Rio Tinto Group (RIO) Earnings Call Transcript & Summary

Good morning to everyone here in London and to those of us -- those of you joining us virtually via Lumi. My name is Simon Thompson. I'm the Chairman of Rio Tinto, and it's my pleasure to welcome you to our 2022 Annual General Meeting. After 2 years of COVID-19 restrictions, it's great to see so many shareholders here in person at our AGM in London. We're also offering virtual participation through the Lumi platform, where you can watch the meeting live, vote and ask questions. We start, as always, with safety, our top priority. So please take a moment to listen to this short safety announcement. [Presentation]

It's my pleasure to introduce my fellow members of the Rio Tinto Board: Steve Allen, our Group Company Secretary; Simon McKeon, Senior Independent Director of Rio Tinto Limited; Sam Laidlaw, Senior Independent Director of Rio Tinto plc and Chair of our Remuneration Committee; Megan Clark, Chair of our Sustainability Committee; Peter Cunningham, our Chief Financial Officer; Jakob Stausholm, our Chief Executive; Dominic Barton, my successor as Chair of the Board; Simon Henry, Chair of our Audit Committee; Jennifer Nason; Hinda Gharbi; Ngaire Woods; and Ben Wyatt. We have had a number of changes to the Board over the past year. Michael L’Estrange retired at the conclusion of the Rio Tinto Limited AGM in May 2021. And as previously announced, Hinda Gharbi, will be retiring from the Board at the conclusion of today's meeting. I'm very grateful to both Michael and Hinda for their contributions to Rio Tinto. In June, we appointed Peter Cunningham as our Chief Financial Officer. And in September 2021, we welcomed Ben Wyatt to the Board. Ben's knowledge of finance, public policy, trade and indigenous affairs has already proved to be invaluable. I'd like to invite Ben to share his reflections since joining the Board.

Thank you, Simon. Good morning, everybody, here in London and those online. My name is Ben Wyatt. I'm from Western Australia. I joined the Board 6 months ago. For those who don't know my background, I was a member of the state government in Western Australia; Treasurer, Minister for Energy, Aboriginal Affairs, Lands and Finance. And my background is a [Foreign Language]. For those who don't know, that's the Southwest of Western Australia based around Perth up through the inland Pilbara through to a town called Newman that is very well known to many. Can I also begin by acknowledging the fact that Rio Tinto operates on the traditional country of First Nations people all over the planet, and I want to acknowledge them, particularly those First Nations people we partner with, we contract with and of course, employ across Rio Tinto. I'm delighted to have been given the opportunity to join the Board of Rio Tinto 6 months ago, when the Board made the decision to appoint me, and I thank those shareholders who have voted for my appointment at this AGM. I find Rio Tinto, as somebody who's spent a lifetime in Western Australia, living and growing up in the mining regions of Western Australia, Rio Tinto has been a big part of my life, one way or the other as it is for most Western Australians. And while we have seen and I've come on the Board in a period of cultural introspection and we have reflected quite deeply, both in the fallout of the tragedy at Juukan and with the Everyday Respect Task Force Report, we are seeing a company fundamentally transforming itself as it looks inward but at the same time, managing to produce some extraordinary results due to these extraordinary assets that we have as a company. I'm very excited to be here. I'm excited by the fact we have as a company said that the decarbonization of the planet, perhaps the great challenge we'll have in my lifetime, is what is going to drive Rio Tinto. Not only is that our challenge, it's also our opportunity. And I'm very much looking forward to be a part of that. And I thank you for the support, for those who have voted for me and for the Board who saw it appropriate to appoint me some 6 months ago. Thank you, Simon.

Thanks very much, Ben. As previously announced, I will step down as Chairman at the conclusion of the Australian Annual General Meeting in May, and I'm delighted that the Board has announced the appointment of Dominic Barton as my successor. Dominic has extensive business and international relations experience, as well as a deep understanding of the linkages between business, government and society. And I wish him every success. Dominic, perhaps, I could also ask you to say a few words.

Well, thank you very much, Simon. And I also want to say how excited I am and delighted to be joining Rio Tinto and to Chair the Board of this incredible company. There are many reasons why I'm excited to join this organization, but at the core of it is the mission that Rio Tinto has in making a significant contribution in providing the materials that will enable the world to transition to a lower carbon economy. I can't think of a more important goal that needs to be fulfilled. I'm also very excited about the future that lies ahead, the strategic direction that was set in 2021, which I think will allow us to pursue the growth, deliver the attractive returns to shareholders and also again, enable a decarbonizing world. I think further strengthening our relationships with customers, partners and local communities and incorporating a broad range of views in our decision-making is something that I'm particularly passionate about. And over the next few months, I'm planning to meet with as many of our employees and partners as possible, as well as, of course, investors around the world. One of my key priorities is to ensure that we create a safe, respectful and inclusive work environment. And I think it's a credit to Jakob and the management team that they commissioned and published the recent review into the company's culture. And I fully support them and the implementation of those recommendations and our new values. There is no doubt we have some work ahead navigating complex geopolitics, a shifting competitive landscape and lots of other societal challenges. We're resetting and strengthening our partnerships, including, in particular, with the traditional owners of the lands in which we operate. And our people are working very hard to improve our operational performance, despite challenging operating conditions from prolonged COVID-19 disruptions. But I'm very encouraged again by the company's resolve and direction. I know Jakob, Peter and my colleagues on the Board recognize we're at this pivotal moment and we're committed to building long-term sustainable growth for Rio Tinto, our shareholders and wider stakeholders. And I'd also like to take the opportunity to thank Simon for your leadership as Chair through very tumultuous times and the manner in which this transition is going and how you're helping me move it is deeply appreciated.

Thanks so much, Dominic. As I reach the end of my 8 years on the Board, it has been a privilege to be part of the leadership team of this great company. And I'm proud of the direction that Rio Tinto is taking and of the talent, resilience and commitment of our employees and contractors around the world. I'll say more about this in a moment. But first, let's deal with some of the formalities for the meeting. The notice of meeting containing the text of each resolution was published on our website and posted to shareholders on the 8th of March 2022. The notice contained supporting notes designed to give further clarification background. If anyone in the room does not have a copy, please raise your hand and an attendant will bring you one. For those attending virtually, copies are available within the documents tab on the Lumi platform through which you're watching this meeting. I can confirm that we have a quorum of shareholders physically present. The poll for voting on the resolutions is now open and will remain open for about 15 minutes after the conclusion of the meeting. I will now make a few introductory comments before handing over to Jakob for his review of the year. 2021 was a year of transition. We appointed a new CEO, a new CFO and 9 members of Exco took on new roles. Following this unprecedented period of management change, we focused on rebuilding relationships and strengthening our social license, while setting out a new strategy that seeks to reestablish Rio Tinto as a leader in an industry that has a critical role to play in creating a sustainable and prosperous future for people and for the planet. Following engagement with management and the Board, the new senior management team led by Jakob have established 4 objectives. In the opening video, you saw some of the important work going on around the business globally in pursuit of these objectives and Jakob will speak further about our progress shortly. In addition, we rolled out 3 new values: care, courage and curiosity and a new strategy with the energy transition at its heart. We're now focused on delivering the strategy in collaboration with our partners and other stakeholders. In 2021, we achieved our third fatality-free year. This achievement reflects the hard work and dedication of our employees and contractors worldwide. Sadly, however, people are still getting injured at work. So we must remain vigilant and focused. While some countries adapted to life with COVID-19, the pandemic has continued to exact a heavy toll during 2021, particularly in some of the developing countries where we operate. I'm very proud of the resilience and care shown by everyone in the business for each other and for their local communities. Our responsibility for ensuring the well-being of our employees and contractors extends beyond -- traditional areas of health and safety. In 2021, we launched the Everyday Respect initiative to help us create a safer, more respectful and more inclusive environment by preventing and improving how we respond to unacceptable behavior in the workplace. I'm grateful to Elizabeth Brodrick, former Australian Sex Discrimination Commissioner revising the everyday respect task force that we set up to drive this initiative. And to the more than 10,000 employees and contractors worldwide who participated in listening sessions and surveys as part of the discovery phase. The findings in the report are deeply confronting, and we are determined to implement all 26 recommendations set out in the report. It is clear both from the findings of the Everyday Respect task force and the tragedy at Juukan Gorge that we must create a work environment where everyone feels safe and empowered to speak up if something is not right. Our 2021 operating and project development performance was negatively impacted by COVID-related travel restrictions, labor shortages, supply chain disruptions and the transition to improved communities and heritage management processes in the Pilbara and elsewhere. Nevertheless, we achieved record financial results on the back of high commodity prices, with underlying earnings of $21.4 billion and free cash flow of $17.7 billion. The group's direct economic contribution to the countries where we operate, including payments to our employees, our suppliers, governments, local communities and our shareholders amounted to $67 billion. We paid $13.3 billion in taxes and royalties globally. In view of this strong financial performance, the Board is recommending a final dividend of USD 4.17 per share and a special dividend of USD 0.62 cents per share. This represents our highest ever total dividend of $16.8 billion or USD [ 10.40 ] per share, which is also the highest dividend ever in the FTSE. Second -- forgive me, the second highest dividend ever in the FTSE. I'm now going to focus on climate change, which is the defining issue for our edge and is at the heart of our new strategy. Rio Tinto has a critical role to play in the energy transition, supplying essential materials, including copper, lithium, high-grade iron ore and aluminum, all of which are vital for the transition to a low-carbon economy. Our new strategy sets out plans to grow production in each of these metals. We've made significant progress in this area with the acquisition of the Rincon lithium project in Argentina, and the commencement of underground mining at Oyu Tolgoi in Mongolia. Most recently, the Board has given in principle approval of the path forward for the development of the Simandou iron ore project in Guinea in line with international ESG and compliance standards. We also have a responsibility to reduce the Scope 1 and Scope 2 carbon emissions from our operations. The materials we produce already have a much lower carbon intensity than most of our competitors. And we've set ambitious new targets for a 15% reduction by 2025 and a 50% reduction by 2030. To thrive in the long term, we also need to be part of net-zero value chains, particularly for steel and aluminum. Our fourth TCFD-aligned climate change report published in February this year sets out our goals, working in collaboration with our customers and suppliers to reduce our indirect Scope 3 emissions. In recognition of the urgent need for action on climate change by business, governments, consumers and investors, we are for the first time this year, putting our climate action plan to our shareholders for an advisory vote in Resolution 17. We continue to implement the recommendations arising from the Juukan Gorge tragedy in May 2020. In September last year, we published an interim report on our communities and social performance commitments. There is a huge amount of work going on to improve our processes and build beneficial and respectful partnerships with traditional owners and other First Nations peoples around the world. It is a multiyear journey, but we are making good progress, such as the agreement with the Yinhawangka Aboriginal Corporation, the first of our new generation of agreements with Australian traditional owners, which sets out our approach to the comanagement of culture and heritage and offers a template for future agreements in the Pilbara. We have emerged from the challenges of the past few years with a firm commitment to become a more inclusive, respectful and caring company that creates value for all stakeholders. We have set out a new strategy that will reestablish Rio Tinto as a leader in an industry that has a uniquely important and challenging role to play in creating a sustainable and prosperous future for people and the planet. With the new senior management team and the new strategy in place, 2022 is all about delivering our strategy in collaboration with our partners and other stakeholders. Let me finish by thanking my colleagues on the Board and especially Jakob for their hard work, commitment and dedication to Rio Tinto over the past year and for their insights, advice and support during my time as Chairman. I'm now going to ask Jakob, our Chief Executive, to give us an update on the business.

