Okay, good morning, everybody. Welcome to our 2018 Interim Results. If I could ask you to put your phones on to silent. And just briefly, health and safety, the best fire exit is back through the door you came just to the right, and then you turn left on to Throckmorton Street for the muster point. There is no test alarm set for this morning. But you'll be told if we need to evacuate. With that, I will hand over to J-S. Thank you. Jean-Sébastien Jacques: Thank you, John. Good morning, all, and welcome to our results presentation. Our strategy is working, is delivering. Rio Tinto has once again delivered strong results with superior shareholder returns. We have real momentum, and I'm absolutely delighted to report that we continue to deliver on our promises. We maximized cash generation through our value-over-volume approach, delivering $9.2 billion of EBITDA, with an EBITDA margin of 43%. We strengthened our portfolio with $5 billion of announced divestment. We invested $1.4 billion in high-return growth. We generated around $300 million of free cash flow through our mine-to-market productivity. And most importantly, we've announced superior cash returns of $7.2 billion, including an interim dividend of $2.2 billion, a $1 billion top-up to our current buyback programs and the return of $4 billion to our shareholders from disposals proceeds, the precise timing and form to be announced shortly. We are proud of those results, but rest assured, we will not become complacent. Our aim is simple: to continue to deliver superior returns over the short, medium and long-term. Now, I will take you through the highlights. In the first half, we continued to deliver robust financial performance to allocate capital with discipline and to position the Company for the long-term. Let me take each of these in…

Thanks, J-S. These are another strong set of results, but let's have a look at the numbers in more detail starting with the commodities. In Iron Ore, benchmark 62% prices declined by 9% versus last year. This was driven by slightly lower demand, stronger than usual first half seaborne supply and some de-stocking of inventory at the ports, mostly in the second quarter. However, lower iron ore prices were offset by higher prices across the rest of the group. We saw increased demand for our seaborne bauxite and reasonable pricing over the period. The LME price for aluminum improved with an increase of 18%, reflecting strong demand and disruption in the sector, including the impact of tariffs in the U.S. We've also continued to increase the proportion of value-added products from 57% of our portfolio to 58%. These carry an average premium of about $222 per tonne. Copper prices in the first half of 2018 were 20% higher than the first half of 2017, primarily as a result of strong demand from both China and the rest of the world. China's environmental policies also curtailed the importation of scrap, which created increased demand for concentrate and cathode. Copper prices [sell off] in the last month or so as markets became concerned by the noise around potential trade wars. For the first time, we're showing a waterfall slide for underlying EBITDA rather than underlying earnings. We think that underlying EBITDA is the better proxy for the cash performance of the group, which is something that we prefer to focus on. This metric has remained fairly flat compared to the same period last year despite some of the headwinds that J-S has already mentioned. As I've just discussed, pricing has been broadly positive across the commodities with higher pricing in most of…

Jason Fairclough, Bank of America Merrill Lynch. J-S, you mentioned the quality premiums being paid in iron ore right now. Could you talk a little bit about how the organization thinks about the sustainability of those premiums? And to what extent is that informing your view on bringing forward CapEx in iron ore to sustain that quality? Jean-Sébastien Jacques: All right. So you asked me the same question last year. Okay, one of your colleagues did. So we believe that the shifts between high-grade and low-grade in iron ore in China is becoming more and more structural, all right. We had the opportunity to meet again with Chairman [indiscernible] a few months ago, and there is no doubt that the restructuring of the steel industry is here to stay. That the push for environmental better performance is there as well. And therefore, they will continue to reduce capacity. That doesn't mean they will reduce production and you saw the latest stats on the production steelmaking is steel production, sorry, is still increasing in China and therefore, for them to continue to produce we will reduce capacity and you need higher grades. So we believe that the spread, the difference, the discount, the premium, call it whatever you want, between high-grade and low-grade is here to stay. That's the first point. The second point is we are delivering to China the reference product, the Pilbara Blend, all right. And today, despite everything you can hear about trade and so on and so forth today we don't have an issue in placing our Pilbara Blend in the marketplace in China. Quite the opposite, people would ask for more of it. So we are – and we do this optimization on an annual basis, what should be the right production the type of…

Good morning. It's Menno at Morgan Stanley. Just two questions, one for Chris and then one for you. Judging by the reaction of the shares this morning, considering that the company is returning $5 billion since it's clearly 5% of the market cap, it suggests that maybe some people are worried that Rio Tinto is losing out on some profitable growth options. What would be your reaction to that statement? Do you think that's right or do you think you're capturing everything that's out there? And secondly, Chris, on the cost, slightly boring, but central costs stepped up quite significantly to 560 million this half. Is that the run rate we need to think of going forward? And if I turn that into your waterfall, the $200 million headwinds post-tax cash flow in the mine-to-market program, is that a run rate for the second half or is it going to accelerate given the statements made on inflation?

