Good evening, and good morning, everybody. Welcome to Rio Tinto's 2021 results presentation, and thank you for joining us. Today's presentation is virtual, but we hope to see many of you face-to-face in the next few days. Our CEO, Jakob Stausholm; and CFO, Peter Cunningham, will go through a presentation, which will be followed by a Q&A session. [Operator Instructions]. Before we start, please have a look at the cautionary statement on Slide 2 for a moment. Thank you very much, and Jakob, over to you.

Thank you, Menno. Good morning, and good evening from Sydney. I would like to acknowledge the Gadigal people of Eora Nation as the traditional custodians and pay my respect to elders past, present and emerging. I extend that respect to all aboriginal and [indiscernible] islanders people. When I presented my first result as Chief Executive last February, I set out 4 key objectives to make Rio Tinto an even stronger company: to become the best operator, to strive for impeccable ESG credentials, to excel in development and to strengthen our social license. This is what we have done, and I'm proud to say that we have made progress against each objective. In October, we launched a new strategy, including more ambitious climate targets. We also set out how we will grow in commodities that facilitate and benefit from the energy transition, decarbonize our assets and value chain, and maintain our tight capital allocation enabling us to pay attractive dividends. Achieving our objectives and delivering the strategy are entirely aligned. We're all focused on execution. But as I've stated previously, it is a multiyear journey. However, even after 12 months and only 4 months after our Capital Markets Day, there's tangible progress. Today's results highlights the underlying strength of our business. We achieved a third consecutive year of 0 fatalities, which we have never achieved before. We realized this record disappears the moment we let down our guard. Having our people return home safely each day remains our first priority, and we continue to focus on this. I'd like to take this opportunity to sincerely thank our people for their commitment, resilience and sacrifice during another COVID-constrained year. They've done a superb job. I'm very proud. Turning to our financials. Our results were very strong. They demonstrate both the quality of…

Thank you, Jakob. Good morning, and good evening, everyone. Let's start by taking a look at the numbers. We've announced a record set of results following strong global demand for all our major commodities. The 42% increase in revenue was driven by price, in particular, iron ore. aluminum and copper were also significant contributors. Importantly, we maintained our financial discipline throughout 2021, achieving underlying EBITDA of $37.7 billion and operating cash flow of $25.3 billion after record taxes and royalties of $13 billion. Free cash flow of $17.7 billion was after $7.4 billion of capital expenditure and a $1.1 billion temporary working capital outflow, reflecting the increased China portside trading inventories and supply chain disruptions. Underlying earnings rose to $21.4 billion, which lifted our return on capital to 44%. This enabled us to declare total dividends of $16.8 billion for the full year. Net earnings was also a record, although we did have some exceptional items, notably the $500 million increase in the closure provision for ERA, where we have taken the midpoint of ERA's guidance, recognizing 100% of the increase. Let's now take a look at our key markets. Iron ore prices rose to record highs, with China importing well above 1 billion tonnes and consumption in the rest of the world largely recovering to pre-COVID levels. The steel intensity of the recovery lifted global crude steel production by almost 100 million tonnes to a record of almost 2 billion tonnes. Global scrap generation also improved, but high-cost iron ore supply was required to balance the market. This did taper off in the second half as prices declined. Aluminum and copper prices rated to multiyear highs on firm recovery in global demand and supply challenges. Looking forward, we're encouraged to see continued momentum in our markets, but also fully…

