力拓 (RIO) 2025 Q4 法說會逐字稿

Okay. A very warm welcome to everyone both here in the room and for those of us joining us remotely. I want to begin by acknowledging the traditional owners and First Nations peoples who host our operations around the world and pay my respects to their elders, past and present.

We are pleased to be here today with our CEO, Simon; and our CFO, Peter Cunningham, to present to you our 2025 full-year results, and this will be followed by a Q&A session. (Conference Instructions)

With that, I'd like to ask Simon to the stage.

Good morning all to those here in London, and of course, also those joining us online. So I'll start with safety. And this evening, I'll fly to Guinea to spend some time with the team at Simandou. As you'll no doubt be aware, last Saturday, one of our colleagues died at the mine site. We've achieved a great deal at Simandou, but this tragedy underlines that we have more work to do to ensure that everyone goes home safely at the end of every shift.

Safety is the foundation of our business, and nothing is more important than the people that work around us. And we must be able to safely operate in different jurisdictions around the world like Guinea. The leadership team and I are determined to learn from this tragedy, and we're taking some immediate actions.

We've stopped all site works and construction activities. We started an independent investigation with both internal and external experts. And in addition, we will appoint an independent safety advisory panel. This will consist of leading safety practitioners from both industry and academia together with experience Rio Tinto Alumni. It will provide additional guidance and support to our team as we complete construction and then move Simandou into operations.

As we put in place these actions, we will reflect further on the lessons from our colleague's death. With these thoughts in mind, I'll turn now to our financial results.

We're making clear progress towards our mission of being the world's most valued metals and mining business. The results today are underpinned by a stronger, sharper, and simpler way of working, which will lift productivity as well as lower cost, enabling us to cut complexity and focus on the right opportunities. Our operational performance was strong in 2025, and we delivered an industry-leading 8% equivalent increase in copper equivalent production, setting annual records for both copper and bauxite.

Our Pilbara mines rebounded strongly from the cyclones at the start of the year and set production records from April. And while volumes increased, our copper equivalent unit costs reduced by 5%. These results also show the value of diversification. Underlying EBITDA increased by 9% to $25.4 billion. The increases from both copper and aluminum were a particular highlight.

Self-help was also a feature as we unlocked a $650 million run rate in annualized productivity benefits. And I'll talk more about this shortly.

Finally, the dividend. We achieved stable underlying earnings of $10.9 billion, and we will return 60% of this to shareholders equating to $6.5 billion.

Now stepping back. We've got the right assets in the right commodities and we're well positioned to deliver growth in the years ahead. Over the next decade, we expect strong growth from aluminum, lithium, and copper, with steel demand remaining resilient. At the same time, across the board, supply is constrained, with sector CapEx 50% lower than its 2013 peak.

Now Rio has got the people, the capability, and the projects to meet this demand, and we're achieving this through operational excellence. This is driving our strong production performance, putting us on track to deliver our ambition of 3% CAGR for copper equivalent production through to the end of this decade.

As part of our stronger, sharper, simpler way of working, we're also driving operational outcomes and structurally reducing costs. We will achieve the $650 million annual run rate in productivity by the end of this quarter. And with this strong start in 2026, we will deliver cash improvements materially above this Q1 run rate in 2026.

Of course, to drive the growth that creates value for our shareholders, we need to deliver on our projects safely, reliably, and at scale. And in 2025, with Oyu Tolgoi, Simandou, and our in-flight lithium projects, we executed some of the most technically challenging mining projects on the planet.

That underground development at OT is now complete, fully invested and the growth is ramping up. And we're on track to deliver, on average, around 500,000 tons of copper per year between 2028 and 2036.

In December, we also achieved our first shipment of high-quality iron ore from Simandou, and we will deliver 60 million tons per annum of iron ore as we fully ramp up. And in lithium, we're progressing our in-flight projects, targeting capacity, 200,000 tons per annum by 2028.

We're delivering tangible outcomes today. And we have the project pipeline to extend growth well into the 2030s with copper at its core. That includes projects like La Granja in Peru, Resolution in Arizona, Nuevo Cobre in Chile, which I'll visit shortly. And I've asked our exploration team to narrow their scope and put copper front and center. And so we're now directing 85% of our exploration budget towards copper.

But we are clear-eyed about the task. No matter how amazing the geology, this effort must translate into value-accretive projects.

And finally, capital discipline, the bedrock of strong and consistent shareholder returns. Rigorous capital allocation guides every investment decision we make. All projects must compete for capital and every dollar we invest must create shareholder value. The same standards apply to how we manage our portfolio.

