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Good morning ladies and gentlemen.
It is a pleasure to welcome you to Rio Tinto’s Annual General Meeting here in the Queen Elizabeth the Second Conference Centre in London.
Not only is 2012 the Olympics year for London, in which we are proudly participating in a small way by providing the metal for the medals, but this AGM marks your company’s fiftieth Annual General Meeting.
As was the case last year, this meeting is being webcast to allow more shareholders to follow proceedings and I would therefore also like to extend a welcome to our on-line audience.
As you all know, safety is vitally important at Rio Tinto – and central in all parts of our business, not just our mines – so, before we continue with the meeting, I will ask you all to listen carefully to the following safety briefing.
Thank you for your attention to that announcement. Changes in your Board
All your directors are present at today’s meeting. May I extend a remote, but nonetheless warm, welcome to Mike Fitzpatrick and Richard Goodmanson who join us today by video link from Melbourne, as well as to Paul Tellier who joins us from Montreal.
I would like to take the opportunity to introduce John Varley and Chris Lynch, who both joined the Board during the year.
Chris Lynch was for many years a senior executive in global mining and metal companies and we are already benefiting from his tremendous practical experience of our industry.
John Varley has an outstanding track record in the financial services industry and will succeed Andrew Gould as the senior independent non-executive director upon Andrew’s retirement from the Board at the conclusion of the Australian Annual General Meeting in May.
John became chairman of the Remuneration committee in October and will be addressing you on our remuneration strategy and plans later in the meeting.
I would like to thank Andrew for his significant contribution to Rio Tinto since 2002, both as Chairman of the Remuneration Committee and as Senior Independent Director.
His leadership and international experience have been invaluable in helping to guide the Board during his nine years with the company.
On a personal level, I also want to thank him warmly for his support to me when I took on the chairmanship of your company in difficult circumstances some three years ago.
Since I became chairman, the composition of the Board has changed considerably.
It will continue to evolve over time as we review the profile, skills, diversity and individual qualities of Board members against the current and future needs of the business, and the ever-changing environment in which we operate.
Before I move on to talk about the highlights of 2011, I would like to thank Tom, Guy and Sam and the rest of the executive team for their strong and effective contribution over the last year.
Highlights of 2011
Let me start with our financial results.
2011 was an outstanding year for Rio Tinto.
Following on from the record underlying earnings reported in 2010, we achieved another record figure in 2011 of 15.5 billion US dollars, up 11 per cent from 2010.
Record cash flows of 27.4 billion US dollars rose 16 per cent on the previous year.
However, our net earnings were impacted as a result of an impairment charge of 8.9 billion US dollars related to the Group’s aluminium business.
This reflects how the aluminium market is being squeezed by challenging supply and demand conditions, as well as rising input costs.
Your Board continues to balance investing in value-creating growth, with returning excess capital to shareholders.
We aim to do this while maintaining a strong balance sheet and our single ‘A’ credit rating.
Our record underlying earnings, together with strong operating cash flows and our confidence in the long term outlook, allowed us to increase our annual dividend by 34 per cent from 2010 levels, reinforcing our progressive dividend policy.
And our share buy-back programme was completed in March 2012, returning a further 7 billion US dollars to shareholders.
The global economy continued to experience high degrees of volatility in 2011 and naturally the management of risk within our business is a high priority for the Board.
We closely monitor the economic development of China, the single most important destination for our products, as well as those OECD countries where 85 per cent of our operating assets are located, whilst being alert to the inevitable risks of investing in assets in emerging economies. And we continually assess the challenges presented by escalating resource nationalism.
Rio Tinto makes significant and transparent contributions to public finances in all thecountries in which we operate.
We followed up our comprehensive and award-winning report of taxes paid in 2010 with the publication in March of an analysis of payments in 2011 by tax type, country and business unit.
In 2011, we paid 10.2 billion US dollars in taxes worldwide.
