Rio Tinto Group (RIO) Earnings Call Transcript & Summary

Good afternoon, everybody, and welcome to the 2020 Annual General Meeting of Rio Tinto Limited, and thank you all for joining us today. My name is Simon Thompson, and I'm the Chairman of Rio Tinto. We live in strange and uncertain times. So let me start by explaining the changes that we've made to this year's AGM as a result of the COVID-19 pandemic. As you all know, the Australian government has taken a number of measures to reduce the transmission of the COVID-19 virus, including requiring people to stay at home, except in limited circumstances, and placing restrictions on public gatherings. We fully support these measures to protect our public health, but they do unfortunately mean that it's not possible for us to hold our AGM in the normal way. Instead, we are conducting this year's AGM as a virtual meeting. We recognize that this event provides you, the owners of our company, with an opportunity to hold the Board to account. It's also an important opportunity for us to talk to and hear from some of our smaller shareholders. So we've done our best to ensure that all shareholders and proxy holders will have the opportunity to participate in the meeting, including, for those entitled, the ability to ask questions and to vote. Every effort has been made to ensure that proceedings run smoothly. However, if technology issues do arise, any procedural updates will be provided on our website and a recording of the meeting will also be available on the website after the meeting. In order to make the proceedings as efficient as possible, I will formally start the meeting by declaring that voting on all resolutions is now open. As usual, resolutions will be decided by poll. For those entitled to vote at today's meeting who are participating using the online meeting platform, the voting icon will appear shortly on your navigation bar. Once you click on this, the resolutions will appear on your screen. To cast your vote, simply select one of the options. You can vote and change your vote at any time until the polls close shortly after the end of this meeting. I am now going to cast the votes for the proxies I hold on all resolutions in accordance with the directions provided by shareholders or otherwise, as set out in the notice of meeting and addendum. Let me now introduce my fellow members of the Rio Tinto Board who join us on the line today from the U.K., the United States, Denmark as well as Australia. Starting with our Chief Executive, J-S Jacques; and our Chief Financial Officer, Jakob Stausholm. Also on the line, we have Sam Laidlaw, Senior Independent Director and Chair of the Remuneration Committee; Megan Clark, who chairs our Sustainability Committee; Simon Henry, Chair of the Audit Committee; Michael L'Estrange; and Simon McKeon. Also very pleased to welcome our 3 new nonexecutive directors, Hinda Gharbi and Jennifer Nason, who joined the Board in March; and Ngaire Woods, who will be joining us in September. We look forward to benefiting from their insights and expertise in natural resources, finance, technology, governance and public policy. Finally, we're joined by Tim Paine, our Company Secretary; and Debbie Smith from our auditors, PricewaterhouseCoopers. After some introductory remarks from me, J-S, our Chief Executive, will update us on the performance of Rio Tinto and our response to the COVID-19 pandemic. We will then open the meeting for your questions. And if you've joined us through the online platform, you can start submitting your written questions now, and we will address them later in the meeting. At Rio Tinto, safety is our top priority, and this has never been truer than over the past few months. The COVID-19 pandemic represents an unprecedented global challenge. But in Australia, it has been very encouraging to see strong leadership and coordinated action by the government, public services, communities, unions, civil society and business to address both the public health crisis and its economic consequences. At Rio Tinto, the Board and the management team have been focused on keeping our employees and communities healthy and safe. We've also played our part to help alleviate both the public health crisis and the worsening economic situation in many of the countries where we operate. Where it is safe to do so, we have tried to keep our operations open and running smoothly in order to safeguard the jobs of our employees and our suppliers and to maintain our contribution to communities, regions and countries where we work. We're also supporting many customers that depend upon our products. I want to pay tribute to J-S, the management team and all of our employees worldwide for their extraordinary efforts over the past few months. A crisis like this brings out the best in many people, and I am proud of our company's response. Before J-S updates us on our performance in 2019, I think it is worth reflecting on our purpose as a company. At Rio Tinto, we produce materials that are essential to human progress. There is hardly any aspect of modern life that our products do not touch. And our 46,000 employees work hard every day on every shift to fulfill this purpose while maintaining industry-leading performance in safety and sustainability. Our goal is to build a strong and resilient business, one that is capable of investing throughout the cycle, generating value for all our stakeholders as well as providing superior returns to our shareholders. In 2019, I'm pleased to report that your company made good progress in all of these areas. As I mentioned earlier, safety is our top priority. In 2019, all of our safety performance indicators improved, we had 0 fatalities. In the first quarter of this year, this strong safety performance has continued despite the many changes necessary to adapt to the pandemic. This is an outstanding achievement that reflects years of hard work and commitment by the leadership team and all of our employees, contractors and suppliers. But we are not complacent. We remain focused on delivering a strong safety performance throughout 2020 despite the challenging circumstances. So with that introduction, J-S, perhaps you could share some of the highlights of our financial performance last year and provide an update on our response to the COVID-19 pandemic.

Thank you, Simon, and good afternoon, everyone. There is absolutely no doubt we hold our AGM this year at a very uncertain and unusual time. Sadly, the COVID-19 pandemic has impacted each and every one of us. At Rio, we believe the best way to contribute right now is to continue to deliver products to our customers while keeping our people and communities healthy and safe. At this point, all of our operations are running, but we are not complacent and remain extremely vigilant as the situation evolves rapidly. Since January of this year, we have been running business resilience teams to do what we can to prepare. And the entire organization is focused on 5 priorities: One, maintain the health and safety of our people and communities; two, keeping our operations running and getting products to our customers; three, generating cash to maintain our balance sheet strength; number four is enhancing our partnerships with governments, customers, suppliers and other partners, including shareholders; and last but not least, staying resilient as a business and as teams. We have introduced a number of new health and safety measures at each of our operations and offices. Let me give you an example. In our iron ore business in Western Australia, we introduced a 5-layer screening process before our fly-in, fly-out workers get to site, aimed at keeping our teams and communities safe. This includes a health questionnaire, a face-to-face assessment with a nurse at Perth Airport, thermal screening and rapid screening as well as the application of a health-clearance bracelet. We were one of the first companies in the world to introduce rapid screening to scale, allowing for quick identification of our employees, who may be at increased risk of having a viral illness before going to site. Just last week, we announced we would extend this program to include the implementation of a similar approach at all relevant Rio Tinto WA regional FIFO airports. We are very grateful for the support of the WA government and health professionals, including 100 nurses and health workers who are supporting our efforts, and most importantly, I should say, to our employees who have been magnificent. We are also looking at what more we can do across our operations and offices around the world to protect health and safety. We have over 5,000 people who have successfully transitioned to homeworking and with travel restriction in place, we are finding new ways to connect. Over the last few months, I've had over 80 virtual team sessions to connect with all of our operational and commercial leadership teams. Today, our teams in both Beijing and Shanghai are now back in the office. We have also connected with our customers in China, and it is reassuring to hear it's business as usual for them. In April, we released a very robust production performance update for the first quarter of this year. Our world-class portfolio and strong balance sheet serve us well in all market conditions and are particularly valuable in the current volatile environment. Our resilience and value-over-volume strategy means we can continue to invest in our business and support our communities and host governments. We know it is a privilege to be able to operate right now. To support the effort to contain COVID-19, we pledged a $25 million investment in community projects globally, with around AUD 20 million to be spent in grassroots communities efforts here. Our community investments in Australia are already well progressed. This week, we announced a AUD 1.25 million, investment in our Queensland Royal Flying Doctor Service partnership, which complements our Western Australia's RFDS partnership. As we look ahead, our focus will be on those most in need, including aboriginal and Torres Strait Islanders, victims of family and domestic violence and those without access to essential services and supply. Further initiatives will include, for example, supplying mask and protective equipment to support energy and health professionals, donating to national and local communities, hospitals and international agencies, the provision of ventilation units and temporary medical units and further investment in education and financial literacy programs as remote learning becomes the global norm for our kids. Our Future Minds partnership with Amazon and BlueChilli will be key there. It will be important to work with communities together for a strong future as we will all need to learn to adapt and coexist with the pandemic for some time. Our aim is to be a strong, resilient business models and partnerships. As we have consistently said, resilience and partnership is key. And what recent times have shown us, so is agility. Your company is resilient, given our strong balance sheet and our world-class portfolio. We have again adapted quickly, and we are working to partner in different ways. We are not complacent as we believe the full economic impact of a pandemic is yet to be felt. Turning to our 2019 performance. Our purpose is to produce materials essential to human progress, now and in the future. To do this, we are focused on 2 things: Perform today and transform for tomorrow. Perform is what we are doing right now to deliver superior value to our shareholders even in the challenging environment. Transform is about what we are doing to prepare for the future. From a financial perspective, 2019 was another successful year for Rio Tinto and our shareholders, a year of strong financial performance, a year we delivered significant cash flow while maintaining balance sheet strength, a year we invested in high-quality growth, and a year we paid $11.9 billion of cash return to shareholders with $10.3 billion in dividends and $1.6 billion in share buyback. You, our shareholders, have received a further $3.7 billion in the first half of this year. In 2019, we generated $21 billion of EBITDA with a strong margin of 47%, resulting in an industry-leading return on capital employed of 24%. Our TSR, or total shareholder return, was 41% from 1st of Jan 2019 to the 31st December 2019 for a combined DLC, including reinvestments of dividends. We generated $15.8 billion of operating cash flow that we allocated with discipline, including investing $2.6 billion in high-value growth as part of the $5.5 billion investment in our assets. So as we perform, we are also transforming for the future. Our strong exploration investment of over $600 million in 2019 shows we are also out there looking for the next world-class business. We are excited about Winu, our copper opportunity in WA. It is progressing well, and is a great example of us building a portfolio of the future. We expect to be able to provide soon some greater insights on this opportunity. Indeed at Rio Tinto, we believe we have a great portfolio, well positioned for the transition to a low-carbon economy. This transition and other demand drivers such as electrification, urbanization and continuous industrialization of the developing world will be material intensive. So we believe we have the resilience to deal with a prolonged period of uncertainty and that, for obvious reasons, our long-term future is bright. On this note, I will now hand back to Simon.

