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About the presentation of our financial statements
 12 Months Ended
Dec. 31, 2024
Disclosure of initial application of standards or interpretations [abstract]  
About the presentation of our financial statements About the presentation of our consolidated
financial statements
All financial statement values are presented in US dollars (USD) 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 2024 were
authorised for issue in accordance with a Directors’ resolution on
19 February 2025.
The basis of preparation
The financial information included in the financial statements for the
year ended 31 December 2024, 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 2024.
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.
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 Rio Tinto Group”, “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 2 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 2 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, 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. Our principal JOs are
shown in note 31. 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 elimMateriality
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 year ended 31 December 2024 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.
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 2024 and how they
compare to the prior year. Taking a different judgement over these matters could lead to a material impact on the 2024 financial statements.
More detail on the judgement can be found in the respective notes.
Key judgements
2024
2023
Context
Indicators of impairment and impairment
reversals (note 4)
a
a
Various cash-generating units of the Group that have been impaired or tested
for impairment in previous years, are at higher risk of impairment charge or
reversal in the future due to carrying value and recoverable amounts being
similar.  Whilst we monitor all assets for impairment, these assets are
monitored more 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.
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
2024
2023
Context
Estimation of the close-
down, restoration
and environmental cost
obligations (note 14)
a
a
Close-down, restoration and environmental 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. During the year, the most significant closure provision updates related to a
number of sites across the Pilbara. The provisions are 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.
Renewable power
purchase agreements
accounted for as
derivatives (note 24)
a
0
A discounted cash flow methodology is used to determine the fair value of the derivative.
Key inputs into the valuation model include forward electricity price curves, which are used to
forecast future floating cash flows, estimated electricity generation and credit-adjusted discount
rates. Long-term forward electricity prices are a source of a significant estimation uncertainty as
they are not readily available and may be impacted by renewable market developments, which
are presently unknown.
Currency
Other relevant judgements - identification of functional currency
We present our financial statements in USD, 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 USD is generally identified to be the functional currency as a higher proportion of costs, particularly imported goods and
services, are agreed and paid in USD, 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 2024, A$15,717 million (2023:
A$15,102 million) 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 USD 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 USD at period-end exchange rates.
Exchange differences arising on the translation of the net assets of entities with functional currencies other than USD 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 USD
2024
2023
2022
2024
2023
2022
Pound sterling
1.28
1.24
1.24
1.25
1.28
1.21
Australian dollar
0.66
0.66
0.69
0.62
0.69
0.68
Canadian dollar
0.73
0.74
0.77
0.70
0.76
0.74
Euro
1.08
1.08
1.05
1.04
1.11
1.07
South African rand
0.055
0.054
0.061
0.053
0.054
0.059
Ore 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 Ore Reserve is the economically mineable
part of a measured or indicated Mineral Resource.
The estimation of Ore 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 Ore Reserves (the JORC
Code)), estimate Ore 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
–renewal of mining licences
With regard to our future commodity price assumptions, to calculate
our Ore 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. 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 Ore 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
–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 target to reduce our net Scope 1 and 2 emissions by 15% by
2025, 50% by 2030 and to reach net zero emissions by 2050, all
relative to our 2018 equity baseline, remains unchanged.  We have
now reduced gross operational emissions by 14% below our 2018
levels; and have a pipeline of projects and committed investments
that support our 2030 target. Our gross emissions reductions are
expected to be at least 40% by 2030, and the use of carbon credits
towards our target will be limited to 10% of our 2018 baseline. While
there is no universal standard for determining the alignment of targets
with the Paris Agreement goals, we concluded that our Scope 1 and 2
target for 2030 was aligned with efforts to limit warming to 1.5°C when
we set it in 2021. To reduce our decarbonisation footprint we focus on
renewable electricity, transitioning from diesel and our processing
emissions. Nature-based solutions (NbS) and carbon credits
complement our decarbonisation activities. To accelerate these
activities, in 2023 we established the Rio Tinto Energy and Climate
Team led by our Chief Decarbonisation Officer. To deliver our
decarbonisation target, we estimate that we will require around
US$5 billion to US$6 billion in capital investment between 2022 to
2030, unchanged from the prior year. This includes voluntary carbon
credits and investment in NbS projects but excludes the cost of
carbon credits bought for compliance purposes.
