Strategic Report

Governance Report

Financial Statements

Production, Reserves
and Operations

Additional Information

			Gross revenue^(a)										EBITDA ^(b)										Net earnings^(c)
			for the year ended 31 December										for the year ended 31 December										for the year ended 31 December
	Rio Tinto
	interest			2017			2016			2015				2017			2016			2015				2017			2016			2015
	%		US$m			US$m			US$m			US$m				US$m			US$m			US$m				US$m			US$m
Iron Ore
Pilbara	(d)			18,143			14,530			13,886				11,383			8,558			7,730				6,576			4,662			4,013
Evaluation projects/other				108			75			66				137			(32	)		(55	)			116			(51	)		(73	)
Total Iron Ore				18,251			14,605			13,952				11,520			8,526			7,675				6,692			4,611			3,940

Aluminium	(e)
Bauxite				2,019			1,913			2,057				804			848			937				463			493			542
Alumina				2,661			2,118			2,145				454			27			(47	)			180			(121	)		(187	)
Intrasegment				(790	)		(786	)		(849	)			(25	)		-			-				(17	)		-			-
Bauxite & Alumina				3,890			3,245			3,353				1,233			875			890				626			372			355
Primary Metal				5,808			4,913			4,931				1,762			1,258			1,245				778			402			446
Pacific Aluminium				2,305			1,971			2,254				453			264			408				176			62			147
Intersegment & Other				(2,321	)		(1,822	)		(1,876	)			(19	)		(50	)		132				(12	)		(13	)		92
Integrated Operations				9,682			8,307			8,662				3,429			2,347			2,675				1,568			823			1,040
Other Product Group Items				1,214			1,075			1,374				(132	)		(42	)		(76	)			(100	)		(30	)		(50	)
Product group operations				10,896			9,382			10,036				3,297			2,305			2,599				1,468			793			990
Evaluation projects/other				109			76			81				126			167			143				115			154			128
Total Aluminium				11,005			9,458			10,117				3,423			2,472			2,742				1,583			947			1,118

Copper & Diamonds
Rio Tinto Kennecott		100.0		1,352			1,243			1,403				539			126			437				78			(228	)		44
Escondida		30.0		1,811			1,465			1,855				1,030			793			760				325			270			281
Grasberg joint venture	(f)			33			-			-				(3	)		(17	)		(17	)			(169	)		(64	)		(34	)
Oyu Tolgoi & Turquoise Hill	(g)			940			1,203			1,636				256			436			501				36			52			57
Diamonds	(h)			706			613			698				287			239			293				92			47			79
Product group operations				4,842			4,524			5,592				2,109			1,577			1,974				362			77			427
Evaluation projects/other				-			-			-				(205	)		(190	)		(141	)			(99	)		(95	)		(57	)
Total Copper & Diamonds				4,842			4,524			5,592				1,904			1,387			1,833				263			(18	)		370

Energy & Minerals
Rio Tinto Coal Australia	(i)			2,829			2,634			2,757				1,223			893			497				716			382			48
Iron Ore Company of Canada		58.7		1,867			1,324			1,353				770			335			197				235			64			12
Rio Tinto Iron & Titanium	(j)			1,763			1,419			1,571				546			370			435				201			86			116
Rio Tinto Borates		100.0		630			620			624				244			213			178				126			117			103
Dampier Salt		68.4		215			259			306				27			74			71				3			25			24
Uranium	(k)			417			456			474				15			54			1				(26	)		10			(42	)
Product group operations				7,721			6,712			7,085				2,825			1,939			1,379				1,255			684			261
Simandou iron ore project	(l)			-			-			-				(13	)		(102	)		(87	)			(6	)		(47	)		(41	)
Evaluation projects/other				43			22			55				(9	)		(31	)		(55	)			(7	)		(25	)		(43	)
Total Energy & Minerals				7,764			6,734			7,140				2,803			1,806			1,237				1,242			612			177

Other Operations	(m)			10			8			18				(116	)		(95	)		(83	)			(138	)		(88	)		(90	)

Intersegment transactions				(15	)		(11	)		(34	)			-			-			-				-			-			-
Product group Total				41,857			35,318			36,785				19,534			14,096			13,404				9,642			6,064			5,515

Other items	(n)													(736	)		(411	)		(546	)			(483	)		(241	)		(375	)
Exploration and evaluation														(218	)		(175	)		(237	)			(178	)		(147	)		(211	)
Net interest																								(354	)		(576	)		(389	)
Underlying EBITDA/earnings														18,580			13,510			12,621				8,627			5,100			4,540
Items excluded from underlying EBITDA/earnings				10			18			(1	)			1,912			(687	)		(563	)			135			(483	)		(5,406	)
EBITDA/net earnings														20,492			12,823			12,058				8,762			4,617			(866	)
Reconciliation to Group income statement
Share of equity accounted unit sales and
intra-subsidiary/equity accounted units sales				(1,837	)		(1,555	)		(1,955	)
Depreciation & amortisation in subsidiaries
excluding capitalised depreciation														(4,302	)		(4,691	)		(4,553	)
Impairment charges, net of reversals														(796	)		(249	)		(2,791	)
Depreciation & amortisation in equity accounted units														(648	)		(526	)		(462	)
Taxation and finance items in equity accounted units														(272	)		(241	)		(276	)
Consolidated sales revenue/profit on
ordinary activities before finance items and tax				40,030			33,781			34,829				14,474			7,116			3,976

