments, are separate and distinct legal entities. Likewise, the words 'we', 'us', 'our' and 'ourselves' are used in some To ensure that the boards of both companies are identical, resolutions to appoint places to refer to the companies of the Rio Tinto Group in general. These or remove directors must be put to shareholders of both companies as Joint expressions are also used where no useful purpose is served by identifying any Decisions, described in the Voting arrangements section below. The Articles particular company or companies. We usually omit “Limited”, “plc”, “Pty”, of Association of Rio Tinto plc and the Constitution of Rio Tinto Limited make “Inc.”, “Limitada”, “L.L.C.”, “A.S.” or “SA” from Group company names, except to clear that a person can only be a director of one company if he or she is also a distinguish between Rio Tinto plc and Rio Tinto Limited. Financial data in US director of the other. This means that if a person were removed as a director of dollars ($) is derived from, and should be read in conjunction with, the 2019 Rio Tinto plc, he or she would also cease to be a director of Rio Tinto Limited. financial statements. In general, where we have provided financial data in pounds sterling (£) and Australian dollars (A$), it has been translated from the One consequence of the DLC merger is that Rio Tinto is subject to a wide range of consolidated financial statements, and is provided solely for convenience; laws, rules and regulatory reviews across multiple jurisdictions. Where these rules exceptions arise where data has been extracted directly from source records. differ, Rio Tinto will comply with the requirements in each jurisdiction at a minimum. Certain key information has been provided in US dollars, pounds sterling and Australian dollars in the 2019 financial statements. Dividend arrangements The Sharing Agreement ensures that dividends paid on Rio Tinto plc and History Rio Tinto Limited shares are equalised on a net cash basis without taking into Rio Tinto plc was incorporated on 30 March 1962 (then called The Rio account any associated tax credits. Dividends are determined in US dollars Tinto-Zinc Corporation Limited (RTZ)) and was formed by the merger of The and (with the exception of ADR holders, paid in sterling and Australian dollars), Rio Tinto Company Limited and The Consolidated Zinc Corporation Limited. both companies are required to announce and pay dividends and other The Rio Tinto Company was incorporated in 1873 to reopen ancient copper distributions at the same time or as close to this as possible. workings in Spain. The Consolidated Zinc Corporation Limited began operations in the early twentieth century as part of the Australian mining In the unlikely event that one company does not have sufficient distributable industry. Based at Broken Hill in New South Wales, it began mining silver, lead reserves to pay the equalised dividend or equalised capital distribution, it and zinc deposits and later expanded into lead and zinc smelting. would be entitled to a top-up payment from the other company. The top-up payment could be made as a dividend on the DLC dividend share, or by way Rio Tinto Limited was incorporated on 17 December 1959 (then called The Rio of a contractual payment. Tinto Mining Company of Australia Pty Limited). In 1962 the Australian interests of The Consolidated Zinc Corporation Limited and The Rio Tinto If the payment of an equalised dividend would contravene the law applicable Company Limited were merged to form Conzinc Riotinto of Australia Limited, a to one of the companies, they can depart from the Equalisation Ratio. In that limited liability company under the laws of the State of Victoria, Australia. In situation, the relevant company must put aside reserves for payment on the 1980, Conzinc Riotinto of Australia Limited changed its name to CRA Limited. relevant shares at a later date. Between 1962 and 1995, both RTZ and CRA discovered important mineral Rio Tinto shareholders have no direct rights to enforce the dividend equalisation deposits, developed major mining projects and grew through acquisition. provisions of the Sharing Agreement. RTZ and CRA began operating in 1995 through a dual listed companies By allowing dividends to be paid between companies and their subsidiaries, structure. In 1997, RTZ became Rio Tinto plc and CRA became Rio Tinto Limited. DLC dividend shares give the Group extra flexibility to manage internal funds. Dual listed companies structure Voting arrangements In 1995, Rio Tinto shareholders approved the terms of the dual listed In principle, the Sharing Agreement enables the shareholders of Rio Tinto plc companies’ merger (the DLC structure). The aim was to put shareholders of and Rio Tinto Limited to vote as a joint electorate on any matters that affect both companies in substantially the same position they would be in if they held them in similar ways. These are referred to as Joint Decisions, and include shares in a single entity owning all assets of both companies. the creation of new classes of share capital, the appointment or removal of directors and auditors, and the receiving of annual financial statements. Following the approval of the DLC structure, both companies entered into a All shareholder resolutions that include Joint Decisions are voted on a poll. DLC Merger Sharing Agreement (the Sharing Agreement). As part of this both companies agreed to be managed in a unified way, to share the same board of The Sharing Agreement also protects shareholders of both companies by directors, and to put in place arrangements to provide shareholders of both requiring joint approval for decisions that do not affect the shareholders of companies with a common economic interest in the DLC structure. both companies equally. These are known as class rights actions, and are voted on a poll. For example, fundamental elements of the DLC structure cannot be changed unless approved separately by the shareholders of both companies. 292 Annual report 2019 | riotinto.com

