SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
|☐||REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934|or
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 001-10533
Commission file number: 001-34121
|Rio Tinto plc|
Rio Tinto Limited
ABN 96 004 458 404
|(Exact Name of Registrant as Specified in Its Charter)||(Exact Name of Registrant as Specified in Its Charter)|
England and Wales
(Jurisdiction of Incorporation or Organization)
(Jurisdiction of Incorporation or Organization)
6 St. James's Square
London, SW1Y 4AD, United Kingdom
(Address of Principal Executive Offices)
Level 43, 120 Collins Street
Melbourne, Victoria 3000, Australia
(Address of Principal Executive Offices)
Julie Parent, T: 514-848-8519, E: firstname.lastname@example.org
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|Title of Each Class||Trading Symbol|
Name of Each Exchange
On Which Registered
American Depositary Shares*
Ordinary Shares of 10p each**
7.125% Notes due 2028
5.200% Notes due 2040
4.750% Notes due 2042
4.125% Notes due 2042
2.750% Notes due 2051
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
|*||Evidenced by American Depositary Receipts. Each American Depositary Share Represents one Rio Tinto plc Ordinary Shares of 10p each.|
|**||Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission|Securities registered or to be registered pursuant to Section 12(g) of the Act:
|Title of Class||Title of Class Shares|
|None||None|Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
|Title of Class||Title of Class of Shares|
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report:
|Title of each class||Rio Tinto plc - Number||Rio Tinto Limited - Number||Title of each class|
|Ordinary Shares of 10p each||1,255,843,808||371,216,214||Shares|
|DLC Dividend Share of 10p||1||1||DLC Dividend Share|
|Special Voting Share of 10p||1||1||Special Voting Share|
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such
reports), and (2) have been subject to such filing requirements for the past 90 days:
Yes ☒ No ☐
Indicate by check mark whether the registrants have submitted electronically every
Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrants were required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or emerging growth companies. See definition
of “large accelerated filer”, “accelerated filer” and “emerging growth company” and in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer ☒
|Accelerated Filer ☐||Non-Accelerated Filer ☐|
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark
if the registrants have elected not to use the extended transition period for complying with any new or revised
financial accounting standards* provided pursuant to Section 13(a) of the Exchange Act. ☐
*The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrants have filed a report on and attestation to their management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued their audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Yes ☐ No ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants' executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Yes ☐ No ☐
Indicate by check mark which basis of accounting the registrants have used to prepare the financial statements included in this filing:
US GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
registrants have elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrants are a shell company (as defined in Rule 12b-2 of the Exchange
Yes ☐ No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
|Auditor Name||Auditor Location||Auditor Firm ID|
|KPMG LLP||London, United Kingdom||1118|
Annual Report on Form 20-F 2022
iAnnual Report on Form 20-F | riotinto.com Form 20-F cross-reference guide Item Form 20-F Caption Location in this document Page 1 Identity of directors, senior management and advisers Not applicable – 2 Offer statistics and expected timetable Not applicable – 3 Key information 3.A – [Reserved] Not applicable – 3.B – Capitalisation and indebtedness Not applicable – 3.C – Reason for the offer and use of proceeds Not applicable – 3.D – Risk factors Risk factors 79-86 4 Information on the company 4.A – History and development of the company Contents Cover At a glance 2-3 150 years of Rio Tinto 4-5 Chair’s statement 6-7 Chief Executive’s Q&A 8-9 Strategic context 12 Our stakeholders 18-19 Key performance indicators 20-24 Chief Financial Officer’s statement 25 Financial review 26-31 Portfolio management 32-33 Business reviews – Innovation through collaboration – Iron Ore – Aluminium – Copper – Minerals – Commercial 34-35 36-37 38-39 40-41 42-43 44-45 Our approach to sustainability 46-75 Governance – Additional statutory disclosure – Operating and financial review 136-137 Financial statements – Note 1 – Our financial performance by segment – Note 5 – Acquisitions and disposals 161-163 169 Rio Tinto Financial Information by Business Unit 270-272 Shareholder Information – Organisational structure – Nomenclature and financial data – History – Dual-listed companies structure 338 338 338 338-339 Additional information – US disclosure – Document on display – Registered offices 348 362
Annual Report on Form 20-F | riotinto.comii Item Form 20-F Caption Location in this document Page 4.B – Business overview At a glance 2-3 Chair’s statement 6-7 Chief Executive’s Q&A 8-9 Strategic context 12 Our strategy and four objectives 13-15 Our business model 17 Our stakeholders 18-19 Key performance indicators 20-24 Chief Financial Officer’s statement 25 Financial review 26-31 Business reviews – Innovation through collaboration – Iron Ore – Aluminium – Copper – Minerals – Commercial 34-35 36-37 38-39 40-41 42-43 44-45 Our approach to sustainability 46-75 Governance – Additional statutory disclosure – Government regulations – Environmental regulations 140 140 Financial statements Note 6 – Revenue by destination and product 169-171 Metals and minerals production 281-282 Mineral Resources and Mineral Reserves 283-306 Competent Persons 307 Mines and production facilities 308-333 Additional information – US disclosure – Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934 345 4.C – Organisational structure Financial statements – Note 30 – Principal subsidiaries – Note 31 – Principal joint operations – Note 32 – Principal joint ventures and associates 211-213 213-214 215-216 Shareholder Information – Organisational structure – Dual-listed companies structure 338 338-339
iiiAnnual Report on Form 20-F | riotinto.com Item Form 20-F Caption Location in this document Page 4.D – Property, plants and equipment Key performance indicators 20-24 Portfolio management 32-33 Business Reviews – Iron Ore – Aluminium – Copper – Minerals 36-37 38-39 40-41 42-43 Our approach to sustainability 46-75 Governance – Additional statutory disclosure – Environmental regulations – Energy efficiency action 140 140 Financial statements Note 13 – Property, plant and equipment 178-182 Metals and minerals production 281-282 Mineral Resources and Mineral Reserves 283-306 Competent persons 307 Mines and production facilities 308-333 Additional information – US disclosure – Summary disclosure of operations pursuant to Item 1303 of Regulation S-K under Securities Act of 1933 350 Additional information – US disclosure – Individual property disclosure pursuant to Item 1304 of Regulation S-K under Securities Act of 1933 350-360 Additional information – US disclosure – Internal controls disclosure pursuant to Item 1305 of Regulation S-K under Securities Act of 1933 360 See Exhibit 96.2 – See Exhibit 96.3 – 4A Unresolved staff comments None – 5 Operating and financial review and prospects 5.A – Operating results Chair’s statement 6-7 Financial review 26-31 Business reviews – Iron Ore – Aluminium – Copper – Minerals 36-37 38-39 40-41 42-43 Our approach to sustainability 46-75 Governance – Additional statutory disclosure – Operating and financial review – Government regulations – Environmental regulations 136-137 140 140 Financial statements Note 24 – Financial instruments and risk management 195-200 Rio Tinto Financial Information by Business Unit 270-272 Alternative Performance Measures 273-278 Additional information – US disclosure – Impact of Climate Change on the Group 349
Annual Report on Form 20-F | riotinto.comiv Item Form 20-F Caption Location in this document Page 5.B – Liquidity and capital resources Portfolio management 32-33 Business reviews – Copper – Oyu Tolgoi underground project 41 Financial statements – Note 14 – Close-down and restoration provisions – Our capital and liquidity – Note 19 Consolidated net (debt)/cash – Note 20 – Borrowings – Note 21 – Leases – Note 22 – Cash and cash equivalents – Note 23 – Other financial assets and liabilities – Note 24 – Financial instruments and risk management – Note 28 – Post-retirement benefits – Note 36 – Other provisions – Note 37 – Contingencies and commitments 182-185 190 191 192-193 193-194 194 195 195-200 204-209 219 219-221 5.C – Research and development, patents and licenses, etc. Our strategy and four objectives 13-15 Business reviews – Innovation through collaboration 34-35 Governance – Additional statutory disclosure – Exploration, research and development 140 Financial statements Note 7 – Net operating costs (excluding items disclosed separately) 171 5.D – Trend information At a glance 2-3 Chair’s statement 6-7 Chief Executive”s Q&A 8-9 Strategic context 12 Our strategy and four objectives 13-15 Our people and culture 16 Our business model 17 Our stakeholders 18-19 Key performance indicators 20-24 Chief Financial Officer’s statement 25 Financial review 26-31 Business reviews – Iron Ore – Aluminium – Copper – Minerals 36-37 38-39 40-41 42-43 5.E – Critical accounting estimates Not Applicable –
vAnnual Report on Form 20-F | riotinto.com Item Form 20-F Caption Location in this document Page 6 Directors, senior management and employees 6.A – Directors and senior management Governance – Board of Directors – Executive Committee 90-91 92-93 Additional statutory disclosure – Directors and executives 138 6.B – Compensation Governance – Remuneration at a glance – Implementation report – Implementation report tables 114-117 118-130 131-135 Financial statements – Note 26 – Employment costs and provisions – Note 27 – Share-based payments – Note 28 – Post-retirement benefits 201 202-204 204-209 6.C – Board practices Governance 89-146 Governance – Board of Directors – Executive Committee – Audit & Risk Committee report – Remuneration at a glance – Termination policy – Compliance with governance codes and standards 90-91 92-93 104-107 115 142-146 Shareholder information – Directors – Appointment and removal of Directors 343 6.D – Employees Our stakeholders – Workforce 18 Our approach to sustainability – Talent, diversity and inclusion 59 Financial statements – Note 25 – Average number of employees – Note 26 – Employment costs and provisions 201 201 Rio Tinto financial Information by Business Unit 270-272 6.E – Share ownership Governance – Implementation report – Executive Directors’ shareholding – Non-Executive Directors’ share ownership – Other share plans 125 130 130 Financial statements - Note 27 – Share-based payments 202-204 6.F – Disclosure or a registrant’s action to recover erroneously awarded compensation Not applicable –
Annual Report on Form 20-F | riotinto.comvi Item Form 20-F Caption Location in this document Page 7 Major shareholders and related party transactions 7.A – Major shareholders Shareholder information – Substantial shareholders in Rio Tinto plc – Substantial shareholders in Rio Tinto Limited – Analysis of ordinary shareholders – Twenty largest registered shareholders 340 340 341 341 7.B – Related party transactions Financial review 26-31 Financial statements Note 33 – Related-party transactions 216 7.C – Interests of experts and counsel Not applicable – 8 Financial Information 8.A – Consolidated statements and other financial information Financial review – Our shareholder returns policy 30 Financial statements Note 37 – Contingencies and commitments 219-221 See Item 18 – 8.B – Significant changes Financial statements Note 39 – Events after the balance sheet date 222 9 The offer and listing 9.A – Offer and listing details Additional statutory information disclosure – Operating and financial review 136-137 Shareholder information – Organisational structure – Markets 338 339 9.B – Plan of distribution Not applicable – 9.C – Markets Shareholder information – Markets 339 See Exhibit 2.1 – 9.D – Selling shareholders Not applicable – 9.E – Dilution Not applicable – 9.F – Expenses of the issue Not applicable – 10 Additional information 10.A – Share capital Not applicable – 10.B – Memorandum and articles of association Financial review – Our shareholder returns policy 30 Governance – Compliance with governance codes and standards 142-146 Shareholder information – Dual-listed companies structures – Material contracts – Exchange controls and foreign investment – Directors 338-339 342-343 343 343-344 See Exhibit 2.1 – 10.C – Material contracts Financial statements – Our capital and liquidity 190 Shareholder information – Material contracts 342-343 10.D – Exchange controls Shareholder information – Exchange controls and foreign investment 343 10.E – Taxation Additional information – US disclosure – Taxation 345-347 10.F – Dividends and paying agents Not applicable – 10.G – Statement by experts Not applicable – 10.H – Documents on display Additional information – US disclosure – Document on display 348 10.I – Subsidiary information Not applicable – 10.J – Annual report to security holders Additional information – US disclosure – Document on display 348
viiAnnual Report on Form 20-F | riotinto.com Item Form 20-F Caption Location in this document Page 11 Quantitative and qualitative disclosure about market risk Risk factors 79-86 Financial statements Note 24 – Financial instruments and risk management 195-200 Cautionary statement about forward-looking statements 363 12 Description of securities other than equity securities 12.A – Debt securities Not applicable – 12.B – Warrants and rights Not applicable – 12.C – Other securities Not applicable – 12.D – American depositary shares Additional information – US disclosure – American depositary receipts 347-348 13 Defaults, dividend arrearages and delinquencies Not applicable — 14 Material modifications to the rights of security holders and use of proceeds Not applicable 15 Controls and Procedures Governance – Additional statutory disclosure – Disclosure controls and procedures – Management’s report on internal control over financial reporting 141 141 See Item 18 for the Report of the Independent Registered Public Accounting Firm – 16 [Reserved] Not applicable – 16A Audit committee financial expert Governance – Audit & Risk Committee report – US listing requirements – Compliance with governance codes and standards 104 142-146 16B Code of ethics Sustainability – Ethics and compliance 74 16C Principal accountant fees and services Governance – Audit & Risk Committee report – External auditors 106-107 Financial statements – Note 38 – Auditors’ remuneration 222 16D Exemptions from the listing standards for audit committees Not applicable – 16E Purchase of equity securities by the issuer and affiliated purchasers Governance – Additional statutory disclosure – Purchases 139 Financial statements – Note 34 – Share capital 217 16F Change in registrant’s certifying accountant Not applicable – 16G Corporate Governance Governance – Compliance with governance codes and standards 142-146 16H Mine safety disclosure See Exhibit 16.1 – 16I Disclosure regarding foreign jurisdictions that prevent inspections Not applicable – 17 Financial statements Not applicable – 18 Financial statements About Rio Tinto 148 About the presentation of our financial statements 148-155 Group Income Statement 156 Group Statement of Comprehensive Income 157 Group Cash Flow Statement 158 Group Balance Sheet 159 Group Statement of Changes in Equity 160 Financial statements – Notes 1 to 40 161-223 Report of Independent Registered Public Accounting Firms 251-253 19 Exhibits See Exhibit List at the end of this document Other information contained within Rio Tinto’s Annual Report on Form 20-F 2022 (Form 20-F ) is not included in this Form 20-F unless specifically identified above and is furnished to the SEC for information only.
Our operations are located on land and waters that have belonged to Indigenous peoples for thousands of years. We respect their ongoing deep connection to Country and recognise their vast knowledge of the land, water and environment. We pay respects to Elders, both past and present, and acknowledge the important role Indigenous peoples play within our business and our communities. For more information visit riotinto.com Contents Strategic report 2022 year in review and our purpose 1 At a glance 2 150 years of Rio Tinto 4 Chair’s statement 6 Chief Executive’s Q&A 8 Living our purpose 10 Strategic context 12 Our strategy and four objectives 13 Our people and culture 16 Our business model 17 Our stakeholders 18 Key performance indicators 20 Chief Financial Officer’s statement 25 Financial review 26 Portfolio management 32 Business reviews Innovation through collaboration 34 Iron Ore 36 Aluminium 38 Copper 40 Minerals 42 Commercial 44 Our approach to sustainability 46 Risk report Risk management 76 Risk factors 79 Five-year review 87 Directors’ report Governance Chair’s introduction 89 Board of Directors 90 Executive Committee 92 Board insights 94 Our stakeholders – our Section 172(1) statement 95 Matters discussed in 2022 99 Governance framework 100 Evaluating our performance 101 Nominations Committee report 102 Audit & Risk Committee report 104 Sustainability Committee report 108 Remuneration report Annual statement by the People & Remuneration Committee Chair 110 Remuneration at a glance 114 Implementation report 118 Additional statutory disclosure 136 Compliance with governance codes and standards 142 Financial statements About Rio Tinto 148 About the presentation of our financial statements 148 Group income statement 156 Group statement of comprehensive income 157 Group cash flow statement 158 Group balance sheet 159 Group statement of changes in equity 160 Notes to the 2022 financial statements 161 Report of Independent Registered Public Accounting Firms 251 Rio Tinto financial information by business unit 270 Alternative Performance Measures 273 Production, Mineral Reserves, Mineral Resources and Operations Metals and Minerals Production 281 Mineral Resources and Mineral Reserves 283 Competent Persons 307 Mines and production facilities 308 Additional information Independent limited assurance report 335 Shareholder information 338 US disclosure 345 Contact details 362 Cautionary statement about forward-looking statements 363 Cover | Oyu Tolgoi copper-gold mine, Mongolia. For this Annual Report on Form 20-F 2022 (Form 20-F ), certain pages have been omitted. References to information on websites in the Form 20-F are included as an aid to their location and such information is not incorporated in, and does not form part of, this Form 20-F. We have included any website as an inactive textual reference only.
1Annual Report on Form 20-F 2022 | riotinto.com Strategic report 2022 year in review Our purpose Finding better waysTM to provide the materials the world needs For 150 years, we have been looking for new and better ways of doing things. Our drive for innovation and continuous improvement is at the core of our purpose. Today, you will find our teams around the world seeking opportunities to reduce our carbon footprint, partnering to develop new technologies to decarbonise steel and aluminium production, and creating new products from waste. Our ambition is to be a business with a commodity mix that is aligned with evolving customer demand in a decarbonising world. But we cannot do it on our own. So we strive to create partnerships that solve problems and create win-win solutions with lower societal and environmental impact. The approach applies as much to large-scale, transformational innovation as to incremental everyday progress, such as our safety and operational performance. And we are finding better ways to partner with Indigenous peoples and host communities. From continuing to rebuild our relationships to putting in place our new co-management agreements and improved ways of working, we are focusing on open and transparent engagement. Our aspiration is to be the partner of choice for communities, governments, customers, suppliers and joint venture partners. We want to be a home to curious people who care about their work and colleagues, are courageous about the challenges they face and find better ways to do things. For more information about sustainability, see page 46. For more information about our financial review, see page 26. 1. The independent cultural heritage audits undertaken by Environment Resources Management (ERM) were a Board action in response to the 2020 Board review of cultural heritage management. All 37 audits were finalised in 2022. 2. A reconciliation of underlying EBITDA to its closest IFRS measure is presented on page 163. All-injury frequency rate Fatalities Consolidated sales revenues Net cash generated from operating activities 0.40 (2021: 0.40) Zero (2021: zero) $55.6bn (2021: $63.5bn) $16.1bn (2021: $25.3bn) Scope 1 and 2 greenhouse gas emissions Women in our workforce Profit after tax attributable to owners of Rio Tinto Underlying EBITDA2 30.3Mt (equity CO2e) (2021: 31.0Mt) 22.9% (2021: 21.6%) $12.4bn (net earnings) (2021: $21.1bn) $26.3bn (2021: $37.7bn) Independent cultural heritage audits completed1 Total dividend per share 37 (2021: 20) 492 cents (2021: 1,040 cents)
Operations and projects2 Iron Ore Aluminium Copper Operations Projects Minerals Annual Report on Form 20-F 2022 | riotinto.com2 Our products Our portfolio includes iron ore, aluminium, bauxite, alumina, copper, diamonds, titanium dioxide, lithium, salt and borates. For more information see pages 36-43. Our business We operate in 351 countries where our 54,000 employees are working to find better ways to provide the materials the world needs. Our portfolio includes iron ore, copper, aluminium, lithium and other materials needed for people, communities and nations to grow and prosper, and for the world to cut carbon emissions to net zero. We have been mining for 150 years, and we continue to build on a history and knowledge that span generations and continents. Today, our business relies on technology such as automation and artificial intelligence to help us run safer, more efficient operations and leave a lighter footprint. Iron Ore Aluminium At a glance Segmental revenue $30.9bn (2021: $39.6bn) Underlying EBITDA $18.6bn (2021: $27.6bn) Production (100% basis) 324.1Mt iron ore (2021: 319.7Mt) Segmental revenue $14.1bn (2021: $12.7bn) Underlying EBITDA $3.7bn (2021: $4.4bn) Production (our share) 54.6Mt bauxite (2021: 54.3Mt) 3,009kt aluminium (2021: 3,151kt) Employees 15,000 (2021: 13,000) Employees 15,000 (2021: 14,000) 1. Includes our mines and production facilities, main exploration activities and countries where we have a significant presence through activities including research and development, commercial, sales, and corporate functions. 2. This map does not include our offices, processing and shipping facilities, or research and development centres. Operations and projects are indicated according to their product group. For example, Simandou is an iron ore project but is reported under Copper. The Iron Ore Company of Canada is an iron ore operation but is reported under Minerals due to the management structure. The dots on the map are indicative and in some locations we have more assets than visually represented due to the size of the map.
Operations and projects2 Iron Ore Aluminium Copper Operations Projects Minerals 3Annual Report on Form 20-F 2022 | riotinto.com Strategic report Outlook We have a strong portfolio of assets across six continents. Our focus is on growing our business while decarbonising, providing products to our customers that support the transition to a low-carbon economy and delivering attractive returns to our shareholders. Many of our products are essential for the energy transition: we expect this new source of demand, combined with traditional sources, to drive significant volume growth in our products over the coming decades. In developed markets, customer demand for low-carbon and recycled materials is growing with supply security top of mind. In developing economies, reliable access to raw materials for domestic processing is critical. We have the people, orebodies, technology, processing capabilities, access to capital and relationships to meet these diversifying needs. Copper Minerals Segmental revenue $6.7bn (2021: $7.8bn) Underlying EBITDA $2.4bn (2021: $4.0bn) Production (our share) 521kt mined copper (2021: 494kt) Segmental revenue $6.8bn (2021: $6.5bn) Underlying EBITDA $2.4bn (2021: $2.6bn) Production (our share) 1,200kt titanium dioxide slag (2021: 1,014kt) 10.3Mt iron ore pellets and concentrate (2021: 9.7Mt) Employees 8,000 (2021: 7,000) Employees 9,000 (2021: 9,000)
Annual Report on Form 20-F 2022 | riotinto.com4 150 years of Rio Tinto For 150 years, we have been striving to find better ways – in how we face challenges, find solutions, celebrate our successes, and learn from our failures. Our strength and scale reflect the courage shown by past generations, and the curiosity of our current employees, who continue to shape important partnerships with companies, communities, and countries – constantly evolving our business and our products to support the world around us. We have marked a wide range of milestones through our 150 years of operation; these are a few of the moments that shaped the Rio Tinto of today. 1873 Rio Tinto commences copper mining in Spain The Rio Tinto Company was registered in London after a British-European investor group bought the Rio Tinto mines in Spain, first mined in Phoenician and Roman times. We introduced new processing facilities and techniques that transformed the operation, and by the turn of the century, we were producing 10% of the world’s copper. 1929-1953 Exploring new lands We looked beyond Spain’s borders for growth opportunities, setting up a series of joint ventures to explore and develop mines, starting in 1929 with the great copper belt of what is now known as Zambia. Come 1952, our exploration team expanded into South Africa and Canada, and the following year Australia, resulting in new uranium mines in Canada and Australia. 1955-1963 The red cliffs of Australia In 1955, a geologist discovered bauxite in Queensland and commercial bauxite mining began at Weipa in 1963, where we still mine today. 2007 Becoming a global leader in aluminium We acquired Alcan, becoming a global leader in aluminium, and further diversifying our portfolio. Through this deal, we also obtained access to water rights and renewable power through a vast network of hydropower facilities in Canada, a major competitive advantage to our smelting business. While Alcan was clearly a leader in green aluminium, the acquisition resulted in an unsustainable level of debt when the global financial crisis happened and left the company in a vulnerable financial situation. 2000-2022 Shaping our portfolio At the turn of the new century, we embarked on an acquisition and divestment programme, which simplified the business, focused the Group on large, low-cost mines and culminated in our divestment of our coal assets in 2018. We became the first major miner to cease coal production. We acquired North Ltd in 2000, significantly expanding our iron ore assets, including mines, rail and port capacity. And in 2006, we partnered with Ivanhoe Mines to construct and operate Oyu Tolgoi in Mongolia. In 2022, we acquired full ownership of Turquoise Hill Resources Ltd, increasing our direct ownership in Oyu Tolgoi to 66%. 2008-2019 Technology redefines the business In an attempt to transform the efficiency and safety of the way we mine, we partnered with Komatsu to be among the first in the world to trial the world’s first driverless haul trucks. This initiative set us on a path to become a global leader in fully integrated, automated mining. In 2019, together with our partner Hitachi, we launched the world’s first fully autonomous, long-distance, heavy-haul rail network – AutoHaulTM.
