Intangible assets

12 Months Ended

Dec. 31, 2023

12 Intangible assets

Recognition and measurement

Purchased intangible assets are initially recorded at cost. Finite-life intangible assets are amortised over their useful economic lives on a straight line

or units of production basis, as appropriate. Intangible assets that are deemed to have indefinite lives and intangible assets that are not yet ready for

use are not amortised; they are reviewed annually for impairment or more frequently if events or changes in circumstances indicate a potential

impairment.

The majority of our intangible assets relate to capitalised exploration and evaluation spend on undeveloped properties and contract-based water

rights. The water rights were acquired with Alcan in Canada.

The carrying values for undeveloped properties are reviewed at each reporting date in accordance with IFRS 6 “Exploration for and Evaluation of

Mineral Resources”. The indicators of impairment differ from the tests in accordance with IAS 36 in recognition of the subjectivity of estimating future

cash flows for mineral interests under evaluation. Potential indicators of impairment include: expiry of the right to explore, substantive expenditure is

no longer planned, commercially viable quantities of mineral resources have not been discovered and exploration activities will be discontinued, or

sufficient data exists to indicate a future development would be unlikely to recover the carrying amount in full. When such impairment indicators

have been identified, the recoverable amount and impairment charge are measured under IAS 36. Impairment reversals for undeveloped properties

are not subject to special conditions within IFRS 6 and are therefore subject to the same monitoring for indicators of impairment reversal as other

CGUs.

Exploration and evaluation

Evaluation expenditure relates to a detailed assessment of deposits or other projects (including smelter and refinery projects) that have been

identified as having economic potential. Capitalisation of evaluation expenditure commences when there is a high degree of confidence that the

Group will determine that a project is commercially viable; that is, the project will provide a satisfactory return relative to its perceived risks and,

therefore, it is considered probable that future economic benefits will flow to the Group. The Group’s view is that a high degree of confidence is

greater than “more likely than not” (that is, greater than 50% certainty) and less than “virtually certain” (that is, less than 90% certainty).

Assessing whether there is a high degree of confidence that the Group will ultimately determine that an evaluation project is commercially viable

requires judgement and consideration of all relevant factors such as: the nature and objective of the project; the project’s current stage, project

timeline, current estimates of the project’s net present value (including sensitivity analyses for the key assumptions), and the main risks of the

project. Development expenditure incurred prior to the decision to proceed is subject to the same criteria for capitalisation, being a high degree of

confidence that the Group will ultimately determine that a project is commercially viable.

In some cases, undeveloped projects are regarded as successors to ore bodies, smelters or refineries currently in production. Where this is the

case, it is intended that these will be developed and go into production when the current source of ore is exhausted or when existing smelters or

refineries are closed. Mineral reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined.

Evaluation costs may continue to be capitalised in between declaration of mineral reserves and approval to mine as further work is undertaken in

order to refine the development case to maximise the project’s returns.

Carbon credits and Renewable Energy Certificates

Carbon credits and Renewable Energy Certificate (RECs) acquired for our own use are accounted for as intangible assets, initially recorded at cost.

They are amortised through the income statement when surrendered.

Contract-based intangible assets

The majority of the carrying value of our contract-based intangible assets relate to water rights in the Quebec region. These contribute to the

efficiency and cost effectiveness of our aluminium operations as they enable us to generate electricity from hydropower stations.



	Other relevant judgements - assessment of indefinite-lived water rights in Quebec, Canada 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. Accordingly, the rights are not subject to amortisation but are tested annually for impairment. We have no other indefinite-lived assets. The remaining carrying value of the water rights of US$1,776 million (included in contract-based assets) as at 31 December 2023 (2022: US$1,693 million) relates wholly to the Quebec smelters CGU. The Quebec smelters CGU was tested for impairment by reference to FVLCD using discounted cash flows. The recoverable amount of the Quebec smelters is classified as level 3 under the fair value hierarchy. In arriving at its FVLCD, post-tax cash flows expressed in real terms have been estimated over the expected useful economic lives of the underlying smelting assets and discounted using a real post-tax discount rate of 6.6% (2022: 6.6%). The recoverable amounts were determined to be significantly in excess of carrying value, and there are no reasonably possible changes in key assumptions that would cause the remaining water rights to be impaired.