As we said at Capital Markets, we will deliver $5 billion to $10 billion in cash proceeds from our asset base. And we're now actively testing the market for RTIT and the borates businesses.

To sum up, we're achieving both returns and growth, returning cash to shareholders and at the same time delivering the largest number of greenfield projects of any of the diversified miners, whilst retaining the industry's best growth options. That same discipline underlines how we approach any major portfolio decision.

So let me touch briefly on the discussions we had with Glencore. We went under the hood with a singular focus on whether we could create value for shareholders. We considered what we could bring to the table and the extent to which we can generate incremental value across a combined portfolio. We had constructive discussions between the two teams. Ultimately, we concluded that we could not reach an agreement that would deliver value for Rio Tinto shareholders.

Now, as you might recall at Capital Markets Day, I said we would look at M&A opportunities that are disciplined lens, and that's exactly what we've done. And the same focus on value will continue to guide us.

With that, I'll hand over to Peter, who will take you through the financials in more detail.

Thanks, Simon. At our Capital Markets Day, we set out a clear pathway to increase volumes, reduce costs, and release cash from our asset base, all of which will strengthen our balance sheet and drive future returns. In 2025, the improvement in our financials was largely driven by volume growth, a function of our ongoing drive towards operational excellence and higher copper volumes from OT.

Today, we are reporting nearly $3 billion of volume improvement year on year. Cost discipline was also good, and we started to deliver substantial reductions late in 2025. These will flow into our results in 2026 and will be enhanced as we implement systemic improvements across our business. More on that later.

Our net debt increased to $14.4 billion as we absorbed the Arcadium acquisition, and falling slightly in the second half of the year due to our strong operating cash flow. The balance sheet remains in good shape, and gearing is modest at 18% with future capital release initiatives set to further strengthen our position. Once again, we're paying out 60% of our underlying earnings as dividends.

Let's now take a closer look at our markets. Now there are two key messages here. Firstly, the resilience of iron ore; and secondly, the positive correlation of our other products with the energy transition. Iron ore remains supported by Chinese steel export growth and a structurally balanced market. As Vivek outlined at our Capital Markets Day, the cost curve remains steep and is supported at the top end by over 100 price-sensitive producers from more than 20 countries.

Copper and aluminum prices both rose 9%, but average prices don't tell the whole story. Copper ended the year 44% higher than 12 months earlier; and aluminum, 17% higher. The demand growth picture is not uniformly strong. Traditional areas, such as construction, remain weak. But the backbone of growth is the energy transition, particularly around power systems and electrification.

The energy transition, combined with supply constraints and reinforced by investment inflows, is driving the market strength. Lithium also ended the year with strong momentum as markets came back into balance earlier than expected. Battery storage demand is emerging as a fast-growing pillar of the energy transition with growth now outpacing EVs as renewable scale and grid firming becomes critical. It continues to surprise many market commentators to the upside.

Turning now to our EBITDA composition over the last two years. Iron ore EBITDA was down 11%, but the copper and aluminum more than offset this. Our portfolio gives us the ability to allocate capital to shareholder returns and to grow with confidence, recognizing our best returns come from improving our existing assets and reducing our cost base.

At the CMD, we announced $650 million of near-term productivity benefits, driven by stronger operational discipline, a streamlined organization, and a sharper focus on the portfolio. For the past few months, we've reshaped our organization, rescoped, and stopped work. By the end of Q1, we will be into our next phase of the program, which is larger in scale, multi-year, and steps us towards full potential.

In the Pilbara, we're looking at different ways to operate our system, focusing on contingency stockpiles and optimization of our asset shut sequencing. This will enable increased asset throughput and smarter use of spend across the mines.

For copper, we're driving productivity of underground equipment and operations in both development and production areas while improving metal recoveries in the concentrators.

In aluminum, we're focused on sharpening day-to-day operational discipline, strengthening smelter stability, improving maintenance quality and raising contractor performance to ensure operational consistency year-after-year.

And centrally, we're reorganizing our operating model to clarify accountabilities and streamline workflows. We've already redefined our closure operating model, optimizing R&D spend and are driving further improvements in sustaining capital projects. Now we expect the value uplift to be materially more than the first phase with programs advancing in 2026 as we scale up to deliver further in 2027 and 2028.

Let's now unpack EBITDA through our standard waterfall. For the first time in many years, we experienced minimal net impact from commodity prices with lower iron ore fully compensated by higher prices for aluminum and in particular, copper. As I said earlier, the big driver of earnings growth was volumes with higher sales delivering a $2.9 billion uplift. This is mostly from copper and gold with the ramp-up of OT and improved output from Escondida.

