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About the presentation of our financial statements
 12 Months Ended
Dec. 31, 2023
Disclosure of initial application of standards or interpretations [abstract]  
About the presentation of our financial statements About the presentation of our financial statements
All financial statement values are presented in US dollars and rounded
to the nearest million (US$m) unless otherwise stated. Where
applicable, comparatives have been adjusted to measure or present
them on the same basis as current year figures.
Our financial statements for the year ended 31 December 2023 were
authorised for issue in accordance with a Directors’ resolution on
21 February 2024.
a. The basis of preparation
The financial information included in the financial statements for the
year ended 31 December 2023, and for the related comparative
periods, has been prepared:
–under the historical cost convention, as modified by the revaluation
of certain financial instruments, the impact of fair value hedge
accounting on the hedged items and the accounting for post-
employment assets and obligations;
–on a going concern basis, management has prepared detailed cash
flow forecasts for at least 12 months and has updated life-of-mine
plan models with longer-term cash flow projections, which 
demonstrate that we will have sufficient cash, other liquid resources
and undrawn credit facilities to enable us to meet our obligations as
they fall due;
–to meet international accounting standards as issued by the
International Accounting Standards Board (IASB) and
interpretations issued from time to time by the IFRS Interpretations
Committee (IFRS IC), which are mandatory at 31 December 2023.
The above accounting standards and interpretations are collectively
referred to as “IFRS” in this report and contain the principles we use to
create our accounting policies. Where necessary, adjustments are
made to the locally reported assets, liabilities, and results of
subsidiaries, joint arrangements and associates to align their accounting
policies with ours for consistent reporting.
b.The basis of consolidation
The financial statements consolidate the accounts of Rio Tinto plc and
Rio Tinto Limited (together “the Companies”) and their respective
subsidiaries (together “the Group”, “we”, “our”) and include the Group’s
share of joint arrangements and associates.
We consolidate subsidiaries where either of the companies controls the
entity. Control exists where either of the companies has: power over the
entities, that is, existing rights that give it the current ability to direct the
relevant activities of the entities (those that significantly affect the
companies’ returns); exposure, or rights, to variable returns from its
involvement with the entities; and the ability to use its power to affect
those returns. A list of principal subsidiaries is shown in note 30.
A joint arrangement is an arrangement in which two or more parties
have joint control. Joint control is the contractually agreed sharing of
control such that decisions about the relevant activities of the
arrangement (those that significantly affect the companies’ returns)
require the unanimous consent of the parties sharing control. We have
two types of joint arrangements: joint operations (JOs) and joint
ventures (JVs). A JO is a joint arrangement in which the parties that
share joint control have rights to the assets and obligations for the
liabilities relating to the arrangement. This includes situations where the
parties benefit from the joint activity through a share of the output,
rather than by receiving a share of the results of trading. For our JOs,
shown in note 31, we recognise: our share of assets and liabilities;
revenue from the sale of our share of the output and our share of any
revenue generated from the sale of the output by the JO; and its share
of expenses. All such amounts are measured in accordance with the
terms of the arrangement, which is usually in proportion to our interest
in the JO. These amounts are recorded in our financial statements on
the appropriate lines. A JV is a joint arrangement in which the parties
that share joint control have rights to the net assets of the arrangement.
JVs are accounted for using the equity accounting method.
An associate is an entity over which we have significant influence.
Significant influence is presumed to exist where there is neither control
nor joint control and the Group has over 20% of the voting rights, unless
it can be clearly demonstrated that this is not the case. Significant
influence can arise where we hold less than 20% of the voting rights if
we have the power to participate in the financial and operating policy
decisions affecting the entity. It also includes situations of collective
control.
We use the term “equity accounted units” (EAUs) to refer to associates
and JVs collectively. Under the equity accounting method, the
investment is recorded initially at cost to the Group, including any
goodwill on acquisition. In subsequent periods, the carrying amount of
the investment is adjusted to reflect the Group’s share of the EAUs’
retained post-acquisition profit or loss and other comprehensive income.
Our principal JVs and associates are shown in note 32.
In some cases, we participate in unincorporated arrangements and
have rights to our share of the assets and obligations for our share of
the liabilities of the arrangement rather than a right to a net return, but
we do not share joint control. In such cases, we account for these
arrangements in the same way as our joint operations, with all such
amounts measured in accordance with the terms of the arrangement,
which is usually in proportion to our interest in the arrangement.
All intragroup transactions and balances are eliminated
on consolidation.
c.Materiality
Our Directors consider information to be material if correcting a misstatement, omission or obscuring could, in the light of surrounding
circumstances, reasonably be expected to change the judgement of a reasonable person relying on the financial statements. The Group considers
both quantitative and qualitative factors in determining whether information is material; the concept of materiality is therefore not driven purely by
numerical values.
When considering the potential materiality of information, management makes an initial quantitative assessment using thresholds based on
estimates of profit before taxation; for the years ended 31 December 2023 and 31 December 2022 the quantitative threshold was US$700 million.