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 investments in Simandou, Matalco, Rincon, Oyu Tolgoi and the
recent agreement to acquire Arcadium Lithium plc. Our budget for
central greenfield exploration mainly focuses on copper with a
growing battery materials program.
Decarbonisation investment is derived from the Group’s capital
allocation framework and aligned to our 2025 and 2030 Scope 1 and
2 emissions targets. 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.
Scenarios
We use scenarios to identify and assess climate-related risks and
opportunities that may affect our business in the medium to long term.
We do not undertake climate modelling ourselves, rather we
determine the approximate temperature outcomes in 2100 by
comparing the emissions pathways to 2050 in each of our scenarios
with the Shared Socio-Economic Pathways set out in the
Intergovernmental Panel on Climate Change Sixth Assessment
Report. We also consider the carbon budgets associated with
different temperature outcomes. Our scenario approach is reviewed
every year as part of our Group strategy engagement with the Board.
This year, we updated the scenario framework used to assess the
resilience of our business under different transition-related scenarios.
Our Conviction scenario is now our central case.  In the prior year, our
central case comprised the Competitive Leadership and Fragmented
Leadership scenarios. The Conviction scenario underlies strategic
planning and portfolio investment decisions across the Group, is used
in commodity price forecasts, valuation models, reserves and
resources determination, and in determining estimates for assets and
liabilities in our financial statements. In the prior year, our central case
comprised the Competitive Leadership and Fragmented Leadership
scenarios. In this scenario, countries will decarbonise at a moderate
pace, real gross domestic product (GDP) grows at 2.5% between
2023-2050, but energy intensity of GDP reduces approximately 2.7%
per year due to sectoral shifts and greater efficiency. In Conviction,
climate policies become more ambitious and effective over time
resulting in a temperature rise of 2.1°C in 2100.
Resilience scenario, which limits temperature rises to around 2.5°C
by 2100, is a sensitivity analysis that is designed to test our annual
plan and investment proposals. Weaker governance, declining global
trade, and lower economic growth lead to less effective climate action.
Real GDP growth only averages 1.6% between 2023 and 2050.
Neither of the Conviction or Resilience scenarios above are
consistent with the expectation of climate policies required to
accelerate the global transition to meet the stretch goal of the Paris
Agreement. Despite global agreements on climate change reached in
Glasgow and Dubai, emissions today continue to rise, making the 1.5°C
goal of the Paris Agreement unlikely to be achieved. As our operational
emissions targets are in line with 1.5°C, so too are our decarbonisation
investment decisions. In 2022, we developed a Paris-aligned scenario,
referred to as the Aspirational Leadership scenario. The Aspirational
Leadership scenario reflects a world of high growth, significant social
change and accelerated climate action. The Aspirational Leadership
scenario is a commodity sales price and carbon cost sensitivity, with
all other inputs remaining equal to our central case. It is built by
design to reach net zero emissions globally by 2050 and helps us
better understand the pathways to meet the Paris Agreement goal,
and what this could mean for our business. We do not use the
Aspirational Leadership scenario in our broader strategic or investment
decision-making.  
Importantly, none of the above scenarios are considered a definitive
representation for our assessment of the future impact of climate
change on the Group. To assess transition risk, we use market
analysis for our short-term outlook, and our Conviction and Resilience
scenarios for our medium- to long-term assessment. For physical
risks, we use an intermediate and high emissions scenario. 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.
