2010 Annual report

Strategy

• The Energy group is focused on safely supplying the world’s growing energy needs through the responsible and sustainable development and operation of large scale, long life, cost competitive assets.
• The group aims to be a sector leader in the development and operation of the world’s coal and uranium resources.
• The group seeks to build strong customer relationships and provide superior customer outcomes while earning significant premiums to the market.
• The group is pursuing opportunities for growth to meet expanding global energy demand, while continuing to focus on operational excellence, community engagement and environmental performance to ensure it is the developer of first choice.

Key achievements

• Commissioning of the new Clermont mine in Queensland, an open cut thermal coal mine due to reach annual peak production of 12.2 million tonnes in 2013.
• Feasibility study started into the open cut thermal coal Mount Pleasant project.
• Australian hard coking coal production increased by 20 per cent in 2010 and set a new record of 2.4 million tonnes in the third quarter.
• A successful heap leach processing trial at Rössing, and finalising work on a proposed exploration decline at Energy Resources of Australia’s Ranger mine.
• Completion of a detailed study of global energy demand to support strategic decision making and growth planning.
• Announced a recommended cash offer for Riversdale Mining Limited. If successful, this acquisition would provide Rio Tinto with a coking coal development pipeline in the emerging Moatize Basin in Mozambique, in line with our established strategy.
• Divestment of Rio Tinto’s remaining 48 per cent equity holding in Cloud Peak Energy Inc. (gross proceeds of US$573 million).

Key priorities

• Continued focus on operational excellence; in particular safety performance to achieve the group’s goal of zero harm.
• Expanding and developing existing assets to meet the strong demand.
• Focusing on exploration and strategic acquisition and/or joint venture arrangements.

Outlook

• The world’s demand for energy and steel production is expected to grow strongly in coming decades, driven by increasing populations and industrialisation in large developing countries.
• The forecast growth in demand for coal over coming decades for both energy and steel production presents a significant opportunity to target expanding export markets, particularly in the Asia Pacific region.
• Global demand for uranium is expected to remain strong due to a desire for base load electricity generation with reduced greenhouse gases, as well as the need for energy security, diversity of supply and strong growth plans in China.