I'll do the cost one first. Okay. So we've got addressing the mine-to-market. The input headwinds, I think they're persisting, but they're probably easing a little bit in terms of the second half. I think they – but where we've seeing that most pronounced was in the aluminum business. And I think if you look across to some of our competitors in aluminum, you'll see the same sort of story coming through there. With regard to the central costs, there's a series of things going on that are sort of placing the company in position to go forward. So we've been working on the operating model and there's commensurate spend with that. We've had a program what we call fix the basics in the ISNT and some of the shared service areas, which are – there are limited timeframe spend. So even the second half will be slower, slightly slower than the first half was, but it's within this year type event. So you got that. If I give you a bit of a breakdown on that though, it's like that operating model and restructuring stuff is about $80 million. There's some work going into the establishment, further establishment of the commercial center in Singapore and the ISNT fixes combined and the majority of this is in the ISNT side, it's about $75 million. And then we've got a higher charge going through Central for our insurance and pension costs. The insurance is something that we're taking through the central rather than within the product groups at the moment. So that's a change this year that's slightly different. That's about $40 million in there. So that's the $200 million give or take in that central cost. I think the run rate in the second half will be lower than that…

[Operator Instructions] We will now take our first question from Paul Young from Goldman Sachs. Please go ahead. Your line is open.

Hi J-S, hi Chris. J-S two questions for you actually. First one is on the bauxite market. I noticed a statement in the results about there being significant uncertainties around the direction of the bauxite market. That appears to be new. You had a decent increase in realized price during the half, but based on what you're seeing in Guinea and Guinea supply, how's this change your view on long run fundamentals and pricing? And second question, J-S, on Oyu Tolgoi, underground development seems to progressing very well. But I'm interested in the exact CapEx requirement for the power plant and the benefits of actually on the cost side. And also your view on the current government study around this implementation on the investment agreement. Thanks. Jean-Sébastien Jacques: Okay, no, I'll share some of it with Chris. On the bauxite, what we are highlighting is there are more and more bauxite moving from Guinea back to China. And it's still early days. And the old question what we are highlighting here, there is a lot of volatility. We don't know going forward if the bauxite market would be priced on the cost plus or on commercial terms between Guinea and China. And that is the only thing we are highlighting now. Let's be clear is we have no doubt that the investment in Amrun that should come onstream next year is a good investment, is a very good investment for us. It will be a world-class asset. So as I said, high level of uncertainty. And the statement I'm going to make is true across all communities of Rio Tinto. All philosophies are following at the end of the day, all right, is that there are things you can control, there are things you cannot control. So let's focus on the controllable. And today, what is important is to focus on having the right cost structure, the right quality of product, the right relationship with the customers. So whatever market conditions we are in, whatever volatility in the marketplace, then we will continue to be profitable. We will continue to generate a lot of cash, and we will be able to do two things. One is to continue to invest for the long-term, which is very important in the mining business, and the second point is to reward those shareholders with superior returns. And I think what we have experienced or what we have disclosed today is a good example of it. So that's where we are in the bauxite. On Oyu Tolgoi is – you want to pick up the power stuff, Chris?

Okay, Paul, the OT power plant is in the pre-feasibility stage, and currently there's a range of cost between one point – well, 1.0 and 1.5, basically. There's a lot of conversation going on with the government as we speak about the various options available to us for that development. And so if I give you a simple example, if the degree to which it meets European standards or local standards or other global standards can have a difference on the capital cost so that's something that's got to be negotiated on the way through here. And then once we get down to a stage where we've got a permitted proven path forward, that's when we'll come back and revise any cost estimates. But what we've got in our CapEx guidance and part of that increase in the 2020 year is actually an expectation that we previously had about $250 million in that year. We think there will be slightly higher spending in that year of 2020. That's part of that $0.5 billion of increase in that guidance we've given you this morning about CapEx. So it's still very much a live conversation and it's really still quite fluid. And once we got something firm in that, we'll come back. Jean-Sébastien Jacques: Right, so the other question is around the agreements in Mongolia. I mean, we have been very clear about the sanctity of this agreement. And no matter what they are, the IEA, the [indiscernible], the UDP and so on and so forth, discussions are underway with the government. There are multiple work streams, some of it have been triggered by the cabinet, the government, some them have been initiated by the Parliament, so discussion is on the way. There has been a slowdown in terms of discussion during…

We will now take our next question from Hayden Bairstow from Macquarie. Please go ahead. Your line is open.