In addition, as our macroeconomic modelling involves a range of
variables, isolating and measuring the impact of specific climate risks
and opportunities is challenging. 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
The low-carbon transition is at the heart of our strategy. This mitigates
risks associated with stricter carbon regulations and changing
consumer preferences and positions us to capitalise on the growing
demand for transition materials. With higher GDP growth and a faster
low-carbon transition, our economic performance is stronger in
Conviction than in Resilience. Higher carbon penalties and the
potential impact on demand for mid and lower grade iron ore result in
weaker economic performance in Aspirational Leadership than in
Conviction. Overall, the economic performance of our portfolio would
be stronger in scenarios with higher GDP growth and proactive
climate action, and is resilient under scenarios aligned with 1.5°C,
2.1°C and 2.5°C outcomes.
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 the
Pilbara and Saguenay-Lac-St-Jean. We continue 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 to date as part of a broader
multi-year program, as well as our ongoing review processes,
including impairment assessments, have not identified any material
accounting impacts to date. For example, 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 2024, we
continued to make progress on the climate-resilience assessment
process for our tailings storage facilities, enhanced our water risk
management, and operationalised analytics that provide real-time
natural-hazard monitoring for 50% of our supply chain.
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 and carbon credits
While prioritising emissions reductions at our operations, we are also
investing in high-integrity NbS in the regions where we operate that
can bring benefits to people, nature and climate. We will voluntarily
retire associated carbon credits to complement the decarbonisation
investment, but will limit the use of voluntary and compliance offsets
towards our 2030 climate target to up to 10% of our 2018 baseline
emissions. We source carbon credits in three ways: we develop new
projects, invest in and scale up existing projects, and source high-
quality carbon credits through spot carbon credit purchases and long-
term offtake agreements. This will complement our abatement project
portfolio and support our compliance with carbon pricing regulation
such as the Safeguard Mechanism in Australia. In 2024, we finalised
offtake agreements for high-quality human-induced regeneration
(HIR), as well as with savanna fire management project developers,
and progressed feasibility studies on other projects.
In 2024, we purchased US$50 million (2023: US$61 million) of carbon
credits. 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 approved “notice to proceed” for the Simandou high-
grade iron ore project in Guinea and the Rincon lithium project in
Argentina (note 12). We have also continued to invest in our copper
portfolio. These projects follow our existing accounting policies on
undeveloped properties and cost capitalisation. In 2024 we also
announced a definitive agreement to acquire Arcadium Lithium plc
(note 5).
In 2023, we entered into an agreement with Giampaolo Group to form
the Matalco joint venture, equity accounted, to meet a growing
demand for recycled aluminium  solutions, and invested 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$283 million
(2023: US$191 million) comprising capital projects, investments and
carbon credits referred to above, 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$306 million (2023:
US$234 million), recognised in the income statement (note 7). Our
capital commitments at the end of 2024 relating to decarbonisation
totalled US$114 million (2023: US$123 million) and included the
Amrun renewable PPA classifed as a lease not yet commenced (note
37).
We invested US$89 million (2023: US$36 million) in entities
specialising in decarbonisation and related technology, accounted for
as financial assets, such as the Silva Carbon Origination Fund, a
developer of high integrity Australian Carbon Credit Units (ACCUs) and
I-Pulse, a developer of decarbonisation applications. In 2023, this
included an investment in 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 purchase agreements (PPAs) 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
and wind PPAs at Richards Bay Minerals (RBM) are 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, we entered into 2 long-term
renewable 2.2GW PPAs: the Upper Calliope solar farm and the 
Bungaban wind farm, at the end of 2023 and in 2024 respectively, to
buy renewable electricity and associated green products to be
generated in the future. In 2024, our New Zealand Aluminium
Smelters signed long-term PPAs with electricity generators for a total
of 572MW of hydro electricity. We also signed the Monte Cristo Wind
PPA in the US, which will account for about 20% of Kennecott Scope
2 emissions abatement. These contracts are recorded as level 3
financial derivatives, with net unrealised losses of US$111 million
recognised in the current year (2023: US$nil) (note 24 (iv)). These
derivatives require complex measurement over the contract’s term,
with inputs such as unobservable long-term energy prices being key
sources of estimation of uncertainty (note e).
No adjustments to useful lives of the existing fleet have been identified
to date as a result of planned mining fleet electrification in the Pilbara.
