Rio Tinto Group

So a warm welcome to everyone, both here in the room and for those joining us remotely. We are pleased to be here today with our CEO, Jakob Salsholm, and CFO, Peter Cunningham, to present to you our 2025 half-year results. This will be followed by a Q&A session. Important. There are no planned fire evacuations today. If you hear the alarm, please follow instructions from the fire wardens here at the London Stock Exchange. With that, I would like to invite Jakob to the stage.

Thank you, Rachel. Good morning, good evening to everyone joining us in person or online. I like to start by acknowledging and paying my respect to all traditional owners and First Nations people who host our operations around the world. It's great to be in London today. I am so proud of the first half financial results we're presenting today. In my time with Rio Tinto, we have had periods with higher prices, but this set of results are the strongest, demonstrating real momentum in improving operational performance, real value from a more diversified portfolio, and excellence in unlocking growth projects. This is allowing us to deliver very resilient financial performance despite lower iron ore prices and a tough start to the year with four cyclones in the Pilbara. Importantly, we are delivering on our strategy which we set out at our investor seminar in December last year. We remain on track for this year's guidance on production, projects and investments and on our strong mid-term production growth. We now have a solid foundation in place to drive ongoing efficiency and we have a diverse pipeline of growth options for the future. When I first started as Chief Executive, I said it would take time to build a stronger Rio Tinto. In February 2021, we introduced four objectives to unlock the potential of our business. Now, four and a half years later, we can see the positive impact of consistent focus against those objectives over time with strategic investments and best-in-class project execution driving profitable growth. Our copper equivalent production was up 13% in the second quarter year-on-year, making a 6% increase in the first half. This is led by the strong ramp-up of Eure Tolkoi. At last year's investor seminar, we indicated 50% growth. I'm proud to report the team hit 54% in the first half year-on-year. Excitingly, our bauxite production also hit a new record for the half with 9% growth, with now Amron consistently performing above its nameplate capacity. This has been driven by really good implementation of the safe production system. And at Simundu, we are accelerating the first shipment of high-grade ore to November and will be focused on safely ramping up to full production over the following two and a half years. These are just some of the highlights across our diverse portfolios showcasing our project-building expertise and the talent of our people. Of course, this progress would not be possible without a strong social license to operate. Just last month, I was fortunate to be in the Pilbara in Western Australia to officially open our new Western Range mine. This is our first project with a co-designed social, cultural and heritage management plan with the Inawanka traditional owners. Being on country together was yet another reminder of me about the importance of social license. This is a strong set of results for the first half year. Our strategy is delivering, and as Peter will share, we're growing while improving cost discipline. I'm proud that our cash generation is largely the same as last year, despite a drop of $14 per ton in the iron ore price. This demonstrates the strength of our diverse portfolio. We are much less dependent on iron ore price, with a growing contribution from our aluminium and copper businesses. And it highlights the excellent work from our Pilbara operations to recover so strongly from the cyclones in the first quarter, by delivering the best production for a second quarter since I joined the company. Our financial performance is very resilient, with underlying EBITDA of 11.5 billion and an operating cash flow of 6.9 billion. Our net operating cash flow decreased by just 2%, while our production volume increased 6% and sales volume increased by 4% year-on-year. And we achieved this growth while maintaining a strong balance sheet and attractive returns to shareholders, which Peter will talk about further. We can expect more global volatility, but our strategy, focus on our four objectives and our diverse set of tier one assets enables us to be extremely resilient in an uncertain world and capture new opportunities as they arise. As you will be able to see, despite complex tariff issues in aluminium, the return on capital doubled. Converting opportunities into value, we are now building a track record of delivering projects on time and on budget. I'll now hand over to Peter to take you through the financials.