However, other considerations can result in a determination that lower values are material or, occasionally, that higher values are immaterial. These
considerations include whether a misstatement, omission or obscuring: masks a change or trend in key performance indicators; causes reported key
metrics to change from a positive to a negative value or vice-versa; affects compliance with regulatory requirements or other contractual
requirements; could result in an increase to management’s compensation; or might conceal an unlawful transaction.
In assessing materiality, management also applies judgement based on its understanding of the business and its internal and external financial
statement users. The assessment will consider user expectations of numerical and narrative reporting. Sources used in making this assessment
would include, for example: published analyst consensus measures, experience gained in formal and informal dialogue with users (including
regulatory correspondence), and peer group benchmarking.
d.Summary of key judgements or other relevant judgements made in applying the accounting policies
The preparation of the financial statements requires management to use judgement in applying accounting policies and in making critical
accounting estimates.
These judgements and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous
experience, but actual results may differ materially from the amounts included in the financial statements. Areas of judgement in the application of
accounting policies that have the most significant effect on the amounts recognised in the financial statements and key sources of estimation
uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are noted below. Further information is contained in the notes to the financial statements.
Summarised below are the key judgements that we have taken in the application of the Group’s accounting policies for 2023 and how they compare
to the prior year. Taking a different judgement over these matters could lead to a material impact on the 2023 financial statements. More detail on
the judgement can be found in the respective notes. 
Key judgements
2023
2022
Context
Indicators of impairment and impairment
reversals (note 4)
a
a
Various cash-generating units of the Group have been impaired in previous
years and are, therefore, monitored closely for indicators of further
impairment or impairment reversal as such adjustments would likely be
material to our results.
Deferral of stripping costs (note 13)
a
a
The deferral of stripping costs is a key judgement in open-pit mining
operations as it impacts the amortisation base for these costs, calculated
on a units of production basis; this involves determining whether multiple
pits are considered separate or integrated operations, which in turn
influences the classification of stripping activities as pre-production or
production phase. This judgement relies on various factors that are based
on the unique characteristics and circumstances of each mine.
Estimation of asset lives (note 13)
a
a
The useful lives of major assets are often linked to the life of the orebody
they relate to, which is in turn based on the life-of-mine plan. Where the
major assets are not dependent on the life of a related orebody,
management applies judgement in estimating the remaining service
potential of long-lived assets. The accuracy of estimating these useful lives
is essential for determining the appropriate allocation of costs over time,
reflecting the consumption of the asset’s economic benefits.
Close-down, restoration and environmental
obligations (note 14)
a
a
Significant judgement is required to assess the possible extent of closure
rehabilitation work needed to fulfil the Group’s legal, statutory, and
constructive obligations, along with other commitments to stakeholders.
This involves leveraging our experience in evaluating available options and
techniques to meet these obligations, associated costs and their likely
timing and, crucially, determining when that estimate is sufficiently reliable
to make or adjust a closure provision.
Information on other relevant judgements to help understand the financial statements has been incorporated into the relevant accounting policy
sections of each note. We have summarised these judgements below:
Other relevant judgements
2023
2022
Context
Identification of functional currencies
(f below)
a
a
The determination of functional currency is a relevant judgement as it affects
the measurement of non-current assets included in the balance sheet and,
as a consequence, the depreciation and amortisation of those assets
included in the income statement. It also impacts exchange gains and losses
included in the income statement and in equity.
Exclusions from underlying EBITDA (note 1)
a
a
Judgement is required in excluding items from profit after tax as they are
gains and losses that, individually or in aggregate with similar items, are of a
nature and size to require exclusion in order to provide additional insight into
the underlying business performance.
Determination of cash-generating units
(CGUs) (note 4)
a
a
Judgement is applied to identify the Group’s CGUs, particularly when assets
belong to integrated operations. Changes in asset allocations to CGUs could
impact impairment charges and reversals.
Uncertain tax positions (note 10)
a
a
Where the amount of tax payable or recoverable is uncertain in any of the
jurisdictions in which the Group operates, whether due to the local tax
authority challenge or due to uncertainty regarding the appropriate treatment,
judgement is required to assess the probability that the adopted treatment
will be accepted.
Assessment of indefinite-lived water rights
in Quebec (note 12)
a
a
We continue to judge the water rights in Quebec to have an indefinite life
because we expect the contractual rights to contribute to the efficiency and
cost effectiveness of our operations for the foreseeable future. This
determination is a relevant judgement as intangible assets that are deemed
to have indefinite lives are not amortised; they are reviewed annually for
impairment or more frequently if events or changes in circumstances indicate
a potential impairment.
Recoverability of deferred tax assets (note
15)
a
a
In considering the recoverability of deferred tax assets, judgement is required
regarding the extent to which certain risk factors are likely to affect the
recovery of these assets, including future profit forecasts.
Lease assessment (note 21)
a
0
The Group has entered into renewable energy power purchase agreements
that require judgements to assess whether the arrangement contains a lease
for the relevant power generating assets.
Accounting for the Pilbara Iron
Arrangements (note 31)
a
a
In assessing the Pilbara Iron Arrangements, judgement is required in
concluding whether they collectively constitute a joint arrangement.