Thank you very much, J-S. Before we move on to the formal business of the meeting, I would like to make a few comments about sustainability. The world has changed out of all recognition during the 147 years that Rio Tinto has been in business and so too have expectations about the role and responsibilities of business towards society and the environment. Over the past few decades, Rio Tinto has been at the forefront of many environmental, social and governance developments in the mining sector. And we must continue to learn and adapt as we seek to improve our safety and sustainability performance. The current public health crisis is likely to lead to a further reappraisal of the role of business in society, and we are preparing for that. Tragically, the COVID-19 pandemic has already resulted in many deaths worldwide, disrupted our daily lives, and across multiple sectors of the economy and geographies, it has brought the economy to a standstill. In such a crisis, the first priority is to protect lives and to strengthen health care provision. But as we emerge from the public health crisis, the next priority is to restart the economy to protect businesses, jobs and livelihoods. The unprecedented social and economic challenges that we face present a unique opportunity for governments, communities, unions, civil society and business to work together as we have done so effectively during the crisis, not only to restart the economy, but also to redirect it onto a pathway towards a more resilient and sustainable future by investing in the new technologies and the skills that we will need to build a sustainable economic prosperity. Over the past few months, we've continued to make good progress with embedding sustainability into our operational and strategic decision-making. In February this year, we published our second climate change report, which you can find on our website. The report sets out our ambition to reach net zero greenhouse gas emissions across our operations by 2050 and new targets to achieve a 30% reduction in emissions intensity and a 15% reduction in absolute emissions by 2030. To deliver these targets, we will spend approximately $1 billion over the next 5 years on climate-related projects and research and development. As well as working hard to reduce our own emissions, we're also working in partnership with our customers and others to reduce greenhouse gas emissions throughout the mining and metals value chain, from the mine to end product, and we continue to engage with governments, business, investors and civil society organizations around the world on the policy measures required to accelerate the energy transition by providing incentives to the business to invest in new low-carbon technology, particularly in hard-to-abate sectors such as steelmaking and aluminum. We also continue to adopt industry-leading position on tax transparency. Last month, we published our 2019 taxes paid report. And last year, we published many of our mineral development contracts and the beneficial ownership of our managed and nonmanaged joint ventures. We believe that this transparency demonstrates the economic contribution that we make, and we hope that it also helps to build trust with the communities where we operate and with the many other stakeholders whose lives we touch. In 2019, we paid $7.6 billion in taxes and royalties to governments around the world, helping them to fund vital services for their citizens. Our direct economic contribution to the communities and countries in which we operate, including wages, payments to suppliers, community investment, development contributions and payments to landowners, was more than $45 billion. This economic contribution has never been more vital than it is today as the world economy and the many thousands of people and local businesses that depend upon our activities start to recover from the current health crisis. It's therefore vital that we do our best to support our employees, our suppliers and our communities and maintain the financial strength and resilience to invest in the future. So let's now move to the formal business of the meeting. The notice of meeting and an addendum to that notice containing the text of each resolution to be put to this meeting were published on our website and posted to shareholders on the 25th of March. I'm going to take both the notice and the addendum as read. Resolutions 1 to 20 will be dealt with under the joint electorate procedure with Rio Tinto plc shareholders, who cast their votes on these resolutions at the corresponding meeting in London on the 8th of April. Resolution 21, as a class rights action, will be voted on by Rio Tinto plc and Rio Tinto Limited shareholders voting as separate electorates. Resolutions 1 to 3 and 5 to 19 relate to the routine business of Annual General Meetings, such as the receipt of the annual report, the election and reelection of directors and the appointment and remuneration of the auditors. You will see that the business of the meeting includes 2 resolutions relating to remuneration: The first, Resolution 2, relates to the approval of the implementation report, which describes the remuneration arrangements in place for the members of the Board and of the executive committee during 2019. This vote is advisory and is required for U.K. law purposes. Second, Resolution 3 relates to the approval of the Director's remuneration report. This vote is also advisory and is required for Australian law purposes. Approval of Resolution 4 would allow the company to give benefits to current and future directors and other employees of Rio Tinto Limited in connection with a person ceasing to hold office. A similar authority was obtained in 2014, 2017 and 2018. As in past years, we have included a resolution seeking authority for Rio Tinto to make political donations. We have no intention of altering our policy, which is not to make donations to political parties or to political candidates. However, the U.K. law on this issue is very broadly drafted. So we are seeking this authority as a precautionary measure. Resolutions 20 and 21 seek approval to amend Rio Tinto plc's articles of association and Rio Tinto Limited's constitution, following a periodic review of both documents to reflect recent developments in best practice and corporate governance. Copies of the proposed amendments are available on our website. Resolution 22 will be voted on by Rio Tinto Limited shareholders only and has been proposed as a special resolution. It is a routine resolution which comes up every year to allow Rio Tinto Limited to buy back its own shares. This year, Rio Tinto Limited again has received 2 requisition resolutions put forward by Market Forces as agent for 109 shareholders. These resolutions are set out in the addendum to the notice of meeting dated 25th of March 2020. Resolution 23 seeks an amendment to the constitution of Rio Tinto Limited to permit shareholders to propose nonbinding advisory resolutions at the company's general meetings. As with any amendments to the constitution, this resolution is proposed as a special resolution and requires a 75% majority to be approved. Resolution 24 is a nonbinding resolution -- a nonbinding advisory resolution, requesting that Rio Tinto in its annual reporting disclose short-, medium- and long-term targets for scope 1, 2 and 3 greenhouse gas emissions and performance against those targets. The resolution also requests that all targets be independently verified as aligned with the climate goals of the Paris Agreement. As Resolution 24 is a nonbinding advisory resolution, it will only be valid if Resolution 23 is approved by the required 75% majority. Consistent with our position on similar resolutions requisitioned in 2019 and 2018, your Board does not support Resolution 23 as it is likely to cause uncertainty in relation to the authority and accountability of directors. Your Board is vested with the power to manage and control the business affairs of Rio Tinto. It is important that your directors are able to do this and to exercise their powers as they see fit. In doing so, the Board is, of course, accountable to shareholders. We support the principle of engagement with shareholders to ensure that their views are taken into account, but the status of nonbinding advisory resolutions under Australian law is unclear. As such, the introduction of a constitutional amendment to enable such resolutions would undermine both the authority and the accountability of the Board. We, therefore, recommend that you vote against Resolution 23. We also recommend that you vote against Resolution 24. We have set scope 1 and scope 2 emissions targets since 2008, but we are unable to set targets for scope 3 emissions, which largely relates to the emissions of our customers in the steel industry, because it is not within our control to reduce the emissions of our customers. There is an important distinction here between Rio Tinto and many other mining and energy companies. Companies that produce and sell carbon can reduce their scope 3 emissions by reducing the amount of carbon that they sell, for example, by not replacing reserves as they deplete or by changing their product mix. Rio Tinto does not produce or sell carbon. The emissions of our customers in the steelmaking industry arise because they use carbon purchased from other companies in the steel manufacturing process. Rio Tinto has set targets since 2008 for the reduction of greenhouse gas emissions that are within our control. In February 2020, we set the ambition to reach net zero greenhouse gas emissions across our operations by 2050 in accordance with the Paris Agreement. And we announced new scope 1 and scope 2 targets for a 15% reduction in absolute emissions and a 30% reduction in emissions intensity by 2030. We will report against these targets in our annual reports as we have done each year for the past 10 years, and we expect to spend approximately $1 billion over the next 5 years in order to achieve them. We also recognize the need to reduce greenhouse gas emissions throughout the mining and metals value chain. So we have established partnerships with our customers and others to reduce greenhouse gas emissions and improve environmental performance across the value chains for both steel and aluminum. But the speed of deployment of these new low-carbon technologies by our customers is not within our control, and we cannot even accurately measure the current emissions of our customers. For these reasons, although we are already in compliance with and support large parts of Resolution 24, your Board recommends that you vote against the resolution because we cannot support all of its component [ parts ]. We will now take questions from shareholders on any matters relevant to the business of the meeting before we move on to voting on the resolutions themselves. Any shareholders or their representatives or proxy holders are entitled to ask questions. You have joined the meeting online via your computer or your mobile phone, and you are entitled to ask a question. You can submit your question online by clicking on the Questions icon, then go to Ask a Question box at the bottom of your screen, compose your question and select the red Send icon. Alternatively, you can ask a question by phone via the teleconference line. We have also received a number of pre-submitted written questions on sustainability and climate change, which I have endeavored to cover in my opening remarks. Before asking your question by phone, please state your name and if you represent an organization, the name of your organization. As many people usually wish to ask questions, please keep your questions short and to the point. It's possible that we may need -- not be able to answer all questions today. And if we receive multiple written questions on the same topic, we may amalgamate some of them together. In order to give as many shareholders as possible the opportunity to speak, I will discourage supplementary questions from those who have already asked a question. I would like to start by inviting Julien Vincent from Market Forces to ask a question in relation to the requisition Resolutions 23 and 24. So could we please go to the telephone lines and invite Sir Julien to speak? Thank you.