Thank you, Peter. I'm convinced that the 4 objectives I said a year ago are the right ones. We have made tangible progress on each one on the back of a significant volume of work. In October, we launched a new strategy aligned with these objectives. This set out a long-term approach to make Rio Tinto a stronger and more relevant company for society and to secure future shareholder returns. We've put in place the right structures and frameworks, creating an organization that is people-centric. We have established centers of excellence in communities and social performance and in energy efficiency and development, to name a few. In some areas, it will take time to make a lasting difference, but we have already achieved notable successes. The start of the underground mining at Oyu Tolgoi and the acquisition of Rincon are 2 standout examples. They're both driving our strategy implementation, are aligned with our objectives and will benefit our shareholders for decades to come. We have also addressed how we engage with stakeholders. We had become too transactional, relying too much on agreements at the expense of developing proper, mutually beneficial relationships. I'm determined that Rio becomes a more inclusive and diverse place to work, where people live our values, feel empowered to challenge decisions and speak up freely if something doesn't feel right. There's a lot of work underway, including making our camps and villages safer. It also means increasing diversity, including gender diversity and lifting indigenous representation. We're investing $50 million to retain, attract and grow indigenous professionals and leaders in our Australian business. We are already seeing real improvements in this area. We're also strengthening our communities and social performance work, taking a different approach to how we engage and operate. We have made progress in resetting relationships…

[Operator Instructions]. Your first question today comes from the line of Paul Young from Goldman Sachs.

Jakob, Peter and Menno, just the financials, gents. So I have a question on growth, in particular, Jakob on OT. No project at the moment. Your portfolio seems that easy to execute in advance at the moment. So fantastic to see the government approvals. Jakob, the question is that net of the negotiations, i.e., is the investment agreement now rock-solid with the government?

We feel very comfortable. We feel that it is an agreement, a wide agreement with the Parliament in Mongolia. There's a couple of remaining issues to be solved. There's a tax dispute, but you have tax disputes from time to time. I'm absolutely convinced that with the resetting of the partnership of the relationship in Mongolia that we will be able to also solve issues in the future in a very constructive manner. So yes, I think it was a very important moment to overcome. Thanks for the question.

Your next question comes from the line of Jason Fairclough, Bank of America.

Just to carry on with the growth theme. I mean grow is the first word on the title of your presentation deck, and you've spoken a lot about it today. so a couple of fairly simple philosophical questions. First, you're a $130 billion company. Can you actually grow and have it make a difference and haven it create value? And then second, do you think that your efforts to deliver growth over the last few years have been successful and ultimately, had a positive impact on Rio Tinto?

Well, thank you, Jason. It is very clear, given the size of our company and given the markets we are facing, Rio Tinto in aggregate will never be a high-growth company. But we haven't grown for quite a while. And we can see that we can move the company towards modest growth within a strict capital allocation framework. We did not grow last year. If you look at the guidance for this year, we have included modest growth, but that's from our existing business. What I've talked about #3 of my 4 objectives about excellent development is really about building the portfolio to the next decade and the decade beyond. And that's what we are doing when we unlock Oyu Tolgoi. And that's what we are doing when we are going in and buying Rincon is -- we don't want to go out and spend a lot of money at probably the high end of the cycle. And therefore, I thought it was quite intelligent to go in and buy a project that is -- you can buy at a modest price and then develop the project. So we do want to excel in development, but we don't want to lose the strict capital allocation. I think you're absolutely right in making the point. We're never going to be a high-growth company. But if we can have a modest, stable growth going forward, that will make imminent sense. We have the competencies in Rio Tinto to be the right owner of a number of assets that we don't have today. That's how we're developing our future. Thank you.

Your next question comes from the line of Hayden Bairstow from Macquarie.

Just a question on the CapEx outlook. Obviously, you've upgraded cost guidance in the Pilbara. But your view on your ability to actually spend the money, I mean, obviously, markets are fairly tight, and labor still tight. Is there a risk of some slippage in that number, particularly for this year, I guess? But just -- it's a line of these projects up and get everything spent that you need to?

Yes. No, it's a very good point. Peter, why don't you underpin a little bit? Because there's fundamentally no changes since the capital markets update in October, but you always have a few things that goes a bit slower and certain things we accelerate. Maybe you want to flesh it out, Peter?