Basis of consolidation of Queensland
Alumina Limited  (note 31)
0
a
Judgement is required to assess how we consolidate Queensland Alumina
Limited (QAL). As a result of the Australian government imposing Trade
Sanctions against Russia, QAL is not able to process bauxite on behalf of
Rusal entities. Rio Tinto has contributed additional bauxite tonnes to ensure
that 100% of production capacity is maintained. We continue to account for
QAL as a joint operation.
Accounting for Minera Escondida Ltda (note
32)
a
a
Judgement is required in our determination that Escondida is a joint venture
as this impacts the classification of the entity in the financial statements.
Recognition of contingencies (note 37)
a
a
Judgement is required to determine whether disclosure is made for material
contingent liabilities depending on whether the possibility of any loss arising
is considered remote, and whether these can be reliably estimated in order
to be quantified.
e.Key sources of estimation uncertainty
We define key sources of estimation uncertainty as accounting estimates that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year. We summarise below the most significant items and the rationale for their
identification. Relevant sensitivities are included within the indicated financial statement notes.
Key accounting estimates
2023
2022
Context
Estimation of the close-down,
restoration and environmental cost
obligations (note 14)
a
a
Close-down, restoration and environment obligations are based on cash flow
projections derived from studies that incorporate planned rehabilitation activities,
cost estimates and discounting for the time value. Closure studies are performed
to a rolling schedule with increased frequency and engineering accuracy for sites
approaching end of life. Information from these studies can result in a material
change to the associated provisions. The most significant closure provision
update related to the Ranger mine at Energy Resources of Australia.  The
provision is based on reforecast cash flows, these are subject to further study
which could result in material adjustment in the near term.
Estimation of obligations for post-
employment costs (note 28)
a
a
The value of the Group’s obligations for post-employment benefits is dependent
on the amount of benefits that are expected to be paid out, discounted to the
balance sheet date. There is significant estimation uncertainty pertaining to the
most significant assumptions used in accounting for pension plans, namely the
discount rate, the long-term inflation rate and mortality rates.
f.Currency
Other relevant judgements - identification of functional currency
We present our financial statements in US dollars, as that presentation currency most reliably reflects the global business performance of the
Group as a whole.
The functional currency for each subsidiary, unincorporated arrangement, joint operation and equity accounted unit is the currency of the
primary economic environment in which it operates. For businesses that reside in developed economies, the functional currency is generally
the currency of the country in which it operates because of the dominance of locally incurred costs. If the business resides in an emerging
economy, the US dollar is generally identified to be the functional currency as a higher proportion of costs, particularly imported goods and
services, are agreed and paid in US dollars, in common with other international investors. Determination of functional currency involves
judgement, and other companies may make different judgements based on similar facts.
The determination of functional currency affects the measurement of non-current assets included in the balance sheet and, as a
consequence, the depreciation and amortisation of those assets included in the income statement. It also impacts exchange gains and losses
included in the income statement and in equity. We also apply judgement in determining whether settlement of certain intragroup loans is
neither planned nor likely in the foreseeable future and, therefore, whether the associated exchange gains and losses can be taken to equity.
During 2023, A$15 billion of intragroup loans continued to meet these criteria; associated exchange gains and losses are taken to equity.
On consolidation, income statement items for each entity are translated from the functional currency into US dollars at the full-year average rate of
exchange, except for material one-off transactions, which are translated at the rate prevailing on the transaction date. Balance sheet items are
translated into US dollars at period-end exchange rates.
Exchange differences arising on the translation of the net assets of entities with functional currencies other than the US dollar are recognised
directly in the currency translation reserve. These translation differences are shown in the statement of comprehensive income, with the exception of
the translation adjustment relating to Rio Tinto Limited’s share capital, which is shown in the statement of changes in equity.
Where an intragroup balance is, in substance, part of the Group’s net investment in an entity, exchange gains and losses on that balance are taken
to the currency translation reserve.
Except as noted above, or where exchange differences are deferred as part of a cash flow hedge, all other differences are charged or credited to the
income statement in the year in which they arise.
The principal exchange rates used in the preparation of the financial statements were:
Full-year average
Year-end
One unit of local currency buys the following number of US dollars
2023
2022
2021
2023
2022
2021
Pound sterling
1.24
1.24
1.38
1.28
1.21
1.35
Australian dollar
0.66
0.69
0.75
0.69
0.68
0.73
Canadian dollar
0.74
0.77
0.80
0.76
0.74
0.78
Euro
1.08
1.05
1.18
1.11
1.07
1.13
South African rand
0.054
0.061
0.068
0.054
0.059
0.063
Mineral Reserves and Mineral Resources
A Mineral Resource is a concentration or occurrence of solid material of
economic interest in or on the Earth’s crust in such form, grade (or
quality), and quantity that there are reasonable prospects for eventual
economic extraction. An Mineral Reserve is the economically mineable
part of a measured or indicated Mineral Resource.