Higher iron ore sales from the Pilbara were also an important contributor. Volumes were also a major driver of the $800 million improvement in unit costs due to fixed cost efficiencies. Now in copper equivalent unit cost terms, this represented a 5% reduction.

There were a few offsets. Kennecott is on track to deliver production increase by 40% to 50% over the next few years, as we outlined at CMD. Its operating performance is much improved, but the financials were impacted by the base effect of refining high intermediate product inventories in 2024.

Secondly, our Pilbara business recovered impressively from the four cyclones with record production rates since April. However, there was a $700 million EBITDA impact.

Looking forward to 2026, volume growth will be more muted at around 3% across our managed operations, which will be offset by closures at Arvida, Diavik and the midyear curtailment at Yarwun, and an expected grade decline at Escondida. Now nothing has changed from the parameters that we set out at the CMD.

We are pushing very hard on productivity improvements and cost reductions building on the initial $650 million already identified and secured. I would, therefore, expect the aggregate volume and cost improvements, net of headwinds, to be a material uplift on that number in 2026.

On to the product groups. Iron ore delivered $15.2 billion of EBITDA. The product strategy has been successfully introduced to the market, aligning sales to our system, and we've seen strong cost control reflected in unit costs, in line with guidance at $23.50 per ton. For 2026, we're guiding to $23.50 to $25 per ton, reflecting in part the impact of a stronger Australian dollar.

Copper was the standout, with EBITDA more than doubling to $7.4 billion, driven by higher prices and rising volumes. Shipments were up 60% at OT, where the underground development project is now complete. Unit costs were down 53% and 2026 guidance is comparable to 2025. Aluminum sustained its impressive record of stability, in particular, for smelting and bauxite where we set a new production record.

And we took advantage of stronger markets, leading to a step-change in financial performance with EBITDA up 20%. Now our commercial team continues to proactively optimize our vertically integrated position in the changing tariff environment. It was the first year for our new lithium business, which is clearly not yet a significant contributor, but as set out at the December deep-dive, we'll focus on delivering the in-flight projects, which will bring us to a meaningful capacity of around 200,000 tons by 2028.

CapEx in 2025 was at the high end of our guidance range of around $11 billion as we hit peak spend on growth with an outlay of $1.6 billion at Simandou and just over $1 billion on lithium growth projects. Now this is a crucial period of CapEx spend, which will underpin future earnings. Our growth commitments will ease over the next few years with Simandou nearly two-thirds complete.

We do continue to strengthen our Pilbara system through replacement mine investments, and also Weipa, where later this year, we will consider a final decision on the expansion of the Amrun mine. Given this context, we see no change to our guidance of up to $11 billion for the next two years before stepping down to $10 billion thereafter.

Turning to the balance sheet. Net debt has risen to $14.4 billion following completion of the Arcadium transaction, a level comfortably in a range consistent with our commitment to a single A credit rating. All our credit metrics are in a solid place. This remains a strong balance sheet.

We're committed to our capital framework and shareholder returns policy of paying 40% to 60% of underlying earnings. We know that distributions to shareholders are incredibly important. And once again, we're paying out at 60%, and now have a 10-year track record of paying at the top of the range.

So to summarize, we have the right assets and the right commodities. 2025 was a solid year of delivery with sustainable volume uplift. And over the next few years, our focus turns to a powerful combination of self-help and growth as we build on the productivity improvements, and we see the first results from the capital release. The balance sheet remains strong, and we're generating very stable operating cash flow from our diversified portfolio.

And with that, I'll turn it back to Simon.

Thanks, Peter. We've talked about what we're achieving and stronger, sharper, simpler is how we're doing it. It's the operating discipline that underpins the way we think about value creation across the group.

Over 2026, we will focus on structurally improving the cost base and achieving a meaningful step-up in underlying performance. This work cannot succeed without our leadership team's full engagement and I'll be impressed by the way we've come together.

Peter has updated you on our program and three words on this slide: simplify, deliver, and release, reflect our priorities for the year ahead. So to sum up, returns and growth. We grew by 8% in copper equivalent terms. Our strong operating performance, combined with our focus on cost and capital discipline, translates into the financial results you see today as we returned $6.5 billion to you, our shareholders. And I'm confident that there's even more to come.

Thank you for your time. And with that, we'll open up to questions.

Give me 1 minute -- 30 seconds. So we are going to open up to Q&A. We've got a bit over 30 minutes. We will start here in the room, and then we'll go to those on the line. And let's start here at the front.

Myles Allsop, UBS. Maybe start with the elephant and the Glencore talks. Maybe could you just say what you've --

I was running a book as well. You've made me happy.

