Our business performed well in 2012, generating strong cash flows and underlying earnings of US$9.3 billion. Although lower than last year, principally due to lower commodity prices and higher costs, these results demonstrate the quality of our assets and the sustainable cash-generating abilities of our underlying businesses.

However, as foreshadowed at the beginning of the year, we recorded impairments of US$14.4 billion, resulting in the Group reporting a net loss of US$3 billion for 2012. These write-downs are deeply disappointing. In particular the substantial impairment of our Mozambique coal business is unacceptable.

Following these impairments, Tom Albanese stood down from the board by mutual agreement, recognising his accountability as chief executive for these impairments. On behalf of the board, I would like to acknowledge Tom’s contribution and dedication to the company over his 30 years of service.

The board’s objective is to ensure that the business delivers sustainable growth in value to you, our shareholders. Your directors are confident that Sam Walsh, who succeeded Tom Albanese as chief executive, will lead a renewed and focused organisation to do just this and we are working closely together with this objective in mind.

Disciplined capital management

Your board aims to unlock greater value for our shareholders through investing in the best opportunities to deliver attractive returns that are well above our cost of capital.

Recent events demonstrate that there is a need for greater discipline across our business, particularly in the way we manage and allocate capital. Under Sam’s leadership, we will be simplifying and strengthening our systems in this area, and seeking greater accountability for decision-making across the organisation.

Your board regularly evaluates opportunities put forward by the business against all competing uses for cash, striving to achieve the right balance between disciplined investment, strengthening our balance sheet and returning cash to investors.

Our commitment to a strong balance sheet, ensures discipline and flexibility in our investment approach, helping us to build a robust and strongly performing business over the long term.

Our confidence is reflected in the 15 per cent increase in our annual dividend in 2012. Our cash returns to shareholders totalled US$4.5 billion in 2012, including completion of the Group’s US$7 billion share buy-back programme as well as the ordinary dividend payment.

Focus of the board

One of the primary roles of Rio Tinto’s board is to provide oversight of strategy development and delivery, while maintaining the highest standards of corporate governance.

The board conducted its annual strategy review with the executive team in September, reaffirming our commitment to invest in and operate large, long-term, expandable, low-cost mines and businesses. The board also took the opportunity in 2012 to visit a number of the Group’s operations in Australia and Southern Africa to gain a deeper understanding of the strategic issues at play.

Amidst continuing volatility in the global economy and major structural shifts affecting the sector, improvements need to be made in how we execute this strategy. The board has tasked Sam Walsh and his executive team with ensuring we improve capital allocation, deliver our growth projects and improve productivity at all of our sites, while building on our industry leading capabilities in areas such as stakeholder engagement and sustainable development.

As geopolitical risks continue, we have continued to look for new ways to form more effective relationships and partnerships around the world. Rio Tinto has always taken its role as a responsible business very seriously.

We believe earning the trust of our host communities and governments is vital in creating sustainable shareholder value. As the company enters its 140th year of operation this year, we recognise we wouldn’t still be in business without the support of our many stakeholders.

In 2012, considerable time was spent engaging with investors on issues ranging from our capital allocation methodology to executive remuneration. More recently, we undertook an assessment of board effectiveness and, for the first time, the board’s annual evaluation was conducted by an independent expert. Considerable attention will be given to the outcomes of our shareholder engagement and this evaluation exercise in the year to come.

In my letter last year, I commented on the importance of succession planning. My goal is to make sure the board combines a broad set of skills and international experience. Rio Tinto’s board should be diverse in the widest sense with the best blend of appropriately skilled and experienced people from our industry, but also outside of it.

We announced last year that Guy Elliott will step down from the board at the end of 2013. I would like to thank Guy for his invaluable contribution over 33 years with the company. Chris Lynch, who joined the board as a non-executive director in 2011, will formally succeed Guy as chief financial officer on 18 April at the conclusion of the Rio Tinto plc annual general meeting. We are fortunate to have appointed someone so well-qualified to take over from Guy.

As well as succession planning, the board committees have always played an important oversight role, freeing the board to focus on strategic matters. All of our committees have been very active this year and have dealt with a number of challenges. I would like to record my personal appreciation to all of the directors who have been unstinting in their considerable support in a challenging year.

Our Remuneration Committee has taken a fresh look at our reward structures to ensure we recruit, motivate and retain the best talent, but not at any cost. I believe our approach to rewarding our people must balance the company’s priorities of driving financial performance, meeting our expectations as a corporate citizen and creating greater value for our shareholders.

Looking ahead

The wider world did not stand still in 2012. The macroeconomic environment remained volatile, and prices for our products were generally lower than the year before. However, the global economy ended the year in a healthier state than forecast, with a recovery in China, and greater confidence in a recovery in the Organisation for Economic Co-operation and Development (OECD) countries.

We remain very positive about the long-term future of our business. As billions of people move from rural to urban areas over the coming decades, there will be increased demand for the metals and minerals we produce.

This is a great company, pursuing a consistent strategy with a renewed executive team and excellent people. I thank you and all of our employees for your continued support. When I report back to you on Rio Tinto’s progress at this point next year, I am sure I will be reporting on an even stronger and safer organisation focused on delivering value for each of you, our shareholders.

Jan du Plessis

Chairman

6 March 2013

Introduction to Rio Tinto

Rio Tinto is a leading international mining group that focuses on finding, mining and processing the Earth’s mineral resources in order to maximise shareholder value. We have a diverse portfolio and a global presence: our 71,000 people work in more than 40 countries.

To deliver superior returns to shareholders over time, we take a long-term and responsible approach to our activities. This means concentrating on developing first-class orebodies into large, long-life and efficient low-cost operations, capable of providing competitive returns through business cycles.

Sustainable development is integrated into everything we do. Our operations give us the opportunity to bring long-lasting positive change to the communities, regions and countries in which we work, and our metals and minerals are transformed into end products that contribute to higher living standards.

Our responsible approach to mineral development ensures we gain and maintain our licence to operate. It means we provide confidence to our stakeholders, and improve our access to the mineral resources, people and capital we need. Our five product groups summarised below are supported by our Exploration and Technology & Innovation groups (also see pages 22 to 31).

Aluminium product group

Building on more than a century of experience and expertise, Rio Tinto Alcan is a global leader in the aluminium industry. Our fully-integrated facilities include high-quality bauxite mines, large-scale alumina refineries, and some of the world’s lowest-cost, most technologically-advanced primary aluminium smelters.

Bauxite production (2012 vs 2011)

+11%

Products

Bauxite

Bauxite is the natural ore used to make aluminium. It is refined into alumina which is smelted into aluminium metal. Our wholly-owned and joint venture bauxite mines are located in Australia, Brazil and Guinea.