The estimation of Mineral Reserves and Mineral Resources requires
judgement to interpret available geological data and subsequently to
select an appropriate mining method and then to establish an extraction
schedule. At least annually, the Qualified Persons of the Group
(according to the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Mineral Reserves (the JORC Code)),
estimate Mineral Reserves and Mineral Resources using assumptions
such as:
–available geological data;
–expected future commodity prices and demand;
–exchange rates;
–production costs;
–transport costs;
–close-down and restoration costs;
–recovery rates;
–discount rates; and
–renewal of mining licences.
With regard to our future commodity price assumptions, to calculate our
Mineral Reserves and Mineral Resources for our filing on the Australian
Securities Exchange and London Stock Exchange, we use prices
generated by our Strategy and Economics team (refer to the Climate
change section for further details about our pricing methodology). For
this Form 20-F, we use consensus price or historical pricing and comply
with subpart 1300 of Regulation S-K (SK-1300), instead of with the
JORC code.
We use judgement as to when to include Mineral Resources in
accounting estimates, for example, the use of Mineral Resources in our
depreciation policy as described in note 13 and in the determination of
the date of closure as described in note 14.
There are many uncertainties in the estimation process and
assumptions that are valid at the time of estimation may change
significantly when new information becomes available. New geological
or economic data or unforeseen operational issues may change
estimates of Mineral Reserves and Mineral Resources. This could
cause material adjustments in our financial statements to:
–depreciation and amortisation rates;
–carrying values of intangible assets and property, plant and
equipment;
–deferred stripping costs;
–provisions for close-down and restoration costs; and
–recovery of deferred tax assets.
Impact of climate change on the Group 
The impacts of climate change and the execution of our climate change
strategy on our financial statements are discussed below:
Strategy and approach to climate change
In 2021, we put the low-carbon transition at the heart of our business
strategy, setting a clear pathway to deliver long-term value as well as
ambitious targets to decarbonise our business. 
Our targets are to reduce Scope 1 and 2 emissions by 15% by 2025,
50% by 2030 (both relative to our 2018 equity baseline) and to reach
net zero emissions by 2050. These targets are aligned with efforts to
limit warming to 1.5°C – the stretch long-term goal of the Paris
Agreement. The pathway to reducing our carbon footprint is organised
into six global decarbonisation programs focused on renewables,
Pacific aluminium operations, aluminium anodes including ELYSISTM
technology, alumina processing decarbonisation, minerals processing
decarbonisation and diesel alternatives. Nature-based solutions (NbS)
and carbon credits complement our decarbonisation programs. By 2025
we expect to have made financial commitments to abatement projects
on renewables, diesel replacement and process heat that will achieve
more than 15% of Group emissions, however, our actual emissions
abatement will lag these. To accelerate these activities, we established
the Rio Tinto Energy and Climate Team led by our Chief
Decarbonisation Officer. To deliver our decarbonisation strategy, we
estimate that we will invest around US$5 billion to US$6 billion in capital
between 2022 to 2030 (revised from US$7.5 billion in prior year, due to
the increased role of commercial contracts treated as operating
expenditure and our expected timeline of fleet electrification roll out post
2030). This excludes capitalised voluntary and compliance-based offset
costs.
Our approach to addressing Scope 3 emissions is to engage with our
customers on climate change and work with them to develop and scale
up the technologies to decarbonise steel and aluminium production.
Our forecast growth capital expenditure captures new growth
opportunities with a focus on materials that are expected to see strong
demand growth from the low carbon transition. This includes our
investment in Simandou, completion of the Oyu Tolgoi underground
copper-gold mine and investment in new copper and lithium projects.
Our budget for central greenfield exploration mainly focuses on copper
with a growing battery materials program.
Decarbonisation investment decisions are made under a dedicated
evaluation framework, which includes consideration of the value of the
investment and its impact on the cost base, the level of abatement, the
maturity of the technology, the competitiveness of the asset and its
policy context, and alternative options on the pathway to net zero. 
Projects are also assessed against our approach to a just transition,
with consideration of the impact on employees, local communities, and
industry.
Climate change scenarios
Our strategy and approach to climate change are informed by our
analysis of the interplay of global megatrends, explored through the lens
of plausible global scenarios. These set the context for our industry and
underpin our commodity price outlooks, portfolio and capital allocation
choices and how we operate as a business.  There are many plausible
scenarios for global energy transition, all with different impacts on future
commodity price outcomes. We did not fundamentally change our
scenarios in 2023, but have updated the temperature outcomes in 2100
based on the Sixth Assessment Report of the Intergovernmental Panel
on Climate Change. The following two core scenarios are used to
generate a single central reference case for use in commodity price
forecasts, valuation models, reserves and resources determination and
in determining estimates for assets and liabilities in our financial
statements, as was the case in the prior year:
–Competitive Leadership scenario, limiting global warming to between
1.6°C-2°C (previously 2°C) by 2100, reflects a rapidly developing
world of high growth and strong climate action post-2030, with
change driven by policy and competitive innovation. As a result, we
expect that countries achieve their Glasgow Climate Pact
commitments agreed at the UN Climate Summit (COP26). Global
weighted average carbon prices are forecast to rise rapidly at an
average of 8% per year over the next three decades, reaching
US$42/tCO2e in 2030, and rising rapidly post-2030 to incentivise
significant mitigation in industrial sectors post-2030.