5Annual Report on Form 20-F 2022 | riotinto.com Strategic report 1961-1973 The founding of our iron ore business in the Pilbara In 1961, geologists set out across Western Australia to assess the iron ore prospects. By 1965, the signing of a long-term contract to supply the Japanese steel mills enabled us to develop our first iron ore mine in the Pilbara, and in 1966 we shipped our first iron ore to Japan. By 1973, we had started shipping to South Korea and China. Our partnerships with these countries endure today. 1989 Securing copper and mineral assets We were ready to focus solely on mining, so sold all oil and gas assets and set our sights on BP Minerals. We acquired Kennecott’s Bingham Canyon copper and gold mine in Utah, US. The purchase also secured the RTIT Quebec Operations1 in Quebec, Canada and interests in QIT Madagascar Minerals and Richards Bay Minerals in South Africa. 1995 Becoming Rio Tinto In one of the most significant events in our history, the RTZ Corporation PLC merged with ConZinc RioTinto of Australia (CRA) to form RTZ-CRA. In 1997, we changed our name to Rio Tinto plc/Ltd (dual listed), becoming one of the largest mining companies in the world. 1998 Tragedy sharpens safety focus A horrific disaster at our talc mine in Lassing, Austria, claimed the lives of ten members of our rescue team following a series of collapses. The profound impact of the Lassing disaster was a catalyst for major change in the way we manage safety. We had our first fatality-free year in 2019, with no fatalities since. 2002 China supporting the iron ore boom The rapid industrialisation of the Chinese economy and the emergence of China as a global economic power was a major catalyst for our iron ore business in the early 2000s. In 2002, we set up a joint venture with Baosteel Group to supply 10 million tonnes of iron ore per year over 20 years, supporting the expansion of our business in the Pilbara and marking our continuing and vital partnership with China. 2018-2019 A step closer to carbon-free aluminium smelting In 2018, we formed ELYSIS, in partnership with Alcoa and supported by Apple and the Governments of Canada and Quebec, which later delivered a disruptive technology that eliminates all direct greenhouse gas emissions from the aluminium smelting process. 2020 Juukan Gorge rock shelters Our destruction of the Juukan Gorge rock shelters in Western Australia fell far short of our values and breached the trust placed in us by the Traditional Owners of the lands on which we operate. It is our collective responsibility to earn back the trust that has been lost, improve our internal practices and culture to minimise our impacts, and manage cultural heritage responsibly. 2021-2022 Creating a safe, respectful and inclusive workplace In 2021, we commissioned an independent review of our workplace culture to better understand, prevent and respond to harmful behaviours across our operations. The review found disturbing cases of discrimination and sexual harassment in the business. We are now working to implement the 26 recommendations of the report, and to evolve our culture to create a safe, respectful and inclusive workplace. 1. Previously known as QIT Fer et Titane.
Annual Report on Form 20-F 2022 | riotinto.com6 Chair’s statement 2022 saw Rio Tinto deliver another set of strong financial results, while keeping our operations fatality-free. In recognition of this, the Board is recommending a final dividend of 225 US cents (2021: 417 US cents), taking total dividends declared to shareholders this year to $8 billion. More broadly, Jakob Stausholm and his Executive team have led the Group out of a challenging period, with the foundations now being laid for us to become the global mining company of choice. A lot remains to be done. We must continue to focus on the pursuit of our four key objectives: becoming the best operator, having impeccable environmental, social and governance (ESG) credentials, excelling in development and strengthening the Group’s social licence. In particular, we must continue to strive for greater consistency in our operating performance. This year, we have secured a healthy pipeline of future growth projects – Oyu Tolgoi (with the successful buyout of Turquoise Hill minority shareholders), Rhodes Ridge and Rincon, and the Western Range replacement project. These now need to be successfully developed, while we continue our efforts to realise other critical growth projects, such as Simandou, Resolution and Jadar. Finally, we must focus on embedding the important culture and leadership changes that are such critical enablers for achieving our strategic objectives and to creating the future organisation that we all wish to see. Building a thriving culture I believe everything we aspire to achieve should be underpinned by our people feeling emotionally safe, empowered, included and respected. One of my priorities as Chair is to ensure that we create a work environment where everyone can be at their best. I commend Jakob and the Executive Committee for the care and courage shown in commissioning and openly sharing the external review of the company’s workplace culture at the beginning of 2022. Since then, a great deal has been done to make positive change. The Board and I fully support the implementation of the 26 recommendations made in the Everyday Respect Report, which we are monitoring closely. We are working closely with Elizabeth Broderick, the former Australian Sex Discrimination Commissioner who conducted the report, on how we, as a Board, can help ensure progress and lead by example in embedding the culture changes that we all wish to see. We have also reinforced the Board and the Executive Committee’s commitment in this area, by expanding our new Remuneration & People Committee’s scope to include an ongoing focus on people and culture. Incentivising the things that matter One of the key learnings from the past few years is that how we achieve our strategy is just as important as what we achieve. As our strategy has evolved, so has the need for an appropriate incentive framework to better support it. In 2022, we undertook a review of our incentives and, from 2023, our Group short-term incentive plan (STIP), which applies to around 24,000 employees, will have a greater focus on how outcomes are achieved. By driving delivery of our four objectives in a manner consistent with our values and behaviours and which advance our culture change agenda, we are confident that we will see great progress towards our strategic ambitions. For more information about changes to STIP, see the Remuneration report on pages 112-113. Seizing opportunities Since joining as Chair, I have visited sites around the world and all of our hub offices, interacting with employees across all levels of the organisation. I have been amazed by the calibre of talent – from our engineers to our economists, from our ecologists to our explorers. There has been one common trait among everyone I have met – a focus on finding better ways of working and a determination to innovate. The shift to electric vehicles and renewable power will require more copper, aluminium, lithium and high-quality iron ore to decarbonise society, but developing new mines is becoming more challenging. To excel in this future development, we must seek to partner with a strengthened social licence and to operate with impeccable ESG credentials. Strategically, we must think long term if we are to harness the right opportunities, while also keeping shorter-term opportunities and risks sharply in view. Alongside supplying the materials for the world’s energy transition, we are aiming to reduce our own emissions by 50% by 2030 and to reach net zero by 2050. This a challenging set of targets but ones that we are determined to achieve. We are delivering this through a range of initiatives and partnerships that are helping us decarbonise our existing operations and secure green energy, as we support the development of low-carbon solutions to help our customers meet their own goals. With access to more than four million hectares of land globally, we are looking to implement natural climate solutions on a significant scale. We also have the opportunity to be a leader in environment by finding better ways to manage water, care for species and rehabilitate land. These are areas where our drive to improve can bring significant social and local benefits. As we enter 2023, the global operating environment has certainly become more volatile and complex and yet there is a sense that Rio Tinto has reached an inflection point, with strong momentum in the business.
7Annual Report on Form 20-F 2022 | riotinto.com Strategic report Engaging with stakeholders and the workforce The Board is passionate about further strengthening our relationships with our shareholders, customers, local communities and other partners to incorporate a broad range of views in our decision making. As travel restrictions began to ease in 2022, we stepped up meeting people in person, including regular dialogue with the Indigenous peoples of the land on which we operate, local communities, governments and, of course, our customers, suppliers and shareholders. We also hosted three civil society roundtables, in Australia, Europe and North America. Engaging with civil society organisations is an important way for us to challenge ourselves to keep improving. One of the key topics of interest at this year’s roundtables was the role that Rio Tinto can play in protecting biodiversity, as well as in the world’s transition to a low-carbon future. I am encouraged by the progress our Communities and Social Performance teams have made this year, with new co-management agreements in place and improved ways of working to deliver better outcomes for Indigenous peoples. A highlight of 2022 was the creation of the Juukan Gorge Legacy Foundation as part of a remedy agreement reached with the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation relating to the destruction of the rock shelters at Juukan Gorge in 2020. Earlier in the year, I was grateful to meet with the Puutu Kunti Kurrama and Pinikura people for the first time and at a second meeting later in the year I heard how they feel our engagement and remediation have been progressing. As the leadership team continues to embed the values and new purpose across the business, I am convinced we will see even greater progress. The Board also met with employees, through site visits, town halls and listening sessions. Feedback suggests that, although we need to continue to improve, people are optimistic about the changes taking place, with good support for the new purpose and the Everyday Respect initiative. We are successful in attracting talented people, including more women, into Rio Tinto, but must now focus on retention. For more information about the Board’s engagement with our stakeholders, see pages 95-98. Board changes We have had some changes to the Board over the past year. Simon Thompson stepped down as Chairman in May 2022, and Hinda Gharbi retired from the Board at the conclusion of our annual general meeting in April. Our thanks go to Simon and Hinda for their outstanding service and contribution. In 2022, we evaluated the mix of skills and experience on the Board, and concluded that we need to refresh our composition, with a particular focus on deepening our mining, operations and projects experience, as well as our renewable energy and sustainability capabilities. In December 2022, we announced the appointment of Kaisa Hietala as a Non-Executive Director with effect from 1 March 2023. Kaisa brings a deep understanding of renewables and sustainability from her experience in the resources industry, as well as broad commercial capabilities, and these are all qualities that will be invaluable as we work to ensure Rio Tinto thrives in a decarbonising world. Separately, we have taken a fresh look at our governance arrangements to ensure that the Board and our committees are focusing our time on supporting the delivery of the Group’s strategic objectives. This includes putting a greater emphasis on people and culture, on risk management and resilience capabilities, and on strengthening our social licence through stakeholder engagement. For more information see my introduction to the Corporate Governance report on page 89. “...as I look to the future, I am confident that we have all of the right ingredients in place – great people, world-class assets, emerging technologies and new partnerships.” Looking ahead As we enter 2023, we will need to maintain a keen eye on near-term opportunities and risks, while always creating sufficient time and space to capture key strategic opportunities as they emerge for the longer term. Without doubt, there is considerable work ahead – to create a safe and empowering culture, to improve the consistency of our operational performance, to anticipate and respond to a shifting competitive landscape and to continue to strengthen our partnerships. But as I look to the future, I am confident that we have all of the right ingredients in place – great people, world-class assets, emerging technologies and new partnerships. As we reach our 150th anniversary this year, we have an opportunity to place the energy transition at the heart of our new strategy as we seek to diversify and extend our portfolio. This opportunity is now embodied in our new purpose: Finding better ways to provide the materials the world needs. And it is this new purpose that will drive the right decisions for our business, our shareholders, our other stakeholders and the environment. Let me end by thanking the leadership team and the many thousands of Rio Tinto employees, contractors and partners who delivered for the company and its shareholders during the year. Dominic Barton Chair 22 February 2023
Annual Report on Form 20-F 2022 | riotinto.com8 How can evolving our culture unlock improvements needed to make us the best operator? Changing our culture is key to achieving each of our four objectives. When people feel respected and valued, they feel empowered to be their best selves and bring their best ideas. For example, our Safe Production System (SPS) relies on this – unlocking the potential of our employees, their skills and expertise, and creating stable, predictable operations. I’ve been impressed by our progress in 2022, achieving a number of operational records, including a record second half performance across the Pilbara iron ore mine and rail system. We now have 30 deployments at 16 sites and 86 Kaizens (rapid problem-solving activities) completed or in progress. We are seeing excellent results. Where we have been deploying the SPS, we have sites that are safer, more engaged employees, and assets that are more productive. We will continue to deploy the SPS to more sites in 2023. More broadly, we are embedding a change in mindset and behaviours throughout the organisation, with the implementation of the Everyday Respect Report recommendations being absolutely crucial to driving this change. Achieving culture change will take time, but we are heading in the right direction. How are we progressing our objective to achieve impeccable ESG credentials? Starting with our social licence, for the past two years we have been changing the way we partner, especially with Indigenous peoples and the communities where we work. Moving to a model of co-management of land and waters, and improving our agreements, will deliver more enduring socioeconomic, heritage and environmental outcomes and, in turn, greater certainty for mine development. And we have continued to develop cultural competency across the Group to help us become a better partner. How did we perform in 2022? This year has been all about progressing our strategy and delivering against our four objectives to build a stronger Rio Tinto for the long term. The strong foundations of our business – world-class assets, great people and strength of balance sheet – allowed us to achieve solid financial performance despite the challenging environment we faced. We definitely made progress in 2022, but there is lots more to do. Most importantly, 2022 was our fourth consecutive fatality-free year. But we continue to see serious incidents in our business and therefore we must continue to focus, every day, on strengthening our safety culture. This is about bringing together best practices from across the business and beyond to inform and improve our risk management and work planning. In terms of financials, we generated underlying earnings of $13.3 billion (2021: $21.4 billion) and net cash generated from operating activities of $16.1 billion (2021: $25.3 billion). Profit after tax attributable to owners of Rio Tinto was $12.4 billion (2021: $21.1 billion) and our balance sheet remains strong with net debt of $4.2 billion (2021: net cash of $1.6 billion). As a result, the Board has recommended a final ordinary dividend of 225 US cents per share, resulting in total shareholder returns declared this year of $8 billion. This represents a pay-out ratio of 60%, in line with our policy. What was the thinking behind the new purpose, “finding better ways to provide the materials the world needs”? Defining our purpose was an exciting process. We looked at what society needs and then considered our own strengths and found ten words that really capture our contribution to the world. It’s partly in our DNA, and partly about setting the direction for the company to evolve. It speaks to our drive for both innovation and continuous improvement, while also emphasising how materials are produced. Consumers are looking for lower-carbon materials, which must be produced responsibly, and we are continuously seeking ways to do things better. 2022 highlights Zero fatalities (2021: zero) $16.1bn net cash generated from operating activities (2021: $25.3bn) $12.4bn profit after tax attributable to owners of Rio Tinto (2021: $21.1bn) $8bn total dividend declared (2021: $16.8bn) Q&A with Jakob Stausholm Chief Executive’s Q&A
9Annual Report on Form 20-F 2022 | riotinto.com Strategic report In terms of climate change, quite frankly we have not advanced our abatement projects as fast as we would like. But despite that our Scope 1 and 2 emissions were 7% below our 2018 baseline. Our capital spend on decarbonisation was also lower than we anticipated in 2021. It is important to note that this is a multi-decade journey and today we have a more robust roadmap to our 2030 and 2050 targets. We are ramping up our technical skills, building competencies and capabilities, and forming partnerships across our value chain to find solutions to some of the bigger challenges we are facing. We have set up six large abatement programmes focused on the decarbonisation challenges that cut across our product groups: repowering our Pacific Aluminium Operations, renewables, ELYSISTM, alumina process heat, minerals processing and diesel transition. We have also established one additional programme to increase our investments in nature-based solutions projects and expect these to make a more significant contribution to our targets. Some of the technology we need to reach net zero by 2050 does not exist today, so we established the Office of the Chief Scientist and increased our yearly research and development target spend to $400 million. We know we can’t solve these challenges alone, so we’re also partnering with other organisations to find solutions. The ELYSIS partnership to develop emissions-free aluminium smelting technology is a good example of this. Our objective to excel in development is all about growing in materials enabling the low-carbon transition. How did we perform in 2022? We expect the energy transition will add as much as 25% in additional demand above traditional sources across our key products by 2035. That is why our strategy is about growing in the materials required to achieve the energy transition, such as copper, lithium and high-quality iron ore. A highlight this year was resetting our relationship with the Mongolian Government and successfully executing our first significant M&A in a decade through our acquisition of Turquoise Hill Resources Ltd. This doubled our interest in Oyu Tolgoi to 66%, a mine that is on track to be the fourth-largest copper mine in the world. We progressed our Western Range and Rhodes Ridge iron ore projects in Western Australia, positioning us strongly to meet future customer needs. They are both exciting developments – Western Range represents our first co-designed mine with Traditional Owners, and the Rhodes Ridge deposits are among the largest and highest quality undeveloped resources globally. At the Simandou iron ore project in Guinea, we are working through all necessary permits and approvals in relation to the infrastructure. We have also hired critical roles with a significant focus on local Guinean businesses. In lithium, we acquired the Rincon project in Argentina for $825 million. We have also approved $194 million to develop a small starter battery-grade lithium carbonate plant with a capacity of 3,000 tonnes per year and first saleable production in 2024. As part of this, we are progressing early works, including constructing a camp and airstrip. We also continue to believe that the Jadar lithium- borate project in Serbia can contribute to enhancing the electric vehicle supply chain ecosystem in Serbia. We are exploring options with all stakeholders on how to progress this world-class opportunity to the highest environmental standards. Our fourth objective, strengthening our social licence, is ultimately judged by others. What have been some of your highlights this year? We’ve been working hard to implement meaningful change in the way we partner with communities. Over the past 12 months we have signed new agreements with the Yindjibarndi and Yinhawangka people in Australia, and the Pekuakamiulnuatsh First Nation in Canada. Most notably, in November we signed an agreement with the Puutu Kunti Kurrama and Pinikura people to create the Juukan Gorge Legacy Foundation as part of the remedy for the destruction of the rock shelters in May 2020. This is a significant step forward, but we know it will be a long journey to rebuild trust. What is the focus of 2023? I am really excited about the momentum we’re building. We have a clear purpose, an ambitious strategy, and I am convinced we have the best people in the industry. The early evidence of progress against each of the four objectives is heartening, not just in terms of our 2022 performance, but also in giving us confidence that we have a truly exciting improvement journey in the years to come. For me, 2023 is all about making further progress against our strategy and delivering on our key projects. We will continue to empower and unleash the quality of our people through the SPS and develop both leadership and technical excellence. We will advance projects like Rincon and Simandou, and at Oyu Tolgoi we expect to reach sustainable production in the first quarter of the year. As we mark 150 years of Rio Tinto, we will reflect on our past and the role it has played in our evolution and in helping us live our purpose in the future. Our people are at the very centre of this – over the next year we will continue our work to transform our culture and how we partner with our stakeholders. I want to thank our thousands of employees and contractors, host governments and communities, customers, shareholders and partners. Together, we’re committed to finding better ways to deliver well into the next 150 years. Jakob Stausholm Chief Executive 22 February 2023 “The early evidence of progress against each of the four objectives is heartening, not just in terms of our 2022 performance, but also in giving us confidence that we have a truly exciting improvement journey in the years to come.”
Annual Report on Form 20-F 2022 | riotinto.com10 Living our purpose Delivered through our strategy and four objectives We have put climate change and the low-carbon transition at the heart of our strategy. We are decarbonising our assets; helping our customers decarbonise by developing new products and technologies; and growing in materials essential for the energy transition. We will deliver our strategy through four clear objectives (indicated below), which guide how we operate. Progressing our strategy and four objectives will ensure that we provide the materials the world needs while maximising shareholder returns and strengthening our position as a partner of choice for our customers and other key stakeholders. Finding better ways to provide the materials the world needs Our purpose defines our role in the world and guides strategic decisions that balance the needs of our business, our stakeholders and the environment. Excel in development Deliver organic and inorganic growth, on time, on budget Impeccable ESG credentials Strengthen track record and transparency Best operator Expand capability and leadership Social licence Earn trust by building meaningful relationships and partnerships Underpinned by our approach to sustainability We want all our stakeholders to benefit from our success. Our purpose guides our efforts to provide people and communities with economic opportunities; to safeguard and promote the health, wellbeing and human rights of people and communities; to combat climate change; and to be excellent stewards of the natural resources entrusted to us. This is how we strengthen our social licence and achieve impeccable ESG credentials. We align our work with the United Nations Sustainable Development Goals, the global blueprint for a sustainable future. For more information about our stakeholders, see pages 18-19 and 95-98. For more information about our approach to sustainability, see page 46. For more information about our strategy, see page 13.
11Annual Report on Form 20-F 2022 | riotinto.com Strategic report Reflected in remuneration STIP metrics1 Financial scorecard: unflexed financials and best operator objective through flexed financials Strategic scorecard with performance measures (including safety, climate change, diversity, reputation, people and culture) linked to our four objectives Individual multiplier to reflect values LTIP metrics TSR relative to the EMIX Global Mining Index TSR relative to the MSCI World Index Enabled by our people and culture, and guided by our values Our purpose is a unifying force that is underpinned by our values of care, courage and curiosity. Together with our Code of Conduct, our values guide how we work and treat each other, the communities in which we operate and our environment. Care For people, for the communities in which we operate and for our environment Courage To try new things, speak up and do what is right Curiosity To collaborate, learn and innovate For more information about our values, see page 16. For more information about our Code of Conduct, see page 74. Tracked and measured We measure our strategic progress through a mix of financial and non-financial KPIs that align with our purpose and strategy. In addition to key financial, operational and safety performance metrics, we track progress across ESG themes including gender diversity and carbon emissions. KPIs Our Remuneration Policy is designed to support the delivery of our strategy in a responsible and sustainable way that reflects our purpose and values. It considers our financial and safety performance, our culture and our ESG measures, such as accelerating decarbonisation and strengthening our social licence. The main elements include base salary, short-term incentive plan (STIP) and long-term incentive plan (LTIP). For more information about remuneration, see pages 110-135. All-injury frequency rate (AIFR) Total shareholder return (TSR) Underlying earnings and underlying EBITDA Underlying return on capital employed (ROCE) Net cash generated from operating activities Free cash flow Net cash/(debt) Scope 1 and 2 greenhouse gas emissions Gender diversity Overseen by our Board Our success depends on effective and responsive corporate governance. Our Board oversees how we deliver on our purpose and strategy and continually monitors our culture to make sure it aligns with our values. The Board also oversees how we manage social and environmental risks, and monitors our performance to ensure we generate value for shareholders while our business contributes to wider society. For more information about our Board, see pages 90-91, 94 and 99-101. 1. From 2023, we have updated our STIP to ensure our performance management and incentives for around 24,000 people are aligned to our strategy and culture journey. For more information about out KPIs, see pages 20-24.
Annual Report on Form 20-F 2022 | riotinto.com12 Strategic context Our strategy is informed by a deep analysis of the interplay of global megatrends, explored through the lens of plausible scenarios. These set the context for our industry and underpin our portfolio choices and how we operate. Our success relies on our ability to strengthen our resilience to the physical, societal and economic effects of climate change and the energy transition, while building partnerships and capabilities that enable us to secure new opportunities. Energy transition and climate action While global efforts to tackle climate change have continued, the long-term pledges made by governments and companies still fall short of what is required to limit the global temperature rise to below 1.5°C above pre-industrial levels. In recognition of this, and faced with increasing societal demands, governments are creating new policies to support the development of low-carbon economies. These include the US’s Inflation Reduction Act (IRA) and the EU’s Carbon Border Adjustment Mechanism (CBAM). Increasing electrification and renewable energy incentives will bolster demand for several commodities, including lithium, copper, aluminium and high-grade iron ore. Interventions by governments are becoming as important as traditional market forces for commodity trajectories and will have important implications for project economics and regional price premiums. New policies could help incentivise new mining projects and accelerate the deployment of large-scale renewable energy and firming solutions essential for steel and aluminium production. Geopolitical tensions and global supply disruption The compound effects of COVID-19 and ongoing geopolitical issues have resulted in major disruption to the global supply of goods and services. The onset of the Russia-Ukraine war resulted in extreme price volatility for fossil fuels and several metals, contributing to record inflation in some jurisdictions. The ongoing global energy crisis and growing concerns about an economic downturn have continued to erode trust in global institutions, fuelling a backlash against globalisation in some quarters. In addition, we have seen increasing regional tensions surrounding new climate policies as governments look to tackle climate change while addressing energy supply issues. Supply chain disruptions have helped support prices for several key products including iron ore, aluminium, copper and nickel, where Russia is a major global supplier. However, the mining sector has faced headwinds, including increased energy costs and ongoing mobility and procurement challenges, which have put pressure on margins across most commodities. Geopolitical tensions have also exacerbated concerns for critical mineral supply, with governments showing increasing support for new projects to help diversify and nearshore supply. Evolving customer demands Customers are becoming more ESG-conscious in their purchasing behaviours, taking into consideration a range of sustainability themes beyond carbon footprint, including biodiversity, water consumption, waste generation and social impact. This is helping to drive a holistic shift towards increasingly transparent, sustainable and circular value chains. Mining companies will need to work closely with a range of stakeholders to improve their ESG metrics and attract new customers and partners. A key opportunity is in recycling, which could allow metal suppliers to supplement their low-carbon primary products with highly sustainable recycled materials to create unique commercial offerings for customers. Nature-based solutions could also provide new revenue streams, while creating opportunities for communities and helping drive emissions towards net zero. Our scenario approach We use global scenarios in our strategy and capital allocation processes to stress test our portfolio and investment decisions under alternative macroeconomic settings. Our scenario framework focuses on two prevailing macro-level business concerns: the speed of global economic growth and the trajectory of climate action, each heavily influenced by global geopolitics and governance. Consistent with the Task Force on Climate- related Financial Disclosures (TCFD) recommendations, our central reference case commodity forecasts and valuations are informed by a blend of our two core scenarios (Competitive Leadership and Fragmented Leadership). These are used to derive critical accounting estimates and are included as inputs for impairment testing; estimating remaining economic life for units of production, depreciation and discounting; and closure and rehabilitation provisions. Further detail is provided in “Impact of climate change on the Group” section to the financial statements on pages 152-155. We use additional scenarios (including our Aspirational Leadership scenario, which is aligned with the stretch goal of the Paris Agreement) to further stress test decisions and assess potential risks to our portfolio. Our two core scenarios Competitive Leadership reflects a world of high growth and strong climate action post-2030, with change driven by policy and competitive innovation. A proactive reform environment encourages business innovation and helps boost investment and productivity. This allows global GDP to continue growing at near recent historical levels with an increasing contribution from India and other developing countries. Fragmented Leadership represents a world where economic growth and climate action are constrained by ineffective policy and rising social and geopolitical tensions. In this world, investment in new technologies slows and their global adoption is highly inconsistent. This, combined with more significant climate damage, results in weaker long-term productivity growth. For more information about our scenarios, methodology and portfolio implications, see our 2022 Climate Change Report at riotinto.com/climatereport.
