Peter Cunningham: Yes. Well, I think we’ve seen four years, as I said, of kind of steel production, crude steel production over 1 billion tonnes. That’s clearly been good for iron ore. This year clearly, well, 2023 clearly the 84 million tonnes of exports were an important component part of that. But absolutely, we’ve always said that we would see sort of China steel demand peaking and it’s exactly what we’ve said. And then you just see demand sort of from elsewhere in Asian and in India growing as well. So I think all of this is playing out exactly pretty much as we thought it would play out over time.
Rahul Anand: Peter, just to quickly follow-up on that. You’ve flagged how manufacturing is increasing as a proportion. And I guess my question is more around the use of scrap in the mix of steel production. And obviously, when you move away from scrap, iron ore units continue to rise. Is that a trend that you think continues, perhaps, to support the iron ore market? Is that part of your internal modeling as well? Because you’ve presented solar cell production up a lot and a lot of other manufacturing uses of steel rising, which then obviously leads to better demand for iron ore units as scrap use becomes reduced?
Peter Cunningham: So certainly, Rahul, in all our modeling, we would see scrap increasing – on an increasing trend as part of those overall iron units. So absolutely, right. So differentiating between the sort of change in the demand profile and the iron units that feed it, we absolutely see – we see sort of that scrap piece as being an important part of the mix.
Rahul Anand: Okay. Thank you.
Operator: Thank you.
Menno Sanderse: Next question from the line please, Nadia.
Operator: Yes, now we’re going to get next question. And the question comes from the line of Lyndon Fagan from JPMorgan. Your line is open. Please ask a question.
Lyndon Fagan: Thanks very much. The first one I had was just on the $1 billion a year spend on closure, provisions or cash withdraw on closure costs. I’m wondering if you could elaborate on the scope of work there. And are we just dragging that right indefinitely? I’m just trying to get a feel for how we schedule that and whether it inflates over time. And then the second question I had was just on the aluminium assets. So I guess still losing money in alumina, that’s break even. I’m wondering whether the new power announcement today will help alleviate some costs and whether there’s any benefits from that repowering agreement. Thanks.
Jakob Stausholm: Yes. No, thank you. Peter and the audit committee has very appropriately provided for closure, and it is a very big amount you can find in our annual report. But that is what goes with mining. And right now, of course, we are doing some of the world’s largest closure project on EIA, Argyle and Gove in Australia and that’s a big cash outflow in the years to come. I think the key thing is, at the end of the day, it just has to be done very, very well and we executed well. And we’re looking at that I think they’re really doing a great job in Gove. I think we have had troubles in EIA, but we are finding a pathway forward where we can do things in the most efficient way. And there has also been a bit noise on exactly what the scope should be in Argyle, but we’re also finding the way there.
Ultimately, you should think about it like projects. It just has to be really well scoped and setting a high bar, but really well scoped and then executed very, very well. Second part, your question on aluminum. It’s a tough business in that sense, but it also represents a massive opportunity. We are the Western world’s largest producer of aluminum. The Western world is structurally short in aluminum. And we are now also at scale into recyclable. So we are building a stronger and stronger aluminium business. And sometimes it’s not a bad thing to do that while the profitability in the industry is low. It’s too early to answer your question on what would it mean to the cost structure with the new renewable deal. So because we have done two things.
The biggest solar farm in Australia, we are building the biggest wind farm in Australia, we are building. That was the announcement this morning. But ultimately, the next step has to come from the Queensland government and the Commonwealth, namely to offer Rio Tinto competitively priced firming power. And if we can’t get that to work, then we don’t have a long-term solutions for our Pacific Aluminium business. So you will have to wait a bit on getting your answers, but let me be very clear. We are super focused on that. We want to protect the Australian business, but we have to bear in mind that it is not an Australian business. It’s an export business that competes with our aluminum in Canada that competes with aluminum from the Middle East everywhere.
So we need to make sure that it becomes competitive. But it is also probably the biggest manufacturing assets remaining in Australia. So it is – I would argue we are in the same boat we should be interested in finding a viable pathway forward for those assets. Thank you.
Menno Sanderse: Perfect. Let’s go back in the room. Alain first and Chris. Behind you…
Alain Gabriel: Thank you. This is Alain Gabriel with Morgan Stanley. So the first question is on Simandou. There was a timing disparity between when you pay for Simandou CapEx and when you get reimbursed by your partners. Should we expect this disparity to continue going forward or will it close? That’s the first question.
Peter Cunningham: So allowed at closure, the finance closure, when all those approvals are in place, we will get repaid.
Alain Gabriel: Thank you. And the second question is probably for Jakob. The spread between your limited and the PLC lines is back into focus given how elevated it is at the moment, should we see this as a catalyst to revisit the whole DLC debate?
Jakob Stausholm: The whole, which?
Alain Gabriel: Collapse of the DLC, basically, dual listed…
Jakob Stausholm: Oh, DLC.
Alain Gabriel: DLC.
Jakob Stausholm: That question is for you. But look, it’s terrible, because I’m going to answer the same question I said before, on my list of CEO agenda items, there’s always a number of things I can’t hit. And the DLC is the smallest issue to my mind. It serves us well to be a global business. It’s not bad to have a headquarter here in London. The DLC works very well. Yes, we have two company secretaries, and we could probably save one company secretary. But it makes no sense. So for us to focus on – the DLC works very well for Rio Tinto.