Thanks very much, Jakob. And thanks for the question, Hayden. I think for the capital guidance this year, we're very comfortable. And clearly, we are still finishing off the tail of the replacement projects that we bought in the Pilbara, the 90 million tonnes. And as we said, Gudai-Darri will come in, in Q2 for first production. So that is a very, clearly, important components of our capital plan this year. In terms of sustaining capital, in terms of that replacement and in terms of the growth with Oyu Tolgoi, all very, very clear. I think as we get forward into 2023 and '24, Hayden, we've set that, and we've been very explicit that the growth component of our capital plan is an ambition. We're working on a range of projects there that will come through. And it all depends on us really finalizing value-accretive plans as to exactly when that capital comes through. If we don't have the projects that are ready to progress, we won't spend the capital, and we'll just put it to our normal sort of capital allocation framework that we have. So I think that's very clear. Clearly, the news on Jadar does probably put back some of our capital spend. But broadly, I think we're very comfortable with the framework that we set out. Thanks, Hayden.

Your next question comes from the line of Alain Gabriel from Morgan Stanley.

My question is on Gudai-Darri and the replacement projects in the Pilbara. Can you give granularity on the operating challenges there beyond COVID? And how do you see the risk of further slippage into Q3? And in a hypothetical scenario where the ramp-up continues to stall, do you have enough flexibility in your system to talk up volumes with SP10? Would that constitute -- or would the slippage contribute to risk to your full year volume guidance?

Yes. Thank you. Let me start off and then hand over to Peter. Look, I visited Gudai-Darri in the first half of last year. There was a really, really good focus. What unfortunately has happened as part of Gudai-Darri is that we haven't been able, because of COVID, to have the same inspection, quality inspections of the material. So when a number of things arrived at site, we had to do quite a lot of rework. And that has been quite limited access to people to the project in the Pilbara because of the closure of the borders. So that has led to delays. I'm very excited that the borders are opening next Thursday. I'm going there myself, and I'm really looking forward to see how we come back on track. But Peter, why don't you share the numbers on CapEx and the question on SP10?

Thanks very much, and thanks for the question. I mean clearly, Gudai-Darri coming through is very important. And right now, we're through a lot of the work. We are now moving towards sort of first production, as we said in the second quarter. all of those issues that we've had around COVID, around labor constraints, around rework, we've worked through a lot of those, but we still have work ahead. So it is very important Gudai-Darri coming in. If that doesn't, if any slippage, that would just result in us -- we still have the flexibility in the system, but it would result, as you say, and just increase the production of SP10 as -- to fill the gap, but we have those options. I think in terms of the other projects, I mean, the main one we pointed out is around Robe River system and some issues that we've had around Misra. We're working through those, and we would expect Robe River system to be up and running at capacity when that's resolved. Thanks, Alain.

Your next question comes from the line of Lyndon Fagan from JPMorgan.

Look, my first question is on the iron ore cost guidance, which now puts you well above BHP and Fortis in terms of unit costs. I'm wondering when you reflect on that, what the key differences are between the Rio Tinto business and your main competitors in the Pilbara? And I'm also interested if there's any potential to rein them in, given that the seminar last year showed the work index going up in 2024. And the next question is just related. There's still really no mention of Simandou in the presentation today. And obviously, it's the elephant in the room when it comes to the iron ore market. When do you think you'll be in a position to articulate the potential scope for that project?

Yes. Thank you. Let me just start off on the Simandou and introduce the first question while Peter will explain to you the differences. On Simandou, we're not saying too much. And that's actually because we're working very, very hard on it. I myself visited Guinea in December. And every week, we have more people in Conagra. [indiscernible] really ramping up our presence in Guinea. There's intense discussions with the government amongst the joint venture partners and between the 2 consortia. So the reason why we're not saying a lot is we are actually really working hard on trying to find the right solution. The government is very keen on seeing the project moving forward. We are very keen to participate. It has to be done to the right standards. I think we agree on that. And now, we just have to get the work done and define the right project. But it's big, and it's complex. So I hope that we can get some good progress this year and tell you more about it. but there's little in the middle of discussions right now that I can share. I would say, you call it the elephant in the room, I don't see it like that. I mean we are -- the global iron ore market is 1.8 billion tonnes. If you have, say, 100 million tonnes development, it's the kind of replacement that you need. And in any case, it's a much higher quality than the Pilbara. So it doesn't compete directly. I think it would fit very well to our portfolio. And I'm also very excited about joint venturing with our customers on this front. So I think it serves many purposes, Simandou. And I don't think you should see that as an elephant in the room. Coming back to the Pilbara, I just want to take one step back and remind you, this is an amazing asset. It had a free cash flow of $15 billion last year. It's one of the world's largest industrial assets. I'm absolutely convinced that Simon Short and his team are doing all the right things. But I just want to say to you what we're doing right now, you will see the results of 2 and 3 years down the road. it's not the kind of assets you do the right things, and then next quarter, things are really changing around. And we are at a crossroad right now with 90 million tonnes of replacement volumes, trying to come in, as Peter was just explaining, and it will take a while before we can get the efficiencies in place. The Safe Production System is also going to help us a lot. But again, we got to be patient here. It's a multiyear journey. Peter, you might like to just share the development of cost.