												Depreciation &									Operating assets ^(p)
			Capital expenditure^(o)									amortisation									as at									Employees
			for the year ended 31 December									for the year ended 31 December									for the year ended 31 December									for the year ended 31 December
	Rio Tinto
	interest			2017			2016			2015			2017			2016			2015			2017			2016			2015			2017		2016		2015
	%		US$m			US$m			US$m			US$m			US$m			US$m			US$m			US$m			US$m			Number		Number		Number
Iron Ore
Pilbara	(d)			1,201			868			1,608			1,645			1,645			1,744			16,535			16,357			16,870			10,159		10,424		11,097
Evaluation projects/other				-			-			-			-			-			-			2			2			2			-		-		-
Total Iron Ore				1,201			868			1,608			1,645			1,645			1,744			16,537			16,359			16,872			10,159		10,424		11,097

Aluminium	(e)
Bauxite				825			343			159			123			110			112			1,897			1,278			1,050			2,534		2,592		2,603
Alumina				108			87			158			209			206			207			2,733			2,588			2,698			2,012		2,139		2,287
Intrasegment				-									-									(18	)
Bauxite & Alumina				933			430			317			332			316			319			4,612			3,866			3,748			4,546		4,731		4,890
Primary Metal				389			394			1,249			665			716			629			9,946			10,701			10,326			6,404		6,799		7,980
Pacific Aluminium				109			91			126			196			193			212			1,016			1,044			1,198			2,173		2,276		2,339
Intersegment and Other				5			1			(10	)		6			25			12			772			171			677			222		231		210
Total Aluminium				1,436			916			1,682			1,199			1,250			1,172			16,346			15,782			15,949			13,345		14,037		15,419

Copper & Diamonds
Rio Tinto Kennecott		100.0		249			333			408			422			530			344			1,936			2,189			2,441			1,734		1,638		1,793
Escondida		30.0		248			517			770			507			364			293			3,369			3,565			3,485			1,079		1,230		1,159
Grasberg joint venture	(f)			138			174			179			42			89			43			1,137			1,151			1,016			1,642		2,859		2,868
Oyu Tolgoi & Turquoise Hill	(g)			901			322			92			344			450			416			4,725			3,804			3,597			2,835		2,728		2,798
Diamonds	(h)			85			97			124			132			164			159			441			655			857			922		907		1,118
Product group operations				1,621			1,443			1,573			1,447			1,597			1,255			11,608			11,364			11,396			8,212		9,362		9,736
Evaluation projects/other				1			(2	)		3			5			4			6			135			166			155			142		127		160
Total Copper & Diamonds				1,622			1,441			1,576			1,452			1,601			1,261			11,743			11,530			11,551			8,354		9,489		9,896

Energy & Minerals
Rio Tinto Coal Australia	(i)/(q)			84			(107	)		108			152			297			336			1,040			1,807			2,137			1,924		3,049		3,157
Iron Ore Company of Canada		58.7		202			75			118			157			151			162			988			1,018			1,152			2,382		2,308		2,316
Rio Tinto Iron & Titanium	(j)			119			97			150			219			189			194			3,881			3,662			3,554			4,048		4,094		4,507
Rio Tinto Borates		100.0		28			31			28			65			53			45			523			508			585			936		984		987
Dampier Salt		68.4		13			11			14			22			23			22			150			146			140			232		317		394
Uranium	(k)			21			30			39			37			25			65			(327	)		(143	)		(216	)		1,307		1,303		1,329
Product group operations				467			137			457			652			738			824			6,255			6,998			7,352			10,829		12,055		12,690
Simandou iron ore project	(l)			-			-			91			-			-			1			17			13			(10	)		10		635		912
Evaluation projects/other				-			4			4			-			1			5			41			38			39			25		763		855
Total Energy & Minerals				467			141			552			652			739			830			6,313			7,049			7,381			10,864		13,453		14,457

Other Operations	(m)			(35	)		(11	)		(36	)		32			34			32			(328	)		203			(33	)		203		249		299
Product group Total				4,691			3,355			5,382			4,980			5,269			5,039			50,611			50,923			51,720			42,925		47,652		51,168
Intersegment transactions																						206			142			242
Net assets/(liabilities) of disposal groups held for sale	(r)																					370			(7	)		182
Other items	(n)			70			(46	)		65			42			51			68			(2,631	)		(2,181	)		(1,012	)		3,882		3,377		3,770
Less: equity accounted units				(417	)		(651	)		(859	)		(647	)		(526	)		(462	)					-			-					-		-
Total				4,344			2,658			4,588			4,375			4,794			4,645			48,556			48,877			51,132			46,807		51,029		54,938
Add back: Proceeds from disposal of property, plant and equipment				138			354			97
Total capital expenditure per cash flow statement				4,482			3,012			4,685
Less: Net debt																						(3,845	)		(9,587	)		(13,783	)
Less: EAU funded balances excluded from net debt																						-			-			-
Equity attributable to owners of Rio Tinto																						44,711			39,290			37,349

Business units are classified according to the Group’s management structure. Certain comparative amounts have been reallocated to appropriately represent changes in management responsibility.