I think we all won.

So do you feel comfortable owning coal? That would be your first question. What do you think you've learned from the discussions? What sort of synergies did you see from that sort of combination? Obviously, the value didn't work, but any other issues that kind of stopped the deal from happening?

So you always learn through these processes. The constructive discussions, you learn, I guess, about your own business, you learn about others as well. And as I said in my presentation, we went deep, we went under the hood. We look rigorously and clinically and ultimately didn't get there on value. The discussions were for the full perimeter.

And the way that we think about that is really through the lens of the underlying asset quality and whether together, in a combined portfolio, we could incrementally add value compared to the case we laid out at Capital Markets, and it's through that lens that we assess the transaction. Really comfortable with the plans that we put out at capital markets, and as you can see today, that's the full focus of the team.

And owing coal, was that ever a concern from the management team?

As I said, so it was for the full perimeter of the business, including coal and really through that lens of what's the underlying asset quality and can we add value through the combination.

Okay. Alain.

This is Alain Gabriel at Morgan Stanley. A couple of questions. One is on streaming, which appears to be quite invoked now. You have a fairly good chunky gold component at OT. Do you see an opportunity there or are the current discussions with the government around taxation, an impediment around going ahead with any streaming agreement? That's the first one.

Yes. I mean, I suppose all of this comes down to the fact that we've got lots of options across our portfolio to release capital, and that's our focus. I mean, we've talked about the strategic reviews of borates and our RTIT, we're testing the market. We've got options around infrastructure. We do have options around streaming.

But we're just going to work through these systematically and say what's the best option that we can undertake. So I mean, those options exist right across the portfolio, but it's all about value and what we can sensibly sort of prioritize to deliver.

And the second question is on cost cutting. You've put out a slide there, looking at the cost-cutting opportunities beyond the $650 million program. The Pilbara seems to be at the heart of it. Can you help us frame a little bit the opportunity there to quantify how much can be taken out of the business in terms of costs?

So on the $650 million, so that was a run rate that we announced at Capital Markets that we'd said we'd hit by the end of Q1. So what we're saying today is that our 2026 cash delivery will be materially above the $650 million, which was a run rate. And so that sizes it for 2026.

I think the main point here, and Pete talked about it, we've gone systematically asset-by-asset looking at full potential with clear plans then around delivery, and it will be a multiyear program. And so we've sized it for 2026, but clearly, there's more to come in '27 and '28. And I should say it's across all businesses. So yes, iron ore, but it's across each of our businesses in the portfolio.

When should we expect that?

Just on the unit cost, I mean remember guidance is $23.50 to $25, but it is at a higher exchange rate. So the exchange rate would take you up more to the midpoint of that. So the business is making pretty sizable sort of improvements because as Matt went to its CMD, there's a lot of headwinds in the Pilbara still, but we're offsetting that through productivity.

Okay. We'll go to some of the people on the line, if we could. Operator, would you mind to give the first speaker the microphone?

(Operator Instructions) Paul Young, Goldman Sachs.

Simon, firstly, on Glencore. I mean, well done for sticking to your guidance of being disciplined and being focused on value. Look, I think a simple merger would have changed your strategy from one of simplification to complication. And it does appear that the true operating synergies were pretty limited. So was the main attraction the copper growth?

And when Mark and the project team reviewed that pipeline, were there major differences on the CapEx and the timing?

Thanks, Paul. It was obviously -- as I said at the outset, it was for the full perimeter. And so they've got a diversified business. And so we looked across all assets, including, as you say, copper. We did go through forensically.

And so, I think there was really constructive engagements with the team. We obviously look deeply at their pipeline, their existing assets as they did with us, and it was that combination that we were really asking ourselves the question, can we add incremental value through the combination. And that took into account all aspects of their business and ours.

I guess if I step back and setting aside those discussions, as we've outlined in the slides today, the nice thing about the results today is we're growing now, the ramp-up at OT, 8% copper equivalent growth. And then we have the project pipeline to really extend that beyond the 3% CAGR through the 2030 -- options to extend that into the 2030s.

And clearly, copper is a particular focus, both in terms of the projects we have, but also through our exploration and other activities. And so that's a singular focus for the team. But we've got to convert what is a really good set of options into value-accretive projects.

Okay. And then second question is on the Brazil aluminum deal with CBA and Chinalco. Not much mention of this. I know the deal was only recently announced. But can you just talk to the high-level rationale?

Can you expand the refinery in the smelter? What it means for your Atlantic strategy more broadly? And obviously, great for the Chinalco relationship. What does this mean for potential further deals going forward with Chinalco?