Alumina

Alumina (aluminium oxide) is extracted from bauxite via a refining process. Approximately four tonnes of bauxite are required to produce two tonnes of alumina, which in turn makes one tonne of aluminium metal. Our wholly-owned and joint venture alumina refineries are located in Australia, Brazil and Canada.

Aluminium

Aluminium is a unique and versatile modern metal. Light, strong, flexible, non-corrosive and infinitely recyclable, aluminium is one of the most widely-used metals. Its largest markets are transportation, machinery and construction. Our smelters are mainly concentrated in Canada. We also have plants in France, Cameroon, Iceland, Norway, the UK and the Middle East.

Key strengths

Full operating review on page 22.

Copper product group

Rio Tinto’s Copper group has a global presence and holdings in some of the world’s largest copper mines. We are among the world’s largest producers of copper, gold and molybdenum, and are uniquely positioned to deliver exceptional long-term value due to our high-quality assets, leading technology and a keen focus on managing costs and improving efficiency.

Mined copper production (2012 vs 2011)

+6%

Products

Copper

The world uses more than 19 million tonnes of copper every year. Copper’s malleability, strength and conductivity make it useful in a broad range of building, construction and electrical applications. Copper is found in nearly every home and vehicle and is a critical element of today’s industrialised world.

Gold

Gold’s conductivity and non-corrosive properties make it a vital fabrication material in technology, electronics, jewellery, space exploration and dentistry. Rio Tinto is currently one of the top 15 gold producers in the world, and the largest among the diversified miners. We have interests in two of the largest gold resources, at Oyu Tolgoi and Grasberg. The latter contains the largest gold reserves in the world.

Silver

Silver has very good electrical and thermal properties. It is used in many electrical and electronic applications, such as photovoltaic cells, and is the principal ingredient of x-ray film. Silver is also regarded as a precious metal used as an investment and to make jewellery.

Molybdenum

Molybdenum is a metallic element frequently used to produce stainless steel and other metal alloys. It enhances the metal’s toughness, high temperature strength and corrosion resistance.

Key strengths

Full operating review on page 24.

Diamonds & Minerals product group

The Diamonds & Minerals group comprises mining, refining and marketing operations across four sectors. Rio Tinto Diamonds is one of the world’s leading diamond producers, active in mining, sales and marketing. Rio Tinto Minerals is a world leader in borates, with mines, processing plants, commercial and research facilities. Dampier Salt is one of the world’s largest producers of seaborne salt. Rio Tinto Iron & Titanium is an industry leader in high grade titanium dioxide feedstocks. The Diamonds & Minerals group also includes the Simandou iron ore project in Guinea.

Titanium dioxide production (2012 vs 2011)

+11%

Products

Diamonds

Diamonds share a role with gold as an important component in jewellery that ranges from top-end jewellery through to more affordable diamond jewellery accessories. Rio Tinto is able to service both established and emerging markets as it produces the full range of diamonds in terms of size, quality and colour distribution.

Borates

Refined borates are used in hundreds of products and processes. They are a vital ingredient of many home and automotive applications, and are essential nutrients for crops. They are commonly used in glass and ceramic applications including fibreglass, television screens, floor and wall tiles, and heat-resistant glass.

Salt

Salt is one of the basic raw materials for the chemicals industry and is indispensable to a wide array of automotive, construction and electronic products, as well as for water treatment, food and healthcare.

Titanium dioxide

The minerals ilmenite and rutile, together with titanium dioxide slag, can be transformed into a white titanium dioxide pigment or titanium metal. The white pigment is a key component in paints, plastics, paper, inks, textiles, food, sunscreen and cosmetics. Titanium metal’s key properties of light weight, chemical inertness and high strength make it ideal for use in medical applications and in the aerospace industry.

Other products include high purity iron, metal powders, zircon and rutile.

Key strengths

Full operating review on page 26.

Energy product group

We are a leading seaborne supplier of thermal and coking coal to Asian customers and are one of the world’s largest uranium producers, serving electric power utilities worldwide. The Rio Tinto Energy product group has operations, exploration and development projects in Australia, southern Africa and Canada.

Thermal coal production (2012 vs 2011)

+16%

Products

Coal

Coal is abundant, relatively inexpensive and safe and easy to transport. We are a large supplier to the export thermal coal market. Thermal coal is used for electricity generation in power stations. We also produce higher-value coking, or metallurgical, coal which, when mixed in furnaces with iron ore, produces steel.

Uranium

Uranium is one of the most powerful natural energy sources known, used in the production of clean, stable, base-load electricity. After uranium ore is mined, it is milled into uranium oxide – the mine product that is sold for processing into fuel rods for use in nuclear power stations.

Key strengths

Full operating review on page 28.

Iron Ore product group

We are the second-largest producer supplying the global seaborne iron ore trade. After a decade of rapid expansion in Australia, and more recent growth in Canada, we are well positioned to benefit from the continuing strong demand in China and other Asian markets. We are driving performance through effective project management and value-adding operational efficiencies.

Iron ore production (2012 vs 2011)

+4%

Products

Iron ore

Iron is the key ingredient in the production of steel, one of the most fundamental and durable products for modern-day living, with uses from railways to paperclips. Our iron ore mines are located in Australia and Canada.

Key strengths

Full operating review on page 30.

I am proud to be leading your company and am committed to building a stronger business focused on pursuing greater value for you, our shareholders.

My more than 20 years’ experience with Rio Tinto, including as a member of the board for the past four years, has shown me that we have great assets, outstanding people and the right strategy. We will now have a single-minded focus on how we deliver this strategy in every market in which we operate, everywhere around the world.

I place the highest importance on upholding our values and ensuring safety is paramount in everything we do.

In 2012, while we did experience safety improvements, there were two fatalities at our managed operations and, earlier this year, a fatality at our La Granja project in Peru. I will never let up in my constant efforts to improve safety, to reinforce our strong safety culture, and to ensure that every employee and contractor plays their part in making our workplaces safer.

Highlights of 2012

The pattern of market uncertainty and volatility we have seen since the global financial crisis continued in 2012. Yet despite this, our underlying financial results were solid, indicating the fundamental strength of our businesses.

This was mainly driven by a strong operational performance from some of our businesses. Our iron ore business delivered record production and shipments, and our copper business showed a second half recovery in copper volumes.

We also experienced production increases in bauxite, alumina, thermal coal and titanium dioxide feedstock.

