Strategic report

Governance report

Financial statements

Production, reserves
and operations

Additional information

22 Borrowings and other financial liabilities

			Non-current		Current		Total		Non-current		Current		Total
				2017		2017		2017		2016		2016		2016
Borrowings at 31 December	Note		US$m		US$m		US$m		US$m		US$m		US$m
Rio Tinto Finance (USA) Limited Bonds 9.0% 2019^(a)				-		-		-		1,235		-		1,235
Rio Tinto Finance (USA) Limited Bonds 3.5% 2020				-		-		-		464		-		464
Rio Tinto Finance plc Euro Bonds 2.0% due 2020^{(a) (b)}				921		-		921		817		-		817
Rio Tinto Finance (USA) Limited Bonds 4.125% 2021^(a)				428		-		428		573		-		573
Rio Tinto Finance (USA) Limited Bonds 3.750% 2021^(a)				347		-		347		621		-		621
Rio Tinto Finance (USA) plc Bonds 3.5% 2022^(a)				227		-		227		459		-		459
Rio Tinto Finance (USA) plc Bonds 2.875% 2022^(a)				377		-		377		509		-		509
Rio Tinto Finance plc Euro Bonds 2.875% due 2024^{(a) (b)}				644		-		644		577		-		577
Rio Tinto Finance (USA) Limited Bonds 3.75% 2025^(a)				1,192		-		1,192		1,195		-		1,195
Rio Tinto Finance (USA) Limited Bonds 7.125% 2028^(a)				965		-		965		980		-		980
Alcan Inc. Debentures 7.25% due 2028				105		-		105		105		-		105
Rio Tinto Finance plc Sterling Bonds 4.0% due 2029 ^{(a) (b)}				669		-		669		609		-		609
Alcan Inc. Debentures 7.25% due 2031				422		-		422		425		-		425
Alcan Inc. Global Notes 6.125% due 2033				740		-		740		741		-		741
Alcan Inc. Global Notes 5.75% due 2035				287		-		287		287		-		287
Rio Tinto Finance (USA) Limited Bonds 5.2% 2040^(a)				1,102		-		1,102		1,103		-		1,103
Rio Tinto Finance (USA) plc Bonds 4.75% 2042^(a)				467		-		467		466		-		466
Rio Tinto Finance (USA) plc Bonds 4.125% 2042^(a)				691		-		691		690		-		690
Oyu Tolgoi LLC Secured Loan due 2027^(c)				2,262		-		2,262		2,259		-		2,259
Oyu Tolgoi LLC Secured Loan due 2028^(c)				255		-		255		247		-		247
Oyu Tolgoi LLC Secured Loan due 2029^(c)				869		-		869		866		-		866
Oyu Tolgoi LLC Secured Loan due 2030^(c)				761		-		761		754		-		754
Loans from equity accounting units				-		31		31		-		49		49
Other secured loans				451		79		530		530		127		657
Other unsecured loans				393		435		828		377		508		885
Finance leases		23		49		4		53		24		21		45
Bank overdrafts		21		-		3		3		-		12		12
Total borrowings including overdrafts^(d)				14,624		552		15,176		16,913		717		17,630

(a)	These borrowings are subject to the hedging arrangements summarised below. Fair value hedge accounting has been applied except for the Rio Tinto Finance plc Sterling Bonds 4.0% due 2029 which has cash flow hedge accounting applied.

(b)

Rio Tinto has a US$10 billion (2016: US$10 billion) European Debt Issuance Programme against which the cumulative amount utilised was US$2.2 billion equivalent at 31 December 2017 (2016: US$1.9 billion). The carrying value of these bonds after hedge accounting adjustments amounted to US$2.2 billion (2016: US$ 2.0 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 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. Further details are provided in note 30.

(d)

The Group’s borrowings of US$15.2 billion (2016: US$17.6 billion) include US$2.7 billion (2016: US$2.8 billion) which relates to subsidiary entity borrowings that are without recourse to the Group, and US$4.7 billion (2016: US$4.8 billion) which is subject to various financial and general covenants with which the respective borrowers were in compliance as at 31 December 2017.

	Non-current		Current		Total		Non-current		Current		Total
		2017		2017		2017		2016		2016		2016
Other financial liabilities	US$m		US$m		US$m		US$m		US$m		US$m
Derivative financial instruments		481		50		531		517		6		523
Other financial liabilities		43		302		345		40		199		239
Total other financial liabilities		524		352		876		557		205		762
Total borrowings including overdrafts (as above)		14,624		552		15,176		16,913		717		17,630
Total borrowings and other financial liabilities		15,148		904		16,052		17,470		922		18,392

Swap arrangements

At 31 December 2017, US$5.7 billion (2016: US$7.7 billion) US dollar notional of the fixed rate US dollar borrowings were swapped to floating US dollar rates and US$1.5 billion (2016: US$1.3 billion) US dollar notional equivalent of Euro borrowings were fully swapped to floating US dollar rates.

Hedge accounting has been applied to the full notional of items marked (a) in the above table except for: US$75 million (2016: US$75 million) of the Rio Tinto Finance (USA) Limited Bonds 7.125% due 2028. This portion is held at amortised cost.

The Rio Tinto Finance plc Sterling Bond 4.0% due 2029 at US$0.7 billion (2016: US$0.6 billion) US dollar notional equivalent of sterling was fully swapped to US dollar notional and fixed US dollar rates. Cash flow hedging was applied to the annual interest coupons and principal of this bond. The hedge was fully effective in 2017 and 2016 financial years.

The fair value of interest rate and cross currency interest rate swaps at 31 December 2017 was US$99 million (2016: US$108 million) asset and US$276 million (2016: US$516 million) liability, respectively. These are included within “Other financial assets” and “Other financial liabilities” in the balance sheet.

Details of the major interest rate and cross currency interest rate swaps are shown in note 30.