Yes. We've learned a tremendous amount through the Simandou project, obviously, working with our partners in the consortium there. And I guess taking that same mindset, we looked at that for the CBA transaction as well, an opportunity to involve ourselves in the Brazilian aluminum sector, an opportunity to add value and growth to our aluminum business and as well as the point you make, which is around securing our supply lines. And so obviously, the potential for bauxite down the track. And so that was the, I guess, the strategic rationale.

And as we got into it, we could see a clear value opportunity for our aluminum business and hence, progressing that transaction.

We'll take one more from the line, please.

Glyn Lawcock, Barrenjoey.

It's Glyn. Just quickly, just on Glencore, again. You talked about there was a valuation gap. Just how did you measure the value? I mean, what are you actually seeing? How did you measure the gap? And what metrics do you think the gap emerged?

So ultimately, Glyn, it's a focus on the underlying value. So we worked our way through their full portfolio. We come to a view as to underlying value. Clearly then, there's also the synergies that you can add on to that and then what any transaction would look like. And it's -- so it's those data points that then go into a view about the potential transaction and whether it's going to be accretive to Rio Tinto shareholders.

And as you would imagine, there's lots of data points that sit behind that, but that's the core principles that we looked at.

So when you say value, Simon, just to clarify, are you saying -- so when you do like a discounted cash flow, you value each individual asset, and you get a sharing of the two entities. You did that much of a deep-dive bottom up under the hood and basically realized that the equity relationship 60-40, two-thirds, one-third, the gap was just way too large.

Yes. So that's the core tenet of the valuation, as you articulate, Glyn. Obviously, we look at all data points as well, those in the market, what others' views are and fold that into our thinking, but that's what underpins the valuation.

Thanks, Glyn. Jason.

Jason Fairclough, Bank of America. So Simon, just to take you back to iron ore. Obviously, still a major project -- product for you. And it's kind of a funny year because you've got the change in the benchmark. We've got BHP having a bit of a dispute with the Chinese and we've got Simandou coming online, which has kind of been this thing that everyone's been talking about for a long time.

So how do you see the dynamic emerging from here? Are you changing your approach to selling the iron ore to producing it even?

I think we're changing our approach the way we think about portfolio because Simandou having been something that's coming is something that's arrived. And so, as we did the work last year on product strategy, we obviously had a pretty clear view around what the future mix would look like in terms of our own portfolio. Having IOC, the Pilbara asset and Simandou obviously gives us real options across high grade, mid grade and low grade. And so thinking about how we best present those iron units to the market and also working with our customers around what their forward projection looks like.

The iron ore industry continues to mature and so working with our customers around it, about what the best mix for that is as well. As you and I have talked about before, Jason, we obviously got a long-term business, and so we've got to look beyond the sort of next few months or into what the future looks like as well for that business and make sure that we're really well positioned regardless of which way the future steel industry goes.

So just a bit of a long-term follow-up. India, how do you see the India's place in the market evolving over the next 5, 10 years?

So I mean, growth rates are really high. The central question in India is what portion of their iron ore demand is met domestically. And so we've been doing, our people work on, on looking at that and understanding it. I think inevitably, as we see those sort of growth rates, there will be periods of time when India is a really strong market for us. They do have relatively more domestic suppliers compared to, say, China through their growth phase. And so it will be a different market for us, but there will be some opportunities as well.

Ephrem Ravi from Citigroup. Two questions. Firstly, on Simandou. It seems to have a high rate of fatalities for the time period. And obviously, you haven't changed your guidance for this year.

But looking forward, like do you see a risk to kind of hitting that 60 million tons in a reasonable period of time unless the safety culture improves quite dramatically? If not, would you consider like portfolio adjustments, i.e., potential disposals of Simandou to your partners?

So the events of the weekend are obviously incredibly sobering and the impact on colleagues, family and friends and looking forward to being on the ground there with the team tomorrow. As I said in my introduction, we've got to be able to safely operate and construct wherever in the world that is. And I think the team at Simandou have made enormous strides and the events of the weekend show we've got further to go. And so that's our real focus at the moment.

And I think the work that they have done, we know we can get there. We've just got to put in place the blocks to make sure that we really can. It is a different jurisdiction in a different environment, and we need to adjust our operating practices to that, but we're confident of the 60 million tons that we've announced.

And just a question on lithium. Obviously, prices have gone up 100% since the site visit about two months ago. And some of the peers like Pilbara is restarting operations, et cetera. So is there any change in thinking in terms of just doing your in-flight projects? Or is something more than in-flight projects going to be approved within a reasonable time frame?