–Fragmented Leadership scenario, with global warming to between
2.1-2.5°C (previously exceeding 2.5°C) by 2100, is characterised by
limited progress on policy reform with volatile low growth. We expect
that nations eventually achieve their 2030 Nationally Determined
Contributions as agreed in Paris in 2015 but fail to progress towards
long-term carbon goals agreed at COP26. Global weighted average
carbon prices are forecast to rise slowly, at an average of 2.9% per
year over the period to 2050, reaching US$42 in 2030; but remain too
low post-2030 to incentivise significant mitigation in industrial sectors
resulting in flat global emissions post-2030.
We note with concern that at the UN Climate Summit in late 2023
(COP28), it was evident in the global stock take that progress to
decarbonise the global economy is falling short of the goal to limit
warming to 1.5°C by 2100 and that current climate policies in many
countries are not yet aligned with their stated ambitions. Consequently,
neither of our two core scenarios are consistent with the expectation of
climate policies required to accelerate the global transition to meet the
stretch goal of the Paris Agreement. Although our operational emissions
reduction targets align with the goals of the Paris Agreement, our two
core scenarios do not. As a result, we also assess our sensitivity and
test the economic performance of our business against a scenario we
have developed to reflect our view of the global actions required to meet
the stretch goal of the Paris Agreement. We refer to this Paris-aligned
scenario as the Aspirational Leadership scenario.
The Aspirational Leadership scenario reflects a world of high growth,
significant social change and accelerated climate action. Global
weighted average carbon prices rise rapidly – at an average of 9.3%
per year over the next three decades – reaching $59/tCO2e in 2030 and
incentivise rapid and deep reductions in industrial emissions post-2030.
Despite geopolitical differences, major economies work together
through multilateral frameworks and proactively work towards limiting
temperature change to 1.5°C by 2100. The Aspirational Leadership
scenario is a commodity sales price and carbon tax sensitivity, with all
other inputs remaining equal to our Reference Case. It is built by design
to reach net zero emissions globally by 2050 and help us better
understand the pathways to meet the Paris Agreement goal, and what
this could mean for our business. It is used for strategy and risk
discussions, including analysis of sensitivity to our view of a Paris-
aligned pathway and comparison of relative economic performance to
our core scenarios.
Importantly, none of our three scenarios are considered a definitive
representation for our assessment of the future impact of climate
change on the Group. Scenario modelling has inherent limitations and,
by its nature, allows a range of possible outcomes to be considered
where it is impossible to predict which outcome is likely.
We do not publish the commodity price forecasts associated with these
scenarios, as to do so would weaken our position in commercial
negotiations and might give rise to concerns from other market
participants.
Low-carbon transition risks and opportunities, financial
resilience of our portfolio
Through our strategy process, we compare the economic performance
of our portfolio under our two core scenarios and the Aspirational
Leadership scenario. This indicates that, overall, the economic
performance of our portfolio would be stronger in scenarios with
proactive climate action, particularly in relation to aluminium, copper
and higher-grade iron ore. This reflects anticipated increased demand
for these commodities in the low-carbon transition. 
We anticipate that our Group’s overall economic performance will be the
strongest under the Competitive Leadership scenario and the weakest
under the Fragmented Leadership scenario.  Our Aspirational
Leadership scenario predicts the Group's overall economic performance
would fall between the Fragmented Leadership and Competitive
Leadership scenarios. This reflects higher estimated economic
performance for our copper and aluminium businesses in the
Aspirational Leadership scenario, based on their higher price profiles,
offset by higher expected carbon penalties across our operating
jurisdictions, and lower prices for lower grade iron ore products. Refer
below for our assessment of the accounting implications of forecast
commodity pricing in the Aspirational Leadership scenario.
We carefully monitor and manage transition risks linked to our
operational Scope 1 and 2 emissions and value-chain Scope 3
emissions.  In particular, we expect the decarbonisation of our assets to
benefit from the implementation of new technologies. The pace of
technological development is uncertain, which could delay or increase
the cost of our decarbonisation efforts.
Physical risk impacts
In 2022, we launched the Physical Resilience Program across the
Group starting with the asset-level resilience assessment in iron ore
operations in the Pilbara and aluminium operations in the Saguenay. In
2023, we continued to make progress in a Group-wide, top-down
assessment to further understand the risks and opportunities
associated with physical climate change and to quantify any financial
impacts, in addition to the site-specific, bottom-up assessments, which
will continue in the foreseeable future. Asset-level resilience
assessments conducted across our Canadian sites, including
Saguenay, Kitimat, and IOC; our iron ore project at Simandou in
Guinea; at Weipa and Yarwun in Australia as well as our ongoing review
processes, including impairment assessments, have not identified any
material accounting impacts to date. For example, in 2023, no write-offs
were necessary in the Pilbara, where certain infrastructure assets, such
as transmission lines, that have reached the end of their natural lives
are being replaced with climate resilient infrastructure. In addition, we
do not foresee the renewal of our contractual water rights in Canada
that have been classified as indefinite-lived intangible assets to be at
risk from climate change (note 12). Further, closure planning considers
future climate change projections at each step of the process to support
safe and appropriate final landform design.