Thanks very much, Jakob. What we said in guidance when we went into 2021 was that we thought we'd be about 17 20 We come at 18 60 as we said. And that a lot of that increase was really 2 factors. One, in the second half, we did see higher input prices into the business. And we also did see some slippage in the projects for all those reasons we talked about around COVID and labor constraints in Western Australia. As we look into 2022, we're being very deliberate, I think, as to what we're going to do. Because we're absolutely clear, we do need to put some more money into some of the plants, in the Pilbara. We absolutely do need to make sure that we're putting the right investments in studies in the future because we've got to be thinking about the replacement mines that will come in, in the middle of the decade as well. And we do, as you said, have to deal with higher sort of work index. But that is where the productivity play really comes into importance. So I think that's -- those are the drivers. I think we're being very deliberate about what we're doing. I think, as Jakob said, this is a multiyear program of work for us to really, I think, get the Pilbara where it can be. But in the meantime, I'll just reiterate that those fantastic sort of financial results and the fact it did actually give a 100% return on capital employed in 2021. Thanks, Lyndon.

Your next question comes from the line of Liam Fitzpatrick, Deutsche Bank.

Jakob and Peter, just another one on Simandou, but more from an ESG perspective. From the discussions that you've had so far, what is giving you comfort that Rio can participate in this project without risking your goal of impeccable ESG credentials? And are there any sort of specifics you can give us over some of the ESG-related challenges that you're aiming to address and derisk with your partners?

Yes. Look, I can give you two things. First of all, when I was visiting the government and meeting with the President, I made it very clear, it's a red line for [indiscernible] so all areas. E, environmental. It's highly sensitive. It's about biodiversity. The chimpanzees, et cetera, it has to be impeccable. S is social about in-migration that we have everything controlled, and that has to be done together with the government. And G, of course, there has to be integrity in everything we do. So that's absolutely a red line. The second part that gives me a lot of confidence is that if you look carefully and listen carefully to what Chinese leaders are talking about, they're actually emphasizing the same things. So I think we are very aligned with our partners Chinalco and Baru in terms of that this has to be done to the right ESG standards. That gives me hope and confidence. Thank you.

Your next question comes from the line of Kaan Peker, World Bank of Canada.

A question on copper. Really good to see a large resource increase there. But just on the back of the envelope, it suggests that will be producing around 70,000 tonnes of copper. Given the size, is there an asset that belongs in Rio's portfolio over the long term? We've developed in all the smallest copper assets by [indiscernible]

I'm really struggling to hear what you're saying. Peter, could you capture it?

Unfortunately, I could not, Jakob.

Do you think there's any way you can speak differently to the microphone and repeat the question?

Sure. Is that better?

A little bit, yes. Thank you.

Just wondering the size of Winu. It looks like it's going to be something around 70,000 tonnes per annum copper asset. Given its size, does it belong in Rio's portfolio over the long term?

Peter?