13Annual Report on Form 20-F 2022 | riotinto.com Strategic report Climate change and the low-carbon transition are at the heart of our strategy. We aim to strengthen our resilience to changing market fundamentals and pursue new opportunities and partnerships that help deliver strong returns and growth options for our business, reduce our environmental footprint and aid our customers in their efforts to decarbonise. Our strategy and four objectives Best operator We aim to improve our operational performance by identifying and replicating best practices across our portfolio and empowering our people to make positive changes. Excel in development We will expand and progress our pipeline of growth opportunities and build capabilities and partnerships to execute projects and establish a strong track record of capital- efficient delivery. Impeccable ESG credentials We will strive to align our business priorities with society’s expectations and ensure sustainability considerations are at the core of every decision we make. Social licence We need to be humbler and more responsive, building meaningful relationships and partnerships with our stakeholders by listening, learning and respecting diverse perspectives. Our culture is a key enabler of our strategic ambitions. It will guide us on the journey to best operator, make us a better partner and help us solve problems as we work towards net zero. By building a safe, respectful and inclusive workplace, we can attract and retain curious people who care about their work and colleagues and are courageous about finding better ways to do things – this is how we will deliver on our purpose. Our strategy has three pillars Accelerate the decarbonisation of our assets Due to the scale of our mining operations and processing activities we have significant Scope 1 and 2 emissions (30.3Mt CO2e). We are working with a range of stakeholders to find commercial and technology solutions to repower our assets, deploy large-scale renewables, scale up ELYSISTM, decarbonise process heat and replace diesel across our portfolio. Develop products and technologies that help our customers decarbonise Our Scope 3 emissions were 584Mt CO2e in 2022 – over 1% of the global total. We are working closely with our customers and others to develop more secure and sustainable value chains and accelerate the development of cleaner production pathways for our products. Processing of iron ore accounts for two-thirds of our Scope 3 emissions. Grow in materials essential for 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. We will deliver our strategy through four objectives, which guide how we want to run our business: to be the best operator, to achieve impeccable ESG credentials, to excel in development and to strengthen our social licence. These essential components will help improve our productivity, reduce capital intensity and assist us in becoming a partner of choice for a range of stakeholders globally. Social licence Earn trust by building meaningful relationships and partnerships Excel in development Deliver organic and inorganic growth, on time, on budget Impeccable ESG credentials Strengthen track record and transparency Best operator Expand capability and leadership
Annual Report on Form 20-F 2022 | riotinto.com14 Progress against our strategy in 2022 Accelerate the decarbonisation of our assets Develop products and technologies that help our customers decarbonise Grow in materials enabling the energy transition C om m itm en ts To strengthen our alignment with the Paris Agreement and our long-term1 ambition 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 (against our 2018 equity baseline). – We expect to invest an estimated $7.5 billion in decarbonisation projects by 2030, predominantly in the second half of the decade. Long-term contracts and operational expenditure will also be an important additional part of our decarbonisation spend. To work with our customers to tackle full value chain emissions and reduce our significant indirect Scope 3 emissions: – We will increase research and development to accelerate the development of cleaner products for our customers. – We will step up our customer engagements and partnerships to help them meet their Scope 1 and 2 emissions goals. – We plan to deploy net zero vessels by 2030 and reach net zero emissions from shipping our products by 2050. To capture new growth opportunities with a focus on materials that will see strong demand growth from the low-carbon transition: – Our ambition is to increase our growth capital to $2 billion in 2023 and up to $3 billion annually in 2024 and 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. – We will maintain our strong commitment to disciplined capital allocation. H ig hl ig ht s High-grade iron ore/green steel – 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. – Blast furnace optimisation: Extended our collaboration with over 20 customers, such as Baowu, POSCO, Nippon Steel Corporation and Shougang, with potential carbon emissions reductions of up to 30%. – BioIronTM: Successfully piloted an innovative, low-carbon iron-making process on Pilbara iron ore. – Hydrogen-based DRI2: Collaborated with BlueScope and Salzgitter Flachstahl to test direct reduction of our products using green hydrogen and develop cleaner processing options. – Simandou: Signed a non-binding term sheet with our partners to progress the co-development of infrastructure. The project will deliver high-grade iron ore, suitable for the DRI-EAF3 steelmaking process. 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. – ELYSISTM: Conducted commercial testing of direct emissions-free smelting technology with 450kA cells under construction. – Low-carbon material: Partnered with organisations including Volvo, Ford and AB InBev (Corona Canada). – Arvida: 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. – Alma: Committed $188 million to expand production of higher-value low-carbon billets. – Laterrière Plant: Commissioned a new aluminium remelt furnace. Copper, 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. – NutonTM: Joined strategic partnerships to test leaching technology on legacy copper waste and sulphide orebodies. – Critical minerals from waste: Began extracting tellurium concentrate at Kennecott. Achieved first production of scandium oxide and demonstration of an innovative spodumene (lithium) concentration process at our Critical Minerals and Technology Centre (RTIT Quebec Operations). – Oyu Tolgoi: Acquired full ownership of Turquoise Hill Resources Ltd (TRQ) for $3.1 billion, increasing our direct project ownership to 66%. – Rincon: Acquired Rincon for $825 million and approved funding of $194 million for early works to develop an accelerated starter plant with planned expansion. 1. Our net zero commitment applies to our Scope 1 and 2 emissions only and ultimately aims to balance any remaining emissions with removals from the atmosphere. For planning purposes, we define short term as up to two years, medium term as two to ten years and long term as beyond ten years. For our analysis of physical climate risks, we define short term as 2030, medium term is 2050 and long term is 2100. 2. Direct Reduced Iron. 3. Direct Reduced Iron – Electric Arc Furnace.
15Annual Report on Form 20-F 2022 | riotinto.com Strategic report Best operator Impeccable ESG Excel in development Social licence A pp ro ac h – A strong safety performance remains our top priority – we will never be complacent. – We are implementing the Safe Production System (SPS) as a new, people-centric approach to engage our workforce and develop and share best practice solutions across our assets. – We are simplifying our systems and processes to enable more agile decision making and empower our people. – We have embedded ESG considerations in every decision we make, from our community work to addressing climate change. – We are striving to be a responsible and trusted steward of resources by driving end-to-end best practices, standards and assurance across our business. – We are committed to creating a safer, equal and equitable workplace for our people. – We are developing a pipeline of growth options leveraged towards the energy transition while maintaining our absolute commitment to capital discipline. – We are assessing new technologies, partnerships and operational synergies to unlock value and bring projects online faster. – We are further building our capabilities in business development and project execution including in downstream processing and renewable energy. – We are stepping up our external engagements to develop deeper connections with all stakeholders and build mutually beneficial partnerships. – We are building cultural capability and competency across the Group to ensure we fully understand, value and partner with our host communities. – We are committed to sharing best practices globally. H ig hl ig ht s – We completed our fourth consecutive fatality-free year with our all-injury frequency rate (AIFR) remaining stable at 0.40 compared to 2021. – We completed 30 SPS deployments across 16 sites with several rapid improvement projects underway to improve performance and safety. – We established an Innovation and Technology Centre to improve our health and safety, boost productivity and support growth opportunities. – We launched the Building Safe and Respectful Workplaces pilot programme, with BHP, Fortescue and the Australian Minerals and Energy Skills Alliance. – We continued the roll-out of the Voyager development programme across our senior leaders. – We released the Everyday Respect external review of our workplace culture, with actions and training being rolled out across the business. – We introduced a new communities and social performance strategy with updated standards, targets and vision for the business. – We have changed the way we engage with Traditional Owner and First Nation groups (see the social licence column). – We set up six large carbon abatement programmes focused on repowering our Pacific Aluminium Operations, renewables, ELYSISTM, alumina process heat, minerals processing and diesel transition. – The Steel Decarbonisation team has advanced 49 projects with more than 30 partners. – We established a dedicated team to secure nature-based solutions projects that help offset emissions, improve biodiversity and create opportunities for communities. – We advanced several key projects, firing 19 drawbells at the Oyu Tolgoi underground project in 2022 and commissioning Pilbara mines equivalent to 120Mt. – We progressed studies for Rincon, Resolution, Kennecott underground and several replacement projects with ongoing stakeholder engagement at Jadar and Simandou. – We are undertaking 32 research and development projects focused on reducing capital intensity and unlocking revenue streams. – We completed several key energy infrastructure projects including the Kemano Tunnel 2 project (Kitimat) and the installation of 34MW of renewables at Gudai-Darri. – In Australia we signed new agreements with the Yinhawangka and Yindjibarndi Aboriginal Corporations and the Puutu Kunti Kurrama and Pinikura people. – We committed A$250 million to support the Western Australian State Government’s new Resources Community Investment Initiative. – In Canada we signed an initial agreement with the Pekuakamiulnuatsh First Nation to co-create terms of a long-term partnership. – We have reset our relationship with the Government of Mongolia for Oyu Tolgoi. – We enhanced our internal human rights expertise and updated our Human Rights Policy to reflect emerging trends and expectations. Progress against our four objectives in 2022
Annual Report on Form 20-F 2022 | riotinto.com16 Our people and culture Our values guide how we work together and how we treat each other, the communities we operate in, and our environment. We act with care, courage and curiosity, empowering our people to build meaningful relationships and find better ways to provide the materials the world needs. To help embed our values throughout the business, we updated our Code of Conduct in early 2023. Care We act with care by prioritising the physical and emotional safety and wellbeing of those around us. We respect others, build trusting relationships and consider the impact of our actions. We look for ways to contribute to a better future for our people, communities and the planet. Courage We act with courage by showing integrity, speaking up when something is not right and taking decisive action when needed. We are not afraid to try new things. We respond positively in difficult situations and demonstrate commitment to achieving shared goals. Curiosity We act with curiosity by inviting diverse ideas and collaborating to achieve more together than can be done alone. We are continuously learning and creatively looking for better and safer ways of doing things. We draw inspiration from others and the world around us. We are finding better ways to support and empower our people, which means creating an environment where everyone feels comfortable being themselves, has the courage to speak up if something is not right and listens to each other with care and curiosity. Oyu Tolgoi copper-gold mine, Mongolia. Guided by our values, we are committed to building a safe, respectful and inclusive workplace. There are elements of our culture today that we are proud of and want to amplify, such as our commitment to safety, teamwork and agility in times of change. But we know there is more to do in some areas, and we recognise that how we achieve is just as important as what we achieve. In February 2022, we reported the findings and recommendations from the Everyday Respect Report, an independent review of our workplace culture that we commissioned to better understand, prevent and respond to harmful behaviours across our global operations. We know from the findings that we can do better as a company. We aspire to be a home for curious people who care about their work and colleagues and are courageous about finding better ways to do things. This starts with ensuring everyone feels safe, respected and included. Implementing the 26 recommendations from the report is one way we are evolving our culture, this was a primary focus for 2022 and it will continue in 2023. We have accelerated some immediate actions: – Building capable leaders. We have trained 91% of our leaders in the foundations of building psychological safety and moving from bystander to upstander, exceeding our target of 80% by the end of 2022. – Creating safe and inclusive facilities. All sites have completed a self-assessment of their facilities, and unsafe areas such as locks, lighting and access to amenities have been updated. This work is ongoing and done in collaboration with our employees to make our facilities safe and more inclusive. – Providing a more people-centric response. We expanded the scope of work for the Business Conduct Office (BCO) and developed a discrete unit that will be responsible for delivering safe, confidential and caring support. For more information about the BCO and our confidential reporting programme myVoice, see page 74. We want to play our part in eliminating harmful behaviours, and we are also working closely with industry bodies across the globe to implement changes and collectively evolve our industry. To further support our culture journey, in 2022 we also: – Updated our global minimum standard for paid parental leave to suit different family needs. – Continued to increase the number of women in our workforce, from 21.6% to 22.9%. – Developed, empowered and invested in our people through the Safe Production System and the Voyager development programme for senior leaders. – Reviewed our incentives and performance management framework. From 2023, our performance management and incentives for around 24,000 people will be aligned to our strategy and culture journey, focusing on both how and what we deliver. For more information about our people, see pages 59-60. For more information about the Everyday Respect initiative, visit riotinto.com/everydayrespect.
17Annual Report on Form 20-F 2022 | riotinto.com Strategic report Our business model Our ability to create value is underpinned by the quality of our assets, the capabilities of our people, our operational and sustainability performance, innovative partnership and disciplined capital allocation. Underpinned by disciplined capital allocation Our business is underpinned by a disciplined approach to capital allocation; we strive to use every dollar prudently. Today, our balance sheet is a key strength, providing a resilient platform for strong and consistent shareholder returns, as well as enabling us to invest throughout the commodity cycle. 1 Explore and evaluate 2 Develop and innovate 3 Mine and process 4 Market and deliver 5 Repurpose and renew We use some of the most advanced exploration technologies in the world to find potential sources of minerals and metals. We consider new commodities and products with an understanding of customers’ and communities’ needs. We are also mindful of our potential future social and environmental impact as well as the diversity and balance of our portfolio. With the low-carbon transition at the heart of our strategy, we will continue to focus our exploration efforts on commodities essential for the energy transition. We also evaluate emerging opportunities in the circular economy and green energy production. We aim to grow our business while finding better ways to provide the materials the world needs. As we develop new mining and processing options, we are also investing in research and development projects to help improve our productivity, reduce capital intensity, unlock new revenue opportunities and improve our environmental and social performance. Reaching our net zero ambition will rely on new technologies, and we work with a range of value chain participants to accelerate the development of greener production pathways. We develop opportunities with a focus on safety, potential returns and long-term value, and sustainability. We partner with a growing network of stakeholders – governments, communities, customers and suppliers – to expand our understanding, capabilities and, ultimately, our ability to develop and operate new projects. We share best practices across our assets to support safe, productive and environmentally responsible operational performances. Our operations benefit local economies by contributing training and skills development, jobs, taxes and royalties, contracts with local businesses, and social and community investment. We also support the economic diversification of regions where we are based, in alignment with national and regional development plans, playing our role in ensuring our host communities can thrive long after our operations close. Our ambition is for our operations to reach net zero carbon emissions by 2050. By understanding and respecting our business partners, employees, communities and the environment, we can create sustainable value for all our stakeholders. We align our products with market and customer needs. Our minerals and metals are essential as enablers of the energy transition and are used in a vast array of everyday products – from electric vehicles to smartphones to skyscrapers. The transition to net zero will create additional demand for materials such as copper, lithium, aluminium and high-quality iron ore. We will support growth in these commodities while developing new technologies and products that help our customers decarbonise. Our network of rail, ports and ships enables us to control end-to-end logistics to deliver our products safely, efficiently and reliably. We aim to design and run our assets in a way that creates a positive legacy once our mining or processing activity concludes. We engage stakeholders of our sites nearing closure – including Indigenous peoples, government, employees and host communities – and actively involve them in the planning. Each of our sites has rehabilitation plans that we review every year. Planning and operating with the future in mind is integral to running a safe, responsible and profitable business.
Annual Report on Form 20-F 2022 | riotinto.com18 Our stakeholders Partnerships and collaboration are essential to the long-term success of our business. They give us a competitive edge and allow us to work more thoughtfully and responsibly, benefiting from the expertise and insight of others. By engaging with our stakeholders and listening to their views, we can make a more meaningful contribution to society while becoming a more valuable company for our shareholders. Section 172(1) statement This stakeholder section, together with our stakeholder pages in the Governance section (pages 95-98), explains how the Board takes account of stakeholder interests. These comprise our “Section 172(1) statement”. Workforce Our people are key to our success. We are focusing on creating a safe, respectful and inclusive workplace where our people feel empowered and engaged. Guided by our values, we are evolving our culture: we are implementing the recommendations from the Everyday Respect Report, rolling out the Safe Production System, enhancing our safety maturity model, empowering our people, training our leaders and listening to employee feedback through our employee survey. In our most recent survey conducted in October 2022, our employee satisfaction score (eSAT) increased by two points (71 to 73). We are making good progress, but we know there is more to do. Communities Communities are the places and the people who make up where we live, work and call home – from the Gobi Desert in Mongolia, to KwaZulu-Natal, South Africa, and Saguenay–Lac-Saint-Jean, Quebec, Canada. We continue to strive to engage consistently and honestly with communities on a range of issues, such as jobs and local procurement, as well as the impact of our operations on the local environment. Over the past few years, we have focused on our own standards of open and transparent engagement. For example, we are moving to a model of co-management of Country in our Pilbara iron ore business, and we are updating our agreements with Indigenous peoples. Governments Governments – national, state and provincial, and local – are important stakeholders for our business. They regulate our operations, are among our commercial partners, and receive revenue from our taxes and royalties. Our economic contribution can be significant for national budgets and local development priorities, such as job creation and skills training. It is important that we engage with officials on issues such as how we explore, mine and process ore; conditions of land tenure; health, safety and environment; taxation; intellectual property; competition and foreign investment; data privacy; conditions of trade and export; and infrastructure access. For more information see page 97. $75bn Paid in taxes and royalties globally over the past ten years $6.9bn Corporate tax paid in 2022 (2021: $8.5bn)2 $6.1bn Corporate tax paid in Australia in 2022 (2021: $7.7bn) 1. Includes our total workforce based on managed operations (excludes the Group’s share of non-managed operations and joint ventures) as of 31 December 2022. 2. When combined with royalties and other taxes, and with our share of taxes and royalties paid by equity accounted units, this resulted in payments to governments of around $10.5 billion (2021: over $13 billion), including over $8 billion paid in Australia (2021: over $11 billion). 28 Organisations participated in our 2022 CSO roundtable discussions in person 3 Roundtables held in London, Sydney and Montreal in 2022. Topics discussed included climate change, biodiversity, recycling, water management, human rights, cultural heritage, communities and transparency Civil society organisations We can only help to address the world’s many complex environmental, social and governance challenges, such as climate change, human rights violations, bribery and corruption, through collaboration with civil society organisations (CSOs) and other stakeholders. Our senior leaders regularly engage with CSOs, and although our opinions may differ from time to time, we respect their views and value the challenges they set for us to improve performance across our business. We hold yearly roundtable discussions with CSOs in Australia, Europe and North America. In 2022, one of the key topics of discussion was our role in the world’s transition to a low-carbon future. For more information see page 96. $62.6m Voluntary social investment in 2022 (2021: $72.1m) 52,0001 Employees across six continents (2021: 47,000) 73 Employee satisfaction score (eSAT) (2021: 71) For more information see page 95. For more information see page 96.
19Annual Report on Form 20-F 2022 | riotinto.com Strategic report Investors Our investors include pension funds, global fund managers, bondholders, and tens of thousands of individuals around the world, including approximately 30,000 Rio Tinto employees. It is important that we understand our investors’ needs and their vision for the company. We therefore communicate and engage extensively with them throughout the year, both in person and through virtual forums across multiple jurisdictions. In addition to our annual general meetings in the UK and Australia, we also held two investor seminars in 2022, one in London and one in Sydney, where our Executive Committee launched our new purpose externally and provided an update on our progress against our strategy. Customers Our customers’ needs are central to our operational decision making. Using the insights generated from everything we buy, sell and move around the world, our Commercial team works closely with customers to ensure that we deliver products that meet their specific requirements. Every year, we ask our customers for their feedback via a survey and the insights help us deliver new and better products and services. Where possible, we partner to co-develop solutions that support our environmental, social and governance commitments. For example, in 2022, we signed a separate memorandum of understanding with both Volvo Group and Ford Motor Company to supply low-carbon materials for a range of their products. 1. Shareholders, primarily through myShare, our global employee share plan. Suppliers Engaging with suppliers is an important way in which we can have a positive impact on communities. We partner with, and help develop, local businesses where we operate, so they can share in our success. Having good relationships with our suppliers also helps us take part in technological and market developments, and we continually strive to improve our supplier experiences. As with our customers, we ask our suppliers to share their feedback in a yearly survey to better understand how we can develop our collaboration. We work closely with our suppliers to create innovative partnerships, such as our partnership with Scania where we are trialling agile autonomous haul trucks. $8.0bn Total dividends declared to shareholders (2021: $16.8bn) 2,000 Customers across multiple industries and countries $22.5bn Spent with suppliers globally in 2022 (2021: $19.8bn) 30,000 Rio Tinto employees own shares in the company1 (2021: 25,000) $55.6bn Consolidated sales revenue in 2022 (2021: $63.5bn) 549Mt CO2e Scope 3 emissions from the processing of our products (2021: 523Mt CO2e) 40% Increase in spend with Indigenous suppliers in Australia from 2021 to 2022 to A$565 million (2021: by 40% from 2020 to 2021 to A$400 million) 26Mt CO2e Scope 3 emissions from all procurement (2021: 26Mt CO2e) For more information see page 98. For more information see page 98. For more information see page 97. A change of approach We have worked with the Yinhawangka people to co-develop a social cultural heritage management plan as part of our proposed development of the Western Range iron ore mine in the Pilbara, Western Australia. The plan includes clearly defined roles and responsibilities regarding life of mine planning, heritage site protection, water management, land access, cultural awareness training and ongoing monitoring of the area. See an interview with Clint, Traditional Owner Engagement Lead in our Iron Ore business, where he shares how the Western Range engagement process differed to our past approach. Learn more about how we work with communities on our website.
Annual Report on Form 20-F 2022 | riotinto.com20 2018 0.44 2020 2019 0.42 2021 0.40 2022 0.40 0.37 Key performance indicators We use a range of financial and non-financial metrics to measure Group performance against our four objectives: to be best operator; to achieve impeccable environmental, social and governance (ESG) credentials; to excel in development; and to strengthen our social licence. Alignment to our four objectives All-injury frequency rate (AIFR) per 200,000 hours worked Definition We define AIFR as the number of injuries per 200,000 hours worked by employees and contractors at the operations that we manage. It includes medical treatment cases, restricted workday and lost-day injuries. Relevance to strategy The safety and wellbeing of our employees and contractors is our number one priority and essential to everything we do. We are committed to having a safe work environment and our focus is on maintaining zero fatalities, preventing catastrophic events and reducing injuries. We continue to implement our safety maturity model (SMM) which, as our blueprint for safety, describes the systems and behaviours we apply to create a strong safety culture. In 2023, we will begin planning for the integration of our SMM with our Safe Production System. This is our new, people-centric approach to engage our workforce and develop and share best practice solutions across our assets. We continue to share learnings and strengthen our partnerships with industry and associated committees (eg the International Council on Mining and Metals), contracting partners and local communities to improve health, safety and wellbeing outcomes. Link to executive remuneration AIFR and SMM are included as performance metrics in the safety component of the short-term incentive plan (see pages 121-122). Our performance in 2022 We had a fourth year in a row of zero fatalities. Our AIFR has remained stable at 0.40 compared to 2021. Forward plan We will renew focus on our critical risk management programme. We will also work on embedding enhancements to the SMM. We will increase our focus on managing psychosocial hazards, and continue to innovate to reduce exposure to safety and health risks. We will continue to implement our major hazard standards, including process safety, underground safety and tailings, and apply strong assurance processes. Alignment to our four objectives and associated risks – Best operator – Impeccable ESG credentials For more information see page 79. Social licence Earn trust by building meaningful relationships and partnerships Excel in development Deliver organic and inorganic growth, on time, on budget Impeccable ESG credentials Strengthen track record and transparency Best operator Expand capability and leadership
21Annual Report on Form 20-F 2022 | riotinto.com Strategic report 2018 Underlying earnings 2019 Underlying earnings 2020 Underlying earnings 2021 Underlying earnings 2022 Underlying earnings Underlying EBITDA Underlying EBITDA Underlying EBITDA Underlying EBITDA Underlying EBITDA 8,808 10,373 12,448 21,380 13,275 26,272 37,720 23,902 21,197 18,136 2018 33.4% 2020 2019 49.6% 2021 263.3% 2022 134.3% 110.1% Total shareholder return (TSR)1 measured over the preceding five years (using annual average share price) Definition TSR is a combination of share price appreciation (using annual average share price) and dividends paid and reinvested to show the total return to the shareholder over the preceding five years. Relevance to strategy Our strategy aims to maximise shareholder returns through the commodity cycle, and TSR is a direct measure of that. Link to executive remuneration TSR is reflected in the long-term incentive plan, measured equally against the EMIX Global Mining Index and the MSCI World Index (see pages 124-125). 1. The TSR calculation for each period is based on the change in the calendar-year average share prices for Rio Tinto plc and Rio Tinto Limited over the preceding five years. This is consistent with the methodology used for calculating the vesting outcomes for Performance Share Awards (PSA). The data presented in this chart accounts for the dual corporate structure of Rio Tinto. Our performance in 2022 TSR performance over the five-year period was driven principally by movements in commodity prices and changes in the global macro environment. Rio Tinto significantly outperformed both the EMIX Global Mining Index and the MSCI World Index over the five-year period. Forward plan We will continue to focus on generating free cash flow from our operations. This allows us to return cash to shareholders (short-term returns) while investing in the business (long-term returns). Alignment to our four objectives and associated risks – Best operator – Impeccable ESG credentials – Excel in development – Social licence For more information see page 79. Underlying earnings and underlying EBITDA $ millions Definition Underlying earnings and underlying EBITDA are non-IFRS measures. Underlying earnings represents net earnings attributable to the owners of Rio Tinto, adjusted to exclude items that do not reflect the underlying performance of the Group’s operations. For more information on these exclusions and a reconciliation to the nearest IFRS measures refer to Alternative Performance Measures (pages 273-278). Underlying EBITDA is a segmental performance measure and represents profit before tax, net finance items, depreciation and amortisation. Exclusions from underlying EBITDA and a reconciliation to the nearest IFRS measures can be found in note 1. Relevance to strategy These financial KPIs measure how well we are managing costs, increasing productivity and generating the most revenue from each of our assets. Link to executive remuneration Underlying earnings are reflected in the short-term incentive plan. In the longer term, both measures influence TSR, which is the primary measure for the long-term incentive plan (see pages 124-125). Our performance in 2022 Underlying earnings of $13.3 billion were $8.1 billion lower than in 2021. Underlying EBITDA of $26.3 billion was $11.4 billion lower than in 2021. The 30% decrease in underlying EBITDA resulted from lower iron ore prices, higher energy and raw material costs, partially offset by movements in sales volumes. Forward plan We will continue to drive attractive margins and returns throughout the cycle through a focus on best operating performance and a disciplined focus on cash costs. Alignment to our four objectives and associated risks – Best operator For more information see page 79.