The mining sector has experienced unacceptable levels of cost increases over the past five years. During 2012 all of our management teams were focused on improving productivity to ensure our assets are at the lower end of the total cost curve.

We are continuing to see the benefits of cost savings from our aluminium transformation programme and through the review of support and service costs across the business – but clearly much more remains to be done.

We are taking a more aggressive approach to assets in our portfolio that no longer fit our strategy. We achieved further cash proceeds from our divestment programme in 2012, with the sale of several non-core businesses including Lynemouth Power Station, the North American and Chinese portions of the Alcan Cable business, our Specialty Alumina division, and we secured a binding agreement to sell our interest in Palabora. We also made good progress on exploring options for our Pacific Aluminium and Diamonds businesses. This focus will continue in 2013.

Growth programme

Our total capital expenditure for 2012 was US$17.4 billion, reflecting investment in the high value growth of our business, in particular our world-leading iron ore operations in the Pilbara and the greenfield copper-gold project, Oyu Tolgoi, in Mongolia.

We also continued to invest in a number of other growth projects throughout 2012, such as our iron ore project in Guinea, our aluminium smelting project in Kitimat, and a project to extend the life of the Group’s Kennecott Utah Copper mine.

2012 was our peak capital expenditure year and, given our commitment to greater capital discipline, we are reviewing all capital commitments in 2013.

Delivering our strategy

Under my watch, our strategy will not change – but how we deliver it will. We will consistently execute our strategy in all of our markets with a focus in three key areas in 2013:

Prioritise our capital expenditure on the highest quality projects and improve the way we manage capital. In addition, we are taking a more aggressive portfolio approach to divest assets that no longer fit our strategy.

Our immediate priority is to improve performance at our existing businesses by unlocking productivity improvements, aggressively reducing operating and support costs, controlling sustaining capital spend and leveraging our expertise across all stages of our operations. We are targeting cumulative cash cost savings of over US$5 billion over the next two years, which will see an annual run rate improvement of US$3 billion by the end of 2014.

During 2013, we continue to focus on delivering our two significant growth projects – our Iron Ore business in Australia and our Oyu Tolgoi copper-gold project in Mongolia – in a risk-managed, value-enhancing manner. See page 6 for more detail on what you can expect from us in 2013. In my drive to increase accountability, I have made some changes to my executive team. I welcome two new members – Jean-Sébastien Jacques and Chris Lynch – and congratulate Andrew Harding on his move to head our iron ore business. I have also announced some further streamlining of my executive team, reducing my direct reports from 11 to nine.

Ongoing commitment

We expect market uncertainty and price volatility to persist in 2013, but there are positive signs emerging. In China specifically, momentum is growing under its new leadership, and we expect to see Chinese GDP growth above eight per cent in 2013.

China will remain important to us, but I also expect to see strong demand growth from India, Indonesia and other South East Asian countries as they also urbanise and industrialise. It is this outlook that gives us confidence to invest in high-value growth projects, and underpins our expectation of strong future cash generation.

The company has a renewed and strong leadership team, supported by outstanding people. I would like to thank our 71,000 employees around the world for their dedication and resilience. In many parts of our operations we faced some testing times and there will be more to come.

I remain fully confident in the long-term prospects of the business. We have the right strategy to deliver sustainable growth over the long term to meet the world’s resourcing needs. In the short term, I am certain of what needs to be done and we are taking decisive steps with a clear plan to build a stronger, more accountable business.

Finally, I would like to thank you, our shareholders, for your continued support. I am committed to making a real difference – building on Rio Tinto’s strong foundations to put us firmly on the path of delivering greater shareholder value.

Sam Walsh

Chief executive

6 March 2013

Global economy

The global economy continues to deal with the aftermath of the global financial crisis (GFC) and associated volatility. European policymakers held successive summits during 2012 to tackle tensions from excessive sovereign debt levels in the eurozone, and debate the balance between austerity and growth policies.

In the US, employment remained below 2008 levels, forcing the Federal Reserve to launch a third round of quantitative easing to further stimulate a recovery.

In contrast, the Chinese government maintained policies to control inflation and other effects from the 2009 stimulus and excess liquidity. This led to a sharper slowdown than expected during the third quarter of 2012 in China, contributing to fears that the global economy was heading for a new recession.

Political leadership transition in China added to the perception of uncertainty in 2012, forcing markets towards greater risk aversion. This was felt strongly in commodity markets, with prices for some metals and minerals experiencing large fluctuations during the year. On average, prices for most commodities were ten to 20 per cent lower than in 2011, although they remained at high levels in the longer historical context. Cost escalations, project delays and other supply constraints continued, in many cases, to offset a weaker and more uncertain demand growth environment.

Towards the end of 2012, several encouraging developments started to emerge. In Europe, action from the European Central Bank, combined with the release of bailout funds for Greece, reduced the likelihood of a Greek departure from the eurozone in 2013. It also provided European governments with more time to work towards further integration and greater resilience.

Economic activity started to pick-up again in China in the final quarter of 2012, alleviating fears of a hard-landing. Although liquidity controls in China are expected to remain in place, we would expect positive momentum to be carried into 2013, with Chinese GDP growth for the year moving back to just above eight per cent.

There remain many risks that could derail a stabilisation and improvement in global activity, including continued tensions in the Middle East. We expect volatility to remain a feature of our markets in 2013.

Our belief in the underlying and longer-term trend of rising prosperity in Asia remains unchanged. This will ultimately contribute to support and sustain an elevated level of global economic growth over the next couple of decades. While recognising that the commodity-intensive growth in China is maturing, the industrialisation and urbanisation forces associated with the economic development of emerging countries will continue to support demand for commodities.

Commodity markets

Commodity markets started 2012 relatively positively, with prices for most metals and minerals making a continued recovery from the declines experienced in the second half of 2011. However, prices largely peaked during the first quarter of 2012, sliding downwards throughout the rest of the year, with a sharp correction in the third quarter in the iron ore market. The price trends and volatility reflected the OECD macro-uncertainties described above and concerns from the market that China’s slowdown was signalling the end of investment-led, steel-intensive growth.

China is entering an important and necessary transition phase to rebalance its economy towards consumption-led growth. The near-term reform agenda remains unclear and is likely to generate volatility and uncertainty. Reforms and a rebalancing of the economy will ultimately be a positive development for the sustainability of growth in China. Overall, we expect a falling level of demand intensity for early development phase commodities, but absolute demand growth should remain strong over the next two decades and new opportunities will arise for late-cycle

commodities such as titanium dioxide and other industrial minerals. Our view remains that China’s steel demand will peak at around one billion tonnes per annum towards 2030. Over this timeframe, India and countries in South East Asia are expected to become increasingly important sources of demand for commodities, including steel.