NbS, carbon credits and renewable energy certificates
(RECs)
While prioritising emissions reductions at our operations, we are also
investing in NbS that can bring benefits to people, nature and climate.
We have three pathways to securing carbon credits: investment in
Australian Carbon Credit Units (ACCUs), the development of our own
voluntary projects and commercial agreements with voluntary carbon
credit developers. We may use high quality carbon credits from these
projects towards our 2030 target. This will complement our abatement
project portfolio and support our compliance with carbon pricing
regulation such as the Safeguard Mechanism in Australia
(approximately half of our Group emissions are subject to carbon pricing
regulation in Australia, Canada and elsewhere).
In March 2023, the Australian Parliament legislated to introduce reforms
to the Safeguard Mechanism that apply from 1 July 2023. In the short-
to-medium term, we anticipate that a number of our facilities will be
above the legislated baseline, requiring us to purchase and surrender
ACCUs. In 2023, we purchased US$61 million (2022: US$33 million) of
carbon credits and RECs. They have been acquired for our own use
and are accounted for as intangible assets (note 12).
Accounting impacts from executing our strategy
Global decarbonisation and the world’s energy transition continue to
evolve, with the potential to materially impact our future financial results
as our significant accounting judgements and key estimates are
updated to reflect prevailing circumstances. In response, carrying
values of assets and liabilities could be materially affected in future
periods. Our current strategy and approach to decarbonise our
operations and achieve our Scope 1 and 2 emissions targets are
considered in our significant judgements and key estimates reflected in
these financial results.
Progressing our strategy to grow in materials needed for the low-
carbon transition
As part of our strategy to grow in materials essential for the energy
transition we progressed our high-grade iron ore project in Simandou,
we continued to invest in our copper portfolio and the Rincon lithium
project. These projects follow our existing accounting policies on
undeveloped properties and cost capitalisation.
As discussed in note 5, we entered into an agreement with Giampaolo
Group to form the Matalco joint venture for a combined consideration of
US$738 million to meet a growing demand for recycled aluminium 
solutions. The investment is accounted for under the equity method. In
2023, we also invested US$45 million in a copper project known as
Nuevo Cobre accounted for as an investment in a partially owned
subsidiary (note 5).
Decarbonising our portfolio
As part of our decarbonisation programs, we invested US$94 million
(2022: US$86 million) in various decarbonisation projects, all capitalised
on balance sheet. Our operating expenditure on Scope 1, 2 and 3
energy efficient initiatives and research and development (R&D) costs,
inclusive of our equity share of R&D related to ELYSISTM, was
US$234 million (2022: US$138 million), all recognised in the income
statement (note 7). Our capital commitments related to decarbonisation
in 2023 totalled US$123 million (2022: US$8 million)and included the
Amrun renewable power purchase agreement (PPA) classifed as a
lease not yet commenced (note 37).
In addition, we invested US$36 million (2022: US$42 million) in entities
specialising in decarbonisation and related technology, accounted for as
financial assets, and Australian Integrated Carbon (AIC), a leading
developer of high-quality carbon credits, which is an equity accounted
unit.
Given the significant investments we are making to abate our carbon
emissions, we have considered the potential for asset obsolescence,
with a particular focus on our Pilbara operations where we are building
our own renewable assets and are prioritising investment in renewables
to switch away from natural gas power generation. No material changes
to useful economic lives have been identified in the current year as the
assets are expected to be required for the transition (note 13). As the
renewable projects progress, it is possible that such adjustments may
be identified in the future.
Large scale renewable power off-take arrangements require judgement
to determine the appropriate accounting treatment and may result in a
lease, a derivative or an executory contract depending on contractual
terms (refer to note 21 for further information on significant judgements
in lease assessment). The renewable solar PPAs at Richards Bay
Minerals (RBM) will be accounted for on an accrual basis as energy is
produced, while the renewable offtake arrangements at QIT
Madagascar Minerals (QMM) and Amrun are leases.
As part of the program to develop renewable energy solutions for our
Queensland aluminium assets, on 22 December 2023 we entered into 
a long-term renewable 1.1GW PPA at Upper Calliope Solar Farm, to
buy renewable electricity and associated green products to be
generated in the future. The contract is accounted for as a level 3
financial derivative with a zero fair value at inception and an immaterial
value at year end. The derivative will require complex measurement
over the contract’s term.
No adjustments to useful lives of the existing fleet have been identified
to date as a result of planned fleet electrification in the Pilbara and the
purchase of battery-powered locomotives in the prior period. The
solutions are still in development or pilot stages and the gradual fleet
replacement is intended to be part of the normal lifecycle renewal of
trucks. Depending on technological development, which is highly
uncertain, this could lead to accelerated depreciation in the future.
Similarly, our target to have net zero vessels in our portfolio by 2030
has not given rise to accounting adjustments to date, as the
replacement is planned as part of the lifecycle renewal. The energy
efficiency double digestion project at Queensland Alumina refinery does
not reduce the economic lives of the underlying alumina assets, but
could lower operating costs and improve margins. The expenditure on
our own carbon abatement projects and technology advancements
follows existing accounting policies on cost capitalisation, research and
development costs.