Thank you, Simon. First, I would like to acknowledge and pay my respect to all traditional owners and First Nation people that host our operations around the world. 2021 was a defining year. When I became Chief Executive, it was clear that we needed a reset. We need a clear sense of purpose, putting respect for people, communities and land at the heart of our contribution, and we needed to listen. We produce materials that are vital for the energy transition and ongoing urbanization, but that's not enough. Indeed, it's the way we produce these essential materials that will make the difference to our customers, to host communities and governments and ultimately to you, our shareholders. We must align our business priorities with society's expectations and ensure all our stakeholders benefit from our success. We have a lot of work to do, but I do believe that we are on the right path. We implemented the biggest management change in our corporate history and identified 4 objectives essential to our success: being the best operator, achieving impeccable ESG credentials, excelling in development and strengthening our social license. We launched our new strategy, including ambitious climate change target setting a new direction for us to contribute to and strive in a decarbonizing world. And we set new simple values for the company that connect us all as human beings care, courage and curiosity. I would like to take a moment to talk about the humanitarian crisis in Ukraine, which has caused enormous suffering to innocent people. I joined the world in condemning the violence and hoping for a peaceful and rapid end to this conflict. We have no operational assets or employees located in Russia and Ukraine. However, we are taking a few actions. Firstly, we're in the process of terminating all commercial relationships we have with Russian businesses. And to support humanitarian efforts, we will donate $5 million to agencies, helping people caught up in the conflict fleeing from it. We have also put in place a scheme to match donations made by our people globally. In 2021, we maintained our commitment to safety first. The ongoing pandemic has touched all of us in some ways, affecting both our physical and our mental well-being. Sadly, we have lost colleagues around the world to this virus. Many of us also lost family and friends, saw people close to us battling COVID-19 or experienced it ourselves. I'd like to take this opportunity to sincerely thank our people for their commitment, resilience and sacrifice during another COVID-constrained year. They've done a superb job. I'm very proud. We have continued to prioritize controls, supporting government vaccinations campaigns, setting up vaccination clinics near our operations and working tireless to help our colleagues and communities with vital supplies and safety protection. Despite the ongoing pandemic still impacting our people at home and at work, we delivered a strong safety performance with 0 fatalities for the third consecutive year. While this is great news, we recognize that being able to go home to one's family at the end of a shift should not be -- should be a given, not an achievement. This remains our first priority each and every day. In 2021, we asked the former Australian Sex Discrimination Commissioner Elizabeth Broderick to conduct an independent study to understand the experiences of our workforce and make recommendations on how we can prevent and respond to harmful behaviors. The findings are deeply disturbing to me and should be to everyone who reads the report with many of our employees experiencing bullying, racism and sexism. I offer my heartfelt apology to every team member, past and present, who has suffered because of these behaviors. This is not the kind of company we want to be. The report also contained 26 detailed recommendations. We will implement them all and have already upgraded some site facilities and launched our new confidential reporting program, my voice. I'm determined that by taking action and with the executive team's commitment to a safe, respectful and inclusive company in all areas, we will make positive and lasting change and make Rio Tinto a less hierarchical, more humane place to work. Our financial performance in 2021 was very strong and demonstrated both the quality of our assets and the strength of our business model. The recovery of the global economy driven by industrial production and high demand for our products resulted in significant price trends for our major commodities. As Simon noted, we achieved record financial results in 2021 with EBITDA of $38 billion and net earnings of $21 billion. Each of our 4 product groups was highly profitable, achieved significant EBITDA and double-digit return on capital employed. Our iron ore business continues to be the primary contributor, but we also benefited from an increased contribution from the other 3 product groups, not least aluminum, which recorded 20% return on capital employed in the second half of 2021, up from just 3% during 2020. A highlight for me comes when you compare the results for 2021 with our performance during a similar period of strong demand and high commodity prices a decade ago. Last year, we converted a far higher proportion of strong commodity prices into earnings. And subsequently, because of our strict capital allocation, we converted the earnings into far higher free cash flow of $17.7 billion. This enabled us to declare a record dividend of $16.8 billion, a 79% payout ratio. In 2021, we made focus against each of our 4 objectives. But we also know we have a lot ahead of us. One of our key objectives is to restoring our reputation as the best operator in the business. We launched the Rio Tinto safe production system, which will empower our people to achieve consistent operational performance and unlock real and sustainable improvement at each of our assets. We have deployed it at 5 sites and we will be rolling it out at many more with up to 30 deployments at 15 sites over the coming months. Our second objective is to have impeccable ESD credentials. We provide materials to help the world progress. We have a responsibility to produce these materials in the right way. Society is demanding a greater commitment on climate change. In October last year, we outlined our new strategy which included ambitious climate targets. The first step is to address our own footprint and we have brought forward our 15% reduction target for our Scope 1 and 2 emissions from 2030 to 2025, and we more than tripled the target for 2030, seeking to reduce our carbon footprint by 50%. Rio Tinto is among the biggest electricity users in the Western world and we also have significant land holdings. This provides a great opportunity, but also comes with responsibility. But if we do it well, we can make a real difference. Our new climate targets are underpinned by an intention to invest $7.5 billion. We will be disciplined, and these Investments will, in aggregate, be value accretive at modest carbon prices. They will also safeguard the long-term cash flows of our assets and help us maintain an attractive cost of capital. We are mobilising the organisation, unleashing the skills and creativity of our many engineers to identify opportunities to decarbonize our assets and invest in renewable power. Construction of our first 34-megawatt solar plant at the Gudai-Darri mine and 45-megawatt battery system at Tom Price continued in 2021 and mark an important step in reducing our carbon footprint in the Pilbara. The solar plant will deliver approximately 1/3 of Gudai-Darri’s average electricity demand and is a big step in a broader programme to leverage the Pilbara’s natural advantages in solar and wind resources and deploy renewable power at scale. We recognise that processing our products also generates material indirect so called Scope 3 emissions. With various partners we are working on a number of potential technologies to decarbonize our value chains, including with BlueScope and POSCO, to explore low-carbon steelmaking pathways. And we have committed to increasing our R&D spend to speed up the development of technologies to enable our customers to decarbonize. In aluminium, our ELYSIS joint venture with Alcoa, supported by Apple and the governments of Canada and Quebec, produced aluminium with zero direct carbon emissions at a fairly large scale last year. We are now scaling up to full commercial size cells in 2023 and commercialization of this ground-breaking technology remains on track from 2024 onwards. The third objective is to excel in development. All the materials we produce today are fundamental to the energy transition and beyond, including iron ore. We are well placed to grow in order to meet the increased demand and in the past year have made meaningful progress on creating a pipeline of options that will create value for our shareholders in the years to come. Our ambition is to increase our investment in growth capital up to $3 billion annually by 2023 to 2024 and to prioritize commodities that are essential for the drive to net zero and we have demonstrated our willingness to grow via acquisitions. The Rincon lithium project in Argentina brings growth in a commodity essential to the energy transition, while at Oyu Tolgoi our proposal to acquire full ownership of Turquoise Hill will simplify the ownership structure and provide additional exposure to copper. We believe the terms of proposal are compelling for Turquoise Hill shareholders and Rio Tinto will remain disciplined in pursuing this opportunity. Without a doubt the most significant development in terms of growth was resetting of relationship with the Government of Mongolia and Turquoise Hill. One of the highlights of my career was to stand side-by-side with the Prime Minister of Mongolia as we commenced the underground mining. It was the culmination of years of hard work and dedication to develop such a complex greenfield project. We continue to look for new options and innovative ways of developing projects faster, but we will only do this in line with our ESG standards, while maintaining our absolute commitment to capital discipline. An example of this approach in action is Simandou in Africa. This project will deliver high-grade iron ore essential to decarbonizing the world steel industry. The Board yesterday gave its in-principle approval to the path forward for this project. The Framework Agreement recently signed with the Government of Guinea and our Chinese joint venture partners sets out a co-development of the port and rail infrastructure, which will occur in line with international ESG standards. We look forward to working together to develop this nation-transforming project and I am personally committed to ensuring that the people of Guinea benefit from Simandou along with our shareholders and customers. In 2021, we committed $2.4 billion to the Jadar lithium-borates project in Serbia, one of the world’s largest greenfield lithium projects. In January 2022, the Government of Serbia cancelled the Spatial Plan for the project and required all related permits to be revoked. We remain committed to exploring all options and are reviewing the implications for our activities and our people in Serbia. We acknowledge the concerns from local communities and are committed to meaningful engagement to explore ways to address these. The fourth objective is to strengthen our social license. We are focussed on listening and resetting relationships. This takes time, but we are moving forward on a model which is respectful and looks to provide certainty of protection for cultural heritage and mining. We have a clear direction and strategy for the company to grow and decarbonize. We are rebuilding relationships and evolving our culture supported by simple human values. I am proud of the progress we made in 2021. But most of all I am proud of the talented, energic and committed people across Rio Tinto, like those you saw in the video earlier, who are working hard to make our company even better. It is through working together and listening to the perspectives of all stakeholders, including our customers, host communities and you, our shareholders, that we will achieve our objectives. Our business is strong and we are all committed to making Rio Tinto even stronger. Thank you.

Thank you, Jakob. We will now move to the formal business of the meeting. Resolutions 1 to 17 and resolution 22 will be dealt with under the joint electorate procedure with Rio Tinto Limited Shareholders, who will cast their votes on these resolutions at the corresponding meeting in Melbourne, Australia on the 5th of May. Resolutions 1 to 16 relate to the routine business of the Annual General Meeting, such as the receipt of the Annual Report, the election and re-election of directors, and the appointment and remuneration of the auditors. You will see that there are two resolutions relating to remuneration. The first relates to the approval of the Implementation Report, which describes the remuneration arrangements in place for members of the Board and of the Executive Committee during 2021. This vote is advisory and is required for UK law purposes. The second relates to the approval of the Directors’ Remuneration Report. This vote is also advisory and is required for Australian law purposes. As usual, we have included a resolution seeking authority for Rio Tinto plc to make political donations. We do not intend to alter Rio Tinto’s policy of not making political donations. However, some of our activities in the ordinary course of business may fall within the widely drafted definitions of political donation and political organization under UK law. This authority is therefore being sought as a precautionary measure to ensure Rio Tinto does not inadvertently breach the law. In addition, for the first time this year, in Resolution 17, we are putting forward a non-binding, advisory resolution, giving shareholders the opportunity to vote on the Climate Action Plan set out in our 2022 Climate Change Report. Resolutions 18 to 21 will be voted on by Rio Tinto plc shareholders only. These resolutions, of which resolutions 19 to 21 have been proposed as special resolutions, relate to the directors’ ability to manage the capital of the Company and to call General Meetings of the Company other than Annual General Meetings on not less than 14 days’ notice, if necessary. Resolution 19 relates to the disapplication of statutory pre-emption rights, where we have sought authority to increase the issued share capital on a non-pre-emptive basis by 5%, rather than the maximum of 10% permitted in accordance with the UK Pre-emption Group’s principles. Your directors are unanimously of the opinion that all the resolutions proposed in this notice, except for the conditional resolution regarding the holding of fresh elections for directors that's Resolution 22 are in the best interests of shareholders and of Rio Tinto as a whole. Accordingly, we recommend that you vote in favor of all the resolutions, except Resolution 22, where we recommend that you vote against. The required notice of the meeting has been given. With your consent, I propose that the notice of meeting should be taken as read. Is that agreed?