Shareholder information Exceptions to these principles can arise in situations such as where legislation Limitations on ownership of shares and merger obligations requires the separate approval of a decision by the appropriate majority The laws and regulations of the UK and Australia impose restrictions and of shareholders in one company, and where approval of the matter obligations on persons who control interests in publicly listed companies in by shareholders of the other company is not required. excess of defined thresholds. These can include an obligation to make a public offer for all outstanding issued shares of the relevant company. The threshold Where a matter has been expressly categorised as either a Joint Decision or a applicable to Rio Tinto plc under UK law and regulations is 30% and to Rio Tinto class rights action, the directors cannot change that categorisation. If a matter Limited under Australian law and regulations is 20% on both a standalone and falls within both categories, it is treated as a class rights action. In addition, Joint Decision basis. if an issue is not expressly listed in either category, directors can decide how it should be put to shareholders for approval. As part of the DLC merger, the Articles of Association of Rio Tinto plc and the Constitution of Rio Tinto Limited were amended with the aim of extending these To support joint voting arrangements, both companies have entered into laws and regulations to the combined enterprise. This amendment also ensures shareholder voting agreements, where a Special Voting Share is issued to a that a person cannot exercise control over one company without having made special purpose company (SVC) and held in trust for shareholders by a common offers to the public shareholders of both companies. trustee. Rio Tinto plc (RTP) has issued its Special Voting Share (RTP Special Voting Share) to Rio Tinto Limited (RTL) Shareholder SVC, while Rio Tinto This guarantees the equal treatment of both sets of shareholders, and that the Limited has issued its Special Voting Share (RTL Special Voting Share) to RTP two companies are considered as a single economic entity. The Articles of Shareholder SVC. The total number of votes cast on Joint Decisions by the Association of Rio Tinto plc and the Constitution of Rio Tinto Limited impose shareholders of one company are decided at a parallel meeting of the other restrictions on any person who controls, directly or indirectly, 20% or more of company. The exact role of these SVCs is described below. the votes on a Joint Decision. If, however, such a person has an interest in either Rio Tinto Limited or Rio Tinto plc only, then the restrictions only apply if they In exceptional circumstances, certain shareholders can be excluded from voting control, directly or indirectly, 30% or more of the votes at that company’s at their respective company’s general meetings. For example, they may have general meetings. acquired shares in the other company in excess of a given threshold without making an offer for all the shares in the other company. In this situation, votes If one of these thresholds is exceeded, the person cannot attend or vote at cast by these excluded shareholders are disregarded. general meetings of the relevant company, cannot receive dividends or other distributions from the relevant company, and may be divested of their interest Following the companies’ general meetings, the overall results of the voting are by the directors of the relevant company (subject to certain limited exceptions announced to relevant stock exchanges and the media, and published on the and notification by the relevant company). These restrictions continue to apply Rio Tinto website. until that person has either made a public offer for all the publicly held shares of the other company, has reduced their controlling interest below the thresholds At a Rio Tinto plc shareholders’ meeting during which a Joint Decision is specified, or has acquired through a permitted means at least 50% of the publicly considered, each Rio Tinto plc share carries one vote. The holder of the Special held shares of each company. Voting Share has one vote for each vote cast by the public shareholders of Rio Tinto Limited in their parallel meeting. The holder of the Special Voting Share This arrangement ensures that offers for the publicly held shares of both companies must vote in accordance with the votes cast by public shareholders for and would be required to avoid the restrictions set out above, even if the interests against the equivalent resolution at the parallel Rio Tinto Limited shareholders’ which breach the thresholds are held in just one of the companies. The directors meeting. The holders of Rio Tinto Limited ordinary shares do not hold voting do not have the discretion to exempt a person from the operation of these rules. shares in Rio Tinto plc by virtue of their holding in Rio Tinto Limited, and cannot enforce the voting arrangements relating to the Special Voting Share. Under the Sharing Agreement, the companies agree to co-operate to enforce the above restrictions contained in their Articles of Association and Constitution. Similarly, at a Rio Tinto Limited shareholders’ meeting during which a Joint Decision is considered, each Rio Tinto Limited share carries one vote and the Guarantees holder of its Special Voting Share will have one vote for each vote cast by the In 1995, each company entered into a deed poll guarantee in favour of creditors public shareholders of Rio Tinto plc in their parallel meeting. The holder of the of the other company. In addition, each company guaranteed the contractual Special Voting Share must vote in accordance with the votes cast for and against obligations of the other and the obligations of other persons guaranteed by the the equivalent resolution at the parallel Rio Tinto plc shareholders’ meeting. other company, subject to certain limited exceptions. The holders of Rio Tinto plc ordinary shares do not hold any voting shares in Rio Tinto Limited by virtue of their holding in Rio Tinto plc, and cannot enforce the Beneficiaries under deed poll guarantees can make demands on the relevant Additional voting arrangements relating to the Special Voting Share. guarantor without first having recourse to the company or persons whose obligations are being guaranteed. The obligations of the guarantor under each Capital distribution arrangements deed poll guarantee expire upon termination of the Sharing Agreement and information If either company goes into liquidation, the Sharing Agreement ensures a under other limited circumstances, but only in respect of obligations arising valuation is made of the surplus assets of both companies. If the surplus assets after such termination and, in the case of other limited circumstances, the available for distribution by one company on each of the shares held by its publication and expiry of due notice. shareholders exceed the surplus assets available for distribution by the other company on each of the shares held by its shareholders, then an equalising The shareholders of the companies cannot enforce the provisions of the deed payment must be made – to the extent permitted by applicable law – such that poll guarantees in relation to their interest in the shares of the other company. the amount available for distribution on each share held by shareholders of both companies reflects the Equalisation Ratio. The aim is to ensure the shareholders of both companies have equivalent entitlements to the assets of the combined Group on a per share basis, taking account of the equalisation ratio. The Sharing Agreement does not grant any enforceable rights to the shareholders of either company upon liquidation of either company. Annual report 2019 | riotinto.com 293