Increasing capital intensity for mining projects was a persistent trend in 2012. This was a reflection of continued real labour cost escalation, declining resource grades and increased mining projects complexity. Through 2012 the mining industry also continued to face increased stakeholder pressures, highlighting the importance of proactive stakeholder engagement and good track records in sustainable development. Nevertheless, rising threats of resource nationalism, greater rent extraction by governments, or simply increased uncertainty, have implications for the economics and feasibility of projects across the industry.

Combined with significant price volatility and stronger calls from investors for near-term returns over long-dated options, these supply challenges are resulting in further investment delays and deferrals. Iron ore and copper projects are being particularly impacted.

Largely due to the supply-side challenges, copper prices remained at levels equivalent to pre-GFC prices throughout 2012. This is in sharp contrast with the aluminium market, where capacity and production in China continue to match the rapid pace of demand. Even so, physical market premia for aluminium reached new records in 2012. The availability of profitable financing deals continued to lock in access to surplus metal. Thermal coal was another market with less favourable supply and demand dynamics in 2012. Prices came under constant pressure throughout the first half of the year. Finally, following continued strong upward momentum at the start of 2012, rutile and zircon prices faced heavy downward pressures during the second half of the year from reduced Chinese buying.

Lower prices and continued cost escalations have put increasing pressure on margins across the mining industry. This is particularly true in Australia where the dollar has remained resilient to falling commodity prices. The country has attracted money-flows from investors reallocating funds away from Europe. The industry in general is starting to respond to the squeeze on margins through a renewed focus on productivity.

Outlook

As the world economy returns to the trend rate of growth, rising incomes and increased prosperity in developing countries – with associated industrialisation and urbanisation – will continue to drive demand for commodities. Looking to the future, our view remains that there will be high average demand growth in our markets while cost escalations and stakeholder pressures remain key challenges to grow future supply.

KPI trend data

The Group’s performance against each KPI is covered in more detail in later sections of this Annual report. Explanations of the actions taken by management to maintain and improve performance against each KPI support the data.

Some KPIs are used as a measure in the long-term incentive arrangements for remuneration of executives. These are identified with this symbol:

External risks

Contents

Performance data

Our sustainable development performance data are reported for calendar years and, unless stated otherwise, represent 100 per cent of the parameters at each managed operation, even though Rio Tinto may have only partial ownership.

Data reported in previous years may be modified if verification processes detect material errors, or if changes are required to ensure comparability over time.

Wherever possible, data for operations acquired prior to 1 October of the reporting period are included. Divested operations are included in data collection processes up until the transfer of management control.

We report in line with the GRI G3 guidelines at Application level A+ and have implemented the International Council on Mining and Metals’ (ICMM) sustainable development framework (www.icmm.com).

Safety

We are committed to achieving our goal of zero harm. This is supported by our management system which provides the framework for incorporating hazard identification, risk assessment and risk management into all aspects of the operations. Safe operations that protect our people are a priority and we work systematically to mitigate risks that are critical to operating safely.

Regrettably, two people lost their lives due to safety incidents while working at Rio Tinto managed operations in 2012. The events were a rail incident at Rio Tinto Alcan Roberval-Saguenay in Canada and an incident during maintenance work on a crusher at Palabora in South Africa. We provided support and counselling to the families and colleagues affected by these events. We conducted in-depth investigations of the causes of these incidents and ensured that the conclusions were communicated across the Group. We are determined to learn from all incidents to prevent similar events from recurring in the future.

We measure progress toward our goal of zero harm through the all injury frequency rate (AIFR), which includes data for employees and contractors. At the end of 2012, our AIFR was 0.67. Over the last five years we have reduced our AIFR by 29 per cent.

The Group-wide safety risk management programme focuses equally on personal and process safety, and material safety hazards. The identification of higher-consequence, lower-probability safety risks are managed through targeted process safety management and the use of a Semi Quantitative Risk Assessment (SQRA^TM) process. Risk reduction resulting from the SQRA^TM process, along with critical risk controls, is used as a Group-wide leading indicator for safety performance.

We focus on building a sustainable safety culture at our operations, based around strong leadership and workforce engagement. We recognise that a slightly different approach is needed at projects where activity and thus risk levels change rapidly. We have benchmarked our approach externally, and we are piloting new methodologies that focus particularly on improving contractor alignment to our approach, and the quality of frontline leadership.

Rio Tinto has required disclosures relating to mine safety violations or other regulatory matters in accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act that are included in Exhibit 99.1 to this filing.

Greenhouse gas emissions

Rio Tinto recognises the reality and scale of the challenges posed by increasing demand for reliable and secure forms of energy, coupled with the need for urgent action to reduce global emissions of greenhouse gases (GHGs). We believe global energy and climate challenges are best met by companies, governments and society working together on a global solution. Until that is in place we recognise that it will be important for individual jurisdictions to take action.

As a capital-intensive business, changing our emissions profile and the transition to low-carbon assets and products is a long-term challenge. We are seeking a substantial decarbonisation of the business by 2050. Following the creation of Pacific Aluminium, the majority of the energy used in Rio Tinto Alcan’s smelters is from low-carbon sources.

We have reduced our total greenhouse gas emissions intensity by 5.1 per cent between 2008 and 2012. Our total GHG emissions were 41 million tonnes of carbon dioxide equivalent (CO₂-e) in 2012, 2.2 million tonnes lower than in 2011.

The majority of Rio Tinto’s GHG emissions are generated as a result of energy use (electricity, fuel and anodes and reductants) during mining, milling and smelting activities at our sites.

We recognise that there are also significant GHG emissions associated with the transportation, processing and use of our products. In 2012, the three most significant sources of indirect emissions associated with our products were:

We face costs associated with greenhouse gas emissions in Europe, Australia, New Zealand, various US states and Canadian provinces. As a result, over two thirds of emissions from our operations are covered by market-based carbon regulation.

Financial performance

Figures above exclude aluminium assets identified for divestment or closure and that are now managed by the Business Support & Operations group.

Strategy and strategic priorities

The aluminium industry is likely to continue facing challenging market conditions for some years, as a structural shift has occurred, driven by the decoupling of the supply chain for bauxite, alumina and aluminium and the continued growth of the Chinese smelting industry. Against this backdrop, Rio Tinto Alcan is focused on a transformation strategy to improve the performance of the product group. This strategy has delivered improvements, but much more needs to be done in this market environment of depressed prices. Further action will be required to reduce costs, improve the productivity of the assets, and the returns that are generated on capital invested.