I have Julien Vincent.

Thank you very much, Chairman. I would like to thank the shareholders who have come together in order to submit Resolution 23 and 24 on today's agenda and it's a privilege to speak on their behalf today, which I'll do so just a couple of minutes. Our company has clearly and repeatedly stated its support for the Paris Agreement, which aims to hold global warming to well below 2 degrees Celsius and pursue efforts to limit temperature increase to 1.5 degrees above pre-industrial levels. And we welcome and share the support, knowing the universal goal of preventing global warming passing the point of no return is one humanity simply must accomplish, doing so with the participation of governments of all levels and private sector actives. However, this company's recent decision to set targets for its operational emissions that fall embarrassingly short of the cuts required to align with the Paris Agreement, calls into question Rio Tinto's claimed commitment to climate action. Moreover, we must confront the reality, the fact that achieving the Paris climate goals means emissions need to fall drastically across all sectors, including industries such as steelmaking. And with roughly 3/4 of our underlying earnings derived from the sale of iron ore, this means a large degree of our business and customer base is structurally challenged unless it works to decarbonize operations. Their risk, in turn, becomes our risk. The Chairman's statement today that Rio does not produce or sell carbon is irrelevant to this and reflect either a failure to understand what structural emissions liability actually entails or a desire to confuse and mislead shareholders into thinking this is not an issue the company needs to confront. The company is clearly aware of this risk, as our CEO has pointed out the structural challenges facing our iron ore operations several times. Yet, our actions and stated intentions are what you would expect from a company with virtually no interest in being a long-term iron ore producer. The partnership with Baowu Steel and Tsinghua University is a demonstration that Rio Tinto can engage and partner with its clients. And I'm sure many would be envious of the engineering, strategic and financial capacity they could tap in this company. But without a target to reduce emissions on scope 3, there is no clarity over the scale of ambition that such efforts should be achieved. All this resolution would do is require the company to set targets to: a, clarify to investors how much the company is willing to mitigate and acknowledge structural risk; and b, frame the actions taken by the company to ensure they reach a desired outcome. It's very rare that major risks to societies and businesses are so clear and so evident with enough time to act sensibly. I'm sure the world would have appreciated as much notice that the COVID-19 pandemic was going to manifest as it has been given about the impending impacts of climate change. To be afforded such a rare opportunity to foresee and mitigate such a substantial threat to the company's prospects and not act is a failure of leadership that exposes the capital invested in this company to needless risk, and that's why we urge shareholders to support the resolutions laid out in items 23 and 24 of today's agenda. Thank you.

Thank you, Julien, for that question and statement. I mean listening to Julien's statements, you might think that Rio Tinto and Market Forces have diametrically opposing views on climate change. But in fact, we've had extensive discussions with Julien and his team over several years. And we agree on much more than we disagree. And then I think it is important to remind shareholders about Rio Tinto's response to climate change. First of all, we produce materials that are essential for the energy transition, like copper, aluminum and iron ore. And then secondly, we have a strong track record of climate action dating back over 2 decades. We've used carbon pricing in our capital-allocations decisions since 1998. And following the divestment of our coal assets, we are the only major diversified miner that does not produce coal or oil or gas. 75% of our power consumption already comes from renewable sources. We produced 2 reports using the guidance provided by the task force on climate-related financial disclosure, which have been highly rated by many of our major shareholders and other independent commentators. So in other words, Rio Tinto takes climate change very seriously. I think there is a fundamental difference between the steel industry and the fossil fuels industry. And that is that steel is going to be required. It is an essential part of the energy transition. Still, there are no viable alternatives to steel, no low-carbon alternatives to steel in a whole range of applications. And if core countries are going to close the gap with the richer industrialized countries of the world, they are undoubtedly going to require steel because their installed steel within their economies is a small fraction of that in major developed economies. Now of course, thrifting and more efficient use of materials will reduce demand for primary steel over time. Nevertheless, if that poverty gap is going to be closed, there is going to be considerable growth in demand for steel. So to describe the -- steel as structurally challenged, I think, is somewhat misleading. And iron ore, to be clear, is an essential ingredient of steel. The challenge is, of course, to decarbonize that value chain. I think the issue here is that you can decarbonize some sectors relatively easily. I mean for example, you can replace coal-fired power with renewables or you can replace the internal combustion engine with electric motors, but there are other sectors, such as steel and aluminum, that are much more difficult technologies. And therefore, for those, they will require new developments, which may take decades to deploy on a global scale. The key point though is this, that it is not -- the problem here is that we can't even measure the scope 3 emissions of our customers. In our climate change reports, we provide our best guess of our customers' emissions, but these are based on industry averages and our actual customers' emissions may vary very significantly from those. We have, as Julien pointed out, entered into partnerships with our customers and indeed our peers and governments around the world who seek to decarbonize the value chains that we are part of, that we supply into. But I think it is extremely problematic for the mining industry to be setting targets for the steel industry. I mean for me, a business target should relate to a process over which you have control and where you can measure the outcome. But what Market Forces is asking us to do is to set targets for a process we do not control and where we cannot even measure the starting point, never mind any improvement. So I mean to be very clear, we agree with Market Forces that the emissions of the steel industry are a major problem. We acknowledge that and we have acknowledged that. This is a problem that needs to be addressed. And we are working collaboratively with our customers and others to develop new technologies that will decarbonize both the steelmaking and the aluminum-smelting value chain. We may talk later about the joint ventures that we already have in that area. I think we fully understand that our shareholders take climate change very seriously and that they want to be seen to be taking firm action, but we need to make sure that we are taking the right action. We agree with Market Forces on the nature of the problem, but we think that instructing the Board of Rio Tinto to set targets for a process it cannot control and cannot even accurately measure is not the right answer, and that is why we recommend that you vote against Resolution 23 and 24. So Julien, I don't know whether you want to respond to that statement. Are you still on the line?

I'm still here, if I can be heard, yes.

Go ahead, Julien.