Annual Report on Form 20-F 2022 | riotinto.com22 Key performance indicators continued 2018 11,821 2020 2019 14,912 2021 25,345 2022 16,134 15,875 2018 19% 2020 2019 24% 2021 44% 2022 25% 27% Our performance in 2022 Net cash generated from operating activities of $16.1 billion was 36% lower than 2021. This was primarily due to lower iron ore prices, higher energy and raw material costs partially offset by lower taxes paid. Forward plan We will focus on effectively delivering strong and resilient cash flows from our quality portfolio of assets throughout the cycle. Net cash generated from operating activities $ millions Definition This KPI refers to cash generated by our operations after tax and interest, including dividends received from equity accounted units and dividends paid to non-controlling interests in subsidiaries. Relevance to strategy This KPI measures our ability to convert underlying earnings into cash. Link to executive remuneration Net cash generated from operating activities is included in the short-term incentive plan. In the longer term, the measure influences TSR, which is included in the long-term incentive plan (see pages 124-125). Alignment to our four objectives and associated risks – Best operator For more information see page 79. Underlying return on capital employed (ROCE) % Definition Underlying ROCE is a non-IFRS measure defined as underlying earnings excluding net interest divided by average capital employed (operating assets). For more information and a reconciliation of underlying ROCE to the nearest comparable IFRS measure, see Alternative Performance Measures (pages 273-278). Relevance to strategy Our portfolio of low-cost, long-life assets delivers attractive returns throughout the cycle and has been reshaped significantly in recent years. Underlying ROCE measures how efficiently we generate profits from investment in our portfolio of assets. Link to executive remuneration Underlying earnings, as a component of underlying ROCE, is included in the short-term incentive plan. In the longer term, underlying ROCE also influences TSR, which is included in the long-term incentive plan (see pages 124-125). Our performance in 2022 Underlying ROCE decreased 19 percentage points to 25% in 2022, reflecting the decrease in underlying earnings driven by lower iron ore prices, and an increase in capital employed due to capital expenditure and acquisitions. Forward plan We will continue to focus on maximising returns from our assets over the short, medium and long term. We will invest in value-accretive growth options for materials that will be privileged in a decarbonising world. Alignment to our four objectives and associated risks – Best operator – Excel in development For more information see page 79.
23Annual Report on Form 20-F 2022 | riotinto.com Strategic report 2018 6,977 2020 2019 9,158 2021 17,664 2022 9,010 9,407 2018 2020 2019 2021 2022 255 (3,651) 1,576 (4,188) (664) Free cash flow $ millions Definition Free cash flow is a non-IFRS measure defined as net cash generated from operating activities minus purchases of property, plant and equipment, intangibles, and payments of lease principal, plus proceeds from the sale of property, plant and equipment, and intangible assets. For more information and a reconciliation of free cash flow to the nearest comparable IFRS measure, see Alternative Performance Measures (pages 273-278). Relevance to strategy This KPI measures the net cash returned by the business after the expenditure of sustaining and growth capital. This cash can be used for shareholder returns, reducing debt and other investment. Link to executive remuneration Free cash flow is included in the short-term incentive plan. In the longer term, the measure influences TSR, which is included in the long-term incentive plan (see pages 124-125). Our performance in 2022 Free cash flow decreased by $8.7 billion to $9 billion in 2022, primarily due to the decrease in net cash generated from operating activities. This was partially offset by a decrease in replacement and development capital expenditure as projects reached completion. Forward plan We will focus on effectively delivering strong and resilient cash flows from our quality portfolio of assets throughout the cycle. Alignment to our four objectives and associated risks – Best operator – Excel in development For more information see page 79. Net (debt)/cash $ millions Definition Net (debt)/cash is a non-IFRS measure defined as total borrowings plus lease liabilities less cash and cash equivalents and other liquid investments, adjusted for derivatives related to net (debt)/cash (see note 19 of the financial statements). For more information and a reconciliation of net (debt)/cash to the nearest comparable IFRS measure, see Alternative Performance Measures (pages 273-278). Relevance to strategy This KPI measures how we are managing our balance sheet and capital structure. A strong balance sheet is essential for giving us the flexibility to take advantage of opportunities as they arise, and for returning cash to shareholders. Link to executive remuneration Net cash/(debt) is, in part, an outcome of free cash flow, which itself is reflected in the short-term incentive plan. In the longer term, net cash/(debt) influences TSR, which is reflected in the long-term incentive plan (see pages 124-125). Alignment to our four objectives and associated risks – Best operator – Excel in development For more information see page 79. Our performance in 2022 Net cash reduced by $5.8 billion in 2022, resulting in a net debt position of $4.2 billion. This reflected $11.7 billion returned to shareholders in the year, $3.0 billion1 acquisition of the remaining non-controlling interest of TRQ and $0.8 billion acquisition of the Rincon Lithium Project, partially offset by $9.0 billion of free cash flow and the $0.5 billion received from the sale of the Cortez royalty. Forward plan We will focus on effectively delivering strong and resilient cash flows from our quality portfolio of assets throughout the cycle. 1. Total consideration of $3,139 million for the minority interest in TRQ excludes transaction costs of $74 million. In 2022, we paid $2,928 million to shareholders and $33 million of transaction costs. In 2023, we expect to pay the remaining $41 million of transaction costs and approximately $211 million to dissenting shareholders, depending on the outcome and timing of dissent proceedings.
Annual Report on Form 20-F 2022 | riotinto.com24 Key performance indicators continued 2018 17.7% 20202 2019 18.4% 20202 20.1% 2021 2022 21.6% 22.9% 19.0% 2019 31.4 2021 2020 31.7 2022 30.3 31.0 20181 32.5 Scope 1 and 2 greenhouse gas emissions (equity Mt CO2e) Definition We measure our Scope 1 and 2 greenhouse gas emissions on an equity basis. It includes the equity share of Scope 1 and 2 emissions from managed and non-managed operations expressed in million metric tonnes of carbon dioxide equivalent. Relevance to strategy Climate risks and opportunities have formed part of our strategic thinking and investment decisions for over two decades. The low-carbon transition is at the heart of our business strategy. We focus on growth in the materials that enable the transition, decarbonising our operations and partnering with our customers to decarbonise our value chains. Link to executive remuneration Climate change is included in our ESG metrics for executive remuneration with a weighting of 5% of the short-term incentive plan (see pages 121-122). In 2022, we approved or delivered abatement projects towards our 2025 target that would contribute 0.29Mt CO2 of abatement compared to an abatement target of 0.8Mt that year. Our performance in 2022 In 2022, our Scope 1 and 2 emissions were 30.3Mt CO2e, 7% below our 2018 baseline. This reduction is primarily the result of switching to renewable power at Kennecott and Escondida in prior years, as well as lower than planned production from our Kitimat and Boyne aluminium smelters in 2022. We did not advance the actual 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 delays, and project readiness. Forward plan We announced ambitious climate targets in 2021 and aim to reduce emissions from our operations by 15% by 2025 and by 50% by 2030. We are committed to reaching net zero emissions by 2050. In 2022, we established six abatement programmes, with dedicated people, to focus on the decarbonisation challenges that cut across our product groups: repowering our Pacific Aluminium Operations, renewables, ELYSISTM, alumina process heat, minerals processing and diesel transition. We are building capability and gaining a deeper understanding of our decarbonisation challenge and are better placed to deliver the structural change needed to achieve our 2030 target. Our progress and plans to meet these targets are summarised in the Climate Action Plan in our 2022 Climate Change Report, which can be found at riotinto.com/climatereport. 1. The 2018 figure is the baseline for our 2025 and 2030 targets and is adjusted to include emissions from acquisitions and exclude emissions from divestments. Actual emissions in 2018 were 33.7 MtCO2e. 2. Baseline reset with definition for 2020 to 2021 gender diversity. 3. In 2020, we updated our definition of our total workforce to include those employees who were unavailable for work (eg on parental leave) and temporary contractors. Note: less than 1% of the workforce gender is undeclared. 4. 1.37 percentage points rounded to 1.4 percentage points. Alignment to our four objectives and associated risks – Best operator – Impeccable ESG credentials – Excel in development – Social licence For more information see page 79. Gender diversity representation of women within our workforce Definition Includes our total workforce based on managed operations (excludes the Group’s share of non-managed operations and joint ventures)3. Relevance to strategy Inclusion and diversity are imperative for the sustainable success of the business. Our sustained performance and growth rely on having workforce diversity that is representative of the communities in which we operate and having a workplace where people are valued for who they are and encouraged to contribute to their full potential. Link to executive remuneration In 2022, our target was to increase the proportion of women in our workforce by 2 percentage points. This target is included in our ESG metrics for executive remuneration, with a weighting of 5% of the short-term incentive plan. For more information, see pages 121-122. Our performance in 2022 In 2022, we increased our representation of women at Rio Tinto by 1.4 percentage points4 from 21.6% to 22.9%. This falls short of our 2 percentage points target. The increases were distributed across all levels of the organisation with senior leaders increasing from 27.4% to 28.3%, and operations and general support increasing by 1.1 percentage points to 16.2%. Forward plan Our aspiration to increase the proportion of women in our workforce by 2 percentage points year-on-year will continue in 2023. The implementation of the Everyday Respect Report recommendations remain our priority and we are confident that this will improve both the attraction and retention of women and other diverse groups to Rio Tinto. For more information about the Everyday Respect initiative, visit riotinto.com/everydayrespect. Alignment to our four objectives and associated risks – Best operator – Impeccable ESG credentials – Social licence For more information see page 79.
Chief Financial Officer’s statement "We will continue to invest consistently through the cycle, balancing near-term returns to shareholders with reinvestment for growth and de-risking future cash flows." Solid financial results Our 2022 financial results were solid, set against a context of record prices and results in 2021. While the business remained resilient, cyclical cost inflation accelerated, leading to pressure on margins. We experienced cost increases as a result of COVID-19, the commodity cycle and broad-based market inflation. Our focus has been to remain disciplined, leading to net cash generated from operating activities of $16.1 billion, underlying earnings of $13.3 billion and profit after tax attributable to owners of Rio Tinto of $12.4 billion. We maintained our financial strength, ending the year with net debt of $4.2 billion, compared with a net cash position of $1.6 billion at the end of 2021, with the movement reflecting, in part, our acquisitions of the Turquoise Hill Resources (TRQ) minorities and the Rincon Lithium Project in Argentina. This balance sheet strength enables us to run our business consistently and maintain investment, regardless of where we are in the cycle. We do not have a net debt target, but have a principles-based approach to anchor the balance sheet around a single A credit rating. Disciplined investing for growth and decarbonisation We will continue to invest consistently through the cycle, balancing near-term returns to shareholders with reinvestment for growth and de-risking future cash flows. Essential capital remains our priority for capital allocation. It includes sustaining capital to ensure the integrity of our assets, high-returning replacement projects and decarbonisation investment. This is followed by ordinary dividends within our well-established returns policy. We then test investment in compelling growth projects against debt management and additional cash returns to shareholders. In 2022, we made some significant investments in growth with the $0.8 billion acquisition of Rincon and the $3.1 billion purchase of non-controlling interests in TRQ, giving us a 66% shareholding in the Oyu Tolgoi copper-gold mine, our largest growth project. Our exploration and evaluation spend also gathered momentum at $0.9 billion, with greenfield exploration mainly focused on copper and evaluation prioritised on those projects where we expect near-term investment decisions. Capital expenditure decreased by 9% to $6.8 billion, reflecting a stronger US dollar and the successful commissioning of our Pilbara iron ore replacement projects in Western Australia. We expect a disciplined increase in capital expenditure over the coming years as our growth projects accelerate and decarbonisation projects advance. This is critical to ensure we have the right portfolio to keep creating value for decades to come, to benefit from the energy transition. 60% average payout on the ordinary dividend over the past seven years Our shareholder returns policy dates back to 2016. We have committed to returning 40% to 60% of underlying earnings on average through the cycle, with additional returns in periods of strong earnings and cash generation. Over the past seven years, we have paid out at the top end of the range, at 60% for the ordinary dividend, in each year. We have remained very consistent with our shareholder returns policy, with the payout ratio giving us some flexibility with regard to the macro-economic environment. It remains a core part of our equity story, which we see as paramount for maintaining discipline. Our financial strength means that we can reinvest for growth, accelerate our decarbonisation and continue to pay attractive dividends through the cycle. For 2022, we are returning 60% of underlying earnings to shareholders, which equates to a full-year ordinary dividend of 492 US cents per share, or $8.0 billion. Energy transition drives additional long-term value We foresee a significant uplift in new demand from the energy transition – adding as much as 25% over and above traditional sources of demand on a copper equivalent basis across our key products by 2035. Decarbonisation is therefore positive for our industry. Given that the world will need more aluminium, more copper, more high-grade iron ore and more lithium, this is where we are focusing our growth investments. Net cash generated from operating activities $16.1 billion (2021: $25.3 billion) Profit after tax attributable to owners of Rio Tinto (net earnings) $12.4 billion (2021: $21.1 billion) Underlying earnings $13.3 billion (2021: $21.4 billion) However, we will only invest in quality assets which give robust returns under a range of economic, geopolitical and carbon scenarios, creating a resilient portfolio with significant upside to the energy transition. We will continue to allocate our capital with great discipline and remain committed to attractive shareholder returns, underpinned by our resilient cash flows and the strength of our balance sheet. Peter Cunningham Chief Financial Officer 22 February 2023 Annual Report 2022 | riotinto.com 2525Annual Report on Form 20-F 2022 | riotinto.com Strategic report
Financial review Key financial highlights In addition to IFRS 1 measures, management uses non-GAAP 2 measures internally to assess performance. Full reconciliations are provided on page 163 and pages 273 to 278. These measures are highlighted with the symbol • At year end 2022 2021 Change Net cash generated from operating activities (US$ millions) 16,134 25,345 (36) % Purchases of property, plant and equipment and intangible assets (US$ millions) 6,750 7,384 (9) % Free cash flow 3 (US$ millions) • 9,010 17,664 (49) % Consolidated sales revenue (US$ millions) 55,554 63,495 (13) % Underlying EBITDA 3 (US$ millions) • 26,272 37,720 (30) % Profit after tax attributable to owners of Rio Tinto (net earnings) (US$ millions) 12,420 21,094 (41) % Underlying earnings per share (EPS) 3 (US cents) • 819.6 1,321.1 (38) % Ordinary dividend per share (US cents) 492.0 793.0 (38) % Special dividend per share (US cents) — 247.0 (100) % Total dividend per share (US cents) 492.0 1,040.0 (53) % Net (debt)/cash 3 (US$ millions) • (4,188) 1,576 Underlying return on capital employed (ROCE) 3 • 25% 44% Solid financial results in 2022, set against a context of record prices in 2021 – $16.1 billion net cash generated from operating activities, 36% lower than 2021. This included items of a non-recurring nature which were not representative of the underlying strength of the performance of the business, which, in aggregate, reduced operating cash flow by around $2 billion. Free cash flow 3 of $9.0 billion included capital expenditure of $6.8 billion, which decreased 9% as we commissioned our current programme of Pilbara replacement projects, notably Gudai-Darri. – $12.4 billion of net earnings, 41% lower than 2021, reflected the movement in commodity prices, the impact of higher energy and raw materials prices on our operations, and higher rates of inflation on our operating costs and closure liabilities. Effective tax rate on net earnings of 30.9% compared with 27.7% in 2021, with the increase being primarily due to the $0.8 billion write down of deferred tax assets in the US. – $26.3 billion underlying EBITDA 3 was 30% below 2021, with an underlying EBITDA margin 3 of 45%. – $13.3 billion underlying earnings 3 (underlying EPS 3 of 819.6 US cents) were 38% below 2021. – $4.2 billion of net debt 3 at year end, compared with net cash 3 of $1.6 billion at the start of the year, primarily reflected the free cash flow 3 of $9.0 billion, offset by $11.7 billion of cash returns to shareholders and $3.8 billion for the acquisitions of Turquoise Hill Resources (TRQ) 4 and Rincon Lithium Project. – $8.0 billion full-year dividend, equivalent to 492 US cents per share. This represents 60% of underlying earnings, in line with our shareholder returns policy. Resilient cash flow from operations Year ended 31 December 2022 Year ended 31 December 2021 US$m US$m Net cash generated from operating activities 16,134 25,345 Purchases of property, plant and equipment and intangible assets (6,750) (7,384) Sales of property, plant and equipment — 61 Lease principal payments (374) (358) Free cash flow 3 9,010 17,664 Disposals 80 4 Cash receipt from sale of Cortez royalty 525 — Dividends paid to equity shareholders (11,727) (15,357) Acquisitions relating to Rincon and McEwen Copper (850) — Purchase of the minority interest in Turquoise Hill Resources Ltd 4 (2,961) — Other 159 (71) (Decrease)/Increase in net (debt)/cash 3 (5,764) 2,240 1. International Financial Reporting Standards 2. Generally Accepted Accounting Principles 3. This financial performance indicator is a non-IFRS (as defined below) alternative performance measure (APM). It is used internally by management to assess the performance of the business and is therefore considered relevant to readers of this document. It is presented here to give more clarity around the underlying business performance of the Group’s operations. APMs are reconciled to directly comparable IFRS financial measures on pages 273 to 278. Our financial results are prepared in accordance with IFRS — see page 148 for further information. 4. Total consideration of $3,139 million for the minority interest in TRQ excludes transaction costs of $74 million. In 2022, we paid $2,928 million to shareholders and $33 million of transaction costs. In 2023, we expect to pay the remaining $41 million of transaction costs and approximately $211 million to dissenting shareholders, depending on the outcome and timing of dissent proceedings. 26 Annual Report 2022 | riotinto.comAnnual Report on Form 20-F 2022 | riotinto.com26
– $16.1 billion in net cash generated from operating activities, 36% lower than 2021, was primarily driven by price movements for our major commodities and a $0.5 billion rise in working capital, primarily due to elevated prices for raw materials in aluminium inventory. We also incurred some items of a non-recurring nature which were not representative of the underlying strength of the performance of the business. These comprised; higher tax payments (relative to profit) in 2022 as a result of a $1.1 billion (A$1.5 billion) final payment to the Australian Taxation Office (ATO) in respect of 2021 profits; $0.4 billion (A$0.6 billion) settlement with the ATO in respect of 12 historical years; and $0.4 billion of cash losses from currency hedges on our external dividends. At the end of 2022, we had no material outstanding tax payable on Australian profits. – We made some significant investments in growth with the $0.8 billion acquisition of Rincon and the $3.0 billion 2 purchase of non- controlling interests in TRQ (including transaction costs), giving us a 66% shareholding in the Oyu Tolgoi copper-gold mine, our largest growth project. Our capital expenditure of $6.8 billion encompassed $0.6 billion of growth capital, $2.2 billion of replacement capital, $3.9 billion of sustaining capital and $0.1 billion of decarbonisation spend. We funded our capital expenditure from operating activities and expect to continue funding our capital programme from internal sources, except for the Oyu Tolgoi underground development, which is project-financed. – $11.7 billion of dividends paid in 2022, being the 2021 final ordinary and special dividends paid in April 2022 ($7.6 billion) and the 2022 interim ordinary dividend paid in September ($4.1 billion), including foreign exchange impacts. – The above movements, together with disposals including the $525 million of cash received from the sale of the gross production royalty at the Cortez Complex in Nevada, USA (Cortez royalty), resulted in net cash 1 decreasing by $5.8 billion in 2022, and gave rise to net debt 1 of $4.2 billion at 31 December 2022. Underlying EBITDA and underlying earnings by product group Underlying EBITDA Underlying earnings 2022 2021 Change 2022 2021 Change Year ended 31 December US$m US$m % US$m US$m % Iron Ore 18,612 27,592 (33) % 11,182 17,323 (35) % Aluminium 3,672 4,382 (16) % 1,472 2,468 (40) % Copper 2,376 3,969 (40) % 521 1,579 (67) % Minerals 2,419 2,603 (7) % 849 888 (4) % Reportable segment total 27,079 38,546 (30) % 14,024 22,258 (37) % Other operations (16) (28) (43) % (340) (84) 305 % Inter-segment transactions 24 42 (43) % 26 19 37 % Central pension costs, share-based payments, insurance and derivatives 377 110 243 % 374 133 181 % Restructuring, project and one-off costs (173) (80) 116 % (87) (51) 71 % Other central costs (766) (613) 25 % (651) (585) 11 % Central exploration and evaluation (253) (257) (2) % (209) (215) (3) % Net interest 138 (95) (245) % Total 26,272 37,720 (30) % 13,275 21,380 (38) % Underlying EBITDA and underlying earnings are APMs used by management to assess the performance of the business, and provide additional information which investors may find useful. APMs are reconciled to directly comparable IFRS financial measures on pages 273 to 278. Continuing to invest in greenfield exploration We have a strong portfolio of greenfield exploration projects in early exploration and studies stages, with activity in 18 countries across seven commodities. This is reflected in our pre-tax central spend of $253 million in 2022. The bulk of this exploration expenditure was focused on copper projects in Australia, Colombia, Namibia, Peru, the United States and Zambia; diamonds in Angola; and heavy mineral sands projects in Australia and South Africa. Exploration is ongoing for nickel in Canada and Finland and in lithium across all regions, with opportunities emerging in the United States and Africa. Mine- lease exploration continued at Rio Tinto managed businesses, including Pilbara Iron in Australia, Diavik in Canada and Cape York bauxite operations in Australia. Commentary on financial results To provide additional insight into the performance of our business, we report underlying EBITDA and underlying earnings. The principal factors explaining the movements in underlying EBITDA are set out in this table. US$m 2021 underlying EBITDA 37,720 Prices (8,101) Exchange rates 801 Volumes and mix 606 General inflation (1,478) Energy (1,169) Operating cash unit costs (2,202) Higher exploration and evaluation expenditure (171) Non-cash costs/other 266 2022 underlying EBITDA 26,272 1. This financial performance indicator is a non-IFRS (as defined below) alternative performance measure (APM). It is used internally by management to assess the performance of the business and is therefore considered relevant to readers of this document. It is presented here to give more clarity around the underlying business performance of the Group’s operations. APMs are reconciled to directly comparable IFRS financial measures on pages 273 to 278. Our financial results are prepared in accordance with IFRS — see page 148 for further information. 2. Total consideration of $3,139 million for the minority interest in TRQ excludes transaction costs of $74 million. In 2022, we paid $2,928 million to shareholders and $33 million of transaction costs. In 2023, we expect to pay the remaining $41 million of transaction costs and approximately $211 million to dissenting shareholders, depending on the outcome and timing of dissent proceedings. Annual Report 2022 | riotinto.com 2727Annual Report on Form 20-F 2022 | riotinto.com Strategic report
Solid financial results impacted by significant movements in commodity prices We saw significant movement in pricing for our commodities, amidst growing recession fears and a decline in consumer confidence. Movements in commodity prices resulted in a $8,101 million decline in underlying EBITDA overall compared with 2021. This was primarily from lower iron ore prices ($9,155 million) and lower London Metal Exchange (LME) copper prices and a negative provisional pricing impact ($733 million). This was partly offset by a price uplift for our Aluminium business ($886 million), driven by a first-half rise in LME prices, improved product premiums and higher alumina pricing, which fell away sharply in the second half. We have included a table of prices and exchange rates on page 344. The monthly average Platts index for 62% iron fines converted to a Free on Board (FOB) basis was 25% lower on average compared with 2021. The average LME price for copper was 6% lower, while the average LME aluminium price was 9% higher, compared with 2021. The gold price was flat compared with 2021. The midwest premium duty paid for aluminium in the US averaged $655 per tonne, 12% higher than in 2021. Weaker local currencies during 2022 Compared with 2021, on average, the US dollar strengthened by 8% against the Australian dollar and by 4% against the Canadian dollar. Currency movements increased underlying EBITDA by $801 million relative to 2021. Improvement in sales volumes and mix Higher sales volumes and changes in product mix across the portfolio increased underlying EBITDA by $606 million compared to 2021. This was mostly attributable to increased iron ore sales from the ramp-up of Gudai-Darri along with higher portside sales in China, and favourable value-added product premiums for our Aluminium business. Impact of rising inflation and significantly higher energy prices Average movements in energy prices compared with 2021 reduced underlying EBITDA by $1,169 million, mainly due to higher diesel prices for our trucks, trains and ships. In addition, rising general price inflation across our global operations resulted in a $1,478 million reduction in underlying EBITDA, including $0.2 billion for the impact of higher than expected inflation on closure provisions (for closed or fully impaired sites and environmental liabilities). Disciplined focus on costs offset some of the market- linked increases We remained focused on cost control throughout the year, in particular maintaining discipline on fixed costs. However, a rise in our operating cash unit costs reduced underlying EBITDA by $2,202 million (on a unit cost basis) compared with 2021. This mainly reflected cyclical cost pressures from higher market-linked prices for raw materials, in particular in our Aluminium business. We also experienced fixed cost inefficiencies from lower volumes at our Pacific alumina refineries and at the Boyne aluminium smelter due to production disruptions. In addition, we increased resourcing in our iron ore business to support the ramp-up at Gudai-Darri and targeted investment in pit health and asset maintenance across the Pilbara. Increasing our global exploration and evaluation activity We increased our exploration and evaluation expenditure by $171 million, or 24%, to $897 million. This was mainly attributable to increased activity at the Simandou iron ore project in Guinea and the Rincon Lithium Project in Argentina. Non-cash costs/other Movements in non-cash costs, one-off and other items increased underlying EBITDA by $266 million compared with 2021. This mainly reflected the acquisition of the remaining 40% of Diavik in November 2021 (+$163 million), lower incremental COVID-19 costs (+$123 million), gain on asset sale at Kennecott (+$133 million) and lower charges to the income statement on updates to closure cost estimates relating to closed and legacy sites (+$166 million). This was partially offset by reduced capacity at the Kitimat aluminium smelter (-$329 million) as ramp-up activities progressed in 2022 following the strike which commenced in July 2021. Net earnings The principal factors explaining the movements in underlying earnings and net earnings are set out below. US$m 2021 net earnings 21,094 Total changes in underlying EBITDA (11,448) Increase in depreciation and amortisation (pre-tax) in underlying earnings (319) Increase in interest and finance items (pre-tax) in underlying earnings (1,112) Decrease in tax on underlying earnings 3,949 Decrease in underlying earnings attributable to outside interests 825 Total changes in underlying earnings (8,105) Changes in exclusions from underlying earnings: Write-off of Federal deferred tax assets in the United States (820) Movement in exchange differences and gains/losses on derivatives (683) Gain recognised by Kitimat relating to LNG Canada's project (230) Loss on disposal of interest in subsidiary (105) Movement in impairment charges net of reversals 145 Movement in closure estimates (non-operating and fully impaired sites) 793 Gain on sale of Cortez royalty 331 2022 net earnings 12,420 28 Annual Report 2022 | riotinto.comAnnual Report on Form 20-F 2022 | riotinto.com28 Financial review continued