Thanks very much for the question. I mean we're progressing. We knew, as we said, we've done a lot of the actual sort of project work. And a lot of the reasons Winu hasn't yet come forward is for very good reasons. The permitting process and the engagement with the traditional owners has just taken longer. And that's just within the context of which we're not operating, and it's just very important to do that at the right pace. So that's the context around Winu. I mean I just think this with Winu, it's something that there's the initial mine and then there's a potential around it. And we've been very focused on trying to really make sure that we develop something with Winu. That has the potential there if the regional district proves perspective for us to grow over time. We need to just work through that and finalize our studies and that broader piece around getting the appropriate approvals for the project. And then we'll make the decision on where to go from there. Thanks very much for the question.

And let me make a little announcement because we have done extensive disclosures today, and one of them is an update on the reserves maturation and you might like to just look at what we're announcing from Winu, it's heading in the right direction. Thank you.

Your next question comes from the line of Bob Brackett from Bernstein.

In terms of the $7.5 billion of decarbonization investments, the way to think about that, for example, the marginal abatement cost curve projects, those have to clear a 10% hurdle rate at an internal carbon price of $75 a tonne? Is that the right way to think about that overall block of investments? And then the follow-up would be, how often do you think that the external or local carbon price will match your internal carbon price?

That's an excellent question. Let me ask Peter to explain the exact methodology, but I would like to make just a philosophical comments. What really for the economics is, of course, not what the carbon price is today. It's what it is 5 years from now and 10 years from now, that's what really have an impact. But if you want to be really specific, that's not what we're saying. We're saying we're using 75% as carbon price internally. And we're saying independent of the 75 we're saying that our portfolio that we will spend $7.5 billion on is value accretive at modest CO2 prices, so well below the 75 Peter, do you want to elaborate? I think you covered it quite a lot in your presentation.

Happy to do so, Jakob. I mean that's exactly right. I mean what we're talking about is a whole range of projects here that have different economics, and those economics will change over time as we do more work. So clearly, we will sort of prioritize those projects that actually some of them being positive without any carbon price at our sort of hurdle rates of investment at the lower end. And we've given a couple of examples of those in the pack in the appendices to the presentation. So it is a whole range. What we want to do with the $75 a tonne is make sure we're incentivizing the work, make sure that we're doing that work that later this decade when we need it around projects around the group to continue taking us down the decarbonization path. Because we have to do this. We have to derisk the long-term cash flows of the company. As Jakob said, what will carbon prices be in the future, that determine sort of so much of the competitiveness of our assets. And this to me is just a continual process of our investing to take us down that carbon intensity curve and to derisk our cash flows for the long term. Thanks very much.

I was in Brisbane a week ago, sitting down with the decarbonization team, and we have a lot of progress. But it's only 4 months ago we announced our targets. But I can see that we are focusing and maturing our plan. And there's nothing in it that doesn't give me confidence in what we said at the Capital Markets Day. But we are still not there where we have the kind of final projects. But we're pushing ahead as fast as we can. Thank you.

Your next question comes from the line of Myles Allsop from UBS.

Just going back to the M&A question. I mean do you -- you're saying you're only look for opportunities that create value and fit within the portfolio. Could you give us a sense of the size of acquisitions you're thinking about the commodities? Is it just future face income commodities, smaller ones, larger ones? And just around, are there opportunities out there? Obviously, Rincon shows there are some opportunities, but is there a long list? Is this going to become more of a theme over the next 12 months? And then, I guess, related is around large-scale M&A. That's obviously been talked about in the press. Do you think there is potential in the sector for larger-scale M&A that Rio can play role in?

Yes. Thank you. Well, I can just talk for Rio Tinto. And I will say to you, I'll be very cautious right now to talk about big M&A. Because I don't know where we are in the cycle, but we are certainly not at a low point. We are pretty high up in the cycle. And I just really would dream about looking back one day and say that we invested countercyclical. And making acquisitions right now could very easily be procyclical. So you could say that larger scale M&A is really not for now, but there are opportunities. And I think Rincon is a good example of it, whereas it would have been very expensive to buy a lithium company right now. We are buying a lithium project at a decent price. And we use our technology, our competence, our people to develop that project. That's an example of how we add value. But the overall guidance from my perspective is, first, ask yourself why are we the best owner of an asset, what can we bring to it? And then, of course, we tend to look quite conservative on prices through the cycle. And when you have very high prices and people expect a high price, it probably doesn't stack up. So I think Rincon is the example of it is possible. But overall, for Rio, I don't see the big M&A out there. Thank you.