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 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. In 2023, we recorded an impairment of Queensland Alumina
Limited (QAL) refinery with the recoverable amount largely dependent
upon the double digestion project, which was at the pre-feasibility
study stage of project evaluation. This major capital project improves
the energy efficiency of the alumina production process and
significantly reduces carbon emissions. In 2024, continued studies for
this project have indicated an increased capital cost compared with
our previous assumption and therefore we recognised further
impairment and provided a sensitivity to the cost of carbon credits
(note 4). 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.
As noted above, we anticipate increased demand for copper in the
low-carbon transition. Whilst we have tested Rio Tinto Kennecott
cash-generating unit for impairment utilising our Conviction price
assumptions, that are not aligned with the goals of the Paris
Agreement, we have also provided a sensitivity using our Paris-
aligned Aspirational Leadership scenario (note 4).
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
Conviction scenario and 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. As
was the case in the prior year, this is very unlikely to give rise to
impairment triggers 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
our Conviction scenario 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 the Conviction scenario does not
represent 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 help us better understand the pathways to meet the Paris
Agreement goal, and what this could mean for our business.
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 2024. 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 Ore Reserves and therefore longer dated closure.
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$45 million during 2024 (2023: US$38 million). We also carry
royalty receivables of US$252 million on our balance sheet at
31 December 2024 (2023: US$214 million), 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.
Overall, based on the Aspirational Leadership scenario pricing
outcomes, and with all other assumptions remaining consistent with
those applied to our 2024 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)
Renewable PPAs accounted for as derivatives (note 24 (iv))
Coal royalty receivables (note 24)
Decarbonisation capital commitments (note 37)
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 2023, except for the accounting requirements
set out below, effective as at 1 January 2024.
Classification of liabilities as current or non-current liabilities
with covenants (Amendments to IAS 1 “Presentation of Financial
Statements”)
We adopted the Amendments to IAS 1 which specify the
requirements for classifying liabilities as either current or
non-current. The amendments clarify that a right to defer the
settlement must exist at the end of the reporting period and that
classification is unaffected by the likelihood that an entity will exercise
its deferral right. In addition, a requirement has been introduced
whereby an entity must disclose when a liability arising from a loan
agreement is classified as non-current and the entity’s right to defer
settlement is contingent on compliance with future covenants within
12 months. The amendments do not have a material impact on the
Group.
Refer to note 20 for additional disclosures made in relation to
Amendments to IAS 1.
Lease liability in a sale and leaseback (Amendments to IFRS 16
“Leases”)
We adopted the Amendments to IFRS 16 which specify the
requirements that a seller-lessee uses in measuring the lease liability
arising in a sale and leaseback transaction. The amendments do not
have an impact on the Group.
Supplier finance arrangements (Amendments to IAS 7
“Statement of Cash Flows” and IFRS 7 “Financial Instruments:
Disclosures”)
We adopted the Amendments to IAS 7 and IFRS 7 which clarify the
characteristics of supplier finance arrangements and require
additional disclosure of such arrangements. The amendments
respond to the investors’ need for more information about supplier
finance arrangements to be able to assess how these arrangements
affect an entity’s liabilities, cash flows and liquidity risk. As a result of
the adoption of the amendments, we provided new disclosures for
liabilities under supplier finance arrangements as well as the
associated cash flows in note 18 and note 24 (i). These amendments
did not have a material impact on the amounts recognised in prior and
the current period. 
The Organisation for Economic Co-operation and Development’s
(OECD) Pillar Two Rules
For the year ended 31 December 2023, we adopted the amendments
to IAS 12, issued in May 2023, which provide a temporary mandatory
exception from the requirement to recognise and disclose information
on deferred tax assets and liabilities related to enacted or
substantively enacted law that implements Pillar Two income taxes.
Pillar Two was substantively enacted in the United Kingdom on 20
June 2023, with application from 1 January 2024. Exposure to
additional taxation under Pillar Two is immaterial to the Group (note
10).