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.

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 same items that are excluded from underlying earnings.

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.

Pilbara represents the Group’s 100 per cent holding in Hamersley, 50 per cent holding of Hope Downs Joint Venture and 65 per cent holding of Robe River Iron Associates. The Group’s net beneficial interest in Robe River Iron Associates is 53 per cent as 30 per cent is held through a 60 per cent owned subsidiary and 35 per cent is held through a 100 per cent owned subsidiary.

Presented on an integrated operations basis splitting activities between Bauxite & Alumina, Primary Metal, Pacific Aluminium and Other integrated operations (which in total reflect the results of the integrated production of aluminium) and Other product group items which relate to other commercial activities.

f)	Through a joint venture agreement with Freeport-McMoRan Inc. (Freeport), Rio Tinto is entitled to 40 per cent of material mined above an agreed threshold as a consequence of expansions and developments of the Grasberg facilities since 1998.

g)	Rio Tinto’s interest in Oyu Tolgoi is held indirectly through its 50.8 per cent investment in Turquoise Hill Resources Ltd (TRQ), where TRQ’s principal asset is its 66 per cent investment in Oyu Tolgoi LLC, which owns the Oyu Tolgoi copper-gold mine.

h)	Includes Rio Tinto’s interests in Argyle (100 per cent) and Diavik (60 per cent).

i)	On 1 September, 2017, Rio Tinto disposed of its 100 per cent shareholding in Coal & Allied Industries Limited to Yancoal Australia Limited.

As at 31 December 2016, this included Rio Tinto’s 100 per cent shareholding in Coal & Allied Industries Limited and its wholly-owned subsidiaries. Rio Tinto as a 100 per cent owner of Coal & Allied held a 67.6 per cent, 80 per cent and 55.6 per cent respectively, with management rights, in Hunter Valley Operations, Mount Thorley and Warkworth. On 1 March 2016, Coal & Allied disposed of its 40 per cent interest in Bengalla Joint Venture and on 5 August 2016, Coal & Allied disposed of its 100 per cent interest in the Mount Pleasant project. Both were included up until their respective disposal dates.

j)	Includes Rio Tinto's interests in Rio Tinto Fer et Titane (100 per cent), QIT Madagascar Minerals (QMM, 80 per cent) and Richards Bay Minerals (attributable interest of 74 per cent).

k)	Includes Rio Tinto’s interests in Energy Resources of Australia (68.4 per cent) and Rössing Uranium Limited (68.6 per cent).

Simfer Jersey Limited, a company incorporated in Jersey in which the Group has a 53 per cent interest, has an 85 per cent interest in Simfer S.A., the company that manages the Simandou project in Guinea. The Group therefore has a 45.05 per cent indirect interest in Simfer S.A. These entities are consolidated as subsidiaries and together referred to as the Simandou iron ore project.

m)	Other Operations include Rio Tinto’s 100 per cent interest in the curtailed Gove alumina refinery and Rio Tinto Marine.

Central office costs, central Growth & Innovation costs and other central items are reported in Other items. The loss in Other items includes restructuring, project and other one off costs of US$177 million (pre-tax) in 2017. The increased loss also reflects an increase in Information Systems & Technology spend and further investment in the Commercial Centre in Singapore and capability to support the Group’s Mine to Market Productivity programme.

Capital expenditure 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 per cent of subsidiaries’ capital expenditure and Rio Tinto’s share of the capital expenditure of joint operations and equity accounted units.

Operating assets of subsidiaries comprise net assets excluding post-retirement assets and liabilities, net of tax, and are before deducting net debt. Operating assets are stated after deduction of non-controlling interests, which 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)	Capital expenditure in 2016 for Rio Tinto Coal Australia includes net proceeds of US$192 million for the disposal of 100 per cent interest in the Mount Pleasant thermal coal project to MACH Energy Australia Pty Ltd on 5 August 2016.

r)	Assets and liabilities held for sale at 31 December 2017 comprise of Rio Tinto’s interest in the Dunkerque aluminium smelter and certain other separate assets.

Assets and liabilities held for sale at 31 December 2016 comprise Rio Tinto’s interests in the Blair Athol coal project and certain separate assets.

Assets and liabilities held for sale at 31 December 2015 comprised Rio Tinto’s interests in the Blair Athol coal project, Carbone Savoie (disposed of on 31 March 2016), Bengalla (disposed of on 1 March 2016), and certain other separate assets.