Yes, I'm still here. Yes. Okay. The only thing I would say in response to that is we won't know if our efforts to, for instance, the partnerships that we've gone into and the efforts that we've undertaken to work with our clients are the right efforts with the right level of ambition if we don't frame them by setting targets around them and if we can't hold this inconsistency sustainably as a company where we -- where the position of the Board appears to be that these aren't emission reductions within our control, yet we can work with our customers and clients to reduce emissions. I think that needs to be resolved. And the only one putting forward a mechanism to attempt to resolve that is Market Forces and the shareholders that have put this resolution up.

Okay. Thanks for that, Julien. And no doubt, we will continue to engage on this very important topic. Let's move now to the general Q&A. Operator, can we take the first question on the phone lines, please?

[Operator Instructions] Your next (sic) [first] question comes from the line of Joe -- of Lucy Manne.

My name is Lucy. I'm the CEO of 350 Australia. I'm here on behalf of shareholders, let's say, [ 15,000 ] people who signed a petition, who are calling on Rio Tinto to lead the Minerals Council of Australia on climate ground and also 200 people who held an online rally [indiscernible] know that at your London AGM, you made it clear that you don't intend to [indiscernible] Australia. As you do so, you're playing a global [indiscernible] climate [ resistance ]. So I just want to start to draw your attention to [ another staff ] survey that we conducted [ for your ] employees. So in the last 3 weeks, we've had over 100 responses and only 39% believe that you should remain [ in the Minerals Council of Australia ]. Turning to my question, I also note that it was reported that as a company, Rio Tinto is very committed to encouraging governments to support economic stimulus measures that also tackle climate change. So given this and given the ongoing pressure around [ industrialization and financial well-being ], I wanted to ask have you [indiscernible] [ in terms of stage ] for the industry associations regarding advocacy on economic recovery spending. And is your expectation that groups like Minerals Council of Australia will also support green stimulus measures rather than fossil-fuel expansion? And if so, how do you [indiscernible] other efforts?

Lucy, thank you very much for your question. I have to say it was slightly broken up, but I think I absolutely got the gist of it. If we could just try and deal with any technical problems on the line, if that is typical, that would be very helpful. So let me address the question on industry associations first. And I am very conscious of the strength of feeling on this topic and recognize that there is a live debate amongst some of our shareholders about whether it is better to stay in an industry association and actively engage with other members on climate change policy or whether you should simply refuse to engage with organizations that hold different views from your own. And I must say I remain convinced that Rio Tinto's approach is the right one, and that is to be very clear about what our policy is on climate change, but also to actively engage with others to try to find common ground and to advance the debate. I mean at the end of the day, industry associations are multi-stakeholder organizations. And by their very nature, they are going to represent a range of different views. But to be honest, the only way, collectively, we are going to make progress in confronting the challenge of climate change is for everyone, and that includes business, governments, investors, civil society, to engage and try to find common ground. And that simply refusing to talk to people or to organizations you don't agree with is going to get us nowhere. Specifically in relation to the MCA, I do think Rio Tinto working with a number of other like-minded members has made real progress in moving forward the climate change debate. I mean for example, the MCA has published a climate-change policy that's broadly aligned with our own. There's been a formal separation of the MCA from COAL21, which represents the interests of the companies that produce coal. And although we are aware of a few instances where the MCA's advocacy has not matched its stated policy, they have now established an appropriate governance process to try and ensure better alignment between policy and advocacy. And I should say, I mean, that unfortunately, COVID-19 has delayed the publication of the MCA's new climate action plan. But I do understand that, that is going to the Board of the MCA shortly. And again, I hope that, that will demonstrate another step forward in developing an industry-wide response to the challenge of climate change. And finally, I mean, I do think the unfortunate thing about the controversy about the MCA's position on climate change is that it is completely overshadowing all of the good work that they are doing in other areas. So for example, in safety, in setting standards on environmental performance on indigenous people's rights, and particularly over the last few months as well, an absolutely critical role in helping to coordinate an industry-wide response to COVID-19. So I continue to believe that we should continue to be members of the MCA, but we should also continue to advocate very actively for policies that align with the ones that we've set for ourselves. And on the question of the green recovery that you raised, I mean -- right now, the government is obviously quite rightly focused on addressing the immediate health crisis and the most pressing economic needs of its citizens. And I have to say, so far, I mean Australia appears to have managed the pandemic very well, and other countries are facing far greater challenges. But the economic consequences of this pandemic are still very uncertain. And governments around the world, as they begin to plan the exit strategies from lockdowns and travel restrictions, will need to focus on how to get people back to work and how to get the economy back on track. And I think a key issue here for Australia will be ensuring that the country is competitive and attractive place for businesses to invest. And to the extent the governments do need to invest to stimulate the economy and to support business and jobs, it makes sense that, that investment should be focused on the infrastructure, the technologies and the skills that we need to build long-term sustainable economic prosperity and, of course, to address some of the great challenges facing the world, such as climate change. And as I said in my introductory remarks, Rio Tinto is very keen to work with governments, communities, business to try and achieve that outcome.

Your next question comes from the line of [ Doug McCurdo ] (sic) [Doug McMurdo].

Are you hearing me?

Yes, Doug, we can hear you. Doug, can you hear us?

Can you hear me now? [Technical Difficulty]

I have just been informed we'll now go to a written question.

Thank you. Simon, we have received a question from Mr. [ Cameron James Reed ] during the meeting. The question is COVID-19 has forced change in how Rio Tinto operates. What changes do the Chairman, CEO see as beneficial? And what changes will the company keep if and when each country returns to pre-COVID conditions?

That is a very good question. J-S, would you like to take that one and talk about some of the steps we've taken?

Yes, so sure. We -- as I mentioned in the speech, I mean, we're taking COVID-19 very seriously. Health is a personal issue, and all of us will be either directly or indirectly impacted by this absolute tragedy. We have changed the way we operate in many ways. And I'm going to give you a few examples, keeping in mind that our priority #1, as I said, our priority #1 is to protect our colleagues and our communities where we operate. So just give you a few ideas of what we are changing is, first of all, is we are implementing wherever we operate, within the guidance as provided by the government -- the local governments. And clearly, social distancing is absolutely critical in that context. So we have changed the way we operate. Let me start with the offices. Around 5,000 people have successfully transitioned from working from an office to working from home. But it's fair to say that we had to keep some of our offices open. For example, our operational center in Perth that is running our Pilbara iron ore system or our operational center in Brisbane, which is running our bauxite system in Queensland, but with additional measures to protect our colleagues there. That's one example. But the bulk of our changes we have implemented are at site level because that's where the risk is significant, not only for our colleagues but for our communities. So above and beyond the social distancing that we have already mentioned is we have changed our roster patterns in order to make sure that in simple terms, we have split all our colleagues between the red team and the blue team. And every 2 weeks, you move from one team to the other with no overlap between those 2 teams. So that's the kind of change we have made. We have changed -- to give you a sense of the scale of what it means, we have changed in less than 5 days around 11,000 rosters across the group, and it was done very successfully. We have empowered our leaders on-site to take more decisions because they have a much better understanding of their local context, both for our colleagues and our communities. We are supporting our communities even more than usual. And we have a priority on -- in terms of donation in kind to help them, it can be in terms of PPE, it can be in terms of medical equipment and so on and so forth. The engagement across the company has been very extensive, and we have introduced new ways of engagement across the group, including what we are doing every other week is a global call with all the employees. We have, in fact, 2 of those in order to cover the entire workforce, one in the morning to deal with Australia and one in the evening to deal with the U.S. and the other geographies. So high level of engagement, high level of delegation to the site where the action is really taking place. And we are taking all kind of actions to protect our colleagues and our communities, as I said, as our priority #1. Now what will be beneficial to keep is still early days, but clearly, the level of engagement will be something that we will continue. We are already thinking on how we can improve on a substantial way, sorry, the resilience of the company. Should we have red team, blue team all the time on the offices and so on and so forth? It's early days. The work is underway, but we are very clear, and thank you for your question, that the new ways of working will be different from the old ways of working because we need -- and that's maybe the most important thing I would like to leave here is, we fully acknowledge as a company that we're going to have to learn to coexist with COVID-19 for an extended period of time. So we don't know exactly what the full answer to your question is. But at this point in time is, although we don't disclose the number of cases in the company, I can share with you that it's a very small number, so our measures are effective. And we will continue to implement them, including the screening that we mentioned earlier today at the Perth Airport, as long as it is required. I think that's all I can say at this stage, Simon, but a very good question, indeed. And clearly, front and center of our mind as we speak.