Thanks. Just a couple for me, one probably for Chris, I guess. On just the cash flow versus EBITDA, I mean, it seems to have been in a bit of a decline the last few years despite revenue EBITDA being pretty flat. Just wondering if there's anything in that or is it tax payments and other sort of variability in the business? And J-S, just a question on the tariffs out of Canada and into the U.S. Just how that's impacting the business. Are the premiums adjusting enough to cover that or is it becoming a bigger issue for you? Thanks. Jean-Sébastien Jacques: Yes, I'll pick up the question on the tariff and aluminum. Just to set the scene is the bulk of the aluminum or should I say aluminum produced in Canada is sold in the U.S. And we are supplying one-third of all the aluminum consumed in the U.S., right. So we're clearly watching this whole trade situation potentially trade situation between the U.S. and Canada very, very carefully, hence I made four trips, five trips to the U.S. and Canada this year. Today, we don't have any problem whatsoever. Remember, you need to look at it through the lens of a consumer in the U.S. If you're a consumer in the U.S., you want to have access to a low cost, reliable source of aluminum. You could argue some of them wants to have a green access to source to have access to a green aluminum as well. And the best aluminum we can think off is coming from most smelters in Canada. I mean, they are not in the first quarter of the cost curve. They are in the first decile of the cost curve. They are hydro-based. And then on top of it, when you think of the joint venture, we signed with Alcoa and Apple to develop the internet technology. We are few years away from having a purely green product there. So at the end of the day, from the consumers' standpoint in the U.S., I've got no doubt because the supply chain is so integrated between the U.S. and Canada that there will be – that common sense will prevail. Now back to your question about the premium and the duties and so on and so forth. The way the pricing formula works is we don't have any material impact for us at this point in time. And you saw it in the margins that we have presented in the presentation today. The impact that we had in aluminum, which started last year and increased that refer a few times in the speech is about inflation, which has nothing to do. So from the purely trade standpoint, today the old situation rushing to NAFTA, between the U.S. and Canada had no material impact on our business at all. You want to pick up the other one?

Yes, on the cash flow, I think probably it's always a bit hard to sort of talk about where people are versus their expectations because we can't get inside the head of everybody's expectation. But what we have observed I guess is slightly higher CapEx, there's increasing working capital, try working capital. And about half of that is good, but it's because it's higher prices and so and receivables and the like. But probably the biggest single difference and some people have fully understood what we're saying at the full-year and some haven't is the timing of that tax payment of $1.2 billion to the Australian jurisdiction that actually pertained to 2017. It's a good outcome for us because we had hung onto the cash for an extra six months in our own balance sheet. So the net debt at the end of last year, if you recall the presentation, we talked about $3.8 billion and we pro forma that – for that tax payment was in the numbers. That would've taken us to $5 billion at the end of last year. And if you go to this year was $5.2 billion. So there's – I think all out, we've got a strong bias on cash generation. I think we've got still – need some more detailed attention on the working capital, make sure our guys don't relax on that. Some of it's good because it's price-related in our favor. But our number of average working days has gone up a couple of days. So that's work that we've got to get the businesses focused on. Jean-Sébastien Jacques: So we go back to the room. One in the front and then I come back to you Paul, after.

Dominic O'Kane, JPMorgan, just three quick questions. On aluminum costs, just maybe push a bit further on to H1 versus H1 2017 performance, just saw a roughly 30% increase in unit costs driven by raw materials. How should we think about second half this year? Do you think there's capacity to keep that flat at best? Or do you think we should be thinking about further raw material cost increases in primary metal? Then on Grasberg, obviously, reported $3.5 billion potential exit. Should we expect any tax payable on that amount and the CGT? And then final question, diamonds. So did about $100 million of EBITDA in diamonds in H1, roughly $50 million of free cash flow. Does that remain a core division? Jean-Sébastien Jacques: All right, so I'll give you the Grasberg one. So we signed the head of agreement, as you know. And I think I said in the speech is the three teams because our three parties are working very hard to come to a conclusion the documentation and the target's still to sign before and give the cash before the end of this year. But as you know transaction, until you can sign and until you get the cash on the balance sheet, you don't have a deal, okay? So let's be absolutely clear. And back to what happened during the night, I know there are a few people in the back row here who were slightly concerned that we wouldn't get the cash on time. So we're working hard to get it. On the tax is discussion under way. Seen from today, we don't see material tax payment on the back of it, but those discussions are taking place with the relevant tax authority. So we'll clarify the situation closer to the closing transaction. Diamonds…