Rio Tinto Alcan is committed to achieving further significant performance improvements by delivering over US$1.6 billion of EBITDA improvement by the end of 2015 – from both strategic investments and business improvement initiatives. This will incorporate the Aluminium group’s contribution to Rio Tinto’s sustainable cost reduction targets by 2014. The annual run rate from sustainable business improvement initiatives is now exceeding US$460 million, with US$250 million delivered in 2012, as planned. Key elements of this ongoing second phase of Rio Tinto Alcan’s transformation include:

Safety

In 2012, the Aluminium product group’s all injury frequency rate deteriorated to 0.72, from 0.58 in 2011. Regrettably, in January there was one fatality, which resulted from an incident on the Roberval-Saguenay railway in Quebec, Canada. The product group’s ongoing priority is to implement the Zero Harm by Choice programme, as well as to continue deploying Rio Tinto HSE performance standards and risk management practices, to reach Rio Tinto Alcan’s ultimate goal of zero incidents. Process safety management has made significant progress, with reporting, investigation and analysis of significant potential incidents and completion of corrective actions as a main focus.

The Grande-Baie aluminium smelter in Quebec jointly won the 2012 Chief Executive Safety Award. Three Aluminium sites were recognised in other categories:

Greenhouse gas emissions

Rio Tinto Alcan accounted for 20 per cent of Rio Tinto’s total greenhouse gas emissions (GHG) in 2012, compared to 19 per cent in 2011. At year end, total GHG intensity was 24 per cent lower than 2008 baseline performance. The realised reductions made a significant contribution to the Rio Tinto Group’s overall total GHG intensity improvements. This sizeable reduction in emissions over the past several years is mainly related to the divestment or closure of non-core assets, as well as ongoing operational improvements that have combined to give Rio Tinto Alcan the lowest carbon footprint in the aluminium industry. Taking into account recent portfolio changes, 96 per cent of Rio Tinto Alcan’s power supply is carbon-free and falls into the lowest-cost quartile for energy. Aluminium produced using hydroelectricity – which currently represents some 83 per cent of the Aluminium product group’s power supply – has the lowest footprint with respect to primary energy consumption and climate change in lifecycle analysis studies.

Rio Tinto Alcan works closely with stakeholders to address sustainability concerns and help identify ways to foster greater transparency and sustainability throughout the aluminium industry.

During 2012, the Aluminium product group played a lead role as a co-founder of the Aluminium Stewardship Initiative (ASI), along with the International Union for Conservation of Nature and several other founding members. The mission of ASI is to define and deliver the first comprehensive global standard for the responsible production, use and re-use of aluminium. Rio Tinto Alcan also agreed to participate in Empreinte Carbone Québec, a pilot project launched by Quebec’s Ministry of Economic Development, Innovation and Export to develop a method for calculating carbon footprint.

Review of operations

Rio Tinto Alcan’s underlying earnings of US$3 million were US$439 million lower than in 2011, primarily from a significant deterioration in market conditions and the impact of the lock-out at the Alma smelter in Quebec. The combined impact of movements in prices and exchange rates, inflation and increasing prices for coke, pitch and caustic reduced underlying earnings by US$569 million year-on-year and lowered EBITDA margins by 11 per cent. This market impact was partially offset by controllable cash cost improvement initiatives which had a net positive impact of nearly four per cent on margins. The absence of the abnormal weather events that occurred in 2011 was outweighed by the impact of reduced operations from the lock-out at Alma.

Further deterioration in aluminium market conditions in 2012, together with strong currencies in certain regions and higher raw material costs, has had a negative impact on current market values in the aluminium industry. The annual impairment review for Rio Tinto Alcan and other aluminium businesses (including Pacific Aluminium)_(a) resulted in a post-tax impairment charge of US$11.0 billion, which includes goodwill impairment of US$6.0 billion.

The average aluminium market price in 2012 was US$2,018 per tonne, a decrease of 16 per cent from 2011. Rio Tinto Alcan’s average realised price for primary metal products in 2012 was US$2,383 per tonne, 12 per cent lower than US$2,715 in 2011.

Gross sales revenue for Rio Tinto Alcan decreased by 17 per cent compared with 2011. This was due to the combined effects of lower market prices across the product range and reduced production at Alma, offset by the Yarwun refinery expansion in Queensland, Australia.

Aluminium production decreased by nine per cent to 2.2 million tonnes in 2012. This was partly due to the lock-out at Alma – resolved through the signing of a new labour agreement. Two thirds of the smelter’s capacity was curtailed throughout the first half of the year. Alma was progressively returned to full production by January 2013. The new organisational design implemented after the negotiated labour agreement will enable productivity improvements and lower total operating costs. This new organisational design is now being deployed in other facilities and will contribute to further cost reductions in 2013.

Rio Tinto Alcan’s bauxite production was 31.4 million tonnes in 2012, 11 per cent higher than in 2011. Record production levels were achieved at Weipa in Queensland, Australia, as well as in Guinea. The increase in output was driven by production creep initiatives to supply requirements from the expanded Yarwun refinery, and increased third-party demand.

Alumina production increased 19 per cent to 7.0 million tonnes during 2012, as expanded refining capacity at Yarwun came on line. First bauxite was injected into the expanded Yarwun plant in July 2012. By September, the expanded refinery was operating at 90 per cent of its nameplate capacity of 3.4 million tonnes per annum. The ramp-up is on schedule to reach full capacity by the third quarter of 2013. Yarwun is moving the product group’s alumina production into the second quartile of the industry cost curve.

Development projects

Rio Tinto Alcan’s development pipeline is focused on developing its long-life Tier 1 assets, while strictly limiting growth in line with market conditions. Project characteristics include a low carbon footprint, low operating costs and attractive forecast returns on capital.

Feasibility and environmental impact studies are currently being completed for the South of Embley project. This would extend the life of the Weipa bauxite mine in Queensland, Australia by approximately 40 years, depending on production rates. The expansion would facilitate staged increases in production of up to 36 million dry product tonnes a year, from the current level of 23 million tonnes. It would enable the continuity of supply to Rio Tinto Alcan’s two Gladstone alumina refineries and capitalise on the rapidly-growing third-party market for seaborne bauxite.

Two major smelting projects under way in Canada are designed to leverage Rio Tinto Alcan’s clean, self-generated hydroelectricity and generate advantages from the latest AP™ smelting technology. In Quebec, the construction of the AP60 smelter is complete and is now in the commissioning phase. This 60,000 tonne plant is the first commercial-scale implementation of Rio Tinto Alcan’s newest smelting technology platform. Operating at an unprecedented 600 kiloamperes, the energy-efficient AP60 is designed to deliver a US$60 to US$90 per tonne full economic cost advantage over the existing benchmark. First metal at the AP60 smelter is expected in the first half 2013. Subsequent phases will be delayed until the aluminium market shows clear signs of recovery.