Additional information Shareholder information continued Markets Rio Tinto Limited Rio Tinto plc Rio Tinto Limited shares are listed on the Australian Securities Exchange (ASX). The principal market for Rio Tinto plc shares is the London Stock Exchange, with shares trading through the Stock Exchange Electronic Trading Service The ASX is the principal trading market for Rio Tinto Limited shares. The ASX (SETS) system. is a national stock exchange with an automated trading system. Rio Tinto plc American depositary receipts (ADRs) are listed on the New York Stock Exchange. Share ownership Substantial shareholders Under the UK Disclosure and Transparency Rules and the Australian Corporations Act 2001, any shareholder of Rio Tinto plc with voting rights of 3% or more, or any person with voting power of 5% or more in Rio Tinto Limited, is required to provide the relevant companies with notice. The shareholders who have provided this notice or an equivalent as of 14 February 2020, being the last practicable date, are: Rio Tinto Plc Date of notice Number of shares Percentage of capital BlackRock, Inc. 4 Dec 2009 127,744,871 8.38 The Capital Group Companies, Inc. 8 Jan 2018 67,470,318 5.03 Shining Prospect Pte. Ltd 7 Dec 2018 182,550,329 14.02(a) The Capital Group Companies, Inc. 8 Jan 2020 61,365,180 4.91 Rio Tinto Limited BlackRock, Inc. 13 Apr 2015 See footnote(b) See footnote(b) Blackrock, Inc. 13 Feb 2019 22,870,305 6.16 Shining Prospect Pte. Ltd 9 Feb 2018 See footnote(c) See footnote(c) The Vanguard Group, Inc. 19 Jul 2018 20,623,906 5.00 (a) In its notification of major holdings filed on 7 December 2018, Shining Prospect Pte. Ltd, a Singapore-based entity owned by Chinalco (Aluminium Corporation of China) disclosed that its percentage of voting rights in Rio Tinto plc had increased to 14.02% on 18 October 2018. This increase in voting rights is due to the ongoing on-market share buy-back programme of Rio Tinto plc shares and the number of shares held by Shining Prospect Pte. Ltd has remained unchanged. (b) In its substantial holding notice filed on 13 April 2015, BlackRock, Inc. and its associates disclosed a holding of 120,174,604 shares in Rio Tinto plc and 22,330,443 shares in Rio Tinto Limited. Through the operation of the Australian Corporations Act 2001 as modified, these interests gave BlackRock, Inc. and its associates voting power of 7.7% in the Rio Tinto Group on a Joint Decision matter, making them substantial shareholders of Rio Tinto Limited, as well as of Rio Tinto plc. (c) In its notice of change of interests of substantial holder filed on 9 February 2018 Shining Prospect Pte. Ltd, disclosed a holding of 182,550,329 Rio Tinto plc shares which, as at 28 November 2017, gave this entity and its associates voting power of 10.32% in the Rio Tinto Group on a Joint Decision matter. Accordingly, in addition to being substantial shareholders of Rio Tinto plc, through the operation of the Australian Corporations Act 2001 as modified and the DLC structure, these entities are substantial shareholders of Rio Tinto Limited. As far as is known, Rio Tinto plc and Rio Tinto Limited are not directly or indirectly owned or controlled by another corporation or by any government or natural person. Rio Tinto is not aware of any arrangement that may result in a change in control of Rio Tinto plc or Rio Tinto Limited. No shareholder possesses voting rights that differ from those attaching to Rio Tinto plc’s and Rio Tinto Limited’s securities. As of 14 February 2020 the total amount of the Group’s voting securities owned by the directors and executives in Rio Tinto plc was 220,653 ordinary shares of 10p each or ADRs, and in Rio Tinto Limited was 131,646 ordinary shares, in aggregate representing less than 1% of the Group’s total number of ordinary shares in issue. 294 Annual report 2019 | riotinto.com

Shareholder information Analysis of ordinary shareholders Rio Tinto plc Rio Tinto Limited As at 14 February 2020 No. of No. of (last practicable date) accounts % Shares % accounts % Shares % 1 to 1,000 shares 24,263 75.616 7,428,860 0.591 132,035 84.49 37,362,715 10.06 1,001 to 5,000 shares 5,659 17.636 11,418,242 0.909 21,748 13.92 43,092,950 11.61 5,001 to 10,000 shares 611 1.904 4,264,286 0.339 1,695 1.08 11,690,753 3.15 10,001 to 25,000 shares 435 1.356 6,828,626 0.543 618 0.40 9,057,679 2.44 25,001 to 125,000 shares 577 1.798 34,215,110 2.723 134 0.09 5,803,570 1.56 125,001 to 250,000 shares 171 0.533 30,682,144 2.442 14 0.01 2,460,708 0.61 250,001 to 1,250,000 shares 243 0.757 131,609,084 10.474 22 0.01 12,430,075 3.35 1,250,001 to 2,500,000 shares 63 0.196 109,236,084 8.693 3 0.00 6,463,956 1.74 2,500,001 shares and over(a) 65 0.203 920,868,248(b) 73.285 8 0.01 242,853,808 65.42 1,256,550,684(c) 100.00 371,216,214(d) 100 Number of holdings less than marketable parcel of A$500 2,954 (a) Excludes shares held in Treasury. (b) This includes 119,178,675 shares held in the name of a nominee on the share register. The shares are listed on the NYSE in the form of American depositary receipts (ADRs). (c) The total issued share capital is made up of 1,278,627,985 publicly held shares, of which 9,440,735 are held in Treasury. (d) Publicly held shares in Rio Tinto Limited. Twenty largest registered shareholders The following table lists the 20 largest registered holders of Rio Tinto Limited shares in accordance with the ASX listing rules, together with the number of shares and the percentage of issued capital each holds, as of 14 February 2020, being the last practicable date. Percentage of issued Rio Tinto Limited Number of shares share capital HSBC Custody Nominees (Australia) Limited 109,130,534 29.40 J. P. Morgan Nominees Australia Limited 72,129,036 19.43 Citicorp Nominees Pty Ltd 24,342,991 6.56 National Nominees Limited 14,231,793 3.83 BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C) 10,567,500 2.85 BNP Paribas Noms Pty Ltd (DRP) 6,527,200 1.76 Citicorp Nominees Pty Limited (Colonial First State Inv A/C) 3,786,688 1.02 HSBC Custody Nominees (Australia) Limited (NT-Comnwlth Super Corp A/C) 3,108,921 0.84 Computershare Trustees Jey Ltd (RE 3000086 A/C) 2,421,301 0.65 Argo Investments Limited 2,097,139 0.56 Australian Foundation Investment Company Limited 2,080,931 0.56 Computershare Comp Noms Ltd (VS4 A/C) 1,139,575 0.31 Australian Mutual Provident Society 871,693 0.23 HKBA Nominees Limited 806,700 0.22 Custodial Services Limited 771,064 0.21 Netwealth Investments Limited 750,124 0.20 Computershare Trustees Jey Ltd (RE 3000091 A/C) 749,778 0.20 BNP Paribas Nominees Pty Ltd (Hub24 Custodial Serv Ltd DRP) 701,300 0.19 Additional Milton Corporation Limited 669,120 0.18 Australian United Investments Co Limited 654,874 0.18 information Annual report 2019 | riotinto.com 295