Yes, well, the K, the year-on-year increase is about $200 million, but that – and your question was really about going forward, I really can't give you any better guidance than probably maintain the same sort of basis into the second half. They seem like they're stabilizing and leveling off, but time will tell. It's primarily the inputs of caustic, pitch and coke. They're the main inputs into that mix. And you'll see that across our peer group areas as well with those same items coming through. And the carbon materials also a factor for us in the TiO2 business, the RTF2 business, so with the [indiscernible] activity there, so – but I don't think I can give you much better than that really. Jean-Sébastien Jacques: I'm going to build on what Chris said, let's be clear, inflation is going to hit – is hitting all communities and all players across the industry. And I'm going to use one metrics. So we did check, it was a week ago, 10 days ago, in Australia today, if you go to sites where you look for jobs and so on and so forth, you got 40% more posting, 40% more posting for jobs in the mining business than the year-ago. So I slightly smile when people say, oh inflation is not going to impact us, and so on and so forth. If you got 40% more requirements for job in Australia, guess what will happen, right. So our position is very simple on this one is we acknowledge your point. We did highlight this concern, this risk around inflation November, December last year, and we have taken actions. Our approach is to say to acknowledge a challenge and try to take as many action as we can in order to mitigate the potential issue. And I think what you saw in the result this morning, the fact that we were able to deliver 43% EBITDA margin on the back of our mine-to-market productivity program is a good example of it. So we acknowledge a challenge and we get on with it. Mine-to-market, it will be absolutely essential in the coming years because inflation is coming back. If you look on the CapEx front, all majors in Australia have announced in the last few weeks major capital program in WA. Once again, what's going to happen? Inflation is coming, and therefore, it's even more important for us not only to put mine-to-market to our existing asset, which are probably mine-to-market approach to the capital space as well, and that is exactly what we're doing, if I go to the back, come on Paul, yes.

Thanks very much. Paul Gait, Bernstein. A couple of quick questions, if I could – you alluded to supply side performance in China in terms of steel capacity, but we've also seen that in terms of the iron ore, domestic iron ore production in China has come down quite markedly year-on-year. Just wondering if you could give us some thoughts about what you're seeing there? Second of all, in terms of the Pilbara Blend and of course Koodaideri feeding into that, but how long can you actually maintain the quality of the Pilbara Blend in sort of roughly today's specifications given the reserve base that we've got or that you've got? And then finally, in terms of Grasberg, Heads of Agreement at the minute, are you still involved in that discussion process or does this essentially now represent Rio Tinto sort of taking a step back from those discussions? Thanks very much. Jean-Sébastien Jacques: Yes, on the Grasberg piece, it's pretty simple. We're still involved in the discussion because – at the end of the day Rio works to sign the SPA with the government of [indiscernible] and only Rio Tinto will sign it, okay? No [indiscernible] get anybody to sign it on our behalf. You agree with that? Okay, good. So we are involved on this one and as I said, the three teams are working hard and the sooner we can sign, the better it is. On the iron ore in China, we have 200 people in Shanghai and we have a big team in China, and part of their job is to find out about it. If you go back a few years ago, our understanding was the local domestic production of iron ore was around 400 million tonne. They dropped to at some stage 225 million.…

We will now take our next question from [indiscernible].

[Indiscernible] internally and for shareholders to deliver more than just 2% sort of volume growth over the next five years and are you seeing kind of related to that more opportunities on the M&A side of the right assets sort of at the right price or is it still effectively a no go? And then secondly, maybe with Pilbara iron ore kind of unit costs. I mean, doing a good job first half of this year. As we look forward with AutoHaul, with the volume increase, can we kind of – is the potential for unit costs to go down on a two-year view despite inflation or is it best case stay where we are? Jean-Sébastien Jacques: All right, you pick up the iron ore, I'll pick up – so the growth – well, we're going to start the road show in a few hours for obvious reasons. But on the back of the concession, last round of concession was at the time of the Bank of America and Merrill Lynch. I should get a discount for that next year, Jason, conference in Miami and the subsequent industry road shows that we had in New York and so on. No, we are not under pressure in terms of growth today. Yes, there are some questions about where you're going to go in the long-term and so on and so forth? Because we fully acknowledge I think the mining business you need to grow because depletion is a reality. And therefore, if you don't grow, you're going to have a problem. But today, we are not under pressure from that perspective, okay. Now what is important for us is to develop a pipeline of attractive growth options, right. But today, when I look at what we are delivering, we deliver Silvergrass,…