Thank you. We will now proceed to the Q&A by inviting questions from shareholders on any matters relevant to the business of the meeting before we move on to voting on the resolutions themselves. For those in the room, if you have a question on any of the resolutions, please hold up the yellow card in the lanyard you were given at registration. To ensure that everyone watching by video and webcast can hear please wait until a microphone is brought to you. And before asking your question, please state your name and if you represent an organization, the name of the organization. Kindly return the microphone when you have asked your question. For those attending virtually, if you have not already submitted a question and would like to do so, you may submit written questions or ask them orally through the Lumi platform. If you're asking an oral question, please state your name and if you represent an organization, the name of your organization before proceeding with your question. To allow us to answer as many questions as possible, please keep your comments short and to the point. In order to give as many shareholders as possible the opportunity, I will discourage supplementary questions from those who have already spoken. If we receive multiple questions online on the same topic, we may aggregate them and provide a single answer to avoid repetition and to ensure the smooth running of the meeting. If you are entitled to vote at today's meeting, you should have been handed a poll card when you registered this morning. If you do not have one, please raise your hand now and an attendant will bring you one. When we finish the question-and-answer session, I will ask you to complete your poll card. Let's start with a question from the floor. Can we take the gentleman in the middle there with --

My name is Stephen Power. I'm trustee for the Jesuits in Britain, which is a Catholic Church Trust. We are institutional investors in the company. So my question takes to Madagascar where there seem to be strong indications that the company may be losing. We talked of strengthening its social license, but is it losing it there. It's relating to minority communities in the site at Mandena. We understand that many villages there have been in the town hall occupying it recently. And the reported losses of their income as high as 50%. So -- and just recently, I think last week, the government of Madagascar in the presence of the President talked of holding QMM, the Rio's subsidiary there, responsible for the impact of the failure of the dam structure the death of aquatic life and the water quality issues. So my question is, is QMM now at risk of losing its political license to operate in Madagascar?

So thank you for that question. And I think it relates in part to the recent -- very recent report published by publish what you pay, which I've scanned but actually because it was only published very recently, I haven't had a chance to study in detail. But first of all, let me just acknowledge that when you build a mine in a very poor country, and Madagascar is one of the poorest countries in the world. It does create inequalities. Because before the mine was there, everybody was uniformly poor. And when the mine arrives and creates very well-paid jobs, it does unfortunately increase the inequality that exists within the community. And this is an issue the mining companies, resource companies have to confront whenever they're developing projects in poorer countries such as Madagascar. So the reality, of course, is that in Madagascar, with the arrival of QMM, we have created well over 2,000 very well-paid direct jobs. We think that we have induced employment connected to the mine and supply chain and so on of about 11,000. When we develop the mine, we brought clean water to the town of Fort Dauphin, which is the nearest major town to the operation and where many of our employees live. We then handed back clean water facility over to the government. And we are currently building clean water facilities for 3 rural communities, which are located much closer to our mine. But the reality is that as the publishers EPA report makes very clear there is a divide between the urban population for Dauphin-- who benefit from Power, which we supply to 80,000 people and from clean water and from jobs. Whereas the rural communities near to the mine, you do not share in those benefits fully. And this is why we are really focused working with stakeholders and including the World Bank, who've taken an active role over many years now in seeking to develop a regional development program to try and redress that balance. We will never, of course, be able to do it in full, but we can certainly strive to do so. So we are, for example, at the moment, converting our power generation in Madagascar to renewable power using solar and wind. And when we complete that project, not only will we be supplying renewable power to Fort-Dauphin, but we will also be able to supply power to 2 of the rural communities that are close to our operations. And we do recognize that we need to step up our engagement with the communities. We've put a tremendous amount of effort into doing that over the past year or so. And we feel that we are building much better relationships, not just with civil society organizations working in Madagascar, but directly with those communities. You mentioned also it was the Minister of Water, in fact, who made the comment about holding QMM responsible for some fish deaths that occurred close near to our operations. It's quite hard to answer this question concisely because it is quite a complex story. But Madagascar in the early month of this year, suffered some extreme weather after a very, very prolonged drought during February and March. There were 3 cyclones in very -- in a matter of weeks, which deposited about half of the typical annual rainfall within a very short period of time. Our operations in Madagascar are ponds essentially, and our normal operating procedure is to keep the level of the water in those ponds below the level of the water in the external environment. So should there be any overflow, it will be from the external environment into the pumps rather than vice versa. However, because of this exceptional extreme weather, we got an accumulation of water within the pond areas and we, therefore had to release some water into the external environment. It's something which we haven't done for well over 18 months. And we did that with the full permission of the National Environmental Office and indeed, we involved local communities in that. And as a precautionary measure, we provided the local communities near the mine with clean drinking water whilst we were releasing that water into the environment. Now several days later, there were some fish deaths reported actually not very close to where the water was released, but further out in the waterways, which, of course, we investigated because we take that extremely seriously. And working again with the National Environmental Office, we tested those fish. We found no signs of toxicity. We found no signs of contamination with heavy metals. So they -- I'm afraid their deaths aren't explained. But I have to say the local fishing community and indeed, our staff reported that the water was extremely turbid which is not surprising because of the vast quantity of flood water, which not only caused enormous damage to local communities, but also actually washed a huge amount of sediment into the waterway where the fish were found. So we were surprised by the minister's comment because certainly, the analysis we have done and the analysis that the National Environmental Office in Madagascar have done doesn't suggest that there's any link with our activities. But certainly, it's something we take extremely seriously, and we will continue to engage with the Minister of Water and try to understand what, if any, steps we should take. I should say, that -- and I'm sorry, this is a long answer, but it's a complicated subject that we have -- we are about to open a water treatment plant at our mine, at QMM, which will actually provide a permanent long-term solution to this. So it will enable us to release water rather than doing so in a sort of emergency situations such as we face because of these extreme weather events, we will be able to release water back into the environment, which will be at least as good, if not better, than the quality of the water and the receiving environment. So we do have a permanent solution. And as I mentioned earlier, we're also developing clean water projects for the communities living close to the mine, which again will address some of their concerns. But I absolutely accept that we have work to do to enhance our license to operate in Madagascar. Can we take -- I think that's Mr. Farmer.

Yes, indeed, Chairman, if I suddenly sit down, that's because I'm in some discomfort at the moment. Indeed, John Farmer, shareholder. After that long answer, Chairman, I have respectfully 4 questions, which I'll endeavor to keep concise. First, as a diversified shareholder reading many annual reports. May I urge you to consider shortening your 420 pages wispy grey and desirably printing in black and across the page, not in columns because if read online, it involves a lot of scrolling, precedent is your remuneration report, which does I suggest. Over to you, Chairman, before I continue.

First of all, Mr. Farmer, it's a pleasure to see you again after 2 years absence from my AGMs. But your comments are noted. I mean the annual report is extremely long. That is in part because we have to comply with both U.K. and Australian regulations. But certainly, your comments on the font and the color of the font, we will take on board.

Secondary, Chairman, is really on euphoria, your annual report, Page 15 says, and I quote, strong financial results driven by significant momentum from higher prices and separately, lower iron ore sales impact underlying earnings before interest, tax and amortization. I mentioned the iron ore because it is your largest sales category and any downfall in that risks a strategic effect. But frankly, Chairman, you have had a windfall year, I suspect. And you've showed dividends on us. And I wonder whether this classy gesture is the expense of wiser, more strategic investment and diversification in the company product or geographic diversification. The specific on that subject, if you've got so much cash flowing around, just the finance director, I really think that he needs another 30-year fixed rate bond, $1.25 billion, I read. Over to you, Chairman.

Thank you. I'm going to ask Jakob to talk about our strategy and our diversification strategy, and I'm going to ask Peter Cunningham, our CFO, to talk about the bond issue that we had. But let me, before doing that, just emphasize that despite the record-breaking dividend that we paid to our shareholders, we continue to have an extraordinarily strong balance sheet. And that is very deliberate. We have, 0 net debt. And that is -- that I think is the correct position for a company like Rio Tinto to be in given all of the geopolitical uncertainties that we're facing at the moment. The other part I'd just reiterate is the one that Jakob made in his presentation that unlike the commodities boom that we saw a decade or so ago, one of the achievements of Rio Tinto over the past years to convert those high prices into earnings and cash. And that, I think, is a reflection of the very disciplined approach that we've adopted as a company. But Jakob, let me pass over to you to talk about capital expenditure.

Yes. Thank you. It's a highly relevant question. Now Rio Tinto is, of course, a very long-term company. So it's not that we can sit and switch on and off the projects and then it has an impact the next quarter. What we have seen is massive buildup of a fantastic iron ore business over a couple of decades. And a year like last year, we were again surprised about the enormous strength of the Chinese economy. It is the Chinese demand that has been driven the high prices in iron ore. We actually took decisions back in 2018 and '19, we were running. And we are, at the moment, finalizing 4 major projects. It's the biggest renewal is 90 million tons of renewed capacity in the Pilbara. It's all coming on stream as we speak. It was supposed to be on stream by the end of the year. It's going to take a little longer. It's going to happen here in the first half. We have been affected by COVID and other matters. But I think what you should think about is if you look back in the annual reports, ever since 2016, every year, we have spent a little bit more. We're not flip-flopping. We are in a very disciplined way, ramping up investments. And we are bringing up a lot of replacement capacity in the Pilbara. So from second half of this year, we should be in a better position with our iron ore business. And in the meantime, I should say, we are also growing much more in the other product group so that we get a better diversification of the company.

That response provokes or --

If I may miss -- can we just invite Peter to just comment on your final part of your second question, which was the bond.

Mr. Farmer thank you very much for that question on the bond. So we did issue a bond, a 30-year bond at coupon 2.75%. I mean I think there's [indiscernible] is that at the same time, we bought back another bond. So we didn't actually change our gross debt through that transaction. We effectively were terming out our debt and actually taking advantage of what we saw as very competitive rates for long-term money at that side. And secondly, it's just us really managing that very strong balance sheet we've talked about, I think, for the very long term and for maintaining the flexibility that we need for investments throughout the cycle. But thank you.

And can I just respond to Mr. Stausholm's point about iron ore going to China. The recent program Russia has acquired suggests that in time, China will follow suit. And if there is a move for worldwide sanctions, that impinges on Rio Tinto. I'd just leave you with that thought. Now move on. The Board -- I'm sorry, annual report, Page 161 contains the sobering statement. 2019 was the first time in 147 years, we were fatality-free. That coupled with the Juukan Gorge fiasco, suggests me the Board as a continuing entity, and I stress that because you have had recent changes. A Board is a continuing entity, dangerously out of control of major issues. And I'd be grateful if you'd comment and without wishing to trivialize on that subject, I did walk as a linguist to your employee engagement session where you talk of town halls and employee dashboard. This nonsensical Americanism really means a staff meeting, doesn't it? The employee dashboard is a survey. So why not say so. Over to you, Chairman.

Well, I'm sorry, we've offended you with the language. So that's the language that we tend to use in Rio Tinto and it's certainly well understood within Rio. We have, of course, apologized for the tragedy of Juukan. And we are putting in place tremendous efforts to rebuild trust and strengthen the relationships that we have with not just the traditional owners in Australia, but First Nations people around the world, and Jakob spoke about that earlier. I have to say, I think you are quite wrong about our safety record. That is an extraordinary record. And there's someone who has worked in the mining industry for more than 3 decades -- I have to say I'm incredibly proud of what Rio Tinto has achieved. No one 3 years ago would have predicted that we would have 3 fatality in 3 years. And unfortunately, many other people working in the mine industry were far safer than that. And that really does reflect the huge effort that has gone into building a really strong safety culture in Rio Tinto, involving not just our employees, but all of our contractors. So I am extremely proud of that record. I don't think there's anything for the Board to be embarrassed about that.