Your next question comes from the line of Richard Hatch from Berenberg.

And two questions. First one, just on costs. I mean you talked about trying to get back to where you were. I mean in 2017, iron ore costs were $3.40 a tonne. So what kind of -- and we're guiding to 19.5 to 20.5 for this year. So what can we expect for costs sort of into the medium term? Can you give us a target? And then secondly, just on IOC. I mean that asset seems to continue to underperform. Just operationally, you're talking the release to a number of operational issues. What exactly is going on there? And when do you think we can finally get back to a stable operational run rate? And then also some leasing costs. I think they're up about 40% versus 2017. I appreciate those inflationary factors there, but what can you do for cost of that asset?

Yes. Thank you. I'll let Peter explain the cost development in the Pilbara, but I do think I have to take account of IOC. I think it's an amazing asset, but it hasn't been operating super good. I think we have, last year, externally recruited a great CEO for the asset. It was already improving beforehand. And I think we are right now taking it to the next step. There is some very basic things that needs to be improved. There are also some investments that needs to be made. I'm really excited about implementing the Rio Tinto Safe Production System in IOC. My starting point, just to say, is it produces the world's best quality of fines and pellets. It has got a very long mine life. It has got a great infrastructure. We've got to get that asset to perform every day at its best. And we'll get there, but it will take a while. Peter, the cost split down, please?

Thanks, Jakob. I mean just one more point on IOC, did make $2 billion of EBITDA in 2021. So just putting things in context. In terms of the unit cost progression in the Pilbara, I mean, clearly, we've seen a set of drivers that have been across the industry in terms of exchange, in terms of input prices coming across the industry. For us, over the last couple of years and as we said, going into the first half of next year, there's some very specific drivers as well as we've had to bring in new capacity into the system. And we're being very deliberate in 2022, as I said, to put more investment into the business, particularly around maintenance and particularly about building out that sort of midterm capacity of the system, which is critically important to us. So certainly, as we get into the second half of the year, Gudai-Darri coming on does give us some flexibility into the mining system. That is important. It -- does it sort of resolve all our issues? We'll still have work index increases. We'll still have challenges to do. But it gives us more flexibility as we then build out to that midterm capacity as we've talked with the next set of new mines coming on, and we talked about Western Range earlier. So I think our job is to really focus to stabilize that system as it is, bring on Gudai-Darri, ramp-up production and to really then deploy the Safe Production System across the Pilbara so that we can manage that sort of natural effect of work index over time as we build out then that midterm capacity. Thanks very much thank you.

Your next question comes from the line of Rahul Anand from Morgan Stanley.

Jakob and Peter, look, I had a question on lithium and Rincon. So in terms of the BLE absorption technology, I think Livent is the only other producer in Argentina that's currently using that technology. But that's used in conjunction with solar evaporation. So I guess a pure DLE process that's required for the project remains at pilot stage. So what I wanted to understand really was what level of due diligence occurred that gave you the confidence that there is actually a solution available for the project? And what are your next steps here? Can you provide some kind of a time line as to when we should expect some more news around Rincon?

Yes. Thank you. Look, we did an awful lot of technical due diligence. And you should probably talk to [indiscernible] But both Peter and I and our investment committee, we -- that was the issue. We went all over that. There was not that much the commercial issue. Yes, the price was the price. But it was really about, really about getting our best technical experts at it. And I think Rincon had actually matured things very well. We went through it with deep technical due diligence. I'm not saying there's no risk with it. But we ended up being comfortable. It was a risk worth taking. It's interesting because we will end up with a project that is not only producing very well battery-grade lithium, but it will also be done in a very environmentally friendly way. So yes, I feel comfortable about that. But if you want to get more details, we can definitely let you talk to a couple of our technical experts. Thank you.