The Kitimat Modernisation Project in British Columbia will increase the smelter’s current production capacity by more than 49 per cent, to approximately 420,000 tonnes per year. The modernised aluminium smelter will be powered by self-generated hydroelectricity and use advanced AP40 technology to cut GHG emissions intensity by more than 50 per cent. Once completed at the end of 2014, Kitimat will be one of the lowest-cost smelters in the world, strategically located to supply key emerging markets in the Pacific Rim.

The modernisation of the ISAL aluminium smelter in Iceland is expected to increase production from 190,000 tonnes to 230,000 tonnes and includes a leading-edge casting facility to produce value-added billet. The new casting facility produced its first billet in the second quarter of 2012.

Outlook

Macroeconomic sentiment remains uncertain and continues to impact the group’s product prices – particularly for aluminium.

With a number of regional economies expected to improve, total primary demand for aluminium is forecast to increase by nearly six per cent in 2013. However, inventories are still high and warehousing transactions, driven by forward pricing estimates and low interest rates, remain attractive. Medium-term supply growth is currently forecast to match or exceed demand growth, resulting in a global market surplus for the industry in the near term.

Smelter grade alumina demand is underpinned by aluminium production, so alumina demand over the long term is directly tied to aluminium demand estimates.

Of Rio Tinto Alcan’s three core commodities, bauxite presents the best opportunities for attractive returns in the near term, given strong Chinese demand and supply uncertainty. The current focus of the traded bauxite market is on China’s sharply increased demand for imported product. Although shipments from a traditional key supplier in Indonesia have been recovering in the wake of bauxite export restrictions introduced in May 2012, the fundamentals for traded bauxite continue to look strong going forward.

On balance, while higher regional market premiums have helped partially offset prevailing low aluminium prices, the short-term outlook for aluminium markets remains challenging, with lingering economic uncertainty and continuing price volatility. This underscores the importance of the ongoing drive to transform Rio Tinto Alcan into a leaner, highly-efficient aluminium producer capable of generating solid returns throughout the economic cycle.

The longer-term outlook for aluminium remains robust and Rio Tinto Alcan believes strong returns will be available in the future for the well-positioned, low-cost operator.

Rio Tinto Alcan anticipates strong future demand in key sectors like transportation, infrastructure and consumer goods, spurred by the continued move to urbanisation and the growth of megacities, particularly in China and other emerging Asia-Pacific economies. A measure of the enormous potential is that per capita consumption of aluminium is currently just one kilogram in India and five kilograms in Brazil, well below the average of more than 20 kilograms per capita in industrialised countries.

Mature markets will also require significantly increased volumes of aluminium. A good example is the automotive industry, currently among the top-performing sectors in the economies of both the US and Germany.

The global demand picture outlined above would translate into a need for around 40 million tonnes of modernised aluminium production (net of inventory reductions) between now and 2025, along with 75 million additional tonnes of alumina and, very importantly, around 230 million additional tonnes of bauxite. Despite this positive outlook for demand, it is ultimately supply growth that will determine whether, or when, the aluminium industry returns to a more balanced market in the long term.

Financial performance

Strategy and strategic priorities

The Copper product group’s strategy is to maximise shareholder returns by delivering superior margins and growth from high-quality assets. This strategy will be realised by:

Safety

In 2012, the Copper product group’s all injury frequency rate was 0.50, compared to 0.56 in 2011. The Copper product group regrettably suffered a fatality at its Palabora operation in South Africa and two industrial fatalities occurred at the non-managed Grasberg mine in Indonesia.

The Copper product group is committed to managing the risks inherent in its business and providing a workplace where there is a culture of zero harm. To that end, the group is developing enhanced programmes and procedures to manage process safety, underground safety and contractor management activities. In addition, the group is embedding the need for all leaders and employees to focus on personal safety and work collaboratively toward the goal of zero harm.

Greenhouse gas emissions

The Copper product group’s 2012 greenhouse gas (GHG) emissions were 10.66 tonnes of carbon dioxide equivalent per tonne of copper cathode produced, compared with 8.15 tonnes in 2011. The decline in efficiency resulted from the smelter shutdown at Kennecott Utah Copper and decreased production at Palabora. The Copper product group represented 6.8 per cent of Rio Tinto’s total emissions.

Review of operations

The Copper product group portfolio is made up of large, long-life, low-cost operations that present meaningful opportunities to grow and improve productivity. In 2012, the group produced 549 thousand tonnes of mined copper (Rio Tinto share), making Rio Tinto the world’s sixth largest supplier. The product group also produced 294 thousand ounces of mined gold, 3,657 thousand ounces of mined silver and 9.4 thousand tonnes of molybdenum as by-products of its copper operations.

Kennecott Utah Copper (Rio Tinto: 100 per cent)

Kennecott Utah Copper, adjacent to Salt Lake City, produces about 17 per cent of US copper supply. In 2012, Kennecott produced 163 thousand tonnes of refined copper, 279 thousand ounces of refined gold, and 9.4 thousand tonnes of molybdenum. Refined metal production was higher

during the second half of the year due to improved mine production and processing of inventories built up during a maintenance shutdown of the smelter in the second quarter, which was planned to coincide with the period of lower grades.

Escondida (Rio Tinto: 30 per cent)

Operated by BHP Billiton, Escondida is the world’s largest copper mine. Located in Chile’s Atacama Desert, it represents five per cent of global production and 16 per cent of all copper production from Chile. In 2012, Escondida produced 1,047 thousand tonnes of copper (100 per cent basis). Production was higher than 2011 due to higher grades and an increase in ore delivered to the concentrator owing to improved material handling.

Grasberg (a joint venture that gives Rio Tinto a 40 per cent share of production above specified levels until the end of 2021 and 40 per cent of all production after 2021)

Grasberg is owned and operated by PT Freeport Indonesia, a subsidiary of US-based Freeport-McMoRan Copper & Gold Inc. Located in the province of Papua in Indonesia, it is one of the world’s largest copper mines. Production in 2012 did not reach the specified level, so Rio Tinto did not receive a share of production for the year.

Northparkes (Rio Tinto: 80 per cent)

Located in New South Wales, Australia, Northparkes is a joint venture with the Sumitomo Group. Northparkes produced 53.8 thousand tonnes of copper and 72 thousand ounces of gold in 2012 (100 per cent basis). The mine is the site of an innovative tunnel boring trial that has the potential to increase the rate of tunnel development underground. The site is also home to a state-of-the-art underground training facility.