Yes. Thanks, J-S. We had a Board meeting yesterday [ and we had a sort of ] long discussion on exactly that. So thanks for that question. Can we take the question from -- can we take a written question now? And then can we try and get Doug McMurdo back on the lines to ask the follow-up question, please?

Yes. Thank you, Simon. We have a question from [ Brooks Investment ]. The question is I am concerned that only 3 of the Board have shares in Rio Tinto. So 8 directors have no shares. How do you then expect shareholders to have a financial interest and have faith in the Board if 8 of the Board do not have financial faith in the company? So my question is could one or more of the 8 directors inform this meeting why they will not invest in Rio Tinto.

I don't think that's correct. I mean I -- obviously we've just recruited 3 new nonexecutive directors to the Board. And I'm not absolutely certain at this stage whether they have already acquired shares, but they certainly will be as we require them to do. But all of the directors who've been on the Board for some time, do hold shares in either Rio Tinto Limited or Rio Tinto plc. So can we just double-check that? But I'm very confident that is the case. Can we see whether we can get Doug [indiscernible] lines or should we take another written question?

I have unmuted Doug McCurdo's (sic) [ McMurdo's ] line. Your line is now live. You are able to ask your question.

Good morning, Simon.

Good Doug, I can hear you now. Thank you.

Excellent. First of all, Simon, might I just commend you for organizing this AGM in the format you are allowing shareholders to participate in the AGM, quite frankly, is exemplar. And I just wish many other funds globally would take your example. So thank you very much. So to go on to the question. We commend Rio Tinto for the strengthening of its work with customer partners such as the China Baowu Steel Group and Tsinghua University. And then your statement at the outset, you make it well understood how difficult and challenging that can be. So we would welcome you to continue to comment on how Rio Tinto provides further information to shareholders on the objectives and progress of these, and indeed, other partnerships to decarbonize the steel and aluminum value chains going forward.

Yes, thanks for that question. Just for the benefit of others, Doug McMurdo is Chair of the Local Authority Pension Fund and one of the members of Climate Action 100+, what we engage with on a regular basis. J-S, would you like to just give an update on progress with Baowu and Tsinghua University? And also on the ELYSIS firm joint venture?

Yes, for sure. So on the ELYSIS. So let me try to say this thing first. So ELYSIS is about developing a new technology for the aluminum industry, to make sure that we fundamentally change the carbon footprint of smelting aluminum. So in very simple terms, just to set the scene, currently, to smelt alumina into aluminum, you need to provide a lot of energy, lot of electricity into a bath. And the way it is currently done is by using carbon anodes. As and when you provide the electricity to the bath, the anode is being consumed. And in doing so, release some carbon dioxide in the atmosphere. What we have established now, a couple of years ago, is a partnership with one of our peer called Alcoa and the Government of Canada at the state level and at a federal level, to develop a new technology that would not use anode made of carbon but of inert materials. That means that, as and when we provide electricity into the bath, no CO2 will be released. The work is underway. We have reached a milestone in a sense of we are currently building a cell, a nearly full-scale cell in the Saguenay, at our Complexe Jonquière, in order to test this new technology and so on and so forth. I want to manage expectations here, because it will take years to develop a fully-proven technology. But as we're having this conversation, we have moved from a very small cell in the last, to a real cell in a real building, which is nearly -- which is an industry of pilot, all right? And that's what we are doing as we speak. So the progress of the work is underway. It's a multiyear program. But I don't want to say so far so good, but that's what I would say. Maybe if I move to Baowu, Tsinghua University. Clearly, as and when we -- we will update on a regular basis or TCFD report, then we will provide update on the progress made in that topic. So that's what I say. On the Baowu, Tsinghua partnership, so let me set the scene here. Baowu is now the largest steelmaker on planet Earth, and definitely the largest steel maker in China. It's one of the key customers of Rio Tinto and is buying only iron ore from us. We have established this partnership with Baowu and Tsinghua. And Tsinghua, by the way, just to set the scene again, is the leading university in China in relation to policies, including environmental policies. So what we have put in place is the partnership between Rio, Baowu and Tsinghua, in order to find ways -- pragmatic, practical ways to reduce the carbon footprint of the steel making. Because you heard it from Simon himself, is -- steel is here to stay. We need steel, and there is no obvious substitute to steel. What we are looking at as we're having this conversation is a series of options in terms of new technology. And I think it's the product demand. So for example, the Baowu is already testing pilots to do steel with using hydrogen. We are looking at what policies should be introduced in order to foster the development of all those new technologies in the context of the steel making supply chain in China. And we are looking at joint investments across the supply chain with some other partners. The work is underway. For sure, we will provide update on a regular basis. This is early days, but it's an important step in the right direction. And last but not least, I should say that we are looking at all the partnership within our key supply chain to make sure that we collectively try to work on finding a solution to this climate change situation. We want to be part of the solution, and those are 2 examples of practical steps, moving in the right direction. That's where we are, Simon.

Very good, J-S. Thanks for that. Do we have more written questions submitted? Can we take one of the written questions?

Yes. Simon, we have a 2-part question from Mr. Daniel Joseph [indiscernible]. The first part is, in Rio Tinto's industry association review published last month, it states that we do not support advocacy for policies that undermine the Paris Agreement or discount nationally determined commitments, NDCs. Can the Chairman confirm that this applies to Kyoto carryover credits as advocated for by the Business Council and the Minerals Council of Australia? What is Rio Tinto doing to change this advocacy? The second part of the same question is, throughout the COVID-19 crisis, the Mineral Council chair, Helen Coonan, has lobbied for company tax cuts and the Business Council CEO, Jennifer Westacott, has lobbied for urgent industrial relations reform. Given the Chairman's public support for green recovery through the Energy Transitions Commission this week, does the Board support the need for company tax cuts and industrial relations reform ahead of green stimulus spending?

So thanks for that. So on the first one, in relation to the Kyoto carryover credits, I mean, we will work with governments around the world on the policy settings that they are putting in place to achieve country targets and to deliver on their international commitments. And we think that industry associations do have an important role to play in representing the views of industry to government. But we have made it clear that we expect them to advocate in a manner that is consistent with the Paris Agreement and not to undermine the NDCs, the nationally determined commitments. On the question of tax and other laws, J-S, do you want to answer that question?

Yes, Simon. Very good question. What I can say is we are engaging with multiple parties, either through the BCA, through the MCA, and including with the task force established by the Prime Minister led by Nev Power, to propose a series or a comprehensive sets of initiatives or ideas on how we can restart the economy in Australia as quickly as we can. The discussions are on the way. And a lot of -- I can say for a fact that lots of assumptions are being tested as we speak. But I can't say at this point in time where we're going to land because that is work in progress. But what is absolutely clear at the end, is to step back and say, what we want is a competitive landscape to attract further investment in Australia, drive productivity and ensuring that Australia remains as competitive as it can be in the global landscape. And my sense is those initiatives will cover things which are important not only for the short term but for the long term. And I'll give you an example. For example, education is going to be absolutely critical in order to make sure that we have the right skill set in terms of digital economy as an example. Because today, the truth of the matter, we know that in Australia, we have some gaps. And that's why, by the way, we are introducing our partnership that we launched last year in order to foster this development. I think another dimension is clearly around energy, energy policies to make sure that we, in Australia, all industries can access reliable and cheap source of energy in order to be able to operate in a competitive landscape. The other thing I can say, a lot of work, lots of idea being tested and what we -- what is the driver for us is we are committed to Australia. And whatever we put forward in those concessions will be the review of building a strong, sustainable and successful future for Australia. That's the only thing I can say at this stage, Simon.

Thanks, J-S. I believe we have a written question now for the auditors. So Debbie Smith if we could hear the question, please? And then Debbie, if you wouldn't mind answering that.

Thank you, Simon. This is a pre-submitted question for the auditor from Mr. Duncan [ Saturn ]. Has the company audit examined the cost of operations at individual mines and exploration sites? In particular, has the audit examined nonspecific mine expenditures such as working capital expenses for mines? For specific expenses of the capital nature has the audit verified the existence of the asset. For example, if a mine has purchased 2 trucks, has the audit verified the existence of the 2 trucks in Rio Tinto's operations? If the audit has not gone down to individual mining operations, to answer these questions, please explain the extent of the audit of the company's mining and exploration operations. In the course of the audit, has the auditor identified any expenditure which could cause the company to be in breach of its commitment to good governance and compromise itself with regard to U.S., U.K. and Australian anti-bribery laws?