Well, I don't quibble with your recent avoidance fatalities. But as a shareholder, among others, some 7 house builders, which also have dangerous environments and seem to attach a lot to safety. I do think it is reasonable for shareholders to expect the Board to avoid killing people. And if you've been killing people for 147 years, that is not good in my opinion. However, I'll move on.

Can I just check this is your final question, --

Yes. it is indeed yes. Amid all the pride of recent financial performance, which I've already suggested may turn out to be a windfall. I've looked at your total shareholder return statement. First of all, Page 169, somewhat misleadingly in my opinion, although I admit you have a heading, which clarifies publishes a 5-year total shareholder return of [indiscernible] . If one looks a bit further to Page 184, the 10-year return is down at 150%, which again, is a diversified shareholder investing in various sectors, I would suggest is lackluster. And yet you have total remuneration, it seems according to Page 175, a $6.8 million to Executive Directors. On Page 193, adds another $3 million for nonexecutives. It's not this money thrilled --

What you are highlighting there, I think Mr. Farmer is just the underlying cyclicity of the mining industry. The reality is that our performance over the past 5 years has been extraordinarily strong, and shareholders have enjoyed some truly remarkable returns as you point out from that total shareholder return period. Sam, as Chair of the Remuneration Committee, would you like to comment on the remuneration point?

No. I mean I think it's very clear that a large part of the remuneration is as a result of the long-term incentive programs that are aligned with shareholders. And say that as the share price performs well as indeed it has in the last 5 years as illustrated by the chart that you brought to our attention to, Mr. Farmer. Then management will participate in that share price appreciation, which is why you'll see that actually in the total table of remuneration as a significant portion of the rewards for management have been a result of both share price appreciation and dividends.

Thank you very much. Let's take another question.

My name is -- Yvonne Orengo I'm a shareholder, and I'm also a Director of the Andrew Lees Trust, has been serving people of Madagascar for about 26 years now. We work closely with published what you pay Madagascar and publish what you pay international, and publish what you pay just brought out the report that Mr. Thompson just mentioned -- sorry, just a second. I had to put my glasses -- I want to take this opportunity because, unfortunately, a community representative of Madagascar was not able to attend today because of COVID, but I have a question from him with, if you will permit me a couple of observations from me. So this question comes from [indiscernible] in the region where the QMM mine is situated in Madagascar. And his question is about transparency of Rio Tinto's communication. He says it creates a feeling of betrayal vis-a-vis is the local community and QMM in Madagascar and he gives some examples. 2001, QMM said they would improve water quality in the Lake Ambavarano. But Fisher folk report a 90% loss of fish species in the lake since the [indiscernible] was built and have protested due to their loss livelihoods. In 2001, QMM said it would not exploit monazite because it's very high radio activity. But now QMM exports the monazite. 2017, QMM said it was compliant on the buffer zone limits. But 2 years later, Rio Tinto admitted, QMM had breached the environmental buffer zone. Rural communities take drinking water and fish in these local lakes, directly affected by QMM mine process water and the contamination that it brings. When will QMM communicate transparently to avoid widespread distress of the community? Please can I just add a couple of observations to this. So QMM told us for years organization with published what you pay have been asking a lot of very, very technical questions about water quality in Madagascar. We were told there was no baseline water data, but now we discovered there is. We're still waiting for it. People told us -- people were told there were no problems with QMM mine water are still being told that. But when pressed to disclose its discharge water data, QMM had to admit last year to exigencies in cadmium and aluminum. We concluded the QMM water management system was not working and QMM and Rio Tinto have had to concede that this is true. QMM discharge also has high levels of uranium and lead but QMM does not like to discuss these and the absence of a regulatory limit for uranium in Madagascar means they haven't had to yet. So civil society was told, QMM was looking for solutions for the discharge water. And you've mentioned them today, Mr. Thompson. I was delivered papers yesterday and announcements were made in the Madagascar press about this last week -- only last week. In fact, they are a temporary solution, not a permanent solution and they were scoped out last year, but nobody knows anything about it. It's a solution that potentially creates even greater risks to the water environment and consequently to help and the subsistence livelihoods of rural communities living around the mine. So the question is, why has there been no transparent discussions about this treatment solution? It's a neutralizing pit solution. We've been asking for information for over a year. Where is the environmental impact assessment and risk assessments and where is the public consultations that should then accompany those, which are required for a change of the project design in Madagascar? Why does Rio Tinto allow QMM to continue to do as the villages put it? What it wants without transparent processes and open communications? Is Rio Tinto really willing to change its culture? Because this way of operating in Madagascar is not conducive to building trust or to the transformational change it is aspiring to as a company.

Thank you, And first of all, I mean this is my last London AGM, and I think you've asked a question about Madagascar at all 8 of the AGMs, both virtual and in person. So I do just want to acknowledge the Andrew Lees Trust commitment to holding Rio Tinto to account. And I hope on that you will concede that we have always been responsive to your request. So for example, over the past 12 months, I understand that you had 5 meetings with management you've made. I think something like 17 or 18 very detailed request for information, which we've endeavored to provide. You mentioned baseline data and we will provide that. The difficulty is if you ask a short notice for data, which actually is 27 years old, we have to go back into the archives,and get that data. I should say also that in terms of briefing you personally on developments at QMM. I know Jakob offered 3 or 4 different dates to meet with you ahead of this meeting regrettably, you weren't able to make any of those times. But that offer absolutely remains open. So the -- you are right. The water treatment plant was developed in response to those exceedances that we had seen in cadmium and aluminum in the water that was released from the mine into the environment. And that is why we stopped releasing water from the mine into the environment for 18 months, whilst we are constructing the treatment plant, which should come on stream very shortly. You are not right that uranium and lead is also an issue. There is no evidence of exceedances in uranium or lead from the waters released from the mine. Although I know that, that has been a consistent concern of yours, and that is why we are conducting the fifth independent water quality survey as we speak. This is being conducted by an independent Australian expert in radionuclides and heavy metals. And they have now completed their interim report. It has to go, first of all, to the National Office of the Environment in Madagascar for their approval. We are also getting it peer-reviewed. But the draft report that we've seen indicates that there are no exceedances of uranium or lead or other heavy metals. They are within the World Health Organization guidelines. This is the fifth study that we have conducted because you have persistently raised this issue with us. And clearly, it is a difficult thing to prove a negative. You are alleging that we are harming the environment. We can produce lots of data to say that we don't think we are. There's no evidence that we are, but it is extremely difficult to prove a negative. And therefore, I hope that this fifth report, which is the most detailed and comprehensive, looking at all kinds of transmission pathways for heavy metals, not just directly from water, but via fish and via crops, will help to address some of your concerns. You did talk about the fish population behind the weir. I'm afraid that was an issue that was identified in the original environmental and social impact assessment study for the project. That was something that was always known about. And the monazite, which indeed we are exporting, that is a radioactive product. That is a natural product that occurs in the mine, and actually, therefore, to export it with all of the precautions that we take in accordance with the very strict regulations that apply to transportation of radioactive material, is probably net-net of benefit to the local environment in reducing the overall level of natural background radiation. So look, Yvonne, we've had many meetings, we heard many discussions. We clearly have to step up our engagement in the local community. We acknowledge that. But I hope that you have seen over the past 12 months, in particular, a change in the approach. We are making very significant progress on addressing some of these long-standing issues. And I would like to say, now that the pandemic is finally coming to an end and travel restrictions are being lifted, please, let us host you, come and look. We issued many invitations to you to actually visit the mine. And during the 8 years that I've been on the Board, I don't believe that you have done so. We would love to show you what we are doing. It will be a complete open book as it is for other CSOs, come and visit, ask any questions you want. And if you raise issues that we can address, we will seek to do so.

Thank you. I think we've been very, very consistent actually in all of the things that we have put forward to the Board and also in all of the meetings that we have had. We have produced very, very significant data to support our arguments. And actually, I don't think it should be difficult for you to prove what is actually for you, apparently, a positive that you don't have any impact on the environment up until now. Over the last 5 years, of all the questions we've asked and all the data we've put on the table showing there are problems, you haven't been able to counter that with the opposite. And there are significant issues with the JBS&G study, as we have already laid out. There are significant issues with the laboratory results that have come back from ANDEA, the water authority. And those are all in the public domain. Now we've put the critiques from our radioactivity specialist up. We would like to discuss those further. We would also like to discuss further why the SEIA isn't there and the risk assessments for this new treatment, because that is a requirement of the Malagasy government is that if you change the project, you must have those public consultations. They haven't happened. People are still trying to catch up with your 2014-2018 Environmental Plan, which they still don't know about. So you are still having a lot of big gaps between what you say here, I'm sorry, Mr. Thompson. I could pick what you said earlier to pieces and it certainly was the President's message, not the Minister of Water that went out. I could pick it to pieces here -- and I don't want to bore everybody, but I could pick it to pieces from beginning to end. There's a lot of things that have to be sorted out on Madagascar. Please take it seriously, because those people that you're saying is all about inequality. It's not. The people we're talking about are now -- they're now actually half of the value of their livelihoods less than they were before the mine. The mine was meant to bring, with a joint venture, people out of poverty in this region. It's done the reverse. Those people were already dirt-full when you started. Now they're half the value of their life lower than when you began. That's all I'm going to say. Thank you.

Thank you, Yvonne. And as I say, it's quite difficult to have detailed conversations speaking to each other on microphones. So it is a great pity that we weren't able to -- Jakob and the team were not able to meet you, and we will certainly follow up on these discussions. Can we take a question on this side of the room? Can we take -- yes. Thank you, that gentleman there, where you are. The one who's got his hand up. Thank you. No, I'm sorry. The microphone is there. It will come to you, sir.

My name is [ Colin Farhi ]. I'm representing the International Missions Office of the Jesuits In Britain, and this is another question on Madagascar. So following the cyclones, the issue of whether the QMM dam structures and mine management -- mine water management systems, it's being bought into a question if they're fit for purpose. We note that Rio Tinto only report excavated storage facility at QMM, not a dam, a berm or an embankment, thereby evading international dam safety criteria. We understand that following the recent events, there was to be an investigation of the QMM tailings dam failure. So when will the tailing dam failure investigation report be made public? And would it not be good practice for Rio Tinto to monitor what counts for a tailings dam according to international safety standards for such?

There is no tailings dam at QMM. The berm that you referred to is an embankment made of sand, which separates the mine from the external environment. But the process that we use in QMM is that we create a water pond within the mineral sands. We put a dredge onto that pond. The dredge dredges sand from one end of the pond. It goes through the dredge where the valuable mineral sands are extracted and the remaining, mainly silica sands, go off the back of the dredge into the environment, where it ultimately dries and the pond progresses through the environment. And we rehabilitate that sand progressively by replanting a variety of indigenous species to restore the habitat to as close as we can get it to how it was before we started mining. But there were no tailings at QMM. And I would just say, we take tailings management extremely seriously. And Megan, if you wouldn't mind, perhaps you could just summarize the governance and the progress that we've made on tailings management elsewhere, where it is relevant?