Depreciation and amortisation, net interest and finance items, tax and non-controlling interests The depreciation and amortisation charge was $319 million higher than 2021, mainly due to an increase in capitalised closure costs in 2021 at a number of our Aluminium sites. Our capital base was also higher in Iron Ore, Copper and Minerals as a result of our investment activities. This was partially offset by a stronger US dollar against the Australian dollar. Interest and finance items (pre-tax) were higher mainly as a result of a $1,101 million increase in amortisation of discount on provisions, as higher inflation had an impact on the Group's closure and restoration/ environmental liabilities. The amortisation charge of $1,517 million (2021: $415 million) incorporates an estimate of inflation at the start of each six-month reporting period. At the end of each half year we update the underlying cash flows for the latest estimate of experienced inflation for the current financial year and record this as “changes to existing provisions”. For operating sites this adjustment usually results in a corresponding adjustment to Property, plant and equipment, and for closed and fully impaired sites the adjustment is charged or credited to the Income statement. These income statement amounts are included within underlying earnings except for the re-measurement of provisions for legacy sites that were never operated by Rio Tinto. The 2022 effective corporate income tax rate on pre-tax earnings, excluding equity accounted units, was 30.9%, compared with 27.7% in 2021. The effective tax rate on pre-tax earnings in Australia was 31.7% in 2022, compared with 30.7% in 2021. We reached agreement with the Australian Taxation Office (ATO) on all tax matters in dispute. As part of this agreement, in August we paid the ATO additional tax of A$613 million for the period from 2010 to 2021. Over this 12-year period, we paid nearly A$80 billion in tax and royalties in Australia. Items excluded from underlying earnings The Inflation Reduction Act of 2022 in the United States may give rise to investment credits on some of our existing projects, with longer dated projects potentially becoming more favourable. However, it also includes a new Corporate Alternative Minimum Tax regime, which has led to the Group reviewing the carrying value of US Federal deferred tax balances. The resulting $820 million write down of Federal deferred tax assets has been excluded from underlying earnings on the grounds of materiality. In 2022, we recognised an exchange and derivative loss of $137 million. This includes losses of $373 million on revaluation of certain derivatives which do not qualify for hedge accounting. These include currency hedges relating to our external dividends, and exchange losses of $262 million on US dollar debt in non-US dollar functional currency Group companies, partly offset by $478 million of exchange gains on intragroup balances. These losses compared with a 2021 gain of $546 million, giving rise to an unfavourable year-on-year movement of $683 million. The exchange gains are largely offset by currency translation losses recognised in equity. The quantum of US dollar debt is largely unaffected and we will repay it from US dollar sales receipts. During 2022, LNG Canada elected to terminate their option to purchase additional land at Kitimat, Canada. This resulted in a $106 million gain which includes the release of deferred income and receipt of a cancellation fee payment. During 2021, we recognised a $336 million gain on recognition of a new wharf at Kitimat that was built and paid for by LNG Canada. These gains have been excluded from underlying earnings consistent with prior years, as they are part of a series of material transactions unrelated to the core business. Impairment charges, net of reversals, decreased by $145 million compared with 2021. In 2022, we impaired the remaining full value of the Boyne Smelter in Queensland, Australia, as a result of reduced capacity and the high cost of energy from the coal-fired power station impacting economic performance. In 2022, we also completed the sale of the Roughrider uranium undeveloped project in Saskatchewan, Canada, which resulted in a reversal of previous impairments. There is a detailed explanation of the impairment process on pages 165 to 168. In 2022, we recognised $178 million in closure costs representing adjustments to the closure estimates relating to legacy sites where the disturbance preceded ownership by Rio Tinto, including inflationary increases to provisions for these sites in excess of the unwind of discount. This was $793 million lower than 2021 closure charges, which related to Energy Resources of Australia (ERA), Gove refinery and Diavik closure provision increases, and further increases at a number of the Group's legacy sites where the disturbance preceded our ownership. In 2022, we completed the $525 million sale of a gold royalty which was retained following the disposal of the Cortez mine in 2008. The carrying value of the royalty at 31 December 2021 was $88 million, resulting in a post-tax gain of $331 million. This has been excluded from underlying earnings on the grounds of materiality. Profit Net earnings and underlying earnings refer to amounts attributable to the owners of Rio Tinto. The net profit attributable to the owners of Rio Tinto in 2022 was $12.4 billion (2021: $21.1 billion). We recorded a profit after tax in 2022 of $13.1 billion (2021: $22.6 billion) of which a profit of $0.7 billion (2021: $1.5 billion) was attributable to non-controlling interests. Net earnings and underlying earnings The differences between underlying earnings and net earnings are set out in this table (all numbers are after tax and exclude non-controlling interests). Year ended 31 December 2022 Year ended 31 December 2021 US$m US$m Underlying earnings 13,275 21,380 Items excluded from underlying earnings Impairment charges net of reversals (52) (197) Gains recognised by Kitimat relating to LNG Canada's project 106 336 Loss on disposal of interest in subsidiary (105) — Foreign exchange and derivative gains on net debt and intragroup balances and derivatives not qualifying for hedge accounting (137) 546 Change in closure estimates (non-operating and fully impaired sites) (178) (971) Gain on sale of Cortez royalty 331 — Write-off of Federal deferred tax assets in the United States (820) — Net earnings 12,420 21,094 On pages 274 to 275 there is a detailed reconciliation from underlying earnings to net earnings, including pre-tax amounts and additional explanatory notes. The differences between Profit after tax and underlying EBITDA are set out in the table on page 163. Annual Report 2022 | riotinto.com 2929Annual Report on Form 20-F 2022 | riotinto.com Strategic report
Balance sheet Net cash 1 reduced by $5.8 billion in 2022, resulting in a net debt 1 position of $4.2 billion at 31 December 2022. This reflected $11.7 billion returned to shareholders in the year, $3.0 billion 2 acquisition of the remaining non-controlling interest of TRQ and $0.8 billion acquisition of the Rincon Lithium Project, partially offset by $9.0 billion of free cash flow and the $0.5 billion received from the sale of the Cortez royalty. Our net gearing ratio 1 (net debt/ (cash) to total capital) was 7% at 31 December 2022 (31 December 2021: (3)%), see page 278. Our total financing liabilities excluding net debt derivatives at 31 December 2022 (see page 191) were $12.3 billion (31 December 2021: $13.5 billion) and the weighted average maturity was around 11 years. At 31 December 2022, approximately 77% of these liabilities were at floating interest rates (85% excluding leases). The maximum amount within non-current borrowings maturing in any one calendar year is $1.5 billion, which matures in 2024. We had $8.8 billion in cash and cash equivalents plus other short-term cash investments at 31 December 2022 (31 December 2021: $15.2 billion). Provision for closure costs At 31 December 2022, provisions for close-down and restoration costs and environmental clean-up obligations were $15.8 billion (31 December 2021: $14.5 billion). The principal movements during the year were the result of a remeasurement of underlying cash flows, including the effect of inflation. This was recorded as an increase to mining properties for current operating sites ($0.5 billion) and as a charge to profit for legacy sites ($0.5 billion). Also contributing to the increase in the provision was amortisation of discount ($1.5 billion) which includes the effect of higher inflation in the year. These increases were partly offset by utilisation of the provision through spend (-$0.6 billion) and a weaker Australian dollar, Canadian dollar and South African rand against the US dollar (-$0.7 billion). Of the $15.8 billion in provisions, $11.6 billion relates to operating sites and $4.2 billion is for legacy sites. Remaining lives of operations and infrastructure range from one to over 50 years with an average for all sites, weighted by present closure obligation, of around 15 years (2021: 16 years). The provisions are based on risk-adjusted real cash flows using a real- rate discount rate of 1.5% to reflect obligations at the present value of cash flows on 31 December 2022 terms. In 2023, we expect to utilise around $0.8 billion of the provisions as we advance our closure activities at Argyle, ERA, Gove alumina refinery and legacy sites. Our shareholder returns policy The Board is committed to maintaining an appropriate balance between cash returns to shareholders and investment in the business, with the intention of maximising long-term shareholder value. At the end of each financial period, the Board determines an appropriate total level of ordinary dividend per share. This takes into account the results for the financial year, the outlook for our major commodities, the Board’s view of the long-term growth prospects of the business and the company’s objective of maintaining a strong balance sheet. The intention is that the balance between the interim and final dividend be weighted to the final dividend. The Board expects total cash returns to shareholders over the longer term to be in a range of 40% to 60% of underlying earnings in aggregate through the cycle. Acknowledging the cyclical nature of the industry, it is the Board’s intention to supplement the ordinary dividend with additional returns to shareholders in periods of strong earnings and cash generation. 60% payout ratio on the ordinary dividend 2022 US$ bn 2021 US$ bn Ordinary dividend Interim 4.3 6.1 Final 3.7 6.7 Full-year ordinary dividend 8.0 12.8 Payout ratio on ordinary dividend 60 % 60 % Additional returns Special dividend announced in July 2021, paid in September 2021 n/a 3.0 Special dividend announced in February 2022, paid in April 2022 n/a 1.0 Total cash returns to shareholders declared* 8.0 16.8 Combined total as % of underlying earnings 60 % 79 % * Based on weighted average number of shares and declared dividends per share for the respective periods and excluding foreign exchange impacts on payment. We determine dividends in US dollars. We declare and pay Rio Tinto plc dividends in pounds sterling and Rio Tinto Limited dividends in Australian dollars. The 2022 final dividend has been converted at exchange rates applicable on 21 February 2023 (the latest practicable date before the dividend was declared). American Depositary Receipt (ADR) holders receive dividends at the declared rate in US dollars. 1. This financial performance indicator is a non-IFRS (as defined below) alternative performance measure (APM). It is used internally by management to assess the performance of the business and is therefore considered relevant to readers of this document. It is presented here to give more clarity around the underlying business performance of the Group’s operations. APMs are reconciled to directly comparable IFRS financial measures on pages 273 to 278. Our financial results are prepared in accordance with IFRS — see page 148 for further information. 2. Total consideration of $3,139 million for the minority interest in TRQ excludes transaction costs of $74 million. In 2022, we paid $2,928 million to shareholders and $33 million of transaction costs. In 2023, we expect to pay the remaining $41 million of transaction costs and approximately $211 million to dissenting shareholders, depending on the outcome and timing of dissent proceedings. 30 Annual Report 2022 | riotinto.comAnnual Report on Form 20-F 2022 | riotinto.com30
Ordinary dividend per share declared 2022 2021 Rio Tinto Group Interim (US cents) 267.00 376.00 Final (US cents) 225.00 417.00 Full-year (US cents) 492.00 793.00 Rio Tinto plc Interim (UK pence) 221.63 270.84 Final (UK pence) 306.72 Full-year (UK pence) 406.98 577.56 Rio Tinto Limited Interim (Australian cents) 383.70 509.42 Final (Australian cents) 577.04 Full-year (Australian cents) 710.19 1,086.46 Special dividend per share declared 2022 2021 Rio Tinto Group Interim (US cents) n/a 185.00 Final (US cents) n/a 62.00 Full-year (US cents) n/a 247.00 Rio Tinto plc Interim (UK pence) n/a 133.26 Final (UK pence) n/a 45.60 Full-year (UK pence) n/a 178.86 Rio Tinto Limited Interim (Australian cents) n/a 250.64 Final (Australian cents) n/a 85.80 Full-year (Australian cents) n/a 336.44 The 2022 final ordinary dividend to be paid to our Rio Tinto Limited shareholders will be fully franked. The Board expects Rio Tinto Limited to be in a position to pay fully franked dividends for the foreseeable future. On 20 April 2023, we will pay the 2022 final ordinary dividend to holders of ordinary shares and holders of ADRs on the register at the close of business on 10 March 2023 (record date). The ex-dividend date is 9 March 2023. Rio Tinto plc shareholders may choose to receive their dividend in Australian dollars or New Zealand dollars, and Rio Tinto Limited shareholders may choose to receive theirs in pounds sterling or New Zealand dollars. Currency conversions will be based on the pound sterling, Australian dollar and New Zealand dollar exchange rates five business days before the dividend payment date. Rio Tinto plc and Rio Tinto Limited shareholders must register their currency elections by 28 March 2023. We will operate our Dividend Reinvestment Plans for the 2022 final dividend (visit riotinto.com for details). Rio Tinto plc and Rio Tinto Limited shareholders’ election notice for the Dividend Reinvestment Plans must be received by 28 March 2023. Purchases under the Dividend Reinvestment Plan are made on or as soon as practicable after the dividend payment date and at prevailing market prices. There is no discount available. Our payout ratio has averaged 72% over the past seven years Annual Report 2022 | riotinto.com 31 185.35 326.49 The Financial review and Business review for the year ended 31 December 2020 can be found on pages 32 to 37 and pages 42 to 57, respectively, of our Form 20-F filed with the United States Securities and Exchange Commission on 2 March 2021. 31Annual Report on Form 20-F 2022 | riotinto.com Strategic report 2017 60% 83% 2018 60% 71% 2019 60% 70% 2020 60% 72% 2021 60% 79% 2016 60% 70% 2022 60% Ordinary dividend Additional return r payout ratio has veraged XX% over th past s ven years
Portfolio management Capital projects Approved projects (Rio Tinto 100% owned unless otherwise stated) Total approved capital cost (100% unless otherwise stated) Status/Milestones Completed in 2022 Investment in Gudai-Darri, a new production hub in the Pilbara region of Western Australia. The investment incorporates a processing plant and infrastructure including a 166-kilometre rail line connecting the mine to our existing network. $3.1bn We delivered first ore in June 2022. Production from the mine ramped up in the second half of the year and we expect Gudai-Darri to reach its nameplate capacity of 43 million tonne per year on a sustained basis during 2023. The mine has an expected life of more than 40 years. Investment in the Robe River Joint Venture (West Angelas C and D and Mesa B, C and H at Robe Valley) in the Pilbara to sustain production capacity. $1.0bn (Rio Tinto share) In the third quarter of 2022, Mesa A rectification works were successfully completed, with the plant operating at design rates. Final train load out tie- in works at Mesa J were also completed, with first ore achieved. Investment in a second tunnel at the 1000MW Kemano hydropower facility at Kitimat, British Columbia, Canada, which will ensure the long-term reliability of the power supply to the Kitimat smelter. $0.8bn The new 16-kilometre tunnel produced its first megawatt of electricity in July 2022 after construction was completed in May 2022. Ongoing Iron Ore Investment in the Western Range iron ore project, a joint venture between Rio Tinto (54%) and China Baowu Steel Group Co. Ltd (46%) in the Pilbara to sustain production of the Pilbara Blend from Rio Tinto's existing Paraburdoo hub. $1.3bn (Rio Tinto share) 1 Announced in September 2022, the mine will have a production capacity of 25 million tonnes per year. The project includes construction of a primary crusher and an 18-kilometre conveyor connection to the Paraburdoo processing plant. Early works construction commenced in 2022 and major contracts have been awarded by Rio Tinto. First production is anticipated in 2025. Copper Phase two of the south wall pushback to extend mine life at Kennecott by a further six years. A $108 million investment in underground characterisation studies is ongoing, with $55 million in development capital approved to commence underground mining. $1.5bn Approved in December 2019, the investment will further extend strip waste rock mining and support additional infrastructure development. This will allow mining to continue into a new area of the orebody between 2026 and 2032. Development of the Oyu Tolgoi underground copper/gold mine in Mongolia (Rio Tinto 66%), which is expected to produce (from the open pit and underground) an average of ~500,000 tonnes 2 of copper per year from 2028 to 2036 and an average of ~350,000 tonnes 2 of copper per year for a further five years, compared with 130,000 tonnes in 2022 (open pit). $7.06bn 3 The project was originally approved in May 2016 for $5.3 billion, with an additional $1.45 billion approved by the Rio Tinto Board in December 2020, following completion of the Definitive Estimate. By the end of 2022, a total of 19 drawbells had been fired. Progression accelerated as a result of improvement initiatives implemented by the Oyu Tolgoi teams, bringing projected first sustainable production from Panel 0 forward to the first quarter of 2023. This followed the comprehensive agreement between the Oyu Tolgoi partners announced in January 2022. Minerals Development of the Zulti South project at Richards Bay Minerals (RBM) in South Africa (Rio Tinto 74%). $0.5bn Approved in April 2019 to underpin RBM’s supply of zircon and ilmenite over the life of the mine. The project remains on full suspension. Development of the greenfield Jadar lithium-borates project in Serbia. The development will include an underground mine with associated infrastructure and equipment, including electric haul trucks, as well as a beneficiation chemical processing plant. $2.4bn The Board committed the funding in July 2021, subject to receiving all relevant approvals, permits and licences. We are focused on consultation with all stakeholders to explore all options following the Government of Serbia's cancellation of the Spatial Plan in January 2022. 1. Rio Tinto share includes 100% of funding costs for Paraburdoo plant upgrades. 2. The 500ktpa target (stated as recovered metal) for the Oyu Tolgoi underground and open pit mines is underpinned 21% by Proved Ore Reserves and 79% by Probable Ore Reserves for the years 2028 to 2036. The 350ktpa production target for the following five years is underpinned 22% by Proved Ore Reserves and 78% by Probable Ore Reserves. These production targets have been scheduled from current mine designs by Competent Persons in accordance with the requirements of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves, 2012 Edition (the JORC code). 3. A cost and schedule reforecast was performed in June 2022 and estimates that $7.06 billion is required to complete the Hugo North 1 project (an increase of $0.3 billion beyond the 2020 Definitive Estimate). The 2022 Reforecast excludes impacts of COVID-19 restrictions arising after June 2022. The 2022 reforecast remains subject to Oyu Tolgoi Board approval. 32 Annual Report 2022 | riotinto.comAnnual Report on Form 20-F 2022 | riotinto.com32
Future options Iron Ore: Pilbara brownfields Over the medium term, our Pilbara system capacity remains between 345 and 360 million tonnes per year. Meeting this range, and the planned product mix, will require the approval and delivery of the next tranche of replacement mines. In addition to Western Range (Greater Paraburdoo), which has commenced early works construction, other key projects to be delivered over the next five years include Hope Downs 1 Sustaining (Hope Downs 2 and Bedded Hilltop), West Angelas Sustaining, Greater Nammuldi Sustaining and Brockman 4 Sustaining (Brockman Syncline 1). We continue to work closely with local communities, Traditional Owners and government to progress approvals for the new mining projects. Iron Ore: Rhodes Ridge In October, Rio Tinto (50%) and Wright Prospecting Pty Ltd (50%) agreed to modernise the joint venture covering the Rhodes Ridge project in the Eastern Pilbara, providing a pathway for development utilising Rio Tinto’s rail, port and power infrastructure. Rhodes Ridge contains 5.8 billion tonnes of high grade Mineral Resources at an average grade of 62.3% Fe. The project’s total resource, 6.7 billion tonnes at an average grade of 61.6% Fe, represents approximately one third of our existing Resource base in the Pilbara. 1 A resource-drilling programme is currently underway to support future project studies. The participants have commenced an Order of Magnitude study, conducted by Rio Tinto, which will consider the development of an operation before the end of the decade with initial plant capacity of up to 40 million tonnes annually, subject to the receipt of relevant approvals. We expect to complete the Rhodes Ridge Order of Magnitude study in 2023. Iron Ore: Simandou The Simandou iron ore project in Guinea 2 contains one of the world’s largest known undeveloped high-grade low-impurity iron ore deposits, demand for which is increasing as steelmakers look to reduce carbon emissions. Simandou is set to diversify our strong iron ore portfolio, complementing our high-grade Iron Ore Company of Canada products and supporting the long-term attractiveness of our Pilbara Blend™ offering. Negotiations towards the co-development of project infrastructure progressed further with the December signing of a non-binding term sheet between our Simfer joint venture, Baowu, Winning Consortium Simandou (WCS) and the Government of Guinea 3. The term sheet further establishes the co-development principles following the incorporation of La Compagnie du TransGuinéen on 27 July 2022, and is a pivotal next step towards securing the shareholder agreement, cost estimates and regulatory authority approvals necessary to progress the co-development of rail and port facilities. Lithium: Rincon We completed the acquisition of the Rincon Lithium Project in Salta province, Argentina in March 2022. Development of a small starter, battery- grade lithium carbonate plant with a capacity of 3,000 tonnes per year is underway. In July 2022, we approved $140 million of investment and $54 million for early works to support a full-scale operation to be expensed through exploration and evaluation expenditure. Construction activities progressed on phase one camp facilities with rooms for 250 persons completed. Airstrip permits were received and contractors mobilised. First saleable production from the small starter plant is expected in the first half of 2024. Copper: Resolution The Resolution Copper project is a proposed underground copper mine in the Copper Triangle, in Arizona, United States. It has the potential to supply up to 25% of US copper demand. The US Forest Service continued work to progress the Final Environmental Impact Statement and complete actions necessary for the land exchange. We continued to advance partnership discussions with several federally recognised Native American Tribes who are part of the formal consultation process. Copper: Winu In late 2017, we discovered copper-gold mineralisation at the Winu project in the Paterson Province in Western Australia. In 2021, we reported our first Indicated Mineral Resource. The pathway is expected to take longer than originally anticipated and remains subject to regulatory and other required approvals. We continued to strengthen our relationships and advanced agreement making with our host Traditional Owners, the Martu and Nyangumarta groups. Planned drilling, fieldwork and study activities continued, strengthening the development pathway ahead of applications for regulatory and other required approvals. Aluminium: ELYSIS ELYSIS, our joint venture with Alcoa, supported by Apple, the Government of Canada and the Government of Quebec, is developing a breakthrough inert anode technology that eliminates all direct greenhouse gases from the aluminium smelting process. Construction of the first commercial-scale prototype cells is underway at our Alma smelter and is expected to become operational in 2023. ELYSIS aims to have its technology available for installation from 2024 and production of larger volumes of carbon-free aluminium approximately two years later. 1. The Mineral Resource estimates for the Rhodes Ridge Joint Venture (JV) were reported in our 2020 Annual Report released to the Australian Securities Exchange (ASX) on 22 February 2021 (and form part of the Pilbara Mineral Resource estimates reported in our 2021 Annual Report released to the ASX on 24 February 2022). The Competent Persons responsible for reporting these Mineral Resource estimates were Mr P Savory, who is a Fellow of The Australasian Institute of Mining and Metallurgy, and Ms N Brajkovich and Mr C Kyngdon, who are Members of The Australasian Institute of Mining and Metallurgy. We are not aware of any new information or data that materially affects these Mineral Resource estimates and confirm that all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed. The form and context in which the Competent Persons’ findings are presented have not been materially modified from when they were reported. Mineral Resources are quoted in this release on a 100% basis, as dry in-situ tonnes. 2. The Simandou iron ore project operates under the Simfer joint venture where the Government of Guinea holds 15% and Simfer Jersey holds 85%. Simfer Jersey is owned by Rio Tinto (53%) and Chalco Iron Ore Holdings (CIOH) (47%). CIOH is owned by Chinalco (75%), Baowu (20%), China Civil Engineering Construction Corporation (CCECC) (2.5%) and China Harbour Engineering Company (CHEC) (2.5%). This structure has been in place since 2017. 3. This followed notification to Rio Tinto and the Government of Guinea of Baowu’s earlier entry into a term sheet agreement with WCS in respect of an investment into WCS mine (blocks 1 and 2) and infrastructure vehicle – an agreement welcomed by Rio Tinto. Annual Report 2022 | riotinto.com 3333Annual Report on Form 20-F 2022 | riotinto.com Strategic report
Annual Report on Form 20-F 2022 | riotinto.com34 Innovation through collaboration Working safer and smarter While empowering our people to find more efficient ways of working, we always treat their health and safety as our most important priority. In 2022, we introduced several new technologies to help us work safer and smarter. For example, we are trialling agile autonomous haul trucks together with Scania at our Channar operation in Western Australia’s Pilbara region. We use these driverless vehicles in a simulated load and haul cycle environment, and they offer a range of potential safety, productivity and decarbonisation benefits. Channar is the first active site for these vehicles, with plans for a future transition to electric-powered vehicles. We are also trialling battery-powered electric vehicles underground at our Kennecott operations. As well as offering significant productivity and decarbonisation opportunities, these vehicles also protect the health and safety of our people by minimising exposure to potentially dangerous diesel emissions and particulates underground. We will use the lessons we learn at Kennecott as we continue these trials on other sites in 2023. We are also partnering with other suppliers, including Komatsu, Caterpillar and Volvo, to progress options for electrified vehicles, with further trials to take place in the coming years. In parallel, we are also working to reduce emissions from our fleet today using biofuels. In 2022, we began trials of renewable diesel at our Boron and Kennecott operations. We are also focusing on learning and implementing lessons from our own pockets of excellence. In 2021, we launched the Safe Production System (SPS) to improve how we operate our assets, manage performance and help our people innovate. Through SPS, we are drawing on data more efficiently to understand asset health, maintenance scheduling and bottleneck solutions. We have started to see improved production efficiency, safety and engagement at the sites where we have deployed SPS. For more information about SPS, see our website. Our Pioneer Portal, used to source innovative solutions to current business challenges, continued to deliver new ideas. In 2022, we launched six new challenges through the portal, focused on developing our people, reducing our environmental footprint, recovering value from our water, and progressing our work towards net zero. We received more than 200 submissions from across the world, resulting in 20 new partnerships underpinned by more than $40 million in research and development (R&D) funds, significantly reducing our discovery and development cycles. Product innovation We have continued our focus on applied innovation and R&D to address technical barriers that may help unlock new orebodies or significantly reduce environmental, social and governance (ESG) impacts. These include: – Copper: advancing commercialisation opportunities for our proprietary Copper Heap Leach technology via the NutonTM Venture and a range of existing product group and exploration deployment options. – Rincon: developing process technical support for progression of our operations, including a focus on water recovery and recycling and process optimisation. – Aluminium: progressing ELYSIS, our joint venture with Alcoa, supported by Apple and the Governments of Canada and Quebec. ELYSIS is developing a breakthrough technology that eliminates all direct greenhouse gases from the aluminium smelting process. Construction of the first commercial-scale prototype cells of ELYSISTM inert anode technology is underway at our Alma smelter, and they are expected to become operational in 2023. – Green steelmaking: development of the innovative BioIronTM process and hydrogen- based steelmaking, and creating a deeper understanding of Pilbara ore characteristics for performance in a green steelmaking world. – Technology leveraging: fast-tracking ideas from our R&D network. Driving R&D ideas and delivery for growth, closure and ESG priorities with a specific focus on resolving technical barriers within critical metals extraction, future net zero flowsheets, mineralised carbon sequestration, dry stack tailings, zero carbon ilmenite smelting, dry processing and hydrogen-based processing. – Capability investments: planning to add battery materials and mineralised carbon sequestration testing facilities. Accelerating the net zero transition We cannot realise a decarbonised world without significant progress in technology solutions. Partnering with suppliers, industry and other organisations to reduce emissions, as well as growing and developing new markets, remain key components in our decarbonisation journey. Through these partnerships, we are switching to renewable power, electrifying processing and, where possible, running electric mobile fleets. For more information about how we are working to decarbonise the steel and aluminium value chain, see our 2022 Climate Change Report at riotinto.com/climatereport. For 150 years, we have been looking for new and better ways of doing things. This drive for continuous improvement is at the core of our purpose, but we cannot do it on our own. Together with our partners, we work on inventing new processes and technologies that can make mining safer, more sustainable and more efficient. Many of the challenges that lie ahead – from decarbonising our operations to improving productivity – will need new technologies and approaches, some of which have not yet been developed. Nurturing an innovative culture will be essential to helping us meet these challenges. Look inside a mine of the futureTM Autonomous drills, water carts and fuelling units are just a few examples of how innovation is shaping our iron ore operations at Gudai-Darri in Western Australia, our most technologically advanced mine yet. Learn more on our website about how we are partnering with global leaders in technology to ensure Gudai-Darri remains at the pioneering edge of mining well into the future. For more information visit www.riotinto.com/news/stories/look-inside-future-mine.
