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Rio Tinto Iron Ore Says Its Strategy Optimises Pilbara Assets To Deliver Value

Rio Tinto Iron Ore chief executive Chris Salisbury said that the company's strategy is to optimise Pilbara assets to deliver value for shareholders. Iron Ore business delivered $7.3 billion of free cash flow in 2017 and the company will continue to maximise free cash flow by pursuing a value-over-volume approach, built on a portfolio of world-class assets that deliver premium iron ore product, the Pilbara Blend.

In a presentation to investors and analysts today in Perth, Rio Tinto will showcase its Pilbara operations, a world-class, leading-edge, fully integrated system.

Rio Tinto Iron Ore chief executive Chris Salisbury said "Our strategy is to optimise our Pilbara assets to deliver value for our shareholders. Our Iron Ore business delivered $7.3 billion of free cash flow in 2017 and we will continue to maximise free cash flow by pursuing a value-over-volume approach, built on a portfolio of world-class assets that deliver our premium iron ore product, the Pilbara Blend.

Salisbury said, "We are driving productivity improvements right across the business and we continue to leverage considerable value from innovation and new technology. Our pioneering autonomous rail project, AutoHaul, is on schedule to be implemented by the end of the year, and is already delivering benefits to the business through an uplift in rail capacity."

More than 4,500 mine-to-market productivity initiatives are being pursued in Iron Ore, delivering $500 million in additional free cash flow per year by 2021 as part of an annual Group-wide target of $1.5 billion. The company's productivity and cash focus are increasingly important to offset early signs of cost inflation which are returning to the industry.

The Group's sector-leading application of new technology will also be discussed, including the continued successful roll out of automation, with 95 autonomous trucks and 11 autonomous drills already in operation. Work is progressing on the feasibility study for the Koodaideri project, designed to be the first mine to take full advantage of all these innovations.

Salisbury added the company continues to benefit from changes in the Chinese steel industry. A large drilling programme for 2018 is scheduled, with 700 kilometres of drilling scheduled at various operational hubs near existing mines in addition to exploration on new leases; The Koodaideri feasibility study continues to progress. The project underpins the Pilbara Blend product and should be a low-cost operation with significant capacity optionality; Expected spending of about $2.2 billion on replacement mines over the next three years including initial spending on the Koodaideri, West Angelas and Robe Valley developments.

The $118 million Billiard South sustaining project is in development, helping to support Yandicoogina operations. Production is expected to commence in 2019.

Rail and mine capacity is expected to match nameplate port capacity by the end of 2019. The rail productivity programme, targeting every part of the rail system, will deliver additional capacity and flexibility to underpin our optimised supply chain design.

Shipment guidance for 2018 remains unchanged at between 330 million and 340 million tonnes.

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