Thank you, Mr. Farhi. Just to give you a bit of background, our surface mining center of excellence, which is part of our management framework, tracks around 165 tailings storage facilities. And we break those down into the ones that we manage in our operations, some 119, and 46 are managed by our joint venture partners or others. In terms of the governance piece, one of the most important pieces of the governance is the implementation of the global industry standard for tailings management, as you mentioned. This is a standard which we actually helped develop through the ICMM as well using our own internal standards and those of all of our peers in the industry. And we assess in terms of the Board, we look at how that implementation is going and also how we're classifying the consequence classification scheme of our tailings facilities. We have 21 tailings facilities, which are ranked as very high or extreme consequence. That's not the probability that they will fall, but that's the consequence level. And they are all on track for meeting the global industry tailings standard by August of 2023. One of the elements of our governance, and part of that standard, is that the executives that are accountable for the safety of the tailings facilities, but also for minimizing the social and environmental impact must have a direct line to the Board. And at our meeting just this week, we heard from 2 of our businesses, our aluminium and iron ore accountable execs, they walked through all of the work that they're doing and any concerns. And earlier in the year, we spoke with and heard from and listened to where our other 3 businesses were. So the Board has now had direct conversations through our Sustainability Committee with those accountable executives. So I share that with you, really Mr. Farhi to share that we take this extremely seriously. We understand the consequences not just in our own business, but the extent to the communities around us. And we have the risk frameworks and management frameworks in our businesses, and the Board oversees those frameworks, and we'll continue to do so.

Thanks for the question. Can we just go back to the gentleman who was standing up? Yes, thank you. On the front row.

My name is [ Jonathan Lawley ]. Most of my career has been in Africa, an association with the mining industry since 1960. I joined Anglo American in about 1976 and worked in the Congo some time, and continued my career in Africa, thanks to speaking French and Portuguese. I was taken on by Rio Tinto in 1982 to develop the first black managers and supervisors, black management for the mining industry as a whole for Africa, in particular, places like Botswana, Zimbabwe. South Africa, there was nothing. Namibia, we achieved wonderfully. I found that the difference that Rio Tinto made, that Rio Tinto I found was very much a people person. It had huge strength. We got on incredibly well. And I was -- towards the end of the time with Rio Tinto, I was -- I used to go out and visit my ex-trainees in places like Orapa, Jwaneng, all over Southern Africa down at Swakopmund, et cetera. And I remember a particular event at Orapa, by which time one of my first trainees was now General Manager of Jwaneng, a huge job. And at a party for me, Rio Tinto was lauded, I was too, blowing our trumpet quite naturally. And was told sort of on the side, well, of course, we know here and you know far, far more about Africa than they do in Johannesburg, where they have -- they're just 20 years behind. So really, I'm saying we, as a company, perhaps need to go back and remind ourselves and remind the public and the press and the shareholders that this is a truly great company, which has done fantastic things in Africa, and we really need to remind ourselves of that. Thank you, Mr. Chairman.

Thank you, Mr. Lawley, for those comments. And I do recall talking to you at one of our previous AGMs. Can we take -- let's take a question from this side of the room, the gentleman who is sort of halfway up.

Good morning. Good morning, Mr. Chair and Board members. My name is Councilor Doug McMurdo and I'm Chair of the local pension -- Local Authority Pension Fund Forum, some 85 members. And over GBP 400 billion -- sorry, $400 billion AUM. Mr. Thompson, you mentioned about language that you use in your reports and with the greatest respect to Mr. Wyatt, but you've used one word that doesn't sit well with me today. And that's the word tragedy in relation to Juukan Gorge. This was not that. This was an operational incident, wholly avoidable and created by, at that time, your executive team. So if you could just note that. I am heartened by the opening remarks and what you say you will do. And as you know, I will be holding you to account. So just to move on, it has been, and I'll put on record, very good to speak to you and colleagues over the past few years. And I thank you all for your engagement, Mr. Stausholm, Mr. Cunningham, Mr. Laidlaw and indeed yourself, Mr. Thompson. So we are indebted to you for that engagement. Thank you. So you might have seen that LAP issued a report on mining and human rights in the mining sector only yesterday, an 87-page document, and that raised concerns about the impact of the mining sector and the human rights issues and practices, and the impact that, that has on corporate financial performance. And with great interest, your fourth objective is at the heart of what we ask. And the area of concern for me, in relation to Rio Tinto, is the process for carrying out environmental and social impact assessments. I am encouraged by the independent investigation that Rio Tinto has taken on. And Mr. Stausholm, you've said that you will be taking the 26 recommendations forward. Further, I am encouraged that in relation to the Panguna Mine in Papua New Guinea, and I'd like to see more independent assessments of this nature conducted before projects are undertaken, not just to assess legacy impacts. Therefore, would you please commit to an independent assessment of Rio Tinto's risk and impact assessment process? I feel an improved process of this nature would help the company to improve both operationally and reputationally, in the way it has stated it would like to earlier in this meeting and that it would help save costs for both you and me. Thank you.

Thank you, Doug. And I'm sorry, I didn't recognize you earlier. But look, thanks for coming to our first post-pandemic AGM. Look, I haven't read the report that you referred to, which was published yesterday. I'd like to do so. And then actually, I suggest that we have a meeting just to discuss the issues you raised. I would just make a couple of observations. The Panguna Mine was permitted and developed in the 1960s. Standards have changed absolutely dramatically since then. The reason that we have to go back and conduct this analysis of the potential human rights and environmental impacts of that mine, which was abandoned during the civil war in 1989. So it was abandoned more than 30 years ago, is precisely because the standards that were adopted when it was permitted and built were entirely different from today. And it was never properly closed because of the civil war. It wasn't closed and rehabilitated, again, to the standards that would have been appropriate. So it is a very specific case. And I think we are -- we do now have a committee formed, including the autonomous government of Bougainville, representatives of the landowners, Bougainville Copper, which is actually the subsidiary or former subsidiary of Rio Tinto that owned the deposit, as well as the Government of Papua New Guinea and representatives from the Human Rights Law Center in Australia. So we have a functioning committee with an independent chair. We have, I think, Jakob, just correct me, we have just appointed the consultants who will conduct the independent review. Is that correct?

It's very independently driven. So we are very much sponsoring it, but we are doing it together with the various institutions. So yes, and we have appointed. So we're going to learn a lot more on that specific things. I mean, the point made is very well made. We would never do anything, whether it was rehabilitation or it's a new mine, without the right environmental impact assessment.

Yes. That was the point now.

It would not be in our interest.

So look, we'll follow up these discussions. But I mean, let me assure you, whenever we conduct a new project, we have an extremely thorough process for environmental and social impact assessment. Should we take a -- we've got a group of questions here. Can we take the lady just where you -- there, yes. Thank you.

Hello. My name is [ Elizabeth Denver ]. I've actually been coming here for about 30-odd years. And I wasn't surprised at the report you got. I'm surprised you were. So I'm asking a question on behalf of the people of Serbia and all other living creatures -- all living creatures, really. The -- as the CEO reported, the Jadar project has been canceled by the Serbian government. So the question is how are the people -- these people at Serbia now wondering when are Rio Tinto planning to leave that area? When will Rio Tinto be selling the land back to the villages? And will it be at the same price at which they bought it in the first place?

Yes. So thank you for the question. And obviously, we, in Rio Tinto, regret the decision of the government to cancel the permits for the development of Jadar. I mean, I should emphasize that we have always operated in complete conformance with the laws of Serbia. And we continue to honor our obligations to our employees and the local community around the site of the project. The -- one of the unusual features of the Serbian law is that you are not permitted to publish your environmental and social impact assessment until it has been approved by the government. And it has not been approved by the government. And therefore, we were unable to publish all of the work that had been done on the environment and social impacts of that project to the highest international standard. And that vacuum in information, I think, did contribute to some misinformation about the project in Serbia. Having said that, we absolutely understand the concerns of the local community about the impact of the project. And we feel that when the -- that the environmental and social impact work that we have done will actually address many of those concerns, but there may well be others as well that would need to be addressed as part of the consultation process. So we do certainly understand the concerns of the local community. I mean, I do make the point that lithium is absolutely vital for the energy transition. And the project, Jadar, is the largest lithium development project of this kind. We desperately need lithium in order to make the transition from internal combustion engines to electric vehicles. It's also, I have to say, an extremely important project for Serbia because it has the potential to add 4% to their gross domestic product as well as offering opportunities for Serbia to develop a downstream business that would enable them to supply green technology to the automotive industry in Europe. So it is an attractive project, but we completely respect the decision of the government. But we are committed to reviewing all options at the right time. Can we take another question? Let's take the gentleman on the front there, and then I'll go to you just straight afterwards. Thanks.

Okay. Good afternoon. My name is Jim Cook. I'm here representing the retirees of Rio Tinto Fer et Titane with operations in Sorel, Quebec. I also worked for the company for 25 years. In the early 1990s, the company implemented a policy for retirees of partial indexation to the extent of 50% of CPI. All the employees, including myself, understood that, that was part of the bargain that they entered into when they joined the company. Rio Tinto decided to end indexation in 2013, about 10 years ago. And until now, they have never explained to the retirees why indexation was stopped, and if and when it might be reinstated. They never answered that simple question, why was indexation stopped? I'd like you to answer that today. I'd also want to point out that during these 10 years, the business, Rio Tinto Iron & Titanium produced $5.5 billion of EBITDA for Rio Tinto. So affordability is not a question. So could you answer that question?

Jim, thank you. And I'm sorry, I wasn't able to meet you. Is that Martine? Why don't you give Martine...

Good morning. So yes, my name is Martine Caplette. I'm a retiree of RTIT, Rio Tinto Fer et Titane, I'm from Sorel. I'm here to represent a group of 700 retirees, member of a closed pension plan, defined benefit pension plan. So that group will not increase, will not grow, but decrease. Bear in mind that those retirees' average income is CAD 30,000 a year. That is approximately GBP 18,000 a year. They used to be indexed for 35 years, and that was stopped by Rio Tinto in 2013. To that day, these retirees still don't understand why, are asking for reinstatement of indexation for them to cope with the increase in cost of living. They are losing their purchasing power. Now I was happy, very glad to hear that the business is doing so good that you have new values in terms of care, courage, respect. I consider retirees, whom I'm part, as being important stakeholders for the company, at least I hope. And we're asking for consideration and reinstatement of our indexation.

Thank you. Thank you, Jim and Martine, for those two questions. And I know one of your colleagues, [ Bruce Grison ], was unable to join you on the trip here. So I wish him a speedy recovery. Of course, we respect our pensioners. Our pensioners are extremely important to us. The plan -- when you raised these concerns, of course, we benchmarked the plan against other pension plans in Canada. And it is a generous plan. It's also a very well-managed plan. It's fully funded by Rio Tinto. There are no employee contributions whatsoever. And of course, in addition to the pension, most of the pensioners benefit from health care provision as well, which again is funded by Rio Tinto. So it is a generous pension plan, but the plan itself has never contained an entitlement to indexation, that was never written into the plan. Now during the meeting yesterday, I know you met a couple of my colleagues yesterday, and we understand from those discussions that the reasons for ceasing the voluntary indexation that did take place until 2013 have not been properly explained to you. And I apologize for that. You left quite a lot of documents with us, I understand, I haven't seen them, but we will review those documents. And I think at the meeting, we gave you an undertaking that when Sinead, who's actually sitting here on the front row, is in Canada in May, we will have another discussion with you once we have a chance to digest the new information that you presented to us. Can we take -- yes. Thank you. Where you are. Yes. Sorry, I'll come back to you in just a moment.

name is Joe Bardwell. I'm here as a shareholder, and I work for Publish What You Pay. You might have guessed, I'm going to ask a question on Madagascar. I think the quantity of questions we're getting today on Madagascar shows how severe the situation is there. And in response to the first question we had, you framed this as an issue around inequality in that villages are begrudged because some people are doing better. But I think Yvonne highlighted that this is about villages and the row of people there feeling worse off than when your mine came. They've had lost of lands, they've had undermined food security, lost livelihoods, health effects. And they put this down to the water in the area. Villages say they can't feed themselves. They can't maintain necessary income. They can't enjoy their health and they can't secure their children's education. 63% of 368 villages interviewed as part of that Publish What You Pay report have submitted complaints about this. And they relate to the water quality, land losses, for example. And 90% of these say they have received no response from the company or the monitoring body. So I have a couple of questions. So the first is, how does the impact of the QMM mine reconcile with Rio Tinto's sustainability, water and human rights commitments? I think a common thread today has been about righting wrongs. How do you intend to right these wrongs? When will Rio Tinto address villages' grievances? And what remedial measures will you put in place to compensate for the losses they've experienced? Thanks very much.