Additional information Shareholder information continued Material contracts Rights attaching to shares Articles of Association, Constitution, and DLC Sharing Agreement Under UK law, dividends on shares may only be paid out of profits available for As explained on pages 292 to 293, under the terms of the DLC structure distribution, as determined in accordance with generally accepted accounting shareholders of Rio Tinto plc and of Rio Tinto Limited entered into certain principles and by the relevant law. Shareholders are entitled to receive such contractual arrangements designed to place the shareholders of both companies dividends as may be declared by the directors. Directors may also pay shareholders in substantially the same position as if they held shares in a single entity which interim dividends as justified by the financial position of the Group. owned all the assets of both companies. As far as is permitted by the UK Companies Act 2006, the Australian Corporations Act 2001 and ASX Listing Under the Australian Corporations Act 2001, dividends on shares may only be Rules, this principle is reflected in the Articles of Association of Rio Tinto plc paid if the company’s assets exceed its liabilities immediately before the dividend and in the Constitution of Rio Tinto Limited. The following summaries describe is declared, the excess is sufficient for the payment of the dividend, the payment the material rights of shareholders of both Rio Tinto plc and Rio Tinto Limited. is fair and reasonable to the company’s shareholders as a whole, and the payment does not materially prejudice the company’s ability to pay its creditors. Objects Any Rio Tinto plc dividend unclaimed after 12 years from the date the dividend At the 2009 AGMs, shareholders of Rio Tinto plc and Rio Tinto Limited approved was declared, or became due for payment, will be forfeited and returned to the amendments to their Articles of Association and Constitution whereby the company. Any Rio Tinto Limited dividend unclaimed may be invested or otherwise object clauses were removed to allow the companies to have the widest used by the board for the benefit of the company until claimed or otherwise possible scope of activities. disposed of according to Australian law. Rio Tinto Limited is governed by the State of Victoria’s unclaimed monies legislation, which requires the company to Directors Interests pay to the state revenue office any unclaimed dividend payments of A$20 or Under Rio Tinto plc’s Articles of Association, a director may not vote in respect more that on 1 March each year have remained unclaimed for over 12 months. of any proposal in which he or she, or any other person connected with him or her, has any interest, other than by virtue of his or her interests in shares or Voting debentures or other securities of, in or through the company, except in certain Voting at any general meeting of shareholders on a resolution on which the circumstances, including in respect of resolutions: holder of the Special Voting Share is entitled to vote shall be decided by a poll, –– indemnifying him or her or a third party in respect of obligations incurred by and any other resolution shall be decided by a show of hands unless a poll has the director on behalf of, or for the benefit of, the company, or in respect of been duly demanded. On a show of hands, every shareholder who is present obligations of the company, for which the director has assumed in person or by proxy (or other duly authorised representative) and is entitled responsibility under an indemnity, security or guarantee; to vote, has one vote regardless of the number of shares held. The holder of the –– relating to an offer of securities in which he or she may be interested as a Special Voting Share is not entitled to vote in a show of hands. On a poll, every holder of securities or as an underwriter; shareholder who is present in person or by proxy (or other duly authorised –– concerning another body corporate in which the director is beneficially representative) and is entitled to vote, has one vote for every ordinary share interested in less than 1% of the issued shares of any class of shares of such for which he or she is the holder. In the case of Joint Decisions, the holder of a body corporate; the Special Voting Share has one vote for each vote cast in respect of the –– relating to an employee benefit in which the director will share equally with publicly held shares of the other company. other employees; –– relating to liability insurance that the company is empowered to purchase A poll may be demanded by any of the following: for the benefit of directors of the company in respect of actions undertaken –– the chairman of the meeting; as directors (or officers) of the company; and –– at least five shareholders entitled to vote on the resolution; –– concerning the giving of indemnities in favour of directors or the funding of –– any shareholder(s) representing in the aggregate not less than one tenth expenditure by directors to defend criminal, civil or regulatory proceedings (Rio Tinto plc) or one 20th (Rio Tinto Limited) of the total voting rights of all or actions against a director. shareholders entitled to vote on the resolution; –– any shareholder(s) holding Rio Tinto plc shares conferring a right to vote at Under Rio Tinto Limited’s Constitution, a director may be present at a meeting the meeting on which there have been paid-up sums in the aggregate equal of the board while a matter in which the director has a material personal interest to not less than one tenth of the total sum paid up on all the shares is being considered and may vote in respect of that matter, except where conferring that right; or a director is constrained by Australian law. –– the holder of the Special Voting Share of either company. The directors are empowered to exercise all the powers of the companies to A proxy form gives the proxy the authority to demand a poll, or to join others borrow money, to charge any property or business of the companies or all, or in demanding one. any, of their uncalled capital, and to issue debentures or give any other security for a debt, liability or obligation of the companies or of any other person. The The necessary quorum for a Rio Tinto plc general meeting is three members directors shall restrict the borrowings of Rio Tinto plc to the limitation that the present (in person or by proxy or other duly authorised representative) and aggregate amount of all monies borrowed by the company and its subsidiaries entitled to vote. For a Rio Tinto Limited general meeting it is two members shall not exceed an amount equal to 1 ½ times the companies’ share capital plus present (in person or by proxy or other duly authorised representative). aggregate reserves unless sanctioned by an ordinary resolution of the company. Matters are transacted at general meetings by the proposing and passing Directors are not required to hold any shares of either company by way of of resolutions as: qualification. The Remuneration report on pages 110 to 138 provides –– ordinary resolutions (for example the election of directors), which require information on shareholding policies relating to executive and non-executive the affirmative vote of a majority of persons voting at a meeting for which directors. Please refer to the Directors’ report for information on the there is a quorum; and appointment of directors. –– special resolutions (for example amending the Articles of Association of Rio Tinto plc or the Constitution of Rio Tinto Limited), which require the affirmative vote of not less than three-quarters of the persons voting at a meeting at which there is a quorum. The Sharing Agreement further classifies resolutions as Joint Decisions and class rights actions as explained on pages 292 to 293. Annual general meetings must be convened with 21 days’ written notice for Rio 296 Annual report 2019 | riotinto.com

