21 February 2024
Production growth of 3% from focused investment in the health of our business; underlying EBITDA of $23.9 billion and full year ordinary dividend of 435 US cents per share
• Underlying EBITDA of $23.9 billion. Net cash generated from operating activities of $15.2 billion.
• Profit after tax attributable to owners of Rio Tinto (referred to as “net earnings” throughout this release) of $10.1 billion, after $0.7 billion of net impairment charges, mainly relating to our Australian alumina refineries.
• Underlying earnings of $11.8 billion, leading to a full year ordinary dividend of $7.1 billion, a 60% payout.
| At year end | 2023 | 2022 | Change |
| Net cash generated from operating activities (US$ millions) | 15,160 | 16,134 | (6) % |
| Purchases of property, plant and equipment and intangible assets (US$ millions) | 7,086 | 6,750 | 5 % |
| Free cash flow¹ (US$ millions) | 7,657 | 9,010 | (15) % |
| Consolidated sales revenue (US$ millions) | 54,041 | 55,554 | (3) % |
| Underlying EBITDA¹ (US$ millions) | 23,892 | 26,272 | (9) % |
| Profit after tax attributable to owners of Rio Tinto (net earnings)² (US$ millions) | 10,058 | 12,392 | (19) % |
| Underlying earnings per share (EPS)¹, ² (US cents) | 725.0 | 824.7 | (12) % |
| Ordinary dividend per share (US cents) | 435.0 | 492.0 | (12) % |
| Underlying return on capital employed (ROCE)¹, ² | 20% | 25% | |
| Net debt¹ (US$ millions) | 4,231 | 4,188 | 1 % |
Rio Tinto Chief Executive Jakob Stausholm said: “The tragic loss of our four Diavik colleagues and two airline crew members in a plane crash last month is a devastating reminder of why safety is and must always be our top priority. We continue to work closely with the authorities to support their efforts to understand the full facts of what happened. This tragedy strengthens our resolve to never be complacent about safety, so that we continue to learn and improve.
“We are making clear progress as we shape Rio Tinto into a stronger and even more reliable company. By focusing on our four objectives, we are building a portfolio that is fit for the future – including our Oyu Tolgoi underground copper mine in Mongolia and the Simandou iron ore project in Guinea. We have taken significant steps over the past month towards our target to halve our global Scope 1 & 2 carbon emissions this decade with agreements to contract future renewable wind and solar power for our Gladstone operations.
“In 2023, we lifted our overall copper equivalent production by over 3% and delivered resilient financial results, with underlying EBITDA of $23.9 billion, free cash flow of $7.7 billion and underlying earnings of $11.8 billion, after taxes and government royalties of $8.8 billion. Our balance sheet strength enables us to continue to invest with discipline while also paying an ordinary dividend of $7.1 billion, a 60% payout.
“We will continue paying attractive dividends and investing in the long-term strength of our business as we grow in the materials needed for a decarbonising world.”
1 This financial performance indicator is a non-IFRS (as defined below) measure which is reconciled to directly comparable IFRS financial measures (non-IFRS measures). It is used internally by management to assess the performance of the business and is therefore considered relevant to readers of this document. It is presented here to give more clarity around the underlying business performance of the Group’s operations. For more information on our use of non-IFRS financial measures in this report, see the section entitled “Alternative performance measures” (APMs) and the detailed reconciliations on pages 40 to 49. Our financial results are prepared in accordance with IFRS – see page 35 for further information. Other footnotes are set out in full on page 25.
2 Comparative information has been restated to reflect the adoption of narrow scope amendments to IAS12 ‘Income Taxes’.
Resilient financial results, steady improvement in operational performance
Safety is our top priority. While we had zero fatalities at our managed operations in 2023, tragically four colleagues and two airline crew members died in a plane crash while travelling to our Diavik diamond mine in Canada in January 2024.
Our team is committed to learning how we continuously improve safety. This remains imperative throughout 2024.
By focusing on our four objectives, and prioritising the health of our assets, our ore body knowledge and our people, we have improved our operational performance and delivered resilient financial results. We have maintained a strong financial position, which allows us to invest for the future to deliver profitable growth, while also continuing to pay attractive returns.
As part of our focus on Best Operator, we continue to roll out the Safe Production System across our business. This is a multi-year process, which is already delivering real improvements in our Pilbara iron ore operations, realising a 5 million tonne production uplift in 2023. We expect to deliver another 5 million tonne uplift in 2024.
In line with our Excel in Development objective, we advanced a number of projects, including making significant progress at the Simandou iron ore project in Guinea, in collaboration with our joint venture partners. We achieved first sustainable production at the Oyu Tolgoi copper-gold mine in Mongolia, which remains on track to ramp up to 500 thousand tonnes3 of copper per year from 2028 to 2036. In our aluminium business, we are investing in a significant AP60 expansion and gradually closing our Arvida smelter, in operation since 1926. We also acquired a 50% equity stake in Matalco from Giampaolo Group for $738 million to become a leader in recycled aluminium supply in North America. We are making real progress in shaping our portfolio for the future, with new technology developments and one of the most exciting exploration pipelines for many years.
