2010 Annual report

Strategy

• The second phase of transformation will target incremental EBITDA improvement of US$1 billion by 2014.
• Leverage the group’s robust growth pipeline with a priority on modernising and expanding existing Tier 1 assets; lower costs of existing facilities; and progress the development of greenfield options at a pace aligned with market demand.
• Be long in bauxite and alumina, providing strong growth potential, particularly in the Asian region.

Key achievements

• Increase of US$1,333 million in underlying earnings from 2009.
• Value added aluminium product sales volumes increased to 65 per cent of total sales.
• Bauxite production up by nine per cent over 2009 mainly in response to increased production at Weipa in Australia to meet the demands of the growing Chinese market.
• Alumina production up by three per cent on 2009 due to improved production at Yarwun in Australia, ramp up at Alumar in Brazil, and restarting idled capacity at Vaudreuil in Canada.
• Construction at the Yarwun expansion project has been accelerated and the completed co-generation plant and ship unloader handed over to operations.
• ISAL aluminium smelter won Rio Tinto’s top safety award with 4.7 million work hours without a lost time injury as at December 2010.

Key priorities

• Proceed with cost efficiencies, capacity creep and step change improvement through strategic capital investment; includes phase one of the AP60 plant in Canada and the ISAL expansion in Iceland.
• Continue steps towards optimising the group’s asset portfolio; progress with Kitimat aluminium smelter modernisation in Canada and Yarwun refinery expansion.
• Capitalise on our value added product capabilities and optimise our casting portfolio to serve customers in all key regions.
• Prioritise power sources with the lowest carbon footprint and improving energy efficiency.
• Create value from AP Technology™ via increased technology sales, faster operational improvements and lower full economic costs on new projects.

Outlook

• Favourable position to leverage strong demand from emerging economies and seize opportunities across the aluminium value chain as the industry continues its recovery.
• Alumina pricing mechanisms are developing and as liquidity builds, the group’s strategy of remaining long in bauxite and alumina will allow it to use various pricing alternatives.
• As aluminium markets continue to recover, the group is expected to benefit from stable energy sources, less linked to LME pricing than those of other large producers.