I'll probably borrow the answer I was giving Jason. I mean, we've got a long-term business. And so we look through at our underlying fundamentals. And the lithium, just given the size of the industry and the rate of growth, we fully expect prices in lithium to be volatile, and we've certainly seen that over the last little while. But we've got to look through that at the long-term pricing because those assets, once we bring them into production, they are going to be in production for decades.

And so it's not so much about next week, next month. It's about the years that follow.

The nice thing, and I hope you saw that for those that were on the site tour. The nice thing about that business is that it's got options. And it's got really good options in that industry. And so there's a high bar for capital allocation. Our focus is the in-flight, but clearly, there's other options in that portfolio as we look a bit longer term.

It was a well-timed side.

Brilliant.

Great. Look, we will go back to the line for two more questions. Over to you, operator, please.

Rahul Anand, Morgan Stanley.

I've got two questions, both on iron ore. The first one is around, I guess, your cost-out targets. Obviously, $650 million outlined at the group level and then you've got a medium-term target in 2023 for the iron ore business around that $20 a ton mark.

My question is around sort of what the targets are for your competitors in the Pilbara? And I kind of think about BHP guiding below $17.50 and they seem to be strongly guiding towards being significantly lower and then Fortescue sub-19.

Now I understand, obviously, your mine systems are quite different to theirs. But today, in terms of the next phase examples, you've talked about the Pilbara. So I guess, how can you better that $20 a ton? And what level of betterment do you think we can expect? And sort of where can you end up in terms of where you sit versus your competitors? I'll come back with the second.

And Pete, I'll get you a comment as well. Probably the first point I'd make is you've got to look at it on apples-to-apples. And people can flip between full unit costs and C1 costs. But the numbers that you're referring to for us anyway is about full unit cost and so got to compare the same.

I think as you've seen today, we finished last year at $23.50; guidance for this year, $23.50 to $25 at a higher exchange rate, probably points to the work that Matt Holcz and the team are doing to really drive efficiencies and effectiveness in the Pilbara.

Obviously, different businesses, as you say, in terms of the particular phase of investment they are and the material that we need to move. But I think the numbers today probably point to a fair bit of the work that the team there is doing.

And Rahul, I mean, I think the key thing is that we've got all the replacement projects. We've always said they're critical to the performance of the system. So they're now being executed. That is absolutely critical to us. And I think what you saw in the nine months of 2025 post Q2 to Q4 was just how the business could perform when it had the volume going through it. And that is, I think, critical for the future.

And at the same time, I mean, it's the same for all of our businesses. What we have done over the last six months is put together really clear actions to drive productivity and costs throughout our whole system. And that is what's going to underpin then real productivity improvement over the next few years. And when we talk about working through the system, and removing bottlenecks and really driving performance, it's going to be really, really driven very, very hard over the next few years to drive productivity at the same time as those new sort of replacement mines come in. That's at the heart of our -- where we will get to that $20 in '23 terms going forward.

No, absolutely, I mean, I acknowledge the business has already improved significantly in terms of, I guess, reliance and productivity, especially the last quarter.

Look, the second question is around the iron ore negotiations. Now, obviously, there's been a lot of press with BHP and the CMRG Group. I just wanted to kind of take the conversation to perhaps a wider industry question. Would I be right to kind of deduce that these types of conversations are perhaps going to happen, not just with BHP, but I guess all iron ore suppliers into China as these contracts come up for renewal? And if you've had any conversations so far, how have those conversations been?

And I guess, if you have some sort of timeline or something in terms of which contracts are coming due for renegotiations, I guess, in the next year or two years?

So we have had conversations, we're having regular conversations with CMRG and all market participants across our business, whether that's in China or in some of our other markets. And so those conversations are what I would describe as continual and ongoing.

Look, if I was to characterize them, they're exactly the sort of conversations you'd expect between us and customers. We're obviously focused on their business, securing supply prices as we are. And so it's coming together and really understanding each other's business and trying to create value together, and that's what we do with customers, that's what we're doing with CMRG. And so in that sense, it's a continuation of where we've been.

The market continues to evolve. We've obviously been talking for some time about the maturing iron ore market in China. You'll see more than 1 billion tons of steel in China this year again. And so it remains a large and really solid market for us as we think about folding in Simandou into the mix. And so all those things are on continual discussions with CMRG.

We'll take the second question from the line, please.

Rob Stein, Macquarie.

Just a couple of quick ones for me. The copper unit cost guidance you provided. Can you give us an indication is the magnitude of byproduct credits there? I think The Street was expecting a lower number that you might be providing a conservative estimate of byproduct credits there. And I'll follow-up with the second.