35Annual Report on Form 20-F 2022 | riotinto.com Strategic report What is our biggest challenge with the energy transition? Speed. The energy transition will require a herculean effort from governments, society and industry to pull this off. An average mine takes eight years of permitting before it can be brought onstream. We also need to transform our flowsheets so that the supply we bring onstream does not have a disproportionate social and environmental cost – the technologies required for this still need much work. We need to create whole supply chains to support these efforts. We know we cannot do this alone, and we need to bring the outside world in. This is a crucial time to partner with universities, companies and our competitors to create a lower carbon future and bring in new ideas and technologies as well as development partners to build and install infrastructure in our operations. Who are some of these partners and what do they specialise in? There are many examples, so I will just touch on what we are doing with start up companies and universities. We created a small venture capital fund to invest in start ups, and we are impressed with the science and technologies being explored. Some of these concepts sound a bit like magic, but to give you a snapshot they involve pulling CO2 out of the air, low-carbon cementitious products, using biomass as a reductant, aluminium ion batteries and using renewable power to convert water into hydrogen. We have formed several partnerships with universities. Where do you see our biggest opportunity? We are researching, developing and implementing so many new technologies to supply the minerals we need for the energy transition as well as reducing the carbon, waste and water footprint of our operations. This may result in new business streams in CO2 capture and hydrogen, and the sale of what we once thought of as waste, as products. Nigel, you were appointed Chief Scientist in 2021. Where do you think we need to focus our future efforts? Our job is to find solutions for the big challenges across our business. These include health and safety, ESG, carbon abatement, productivity, and growth in critical metals and minerals. We play an important role in introducing new science, technology and expertise to solve problems and identify opportunities; accelerating delivery and facilitating technology and R&D solutions; and collaborating with our product groups to build our internal skills and create an environment where R&D can flourish. We will continue to focus on these areas in 2023. Through an R&D lens, what critical metals and minerals are we focusing on for the future? Our products are critical to the energy transition. We will need more aluminium and copper as we electrify the world and replace fossil fuels, and this will also drive steel growth. Other minerals and metals will be required to supply the emerging technologies of the energy transition. Battery systems require lithium and nickel; fuel cells require scandium, cerium, zirconium and yttrium; green hydrogen electrolyzers need iridium, ruthenium, and titanium; flow batteries need vanadium; our 5G phones need gallium and indium; electric vehicles need neodymium and praseodymium; and next generation solar panels will need tellurium. We are focusing on resetting the carbon footprint of today’s products; valorising waste or extracting critical minerals in our waste streams; and growing copper, lithium and other battery minerals. We have already had some success: at Kennecott we have extracted tellurium, at Sorel-Tracy, we have extracted scandium and we are finding more opportunities to extract other critical minerals and find uses for our wastes. Partnerships An interview with Nigel Steward, Chief Scientist, Rio Tinto “This is a crucial time to partner with universities, companies and our competitors to create a lower carbon future and bring in new ideas and technologies as well as development partners to build and install infrastructure in our operations.” Nigel Steward Chief Scientist Some of our new initiatives and partnerships in 2022 – We have set up a new China Technology and Innovation Centre (CTIC) to harness China’s leading expertise in research, technology and innovation to help solve some of our operational and business challenges. – We are exploring carbon storage potential with a team of climate innovation and research leaders. This three-year project, backed by the US Department of Energy’s ARPA-E innovation challenge, will explore new approaches to safely and permanently store carbon as rock. – We have become a member of the Australian Remote Operations for Space and Earth organisation, to support our development of new flowsheets for critical minerals. – We have become a member of the MIT Future Energy Systems Initiative, the MIT Industrial Liaison Programme, and the MIT Regional Entrepreneurship Acceleration Programme in Western Australia in partnership with Woodside. – We are partnering with BHP on new tailings technology that could significantly increase water recovery from mine tailings. Through our venture capital fund, we have invested in technology and start ups to help solve critical business challenges. These include: – Lumo Analytics: rapid characterisation of exploration drill core using laser induced breakdown spectroscopy. – TerraCO2: supplementary cementitious materials from copper tailings to lower the carbon dioxide emissions of cement and concrete production. – CarbonCapture Inc.: direct air capture technology to remove carbon dioxide from the atmosphere. – Aymium: production of high quality, low impurity BioChar to support the net zero CO2 reduction projects for ilmenite smelting. – Electric Hydrogen: low-cost green hydrogen production to decarbonise iron and titanium smelting, alumina calcination and steel making. – ElectraLith: electrically-driven filtration process to extract lithium from brine. – NanoOne: innovative cathode materials manufacturing for batteries in electric vehicles and energy storage.
Annual Report on Form 20-F 2022 | riotinto.com36 Enabling the low-carbon transition In 2022, our Iron Ore business’s absolute greenhouse gas (GHG) emissions were 3.1Mt CO2e (on an equity basis), an increase of 0.50Mt CO2e compared to the 2018 emissions baseline. This was driven by an increase in diesel emissions due to increased haul distances, pre-strip ratios and material movement. With abundant wind and solar resources in the Pilbara, we are developing large-scale renewables projects to contribute to our emissions reductions targets. For more information about our decarbonisation efforts in the Iron Ore product group, see our 2022 Climate Change Report at riotinto.com/climatereport. Iron Ore We are one of the world’s leading producers of iron ore, the primary raw material in steelmaking. In the Pilbara region of Western Australia, we operate a network of 17 iron ore mines, four port terminals and a rail network spanning nearly 2,000 kilometres. Steel remains essential for ongoing urbanisation and will support the global shift to decarbonise. Snapshot of the year 0.68 AIFR (2021: 0.67) 68% Pilbara underlying FOB EBITDA margin (2021: 76%) $18.6bn Underlying EBITDA (2021: $27.6bn) $30.9bn Segmental revenue (2021: 39.6bn) $2.9bn Capital expenditure (2021: $3.9bn) $14.0bn Net cash generated from operating activities (2021: $19.2bn) 3.1Mt Scope 1 and 2 GHG emissions (equity Mt CO2e) (2021: 3.0Mt) 15,000 Employee numbers (2021: 13,000) Safety The number of potentially fatal incidents (PFIs) in Iron Ore increased to 25, with vehicle collisions/rollovers and falling objects accounting for the highest number of incidents. Our all-injury frequency rate (AIFR) increased to 0.68 compared to 0.67 for 2021, with the rate of injuries in our contractor workforce decreasing. We are committed to preventing harm to our people. In 2022, we developed the mentally healthy Iron Ore strategy to mature our workplace safety culture and create an environment where our people are both physically and psychologically safe and healthy. With changes in workforce dynamics, in particular levels of experience, we examined underlying organisational and people factors to determine the most critical gaps to be addressed. We made significant progress on influencing mindsets, behaviours and the felt experience; however, more work is underway to strengthen the application of existing safety systems such as critical risk management. For more information about our global health and safety initiatives, see pages 57-58. In January 2023, a radioactive capsule was lost after being sent offsite to Perth. The capsule was subsequently recovered in a search operation led by Western Australia’s Department of Fire and Emergency Services and supported by other agencies. The safety of our communities, our employees, and contractors is our main priority and we are undertaking an investigation, with involvement of the relevant specialist contractor, to ensure it does not happen again. For more information see the media release on our website.
37Annual Report on Form 20-F 2022 | riotinto.com Strategic report “Last year, we continued to strengthen our partnerships with local communities and Traditional Owners, and made substantial progress in securing the future of our Pilbara business.” Simon Trott Chief Executive, Iron Ore Read the full interview with Simon on our website. Financial performance We achieved a number of operational records across the mine and rail system in the second half of 2022, due to operational improvements and the ramp-up of Gudai-Darri. In the year, we safely commissioned our Pilbara projects, despite challenging conditions with COVID-19, labour and supply chain disruptions. The focus now moves to the next tranche of mines starting with Western Range. Underlying EBITDA of $18.6 billion was 33% lower than 2021, due to lower prices ($8.8 billion), following the 25% drop in the monthly average Platts index for 62% iron fines adjusted to an FOB basis. Higher sales volumes were achieved from our portside operations in China, which improved underlying EBITDA by $0.6 billion. We also increased resourcing to support the ramp-up at Gudai-Darri and targeted investment in pit health and asset maintenance across the Pilbara. This additional investment, together with rising input prices, including diesel price escalation and labour, resulted in 2022 Pilbara unit cash costs of $21.3 per tonne (excluding COVID-19 costs of $0.4 per tonne). This compared with $18.6 per tonne in 2021 (excluding COVID-19 costs of $0.5 per tonne). Our Pilbara operations delivered an underlying FOB EBITDA margin of 68%, compared with 76% in 2021, largely due to the change in the iron ore price. We price the majority of our iron ore sales (77%) by reference to the average index price, for the month of shipment. In 2022, we priced approximately 10% of sales with reference to the prior quarter’s average index lagged by one month with the remainder sold either on current quarter average, current month average or on the spot market. We made approximately 72% of sales including freight and 28% on an FOB basis. We achieved an average iron ore price of $97.6 per wet metric tonne on an FOB basis (2021: $132.3 per wet metric tonne) across our product suite. This equates to $106.1 per dry metric tonne, assuming 8% moisture (2021: $143.8 per dry metric tonne), which compares with the monthly average Platts index for 62% iron fines converted to an FOB basis of $109.8 per dry metric tonne (2021: $146.9 per dry metric tonne). The 3% lower realised price compared to the Platts index was due to lower average grades, partially offset by higher premiums for lump products. Segmental revenue for our Pilbara operations included freight revenue of $2.2 billion (2021: $2.7 billion). Net cash generated from operating activities of $14.0 billion was $5.2 billion lower than 2021, with lower pricing partly offset by a monetisation of working capital. Free cash flow of $11.0 billion was $4.1 billion lower than 2021 due to the factors above, partially offset by a $1.0 billion reduction in capital expenditure to $2.9 billion following completion of brownfield mine replacement tie-in projects. Review of operations Pilbara operations produced 324.1 million tonnes (Rio Tinto share 272.9 million tonnes), 1% higher than 2021. Shipments of 321.6 million tonnes (Rio Tinto share 270.8 million tonnes), in line with 2021, included 35.5 million tonnes of lower grade SP10 products, 11% of shipments, on a 100% basis (2021: 11% of shipments). Performance improvements continued across the system and we achieved a number of operational records in the second half across the mine and rail system. System inventories at the end of December were healthy, including strong blasted stocks, mine stocks and port stocks. Our iron ore portside sales in China were 24.3 million tonnes in 2022 (14.0 million tonnes in 2021). At the end of the December, inventory levels were 7.8 million tonnes, including 5.5 million tonnes of Pilbara product. In 2022, approximately 80% of our portside sales were either screened or blended in Chinese ports. For more information about our capital projects and future growth options, see pages 32-33. Iron Ore Year ended 31 December 2022 2021 Change Pilbara production (million tonnes – 100%) 324.1 319.7 1% Pilbara shipments (million tonnes – 100%) 321.6 321.6 –% Salt production (million tonnes – Rio Tinto share)1 5.8 5.8 (2)% Segmental revenue (US$ millions) 30,906 39,582 (22)% Average realised price (US$ per dry metric tonne, FOB basis) 106.1 143.8 (26)% Underlying EBITDA (US$ millions) 18,612 27,592 (33)% Pilbara underlying FOB EBITDA margin2 68% 76% Underlying earnings (US$ millions) 11,182 17,323 (35)% Net cash generated from operating activities (US$ millions) 14,005 19,177 (27)% Capital expenditure (US$ millions)3 (2,940) (3,947) (26)% Free cash flow (US$ millions) 11,033 15,172 (27)% Underlying return on capital employed4 62% 100% 1. Dampier Salt is reported within Iron Ore, reflecting management responsibility. Iron Ore Company of Canada continues to be reported within Minerals. The Simandou iron ore project in Guinea is reported within Copper. 2. The Pilbara underlying free on board (FOB) EBITDA margin is defined as Pilbara underlying EBITDA divided by Pilbara segmental revenue, excluding freight revenue. 3. Capital expenditure is the net cash outflow on purchases less sales of property, plant and equipment; capitalised evaluation costs; and purchases less sales of other intangible assets. 4. Underlying return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed.
Annual Report on Form 20-F 2022 | riotinto.com38 Enabling the low-carbon transition In 2022, our Aluminium business’s absolute greenhouse gas emissions (21.1Mt CO2e) were 4.4% lower than the 2018 equity baseline (22.0Mt CO2e). This reduction includes improvements in processing efficiency, increased use of hydroelectric boilers in refining instead of natural gas boilers, and reduced aluminium production at the Kitimat smelter, which continues to ramp up after a strike in 2021. The 2022 emissions intensity of our managed Atlantic smelters, powered by hydroelectricity, was 2.21Mt CO2e per tonne of aluminium. Our Vaudreuil alumina refinery has one of the lowest carbon footprints of any metallurgical alumina refinery in the world today. For more information about our decarbonisation efforts in the Aluminium product group, see our 2022 Climate Change Report at riotinto.com/climatereport. Aluminium As a global leader in low-carbon aluminium, we are uniquely positioned to further decarbonise our business and support the world’s transition towards a lower-carbon footprint. A critical material – lightweight and infinitely recyclable – aluminium is found in diverse products ranging from solar panels to electric vehicles and smartphones. Snapshot of the year 0.35 AIFR (2021: 0.33) 29% Underlying EBITDA margin (integrated operations) (2021: 38%) $3.7bn Underlying EBITDA (2021: $4.4bn) $14.1bn Segmental revenue (2021: $12.7bn) $1.4bn Capital expenditure (2021: $1.3bn) $3.1bn Net cash generated from operating activities (2021: $3.6bn) 21.1Mt Scope 1 and 2 GHG emissions (equity Mt CO2e) (2021: 21.7Mt) 15,000 Employee numbers (2021: 14,000) Safety In 2022, we continued to progress in our safety maturity journey, expanding our focus on contractors and integrating health and environment into the daily leadership rituals. Our Pacific assets significantly improved their all-injury frequency rate (AIFR) to a best-ever of 0.27, while a difficult year at Kitimat contributed to an AIFR in the Atlantic of 0.43, for an overall AIFR of 0.35 in 2022 compared to 0.33 in 2021. The number of potentially fatal incidents (PFIs) in our business remained steady in 2022 (29), and we remain committed to reducing these risks. The work programme we commenced in 2021 to address overhead crane asset maintenance continued into 2022, and the number of PFIs relating to falling objects has reduced by 47% compared to 2021. We will be integrating the learnings from the 2022 safety maturity model assessments to strengthen our front-line risk assessment and critical risk management programme, as well as our Safe Production System to reduce fatality risk, prevent injuries and stabilise our operations. The occupied building programme helped remove over 2,000 of our workforce from buildings with exposure to process hazards in our business. This programme is a significant step forward for process safety. For more information about our global health and safety initiatives, see pages 57-58.
39Annual Report on Form 20-F 2022 | riotinto.com Strategic report “2022 has been a year of transition for our Aluminium business. We sustained investment to strengthen the health of our assets, and announced several growth projects including AP60, Alma’s billet centre and early stage expansions in recycling.” Ivan Vella Chief Executive, Aluminium Read the full interview with Ivan on our website. Financial performance Strong pricing in the first half fell away sharply in the second, which, together with rising energy and raw materials costs, led to a significant margin squeeze on our Aluminium business and a 16% decrease in underlying EBITDA for the year as a whole. Underlying EBITDA margin fell nine percentage points, but remained robust for the year at 29%. Underlying EBITDA of $3.7 billion benefited from higher product premiums for primary metal in addition to the stronger pricing environment for primary metal and alumina in the first half. However, this was offset by higher coal prices and costs for key materials such as caustic soda, coke, pitch and anodes, leading to an increase in cash costs for alumina and primary metal. We achieved an average realised aluminium price of $3,330 per tonne, 15% higher than 2021 ($2,899 per tonne). Average realised aluminium prices comprise the LME price, a market premium and a value-added product (VAP) premium. The cash LME price averaged $2,703 per tonne, 9% higher than 2021, while in our key US market, the Midwest premium duty paid, which is 57% of our volumes (2021: 55%), increased by 12% to $655 per tonne (2021: $584 per tonne). Our VAP sales were stable at 50% of the primary metal we sold (2021: 50%) and generated product premiums averaging $431 per tonne of VAP sold (2021: $230 per tonne). Our conversion of underlying EBITDA to cash remained relatively strong, with net cash generated from operating activities of $3.1 billion and free cash flow of $1.7 billion. Review of operations Bauxite production of 54.6 million tonnes was 1% higher than 2021, despite equipment reliability issues at Weipa and Gove in Australia. We shipped 38.0 million tonnes of bauxite to third parties in 2022, 1% higher than 2021. In 2022, segmental revenue for bauxite increased 9% to $2.4 billion this includes freight revenue of $635 million (2021: $462 million). Alumina production of 7.5 million tonnes was 4% lower than 2021. The refineries in the Pacific (Yarwun and Queensland Alumina Limited) were impacted by a range of challenges in 2022, including unplanned outages and equipment reliability issues. COVID-19 absenteeism impacted production in early 2022 but eased in the second half. Production at the Vaudreuil refinery in Quebec remained stable. As the result of Queensland Alumina Limited's (QAL) activation of a step-in process following sanction measures by the Australian Government, we have taken on 100% of capacity for as long as the step-in continues. We are using Rusal’s 20% share of capacity under the tolling arrangement with QAL. This additional output is excluded from our production results as QAL remains 80% owned by Rio Tinto and 20% owned by Rusal. Aluminium production of 3.0 million tonnes was 4% lower than 2021, due to reduced output at our Kitimat smelter in British Columbia, Canada and Boyne smelter in Queensland, Australia. The rate of pot restarts at Kitimat picked up in the fourth quarter and Boyne smelter cell recovery efforts continued on plan. Recovery at both smelters is progressing, with full ramp-up expected to be completed during the course of 2023. All of our other aluminium smelters continued to demonstrate stable performance. For more information about our capital projects and future growth options, see pages 32-33. Aluminium Year ended 31 December 2022 2021 Change Bauxite production (‘000 tonnes – Rio Tinto share) 54,618 54,326 1% Alumina production (‘000 tonnes – Rio Tinto share) 7,544 7,894 (4)% Aluminium production (‘000 tonnes – Rio Tinto share) 3,009 3,151 (4)% Segmental revenue (US$ millions) 14,109 12,695 11% Average realised aluminium price (US$ per tonne) 3,330 2,899 15% Underlying EBITDA (US$ millions) 3,672 4,382 (16)% Underlying EBITDA margin (integrated operations) 29% 38% Underlying earnings (US$ millions) 1,472 2,468 (40)% Net cash generated from operating activities (US$ millions) 3,055 3,606 (15)% Capital expenditure – excluding EAUs (US$ millions)1 (1,377) (1,300) 6% Free cash flow (US$ millions) 1,652 2,272 (27)% Underlying return on capital employed2 10% 16% 1. Capital expenditure is the net cash outflow on purchases less sales of property, plant and equipment; capitalised evaluation costs; and purchases less sales of other intangible assets. It excludes equity accounted units (EAUs). 2. Underlying return on capital employed (ROCE) is defined as underlying earnings excluding net interest divided by average capital employed.
Annual Report on Form 20-F 2022 | riotinto.com40 Enabling the low-carbon transition In 2022, our Copper business’s absolute greenhouse gas emissions (1.5Mt CO2e) were 57% lower than the 2018 equity baseline (3.5Mt CO2e). And we were down 33% in emissions year-on-year. The decrease in emissions was mainly driven by the closure of the coal-fired power plant at Kennecott in 2019, with the balance of power met by the utility with commensurate renewable energy certificates. Escondida also completed its repowering in 2021, sourcing green power for its operations. In 2022, we considered long-term sustainable green power solutions, and how to address emissions from diesel haulage with ongoing trials and studies. This has involved collaborative partnerships with third parties. For more information about our decarbonisation efforts in the Copper product group, see our 2022 Climate Change Report at riotinto.com/climatereport. Copper Copper is essential to creating a sustainable, low-carbon world. Rapid electrification across all aspects of daily life is set to drive long-term demand for copper. With assets spanning the globe and an evolving suite of technologies to enable low-carbon production, we are accelerating growth and decarbonisation by producing the materials that enable a cleaner future. Snapshot of the year 0.22 AIFR (2021: 0.21) 49% Underlying EBITDA margin (product group operations) (2021: 59%) $2.4bn Underlying EBITDA (2021: $4.0bn) $6.7bn Segmental revenue (2021: $7.8bn) $1.6bn Capital expenditure (2021: $1.3bn) $1.4bn Net cash generated from operating activities (2021: $2.6bn) 1.5Mt Scope 1 and 2 GHG emissions (equity Mt CO2e) (2021: 2.2Mt) 8,000 Employee numbers (2021: 7,000) Safety Our operations and projects continued to progress on their safety maturity journey throughout 2022. We recorded zero fatalities for the fourth consecutive year; however, we continued to see a steady rate of potentially fatal incidents (PFIs) across our assets and the number of PFIs (18) has not changed compared to 2021. We ended 2022 with an all-injury frequency rate (AIFR) of 0.16 among our employees and 0.26 among our contractors. Our overall AIFR has increased slightly to 0.22 compared to 0.21 in 2021, with significant improvement for employees compared to 2021 (0.26) and a regression for contractors compared to 2021 (0.17). Critical risk management remains a priority. Recognising the disruption caused by the COVID-19 pandemic, we are also increasing our focus on employee wellbeing. For more information about our global health and safety initiatives, see pages 57-58.