Thank you, Duncan, for the question. I think there's 2 questions in that one. So let me tackle each of them individually. So I guess I'll draw your attention to our audit opinion, which is on 258 to 265 of the annual report. Just with respect to how we scope our audit, and that is with due regard to both for the financial statement risks and materiality. And there are 44 business units across Rio Tinto. And the way that we have conducted our audit is that we've conducted full scope reporting on 21 of those reporting units, and then specific reporting on 19 of those. And then the way that we determine the work that we perform at each of those reporting units, we look at specific financial statement line items, and we then perform a number of procedures. So in the course of our audit work, we specifically test controls around operating costs and capital expenditure at the mine as well as substantive tests of details. And then performing that audit, we actually are required to gather sufficient audit evidence around the existence of assets on the balance sheet. And in order to do that, we certainly do undertake some physical verification procedures for both fixed assets and inventory at mine site. In terms of the second part of your question, we actually are required to perform procedures on compliance with laws and regulations. And in doing so, we do consider the extent to which the noncompliance with those laws might have a material effect on the financial statements. And the laws and regulations we consider do include U.S., U.K. and Australian anti-bribery law. We do describe this on Page 259 of the annual report. So I can confirm that our procedures did not identify any matters that risk communication to those charts or that had a material impact on the financial statements. Thank you, Simon.

Thanks very much, Debbie. Can we take another -- can we take another of the written questions that have been submitted during the meeting?

Yes. The next question is from the Australian Shareholders' Association. We are concerned that the Board's skills matrix is constructed to reflect the skills of the Board rather than independently determined, and the Board constructed accordingly. Please, could you explain the process for determining the Board skills matrix?

Yes. And Duncan, if you're on the line, thanks for that question. And thank you also for the meeting that we had earlier this week. So the -- I mean one of the objectives that we set when we refreshed the Board recently was that we wanted to improve the diversity of the Board in terms of skills, experience, background and gender. And the specific skills that we identified that we felt that we needed within the company to address the challenges that we anticipate that we will have over the next 5 or 10 years, were technology, finance, geopolitics and public policy, in particular, as we start thinking about trading relationships and natural resources. And therefore, we set out that -- those skills as being our objectives, and we endeavor to find people who combine that with real diversity of background and viewpoint to contribute to the debate at the Board. And I'm really pleased with the 3 new directors who will be joining us. They provide genuine diversity of view and approach, and I think will make a very valuable contribution to the Board in all of those areas. And I think, specifically, I know Duncan has, in the past, expressed concerns about the lack of mining expertise on the Board. But I would just remind everybody that Megan Clark, who chairs our Sustainability Committee, is a mine geologist by background. I mean her PhD was in mine geology. She's worked for both Western Mining and BHP, and she's worked both underground and in open pits, at a whole range of operations over the years, including Victory-Defiance, Kambalda, Mount Magnet and so on. And David Constable was -- when he was working for Fluor, for a time, he ran the mining business. So David has built mines all over the world, including -- I have to say, we worked together on a mine in Argentina in Southern Patagonia back in the 1990s. And since then, David has been CEO of Sasol, which operates coal mines in South Africa. And in addition to Rio Tinto, I have sat on the Board of Newmont Mining, AngloGold Ashanti and Anglo American. So there is plenty of mining expertise on the Board. I think what Hinda and Jennifer and Ngaire will bring is a very different perspective and a number of skills and experience and technical knowledge, which will be extremely valuable to the Board going forward. Can we take -- are there more written questions? Can we take a written question -- another written question?

Yes, Simon. I have another question from the Australian Shareholders Association. In relation to Rio Tinto's carbon targets, are you going to continue to support Pacific Aluminum?

Yes, I think there are 2 different questions there. So J-S, why don't you talk about PacAl?

Yes, absolutely. So I mean we are on public record that you know, the aluminum market has been pretty challenging for some time and that our aluminum asset in PacAl, Pacific Aluminum, have been under pressure. The first one I would like to say is it's important to take a broad perspective of performance. And the first one is, I'm pretty proud of the performance of the leadership team and of colleagues in terms of safety of those assets. And I can tell you, as we're having this conversation, those are maybe some of the best assets that we have across the group. And I would really like to say thank you to the leadership team and all of my colleagues there. Now we are doing everything we can to optimize the performance of those assets, and they are under pressure. We need to find a viable and sustainable, commercially acceptable solution. And it's primarily in relation to power, because those assets are very well run. But the big element, the big issue they are facing is their cost, primarily around the power cost. We are in discussion, we are in discussion at the federal and state government level, including in the [indiscernible] state with the appropriate utility provider, about how we could find ways to deal with those high energy costs. Discussions are underway. And we are trying to progress them as quickly as we can in a challenging environment of COVID-19 that did limit our ability to engage face-to-face. But we are on the case, but we are not there yet, but for obvious reasons these -- we'll continue to work to find a solution to those assets, and the profitability they are facing. That's where we are, Simon, in relation to PacAl.

Thanks, J-S. Let's take a question from the [ telephone lines ] if we can?

Your next question on the phone comes from the line of [ Will Vanderpool ].

Just a quick question from me and a short follow-up, depending on the response, if that's okay. The coal-fired power station Rio plans to build to power the Oyu Tolgoi mine in Mongolia is expected to emit over 2 million tonnes of carbon dioxide each year. Would those emissions be counted as scope 1, 2 or 3 emissions for Rio Tinto?

Thanks for the question, Will. So I'm going to ask J-S to talk about progress with the discussions on the power contract in Mongolia in general terms. But to be clear about their classification, we currently purchase power for Oyu Tolgoi from China. That power is from coal-fired power stations. And therefore, we are currently counting that as a scope 2 emission. If indeed we do, if the project does -- Oyu Tolgoi does construct and own its own power station, those emissions would, in effect, switch from scope 2 to scope 1, but there would also be some reduction because the new power station would be considerably more efficient than probably -- than the existing one. However, there are a number of moving parts going on at the moment, in the discussions on the power contract. And J-S, if you would -- if you [Audio Gap] and then I'll come back to you Will to see whether there's a follow-up.

Hello, can you hear me?

You're good J-S, I can hear you.

Okay. Okay, sorry. We are not in the phone. So yes, so I think let's step back. When the investment agreement was signed in 2009, it was an explicit clause that after a number of years, the Oyu Togoi joint venture would have to secure their power domestically. And that the priority should be given to a coal-fired power station. All those documents are, by the way, in the public domain. You can find them on the website of [ Turquoise Hill ]. The discussion are underway. And in compliance with the agreement deal, Oyu Tolgoi joint venture has submitted the feasibility study for what we call Tavan Tolgoi power plant. Now in parallel with the TT power plant and in consultation with the Government of Mongolia, Rio Tinto is also progressing alternative options to source domestic power, including some element of renewable. That's where we are, discussion on the way. But I think the point made by Simon is very clear. It's currently, we're buying all our power from [ inner ] Mongolia, across the border and its coal-fired power station. So as and when we come, there would be a net benefit in the end because we will use a better technology. So that's where we are at this stage.

Yes. Just a quick follow-up, if I may. I think the claim that there would be a net benefit in terms of emissions overall is a little bit disingenuous given, we're talking about building an entirely new coal-fired power station destined to operate for a long time. I also think it's slightly disingenuous to glorify Rio Tinto's plan to spend $1 billion on emission reduction projects over the next 5 years when the company is planning to spend roughly the same amount on building a new coal-fired power station. I just wondered if there could be some sort of comment as to how this project fits within Rio Tinto's claims about its emissions reduction funding and also commitment to be not involved in the fossil fuel sector as has been claims to-date.

Yes. So I think -- Will, I think J-S has sort of answered the question in the sense that this was a requirement from the governments. And it was part of the investment agreement that was -- we've entered into. And I think just to contextualize that, I mean, Mongolia is a landlocked country and is surrounded by China and Russia. It is currently dependent -- the mine is currently dependent upon power coming in from China. I think the government is understandably focused on power security for the country. They have very substantial coal reserves. But they are also very focused on creating employment. And the coal industry does create employment in Mongolia. Clearly, we are, as J-S said, looking at whether we can introduce a component of renewables, but we have a contractual obligation to the government to build that coal-fired power station. And that's the situation we find ourselves in. But I don't think it's disingenuous to say that it's -- we're spending $1 billion on seeking to reduce emissions elsewhere is inconsistent with meeting our obligations to the government of Mongolia. And it will result in a reduction overall in emissions because if we do build the coal-fired power station, it will certainly be more efficient than the one which we are currently sourcing power from in China. Can we take another question from the telephone lines, please?