Shareholder information Tinto plc and with 28 days’ notice for Rio Tinto Limited. In accordance with Rio Tinto Limited the authority granted by shareholders at the Rio Tinto plc AGM in 2019, other Under current Australian legislation, Australia does not impose general meetings of Rio Tinto plc may be convened with 14 days’ written notice for the exchange or foreign currency controls. Subject to some specific requirements passing of a special resolution, and with 14 days’ notice for any other resolution, and restrictions, Australian and foreign currency may be freely brought into depending on the nature of the business to be transacted. All meetings of and sent out of Australia. There are requirements to report cash transfers in or Rio Tinto Limited require 28 days’ notice. In calculating the period of notice, out of Australia of A$10,000 or more. There is a prohibition on (or in some cases any time taken to deliver the notice and the day of the meeting itself are not the specific prior approval of the Department of Foreign Affairs and Trade or included. The notice must specify the nature of the business to be transacted. Minister for Foreign Affairs must be obtained for) certain payments or other dealings connected with countries or parties identified with terrorism, or to Variation of rights whom United Nations or autonomous Australian sanctions apply. Sanction, If, at any time, the share capital is divided into different classes of shares, anti-money laundering and counterterrorism laws may restrict or prohibit the rights attached to each class may be varied, subject to the provisions of the payments, transactions and dealings or require reporting of certain transactions. relevant legislation, the written consent of holders of three-quarters in value of the shares of that class, or upon the adoption of a special resolution passed Rio Tinto Limited may be required to deduct withholding tax from foreign at a separate meeting of the holders of the shares of that class. At every such remittances of dividends, to the extent that they are unfranked, and from meeting, all of the provisions of the Articles of Association and Constitution payments of interest. relating to proceedings at a general meeting apply, except that the quorum for Rio Tinto plc should be two or more persons who hold or represent by proxy Acquisitions of interests in shares, and certain other equity instruments in not less than one-third in nominal value of the issued shares of the class. Australian companies by non-Australian (“foreign”) persons are subject to review and approval by the Treasurer of the Commonwealth of Australia under Rights upon a winding-up the Takeovers Act. Except as the shareholders have agreed or may otherwise agree, upon a winding-up, the balance of assets available for distribution after the payment In broad terms, the Takeovers Act applies to acquisitions of interests in securities of all creditors (including certain preferential creditors, whether statutorily in an Australian entity by a foreign person where, as a result, a single foreign preferred creditors or normal creditors) and subject to any special rights person (and any associate) would control 20% or more of the voting power or attaching to any class of shares, is to be distributed among the holders of potential voting power in the entity, or several foreign persons (and any associates) ordinary shares according to the amounts paid-up on the shares held by them. would control 40% or more of the voting power or the potential voting power in This distribution should generally be made in cash. A liquidator may, however, the entity. The potential voting power in an entity is determined having regard upon the adoption of a special resolution of the shareholders, divide among to the voting shares in the entity that would be issued if all rights (whether or the shareholders the whole or any part of the assets in specie or kind. not presently exercisable) in the entity were exercised. The Sharing Agreement describes the distribution of assets of each of the The Takeovers Act also applies to direct investments by foreign government companies in the event of a liquidation, as explained on pages 292 to 293. investors, in certain circumstances regardless of the size of the investment. Persons who are proposing relevant acquisitions or transactions may be Facility agreement required to provide notice to the Treasurer before proceeding with the Details of the Group’s $7.5 billion multi-currency committed revolving credit acquisition or transaction. facilities are set out in note 30 to the 2019 financial statements. The Treasurer has the power to order divestment in cases where relevant Exchange controls and foreign investment acquisitions or transactions have already occurred, including where prior notice Rio Tinto plc to the Treasurer was not required. The Takeovers Act does not affect the rights There are no UK foreign exchange controls or other restrictions on the import of owners whose interests are held in compliance with the legislation. or export of capital by, or on the payment of dividends to, non-resident holders of Rio Tinto plc shares, or that materially affect the conduct of Rio Tinto plc’s Limitations on voting and shareholding operations. It should be noted, however, that various sanctions, laws, regulations Except for the provisions of the Takeovers Act, there are no limitations imposed or conventions may restrict the import or export of capital by, or the payment by law, Rio Tinto plc’s Articles of Association or Rio Tinto Limited’s Constitution, of dividends to, non-resident holders of Rio Tinto plc shares. There are no on the rights of non-residents or foreigners to hold the Group’s ordinary shares restrictions under Rio Tinto plc’s Articles of Association or under UK law that or ADRs, or to vote that would not apply generally to all shareholders. limit the right of non-resident owners to hold or vote Rio Tinto plc shares. However, certain of the provisions of the Australian Foreign Acquisitions and Directors Additional Takeovers Act 1975 (the Takeovers Act) described below also apply to the Appointment and removal of directors acquisition by non-Australian persons of interests in securities of Rio Tinto plc. The appointment and replacement of directors is governed by Rio Tinto plc’s Articles of Association and Rio Tinto Limited’s Constitution, relevant UK and information Australian legislation, and the UK Corporate Governance Code. The board may appoint a director either to fill a casual vacancy or as an addition to the board, so long as the total number of directors does not exceed the limit prescribed in these constitutional documents. An appointed director must retire and seek election to office at the next AGM of each company. In addition to any powers of removal conferred by the UK Companies Act 2006 and the Australian Corporations Act 2001, the company may by ordinary resolution remove any director before the expiry of his or her period of office and may, subject to these constitutional documents, by ordinary resolution appoint another person who is willing to act as a director in their place. In line with the UK Corporate Governance Code, all directors are required to stand for re-election at each AGM. Annual report 2019 | riotinto.com 297