I mean, I think the gold volumes are kind of a bit higher in '26 and '25. And Rob, we've used pretty much, I think, just a bit higher than the average price of '25 in those calculations.

Okay. And then just speaking about copper and longer-term growth. I mean, one of your competitors came out the other day and provided quite a comprehensive list of growth projects organically that they're pursuing that takes their growth profile out across next decade, and it's quite transformative in terms of their own portfolio.

How are you guys thinking about those longer-duration copper growth options that you may have in your portfolio, noting resolution currently is still in the ground and not being mined? And I'm sure you would like to have a project there. But can you give us a bit of a flavor as to how the copper JV is going as well with Codelco and how quickly that's progressing?

Sure. And I talked to, Rob, the copper pipeline in my introduction today because we do have some really good options, but we need to translate options into value-accretive projects.

I'll visit Nuevo Cobre in Chile in the next month or two months and our projects in the US. I guess the nice thing about today's results is we're growing today. And then we've got the 3% copper equivalent growth through to 2030. And so that's why we've tended to focus on the here and now because our growth is through this period.

And we have the options then to extend that growth out into the 2030s. And so, we'll come to market and update as those projects progress. And in terms of Chile, as I said, I'll be there shortly. Relationship with Codelco is really good. Looking forward to seeing them next week.

And so Chile, Argentina, South America, in general, remains a real focus for our copper efforts. I do think, as I talked about capital markets, partnering is a real super power for Rio Tinto and we certainly look forward to progressing those JVs with Codelco and with our other partners in that region.

So Rob, it's really nice progress now, which is what we've got in our numbers today. I mean, in the next few years is really good.

And is there anything through DD with Glencore that identified potentially opportunities for JV at a project level there?

Well, I'll probably set aside the -- if I pull it back to an industry level, as I said, partnering has delivered enormous value to this organization over time in almost all -- in all of the commodities in the portfolio. And so that's an area we are really focused on. Certainly, exploration is one way, partnering with others where we bring something to the table, project execution capabilities, operating capabilities, technical know-how, and partners bring something to the table as well. And I would just make that general comment whether that's with Glencore or with others.

Great. Thank you. Chris?

It's Chris LaFemina from Jefferies. I just want to ask about geopolitical risk profile and how that's changing at Rio? So your growth is in Mongolia, in Guinea, you consider doing a deal with Glencore who is in the DRC and Kazakhstan and Glencore is marketing businesses in many regions in the world where you guys don't operate. Rio has spent the last five years restoring a culture and which -- and the culture historically has been in relatively low-risk regions.

How do you think about geopolitical risk in terms of -- so I'm not only thinking about the Glencore deal, but even going forward, would you consider buying into assets in very high-risk regions where historically you might not have gone? Like would you look at a pure play DRC copper miner, for example?

And what would give you comfort in going into regions where you've never been before, for example, Kazakhstan? I mean, how do you think about that? So when you're valuing Glencore in that situation, how do you -- is it a much higher discount rate that you're using? How do you get comfort around assets in those types of regions?

Look, it's an excellent question, and it's one that we spend a lot of time grappling with and thinking about it, and I'm not sure there's a perfect answer. You're right in the sense of, ultimately, it's got to come back to value. And so a higher discount rates, the way you think about the opportunity could clearly, in more challenging projects, whether they're more challenging because of the jurisdiction or more challenging because of technical aspects. The size of the prize has to be there to really step in and take on some of those challenges.

And so we have a number of different tool sets, discount rates is one, putting a high bar in terms of the returns that we expect, thinking deeply about how you could mitigate and share some of that risk might be another one. But ultimately, it's a bit hard in the hypothetical because it comes back to the opportunity and what we think about that specific opportunity, whether we take some of those risks. But it's certainly one we spend a lot of time thinking about historically and probably for the reasons you articulate more time now given some of the changes in the world.

Tell you what, so the other point I would make just to tag on the back of that. I think in the numbers today, you can see the real value of the diversified model, and it goes a little bit to your question as well, whilst iron ore prices were down, EBITDA has gone up because of greater contribution from copper as we ramp up and obviously, a strong contribution from aluminum as well.

And so as we think about risk, as we think about some of the geopolitical tensions, clearly, having that diversified model is also helps you mitigate and manage some of that between jurisdictions.

Alan Spence from BNP Paribas. On the dividend, 10 years paying out the top end of the range. Looking forward, costs are coming out of the business, CapEx is starting to come down. There's no big M&A for now. Is it still the appropriate range? Or how do you think about recalibrating it potentially higher?