Your next question comes from the line of [ Jack Egan ].

Thank you, Mr. Chairman, in January this year, I lost my home in the climate change driven fires on the New South Wales, South Coast. I have witnessed the impact of climate change, and I want Rio Tinto to do everything within its power to prevent others from having to experience what I have. I know this is another question on a matter raised already, but it does concern a deadly serious matter on which Australia is a very influential global player. Your 2019 industry association reviews concedes that the Minerals Council of Australia has advocated, actively advocated to undermine the Paris Agreement. However, despite this, you said earlier that Rio intends to remain a member, paying $3.3 million per year in subscription. This is a substantial amount of money assisting the Minerals Council's attempt to effectively torpedo global achievement of the Paris targets. My question has 2 parts, Mr. Chairman. Firstly, what timeframe have you provided the Minerals Council to bring both its policy and its advocacy in line with the Paris Agreement goal of keeping warming to below 1.5 degrees? Secondly, if the Minerals Council's destructive behavior continues, will you undertake to leave the Minerals Council by next year's AGM, please?

; Thanks very much for that. And let me say, I'm very, very sorry to hear about your loss. I'm very glad that you are safe and able to join us today. J-S, do you want to -- I'm going to answer the question on the MCA, but J-S, do you just want to talk a bit about the response of Rio to the bush fires because clearly, that was an event that sort of -- that really shocked the world. And it would be good just to hear about some of the steps that we took.

Yes, absolutely. So we -- during this absolute human tragedy, end of last year, beginning of this year, we were absolutely -- and we remain absolutely committed to supporting our employees, contractors as well as the communities and wildlife impacted by the bushfires. I mean, in terms of support is, the first port of call was reach for the volunteers, and to make sure that they could help from the emergency services without any loss in terms of salaries and so on, so forth. And that was the first decision we made right away with our colleagues, to make sure that they could do what they love doing. Now in terms of financials, it's very clear that we -- as of today, we have contributed around $2 million to the bushfire relief, $1 million to the Red Cross, something around $0.5 million, which is very close to my heart, which was the Volunteer Support Trust set up by the BCA, which is for the children of the lost heroes who did fight in order to limit the bushfire impact. And then around $600,000, which is a matching scheme in terms of money given by our colleagues and matched by the company, plus $300,000 to the [ AFL ] relief home. Aside from this financial contribution, we have provided income support, including donations of hay from the Pilbara to affected farmers in New South Wales. I already mentioned this, we had, on very short notice -- over a weekend in fact, we have introduced a new standard for our Australian colleagues, which supports affected employees with full leave entitlement. We will continue to explore other ways to support the communities, including income initiatives. So that's how we did react and we'll continue to look at ways to help the recovery, either directly or through initiative, including the one launched by the Business Council of Australia, which is under the leadership of Cosgrove. The 2 provide pragmatic, material help to all impacted by this absolute tragedy. So that's where we are, Simon, at this point in time.

J-S, thanks for that. So yes. Getting back to the -- I mean, obviously, I gave a reasonably [ full ] answer on our position on the MCA. And to be clear, the MCA has now issued a climate change policy, which is supportive of the Paris Agreement. We recognize, and indeed, it's been drawn to our attention that there have been some minor inconsistencies between its advocacy and its policy position in the past few months, since the development of that new policy. And as I said earlier, we have worked hard with the MCA to put in place governance arrangements to ensure that there is much better alignment between its stated policy position on climate change and the advocacy that they undertake. I think the other thing, in terms of the timeframe and will we give an undertaking to leave by the next AGM. As I said earlier, we have been working hard with all the other members of the MCA on the new climate action plan. It has been delayed for very understandable reasons because the whole industry and indeed, the whole of the MCA has been very focused on the COVID-19 crisis, but that will be published shortly. And we think that, that will represent a further step forward in the industry developing an industry-wide response to climate change consistent with the agreement. And certainly, I have spoken personally to Helen Coonan and Tania Constable about the importance that we attach to making progress on that. So once again, I'm very sorry for your loss in the fire, but thanks very much for the question. Can we move -- can we move to another written question at this stage? Do we have more written questions?

Yes, I have a question from [ Mercado ] Superannuation Fund. How will the directors assess how to invest the $1 billion climate change money? And how will the directors measure the outcome of that investment? Which director will be responsible for the overall fund?

Good. Thanks for that question. J-S, I'm going to ask you to talk about some of the detail exists with projects that we're current [ with ]. Can I just start by saying that within that $1 billion, there will be a combination of capital expenditure and operating expenditure. So there will be capital projects designed to reduce our scope 1 and scope 2 emissions, and J-S can talk about at least one of those, which is very much on track at the moment. But there will also be operating expenses, some of which might be directed at research and development projects such as the ones which J-S talked about earlier, the ELYSIS project in Canada or work that we do with Baowu and Tsinghua. And whilst probably the majority of that $1 billion will be spent on mitigation measures, there may also be an element within it, which is adaptation in the sense of building the resilience of our core assets and infrastructure to, for example, extreme weather events or extreme temperatures because clearly, that is another important part of thinking about how we make Rio Tinto a resilient business in the context of climate change. From a governance point of view, we are set up with climate change policy decisions such as the allocation of this $1 billion. That's a Board decision. Megan Clark, who chairs our Sustainability Committee and the members of that committee -- and I am a member of that committee, collectively, are responsible for monitoring the delivery against the strategy and the policy decisions that are taken at the Board, and holding management to account to make sure that they deliver on that. J-S, do you want to talk about some of the specific projects?

Yes, absolutely. So let me step back, the $5 billion is for the next 5 years. So this $1 billion is a combination of 2 things. One is a series of investment project in order to enable meeting our target in -- by 2030. And a good example of it is the investment that we have disclosed earlier this year, in terms of around $100 million in renewable for the Pilbara in Australia. And we have a pipeline of such projects. And the way those projects are decided are as per the normal governance of rules of the company, which is they have to go through the investment committee where we check the benefits, both in terms of climate change or impact in terms of CO2 and in terms of returns as well. But the second element is, and Simon mentioned it, is we have to put money in order to develop the new technologies that will be required in order for us to meet our target by 2050. Because we know that our existing technology will not be sufficient to enable us to get to the 2050 ambition. That is absolutely clear. So -- and those, as Simon said, is it will be about operational expenditure and so on and so forth. And these budgets are approved on an annual basis as per the normal processes. Because what is very important, and that's maybe the key message of where to leave people with today is, climate change is now fully embedded in the way we run our business, all right? I don't want to say it's business as usual because people would -- but it is business sure. It's totally embedded, incorporated in our thinking, either in terms of short-term, medium-term and long-term planning; how we allocate money across the company, either through operating budget, R&D budget or through capital expenditures. And depending on the nature of the project, either we approve it through the budget or we approve it for the investment committee. So it's there. It is totally embedded in the business. Any decision in terms of investment now, there is an element of discussion in relation to climate change and how this fits against the $1 billion total target that we just mentioned. How are we going to measure the effectiveness? I think that is going to be pretty straightforward. It will be on the impact, impact in terms of emissions as an example. And we will continue to disclose on a regular basis how we are performing on this important topic. So that's where we are, Simon.

Very good. Thanks, J-S. Can we take another written question?

Yes, I have a pre-submitted question from Mr. [indiscernible], he's a shareholder. Question is, as Her Majesty is a shareholder in Rio Tinto, doesn't resolution 19 seriously affect her political impartiality?

Yes. Well, so this question relates, I think, to our resolution on political donations. And obviously, I can't comment on whether Her Majesty is a shareholder of Rio Tinto or not. But as I said in my introductory remarks, we have no intention of changing our policy, which is not to make donations to political parties or to political candidates. And the main reason we have this resolution is because the U.K. law is very broadly drafted and includes events, for example, which probably would not be ordinarily regarded as political. So it is just a -- it's a precautionary measure. So I'm happy to say that if Her Majesty is as a shareholder, and I very much hope she is, that Rio Tinto is not endangering her political impartiality. So can we take a -- are there any more written question? Can we take another written question at this stage?