Additional information Shareholder information continued Directors’ powers Financial calendar The board manages the business of Rio Tinto under the powers set out in these constitutional documents. These powers include the directors’ ability to issue 2020 or buy-back shares. Shareholders’ authority to empower the directors to 17 January Fourth quarter 2019 operations review purchase its own ordinary shares is sought at the AGM each year. The constitutional 26 February Announcement of results for 2019 and date of 2019 Annual documents can only be amended, or replaced, by a special resolution passed in report (published on 27 February (GMT)) general meeting by at least 75% of the votes cast. 28 February Form 20-F publication 5 March Rio Tinto plc and Rio Tinto Limited ordinary shares and UK listing rules cross reference table Rio Tinto plc ADRs quoted “ex-dividend” for the 2019 The following table contains only those sections of UK listing rule 9.8.4 C which final dividend are relevant. The remaining sections of listing rule 9.8.4 C are not applicable. 6 March Record date for the 2019 final dividend for Rio Tinto plc and Rio Tinto Limited ordinary shares and Rio Tinto plc ADRs Listing rule Description of listing rule Reference in report 10 March Notices of AGM A statement of any interest Note 8 Finance income and 24 March Final date for elections under the Rio Tinto plc and Rio Tinto capitalised by the Group during finance costs and note 17 Deferred Limited dividend reinvestment plans and under facilities for 9.8.4 (1) the year taxation dividends to be paid in alternative currency for the 2019 Details of any arrangement under Note 11 Dividends final dividend which a shareholder has waived or 7 April Dividend currency conversion date (Rio Tinto plc holders 9.8.4 (12) agreed to waive any dividends electing to receive Australian dollars and Rio Tinto Limited holders electing to receive pounds sterling) Shareholder security 8 April Annual general meeting for Rio Tinto plc, London Shareholders tell us that they sometimes receive unsolicited approaches, usually by telephone, inviting them to undertake a transaction in shares they own. 16 April Payment date for the 2019 final dividend to holders of ordinary shares and ADRs If a shareholder does not know the source of the call, they should check the 17 April First quarter 2020 operations review details against the Financial Conduct Authority (FCA) website below and, 7 May Annual general meeting for Rio Tinto Limited, Brisbane if they have specific information, report it to the FCA using the consumer 17 July Second quarter operations review 2020 helpline or the online reporting form. 29 July Announcement of half-year results for 2020 6 August Rio Tinto plc and Rio Tinto Limited ordinary shares and If a shareholder is worried that they are a victim of fraud and is resident in the Rio Tinto plc ADRs quoted “ex-dividend” for the 2020 UK, they should report the facts immediately using the Action Fraud helpline interim dividend on 0300 123 2040. More information about potential scams and other 7 August Record date for the 2020 interim dividend for Rio Tinto plc investment-based fraud can be found at actionfraud.police.uk or and Rio Tinto Limited ordinary shares and Rio Tinto plc ADRs fca.org.uk/scamsmart. 26 August Final date for elections under the Rio Tinto plc and Rio Tinto Limited dividend reinvestment plans and under facilities for Metal prices and exchange rates dividends to be paid in alternative currency for the 2020 interim dividend Metal prices – average increase/ 10 September Dividend currency conversion date (Rio Tinto plc holders for the year 2019 2018 (decrease) electing to receive Australian dollars and Rio Tinto Limited Copper – US cents/lb 273 297 -0.08% holders electing to receive pounds sterling) Aluminium – US$/tonne 1,791 2,110 -0.15% 17 September Payment date for the 2020 interim dividend to holders of ordinary shares and ADRs Gold – US$/troy oz 1,393 1,269 -0.10% 16 October Third quarter 2020 operations review Average exchange rates 2021 against the US dollar January Fourth quarter 2020 operations review Sterling 1.28 1.34 -0.45% February Announcement of results for 2020 Australian dollar 0.70 0.75 -0.07% April Annual general meeting for Rio Tinto plc, London Canadian dollar 0.75 0.77 -0.03% April First quarter 2021 operations review Euro 1.12 1.18 -0.05% May Annual general meeting for Rio Tinto Limited, Sydney South African rand 0.069 0.076 -0.09% July Second quarter 2021 operations review Year-end exchange rates August Announcement of half-year results for 2021 against the US dollar October Third quarter 2021 operations review Sterling 1.31 1.27 0.03% Australian dollar 0.70 0.70 0% Canadian dollar 0.77 0.73 0.05% Euro 1.12 1.14 -0.02% South African rand 0.071 0.069 0.03% 298 Annual report 2019 | riotinto.com