Alan, I think, very comfortable with the policy we've got. We've always said in our capital allocation framework of the priorities we'll have, investing in the existing business, the sort of ordinary shareholder returns policy and then looking at growth, the balance sheet and returns. If we have excess capital, we will look to sort of return more to shareholders. That framework is still absolutely applicable as to how we think about that right now.

If I can push back a little bit. What's the point of having the low end of the range of 40%, if over the last 10 years, not every year has been an easy year, but you've never paid 40%.

Well, I mean, I think I'd sort of push back as well and say that the business has kind of performed at a level to have the 60% payout range. I mean, that's what we've had. I think that's sort of just reflective of the cash flows, quality of assets. And the reality is now we're growing the business. That pie will grow.

And so the absolute number in line with the growth of the earnings would increase as well. I think that's a pretty good place to be. It's growth and its returns.

So a minimum 60%?

All I'd say is our policy.

Okay. We've got one more on the line. Please?

Ian Rossouw, Barclays.

Just a follow-up on the Glencore sort of discussions. Yesterday at the Glencore presentation, Gary talked about sort of meaningful potential synergies on sort of overhead, procurement cost savings, line optimization on the marketing side. And I guess he was referring to the point that not a lot of the synergies would have come from sort of operational synergies with mining next to each other as we've seen with some of the other mergers in the industry. I mean, that all suggests that the synergies potential between Rio and Glencore could have been much bigger than what the market was estimating. Just wanted to hear your views on that.

So there were synergies, and I'll probably go back to what I said. I think the discussions with Gary and the team were constructive and the teams work well together, looking at and really thinking about what those synergies could be. But it's one data point that falls into the valuation and there are many others. And so there was synergies, it's only one data point, though, as well.

And the other point I would say is you've got to look at it rigorously compared to the base case, which is what we laid out at Capital Markets Day and what you can do and what you can do yourself. And so it's got to be a really robust methodology of truly value that you can only derive from the combination rather than the value you can chase through other means.

And then maybe a follow-up in sort of on the back of Myles was asking about sort of learnings from this process. I mean, would you approach the marketing side slightly differently within the Pilbara or other parts of the business?

Again, if I lift it up to a more general industry statement, I think that marketing front end is something that we are spending quite a bit of time thinking about. We, obviously, established commercial a few years ago, a little bit to the question that was made before in terms of geopolitical tensions and volatility in the world. I think, around our physical flows there are ways we can generate greater value around those flows. And certainly, that's top of mind for Bold and the commercial team.

Okay. I think we have time for one more. So, Liam?

Liam Fitzpatrick from Deutsche Bank. I'll just ask one. On Chinalco. There was talk last year from you and your predecessor about discussions over the stake in Rio plc. Has that gone anywhere? Are discussions live? Any color you can give.

Continue to engage with Chinalco. Nothing to announce today, obviously. But the relationship is in a good place. Obviously, the CBA deal is with Chinalco as well, and so we're continuing to engage.

It's Matt Greene at Goldman Sachs. Simon, if I could just come back to Glencore, we talk a lot about valuation today and you touched on discount risk profile. What about where you could see value tomorrow? And more importantly, where the market will value your company tomorrow?

So in terms of a potential re-rate either being a combined entity being a leader in all these commodities or potential future simplification of demerge got, how much weighting was put on in terms of your view on valuation? How much emphasis did you put on that?

So valuation by its very definition is forward-looking. And so it completely flowed into our view of value. But strategic rationales don't pay the grocery bills. It's got to come back to cash accretion for Rio shareholders, and that's the lens we talk.

Okay. Any last question? We're good. Ben?

Ben Davis, RBC. Just a question on the mineral sands. Obviously, you've got these asset sales that you're looking at and you're not forced sellers. I'm just wondering if there's anything sort of -- clearly, the cycle is not great in mineral sands. So just curious what sort of minimum valuation you'd be looking for these type of assets? And how surely wouldn't be a better time to wait for another three years for it to start again?

We're going to do it patiently, yes. As I've said earlier, we are a long-term business. And similarly, I think the people that are interested in that or the borates business is going to look through the market as it stands. But we're going to be patient, as you say, we're not under any pressure. And so if we don't get the sort of value that we see in the business, we won't progress them. But anything to add?

No, I think that's exactly right.

And then just quickly on Yarwun, how much are we looking at care and maintenance costs? And again, what's the longer-term plan for that asset, which is sitting there?

We're currently moving that as we announced low single digits, I would say, in terms of spend.

Okay. Many, many thanks for joining us today. For those online, we will conclude our time now. And for those here in London, I welcome you to join us for a light refreshment before, for the analysts here, we move into an analyst roundtable. So thank you again.

And with that, I conclude today's presentation. Thank you.