Thanks, Jakob, and good morning, everyone. Let's look at our very resilient financials. Once again, we reported a clean set of results, with few differences between underlying and net earnings. I'd like to highlight three key points. Firstly, with our improving operational performance, we saw further productivity gains. We've been particularly focused on our highest cash-generating businesses, but I would like in particular to call out the progress made at Kennecott, which we spoke about in December last year. Secondly, we continue to see very stable operating cash flow, driven by good discipline on costs and tight control over working capital, despite the usual seasonality in the first half. Thirdly, our projects remain on track and are ramping up, in particular OT. Overall, copper equivalent production was up 6%. So let's look at the numbers. In terms of underlying EBITDA, we offset the 13% lower iron ore price with a rising contribution from our copper and aluminium divisions. Bauxite was a particular highlight. Underlying earnings were down 16%, mainly due to the drivers of EBITDA, a higher interest charge following the Arcadium acquisition, and one-off increases in the effective tax rate. Cash flow from operations was very consistent at $6.9 billion compared to $7.1 billion last first half and $7 billion in 2023 first half, while our share of capital investment rose to $4.5 billion. Following completion of the Arcadium acquisition in March, we ended the half with net debt of $14.6 billion. And we've maintained our practice of paying out at 50% for the interim ordinary dividend, equating to $2.4 billion. Let's now take a look at commodity prices. Now, I've talked about this before, but it's really important. Taking a longer-term perspective, removing the noise of short-term volatility, and factoring in the impact of inflation, This chart shows rolling 12-month average prices for our key commodities, rebased to 2025 real terms. Now, we've indexed these and show the average of the 15 years is 100. In nominal terms, copper and aluminium may appear elevated, but in real terms, they're actually trading at around their averages since 2010. Iron ore and lithium are well below their historic averages. It's an important picture because it shows our financial results are not a product of elevated prices. And in fact, demand is soft in a lot of traditional segments, particularly property, but is being offset by those driven by the energy transition. Now, like Jakob said, we're really starting to see the benefits from our diversified portfolio. with higher volumes in copper, bauxite and aluminium, together with improved pricing, offsetting the iron ore price decline. Now, of course, our Pilbara business continues to generate very strong margins and remains a stable foundation, comprising 58% of Group Heavy DA. The last first half, it was 73%. Over the next few years, we expect to increasingly see our financials driven by the entire portfolio, as growth projects ramp up and productivity improvements flow through. We are intensely focused on cost discipline. Operational employee numbers across the group have decreased by 2% over the last 12 months, which is impressive when set against the context of production growth this half. In February, I talked about finding solutions to complex problems and how we can unlock value. Kennecott is a great case in point. We're now seeing much more stable operational performance. We've made substantial efforts to lower the cost base, achieving a 10% headcount reduction, changing contractor engagement and driving operational improvements. Kennecott is well positioned to benefit as a capital producer. one of only two active U.S. copper smelters. We've also launched a business transformation program with our iron and titanium operations in Quebec as part of our asset productivity drive. And functional support costs for the group are tracking below 2022, a trend we expect to continue. Now let's unpack EBITDA through our standard waterfall. This underlines the operating strength and financial resilience I mentioned earlier. Commodity prices were the biggest driver, netting out to $800 million negative. But note, the iron ore price impact was $2 billion negative. In copper equivalent terms, sales were up 4%, which gave rise to a $700 million volume uplift. This was mostly driven by balkite and copper, with a ramp-up at OT and higher grades at Escondida. It more than compensated for the modest decline in iron ore sales, which we expect to recover in the second half, given that Q2 shipments were constrained by port maintenance. Expiration and evaluation was $200 million lower, mainly a function of Rincon costs now being capitalised, with underlying spend slightly below $1 billion for the full year, as we prioritise copper and lithium. Turning to cash unit costs. These were lower in aluminium and copper on a gross basis, with efficiencies from the higher volumes from OT and Escondida. C1 copper costs, which decreased by 34%, benefited further from the higher gold credits, which reflects in the price, and volume variances for this analysis. Overall, we're continuously improving on our costs, with SPS giving us momentum and a safer operating environment. So