Contact details Contact details Registered offices Shareholders Rio Tinto Limited Rio Tinto plc Please refer queries about shareholdings to Computershare Investor Services Pty Limited 6 St James’s Square the investor centre of the respective registrar. GPO Box 2975 London Melbourne UK Rio Tinto plc Victoria 3001 SW1Y 4AD Computershare Investor Services PLC Australia Registered in England No. 719885 The Pavilions Telephone: +61 (0) 3 9415 4030 Telephone: +44 (0)20 7781 2000 Bridgwater Road Fax: +61 (0) 3 9473 2500 Website: riotinto.com Bristol Australian residents only, toll free: 1800 813 292 BS99 6ZZ New Zealand residents only, toll free: Rio Tinto Limited UK 0800 450 740 Level 7 Telephone: +44 (0)370 703 6364 Website: computershare.com 360 Collins Street Fax: +44 (0)370 703 6119 Melbourne UK residents only Former Alcan Inc. shareholders Victoria 3000 Freephone: +44 (0)800 435021 Computershare Investor Services Inc. Australia Website: computershare.com 8th Floor ABN 96 004 458 404 100 University Avenue Telephone: +61 (0) 3 9283 3333 Holders of Rio Tinto American depositary Toronto, ON Fax: +61 (0) 3 9283 3707 receipts (ADRs) Canada Website: riotinto.com Please contact the ADR administrator if M5J 2Y1 you have any queries about your ADRs. Telephone: +1 514-982-7555 Rio Tinto’s agent in the US is Cheree Finan, North American residents only, who may be contacted at ADR administrator toll free: +1 (800) 564-6253 Rio Tinto Services Inc. JPMorgan Chase & Co Website: computershare.com 80 State Street PO Box 64504 Albany St. Paul US MN 55164-0854 NY 12207-2543 US Telephone: +1 (651)453 2128 US residents only, toll free general: +1(800) 990 1135 US residents only, toll free Global invest direct: +1 (800) 428 4267 Website: adr.com Email: jpmorgan.adr@eq-us.com Additional information Annual report 2019 | riotinto.com 299

Additional information Forward‑looking statements Investor Centre Forward-looking statements Investor Centre is Computershare’s free, secure, This report includes “forward-looking statements” within the meaning of the Private Securities Litigation self-service website, where shareholders can Reform Act of 1995. All statements other than statements of historical facts included in this report, manage their holdings online. The website including, without limitation, those regarding Rio Tinto’s financial position, business strategy, plans and enables shareholders to: objectives of management for future operations (including development plans and objectives relating to –– View share balances Rio Tinto’s products, production forecasts and reserve and resource positions), are forward-looking –– Change address details statements. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, –– View payment and tax information “may”, “should”, “will”, “target”, “set to” or similar expressions, commonly identify such forward-looking –– Update payment instructions statements. In addition, shareholders who register their email Such forward-looking statements involve known and unknown risks, uncertainties and other factors which address can be notified electronically of events may cause the actual results, performance or achievements of Rio Tinto, or industry results, to be materially such as annual general meetings, and can receive different from any future results, performance or achievements expressed or implied by such forward- shareholder communications such as the Annual looking statements. Such forward-looking statements are based on numerous assumptions regarding report or notice of meeting electronically online. 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 Rio Tinto plc shareholders or achievements to differ materially from those in the forward-looking statements are levels of actual Website: www.investorcentre.co.uk production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, Rio Tinto Limited shareholders operational problems, political uncertainty and economic conditions in relevant areas of the world, the Website: www-au.computershare.com/Investor actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors 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. 300 Annual report 2019 | riotinto.com

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Exhibit 15.3

28 February 2020

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Commissioners:

We have read the statements made by Rio Tinto plc and Rio Tinto Limited (together “Rio Tinto”) (copy attached). We understand Rio Tinto’s statements will be included under Item 16.F of its annual report on Form 20-F which will be filed with the Securities and Exchange Commission on 28 February 2020. We agree with the statements concerning our Firms contained therein.