Yes. Well, as you say, we've had quite a number of questions on Madagascar. And as I said at the outset, I'm not sure precisely when your report was published, but I think I certainly only received it yesterday. So I haven't had a chance to fully digest it. But I think at the appropriate time, Sinead, it would be good if we could set up a meeting with Publish What You Pay, too, once we've actually read and analyzed the report. But I would say, as I said earlier on, that we are already taking steps to try and improve the conditions for the local communities. We are currently building freshwater treatment plants for them within their villages. And as I mentioned, as we move towards net zero mine in QMM, we will be replacing all of our currently fossil fuel-fired power with renewable energy. And as part of that, we will be supplying electricity to the communities as well, in addition to the 80,000 citizens that we provide with power in Fort Dauphin. So there are certainly steps being taken. But as I have acknowledged, we absolutely have to find ways of being more transparent and working closely with the communities. And I think we have made over the last 12 months very significant progress, but I think we all acknowledge that there's more work to do. Can we take a question? Let's take this gentleman here?

Thank you, Chairman. I'm [ Andrew Whitmore ], a shareholder. And bearing in mind what was said earlier, particularly around respect for traditional owners, I have 2 short linked questions regarding Rio Tinto's 86.3% controlling interest in Energy Resources of Australia, particularly around recent announcements of cost and schedule overruns with rehabilitation of the Ranger uranium mine within the world heritage-listed Kakadu National Park, with an estimated blowout of over AUD 1 billion. So firstly, given this massive shortfall, can you assure us today that the company will maintain its commitment to the Mirrar traditional owners to ensure that the complete rehabilitation of the Ranger uranium mine is fully funded so that no radionuclides for Ranger will enter the surrounding environment for 10,000 years as is required by Australian law? And secondly, in ERA's recent annual statements, repeated mention is made of the controversial Jabiluka deposit as an undeveloped property of significant potential, either through and I quote, "successful development or sale." Are you prepared today to unequivocally reaffirm our company's commitment to support the Mirrar wish that the Jabiluka never be mined or incorporated and is instead incorporated into the Kakadu National Park?

Yes. Thank you, Andrew, for your question. And it's an issue that you've raised before. So we need to be clear that ERA is a listed company. It has shareholders other than Rio Tinto, but Rio Tinto is by far the largest shareholder. And I can, therefore, speak on behalf of Rio Tinto, I cannot speak on behalf of ERA because they clearly have a separate Board and a separate governance. But we are evaluating the revised forecast for the closure of ERA. And we remain, as a company, absolutely committed to making sure the ERA is appropriately rehabilitated. We've given that undertaken before, and we are absolutely sticking with that. We have to make sure that we have appropriate governance structures around that rehabilitation to ensure that it is done correctly and to our standard, notwithstanding the fact that we are not the owners of the mine. And so far as Jabiluka is concerned, I personally have met with the Mirrar people and reiterated our commitment that we will not develop Jabiluka without the agreement of the Mirarr people. And I think, Ben, you were probably the most recent visitor to ERA. And I think you had a very similar conversation with the traditional owners.

That exact same conversation, Andrew, with the Mirrar people. They're actually very keen for Rio to stay engaged, of course, in the project as a shareholder. And it's very, very clear in respect of Jabiluka will only ever be exploited, whether it's by ERA or others with the consent of the Mirrar people. And I've got to say, I don't get any sense of that consent forthcoming anytime soon.

Let's -- Steve, if you're in the line, let's take a couple of questions from the line because I know people have probably been waiting to ask questions for some time.

Thank you, Simon. Yes, we've got 2 written questions on the line. The first is from [ Mr. Philip Clark ]. Mr. Clark says I'm very interested in the ELYSIS process for aluminium production. And asks, "Could you please explain how this is different to current production methods? And could you also indicate whether ELYSIS will be economically advantageous, neutral or disadvantaged compared to existing production processes?"

Yes. Jakob, we're all very excited about ELYSIS, but you've probably had the most recent visit there to see it in person. So why don't you take that one?

Look, it is absolutely a fantastic process. It is one of those things, you work on it for 25 years of research and development and suddenly, we have a new manufacturing process. We have -- we are at the start of being able to change how aluminium is being produced. A manufacturing process that's more than 100 year old is standing up for a complete renewal. I went there and I saw the cells that we have up in the Saguenay, it's amazing. It is really very different with inert anode. I mean just to explain it very simple, you get alumina in, which is AlO2 and you want to extract the O2 in the old ways, you had a carbon anode, so you've got a C on, so you basically release CO2. But now with an inert anode, you can release the O2. It's almost too good to be true. But of course, it is complicated, and it will require a careful time on how we are scaling it up. But it is fairly large-sized cells, and they are producing very, very well. So we -- our obligation is now to say, "How can we actually translate that into" -- we have the Western world's largest aluminium business, it's just a matter of getting on with it. But of course, we need to be able to afford it. We need to find out how can we do it in the cheapest possible way. How can we operate as well as possible. But it really gives me hope. I mean, our aluminium business in Canada is just second to none. We have our own hydropower. The only CO2 emissions we have there is exactly in the smelting. And if we can get ELYSIS in, we can produce the iPhones of this worlds, et cetera, totally CO2-free. You need a lot of aluminium for the energy transition, and it is possible to do CO2-free. So I'm super, super excited about it. The only thing I would say, may be a little bit patient because, it's not something you can do from one quarter to another. It will take us a number of years to get there. But I can assure you, we are pushing as hard as we can forward.

So I think you can tell we're excited about the ELYSIS project. And this is -- let's be clear, this is real breakthrough technology. This is an opportunity to decarbonize one of the most energy-intensive industrial processes in the world. So it is very exciting. Steve, can we take some -- another call from the line?

Yes, it's a written question, a written question from [ Mr. Robert Mireal ]. He says, "I'm very impressed by the annual report," and then asks, "After heavy expenditure, how could Serbia revoke licenses? Is it only community pressures?"

I think I have already really answered that question by saying we -- of course, we respect the decision of the government to revoke the licenses. We understand the concerns of the local community. But we remain absolutely convinced that this is a project that can be developed in an environmentally and socially conscious way, and one which has very clear benefits from the point of view of climate change and indeed, economic development in Serbia. So -- but hopefully, I covered most of that question with the previous one. Let's go back to the floor. And can we have a show of hands. Let's take the gentleman here. I'll take you, the 2, sequentially. So just leave the microphone there, if it's okay.

First of all, [Foreign Language]. I'll be referencing the Resolution Copper mine project in Arizona. Hi. My name is Henry C. Munoz Sr. I'm Chairman of the Concerned Citizens and Retired Miners Coalition of Superior, Arizona, I thank you for the opportunity to speak to you this morning. I was an underground miner for 23 years at both the old Magma Mine from 1973, which closed in 1982, doing cut-and-fill mining. I also worked at the BHP block cave operation at San Manuel, Arizona from 1987 until it closed in 1999. The San Manuel mine was closed with 30 years of copper ore left underground. I come from a family of 5 generations of miners. I was also a town council member of Superior, Arizona for 10 years, where I was born and raised. The town surrounding environment would be destroyed, which would eliminate the ability of Superior's economy to benefit from tourism and recreation as a result of this project. From my experience as a miner, I know that this proposed project would fail because of the depth, underground conditions, lack of water and other external design flaws. One need only reference what is happening at your Oyu Tolgoi project in Mongolia, including design flaws and billions in cost overruns. You cannot build a block cave mine that is 1,000 feet shallower. How do you think you can build one at 7,000 feet at Oak Flat? We have been having water issues, which are affecting the Southwestern United States, especially the state of Arizona. The United States Forest Service Environmental Impact Statement, which you provided many of the studies for and what you paid for, has concluded that the towns' aquifers would be drained and contaminated by your project. To obtain water for the project, you would deplete the aquifer that Pinal County farmers and the proposed Mega City of Superstition Vistas need for survival. Arizona's current drought is so severe that our communities are already running out of water. Our state's decision makers are scrambling to find solution to this water crisis that has already financially burdened our states' taxpayers. We are to the point of deciding whether precious water should go to our communities and the environment or to projects like Resolution Copper. Our Arizona State Land Department has determined that due to water pumping by your proposed wells for the project would cut $0.5 billion from our state's educational system due to loss of land sale revenue. Recently, the governor of Arizona proposed setting aside $1 billion for drought relief needs for the state. How can Rio Tinto proceed with your Resolution Copper project, knowing that Arizona is in the worst drought in 1,200 years? [Foreign Language] And thank you very much for your time.

Thank you very much, and thank you also for -- I gather you had a very good discussion with Jakob. So thank you for the question. Look, the reality is that the world desperately needs new copper mines. And there is no copper mine in the world that doesn't face challenges. This mine, if we develop it, and we still haven't completed the feasibility study, but if we develop it, if the land swap agreement goes through, has the potential to deliver 25% of the U.S. copper demand at a time when the U.S., of course, is, like everybody else, investing very heavily, in renewable energy, which absolutely requires additional sources of copper. You are right to highlight water as one of the critical risks of this project. As you know, we have done an enormous amount of work on water with the regulators, the authorities, the U.S. Forest Services and so on. We've had over 11 years of studies on this mine. We won't, of course, be able to finalize the design and the feasibility study until if and when the land swap takes place because it's a magnificent ore body. It sounds like you know very well as an experienced miner. But actually, the land that we can access from our current land holdings doesn't cover the whole of the ore body. So there is still work to be done, technical work to be done to understand the optimum mine plan. And there is clearly still work to be done with -- in consultation with all of the interest and affected stakeholders, including, of course, the Native American tribes. Many of whom are in favor of the project but some, as you know, the San Carlos Apache, in particular, who are opposed to the project. So there is a lot of work to be done. I think when you met Jakob, you agree that you would meet up when Jakob is next over in Arizona. And I think it would certainly be good to follow up on the discussions that started earlier on today. Thank you for the question. Yes. Thank you.