after factoring in $600 million of other movements, mainly provision-related, this brings us to a very resilient EBITDA of $11.5 billion. On to the product groups. Iron Ore remains our cornerstone, delivering $6.7 billion of EBITDA. We saw good levels of productivity improvement with the highest Q2 production since 2018 and first tons from Western Range. And we're now implementing our new product strategy, aligning sales to our system as we continue to meet the needs of our customers. Unit costs were within guidance at $24.30 per ton, despite lower production and additional costs to recover from the four cyclones in Q1. As Jacob mentioned, aluminium continues its impressive record of stability, in particular for smelting and bauxite. We took full advantage of stronger markets, leading to a step change in financial performance. Our commercial team were able to proactively flex the business to optimise our position in the wake of the changing tariff environment. and today the Midwest premium is substantially offsetting the tariff. The main impact on our financials is the cancellation of the 10% Section 232 exemption Canada previously enjoyed. Copper was stronger still, with EVGA driven by higher prices and rising volumes, up more than 50% at OT. where we've retained our longer-term guidance of 500,000 tonnes a year by 2028. Unit costs are now guided lower, driven by disciplined cost control and strong production. Lastly, minerals. We saw increasing operational stability at IOC, and at ION Entertainment, we're focused on improving plant performance, but TiO2 volumes remain weak. reflecting continued weak market conditions. The integration of Rio Tinto lithium is proceeding well following closure of the Arcadium transaction, who is Rincon, now an integral part of this business. I'd now like to return to iron ore, as I'm often asked about the industry structure and the impact of Simundu, which will bring online about 120 million tonnes over the next few years from the two blocks. Now, it's helpful to show our view of the iron ore industry and how the cost curve has evolved. The red line shows the 2024 cost curve we forecasted back in 2018. It shows that we expected more production than the lower half of the cost curve. In reality, we've seen many more high-cost operators remaining in the market. And the curve has therefore steepened relative to 2028 expectations. with a larger proportion of high-cost producers than anticipated, compounded by inflation. As Simundu comes online, some higher-cost production will probably be pushed out. But it's also important to note that going forward, over the next 10 years, we expect that 40% of production from the majors needs to be replaced. And finally, note the size of the contestable iron ore market. It's around 1.9 billion tonnes. And while China's steel consumption has plateaued, there is demand growth elsewhere in global steel markets, often supplied by Chinese exports. We therefore continue to expect an attractive industry structure into the future. Our approach to capital allocation remains very disciplined, with no change to our well-flagged CAPEX guidance of around $11 billion in 2025, and $10 to $11 billion thereafter. This includes growth of around $3 billion each year, with Arcadium now absorbed in our guidance. We're due to complete Saldovida and the Phenix expansion next year, as we work through the phasing of the various lithium growth options. With the recent Pilbara replacement approvals, CapEx will be weighted to the second half of the year, with major commitments including the ongoing delivery of Simundu and construction of Rincon. Net debt has risen to $14.6 billion following completion of the Arcadian transaction, a level comfortably in a range consistent with our commitment to a single A credit rating. All our debt metrics are in a reasonable place. This remains a strong balance sheet. Since 2021, we've invested to grow our production base through productivity improvements and capital expenditure. You'll see on this chart how we have increased capex since 2019 and delivered four consecutive years of production growth following declines between 2018 and 2021. The rate of production growth gathered momentum in the first half of 2025. This is strengthening our cash flows, allowing us to absorb the effect of a lower iron ore price over the last few years and grow our cash flows in the future. But the growth has not been at the expense of shareholder returns. Our commitment is unwavering, and in line with our usual practice, we've declared a 50% payout for the interim. We're now into the 10th year of our policy, which has proved to be highly successful and predictable. And this has been achieved while both maintaining a strong balance sheet and the commitment to shareholder returns. So to summarise, our operational performance is improving. Our projects are on track and ramping up. This is driving our copper equivalent production, which was up 6% this half. and we're generating very stable operating cash flow. Our consistent strategy and diverse portfolio will ensure Rio Tinto remains strong in the short, medium and long term, while continuing to pay attractive returns. And with that, let me pass back to Jakob.