41Annual Report on Form 20-F 2022 | riotinto.com Strategic report “2022 has been a year of achievements. In January we reached an agreement with the Government of Mongolia, started the undercut at Oyu Tolgoi and completed the acquisition of Turquoise Hill Resources in December. In Guinea, we signed the infrastructure joint venture with our Chinese partners and the Government to unlock Simandou.” Bold Baatar Chief Executive, Copper Read the full interview with Bold on our website. Financial performance Underlying EBITDA was down 40% to $2.4 billion, with $0.7 billion of the reduction a result of lower copper prices, particularly in the second half of the year. An anticipated decrease in by-product sales volumes (particularly lower gold in concentrate at Oyu Tolgoi), rising cash costs, higher energy prices and an increase in exploration and evaluation expenditure also impacted EBITDA in 2022. Underlying EBITDA margin remained strong at 49%. Our copper unit costs, at 163 cents per pound, increased by 81 cents, largely driven by the decline in by-product credits, together with rising input and higher labour costs, following the implementation of new labour laws in Mongolia and a new five-year collective bargaining agreement at Kennecott. We generated $1.4 billion in net cash from operating activities, a 48% decrease on 2021, from the same drivers as underlying EBITDA, together with a smaller increase in working capital compared to 2021. Negative free cash flow of $0.3 billion reflected the significant investment of $2.0 billion in our projects, an increase of 26% on 2021. This mainly related to the ongoing development of the Oyu Tolgoi underground project, underground growth projects at Kennecott and the Simandou iron ore project in Guinea. Review of operations Mined copper production, at 521 thousand tonnes, was 6% higher than 2021 due to higher grades at Kennecott and Escondida, partly offset by lower grades and recoveries at Oyu Tolgoi as a result of planned mine sequencing. The 4% increase in refined copper production to 209 thousand tonnes mainly reflected a furnace failure in 2021 at Kennecott which resulted in the smelter being offline for the majority of the fourth quarter of 2021. Unplanned maintenance was required in the fourth quarter of 2022 in our anode furnaces, leading to extended downtime and continued poor anode production. Oyu Tolgoi underground project A comprehensive agreement was reached with the Government of Mongolia on 25 January 2022, resetting the relationship between the partners, increasing the value the project delivers for Mongolia, and allowing underground operations to commence. In 2022, Rio Tinto and the Government of Mongolia remained focused on supporting Oyu Tolgoi to reach the sustainable production milestone, and continuing progress on the remaining measures contained in Mongolian Parliamentary Resolution 103. At the end of 2022, a total of 19 drawbells had been fired. Drawbell progression accelerated as a result of improvement initiatives implemented by the Oyu Tolgoi teams, bringing projected first sustainable production from Panel 0 forward to the first quarter of 2023 (previously first half of 2023). At the end of December, shafts 3 and 4 sinking had reached 378 metres and 507 metres below ground level respectively. Operational safety sinking pauses have caused some delays against the 2022 reforecast5 to shaft sinking. Final depths required for shafts 3 and 4 are 1,148 and 1,149 metres below ground level respectively. Construction of conveyor-to- surface works continued with civil scope of works completed and other contractors mobilised to site. Study work for Panels 1 and 2, which are required to support the ramp-up to 95,000 tonnes of ore per day, remains on track to be completed in the first half of 2023. It will incorporate any ventilation impacts due to the shaft 3 and 4 delays as a result of COVID-19 restrictions and reprioritisation of the mobilised workforce over the course of 2022. On 16 December, we completed the acquisition of Turquoise Hill Resources Ltd (TRQ) for consideration of approximately $3.1 billion6, simplifying ownership of the Oyu Tolgoi mine, significantly strengthening our copper portfolio, and demonstrating our long-term commitment to the project and Mongolia. We now hold a 66% direct interest with the remaining 34% owned by the Government of Mongolia through Erdenes Oyu Tolgoi. This is allowing us to focus fully on strengthening our relationship with the Government of Mongolia and moving the project forward with a simpler and more efficient ownership and governance structure. For more information about our capital projects and future growth options, see pages 32-33. Copper Year ended 31 December 2022 2021 Change Mined copper production (‘000 tonnes – Rio Tinto share) 521.1 493.5 6% Refined copper production (‘000 tonnes – Rio Tinto share) 209.2 201.9 4% Segmental revenue (US$ millions) 6,699 7,827 (14)% Average realised copper price (US cents per pound)1 403 424 (5)% Underlying EBITDA (US$ millions) 2,376 3,969 (40)% Underlying EBITDA margin (product group operations) 49% 59% Underlying earnings (US$ millions) 521 1,579 (67)% Net cash generated from operating activities (US$ millions)2 1,374 2,634 (48)% Capital expenditure – excluding EAUs3 (US$ millions) (1,622) (1,328) 22% Free cash flow (US$ millions) (265) 1,295 (120)% Underlying return on capital employed (product group operations)4 6% 14% 1. Average realised price for all units sold. Realised price does not include the impact of the provisional pricing adjustments, which negatively impacted revenues by $175 million (2021: $246 million benefit). 2. Net cash generated from operating activities excludes the operating cash flows of equity accounted units (EAUs) but includes dividends from EAUs (Escondida). 3. Capital expenditure is the net cash outflow on purchases less sales of property, plant and equipment, capitalised evaluation costs and purchases less sales of other intangible assets. It excludes EAUs. 4. Underlying return on capital employed (ROCE) is defined as underlying earnings (product group operations) excluding net interest divided by average capital employed. 5. A cost and schedule reforecast was performed in June 2022 and estimates that $7.06 billion is required to complete the Hugo North 1 project (an increase of $0.3 billion beyond the 2020 Definitive Estimate). The 2022 Reforecast excludes impacts of COVID-19 restrictions arising after June 2022. The 2022 reforecast remains subject to Oyu Tolgoi Board approval. 6. Total consideration of $3,139 million for the minority interest in TRQ excludes transaction costs of $74 million. In 2022, we paid $2,928 million to shareholders and $33 million of transaction costs. In 2023, we expect to pay the remaining $41 million of transaction costs and approximately $211 million to dissenting shareholders, depending on the outcome and timing of dissent proceedings.
Annual Report on Form 20-F 2022 | riotinto.com42 Enabling the low-carbon transition In 2022, our Minerals product group’s absolute greenhouse emissions were 4.0Mt CO2e, an increase of approximately 12.5% from 2021 levels1. The increase in emissions was mainly driven by Richards Bay Minerals (RBM) operating continuously in 2022 as opposed to reduced production in 2021. In 2022, we also advanced several key strategic decarbonisation projects. For example, we signed a 130MW solar power purchase agreement with Voltalia at RBM in South Africa, which would eventually deliver abatement of more than 200kt CO2/year in 2025. We have also partnered with the Government of Canada in support of technological innovations at our Rio Tinto Iron and Titanium Quebec Operations in Sorel-Tracy, such as the BlueSmeltingTM project, a new ilmenite smelting technology that, if fully implemented, has the potential to deliver a reduction of up to 70% in the site’s overall greenhouse gas emissions. For more information about our decarbonisation efforts in the Minerals product group, see our 2022 Climate Change Report at riotinto.com/climatereport. Minerals Our Minerals portfolio includes a global suite of businesses producing materials essential to a low-carbon future and projects well-positioned to meet the growing demand for electric vehicles. We produce high-grade, low-impurity iron ore pellets and concentrate, titanium dioxide, diamonds and borates from our operations in Canada, Madagascar, South Africa and the US. 1. Our baseline emissions have been adjusted to reflect the increase in Rio Tinto’s ownership interest of Diavik Diamond Mine from 60% to 100% in November 2021. Snapshot of the year 0.38 AIFR (2021: 0.38) 40% Underlying EBITDA margin (product group operations) (2021: 43%) $2.4bn Underlying EBITDA (2021: $2.6bn) $6.8bn Segmental revenue (2021: $6.5bn) $0.7bn Capital expenditure (2021: $0.6bn) $1.5bn Net cash generated from operating activities (2021: $1.4bn) 4.0Mt Scope 1 and 2 GHG emissions (equity Mt CO2e) (2021: 3.5Mt) 9,000 Employee numbers (2021: 9,000) Safety For the fourth consecutive year, we recorded zero fatalities. In 2022, we saw an increase in the number of potentially fatal incidents (PFIs) with 19 this year, compared to 16 in 2021. The rate of injuries remained the same, with our all-injury frequency rate (AIFR) at 0.38. However, we ended 2022 with a significant increase in the AIFR of our contractor workforce, going from 0.22 in 2021 to 0.42 in 2022. In 2023, we will continue our improvement journey, enabled by the safety maturity model, including health and environment, to achieve our objectives of creating a safe and productive workplace for our employees and contractor partners. For more information about our global health and safety initiatives, see pages 57-58.
43Annual Report on Form 20-F 2022 | riotinto.com Strategic report “We’re working hard in the critical minerals space. For example, we’re extracting high purity scandium oxide from the waste streams of titanium dioxide production, and we continue to invest in research and development and form key partnerships with experts from industry, academia and government.” Sinead Kaufman Chief Executive, Minerals Read the full interview with Sinead on our website. Financial performance In 2022, we benefited from strong market conditions for titanium dioxide pigment and borates, partially offset by a weaker market for iron ore pellets and concentrate, albeit off record levels. We also saw higher diamond prices compared with 2021, following a pandemic-related build up of demand and low inventory levels. Underlying EBITDA of $2.4 billion was 7% lower than 2021, primarily due to inflationary pressures, energy price increases and Rincon evaluation costs. This was partially offset by prices and higher EBITDA in relation to the increased ownership in Diavik. Net cash generated from operating activities of $1.5 billion was 6% higher than 2021, while free cash flow of $0.8 billion was 7% higher, reflecting a higher EBITDA cash conversion supported by lower dividends paid to holders of non-controlling interests at Iron Ore Company of Canada. Review of operations Production of iron ore pellets and concentrate at IOC was 6% higher than 2021 due to the successful deployment of the Safe Production System (SPS) at the concentrator, which was completed in the year. Record performance metrics were achieved in the year, including monthly records for concentrate production and total material moved in the second quarter. Planning for SPS deployment at the pellet plant commenced in December. Titanium dioxide production of 1.2 million tonnes was 18% higher than 2021 due to community disruptions at Richards Bay Minerals (RBM) in South Africa in 2021, and continued improved performance of operations at Rio Tinto Iron and Titanium Quebec Operations, Canada. Nationwide loadshedding of electrical power caused production constraints at RBM in late 2022. Borates production was 9% higher than 2021, with strong production rates, higher grades and improved equipment reliability. Our share of carats recovered was 21% higher than 2021, from our increased share of production since taking 100% ownership of Diavik in November 2021, partly offset by lower carats recovered due to lower grades. For more information about our capital projects and future growth options, see pages 32-33. Lithium, a material for the future The Rincon Lithium Project – a large, undeveloped lithium-brine project located in the heart of the “lithium triangle” in Argentina – will be a valuable source of rapidly produced, high-quality lithium for the global energy transition. A long-life, scalable resource capable of producing battery-grade lithium carbonate from raw brine, the project will help us deliver this vital resource to the global energy industry while meeting our commitment to decarbonise our operations by 2050. With the Rincon acquisition completed in early 2022, we are now developing a three thousand tonne per annum lithium carbonate starter plant. To optimise the process and recoveries, we also continue to produce battery-grade lithium carbonate from raw brine from the existing pilot plant operating at site. We are now advancing detailed studies for the full scale of operation and progressing exploration activities to further understand Rincon’s basin and brine reservoir. We continue to engage with communities, the province of Salta and the Government of Argentina to ensure an open and transparent dialogue with stakeholders about the works underway. Minerals Year ended 31 December 2022 2021 Change Iron ore pellets and concentrates production1 (million tonnes – Rio Tinto share) 10.3 9.7 6% Titanium dioxide slag production (‘000 tonnes – Rio Tinto share) 1,200 1,014 18% Borates production (‘000 tonnes – Rio Tinto share) 532 488 9% Diamonds production (‘000 carats – Rio Tinto share)2 4,651 3,847 21% Segmental revenue (US$ millions) 6,754 6,481 4% Underlying EBITDA (US$ millions) 2,419 2,603 (7)% Underlying EBITDA margin (product group operations) 40% 43% Underlying earnings (US$ millions) 849 888 (4)% Net cash generated from operating activities (US$ millions) 1,522 1,433 6% Capital expenditure (US$ millions)3 (679) (644) 5% Free cash flow (US$ millions) 814 762 7% Underlying return on capital employed (product group operations)4 22% 21% 1. Iron Ore Company of Canada (IOC) continues to be reported within Minerals. 2. On 17 November 2021, Rio Tinto’s interest in Diavik increased from 60% to 100%. Production and financials reflect this from 1 November 2021. 3. Capital expenditure is the net cash outflow on purchases less sales of property, plant and equipment; capitalised evaluation costs; and purchases less sales of other intangible assets. 4. Underlying return on capital employed (ROCE) is defined as underlying earnings (product group operations) excluding net interest divided by average capital employed.
Annual Report on Form 20-F 2022 | riotinto.com44 Commercial Our Commercial team includes global sales and marketing, procurement, and marine and logistics operations. We are the primary interface with markets, customers and suppliers – local, regional and global – through a network of over 20,000 active suppliers and almost 2,000 customers. As the key interface to the market, our Commercial team works very closely with our customers and suppliers. We generate insights and opportunities to unlock the full commercial potential across our value chains, always striving to find better ways to provide the materials the world needs. Finding solutions to shipping’s global carbon emissions Maritime shipping is responsible for around one billion tonnes of CO2 emissions every year, accounting for nearly 3% of global carbon emissions. As the largest shipper by tonnage in the world, we have a role to play. We are actively exploring partnerships to achieve our commitment to have net zero vessels in our portfolio by 2030, while taking actions to reduce emissions through efficiency initiatives and alternative fuels. For more information visit www.riotinto.com/news/stories/decarbonising-the-high-seas. consumers can see how products were made from the mine to their hands and make more informed choices on what they buy. – Signing a separate MoU with both Shougang Group and Salzgitter Flachstahl, and continuing significant partnerships with Nippon Steel Corporation, BlueScope, and Baowu to develop low-carbon solutions for the steel value chain. We have also successfully proven the effectiveness of BioIronTM, a low-carbon iron-making process using raw sustainable biomass and microwaves. Supplier partnerships In the areas where we operate, we work hard to partner with and develop local businesses so they can share in our success. In 2022, we increased our spend with Indigenous suppliers in Australia by 40% from 2021 to A$565 million. We also actively seek partnerships with our suppliers to reduce our own emissions. In 2022, we have: – Continued our partnership with Scania to develop smaller and more agile autonomous haul trucks. In April 2022, we launched new trials on Scania’s 40-tonne-payload autonomous mining trucks and quickly reached a key milestone of driverless operation in a simulated load and haul cycle environment. These trucks will require less energy and have a smaller infrastructure footprint. – Signed an MoU with Volvo Group to work towards decarbonising our operations through piloting Volvo’s sustainable autonomous hauling solutions. – Joined the First Movers Coalition, a global initiative to help commercialise zero-carbon technologies by harnessing purchasing power and supply chains. For more information about our decarbonisation initiatives, see our 2022 Climate Change Report at riotinto.com/climatereport. Safety and wellbeing In 2022, we recorded zero fatalities and a 0.14 all-injury frequency rate (AIFR), compared to 0.07 for 2021. As we continue to navigate COVID-19 impacts, we have maintained our strong focus on critical risk management and prevention programmes across areas of greatest exposure. We continue to work on our safety performance within our maritime fleet of 17 owned, and more than 230 contracted, vessels. Although we had no fatalities on our managed operations in 2022, tragically, there was a fatality on one of the non-managed marine vessels and, in a separate incident, another mariner suffered a permanent disabling injury. We are determined to improve maritime safety for our industry and we are working closely with our shipping partners, industry associations and other mining companies. Customer partnerships In our mission to find better ways to provide the materials the world needs, we partner with customers to work towards our shared goal of enabling the world’s transition to a low-carbon future. In 2022, some initiatives included: – Signing a separate memorandum of understanding (MoU) with both the Ford Motor Company and Volvo Group, each of which leverages our advantage as a one-stop multi-commodity supplier for sustainable products and solutions in the low-carbon transition. Ford will also explore becoming the foundational customer for our Rincon Lithium Project in Argentina to support its production of electric vehicles. – Strengthening our low-carbon product offering with aluminium produced by ELYSISTM emissions-free smelting technology, used by Apple (in their iPhone SE), and Corona Canada (in Canada’s first specially marked, low-carbon aluminium cans). – Leveraging STARTTM, our blockchain technology, to provide over 110 customers with 14 key ESG metrics. Via a QR code, Snapshot of the year $55.6 billion Group consolidated sales revenue (2021: $63.5bn) 2,600 sea voyages 2,100 contracts under management (2021: 2,100) $20.7 billion in contestable spend globally (2021: $17.9bn) 106,000 shipments by rail, truck and containers A$565 million spent with Indigenous suppliers in Australia, an increase of 40% from 2021 (2021: A$400m) 42% increase in spend with Chinese suppliers from 2021 (2021: 44%)
45Annual Report on Form 20-F 2022 | riotinto.com Strategic report Combined shipments from major producers were effectively unchanged year-on-year in 2022, but remained below the volume delivered in 2018. Meanwhile, a combination of price-related and other external factors reduced overall seaborne supply. These included small-scale, high-cost producers who discontinued operations when prices declined below break-even points; supply disruptions due to the war in Ukraine; and India’s decision to impose export tariffs on iron ore. Despite the introduction of a range of supportive policies and growth targets, China’s domestic iron ore production also declined year-on-year in 2022 following a number of safety accidents and the imposition of operating restrictions. Aluminium The aluminium price rose in the first quarter of 2022 to a multi-year high, on expectations of stronger demand outlook and Russian aluminium supply cuts, both of which eventually did not materialise. The price then fell to its low point in the third quarter as fears of a global economic slowdown set in, and Chinese aluminium production rose on restarts and commissioning of new capacity. Chinese aluminium domestic demand also weakened due to COVID-19 restrictions, especially in the building and construction sector. However, the aluminium price stabilised in the fourth quarter as a result of a high level of smelter curtailments in Europe given high energy costs, and curtailments in Southern China given drought conditions and low hydropower levels. Global aluminium inventories remained low and the market deficit provided support to the aluminium price. Elevated carbon raw material and energy prices resulted in the industry facing a significant margin squeeze in the second half of 2022. Copper After a record quarterly average price was reached in the first quarter of 2022, copper prices trended down from late April, as a wave of uncertainty surrounding the global economy and China’s COVID-zero policy weighed on the prospects for copper demand. The average price in the third quarter was the lowest quarterly average since the fourth quarter of 2020. Global visible copper cathode inventories fell to multi-year lows, providing support to prices. Mine supply growth, while remaining positive, stalled in 2022 due to issues such as water availability, geological and geotechnical challenges, and slower project ramp-ups contributing to a higher level of disruptions to production. Mine supply growth is expected to return over the 2023 to 2024 period, as committed projects get underway after earlier delays. “Commercial is the key interface between our assets and the markets, our customers and suppliers. Our mission is to generate insights and opportunities to unlock Rio Tinto’s full commercial potential across our value chains and future growth opportunities. We will always strive to find better ways to serve our customers and provide the materials the world needs.” Alf Barrios Chief Commercial Officer Read the full interview with Alf on our website. Marine and logistics To deliver our climate commitments on shipping, we are focusing on improving fuel efficiency, increasing the use of transitional fuels and partnering to develop end-state fuels. In 2021, we committed to reduce our CO2 emissions intensity in shipping by 40% by 2025, five years ahead of the International Maritime Organisation (IMO) deadline. To date, we have achieved a 30% intensity reduction in conventional fuel use from an IMO 2008 baseline through operational and technical measures such as weather routing, schedule optimisation and vessel modifications. We have a year-long biofuel trial underway and we recently received the first of nine dual-fuelled liquified natural gas-powered vessels that we are introducing into our fleet. We continue to support new technologies and industry collaborations that will contribute to the industry’s low-carbon transition, including through our strategic partnerships with the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping and the Global Maritime Forum. For more information about our shipping decarbonisation efforts, see our 2022 Climate Change Report at riotinto.com/climatereport. Commercial insight and outlook Economic growth and commodity demand started positively in 2022 as the world continued its recovery from the pandemic downturn. However, the large supply shock brought about by the war in Ukraine led to energy security concerns and exacerbated inflationary pressures, while a resurgence of COVID-19 lockdowns and outbreak in China affected business activities and consumer confidence. High inflation prompted many countries, led by the US, to aggressively tighten monetary policy to re-establish price stability. These risks are carried over to 2023, and the global economy is expected to slow further. China’s economic recovery from COVID-19 remains volatile, while the Chinese Government provides support to stabilise the economy, especially in the infrastructure and real estate sectors. Iron ore Following three consecutive years of growth to a 2021 all-time high, iron ore demand simultaneously contracted in China and the rest of the world for the first time since the beginning of the COVID-19 pandemic. The Chinese property market slump continued to worsen, while extended COVID-19 restrictions impacted China’s steel demand, exerting downward pressure on prices. There were also headwinds to ex-China iron ore demand, which was negatively impacted by sharply higher energy and raw materials costs to steel producers. Iron ore prices were more resilient and market fundamentals tighter than consensus expectations because the demand weakness was offset, and at times outweighed, by even lower supply. Minerals There was low demand growth for titanium dioxide (TiO2) pigment in 2022 as weakness in China and the EU was only partially offset by growth in North America. Nevertheless, prices were supported by tight global high-grade supply. Inventories remained low in 2022 but are expected to grow in 2023. Structural factors relating to orebody depletion remain favourable for high-grade TiO2 feedstock and zircon markets. Lithium prices remained elevated on strong demand. The electric vehicle market continues to experience strong growth, supported by government policies. There was strong buying activity for borates in 2022 due to persistent supply tightness, resulting in prices closing the year at a decade high. In diamonds, prices started 2022 with strong growth but have cooled amid weakening demand. Global diamond supply remains stable, which is resulting in some inventory accumulation through the supply chain.
Annual Report on Form 20-F 2022 | riotinto.com46 Our approach to sustainability For 150 years, we have been entrusted with accessing the world’s essential materials and making them available for society’s use. These resources are finite, and as temporary custodians of the land where we operate, we have a responsibility to extract the full value from the minerals and materials we produce in the safest and most sustainable way possible. Our approach to sustainability is guided by our purpose: finding better ways to provide the materials the world needs. Our shareholders, employees and host governments expect us to find ways to lower our impact, decarbonise our operations and increase circularity, while contributing to a positive legacy for the host communities and countries where we operate. And we have a big role to play in the world’s transition to a low-carbon future – the materials we produce are essential in many low-carbon technologies. It means we must deliver our own decarbonisation, alongside investing in research and development that enables our customers to decarbonise more quickly. We know that responsibly managing our business impacts is fundamental if we want to continue to grow and deliver on our strategy. Two of our core objectives in our strategy relate to strengthening our social licence and achieving impeccable environmental, social and governance (ESG) credentials. As part of these commitments, we align our business priorities with society’s expectations and ensure sustainability considerations are at the core of every decision we make. To meet our goals, we are focusing on developing the right mindset and culture, encouraging our people to work together to find new solutions and building partnerships with those who share our ambition for a more sustainable future. Renewable hydropower. The Saguenay – Lac-Saint-Jean, Canada.
47Annual Report on Form 20-F 2022 | riotinto.com Strategic report Low-intensity materials Economic opportunity & just transition Scope 1 & 2 reduction Community engagement & social investment Environmental stewardship Health, safety & wellbeing Mining & metal practices Talent, diversity & inclusion Heritage, culture & Indigenous peoples Human rights Transparent, values-based, ethical business operations SDG 17 Supportin g SDG 3 4 5 1 0 15 Lead SDG 12 Lead SDG 8 Supporting SD G 6 9 13 15 Sy st em s im pa ct Fo un da tio ns Sustainability framework Planet People and society System s im pact Foundations Becoming a trusted steward of resources Supplying low-intensity materials Supporting social and economic opportunity Becoming a socially responsible business partner Our sustainability framework Our sustainability framework describes how we manage the ESG issues that are important to us and our stakeholders, and how we contribute to the United Nations Sustainable Development Goals (UN SDGs). Our sustainability framework guides our work towards achieving impeccable ESG credentials and strengthening our social licence. This includes providing people and communities with economic opportunities; safeguarding and promoting the health, wellbeing and human rights of people and communities; combatting climate change; and being excellent stewards of the natural resources entrusted to us. Our commitment to running a transparent, values-based, ethical business underpins all our work. People and society: Supporting social and economic opportunity We aim to: – Provide people and communities with social and economic opportunities so that they can live and grow sustainably. – Play our role to advance a fair and socially inclusive energy transition. Becoming a socially responsible business partner We aim to: – Build a healthy, diverse and inclusive workforce, support local communities to achieve their goals and aspirations and deliver positive social outcomes. Planet: Supplying low-intensity materials We aim to: – Decarbonise our value chains (Scope 3) and maximise the full value of our resources. – Encourage circularity and provide critical minerals that the world needs to advance. Becoming a trusted steward of resources We aim to: – Decarbonise our operations (Scope 1 and 2 reduction). – Minimise environmental and heritage impacts and act as a responsible steward of water and biodiversity to strengthen our resilience to a changing environment, assessing impacts across the supply chain. The United Nations Sustainable Development Goals Our approach to sustainability aligns with the United Nations Sustainable Development Goals (UN SDGs), which are recognised as the global blueprint for a sustainable future. The SDGs are a useful reference point to ensure our sustainable focus areas reflect society’s expectations and help us direct our efforts where they can deliver the most impact. Our sustainability framework focuses on the two lead goals that we feel are most relevant to operating our business responsibly and where we can have the biggest impact: responsible consumption and production (SDG 12) and decent work and economic growth (SDG 8). Our business operations also contribute to eight supporting SDGs (3, 4, 5, 6, 9, 10, 13, 15), while partnerships for the goals (SDG 17) reflects our approach to sustainability and is fundamental to the way we run our business. For more information about our approach to the UN SDGs, see our website.