Palabora (Rio Tinto: 57.7 per cent)

Palabora Mining Company is a South African company listed on the Johannesburg Stock Exchange. The mine produced 40.9 thousand tonnes of refined copper in 2012 (100 per cent basis). In December 2012, Rio Tinto announced an agreement to sell its interest in Palabora for consideration totalling US$373 million. While South Africa remains an important and prospective region for Rio Tinto, and Palabora is a good business, it is no longer a natural fit within Rio Tinto’s portfolio.

Development projects

Extending mine life

The Copper product group is pursuing several promising projects to extend the life of existing operations in its portfolio.

In June 2012, Rio Tinto approved a US$660 million investment to extend the life of Kennecott Utah Copper’s Bingham Canyon mine from 2018 to 2029. The project, known as Cornerstone, involves pushing back the south wall of Bingham Canyon to gain access to 515 million tonnes of 0.79 per cent copper equivalent ore. Work continues on evaluating projects to expand and upgrade the power plant to natural gas and expand the tailings impoundment.

At Escondida in northern Chile, the Ore Access and Laguna Seca Debottlenecking projects were completed in the second half of 2012, with significant production improvements already realised, in particular with the material handling process.

Escondida’s Organic Growth project costing US$3.8 billion (Rio Tinto share: US$1.2 billion) was 26 per cent complete at year end. This project involves constructing a new, 152,000 tonnes per day concentrator to replace the Los Colorados concentrator and allow access to high-grade ore located under the existing facilities. The additional Oxide Leach Area project will cost US$721 million (Rio Tinto share: US$216 million) and involves the construction of a new dynamic leach pad that will maintain current levels of oxide leaching after the existing heap leach has been fully exhausted. Construction of the project is expected to be completed in 2014.

In Indonesia, the Grasberg mine is continuing its transition from primarily an open pit to a fully underground operation. The Grasberg underground

block cave project will come on line in 2017, when the current open pit mine will be depleted, and is expected to ramp up to full capacity by 2022, reaching 160,000 tonnes of ore produced per day. In addition, Grasberg has begun construction on the Deep Mill Level Zone block cave mine, which will produce an additional 80,000 tonnes of ore per day at full capacity, expected in 2021. Together, these two projects will supply ore to the mill at 240,000 tonnes per day by 2022.

Technological innovations

Technology continues to be a primary lever to improve productivity and cost performance by increasing recoveries, enabling the processing of low-grade material, as well as optimising underground and capital development.

In 2014, Kennecott will commission its Moly Autoclave Process (MAP), which will process lower grade molybdenum concentrate more efficiently than conventional roasters and will improve recovery rates by eight per cent.

Kennecott has also completed construction and commissioning of a pilot ore sorting facility. The new technology, Copper NuWaveTM, has the potential to upgrade marginal ore and waste material by rejecting barren material from the mill pebble recycle stream.

Northparkes began commissioning of a new tunnel boring technology in October 2012. This technology is one pathway to reduce up-front capital costs and decrease construction time for underground operations. Initial tests have demonstrated a 40 per cent increase in the speed at which tunnelling occurs. Additionally, in August 2012, the Rio Tinto Block Cave Knowledge Centre officially opened at the Northparkes mine, providing employees from across the Group with the highest standard of technical and safety training for underground block caving operations.

Greenfield projects

Rio Tinto is focused on developing greenfield projects that can deliver the highest potential returns. The Group approaches each project with world-class environmental standards, and with a goal of creating sustainable economic benefits for all stakeholders.

Oyu Tolgoi (Rio Tinto: 51 per cent interest in Turquoise Hill Resources)

In a span of 34 months, the Oyu Tolgoi copper and gold mine in Mongolia has gone from the planning stage to near completion as a world-class operation and is the flagship of the Copper product group’s growth portfolio. At the end of 2012, the project was 99 per cent complete for the open pit, and the group has signed a binding agreement with a Chinese power company for the supply of electricity.

Commercial production of copper concentrate is expected in 2013, and Oyu Tolgoi is set to be a top five copper producer once fully developed. Over its life, it will deliver an average annual production of 425,000 tonnes of copper and 460,000 ounces of gold, and will have net unit cash costs in the first quartile of the industry cost curve.

Oyu Tolgoi contains a 1.5 billion tonne reserve and substantial additional copper mineralisation. The deposit provides opportunities for further expansions that could see production continuing for more than 50 years. In addition, Oyu Tolgoi is in a highly prospective region with further exploration potential.

La Granja (Rio Tinto: 100 per cent)

The La Granja project in northern Peru has the potential to be one of the Group’s highest value opportunities. La Granja could be the largest undeveloped greenfield copper project in Latin America, and has the potential to be a very large, long-life operation.

In 2012, Rio Tinto launched a prefeasibility study to mine copper from an open pit, with low technical risk, and using a leaching process to maximise recovery of copper. To date, 168,000 metres of drilling has been completed and further drilling will be ongoing during 2013.

The current plan is to develop the project using a staged, three-phase approach, in which the group will develop an initial leach operation, expand the operation and then construct a concentrator on site. Employing this phased approach will defer significant capital investment until after production begins, with operating cash flows supporting further expansions. Rio Tinto’s knowledge of La Granja’s orebody – and of the broader region – continues to evolve. Developing La Granja will provide access to an attractive orebody and will allow the Group to establish a positive presence in a part of the world with significant mineral potential.

Eagle (Rio Tinto: 100 per cent)

Located in Michigan, US, the Eagle copper/nickel mine is scheduled to begin operation in 2014. The mine will produce an average of 16 thousand tonnes and 13 thousand tonnes per year of nickel and copper metal respectively over seven years. Eagle Mine is also located in a highly prospective region where Rio Tinto currently holds significant tenements.

Resolution Copper (Rio Tinto: 55 per cent)

The Resolution Copper project, located in Arizona, US, is ranked among the top ten undeveloped copper assets in the world, and is expected to be a major underground block cave operation.

Resolution Copper has mining tenements covering the identified orebody. However, to realise the full potential of the project, Resolution Copper requires access to public land where mining is currently prohibited. Resolution Copper continues to seek legislative approval in the US Congress to acquire full legal title to all needed land including the adjacent public land. In exchange for that title, the project would give the public more than 2,400 hectares of high-quality Arizona conservation lands. Permitting of the project will start in 2013 with submission of the General Plan of Operations (GPoO) to the United States Forest Service, a Federal Government agency. Submission of the GPoO will initiate the process of assessing the project’s environmental impacts and applying appropriate mitigation. This will be done through the generation of an Environmental Impact Statement (EIS), written by the Federal Government, per the National Environmental Policy Act (NEPA). In parallel, work continues on the prefeasibility study, with a timeline that has been extended to allow for a more complete evaluation of mining and processing options and to determine the optimal path forward.