Yours faithfully



/s/ PricewaterhouseCoopers LLP	/s/ PricewaterhouseCoopers
PricewaterhouseCoopers LLP	PricewaterhouseCoopers
London, United Kingdom	Brisbane, Australia

16.F Change in registrant’s certifying accountant

On 12 June 2018, the company announced a proposal to appoint KPMG LLP and KPMG (together, “KPMG”) as external auditor for the financial year ending 31 December 2020, subject to shareholder approval. PricewaterhouseCoopers LLP and PricewaterhouseCoopers (together, “PricewaterhouseCoopers”), Rio Tinto’s current auditor, has been the Group’s auditor since its formation under a dual listed company structure in 1995. The proposed change of auditor followed a recommendation by the Audit Committee based on a formal tender process. PwC will hold office until the filing of the Form 20-F. KPMG will become the Group’s auditor subject to approval by the shareholders at Rio Tinto’s annual general meetings in 2020.

Exhibit 16.1

Disclosure of Mine Safety and Health Administration (“MSHA”) Safety Data

Rio Tinto plc and Rio Tinto Limited (together, “Rio Tinto” or the “Company”) maintain a comprehensive health and safety program that includes extensive training for all employees and contractors, site inspections, emergency response preparedness, crisis communications training, incident investigation, regulatory compliance training and process auditing.

Rio Tinto’s U.S. mining operations are subject to MSHA regulation under the U.S. Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects Rio Tinto’s mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation.

The following disclosures are provided pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”), which requires certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934 that operate mines regulated under the Mine Act. The disclosures reflect Rio Tinto’s U.S. mining operations only as the requirements of the Act do not apply to its mines operated outside the U.S.

The information in the table below reflects citations and orders MSHA issued to Rio Tinto during the year ended 31 December 2019 as reflected in Rio Tinto’s records. The data in Rio Tinto’s system may not match or reconcile with the data MSHA maintains on its public website. In evaluating this information, consideration should also be given to factors such as: (i) the number of citations and orders may vary depending on the size and operation of the mine, (ii) the number of citations issued may vary from inspector to inspector and mine to mine, and (iii) citations and orders may be contested and appealed, and in that process, may be reduced in severity and amount, and may be dismissed.



Mine / Contract or ID number¹	Mine or Operating Name	Section 104 Significant and Substantial Citations²	Section 104(b) Orders³	Section 104(d) Citations and Orders⁴	Section 110(b)(2) Violations⁵	Section 107(a) Orders⁶	Total dollar value of MSHA assessments proposed⁷		Total number of Minng Related Facilities	Received Notice of Pattern of Violations Under Section 104(e) yes/no	Notice of Potential to Have Pattern under section 104(e) yes/no	Legal Actions Pending as of Last Day of Period⁸	Categories of Pending Legal Actions (i-vii)⁹	Legal Actions Initiated During Period	Legal Actions Resolved During Period
4200149	Kennecott Utah Copper LLC (Bingham Canyon Mine)	9	0	0	0	0		$60,855	0	No	No	0	n/a	0	0
4201996	Kennecott Utah Copper LLC (Copperton Concentrator)	7	0	0	0	0		$67,258	0	No	No	0	n/a	1	1
400743	U.S. Borax Inc. (Boron)	6	0	0	0	0		$30,012	0	No	No	0	n/a	0	0
402834	U.S. Borax Inc. (Owens Lake)	1	0	0	0	0		$967	0	No	No	0	n/a	0	0
200152	Resolution Copper Mining LLC	0	0	0	0	0		$847	0	No	No	0	n/a	0	0
4201392	Kennecott Keystone Underground	0	0	0	0	0		$121	0	No	No	0	n/a	0	0
B5379	Rio Tinto Projects*	0	0	0	0	0		$0	0	No	No	0	n/a	0	0

*An independent contractor performing services at a mine since 20 June 2017.


1	MSHA assigns an identification number to each mine or operation and may or may not assign separate identification number to related facilities. The information provided in this table is presented by mine identification number.


2	Represents the total number of citations issued by MSHA for violation of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.


3	Represents the total number of orders issued, which represents a failure to abate a citation under section 104(a) within the period prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.


4	Represents the total number of citation and orders issued by MSHA for unwarrantable failure to comply with mandatory health or safety standards.


5	Represents the total number of flagrant violations identified.


6	Represents the total number of imminent danger orders issued under section 107(a) of the Mine Act.


7	Amounts represent the total dollar value of proposed assessments received from MSHA.


8	Pending legal actions before the Federal Mine Safety and Health Review Commission (the "Commission") as required to be reported by Section 1503(a)(3) of the Act.


9	The following provides additional information regarding the types or categories of proceedings that may be brought before the commission:


(i)	Contest Proceedings - a contest proceeding may be filed with the Commission by an operator to challenge the issuance of a citation or order issued by MSHA;


(ii)	Civil Penalty Proceedings - a civil penalty proceeding may be filed with the Commission by an operator to challenge a civil penalty MSHA has proposed for a violation contained in a citation or order;


(iii)	Discrimination Proceedings - a discrimination proceeding involves a miner's allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint;


(iv)	Temporary Reinstatement Proceedings - a temporary reinstatement proceeding involves cases in which a miner has filed a complaint with MSHA stating that he or she has suffered discrimination and the miner has lost his or her position;


(v)	Compensation Proceedings - a compensation proceeding may be filed with the Commission by miners entitled to compensation when a mine is closed by certain closure orders issued by MSHA. The purpose of the proceeding is to determine the amount of compensation if any, due to miners idled by the orders;


(vi)	Applications for Temporary Relief-applications for temporary relief of any order issued under Section 104; and


(vii)	Appeals.