I'm Roger Featherstone, Director of the Arizona Mine Reform Coalition. We do take the -- appreciate the opportunity to meet with the Jakob earlier. I'm here also to ask a question about Resolution copper that with storplate Native American sacred site that is a recreational and ecological heaven. After your company blew up the sacred rock shelters at Juukan Gorge in Australia, Rio Tinto made several statements about never destroying a sacred site again. However, as you know, your resolution copper mine plan calls for turning out flat into a crater 1,000 feet deep and 2 miles in diameter. I do not understand how you can announce to the world that you'll never again destroy a sacred place while at the same time, move forward with a project that would do exactly that. In 2014, 2 of our U.S. senators incited an amendment at your behest to a must-pass defense appropriations bill that requires the U.S. government to give you Oak Flat within 60 days of the publishing of a final environmental impact statement. You asked for and received a special interest law that would allow you a foreign private mining company to gain ownership of a place vitally the freedom of Native American people. The final environmental impact statement was released in January 2021, but after reconsideration, our government rescinded the statement, which halted the land transfer. Now Rio Tinto is saying that you need to own the sacred site in order to do a feasibility statement before you decide to move forward with the project. It is inconceivable that you would want to own a Native American Holy Place so that you may destroy it at all. It is worse that you want to own it before you even decide whether to move forward with a mine that will fail. It is beyond understanding that if you own Oak Flat, not only would you destroy it, you would deprive Arizona communities in the environment of the water we need to live. In Arizona, water is more precious than copper. Your cavalier attitude towards the planned destruction of a Holy Place and the use of precious water for a failed experiment helps us understand why your company's February report shows racism, sexism and bullying at some of your work locations, how you treat your employees is how you treat the world. So how can you explain these economies? And when will you announce that you are abandoning the resolution copper project?

Yes. Thanks, Roger, for that question, and thank you, again, for coming to our AGM. You know that there has been very extensive consultation on this project over many, many, many years, both by us and by the U.S. government, who, through the U.S. Forest Services, of course, conducted a 7-year environmental impact and social impact assessment and consultation process. We've got over 500 individually documented consultations that have taken place on this. There is -- there are a range of views. There is broad-based support for this project across many of the communities around resolution. There are certainly some and your organization is 1 that is opposed to the project. We recognize that. The whole point of consultation, of course, is to seek to amend the design of the project, where it's possible to do so to accommodate some of those concerns. And you'll be aware that we deliberately carved out Apache Leap, which is a spectacular cliff formation directly above the town of Superior, and to make sure that -- and this is a site that was culturally significant for a number of the 11 native American tribes that have overlapping claims on the area around resolution. We were also able to carve out the Bingham Canyon, again, a site of cultural significance to quite a number of the 11 native American tribes that have claims over the area. We know that the San Carlos Apache are at least -- many members of the San Carlos Apache are opposed to this project. We will continue to engage with them. We'll continue to see whether there are opportunities to deal with their concerns. But I should emphasize we're working incredibly closely with native American tribes. We have tribal monitors following the work that we're doing, making sure that any impacts that we have on their culture and heritage are identified and recorded and preserved where possible. So we have monitors are working on the project currently from 7 out of the 11 Native American tribes. And I think I'm right in saying that provided we respect their culture and heritage as we absolutely should, they are broadly supportive of the project. But we do recognize this opposition. And I think the point I would emphasize is, we've had 11 years of consultation so far, we haven't finished because there needs to be more consultation if we get to that stage while we are conducting the feasibility study. Can we take another question from the floor? There's a gentleman back holding up. That one. Thank you.

My name is Richard Sole. I'm a shareholder. And my question concerns the company's exploration activities in Finland. Rio Tinto has launched several exploration projects in Finland, one of them located in Rautalampi is especially controversial, and has been widely criticized by numbers of people from members of the local community to members of the Finnish Parliament. Rautalampi is known for the Southern Konnevesi National Park in Rautalampi route, the largest free-flowing finish inland waterway. It is 1 of the most valuable freshwater ecosystems in the whole country consisting of lakes with excellent water quality and free flowing rapids inhabited by many endangered species. The area also holds significant cultural heritage value dating back to prehistoric times. Rio Tinto plans to continue copper and nickel exploration in the area despite the wide opposition. The targeted exploration areas are located alongside the lakes and rivers of Rautalampi bordering the Southern Konnevesi National Park. They also surround important groundwater areas for local water supply. In the regional land use plan, the whole area is designated for outdoor recreation, environmental tourism and nature preservation. This is not a suitable place to even consider mining activity. The risks are simply too high. They are too high for the environment, but also for the company, its reputation and its investors. It's very unlikely that this project could ever develop into a mine, which is why pushing to proceed with it seems like a waste of time and money. Rio Tinto has repeatedly claimed that they listen and respect the local communities. In Rautalampi, in March 2021, the municipal council unanimously decided and announced that it will not approve of mining or exploration in the area. But instead of listening, Rio Tinto went on and applied for new exploration permits on the following day. Local people and the Pro Rautalampi Group have asked Rio Tinto to drop this project. It would still be easy to do so since everything is in its early stages. The company's response, however, has only dealt with details of how to carry on the exploration work. The question is, since it's clear that this is not a suitable place to even consider mining, will Rio Tinto withdraw from the Rautalampi project?

Thank you, Mr. Sole for the question. You're right in identifying this is a very early stage exploration project in Finland for copper and nickel, 2 metals which are absolutely vital for the energy transition, copper because of renewable energy, nickel because it's a critical component for electric vehicles. We have had no activity on the ground since 2020 in Finland. We have applied for exploration licenses. If we proceed, we will, of course, in our normal way, consult very widely with the local community and obviously evaluate the social and environmental risks of exploring in that area. So we've given a commitment to be transparent. And certainly, before we move further on this project, we post-COVID importantly, we will certainly recommence engagement with the community to understand their concerns.

Thank you. I hope you will take no as an answer.

We see -- is there anything else on the line? Well, let's just take the question.

Yes. There's one final written question, Simon, on the line. It's a further question for Mr. Clark. I've been a shareholder for a number of years. In the distant past, I've seen Rio Tinto and other miners incurring excessive capital expenditure, much of which has been wasted, causing massive impairments. For the last 8 years, the group has been much more disciplined, but I've observed that capital expenditure has risen every year for the last 6 years. Can you please reassure shareholders that the Board strictly rations capital spending? And could you indicate expected spending for the forthcoming 3 years, I hope this will not be a further increase?

Yes. Well, I will give a Board perspective. But first, I think we should ask our Chief Financial Officer, who's the person who holds the [ post range ].

Thanks very much for the question, Mr. Clark. I think the most important thing to say is that our overall approach to capital allocation is going to be entirely consistent with what we have been doing and investing very much in the -- our current assets and sustaining capital, replacement capital and also decarbonization spend to maintain our current capacity. Then the next commitment is clearly to the dividend and our well-established shareholder returns policy. And then we will look at residual sort of capacity we have for growth for the balance sheet strength, if needed or for additional returns to shareholders. That is the well-established capital allocation framework. And I think going forward, we've set out very clearly, again, our profile of capital expenditure guidance within that context, which is around $8 billion of spend this year and then between $9 billion and $10 billion in the following 2 years. And that does include an amount up to $3 billion, as Jakob said in his speech for growth opportunities to the extent that they are there.

Thank you. Thanks, Peter. And the Board will continue to exercise very close scrutiny and maintain discipline on capital expenditure. Can I just have a check to see how many more questions that are in the room. I sense perhaps getting towards the end. There's a gentleman here, and there's someone on the back row. Can we take -- let's take the gentleman here.

Thank you. My name is Patrick Scott. I'm an individual shareholder. My question is another question relating to Madagascar. And the question I want to ask is can Rio Tinto explained its delay in responding to earlier request to provide drinkable water to frontline mine affected communities in [ Modena ], especially when these demands reflect the company's sustainability, water and other international commitments? And will Rio Tinto ensure drinkable water is available to all members of the frontline affected communities, and if yes, when?

So the precise timing of the delivery of the project, Sinead.

August.

August. So as I mentioned earlier on, in the responses to several questions on Madagascar, we are currently developing clean water supplies for the 3 communities closest to the mine, and Sinead tells me that those will be delivered in, let's say, the third quarter.

I say, well, I mean obviously, August, you could say, well, better late than never, but it's what month it's April, that's another 4 months till August to go. So you have to be mindful of the fact that in those remaining 4 months, the effect communities are still not getting proper drinkable water.

Yes. Again, as I mentioned, and I think it was the first question on Madagascar, whilst we were releasing the surplus water from the mine site into the environment during the extreme weather events that we had in February and March, we were tracking freshwater into those communities as a precautionary measure to make sure that they would not be impacted by any adverse consequences from that. But of course, we're also sampling that water every single day with community members present whilst we sampled the water. And happily, there were no those consequences of releasing that water so far as we could determine from that sampling. So -- but yes, August is the date when we will be delivering a permanent solution rather than a temporary one. Thank you for the question. There's a gentleman on the back. Thank you. Yes.

Thank you, Chair. My name is Richard Harkinson. I'm a shareholder. And my question is from 2 Mongolian civil society organizations. Oyu Tolgoi and Gobi soil. They represent an advise nomadic pastoralists affected by your Oyu Tolgoi mine. That's a mine that you acquired in 2010, you produced a copper concentrate, you ship it 75 kilometers to the Chinese border and sell it into a buyer's market there, okay. The main attraction is the underground deposit that you have been seeking to develop. So you approached the IFC and the European Bank reconstruction development back in the early part of the -- sorry, 2012. That was the original ESIA. That's when I became involved with other NGOs. So now we've got a stage where while you celebrated the start of mining, the NGOs are being asked to comment on the terms of reference as a consultant to draw at the supplemental ESIA for the deep mining, the block caving. And the terms of reference, just talk about the fact that, yes, are you talking about concede that the NGOs were right that the zone of subsidence is 88% greater than Oyu Tolgoi Rio Tinto said in the first place. So that being asked to comment on the terms of reference for this consultant going forward. The concerns of the NGOs is about the complete lack of transparency of this project of the supplemental ESIA going forward. The consultant that will be appointed, it will be completely wrapped up by nondisclosure agreements. So we won't even be allowed to check the veracity of his interim report with the people who've contributed to it. And it's -- the concern is also about the mode of operation. Taking this forward, it only talks about the larger zone of likely subsidence, which is as big as Ulaanbaatar, an area, huge. So we're talking about a huge problem. But -- and this is a big but, there is no reference and the 2 NGOs have stated to Oyu Tolgoi that there will be a 4x increase in the amount of waste, there will be more tailings dams built. There will be -- we're talking about 720 million tonnes of waste during the 28-year projected life of mine. We're talking about the lack -- the lenders that were IFC and EBRD insisted on certain levels of reporting requirements, the last 3 audit reports to the lenders, were the last 1 was 2020 April. They were hard through a desk studies, they reported that there's extensive seepage in 3 places in the existing tailings dam. And then we're talking about more to come. The seepage -- their studies not asking what level the seepage is, but the warning is on that seepage that it could be a cause for breakage. So the 2 NGOs use the complaints mechanism of the IFC, the complaints, advisory Ombudsman and there was a consultation in Mongolia, mediated by the CAO, the Complaints Advisory Ombudsman bringing forward with a degree of respect, a tripartite situation. But occasionally, the need for more and more better technical information about the greater than already contained in the 2012 ESIA. So we've got this -- so into that went studies about the nature of the mining West, the 2-kilometers square tailings dams, the 70-meter high going up to 70-meter high containment walls and the impacts are down in it, you wouldn't think there'd be impact, you would think that you'd actually moved out all the hurdles out of the area. But no, there are villages down radiant, the nearest would be like 5 hours. It would be significant failure there. And the cause would -- might be overtopping but more [ IAB ], something propagating, which is where you've got seepage, you weaken and weaken and weaken the integrity of the containment, and that is happening now. So we want -- what the NGOs want is a guarantee that nothing will be so bound. There'll be more transparency. It won't be so bound in nondisclosure agreements that they -- and that the sort of consultation that will go forward on this respect international -- stated international standards with independent verification and not just what you can do in Mongolia in a situation as best you can without really trying hard. So that's the demand for transparency going forward on taking forward the terms of reference and the supplemental ESIA on the Oyu Togolio mine.