Outlook

Rio Tinto is confident in the fundamentals of the industry and the long-term future of the copper market. While the Group expects continued volatility in the short term, the copper market’s robust long-term fundamentals remain intact.

With roughly 60 per cent of copper used as an electrical conductor, the electrification and urbanisation of emerging markets, primarily China, followed by India and South East Asia, will drive copper demand growth through the next several decades. While new mine supply is due to come on line in 2013 as a result of higher prices in the past few years, Rio Tinto has exceptional copper assets and is well positioned to make the most of these market conditions.

The Copper product group is keenly focused on managing costs across its business, and maximising the technological innovations that can lower the cost of developing new mines and improving the productivity of existing operations.

Through a strategic approach of carefully prioritising work and organising key projects into phases, the Copper product group will continue to be flexible and focused on making investments that create the most value.

Financial performance

Following changes to Rio Tinto’s management announced in July 2012, the Simandou iron ore project is now reported within Diamonds & Minerals to reflect management responsibility. Prior year comparatives have been restated.

Strategy and strategic priorities

Demand growth for diamonds and industrial minerals typically follows peak requirements for commodities such as iron ore and copper. The Diamonds & Minerals product group intends to capitalise on this trend by strengthening its portfolio and securing opportunities for valuable growth. The product group strategy is to:

Safety

The product group continues to focus on fostering a culture of accountability and awareness among employees and improving contractor safety. The product group’s all injury frequency rate (AIFR) increased slightly to 0.57 in 2012 from 0.55 in 2011.

The product group faces some unique challenges in health and safety. The workforce spans multiple nationalities, ethnicities, languages and cultures in developing countries. In response, management is employing innovative strategies and visible safety leadership to educate the workforce. The product group is committed to eliminating risks of fatalities and permanent injuries, particularly in the large development projects under way. At Diavik, where the transition to underground mining was recently completed, the mine rescue team came third at the 8th International Mine Rescue Competition held in Donetsk, Ukraine, a significant achievement at the highest possible skill level.

Greenhouse gas emissions

Overall greenhouse gas (GHG) emission intensity improved across the product group due to higher production levels and the implementation of more efficient equipment and technology. GHG emissions per tonne of product were marginally higher at Rio Tinto Minerals in 2012 as a result of lower production, and intensity decreased by 8.4 per cent across Rio Tinto Iron & Titanium’s operations, reflecting efficiencies associated with higher production levels and new technology. GHG emission intensities improved across all Rio Tinto Diamonds operations. In 2012 Diavik commissioned its wind farm which will reduce diesel consumption by approximately ten per cent and lower greenhouse gas emissions by approximately six per cent. The Diavik wind farm is the largest wind diesel hybrid system in the world and the first wind generation facility for Rio Tinto.

Review of operations

Diamonds & Minerals’ underlying earnings of US$119 million include evaluation costs in respect of Simandou of US$262 million. Excluding Simandou expenditure, underlying earnings of US$381 million were 52 per cent higher than in 2011. The group benefited from higher prices for titanium dioxide feedstocks and borates. The acquisition of BHP Billiton’s interests in Richards Bay Minerals also contributed to the increase in earnings. This was offset by lower prices for diamonds and higher depreciation at Diavik following an impairment reversal in 2011.

Rio Tinto Minerals (RTM)

RTM (100 per cent interest) supplies over 30 per cent of the world’s refined borates from its world-class deposit in Boron, California. RTM also has borates refineries and shipping facilities in China, France, Malaysia, the Netherlands, Spain and the US.

Borates production of 463,000 tonnes boric oxide equivalent was eight per cent lower than in 2011, reflecting current global economic market conditions. The sale of Borax Argentina which historically contributed around four per cent of RTM’s borates production completed in August 2012. Despite a weakening in demand during the year, RTM achieved a one per cent improvement in refined borates revenues. Earnings of US$140 million were six per cent higher than 2011, excluding the contribution from talc in the prior period.

Rio Tinto Iron & Titanium (RTIT)

RTIT is the largest producer of titanium dioxide feedstocks. RTIT mines ilmenite at its wholly-owned Rio Tinto Fer et Titane (RTFT) operation in Quebec; its managed operation Richards Bay Minerals (RBM) in South Africa (74 per cent interest); and its QIT Madagascar Minerals (QMM) operation (80 per cent interest). RTIT produces high-quality titanium dioxide feedstocks at its world-class metallurgical complexes as well as co-products including high purity iron, steel, metallic powders, zircon and rutile.

In September 2012, Rio Tinto doubled its holding in Richards Bay Minerals to 74 per cent following the acquisition of BHP Billiton’s entire interests. The purchase price paid by Rio Tinto on completion was US$1.7 billion. The acquisition was triggered in February 2012 by BHP Billiton exercising a put option agreed with Rio Tinto as part of RBM’s restructuring in 2009. The price was determined through a previously-agreed expert valuation process.

In 2012, titanium dioxide feedstock production increased by 11 per cent year-on-year to 1.6 million tonnes. This reflects higher production at RTFT which completed a furnace rebuild in 2011 and an increase in attributable volumes at RBM resulting from Rio Tinto doubling its stake in September. Production was negatively impacted by the furnace rebuild at RBM that commenced in May 2012.

RTIT increased its revenues by 41 per cent due to higher prices for titanium dioxide feedstocks and the RBM transaction. RTIT continued to replace its multi-year sales contracts with alternative pricing mechanisms, increasing the exposure to current market prices. The impact of improved pricing more than offset increased input costs resulting in a 163 per cent increase in year-on-year earnings to US$397 million, including the higher contribution from RBM.

Rio Tinto Diamonds (RTD)

RTD is a leading producer of rough diamonds with a product portfolio that provides a presence in all major markets. Rio Tinto’s diamond assets currently comprise the Argyle Diamond Mine in Australia (Rio Tinto: 100 per cent), the Diavik Diamond Mine in Canada (60 per cent), Murowa Diamonds in Zimbabwe (78 per cent) and the Bunder diamond project in India (100 per cent). RTD sells its share of production through its centralised marketing office in Belgium and has a niche cutting and polishing factory in Australia, where it cuts and polishes the high-end pink diamonds from the Argyle mine, and sells them to an international customer base.