Euro Bond Offering April 2002

Transcription

1 Euro Bond Offering April 2002

2 Offering summary Issuer Guarantor Issue Long term ratings Anticipated maturity Listing Use of proceeds Joint bookrunners Rio Tinto Finance plc Rio Tinto Plc Benchmark Euro issue via EMTN programme Aa3/AA- (Outlook: Negative/Negative) 5 year London Refinancing and general corporate purposes ABN AMRO, Barclays Capital, Morgan Stanley 1

3 Agenda Business overview Performance highlights Financial profile Summary 2

4 Rio Tinto - history 1873 The Rio Tinto Company was formed to mine ancient copper workings at Rio Tinto in Southern Spain Merger with Consolidated Zinc Corporation led to the creation of two companies: Rio Tinto Zinc in the UK (RTZ) Conzinc Riotinto of Australia (CRA) The two companies merged under a dual listed companies structure - to ensure shareholders in both entities hold the same economic position 2002 Organic growth combined with successful value-enhancing acquisitions maintains Rio Tinto as one of the largest diversified mining companies by market capitalisation, ($27bn as of 15 April 2002) 3

5 Organisational Structure Rio Tinto Group Exploration Technology Iron Ore Copper Aluminium Industrial Minerals Energy Diamonds and Gold Product Group Earnings (FY 2001) $502m $262m $313m $323m $373m $133m 4

6 Rio Tinto assets are predominantly in OECD countries Rio Tinto 2001 assets - by region North America 40% Europe 3% 4% Indonesia S America 5% Africa 3% Australia 45% Operating Assets = $13bn 5

7 Rio Tinto is a leader across a broad range of products Copper Iron ore Energy Interests in three of the largest and lowest cost mines - Bingham Canyon - Escondida - Grasberg Aluminium World s 2 nd largest iron ore producer Industrial Minerals Kennecott Energy: 3 rd largest coal producer in the US Leading thermal coal producer in Asia Pacific Diamonds and Gold Weipa Resource One of the largest low cost bauxite resources in the world. Refining and smelting in Australia & NZ. Boron Mine: One of the world s largest boron producers World s largest titanium minerals producer - Fer et Titane - Richards Bay Minerals Argyle, Diavik A leading diamond producer 6

8 Life of significant group mines Iron Ore 100% Copper 90% Aluminium 100% Industrial minerals 100% Energy US Coal Australian Coal Diamonds & Diamonds Gold Gold 50% 100% 60% 80%

10 Rio Tinto s revenue is diversified by geography as well as by commodity Revenue - by geographical destination Japan 22% Australia & NZ 4% Revenue - by commodity Other Other 4% Copper North Diamonds 7% 12% America 3% 28% Industrial minerals 17% Gold 9% Aluminium 16% Other Asia 19% Europe 23% Coal 20% Iron Ore 16% Revenue in 2001 = $10bn 9

11 Rio Tinto has generated increasing earnings, despite weak price environment Adjusted Earnings US$ millions Earnings - by commodity ,070 1,220 1,103 1,282 1,507 1,662 Industrial minerals 17% Diamonds 3% Other 3% Copper & Gold 16% Aluminium 17% Coal 18% Iron Ore 26% 10

12 Consistently strong cash flow US$m Cash flow from operations Dividends from associates & JVs Net Group capital expenditure 3,500 3,000 2,500 2,000 1,500 1,

13 Margin improvements despite decline in commodity prices Prices Index: 1996 = 100 % Margin -rhs Prices -lhs Prices: Weighted average of major Rio Tinto products (2001 volumes) Margin: Earnings before interest & tax to sales revenue 12

14 Organic growth is locked in for the next few years Index (1990 = 100)* 6% compound annual growth in 1990 s 260 Current projects under construction** * Production volumes of nine major commodities valued at constant prices 2004 proform ** West Angelas, Escondida 4, Diavik, Hail Creek The Comalco alumina refinery is not included above as this project will commence production in

15 Rio Tinto has a strong project pipeline Under construction Feasibility Diavik North Jacob s Ranch Grasberg Hail Creek Escondida Phase IV West Angelas Palabora underground HIsmelt Mt Pleasant Alumina Refinery 14

16 Rio Tinto has a prudent record of growth by acquisitions Quality of opportunity Well known to us Near/adjacent existing Rio Tinto operations Best opportunities irrespective of commodity or geography Low risk Synergy benefits No new global capacity Existing assets Historical net capital spent on acquisitions* US$ millions 3, * Acquisitions less disposals 15

17 Rio Tinto s strategy is designed to leverage its existing key strengths Maximise long term value Invest in areas where we have competitive advantage: - mining, not downstream - large, long-life, low-cost mines Investment driven by quality of opportunity, not choice of commodity or geography 16