Yes, so iron ore is not immune from the threat of inflation. What our challenge is to offset that. So that's where we will be targeting with the productivity agenda. Obviously, things like the oil price, showing pretty healthy sort of increases over the course of last year. And we'll have – we will be entering more below water table type mining as well. We're going to have longer haul distances. So we do have some challenges coming our way, which it's important that we get the productivity agenda in full run there. Where we need to attack our costs is on the first line of entry into the business. So the volume absorption is one thing but the first spend is really where you want to attack it. The guys have done a great job over the last six to 12 months in easing that rail bottleneck so we now a position where the rails more attuned to the port capacity, so we've got a bit of flexibility in the system there that wasn't there up until about well, early in this half. So I think we don't give you guidance about the cost, as you well know, but I think there are a series of factors there. There's a good challenge there, and the team – Chris and the team are more than up for the challenge. But it's – that thread of inflation is there and it will be there and it's going to be a constant. And then once we get the early works on Koodaideri is sort of that’s an encouraging thing. But once we get that in play, assuming that comes through in a normal approval processes and the like, that's going to be a very exciting mine. I'd love to be around when it's... Jean-Sébastien Jacques: You can come back Chris.

Yes, will live on still around… Jean-Sébastien Jacques: We welcome all [indiscernible].

It's pretty much going to be a fully automated mine and you'll have on display on one side quite a lot of the functionality that we've been working on for the last decade. Jean-Sébastien Jacques: John is telling me we have time for two questions. So we'll take one from the call and then we'll come back to the room, so one from the conference call, David?

We will now take our next question from Mr. Clarke Wilkins from Citi. Please go ahead. Your line is open.

Hi, Jean, just a question on bauxite and also on iron ore, just on your comments earlier about the sort of the uncertainty around that market, when you look at your volumes – increasing volume kind of [indiscernible] is it also a volume risk? Like is there any sort of off-type volumes for those projects or a much shorter term sales contracts so depending on what happens in the market is there a volume risk there? And also, just in regards to iron ore, like the comments around the sort of grade discounts being more structural, we've obviously seen recently in purity penalties the rising price significantly given your comment around China domestic supply continuing to fall, yes, is there a chance or is there a potential that the impurity penalties in the market are going to be more structural and is bringing forward the sort of CapEx Koodaideri a potential way to sort of adjust the quality of that Pilbara Blend? Jean-Sébastien Jacques: Two very good questions, so on the bauxite is the key question for us is mainly about Amrun. Remember that after the additional capacity of Amrun is replacement capacity, and the other half is really growth. Do we have any concern today in our ability to place the growth of Amrun when it comes on line? The answer is absolutely, no. Absolutely no, so we don't have concern from that perspective. On the iron ore pricing is without getting to the detail too much, the impurity is already priced. So if you look at the pricing formula, it's not only about the [SE] content. There are adjustments for alumina, for us so on and so forth. So the pricing exists already there to adjust for those impurities. But your question is absolutely spot on, is it…

Good morning. Liam Fitzpatrick from Deutsche Bank, I'll keep it to one. Just on the Canadian. Jean-Sébastien Jacques: One for Chris, come on. That's his last set of results. I don't know what the question is going to be Chris, buy you're going to have to pick it up.

Hi, Chris. On the Canadian aluminum expansion, you've been flagging them for a while. So if the market does tighten can you give us a sense on timing? I mean, could we see these approved early next year or these much more long-dated options? Jean-Sébastien Jacques: We are a few years, I'll pick it up this one because you won't be there that's for sure. Maybe as a shareholder, you will be there. But we are a few years away, okay? For us, to take a decision to build a new smelter in Canada, okay. We need to be absolutely convinced that the structural change in China are there, okay. I've got no doubt that aluminum in long-term China is moving in the right direction and that China will become more and more balanced, but until we get to this point, we do the work, we do the study, we're ready, we will become option ready, option rich, option ready but we have still a few years away before taking a decision to add capacity in the aluminum space, so that's one. Having said that, we are looking at option that could forever to expand the capacity of aluminum smelter on the back of Brownfield, on the back of [indiscernible] because that is productivity and so on and so forth, but before we take a decision to build a brand-new 0.5 million tonne smelter in Canada, we see a few years away. And I invite you to open this matter, Chris, when it happens.

That will be good. End of Q&A Jean-Sébastien Jacques: On this note, we're going to have to stop. Thanks for coming. If you have only one number to – I know you have you love your numbers and so on and so forth. There are only two numbers you should remember is $7.2 billion of return to shareholders and $2.2 billion of dividend, which is the highest in the 146 years of our three numbers in the history of the group. So thanks a lot and we'll talk you soon. Thank you very much.