Impairment - sensitivities to climate change
In our impairment review process we consider the risks associated with
climate change.
The Gladstone alumina refineries are responsible for more than half of
our Scope 1 carbon dioxide emissions in Australia and therefore have
been a key focus as we evaluate options to decarbonise our assets.   
The legislated Safeguard Mechanism reforms referred to above, difficult
trading conditions, together with our improved understanding of the
capital requirements for decarbonisation, were identified as impairment
triggers and an impairment of US$1,175 million was recognised during
the year at the Yarwun alumina refinery and Queensland Alumina
Limited (note 4). The recoverable amount included the benefits of an
energy efficiency digestion project at Queensland Alumina refinery. This
does not reduce the economic lives of the underlying alumina assets
but could lower operating costs and improve margins.
Following the impairment in 2022, we continue to evaluate lower
emission power solutions for the Boyne smelter that could extend its life
to at least 2040. In such circumstances, the net present value of the
forecast future cash flows could support the reversal of past
impairments. In note 4 we illustrated the sensitivity of the refineries
valuations to the cost of carbon credits.
Under the Aspirational Leadership scenario, which is not used in the
preparation of these financial statements, nor for budgeting purposes,
the economic performance of copper and aluminium is expected to be
stronger under supply and demand forward pricing curves, which we
believe will be consistent with the Paris Agreement. It is possible
therefore, under certain conditions, that historical impairments
associated with these assets could reverse. 
In the Aspirational Leadership scenario, the prices for lower-grade iron
ore are supported in the medium term by an assumed underlying
increase in GDP-driven demand. However, in the longer term, we
assume the pricing for lower-grade iron ore to be weaker than in our
core scenarios. This will depend on the development of low-carbon
steel technology, the pace of which is uncertain, but is expected to be
offset by higher prices for higher-grade iron ore. Consistent with the
prior year, this is very unlikely to give rise to impairment triggers for
2024 or in the short- to medium-term due to the high returns on capital
employed in the Pilbara and the slow deployment of low-carbon steel
technology.
Use of Paris-aligned accounting
Forecast commodity prices, including carbon prices, incorporated into a
blend of our two scenarios are used to inform critical accounting
estimates included as inputs to impairment testing, estimation of
remaining economic life for units of production depreciation and
discounting closure and rehabilitation provisions. These prices
represent our best estimate of actual market outcomes based on the
range of future economic conditions regarding matters largely outside
our control, as required by IFRS. As neither of our core scenarios
represents the Group’s view of the goals of the Paris Agreement, our
commodity price assumptions used in accounting estimates are not
consistent with the expectation of climate policies required to accelerate
the global transition to meet the goals of the Paris Agreement. As
described above, we use our Aspirational Leadership scenario to
understand the sensitivity of these estimates to Paris-aligned
assumptions.
We completed the divestments of our coal businesses in 2018 and no
longer mine coal, but retained a contingent royalty income from these
divestments. Recent favourable coal prices exceeded contractual
benchmark levels and resulted in the cash royalty receipt of
US$38 million during 2023. We also carry royalty receivables of
US$214 million on our balance sheet at 31 December 2023, measured
at fair value (note 24). The fair value of this balance may be adversely
impacted in the future by a faster pace of transition to a low carbon
economy, but this impact is not expected to be material.
Closure dates and cost of closure are also sensitive to climate
assumptions, including precipitation rates, but no material changes
have been identified in the year specific to climate change that would
require a material revision to the provisions in 2023. For those
commodities with higher forward price curves under the Aspirational
Leadership scenario, it may be economical to mine lower mineral
grades, which could result in the conversion of additional Mineral
Resources to Mineral Reserves and therefore longer dated closure.
Overall, based on the Aspirational Leadership scenario pricing
outcomes, and with all other assumptions remaining consistent with
those applied to our 2023 financial statements, we do not currently
envisage a material adverse impact of the 1.5°C Paris-aligned
sensitivity on asset carrying values, remaining useful life, or closure and
rehabilitation provisions for the Group. It is possible that other factors
may arise in the future, which are not known today, that may impact this
assessment.
Additional commentary on the impact of climate change on our
business is included in the following notes:
Financial reporting considerations and sensitivities related to climate change
Page
Recoverable value of our assets, asset obsolescence, impairment and use of sensitivities (note 4)
Operating expenditure spend on decarbonisation (note 7 - footnote (h))
Water rights - climate impact on indefinite life (note 12)
Carbon abatement spend on procurement of carbon units and renewable energy certificates (note 12 - footnote (a))
Estimation of asset lives (note 13)
Additions to property, plant and equipment with a primary purpose of reducing carbon emissions (note 13 - footnote (d))
Useful economic lives of power generating assets (note 13)
Close-down, restoration and environmental cost (note 14)
Upper Calliope Solar Farm PPA in Queensland (note 24 (iv))
Coal royalty receivables (note 24)
Decarbonisation capital commitments (note 37)
New standards issued and effective in the current year
Our financial statements have been prepared on the basis of
accounting policies consistent with those applied in the financial
statements for the year ended 31 December 2022, except for the
accounting requirements set out below, effective as at 1 January 2023.