Annual Report on Form 20-F 2022 | riotinto.com48 Materiality to Rio Tinto M at er ia lit y to s ta ke ho ld er s Lower materiality Medium materiality Higher materiality Respecting human rights Climate change Cultural & heritage site management Health, safety & wellbeing Inclusion, diversity & equality ESG transparency & disclosure Water management Business Business performance integrity & governance Local community relations Tailings & mineral waste management Biodiversity & ecosystems Closure, post-mining & land rehabilitationPandemic response & public health Employment & talent retention Supply chain transparency Impact of technology End-to-end materials management Responsible tax & royalty payments Risk management & cyber security Future-proof assets Industrial environment impacts How we report on sustainability We want to ensure all our stakeholders benefit from the success of our business. To do this, our priorities and performance must align with society’s expectations, which are constantly evolving. So each year we complete a sustainability materiality assessment to understand which issues and topics matter most to, and have the greatest impact on, our stakeholders and our business. We gather information on sustainability topics and their impact from internal and external stakeholders and employees via interviews, surveys, and reviews of publicly available materials. We ask them what is important now, and what they think will be important in five to ten years. The insights we gather through this process also guide our approach to sustainability and how we report externally. What is important now Our internal and external stakeholders are broadly aligned on the four most important sustainability topics. Climate change is the most important issue and includes concerns about emissions reduction and how resilient and adaptable our business is to cope with climate-induced change. Respecting human rights; cultural and heritage site management; and health, safety and wellbeing are other highly material topics. For our business, the safety and wellbeing of our people remains our highest priority (see page 57). Business integrity, governance, and local community relations are important topics as we continue to build trusting relationships with our partners, employees and host countries. What will be important in the future Our internal and external stakeholders feel that climate change will only continue to increase in importance over the next decade, as will geopolitical uncertainty, the impact of technology, respecting human rights, business integrity and governance, supply chain transparency and end-to-end materials management. Other emerging critical topics include water management due to the reliance of local communities and mining operations on an increasingly scarce resource, and biodiversity due to the increasing impacts of climate change. Managing all these well will be integral to our social licence to operate. Reporting our performance Our sustainability materiality assessment records the threshold at which an issue or topic becomes important enough for us to report on externally. The importance of a topic is based on the significance of its impact on stakeholders. A sustainability materiality assessment differs from financial materiality, which may use financial metrics or other quantitative analyses to determine what would be considered a significant or material impact. As a member of the International Council on Mining and Metals (ICMM), we commit to reporting on our sustainability performance against Global Reporting Initiative (GRI) standards and implementing the ICMM Performance Expectations (PEs). The ICMM Mining Principles framework focuses on the implementation of systems and practices related to a broad range of sustainability areas. In line with the ICMM’s requirements, all 29 Rio Tinto managed operating and refining assets completed an ICMM PEs self-assessment before 30 September 2022. A self-assessment was also completed for Rio Tinto Corporate. These assets met the requirements in the areas of ethical business practice, decision making and stakeholder engagement.
49Annual Report on Form 20-F 2022 | riotinto.com Strategic report How we report Annual Report Climate Change reports1 CSP Report2 Tax reports3 Human Rights reports4 Sustainability Fact Book Linking sustainability to purpose and strategy Materiality and material topics Climate change Economic contribution Human rights Indigenous peoples Memberships and certifications Sustainability data and trends 1. Includes our 2022 Climate Change Report and Scope 1, 2 and 3 Emissions Calculation Methodology. 2. Our Communities and Social Performance Commitments Disclosure Report will from 2023 be incorporated into our 2023 Annual Report. 3. Includes our Taxes Paid Report and Country-by-Country Report. 4. Includes our Modern Slavery & Human Trafficking Statement and our Voluntary Principles on Security and Human Rights Report. For more information see the full reporting suite on our website. Our teams identified opportunities to improve our performance in human rights, risk management, health and safety, environmental performance, conservation of biodiversity, responsible production and social performance. We will work through these opportunities with our assets over the coming months. The majority of our sustainability reporting is incorporated into this Form 20-F and supplemented by our full 2022 Sustainability Fact Book containing current and historical data on topics including health, safety, environment, climate, communities, human rights, responsible sourcing, ICMM PEs and transparency. For more information see our Sustainability Fact Book at riotinto.com/sustainabilityreporting. Governance and assurance The Sustainability Committee oversees strategies to manage social and environmental risks, including management processes and standards. The Committee reviews the effectiveness of management policies and procedures relating to safety, health, employment practices (apart from remuneration, which is the responsibility of the People & Remuneration Committee), relationships with neighbouring communities, environment, security and human rights, land access, political involvement and sustainable development. Given its strategic significance, climate change is overseen directly by the Board. For more information about our Sustainability Committee, see page 108. Non-financial information statement The Sustainability section includes information required by regulation in relation to: – Environmental matters – pages 66-70 – Our employees – pages 59-60 – Social matters – pages 53-56 – Human rights – page 61 – Corruption and bribery – pages 73-75. Other related information can be found here: – Our business model – page 17 – Material risks and how they are managed – pages 76-86 – Non-financial key performance indicators – pages 50-51. Notes on data The data summarised in this Sustainability section relates to calendar years. Unless stated otherwise, parameters are reported for all managed operations without adjustment for equity interests. Where possible, we include data for operations acquired before 1 October of the reporting period. Divested operations are included in data collection processes up until the transfer of management control.
Annual Report on Form 20-F 2022 | riotinto.com50 Supplying low-intensity materials Key achievements Becoming a trusted steward of resources 7% reduction in Scope 1 and 2 greenhouse gas emissions below our 2018 baseline. (2021: 4.3%) 5 of the 7 water stewardship targets remain on track for attainment in 2023. For more information about individual water target performance in 2022, see pages 67-68. (2021: 5 of 7) 8 submissions from technology innovators selected to progress beyond the Charge on Innovation Challenge. 40-tonne-payload agile autonomous haul trucks trialled with Scania at our mine in Western Australia’s Pilbara region, offering potential environmental and productivity benefits. 522km2 cumulative land rehabilitated to end of 2022, mostly at our bauxite mines in Australia, mineral sands mines in South Africa and Madagascar, and at our iron ore mines and exploration areas in the Pilbara, Western Australia. (2021: 494km2) $4 million to explore new approaches in carbon mineralisation technology as a way to safely and permanently store carbon as rock. 2022 sustainability targets and key achievements Supporting SDGsLead SDGs Supporting SDGsLead SDGs $537 million (C$737 million) to be invested over eight years to decarbonise our Rio Tinto Iron and Titanium (RTIT) Quebec Operations in partnership with the Government of Canada. $29 million invested in constructing an aluminium recycling facility at our Arvida Plant in Saguenay–Lac-Saint-Jean, Quebec, Canada to expand our offering of low-carbon aluminium solutions. One-year biofuel trial in partnership with BP to reduce carbon emissions from our marine fleet. First production of spodumene concentrate, a mineral used in the production of lithium for batteries, at a demonstration plant in our RTIT Quebec Operations in Canada. 1.2 million low-carbon beverage cans produced as part of our partnership with Corona Canada. The cans were made using our aluminium leveraging ELYSISTM technology. Around 20 tonnes of tellurium can now be produced every year at Kennecott in Utah, US. Tellurium is a critical mineral used in advanced thin film photovoltaic solar panels. Key achievements Target To achieve net zero emissions from our operations (Scope 1 and 2) by 2050. Targets To reduce our absolute Scope 1 and 2 greenhouse gas emissions by 15% by 2025 and by 50% by 2030. To achieve local water stewardship targets for selected sites by 2023.
51Annual Report on Form 20-F 2022 | riotinto.com Strategic report Key achievements Key achievements Supporting social and economic opportunity Becoming a socially responsible business partner $2.7 billion spent with local1 suppliers, which represents 14.5% of total contestable spend. Zero fatalities at managed operations. (2021: 0 fatalities) 0.40 all-injury frequency rate (AIFR). (2021: 0.40) 1.37 million critical risk management (CRM) verifications. (2021: 1.31 million) $188 million spent with Indigenous suppliers in Canada. 2.8% increase in the rate of new occupational illnesses since 2021. 9 assets achieved an exposure reduction to known health risks (airborne contaminants and noise). (2021: 13 assets) $25.5 million invested through the Rio Tinto COVID-19 Fund between 2020 and 2022 to support global grass-roots, community COVID-19 preparedness and recovery programmes. 22.9% of our workforce are women, up 1.4% from 20212. 25% of executive leaders are women, same as 2021. 28.3% of senior leadership are women, up 0.9% from 2021. 30% of Board roles are held by women, down 6.4% from 2021. $62.6 million contributed to community programmes across a wide range of social and economic categories. (2021: $72.1 million) 2-point increase in our employee satisfaction score (eSAT) since 2021 (from 71 to 73). (2021: 2-point decrease) 6 formal agreements signed with Indigenous rights holders across our global footprint. 53% of our graduate intake are women, down 5% from 2021. 36% of our graduates were from places where we are developing new businesses, up 1% from 2021. 48% increase in Australian Indigenous leaders. (2021: 31 leaders; 2022: 46 leaders) Lead SDGs Supporting SDGs Supporting SDGsLead SDGs Target To increase contestable spend sourced from suppliers local to our operations year-on-year. Targets To reach zero fatalities and to eliminate workplace injuries and catastrophic events. All-injury frequency rate target: 0.38 To have all of our businesses identify at least one critical health hazard material to their business, and demonstrate a year-on-year reduction of exposure to that hazard. To reduce the rate of new occupational illnesses each year. To improve diversity in our business by: – Increasing women in the business (including in senior leadership) by 2% each year. – Aiming for 50% women in our graduate intake. – Aiming for 30% of our graduate intake to be from places where we are developing new businesses. To improve our employee engagement and satisfaction. 1. We take a “site-centric” view of the definition of local, which allows operations to establish their own definition, based on a set of common principles. These principles require that each operation, in defining “local” takes into consideration its geographic, social and economic area of impact as well as ownership. For example, suppliers located within the Pilbara Region of Western Australia are defined as “local” for Rio Tinto Iron Ore’s Pilbara Operations. This approach is consistent with international best practice and aligns with the ICMM Social and Economic Reporting Framework guidance. 2. Women % increase is 1.37% rounded to 1.4%.
Annual Report on Form 20-F 2022 | riotinto.com52 People and society Our operations can have far-reaching impacts on society. We work hard to avoid or minimise adverse impacts and seek to understand, and invest in, the diverse knowledge, cultures and resources that exist in areas where we operate. Our ambition is to contribute to positive and enduring outcomes for our workforce and the countries and communities where we operate. In 2022, we continued to progress on our objectives to achieve impeccable ESG credentials and strengthen our social licence. Among other initiatives, we focused on becoming a better partner to our host communities, enhancing our safety maturity model, and beginning to implement the Everyday Respect recommendations. Simandou community project. Conakry, Guinea.
53Annual Report on Form 20-F 2022 | riotinto.com Strategic report Community engagement and social investment Communities and social performance targets In 2022 we finalised a new suite of CSP targets, following the end of our previous target reporting period (2016-2021). The new targets will help us monitor progress towards the core objectives of our CSP Group strategy. We have transitioned from having individually set and defined local asset targets to common global targets, which will allow us to see progress across the Group as well as for individual assets. Our assets will continue to maintain local targets and metrics, developed in consultation with local communities, in addition to the global targets. Reporting will evolve over the next 12 months. Communities and social performance targets 2022-2026 Reporting status By 2026, all sites to co-manage cultural heritage with communities and knowledge holders. Progress will be evaluated through a co-management maturity assessment currently in development for reporting from 2023. Year-on-year increase in contestable spend sourced from suppliers local to our operations. Baseline included in the 2022 Sustainability Fact Book for: – Rio Tinto Group – Product groups Progress against target reported annually from 2023. By 2026, 70% of total community investment to be through strategic, outcomes- focused partnerships. Progressive reporting through roll-out of the social investment strategy and framework in 2023. By 2024, 100% of employees in high human rights risk roles to complete yearly job-specific and general human rights training. By 2026, 100% of employees to complete yearly general human rights training. Progressive reporting with 2022 focus on training development and role mapping. Effective communities and social performance (CSP) is fundamental to our business. Without the support of the communities where we live and work, we cannot operate. We aim to contribute to a shared future and positive legacy by developing lasting relationships with people, learning about and supporting their goals and aspirations, avoiding or mitigating adverse impacts, and respecting different cultures and connections to lands and waters. We are finding better ways to work with communities and Indigenous peoples, particularly in how we protect heritage. We are moving to a model of co-management of land and waters, and we are updating our agreements to deliver more enduring socioeconomic, heritage and environmental outcomes. This, in turn, delivers greater certainty for mine development. Our CSP teams span our entire business and work in partnership with communities to understand how the work we do affects their lives, culture and heritage. By doing so, we can optimise benefits and reduce negative impacts, both for local communities and our business. Our teams include people who have a range of expertise, from archaeologists, anthropologists, social scientists and economic development experts to human rights specialists and operational leaders. While these teams lead our technical activities, our social licence is the responsibility of all employees. Everyone has a role to play in our engagement with, and contribution to, host communities and society more broadly. Our CSP and site teams are also starting to work with Indigenous communities to explore opportunities for them to participate in our climate initiatives. For more information about our climate initiatives, see our 2022 Climate Change Report at riotinto.com/climatereport. 2022 progress Strengthening social performance We continue to strengthen our social performance governance, capacity and capability. In 2022, we launched our revised Communities and Social Performance Standard. It applies to all managed operations globally and will help us work thoughtfully, responsibly and transparently. It provides clear direction on what success looks like and the minimum standard expected across our global operations. In 2022, we also launched the 2022 to 2027 Group CSP vision, goal and strategic framework, which will guide our activities over the next five years and help improve our performance. Our CSP vision is to respect and enable communities to realise their goals and aspirations and create long-term shared benefits. We continue to build internal capability and collaboration across our teams working in CSP, Indigenous Affairs and Cultural Heritage. In 2022, we held two global conferences in Brisbane and Montreal for more than 260 CSP employees to explore complex technical issues and share good practice and learnings. These conferences also offered the opportunity to engage with civil society organisations, investors and academia on emerging CSP trends and practice. As we evolve our approach to co-design and co-management, we continue to listen to the wealth of knowledge that resides both inside and outside our business. QIT Madagascar Minerals (QMM) In 2022, QMM worked together with national and local authorities, representatives of the communities and Traditional Owners to address complaints raised by members of the local communities through a grievance management process. Throughout the year, the parties continued to work together to find equitable and sustainable solutions and we will continue to work closely with the community on these issues in 2023. Despite the challenges at QMM, we are implementing initiatives to strengthen our collaboration with the community. One example is our village nursery project, which generates income for the community that is supporting the rehabilitation of the area surrounding the Mandena mine. In 2022, QMM invested over $550,000 to support rehabilitation activities, producing 300 tonnes of compost and providing 1,500,000 seedlings used for commercial tree planting, ecological restoration, greening of the area around Mandena and an offset plantation near the future mining lease in Ambatoatsinana. Community associations are the input suppliers, and some community members are also employed. More than 400 households have benefited from QMM’s rehabilitation activities. In addition, QMM will increase its spending on its Corporate Social Responsibility Policy over the next three years to implement development projects in full collaboration with the communities and for the benefit of all local community members. Resolution Copper project, Arizona, US At our Resolution Copper project in Arizona, we continue to strengthen relationships with local communities and Native American tribes by deepening our engagement and partnership support. We recognise the enduring historical connection Native American tribes have with the land at, or near, the proposed mine and we have partnered with the Tonto National Forest Service and Native American tribes to develop a programme to train tribal members in archaeological surveys and to help us identify sites of special significance to tribes. For more information, see resolutioncopper.com The project is going through comprehensive and independent social and environmental regulatory reviews. The US Forest Service (USFS) published the Final Environmental Impact Statement (FEIS) in January 2021. In March 2021, the US Department of Agriculture (USDA) directed the USFS to retract the FEIS, which allowed the agency to undertake further review and consultation.
Annual Report on Form 20-F 2022 | riotinto.com54 Simandou project, Guinea At our Simandou iron ore project in Guinea, we are working with communities to help them prepare for construction and future operations by identifying and managing our impacts, and designing and delivering local social investment and regional economic development programmes. In addition to implementing environmental and social impact mitigation measures, our teams are working with local communities to enhance social infrastructure, deliver livelihood restoration initiatives and build community resilience. Recognising the cumulative impacts that will occur as a result of the development of Simandou, we are also working with our infrastructure and joint venture partners to ensure the consistent application of internationally recognised environmental and social performance standards across the entire project footprint. We are also working towards raising local capacities to maximise local content. Engaging with local entrepreneurs and investing in training and development of local capacities is key to optimise benefits to our host communities. Oyu Tolgoi, Mongolia We focus on long-term sustainable development in Mongolia, increasing transparency in our business processes and building trust with local communities through community investment and local employment. In 2022, local employment at Oyu Tolgoi increased by 25% from January to September as a result of a comprehensive recruitment process and local talent development. Since 2015, Oyu Tolgoi has made a yearly contribution of $5 million to a Development Support Fund (DSF) – administered jointly by Oyu Tolgoi and the community – for community programmes and projects in the Umnugovi aimag. In 2022, after reaching $38.9 million, the fund invested in constructing a community school, a kindergarten, and a health care centre, increasing accessibility to quality educational and healthcare services for community members and creating more than 480 permanent jobs. The DSF also funded the Gobi History and Nature Museum, which opened in May 2022. It has already benefitted tourism in the region by attracting more than 28,000 people, and it is playing an important role in protecting and promoting Mongolian cultural heritage. We continue to engage with local communities through the Khanbogd Tripartite Council (TPC). In 2022, we focused on herder sustainable livelihood, student scholarships and pastureland water access. Compagnie des Bauxites de Guinée SA (CBG), Guinea CBG is a bauxite operation in Guinea owned by Halco Mining Inc. (51%) and the Guinean Government (49%). Halco is a consortium comprised of Rio Tinto (45%), Alcoa (45%) and Dadco Investments (10%). Rio Tinto participates on the boards of Halco and CBG, with representation on various shareholder oversight committees. Through our Board and committee roles, we monitor and support CBG’s approach to environmental protection, community issues and human rights. We are aware of the concerns regarding access to land and water, and the pace of livelihood restoration programmes as well as concerns regarding CBG’s stakeholder engagement. In 2022, sustainability advisory committees at Halco and CBG levels met regularly, strengthening our oversight and providing support to CBG for the improvement of CBG’s social and environmental practices, including for the development of an ongoing human rights due diligence process. Both the Halco and CBG advisory committees are closely following CBG’s response to a complaint made to the International Finance Corporation’s (IFC) Office of the Compliance Advisor Ombudsman (CAO). The mediation process facilitated by the CAO has conducted seven sessions in 2022 and through a collaborative approach the parties made important progress towards an agreement on the improvement of community access to water. Halco continues to participate in the mediation process as an observer, alongside the IFC. Panguna mine, Bougainville, Papua New Guinea The Panguna mine was operated by Bougainville Copper Limited (BCL), majority-owned by Rio Tinto, for 17 years from 1972 until 1989, when operations were suspended due to a civil war, which lasted until 1998. In 2016, Rio Tinto transferred its 53.83% majority shareholding in BCL to the Autonomous Bougainville Government (ABG) and the Papua New Guinea (PNG) Government for no consideration, enabling the ABG and PNG to hold an equal share in BCL of 36.4% each. In September 2020, the Human Rights Law Centre (HRLC) filed a complaint against Rio Tinto on behalf of 156 Bougainville residents with the Australian National Contact Point (AusNCP) regarding the Panguna site. In 2021, as an outcome of the AusNCP engagement, a joint committee of stakeholders, the Panguna Mine Legacy Impact Assessment Committee, was formed to oversee a detailed independent assessment of the Panguna mine to identify and better understand the environmental and human rights impacts of the mine. The Committee is chaired by an independent facilitator with representatives from the ABG, the Independent State of PNG, clan leaders and landowners, local communities, Rio Tinto, BCL and HRLC. It has met regularly since its formation. In 2021, the Committee commissioned the Panguna Mine Preparatory Phase Report to inform priority areas for the Impact Assessment. Completed in 2022, the report identified risks of potential failure of the levee at the former Main/Pump station, and potential flooding events along the Kawerong and Jaba river. On behalf of the ABG, Tetra Tech Coffey completed on-the-ground investigations in October 2022 and will present findings to the ABG who will determine next steps. In 2022, the Committee selected and endorsed Tetra Tech Coffey to complete phase 1 of the independent environmental, social and human rights Legacy Impact Assessment. The Legacy Impact Assessment began in December 2022 and will provide all parties with a clearer understanding of the impacts, so that together we can consider the best way forward. Jadar lithium-borates project, Serbia We continue to believe that the Jadar lithium- borates project in Serbia can contribute to enhancing the electric vehicle supply chain ecosystem in Serbia. We continue to explore options with all stakeholders on how to progress this world-class opportunity to the highest environmental standards. Group-wide COVID-19 fund In 2021, we committed $25 million to help the communities where we live and work respond to the pandemic. Our assets led the implementation of the fund, supporting grassroots communities across three pillars: response, recovery, and resilience. The remaining funds were allocated in April 2022 to support communities in Madagascar, Mongolia, Serbia and South Africa. More information is available on our website. Social contribution Supporting economic opportunities for our host communities and regions is a key priority for us and we strive to employ local people, buy local products and engage local services. In 2022, our total voluntary global social investment was $62.6 million, covering a wide range of social and economic programmes. In 2022, we spent $2.7 billion with suppliers local to our operations, which is 14.5% of our total contestable spend. 88 Indigenous rangers across 12 Pilbara Traditional Owner groups will be supported to deliver cultural land management, through our contribution of A$11.8 million over five years towards Ranger Programs. Humanitarian support through $5 million donated to humanitarian efforts in Ukraine. We also contributed A$271,530 through our global employee appeal. Residents of 10 towns in the Shire of Ashburton and City of Karratha in the Pilbara region of Western Australia will realise improved social outcomes over the next ten years through our A$75 million contribution. Indigenous history will be preserved through a two-year archaeological partnership with the Cheslatta Carrier Nation in Canada, to better understand the history of Indigenous communities and human migrations. 1,000 people in remote rural communities will have access to mobile health care for the first time, through our contribution of $375,000 to Clinic Mobile des Oubliés, a Guinean social enterprise. 550,000+ students in elementary and high schools in Quebec will have access to a free homework helpline and learning website through our contribution of C$1 million over three years. Culturally safe care for mothers and
children will be made available to First Nations and Inuit patients and families at Sainte-Justine through our C$500,000 donation. People and society continued
55Annual Report on Form 20-F 2022 | riotinto.com Strategic report Update on our communities and social performance commitments In October 2022, we released our final standalone report on our progress on the commitments we made after the tragic destruction of the rock shelters at Juukan Gorge. Significant updates since this report are summarised below under three areas of interest: relationships, governance and process, and leadership and inclusion. For more information see our 2022 Communities and Social Performance Commitments Disclosure Report on our website. In 2023, we will repeat the feedback process with Traditional Owners in the Pilbara. This will provide a three-year longitudinal perspective on our relationships. In parallel, we will undertake a project to design and pilot a community feedback process for host communities where we operate globally. Relationships We have changed the way we engage with Indigenous communities. We are progressively working more closely in partnership with Indigenous peoples across our operations to preserve and protect cultural heritage. We are moving to a model of co-management to ensure Indigenous voices are heard as part of our decision making. Remedy agreement with the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation In November 2022, we agreed with the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation to create the Juukan Gorge Legacy Foundation as part of a remedy agreement relating to the destruction of the rock shelters at Juukan Gorge in the Pilbara region of Western Australia in May 2020. Financial support will be provided to the Traditional Owner-led foundation to progress major cultural and social projects, including a new keeping place for storing important cultural materials. The agreement forms part of our commitment to remedy and rebuild the relationship with the Puutu Kunti Kurrama and Pinikura people. For more information see our website. Updated agreement with the Yindjibarndi people As part of our commitment to modernise our relationships with Traditional Owners, in November 2022, we signed an updated agreement with Yindjibarndi Aboriginal Corporation. The agreement aims to provide better social and economic outcomes for future generations and reflects our commitment to create opportunities for Yindjibarndi people to participate in our operations. The agreement also includes support for Yindjibarndi Aboriginal Corporation to develop community, commercial and cultural projects and programmes to fulfil its aspirations of self-determination. For more information see our website. Pilbara Cultural Land Management project As part of our A$11.8 million investment over five years into Ranger programs in Western Australia, we announced a partnership with the Pilbara Cultural Land Management Project (PCLMP) in October 2022. The PCLMP will enable 12 Pilbara Traditional Owner groups to take part in training programmes to help develop tools that support cultural, heritage and environmental mapping, monitoring and management. The project will provide greater employment opportunities and ongoing social and cultural benefits. For more information, see our website. We are also investing in developing and diversifying individual Ranger Programs across the Pilbara, partnering with Murujuga Aboriginal Corporation, Karlka Nyiyaparli Aboriginal Corporation and Yindjibarndi Aboriginal Corporation. The Aboriginal-led Ranger Programs provide connection to culture, opportunities for healing and strengthening families, and holistic support to achieve generational change.