Look, I'm going to pass this to Jakob in a moment just to see whether he passed any light on this. But before doing so, I mean the principal concern of your question there was around tailings and Megan spoke earlier about the -- I'll come to transparency. No, I heard that loud and clear. But Megan did outline earlier on the very, very rigorous processes that we have in place for monitoring all of our tailings management facilities around the world. And of course, those would apply equally to Mongolia. You also made reference to the tripartite council that was set up, which was set up through the auspices of the IFC ombudsman to improve engagement with the herders. So that was a tripartite council that was set up for the herders, by the herders, with representatives from OT and from the Governor's office of Hamburg, the town, which is near Oyu Tolgoi.

That's an important thing. With an independent element from the CAO, that was when it was set up. That was how it worked. This is -- we no longer have got the independent element. All we've got is this projected nondisclosure bound consultancy that OT will put in place. And OT is a really problematic thing. You know this, right? There have been 4 deaths there in the last year. I'm sorry to burst your bubble on this, but there are 4. It's because it's so untransparent, you're holding, you're holding, when you bought the Oyu Tolgoi mine, you are a Canadian company and Netherlands, [ Nato box ] company. An IMF report that criticized your lack of transparency on your ownership, and it's great. I congratulate you on moving to get to a position where things may be more transparent by paying the Mongolia government so that it would take benefits from the mine before it was projected to be -- to pay off its accuracy before we ever started gaining. And it wasn't due to get -- this is an open oil report, read the stuff. It would be 37 years until the state of Mongolia would get benefit from this mine apart from stuff that's sold and that on that. The point is -- and also, you're buying out this confusing situation that allows you, Rio Tinto, to hide behind what goes on is done by Turquoise Hill holding. And I am glad, I congratulate you Jakob seeking to clarify and make possible transparency. This is the situation. And this is a situation where there must be independent elements in how you say, okay, we'll do an ESIA for a new mine that the world needs because we've got to make transition to the brighter future, you must be transparent.

So there are lots of issues there. Jakob, why don't you...

Thank you. It is a very complex issue. It is a very, very big mine. I think it's a quite terrific development. I don't claim that I necessarily understand everything. I've been to Mongolia several times over the last few months. But what I'm planning to do in July is to spend a week there where I will meet the local herders, et cetera. I haven't had time for doing that yet. So I really appreciate you come to our AGM and raise those issues. I definitely are committed to transparency. I just need to be sure that I capture all the points you're making there. And you certainly have my commitment to look deep into it.

Great. Thank you very much. I think we're probably moving towards the final questions. Now are there any more questions in -- oh, there's a question right at the back of the room. Sorry if I was ignoring here earlier.

Yes. Well, I mean not positioned, good afternoon, Mr. Chairman. A Request and 2 brief inquiries. Would you please tell me if anyone on the Board is responsible for cybersecurity for your new aluminum development? I'm particularly concerned about the Chinese, not to mention the Russian you wouldn't want to lose your patents, et cetera, would you? And the next thing is the geopolitical risk is on everybody's mind. Could you please update shareholders about the situation in Chile? Obviously, Antofagasta has been vastly affected by the new government proposal to these excess charges. And would it affect you? And have you got any reserves to cover it? The last thing is, you won 25 years ago going to VHS tape on the life of the mine, which was approximately then 25 years. But with all the reinstatements required now and the length of time feasibility studies take, could I please have an update on what the projected life of the mine is now? Your larger holdings anyway.

Thank you for those questions. So Jakob, why don't you start with ELYSIS intellectual property protection.

So look, I was actually looking at my colleague, Peter Cunningham, who's responsible for IT. But I do assure we have very good cybersecurity in place and we have some of the world's leading experts who are testing our network all the time. But I probably -- I'm probably less concerned on that front in terms of the patterns of ELYSIS, but we are very, very careful about this. Ultimately, it's not just the invention. It's also developing the practices, how to overrate this new ELYSIS. It's a very, very comprehensive thing. But I think in this world, we are living in cybersecurity is absolutely vital partly to protect yourself from stealing patterns, but as well in terms of just having a safe operations. And so it's a really top priority for me. And I can never give you full guarantees, but I think it is in good hands that part of our controls.

Thanks, Jakob. And then in relation to Chile, we a shareholder in Escondida, which is -- we're not the operator of Escondida and the majority of shareholder there is BHP. But again, Jakob, do you want to comment on that. This is an extremely high-quality, long-life mine. So I don't know whether you can comment on the specifics there?

Look, Escondida is -- you want me to comment on this. Yes. So Escondida is the world's largest copper mine. It's an absolutely amazing mine. We have a good share of it. It's operated by BHP. It's very well operated by BHP. And I mean regular contact with BHP about the future development of it. I'm confident that we will continue to have a good business in Chile. And yes, there are, of course, always in every country we operate some challenges and some views expressed. How should I say it? I mean cautiously optimistic that this will be a fuel for both BHP and [ mutant ] for many, many years to come.

And then the final part of your question, I'm not sure I entirely understood it. But we publish in our annual reports, the reserves and resources position that we have at all of our mines, which will give you a rough indication of the mine life. But what I should say is that it costs money to draw and convert resources into reserves. So you actually -- you don't do that significantly ahead of time. You have a sort of rolling pattern of upgrading resources to reserves at minable reserves. So I mean just to take an example in the Pilbara in Australia, annual production is order of magnitude, let's say, 330 million tonnes. Our reserve position there is about 3 billion tonnes. So you might think, well, that means the mine life is 10 years. But in fact, we've got a resource position there of 22 billion tonnes. It's just that we haven't converted those resources to reserves and confirmed absolutely that they are economically viable and minable. So it is quite a difficult question to answer in the 25-year number that you came up with would certainly be that would be true of some mines. But I'm not sure whether you were referring to a specific mine or whether you were talking about an average for the portfolio. But we do have extremely long life assets, extremely high-quality assets particularly in our iron ore division, which is the most important division for us from a profitability point of view. Can I just check there's a final question? And then I think we're going to wrap it up at that point.

Thank you, Jakob. My question is about Resolution 17, which is about your engagement with copper and a lot of people share the view that you're making good progress in the right direction. What I understand from talking with people in Australia is, there's a real request to you to report on your Scope 3 emissions, which is 95% of your emissions, if yes, in the real world, you should report more often than 3 years, every 3 years that you should be thinking that you've got -- your Board should know more often than 3 years, perhaps you could share with the investors more often than 3 years. Maybe 1 every year report on Scope 3, that would -- I know that's going to come up in Australia, and that would be great. And also looking any sort of statement about breaking with trade bodies and the chambers. We congratulate you on breaking with the Western Australia chamber on after [indiscernible] that aboriginal people must have remedies and you rejected the industry-led thing about no, there should not be any remedies just get on with business and that's what the Western Australian government did. And even legislated for it, and we congratulate you for breaking with that, and a work in process over the next 2 years for negotiating an equitable situation of protecting cultural heritage.

Thank you. I think there are 3 elements there. So the first 1 was Scope 3, which is very difficult for us to set quantifiable targets for Scope 3 because these are the emissions of our customers and our suppliers. So if you take iron ore as an example, the customer might be a state-owned Chinese steel mill and the speed with which they reduce their Scope 1 and Scope 2 emissions, which relate to our Scope 3 emissions will depend on government policy, on changes in technology and the speed of adoption of that technology, which is why it is very difficult for us to set firm quantified targets for Scope 3 and why we've adopted the approach of reporting instead on all of the partnerships, technology and other partnerships that we've set up with our customers and suppliers to work with them on delivering the technologies that will enable them to decarbonize their operations. We think that 3 years is the right regularity for the advisory vote on the Climate Action Plan. We will, of course, be reporting annually on our delivery against the targets that we've set for Scope 1 and Scope 2 emissions, and that reporting will be independently verified by our auditors. So you will certainly see how we are progressing towards the targets we've set for 2025 and 2030. But we would not expect our strategy to fundamentally change every year. I mean, to the extent that we do have a radical shift in strategy, then I think as a board, we would certainly have to consider whether it was appropriate to come back to shareholders. But that's not what we foresee over the next 3 years. And then on the heritage point, I think there may be some confusion there, but let me just say that we fully support the strength in legal provisions in Western Australia for the protection of aboriginal heritage. But we regard that as the legal minimum and certainly, the processes that we are introducing internally in the wake of Juukan Gorge go far beyond that legal minimum. But we are absolutely committed to co-management of heritage and culture with the traditional owners of the lands where we operate. So I think there was 1 final question here, and then I am going to draw the meeting to a close.

Just briefly with regard to Resolution 16, authority to make political donations, what political donations, if any, do you intend to make in the next year?

None. As I said in my opening remarks, this is just a precautionary measure because the drafting of the law in England on political donations has got extremely broad definitions of what constitutes a donation and what constitutes a political organization because that drafting is so broad. We simply put this resolution in each year, and we've done this for a number of years as a precautionary measure, so that we don't inadvertently trip ourselves up and breach these very broad definitions but our policy is and continues to be that we do not make political donations. Thank you very much. Look, I think we've had a good discussion. So the time has now come for us to take a poll on the resolutions. Many of you have already sent in your proxy cards and you do not need to vote again. But people eligible to vote who have not appointed a proxy and wish to vote should now complete the voting card. These are the white cards which we were given when you arrived earlier this morning. Please cast your votes by completing your poll card and either hand your completed card to the registrar staff or post it into one of the ballot boxes at the exits as you leave the hall. If you have any difficulty, 1 of our attendants will be happy to assist you. If you're attending online, you should complete your votes now through the Lumi platform. If you have any difficulty, please refer to Page 17 of the notice of meeting for instructions. The polls will close approximately 15 minutes after the end of this meeting. The results of the polls on resolutions 18 to 21 will be announced as soon as possible after this meeting and will be posted on the Rio Tinto website. The results of the polls on the remaining resolutions will be published after the Rio Tinto Limited AGM on Thursday, the 5th of May. Ladies and gentlemen, that brings us to the end of the meeting.

Ladies and gentlemen, just before the Chairman does bring the meeting to a close, I think I should say just a few words on behalf of the Board and all our shareholders for Simon Thompson's unstinting service over the last 8 years. As Chairman, as Simon has led this company, I think we all would acknowledge through some of the most challenging periods in its 149-year history. And I think he's consistently done that with great professionalism with very sound judgment and above all, with, I think, huge commitment to you, our shareholders and to our employees and all our stakeholders. And I think as you've heard, he's left the company, I think, well repositioned with Jakob, very strong management team, with Dominic taking over as Chairman, a new strategy, I think, that is really leaning into the energy transition and fit for the future and a new set of values. And of course, he does that also on the back of a record set of financial results and a record dividend to shareholders. So I think we all have a great deal to be thankful to Simon for his commitment over the last 8 years. And Simon, on behalf of the Board, I wish you all the very best of luck, and I think we should all congratulate him.

Thank you very much, Sam, for those kind words. And may I, on behalf of the Board, I'd just thank all of you for your participation today and for your continued support. I hope you will join my fellow directors and members of the executive team for some refreshments in the Pickwick suite, which is on the first floor, and there are signs outside to show you the way. I'd also just remind you to hand in your completed poll cards as you exit. And I now declare the meeting closed. Thank you.