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 “Income
Taxes”), mandatory in 2023 and endorsed by the UK)
At 1 January 2023, we adopted narrow-scope amendments to IAS 12
and have restated comparative periods in accordance with the transition
arrangements. These amendments introduce an exception to the initial
recognition exemption application for transactions giving rise to equal
and offsetting taxable and deductible temporary differences.
Under the amendments, separate deferred tax assets and liabilities are
calculated and recognised, prior to application of any required recovery
testing and permitted offsetting, and subsequent movements in those
deferred tax assets and liabilities are recognised in the income
statement. Our previous accounting policy stated that “where the
recognition of an asset and liability from a single transaction gives rise
to equal and offsetting temporary differences, we apply the initial
recognition exemption allowed by IAS 12, and consequently recognise
neither a deferred tax asset nor a deferred tax liability in respect of
these temporary differences”.
The most significant impact of implementing these amendments is from
temporary differences related to the Group’s provisions for close-down and
restoration, and lease obligations and corresponding capitalised closure
costs and right-of-use assets. Adjustments to deferred tax assets and
liabilities related to these balances have been recognised as at 1 January
2021, being the beginning of the earliest comparative period to be
presented in the financial statements for the year ended 31 December
2023, with the cumulative effect recognised as an adjustment to retained
earnings or other components of equity at that date. For other transactions,
the impact of which was immaterial, the amendments apply only to those
taking place on or after 1 January 2021. The impact on equity attributable
to owners of Rio Tinto at 1 January 2023 of implementing the amendments
to IAS 12 is as follows:
At 1 January
2023
US$m
2022
US$m
2021
US$m
Equity attributable to owners of Rio Tinto
(previously reported)
50,175
51,415
47,054
Impact of IAS 12 amendments(a)
459
515
516
Restated equity attributable to owners
of Rio Tinto
50,634
51,930
47,570
(a)Retained earnings adjustments at 1 January 2023 and 2022 include the impact of income
statement adjustments for the years ended 31 December 2022 and 2021, respectively.
The restatement of deferred tax balances for the comparative reporting
date is as follows:
31 December 2022
US$m
Deferred tax assets (previously reported)
2,766
Impact of IAS 12 amendments
30
Deferred tax assets (restated)
2,796
Deferred tax liabilities (previously reported)
(3,601)
Impact of IAS 12 amendments
437
Deferred tax liabilities (restated)
(3,164)
Net impact of IAS 12 amendments on deferred tax
balances
467
Comprising, prior to offsetting of balances:
Deferred tax assets arising from:
-  Provisions and other liabilities
1,586
- Capital allowances
(57)
1,529
Deferred tax liabilities arising from Capital allowances
(1,062)
Restatement of pre-offset balances at 31 December 2022 represents
additional gross deferred tax liabilities of US$922 million and gross
deferred tax assets of US$1,380 million in relation to close-down and
restoration obligations and related capitalised closure costs, and
additional gross deferred tax liabilities of US$140 million and gross
deferred tax assets of US$149 million in relation to lease liabilities and
related right-of-use assets.
The impact of restatement on net earnings for the years ended
31 December 2021 and 31 December 2022 were a net credit of
US$22 million and net charge of US$28 million, respectively, related to
depreciation of closure and right of use assets and settlement of closure
and lease liabilities.
IFRS 17 “Insurance Contracts” and Amendments to IFRS
17 “Insurance Contracts” (mandatory in 2023 and endorsed
by the UK)
We implemented IFRS 17 and related amendments on 1 January 2023,
which provides consistent principles for all aspects of accounting for
insurance contracts. The standard does not have a material impact on
the Group.
Amendments to IAS 1 “Presentation of Financial
Statements”, IFRS Practice Statement 2 “Making Materiality
Judgements” and Amendments to IAS 8 “Accounting
policies, Changes in Accounting Estimates and Errors”
We adopted Amendments to IAS 1 and IFRS Practice Statement 2,
requiring companies to disclose their material accounting policies rather
than their significant accounting policies. The amendments do not have
a material impact on the Group.
We adopted Amendments to IAS 8 clarifying how companies should
distinguish changes in accounting policies generally applied
retrospectively, from changes in accounting estimates applied
prospectively. The amendments introduce a new definition for
accounting estimates clarifying that they are monetary amounts in the
financial statements that are subject to measurement uncertainty. The
amendments do not have a material impact on the Group.
The Organisation for Economic Co-operation and
Development’s (OECD) Pillar Two Rules
We have adopted the amendments to IAS 12 issued in May 2023,
which provide a temporary mandatory exception from the requirement
to recognise and disclose deferred taxes arising from enacted or
substantively enacted tax law that implements the Pillar Two model
rules, including tax law that implements qualified domestic minimum
top-up taxes described in those rules. Under these amendments, any
Pillar Two taxes incurred by the Group will be accounted for as current
taxes from 1 January 2024.