We welcome constructive debate on the achievement of transparent, stable and competitive fiscal regimes that encourage investment and acknowledge the significant contribution that responsible mining investments can make to economic development in the countries where we operate.
A sustainable strategy
Looking ahead, our strategy remains unchanged – to invest in and operate large, long-term, cost-competitive mines and businesses.
Our approved capital expenditure programme for 2012 of 16 billion US dollars supports this strategy and will provide investment in growth opportunities the Board believes will deliver superior returns to our shareholders.
Your Board regularly reviews the growth opportunities in the company portfolio, together with potential acquisitions and disposals that will improve the overall quality of our business.
We focus on where we can achieve the best value for our shareholders.
We have some of the most exciting growth prospects in the sector. We made some carefully-chosen acquisitions in 2011 that give us further growth options.
We now have significant tier one opportunities in coking coal in Mozambique and uranium in Canada.
We have also moved to 51 per cent ownership of Ivanhoe Mines, giving us greater exposure to the excellent Oyu Tolgoi copper-gold project in Mongolia.
In addition, we have an ambitious organic growth programme with continuing significant investment in our world-class iron ore operation in the Pilbara in Western Australia.
We have also chosen to exit a number of businesses that are no longer in line with our strategy.
During the year, a decision was taken to streamline our aluminium portfolio with thirteen assets around the world targeted for further efficiencies and preparation for divestment or closure.
The fundamentals of our diamond business are very sound, with demand growing strongly and lack of discoveries limiting supply, although the business has become less relevant in terms of scale, as other parts of Rio Tinto have grown much larger.
As a result, we have begun a strategic review of our diamonds business that will include exploring a range of options for potential divestment, which may be the best route to optimise value for our shareholders.
At Rio Tinto, our commitment to sustainable development is integrated into everything we do.
Our operations give us the opportunity to bring long-lasting, positive change to the communities, regions and countries where we work.
Adopting a responsible approach to mineral development ensures we secure and maintain our licence to operate.
It means we provide confidence to our stakeholders, and improve our access to the mineral resources, people and capital we need.
Our approach to sustainable development therefore enables us to keep investing in line with our Group strategy.
Outlook
The world continues to face considerable uncertainty and we believe this will contribute to ongoing volatility.
Whilst the European Central Bank has in recent months managed the sovereign debt crisis in Europe well, the situation is clearly not resolved and the potential for contagion continues to linger.
At the same time, promising signs of a recovery in the US have improved the global picture compared to six months ago.
China is not growing at the same rate as we have seen in recent years, but the rate of growth is still very favourable in comparison to global economic growth.
Overall, we are somewhat more confident than six months ago, in addition to which I believe our strong balance sheet will serve to strongly underpin our business in the face of shortterm volatility.
Over the longer term, we continue to believe the outlook remains strong with demand for many of the products we produce expected to double over the next 20 years.
Emerging markets are industrialising, people are moving to cities and working to raise their standards of living.
Your company is well placed to supply this increase in demand for metals and minerals to meet rising infrastructure and consumption needs.
In summary
Ladies and gentlemen, overall 2011 was an outstanding year for your company and one in which we have achieved excellent results.
Despite the current volatility, we are retaining flexibility and preserving our investment options to meet the growing global demand for our metals and minerals. Our organic growth programme continues and we will make value-enhancing acquisitions as the opportunities arise.
Where necessary we will refocus our activities to fit our strategic objectives of running large, cost-competitive operations.
Before I conclude and hand over to Tom, may I take this opportunity to thank all of our employees for the tremendous contributions that they have made this year.
With their ongoing commitment to improvements in our operational and financial efficiency they have – throughout 2011 – once again excelled.
I would also like to thank you, our shareholders, for your continued support. I extend my gratitude to the countries and communities that host our operations.
We are grateful for the opportunities they create for us to demonstrate our commitment to growing sustainably.
Thank you for your attention and I will now hand over to Tom to make some comments on our performance in 2011. Tom, over to you.