Yes, I have a further pre-submitted question from [ Dainty Tina ]. Will you guarantee to pay all Australian taxes and not seek to evade some?

Yes. So I think Rio is -- has been absolutely transparent about its tax payments over many years. I mean we were the first company in the industry to publish a taxes paid report, which disclosed all of the payments that we make to governments around the world in detail. And we recently published the latest version of that, which gave a detailed breakdown of the $7.6 billion of taxes and royalties that we paid in 2019, which includes AUD 8.9 billion of taxes paid in Australia. I mean our policy on this is very clear. Our policy is to pay the right amount of tax. We do not use artificial or opaque structures to avoid or evade taxes. Having said that, because tax laws inevitably demand judgment from time to time, disputes will arise. And that is unfortunately true of every multinational company operating in multiple jurisdictions, that there will be tax disputes because of genuine differences of interpretation or judgment. And when those disputes do occur, we try to settle them in a fair, professional and transparent matter. But I can assure you that we do not evade taxes. Can we take a question from the lines now? Do we have questions queued?

Your next question on the line comes from the line of [ Faye Comley ].

I have a question and maybe a follow-up, depending on your response. One of the 4 elements of Rio Tinto's climate change strategy is to reduce the carbon footprint of their operations. In his introduction to the latest climate change report, our executive, J-S Jacques, claims our strategy is consistent with the Paris goals. Can you provide any material to demonstrate that Rio Tinto's current targets to reduce the carbon footprint of our operations by 2030 are consistent with the Paris goals?

Sorry, can I just clarify which organization you're with?

I'm a proxy on behalf of [ KOFI Investments ].

Okay. So the -- I mean this was clearly an issue that was also raised by Market Forces. And I think -- if you look at the analysis the Market Forces did, essentially, they start with our -- with 2018 and then they drew a straight line through the targets that we had set for 2030, and then they continued that straight line on to 2050. And on that basis, they said that our targets were not consistent with the Paris Agreement because they did not achieve net zero emissions by 2050. And I think the -- I think that methodology really misses 2 very important points. The first is we didn't start setting targets in 2018. As I said earlier on, we started setting targets in 2008, and we have already achieved a 46% reduction in absolute emissions and a 29% reduction in emissions intensity. And as we set out in the climate change report that you referred to, we own and operate some of the most carbon-efficient assets in the world. And of course, as you do progress down the carbon abatement curve, it gets harder to reduce emissions. Nevertheless, we -- as we said earlier on, we have set new targets. We've got an ambitious goal to achieve net zero by 2050, and we've set new targets to reduce our emissions intensity by 30% and absolute emissions by 15%. And as J-S has just said, we've got a pipeline of projects already on the go to achieve those targets. The way we set those targets is based upon a very detailed evaluation of all of our major assets used, and that's based on known technology or technology which is in an advanced stage of development. It's also based on current government policy. Now clearly, if there are major technological breakthroughs or if there are major changes in government policy that provide incentives for companies to invest in low-carbon technology, it might be possible for us to accelerate the achievement of those targets. But if we were, at this stage, to take more rapid unilateral action to reduce emissions, it would require the closure of some of our operations. And that would clearly have major negative consequences for our employees, for our suppliers, for our communities, for the government. And, of course, not least, for our shareholders. I think the second problem with the methodology is the assumption that all sectors will be carbonized [Audio Gap]. I mean the reality, is very different. I mean some sectors are relatively easy to decarbonize, in replacing fossil fuel-fired power stations with renewables, for example, or replacing internal combustion engine with electric motors. There are other sectors like steel and aluminum, which are much more difficult because they will depend upon new technologies, which are going to take decades to develop and to deploy on a global scale. So I think there is no simple answer to this, but drawing a straight line and saying that every industry must decarbonize on exactly the -- at exactly the same pace, I think is -- obscures the complexity of the situation. And we are working hard with the aluminum industry and others to come up with a much more thoughtful and considerate, sector-by-sector pathway towards achievement of the Paris Agreement in the various sectors where Rio Tinto is active. So does that answer your question or would you like to ask a follow-up? I assume that, that's fine. Are there any other questions on the lines?

We have one more question coming from the line of [ David Huck ].

Rio Tinto is engaged in the Climate Action 100+ investor initiative, which is now at the halfway point of its 5-year lifetime. Given Rio's refusal to set scope 3 emission reduction targets, how and when does the company intend to meet the Climate Action 100's simple demand that companies take action to reduce greenhouse gas emissions across their value chain, consistent with the Paris Agreement's goal? And if Rio does not intend to meet this request in the near future, what retaliatory action might the company face from the Climate Action investors?

Yes, I think if I may, that is essentially the same question that I answered at the start, when Julien asked a question on behalf of Market Forces. I mean, I should say, in our engagement with the Climate Action 100+ group, which represents a large group of some of our most important shareholders, that has been a very helpful engagement for Rio Tinto. And we are very grateful to the convenience of that group, both in Australia and in the U.K. because it does enable us to talk to our large, long-term shareholders, who, of course, are very interested indeed, that Rio Tinto does indeed come up with a climate change -- approach to climate change that sustains the business over the long term and protects the interest of their shareholders. So it has been a very valuable exercise. But I think in relation to the scope 2 targets, I have already answered that question. Can we -- are there any other telephone questions on? Any questions on the line?

There are no further questions on the line.

Are there any more written questions?

Simon, there is one final written question. It is a pre-submitted question from Mr. [indiscernible]. The question is, will all Board members accept a total freeze on pay during this viral pandemic period?

Okay. So the answer is that we have not taken any decisions at this stage on remuneration for 2020. But we will, of course, as we get towards the end of the year, look at the performance of the business. And as we think about what pay would be fair and proportionate in accordance with our remuneration policies. And I should say, as part of that debate, we will certainly take into account not only the shareholder experience during the course of 2020 but also the experience of our employees during the course of the year and any impacts that the pandemic may have on them. I am very, very pleased to say that at this stage, we have not made any redundancies as a result of the pandemic. In fact, I think, and J-S, you should talk to this, but I think we're actually recruiting in Australia at the moment. So happy that so far, at least the impact on our employees has not been that great. But it's certainly something that I think the Remuneration Committee, chaired by Sam Laidlaw, will look at very carefully as we get towards the end of 2020. J-S, do you just want to -- do you want to comment? Can you just confirm what I said on recruitment?

Yes, that is absolutely correct, Simon. As we indicated, the order books are pretty healthy as we speak. And we need to recruit more people. And there are around 300 positions, open positions currently that we are trying to fill at this point in time. And it's true in Australia, it's true in other places globally. So that's where we are. So we are still recruiting in order to meet our customers' demands as we're having this conversation, yes?

Thanks, J-S. Can we just check, are there any more written questions?

There are no more written questions in my queue.

And are there any more questions on the line?

There are no further questions on the line.

Okay. Well, great. Well, look, thank you. Thank you all for your questions. I think, probably now is the time to move on to voting on the resolutions themselves. And as I mentioned at the start of the meeting, voting is already open. Many of you, I suspect, have already voted by proxy and you do not need to vote again. For those of you who have not appointed a proxy and are eligible, and wish to vote, you should now submit your vote online if you haven't already done so. And as I said earlier, you can vote by clicking on the voting icon that appears on the screen. And once you click this, the resolutions will appear along with the For, Against, and Abstain voting options. And to vote, you simply select your option and follow the prompts. There is no need to press submit or to click the enter buttons, the vote is automatically recorded. If you have any difficulties, please refer to the user guide, which you can access through the platform, and the polls will stay open for approximately 15 minutes after the end of this meeting. Scott Hudson from Computershare Investor Services has been appointed as the returning officer for the poll. The results of the poll will be announced as soon as possible after this meeting, and they will, of course, be posted on the Rio Tinto website. I would just like to conclude by thanking you, our shareholders, for your continuing support. But I also want to reiterate my thanks to all of the employees of Rio Tinto around the world. And we often talk about Rio Tinto being financially strong and resilient. But I think the COVID-19 crisis has shown that the real strength and resilience of this company is its people, with all of our employees, contractors, suppliers and other partners have just shown great adaptability and resilience and teamwork during this crisis. And they have demonstrated, I think, but today, more than ever, we really are all in this together. So let me finish by thanking them and by wishing all of you, good health. And I now declare the meeting closed.