Rio Tinto intends to raise productivity across its $50 billion portfolio of assets by focusing on operational excellence to generate superior shareholder returns throughout the cycle. This is expected to generate a total $5 billion of further free cash flow by the end of 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017.

“We have placed our assets at the heart of the business to drive improved performance and ensure our resilience through the cycle,” Jacques said. “We are well on track to meet our target of $2 billion of cash cost savings by the end of next year. We are also taking advantage of any opportunity to generate value from mine through to market. Lifting the productivity on our $50 billion asset base creates a low risk and highly attractive return. It will deliver an additional $5 billion of free cash flow over the next five years.

“We are continuing to reshape our portfolio. Following our announcement yesterday that we will sell our Lochaber smelter in Scotland for $410 million, the total of agreed divestments in 2016 now stands at $1.3 billion,” he said.

The transaction includes Rio Tinto’s interest in Alcan Aluminium UK Ltd., which includes an operating smelter, the hydroelectric facilities at Kinlochleven and Lochaber, as well as all associated land.

SIMEC’s intention is that the smelter will be operated by the Liberty House Group, its sister company within the international GFG Alliance.

In addition to improving the performance of its asset base, Rio Tinto is also committed to investing in growing the business. In the near term, this will be delivered via three high-quality growth projects—Silvergrass (iron ore in Western Australia), Amrun (bauxite in Queensland) and Oyu Tolgoi (copper and gold in Mongolia). This investment underpins an annual average copper equivalent growth in excess of 2% between 2015 and 2025. Longer term, exploration remains a priority for Rio Tinto.

Regarding iron ore production, Rio Tinto set out the high-value options available to optimize its Pilbara system, with a focus on value over volume. This includes potential enhancement of mine capacity through productivity improvements and replacement of depletion through low capital cost brownfield investment, including Yandicoogina Oxbow and West Angelas Deposit F. The approximately 20 million-metric-ton-per-year (mt/y) Silvergrass project with a capital intensity of $29/mt and an IRR of more than 100% remains on track for completion in the second half of 2017.

Over the next three years, sustaining capital expenditure in the Pilbara is expected to be around $2.2 billion and replacement mine capital expenditure around $1 billion. One option following the brownfield replacement mines is the next greenfield Pilbara development, Koodaideri, with capacity of around 40 million mt/y and capital expenditure of around $2.2 billion from late 2019. First ore will potentially be available by 2021.

The AutoHaul project is expected to advance progressively during 2017 and be fully implemented by the end of 2018. Pilbara shipment guidance for 2017 remains at 330 million-340 million mt/y of iron ore.

Rio Tinto Aluminum remains globally the highest margin aluminum business, according to the company. The aluminum product group is on track to deliver 2016 cost savings of $300 million. Initiatives are under way in the aluminum business to further reduce costs and increase productivity, including more than 250 initiatives in bauxite and more than 500 initiatives in each of the alumina refining and aluminum smelting businesses.

The Amrun bauxite project remains on schedule and on budget. Production guidance for 2017: Aluminum, 3.5 million to 3.7 million mt; alumina, 8 million to 8.2 million mt; and bauxite, 48 million to 50 million mt.