Climate Change

1. Accelerate the decarbonisation of our operations

Due to the scale of our mining operations and processing activities we have significant Scope 1 and 2 emissions. And we know we must address this with urgency to be part of the solution. Between now and 2030, we must switch to renewables at scale and at pace, electrify everything we can, work across our entire value chain, accelerate the development of new technology, and address emissions related to process heat at our alumina refineries and minerals processing operations.

Our goals

To strengthen our alignment with the Paris Agreement and our long-term commitment of achieving net zero emissions by 2050:

• We aim to reduce our Scope 1 and 2 emissions by 15% by 2025 and by 50% by 2030
• We estimate that we will invest $7.5 billion in decarbonisation projects, predominantly in the second half of the decade

Actions we’re taking to Scope 1 and 2 targets

In 2022 we established six abatement programmes to focus on the decarbonisation challenge across our business: repowering our Pacific Aluminium operations, renewables, aluminium anodes – ELYSIS^TM, alumina process heat, minerals processing and diesel transition.

We are also increasing our investment in our Nature-based Solutions team and now expect high integrity offsets to play a greater role in our decarbonisation strategy.

Why these actions are important

In contrast to many of our peers, about 80% of our emissions are driven by processing and producing metals and minerals, which are high temperature, hard-to-abate activities. The remaining 20% are from our mining operations.

Our six abatement programmes are focused on the most significant sources of our Scope 1 and 2 emissions: electricity at 41% (purchased and generated), carbon anodes in aluminium smelting and reductants in titanium dioxide furnaces at 21%, fossil fuels for heat at our processing plants and alumina refineries at 20%, and diesel consumption in our mining equipment and rail fleet at 13%.

Progress in 2022

So far, we have reduced our Scope 1 and 2 emissions by 7% below our 2018 baseline. This is primarily the result of switching to renewable power at Kennecott and Escondida in prior years, as well as lower than planned production from the Kitimat and Boyne aluminium smelters in 2022.

We purchased renewable electricity certificates at Kennecott in the US and switched to renewable electricity contracts at the Escondida mine in Chile (managed by BHP; Rio Tinto owns 30%).

We also took the following specific actions.

Iron Ore

• Pilbara: Planned investment of $600 million in 230MW of solar power facilities and 200MWh of storage. This is in addition to the 34MW solar facility installed at Gudai-Darri.
• Pilbara: Developed partnerships with Scania, Caterpillar, Volvo and Komatsu to deploy more efficient autonomous haulage solutions and battery-powered trucks.
• Marine biofuels: Joined a trial with BP.

Aluminium

• Queensland smelter repowering: Commenced evaluation of proposals to repower our aluminium assets with up to 4GW of wind and solar, backed up by energy firming and storage solutions.
• Queensland Alumina: Progressed to a pre-feasibility study for a double digestion project to reduce emissions and operational expenditure.

Copper and Minerals

• Rio Tinto Iron and Titanium (RTIT) Quebec Operations: Committed $537 million (C$737 million) in partnership with the Government of Canada to decarbonise RTIT Quebec Operations and boost critical minerals processing.
• Richards Bay Minerals: Partnered with Voltalia for solar power (20-year power purchase agreement).
• Renewable diesel: Launched a pilot at Boron, with trials also planned for Kennecott.

We did not advance the implementation of our abatement projects as fast as we would have liked last year. Challenges have included late delivery of equipment, resourcing constraints impacting study progress, construction and commissioning and project readiness.

We still have much work to do to progress our abatement projects and we continue to aim for our 2025 target to maintain focus within the organisation and drive action across our portfolio.

3. Grow production of materials enabling the energy transition

The energy transition will create significant additional demand for our commodities, including copper, lithium and aluminium. We aim to grow in these commodities as well as in the production of high-quality iron ore. This iron ore will support the production of low-carbon steel required for infrastructure for the energy transition and ongoing urbanisation.

Our goals

To capture new growth opportunities in materials with strong low carbon transition-related demand:

• Our ambition is to increase disciplined capital growth of up to $3.0 billion annually by 2024 to 2025
• We will seek to grow further in copper and battery materials and bring additional tonnes of high-grade iron ore and low-carbon aluminium to market

Actions we’re taking

We are developing a pipeline of growth options leveraged towards the energy transition while maintaining our absolute commitment to capital discipline.

Why these actions are important

Meeting the incremental demand of the energy transition, and ensuring local supplies of critical minerals globally, deepens our relevance to the world and ensures our long-term profitability.

Progress in 2022

High-grade iron ore

• At Simandou, we signed a non-binding term sheet with our partners to progress the co-development of infrastructure. The project will deliver high-grade iron ore

Aluminium

• At our Arvida smelter, we invested in a new aluminium recycling facility and plans to replace our closing smelter with an expansion of the AP60 smelter to produce low-carbon aluminium
• At Alma smelter, we committed $188 million to expand production of higher-value low-carbon billets
• At our Laterrière plant, we commissioned a new aluminium remelt furnace

Copper and Minerals

• At Oyu Tolgoi we acquired full ownership of Turquoise Hill Resources Ltd (TRQ) for $3.1 billion, increasing our direct project ownership to 66%
• We acquired the Rincon Lithium Project for $825 million and approved funding of $194 million for early works to develop an accelerated starter plant with planned expansion.