19 Rio Tinto has strong ratios and a conservative capital structure EBITDA margin 34% 34% 37% 40% % EBITDA/net interest coverage 24.3x 17.0x 14.0x 11.8x 12.5x OCF/capex 143% 216% 314% 373% OCF/net debt 83% 78% 100% 59% Net debt/total capital 27% 31% 24% 38% 197% 48% 42% 18

20 Leverage rose in 2000 due to acquisitions Rio Tinto s Net Debt and Leverage US$millions 6,000 Net debt Net debt/total Capital (%) (left hand scale) (right hand scale) 42% 5,000 4,000 3,000 2,000 28% 17% 15% 16% 22% 27% 31% 24% 38% 40% 30% 20% 1,000 10% % 19

21 The rating agency perspective Moody s (Aa3*/P-1) Aa3 since 1990 It enjoys excellent diversity in its geographic locations and commodity positions Rio Tinto has a portfolio of solid, low-cost, long lived assets and resulting operating diversity helps it limit the affect of cyclical swings in any particular commodity or economic impact in any single geographic location S&P (AA-*/A-1+) AA- since 1990 Rio Tinto s very strong business positions are based on a portfolio of substantial, good-quality reserves across a wide range of minerals and geographical locations In 2001, Rio Tinto demonstrated the resilience of its cash flow generation capabilities in the context of a weak economic environment Recent acquisitions should lead to significant synergies and help maintain or improve existing margins Source: Moody s report dated March 2002 * outlook: negative Source: S&P report dated February

23 Highlights Global scale Stable revenues Broad product and geographical diversification Product diversity with a spread of terminal market and contract negotiated products Product leadership Leader across major product categories Strong cashflow Experienced management Growth Powerful cash generation from core businesses Stable senior management team with unrivalled experience Exploit opportunities to enhance position as a global leader in the mining and base metals industry Financial management Prudent approach to investment 22

24 Disclaimer THIS PRESENTATION DOES NOT CONSTITUTE A PROSPECTUS OR OTHER OFFERING DOCUMENT (AN "OFFERING DOCUMENT") IN WHOLE OR IN PART. INFORMATION CONTAINED IN THIS PRESENTATION IS A SUMMARY ONLY, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OFFERING DOCUMENT. IT IS STRONGLY RECOMMENDED THAT EACH INVESTOR READ THE OFFERING DOCUMENT FOR MORE COMPLETE INFORMATION REGARDING THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION. TO REQUEST A COPY OF AN OFFERING DOCUMENT PLEASE CONTACT YOUR ABN AMRO, BARCLAYS CAPITAL, MORGAN STANLEY (THE "UNDERWRITERS") SALESPERSON OR ONE OF THE UNDERWRITERS REPRESENTATIVES ATTENDING THIS MEETING THIS PRESENTATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THERE SHALL BE NO SALE OF THESE SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO QUALIFICATION UNDER SECURITIES LAWS OF SUCH STATE OR JURISDICTION BY RECEIVING THIS PRESENTATION EACH INVESTOR IS DEEMED TO REPRESENT THAT IT IS A SOPHISTICATED INVESTOR AND POSSESSES SUFFICIENT INVESTMENT EXPERTISE TO UNDERSTAND THE RISKS INVOLVED IN THE OFFERING. INVESTORS MUST RELY SOLELY ON THEIR OWN EXAMINATIONS OF THE OFFERING DOCUMENT AND THE OFFERING IN MAKING A DETERMINATION AS TO WHETHER TO INVEST IN THE SECURITIES OFFERED ALTHOUGH THE STATEMENTS OF FACT IN THIS PRESENTATION HAVE BEEN OBTAINED FROM AND ARE BASED UPON SOURCES THAT THE UNDERWRITERS BELIEVE TO BE RELIABLE, THE UNDERWRITERS DO NOT GUARANTEE THEIR ACCURACY, AND ANY SUCH INFORMATION MAY BE INCOMPLETE OR CONDENSED. ALL OPINIONS AND ESTIMATES INCLUDED IN THIS PRESENTATION CONSTITUTE THE ISSUER'S JUDGEMENT AS OF THE DATE OF THIS PRESENTATION AND ARE SUBJECT TO CHANGE WITHOUT NOTICE THIS PRESENTATION HAS BEEN PREPARED BY THE ISSUER APPROVED FOR ISSUE BY THE THREE LEAD MANAGERS, ALL OF WHOM ARE REGULATED BY THE FINANCIAL SERVICES AUTHORITY (FSA) FOR THE CONDUCT OF INVESTMENT BUSINESS IN THE UK 23