Your next question comes from the line of Tyler Bulva from RBC.

Great. In fact, the recent intervention by China into the iron ore market, obviously, it's a massive customer. Is there anything you can share from the meeting that you reportedly had the government? And then I guess on a wider basis, just with the increased volatility we've seen over the last year or 2, do you see the current spot sales structure construct as being optimal? I guess is there any thought from Rio's side in terms of seeing that evolve as we go forward?

Sorry, I need a little clarification. What meeting with the government are you referring to and what government?

Sorry, from the Chinese government. So there's a report from Bloomberg just yesterday, Rio Tinto met with the government as part their current investigations into that. Yes.

So it's very difficult for me to comment upon an article. It's rumors. I mean the only thing I can say is that we work and we have always worked constructively with our customers and other stakeholders for having free and transparent price setting in a free market of iron ore, and we'll continue to constructively work on that. But I cannot say anything concrete. But what you're referring to is simply rumors.

Your next question comes from the line of Lachlan Shaw from UBS.

Yes. So maybe just a lithium strategy, first question. So obviously, Gudai-Darri has a paper to play out, and Rincon sounds pretty interesting. But assuming Rincon goes through development, is that where you want to get to? Or do you see yourself wanting to get bigger in that space given the growth outlook there? You've obviously indicated by acquiring the asset, you got quite good appetite for lithium. So just interested in how you're thinking about the broader strategy in terms of lithium in the portfolio.

Yes. Thank you. I don't look too much in kind of the spreadsheet part of it where the numbers should bring us. But the starting point is that we expect the global lithium market to be 10x bigger in 2030 than in 2020. That means that the world needs a number of new mines. And what we're doing, we have actually been working since 2003 in Gudai. We have developed a lot of good technology. With Rincon, we can give something new to now going into [indiscernible] giving something new to our technical experts, and we develop technological know-how, competencies. And it's really from that technical expertise pool that we want to see expansion. So it's actually more the technical competencies that drives it than necessarily setting a specific target because, quite frankly, it's going to be opportunity driven. The only thing we know, and it might not be a line development, but what we know quite sure if we believe in the energy transition is that the world needs much more lithium, and we think we can contribute here.

Your next question comes from the line of Dominic O'Kane from JPMorgan.

Peter. I just wondering if you could just quantify for us in a bit more detail the SP10 guidance for 2022. You -- Peter said about 11% of the sales mix in 2021. So is it reasonable to assume it should be more than 11% in the first half of the year? and again, how should we think about that evolving as we move through 2022?

Peter?

I mean I think broadly, you should see the first half of 2022 as similar to the second half of 2021. The key is then Gudai-Darri coming on, which will then give us much more flexibility. And at that stage, we should then assume sort of SP10 will come down towards the sort of that midterm guidance that we've given. Thanks very much, Dominic.

The next question comes from the line of Amos Fletcher from Barclays.

Jack and Peter, the first question is just on the iron ore unit cost guidance, which implies year-on-year inflation of 5% to 13%. Can you give us some color on what scenarios at the top and bottom end of that range? And then the follow-up would just be on the aluminum business. Can you give us a little more color around what's happening at Kitimat and why the ramp-up is taking so long there?

Yes. So let me start with Kitimat and leave the cost guidance to Peter. I visited Kitimat in September last year, and it's very sad to have such a strike situation. But what is happening is when a strike is invoked and if it happens fairly quickly is that there's actually a lot of cleaning up of pots before you can get started. There was clearly also a need for a reset of the culture at the site. And we have been absolutely crystal clear for everyone, management and staff, that we need to find the right way of working together in the future. And therefore, we're taking the time. We're taking -- people are well back. We are bringing maintenance up to stuff. We're cleaning the pots. And we will have a very controlled start-up. So that's, unfortunately, sometimes the characteristics of an aluminum smelter. If you shut it down quickly, it takes a long time to bring it back. It would have been nice to get it up earlier. But we are trying to achieve a number of objectives with the start-up plan that we have set. Peter, over to you on the iron ore.