	Impact of climate change on our business - water rights To manage the uncertainties of climate change and our impact on the area, our team of hydrologists in Quebec analyse different weather scenarios on a daily basis. We monitor the water resource available to us along with the impact that our operation is having on the water quality and quantity, and on the environment when we return the water following use. Based on our analysis to date, we do not consider the renewal of our contractual water rights to be at risk from climate change for the foreseeable future.

12 Intangible assets continued


	2023
	Exploration and evaluation US$m	Trademarks, patented and non-patented technology US$m	Contract-based intangible assets US$m	Other intangible assets(a) US$m	Total US$m
Net book value
At 1 January 2023	1,368	12	1,875	390	3,645
Adjustment on currency translation	—	1	52	8	61
Additions(b)	471	—	—	121	592
Amortisation for the year	—	(4)	(7)	(113)	(124)
Impairment reversal(c)	231	—	—	—	231
Newly consolidated operations(d)	85	—	—	—	85
Disposals, transfers and other movements	(176)	—	33	42	(101)
At 31 December 2023	1,979	9	1,953	448	4,389
– cost (c)	1,989	222	2,996	1,926	7,133
– accumulated amortisation and impairment (c)	(10)	(213)	(1,043)	(1,478)	(2,744)


	2022
	Exploration and evaluation US$m	Trademarks, patented and non-patented technology US$m	Contract-based intangible assets US$m	Other intangible assets (a) US$m	Total US$m
Net book value
At 1 January 2022	363	22	2,008	439	2,832
Adjustment on currency translation	(22)	(2)	(114)	(24)	(162)
Additions	207	5	—	106	318
Amortisation for the year	—	(13)	(9)	(137)	(159)
Impairment reversal(c)	150	—	—	—	150
Subsidiaries no longer consolidated(c)	(150)	—	—	—	(150)
Newly consolidated operations(d)	822	—	—	—	822
Disposals, transfers and other movements	(2)	—	(10)	6	(6)
At 31 December 2022	1,368	12	1,875	390	3,645
– cost	3,030	211	2,908	1,732	7,881
– accumulated amortisation and impairment	(1,662)	(199)	(1,033)	(1,342)	(4,236)

(a)Carbon abatement spend of US$61 million in 2023 (2022: US$33 million) relates to procurement of carbon units and RECs included within “Other intangible assets” on initial recognition and

charged to the income statement when surrendered.

(b)In the current year, additions to exploration and evaluation assets includes US$4 million of interest capitalised. Our average borrowing rate, excluding any project finance, used for capitalisation

of interest is 7.50% (2022: 5.60%).

(c)The impairment reversal in the current year relates to the Simandou project, this also impacted cost and accumulated impairment due to derecognition of historical exploration and evaluation

costs. In 2022, the impairment reversal and disposal related to our sale of the Roughrider uranium project. Refer to note 4 for details.

(d)In the current year, the acquisition relates to our purchase of Meridian Minera Limitada’s 57.7% share in Agua de la Falda. In 2022, the acquisition related to our purchase of Rincon, a lithium

project in Argentina. Refer to note 5 for details.

Where amortisation is calculated on a straight line basis, the following useful lives have been determined:


	Trademarks, patented and non-patented technology		Contract-based intangible assets		Other intangible assets
Type of intangible	Trademarks	Patented and non-patented technology	Power contracts/water rights	Other purchase and customer contracts	Internally generated intangible assets and computer software	Other intangible assets
Amortisation profile	14 to 20 years	10 to 20 years	2 to 45 years	5 to 15 years	2 to 5 years	2 to 20 years