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Sustainable returns for Rio Tinto shareholders

World Coal,

Rio Tinto’s transformation into a more streamlined, accountable business is gathering momentum, with a promise for sustainable cash returns to be delivered to shareholders in 2015.

At an investor seminar in Sydney, Rio Tinto underlined its commitment to capital discipline and shareholder value, confirming it will focus only on the projects with the highest returns to drive shareholder value. The group’s portfolio of high-quality assets, with industry-leading EBITDA margins and potential for growth, are positioned to generate strong free cash flow.

Rio Tinto also revealed new detail around the compelling investment fundamentals for the expansion of its flagship Australian iron ore operations, with the Pilbara expansion to 360 million tpy delivering an internal rate of return (IRR) of 40% with a five-year payback period.

Sustainable returns

Rio Tinto CEO, Sam Walsh commented: “Our commitment to our shareholders is to deliver sustainable cash returns to shareholders through the cycle. We will deliver this thanks to our superior portfolio of tier one assets, an unrelenting focus on financial discipline and our unquestionable operating and commercial expertise, founded on a culture of safety and integrity.

“The delivery of our progressive dividend is a key commitment. Looking out over the next five years, we expect to generate strong free cash flow and we remain committed to materially increase cash returns to shareholders in a sustainable way. I look forward to announcing this at our annual results in February next year.

Value and growth

“We aim to deliver best-in-class returns by operating in the most attractive long-term sectors with assets that enable us to be the most competitive in the industry, complemented by a strong balance sheet. Rio Tinto stands apart from its competitors with its strategic approach, well placed to thrive in times of volatility and deliver value and growth through the cycle.

“We are transforming our business into a more streamlined, accountable organisation by delivering on our promises. Capex is down 34% on last year, yet we expect copper equivalent growth of 5.2% a year to 2019 as we invest your dollars in only those projects with the best returns.

“While the long-term outlook remains sound, the near term is undoubtedly more challenging. However Rio Tinto is soundly positioned to prosper against this backdrop of uncertainty because the current dynamics play to our strengths and our competitive advantages come into their own.”

Adapted from press release by Katie Woodward

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