Yes. Thanks very much. So what we've built in is what we think is a fairly realistic set of input price assumptions. That's key, clearly, to the price progression -- the cost progression as we get into 2022, given the increases that we've seen in diesel and other inputs into the business. The other sort of key assumptions really are around the commissioning and ramp-up of the new replacement mines and also Gudai-Darri. And again, we think we've built into that guidance sort of range, which is very sensible from everything we see today. But those, I think, are the 2 key sort of scenario that needs to be placed on those numbers. Because I think we're fairly clear on the side of investment and maintenance and investment in studies for that midterm development of the system, I think those variables are pretty clear. Thanks very much.

Your next question comes from the line of Peter O'Connor from Shaw & Partners.

Jakob, Peter, my question is twofold, and it comes through the lens of the narrative of income versus growth. So my first question is, given the spin that Jason asked about earlier of $3 billion per year in growth versus $120 billion market cap size, is that again sufficient to grow the company at that level? As your pie chart on Slide 17, it seems to be skewed less than 1/3 of that pie. And secondly, a you've mentioned twice in your commentary in the Q&A about the high point of the cycle. The key word being high in the second cycle. So are you foreshadowing it into the cycle, and so rhetoric and narrative about big dividends, is that about to change? And how do we think about the income business growth of the company given that line of commentary which you presented?

Yes. Thank you. I have to admit it was a little bit difficult to hear your question, but I think I captured it. But do come in if I'm not answering it sharp enough. But the thing about the cycle is that what we're trying to do is we're trying to ramp up our organic investments. And organic investments are, of course, to a certain extent, when it comes to inflation, exposed to the cycle. But the real exposure to the cycle is M&A. You just don't want to buy at a very expensive point of view. So my comment about the cycle is mainly about M&A. I think organic development is actually quite important that you try to have some stability there because it's not just a matter of money. It's also a matter of competence is having a great organization that can execute project in the most efficient way. So I think that's the gist of it. But there might be 1 or 2 things I missed in your questions. So please clarify what you're missing.

It sounds like you've clarified that we're at the high point of the M&A cycle, at the high point of the commodity cycle to be clear.

Well, exactly I don't know what the commodity prices. But obviously, we have very attractive commodity prices right now. And the only thing I can say is it's certainly more expensive to buy assets than it was a couple of years back. And I think, as I said earlier on, we only know it afterwards. And 5 years from now, looking back, I would love to see that we have not bought too much on top of the cycle, but rather at a lower point in the cycle. and that's why I'm cautious about M&A, but I'm not cautious about us really investing in our project capabilities and experiencing and becoming better and better and really what I call excel and development.

Your next question comes from the line of Carsten Riek from Credit Suisse.

Peter and Jakob, my question is on aluminum. You mentioned, I think, in your release that the tensions between Russia and Ukraine could send actually aluminum prices even higher. Could that -- could you actually think about a way that Russia could actually redirect those volumes to China? And could the price impact be less pronounced in your opinion? And a follow-up, could you actually production in aluminum in the short to midterm other than at the Kitimat smelter in British Columbia to benefit from strong aluminum prices?

Yes. Thank you. You're right. I think it goes for VTEs, and it goes for all aluminum smelters. You have very little flexibility. You either run a smelter or you run a smelter flat out. I don't think I predicted increased prices in aluminum because quite frankly, I don't know where prices are going. What I said about the Ukraine conflict is that it has the potential to create disruption in the market. And I think what you're saying there is one scenario. There are many scenarios that can pan out. What I'm trying to say is, I think, actually, we have tried sanctions before. I think we are quite well placed because we have got that integration between bauxite mines, refineries and smelters so that we would be quite robust if there is disruptions. But predicting prices, I leave for you.

I will now hand the call back for closing remarks.

Well, thank you very much for taking the time here attending and showing interest in Rio Tinto. It's an important day for us. We have disclosed a set of very strong financial results. But leave no doubt, we see everyday opportunities to continue to improve. We tend to strengthen our culture, strengthen our operational performance, always in a safe manner. Thank you for joining, and have a nice day.