The Energy group comprises thermal coal, coking coal and uranium operations. Its coal interests are located in Australia and the US and supply the seaborne traded and Australian and US domestic markets. These interests comprise: Rio Tinto Coal Australia (RTCA) which manages the group’s interests in eight coal mines in Queensland and New South Wales; and the open cut mine Colowyo in Colorado, US and an interest in Cloud Peak Energy in Montana and Wyoming, US. Rio Tinto Uranium produces uranium oxide from its majority owned mines in Australia and Namibia for electric power utilities worldwide.
Doug Ritchie, chief executive, Energy. See biography
For more information see production and reserves
| US$ million | |
|---|---|
| Revenue | 6,709 |
| Operating cash flow | 2,576 |
| Underlying earnings | 1,420 |
| Capital expenditure | 686 |
| Net operating assets | 2,538 |
Operating cash flow contribution
Underlying earnings contribution*
2007-2009 US$m
- * A reconciliation of the net earnings with underlying earnings for 2008 and 2009 as determined under EU IFRS is set out in the Group financial performance. All amounts presented by the product groups exclude net interest and other centrally reported items.
Strategy
- The Energy group’s core purpose is to maximise the value it creates for shareholders from supplying the world’s mineable energy needs.
- The group focuses its resources on excellence in operations; large scale, long life, cost competitive assets.
- Opportunities for brown field expansions are being progressed across the business.
Achievements
- Australian thermal and semi soft coal production of 37.4 million tonnes (Rio Tinto share 23.1 million tonnes) – a five per cent increase on 2008.
- Record production and sales results throughout the year from many operations.
- Safety performance improved at most operations.
- Successful divestment of numerous energy assets in line with the Group divestment strategy.
- Separation from Rio Tinto Energy America (RTEA) and transition to a standalone business in 2009 by Colowyo Coal Company.
- A milestone achievement of 100 indigenous employees at Energy Resources of Australia (ERA), representing almost 20 per cent of ERA’s workforce.
- Continued delivery of operational excellence programmes in all businesses to systematically eliminate waste, reduce process variability, and engage and empower our workforce.
Key priorities
- Continuing to improve HSE performance, including contractor safety.
- Maximising free cash flow and continuing to operate in a responsible and sustainable manner.
- Timely delivery of current expansion projects.
- Continuing work with industry, government and infrastructure providers to resolve coal supply chain bottlenecks and increase export capacities.
- Positioning the group as the supplier of choice as the global economy recovers.
- Retaining and continuing to develop the best people.
- Aligning business growth strategies with climate change and energy strategy.
Outlook
- Rio Tinto believes the outlook for seaborne coal remains very positive.
- The supply-demand balance for both thermal and metallurgical coals remains tight and towards the end of 2009 prices were increasing across all types of coal.
- The rising domestic prices in China have supported the demand for imported coal, while traditional importing markets continue to increase imports in line with a broader economic recovery.
- A global resurgence in nuclear power is under way, driven in large part by the need for energy security and baseload electricity generation that minimises emissions of greenhouse gases.
- Uranium prices are likely to increase if many new uranium projects, which were looking less financially attractive due to the effect of weaker uranium prices, are delayed.