Alain Gabriel: Thank you.
Menno Sanderse: Chris?
Chris LaFemina: Hey, thanks. Good morning. It’s Chris LaFemina from Jefferies. So you mentioned First Quantum earlier, they announced last night a long list of measures to kind of aggressively repair their balance sheet, and one of them was bringing in a strategic partner for the Zambian copper assets as a possibility. My first question is, is that something that you could potentially do something with? Would you be interested in being a minority, non-operating owner of a relatively high quality asset base in copper? That’s first.
Jakob Stausholm: Yes. So thank you. We do a lot in Africa, not just in Guinea and in South Africa and Madagascar, where we’re operating, but we do a lot of exploration. So we are very close to the governments in the mineral rich countries in Africa. And we are open to look into business in those places. But I always ask myself what are we bringing to the table? And just a non-operated minority share, what are we really bringing to the table. I don’t want to rule it out, but it’s just – my question is, if I can – when my – a lot of people, particularly bold comes to me and says, we should do this, we should do that, et cetera. So the first question I ask is just what are we bringing to the table here. And if I can’t get an answer to that, you will probably not see us investing in that. But yes, we would love to go deeper into a couple of African countries.
Chris LaFemina: Thanks. And secondly, just on SP10. You had a – I mean the portion of iron ore production that has been SP10 has been rising over the last four or five years. I think last year it was quite a bit higher than initially expected. I think when we were in the Pilbara back in the fall, you explained why that was the case. But just wondering how that production mix will shift over the next couple of years? I mean, obviously, by the end of the decade, with Rhodes Ridge, the problem kind of goes away. But first question is how that production mix shifts? And then secondly, maybe more importantly, how do you expect those price discounts to trend over the next two, three years? Thank you.
Jakob Stausholm: Well, look, this is the $100 question that we are also working in our strategy. And I don’t have a full answer to you. One of the things that we have done, in my view, very well over the last couple of years is, we have really reinstated a good understanding of our ore bodies. And on and on top of that, the way we are working with traditional owners of the land is just at a different scale than it was in the past, post-Juukan. And those two things have, unfortunately, you can’t fool the rocks, it’s a given thing. And on top of that, you cannot freely access land, you need to – it’s a partnership. So those two things have led to elevated levels of SP10. And then you have a bit of a choice of how much absolute volume are you producing versus the share of SP10.
And that’s what we want to spend a bit time on in our strategy now saying, what is it actually that best served to the market, more volume with elevated level of SP10 or other products, et cetera. So it’s an open question. But what I will say to you is we have more information now. We work in harmony with the traditional owners of the land and we know what we can producing. But you’re right, we have learned lessons that it was difficult to just meet the Pilbara blend great at that scale that we had hoped so, I’ll say we will keep on informing you more about that level. You should expect the next few years, elevated levels of SP10.
Chris LaFemina: Yes, and price discounts?
Peter Cunningham: Well, Chris, what’s the steel market going to be like? I mean, it’s – all I can say is last year it was very good. We were getting relativities above 90%.
Menno Sanderse: Let’s go back to the line. Nadia, can we have two more questions from the line, please?
Operator: Yes, of course. The next question comes from line of Lachlan Shaw from UBS. Your line is open. Please ask your question.
Lachlan Shaw: Good morning, Jakob, Menno, thanks for your time. Two questions from me. So just on Pacific Aluminium decarbon, the firming, just interested what technologies are shaping up there? And then in the way that you’re thinking about that commercial negotiation, do you see yourselves having to impute a carbon price to get the economics to fly in terms of that decarbonization process? I’ll come back with my second question.
Jakob Stausholm: Thank you. It’s a super good question. You should probably ask it to the Australian government because the way I look at it is, and I would say I learn a lot and I think we as an organization learn a lot. We need to be – to learn much more about new energy systems because renewable energy systems are inherently less stable and therefore more complex to firm up. But it is probably a combination of batteries, gas peakers [ph] and maybe some existing infrastructure. Ultimately the firming as anticipated is access the grid. So it’s not our firming, but it is the Queensland government’s firming. So I can’t – I mean, from my perspective, it doesn’t matter. What I’m focusing at is how can I get competitively priced firm power with the lowest possible carbon footprint.
Lachlan Shaw: Got it. Understood. Thank you. So – and the second question is just on iron ore and just around the China Mineral Resources Group, I’m just wondering, are you seeing or experiencing any sort of differentiated pricing terms with CMRG yet? Is there any sort of difference in the terms that you’re realizing between CMRG and your existing portfolio of steel mill customers? Thank you.
Jakob Stausholm: Well, it’s two sides of the same coin, isn’t it? Because our major customers are in China and we work through CMR. We have had entirely constructive engagements. We are trying to find things that can work for both parties and we have progressed on many things. We made an agreement last year and we are progressing on another agreement, et cetera. And they are by any standard the biggest buyer of iron ore. So obviously we have to listen very carefully to them and find mutually acceptable solutions. But I can’t really comment on ongoing negotiations.
Menno Sanderse: Next question, Nadia, please.
Operator: Yes, of course. Just give me a moment. And now we’re going to take our next question and it comes from line of Robert Stein from Macquarie. Your line is open. Please ask a question. Excuse me, Robert, your line is open.
