At Rio Tinto, we see ourselves as pioneers. For 145 years now, we have been at the forefront of producing materials essential to human progress. Our company grew from humble beginnings in 1873 with our first mine located on the banks of the Rio Tinto, a river in Spain.
There, those early miners introduced pioneering processing facilities, turning the mine into the world’s leading copper producer of the time. And to this day, copper remains an important part of our portfolio, with our business built on world class assets across our product groups of Rio Tinto Iron Ore, Aluminium, Copper and Diamonds, and Energy and Minerals.
But the world doesn’t stand still, and neither can we. We must constantly be challenging ourselves to do things smarter and more efficiently, and be looking for the opportunities of tomorrow. It is this mindset that is behind the formation of Rio Tinto Ventures, a new team tasked with seeking out opportunities beyond our current businesses and focussing on new products. We have a willingness to invest through a broader range of structures, understanding the value that partnerships can bring.
There is no doubt that today’s global growth momentum will continue to be positive for traditional mining products; those products that underpin manufacturing and development in all the world’s major economics. Emerging at the same time however, is the potential for a broader suite of metals to play an increasingly important role as new and disruptive technologies change the way we live. Among those, it is the potential for, in particular, electric vehicles and new power storage solutions, that may in the near future bring significant change to our lives and consequently to the mining industry. Rio Tinto is already well placed to benefit from this growth with our copper and aluminium offerings from within our existing product groups. And now, through Ventures, we are evaluating what other metals and minerals may also be preferentially impacted by these trends.
“We have a willingness to invest through a broader range of structures, understanding the value that partnerships can bring”
The Ventures objective is to bring the skills and resources that Rio Tinto has to offer, through a broad range of investment structures, to investment opportunities in new metals and businesses.
Rio Tinto has much to offer to a project and all its stakeholders, much more than capital alone. We are a world leader in Health, Safety and Environmental management. Our exploration activities and operations cover the world, with broad skills in ore body knowledge, surface and underground mining and mineral processing. Our Singapore commercial hub brings economies of scale to logistics and marketing, and our strong relationships with our host countries and governments are not by chance, but from the work, care and commitment of our teams.
It is this depth that is offered through Ventures, that differentiates us from other investors and that, we believe, increases the chances of project success.
The Rio Tinto name is associated with owning and operating many of the largest businesses in the resources industry. Through Ventures we may continue that model into new businesses, but we are also ready to think more widely. We may hold investments for the long term but if, after investing and adding value to a project, it has more value to others, then we will exit and recycle capital to new opportunities. If it makes sense for us to own a business outright then we will, but we will also be comfortable as a non-controlling investor, acknowledging that others may have specific operating skills that should be embraced to bring project success.
The role of equity investor is likely to be the most natural fit for Ventures, but we also have considered relationships built around debt instruments, offtake, and streams. Ventures will bring together the knowledge of our specialist financing and marketing teams, along with our more traditional expertise.
“If it makes sense for us to own a business outright then we will, but we will also be comfortable as a non-controlling investor”
Rio Tinto’s major product groups continue to seek new opportunities in their core businesses; it is the role of Ventures to look to new areas. What remains consistent however, is that the key to profitability, beyond fundamental ore body quality, is efficiency and the control of cost. These will continue to be managed through our tried and tested model of drawing together businesses that, although not in a single commodity, can be managed together within a single, lean and efficient product group.
In terms of project characteristics, Rio Tinto Exploration covers the earlier stages of discovery and evaluation, while the Ventures interest will begin when projects reach feasibility and beyond. The majority of our investments are expected to be upstream in mining and the first stages of processing and refining, but we will be open to considering related businesses where there is a clear value proposition and, most likely industrial logic and synergies with our existing businesses.
So where should we be investing? There is some excellent work being done by the likes of the Massachusetts Institute of Technology that may guide us in this regard, looking at key new technologies that will influence future metal demand. The geographic spread of Rio Tinto’s existing portfolio also provides plenty of potential. It is an exciting time as Rio Tinto continues to transform its business to take advantage of the opportunities that the 21st century will present.