The low-carbon transition continues to be at the heart of our strategy, aligned with our objective of achieving impeccable ESG credentials. In 2023, our Scope 1 and 2 emissions were 32.6Mt CO2e (32.7Mt4 in 2022), 6% below our (restated and adjusted) 2018 baseline of 34.5Mt CO2e4.
We continue to progress our six large carbon abatement programs, focusing on repowering our Pacific Aluminium operations, renewable energy, aluminium anodes, alumina process heat, minerals processing and diesel transition. In 2023, we made significant progress with our decarbonisation commitments, with two sites fully transitioning to renewable diesel (Boron is complete and we have announced that Kennecott will transition in 2024). We also focused on progressing our other promising new technologies including BlueSmeltingTM, ElysisTM and NutonTM. Key to achieving our 2030 Scope 1 and 2 decarbonisation target is the repowering of our Gladstone operations in Queensland: our substantial efforts in 2023 have resulted in us signing two major renewable Power Purchase Agreements in early 2024, one for solar and one for wind.
A significant development with respect to potentially reducing Scope 3 emissions, was the announcement in February 2024 of a new partnership with BHP and BlueScope to jointly investigate the development of Australia’s first ironmaking Electric Smelting Furnace (ESF, also known as Electric Melter) pilot plant. This will consolidate the work each party has completed to date, leveraging both BHP’s and Rio Tinto’s deep knowledge of Pilbara iron ores with BlueScope’s unique operating experience in ESF technology. We also continued to advance our pioneering BioIronTM technology, which has the potential to support low CO2 steelmaking and significantly reduce our Scope 3 emissions. For further detail, please refer to our 2023 Climate Change Report released today.
Inclusion and diversity are imperative for the sustainable success of the business. We increased our gender diversity to 24.3% (from 22.9% in 2022). The increases were distributed across all levels of the organisation with female senior leaders increasing to 30.1% (from 28.3% in 2022).
Other footnotes are set out in full on page 25.
Guidance
• Our share of capital investment (non-IFRS measure, refer to APMs on page 46) is unchanged from the 2023 Investor Seminar. In 2024, 2025 and 2026 it is expected to be up to $10.0 billion per year, including up to $3.0 billion in growth per year, depending on opportunities. Each year also includes sustaining capital of around $4.0 billion and $2.0 to $3.0 billion of replacement capital. Sustaining capital includes around $1.5 billion over the next three years on decarbonisation projects ($5 to $6 billion in total up to 2030). This remains subject to Traditional Owner and other stakeholder engagement, regulatory approvals and technology developments. All capital guidance is subject to ongoing inflationary pressures and exchange rates.
• In 2024, we expect our ongoing exploration and evaluation expense (excluding Simandou) to be around $1.0 billion. We have been capitalising all qualifying Simandou costs from the fourth quarter of 2023: our guidance assumes this continues.
• In the coming years, we expect to spend (on a cash basis) around $1 billion per year on closure activities ($0.8 billion in 2023) as we advance our closure activities at Argyle, Energy Resources of Australia (ERA), the Gove alumina refinery and legacy sites. Spend will vary from year to year as we execute individual programs of work and optimise investment across the portfolio. In 2024, spending may be somewhat above this level as we consider one-off investment options to reduce our exposure over the longer term.
• Effective tax rate on underlying earnings is expected to be around 30% in 2024.
| Unit costs | 2023 Actuals | 2024 Guidance |
| Pilbara iron ore unit cash costs, free on board (FOB) basis – US$ per wet metric tonne | 21.5 | 21.75-23.50 |
| Australian dollar exchange rate | 0.66 | 0.66 |
| Copper C1 unit costs (includes Kennecott, Oyu Tolgoi and Escondida) – US cents per lb | 195 | 140-160 |
• 2024 guidance for Pilbara unit cash costs reflects the increased work effort in the mines and persistent labour and parts inflation in Western Australia.
• Our Copper C1 unit costs are expected to decrease in 2024, primarily driven by higher volumes at Oyu Tolgoi as the underground continues to ramp up and at Kennecott, where refined copper volumes are expected to increase following the planned smelter rebuild in 2023.
| Production (Rio Tinto share, unless otherwise stated) | 2023 Actuals | 2024 Guidance |
| Pilbara iron ore (shipments, 100% basis) (Mt) | 331.8 | 323 to 338 |
| Bauxite (Mt) | 54.6 | 53 to 56 |
| Alumina (Mt) | 7.5 | 7.6 to 7.9 |
| Aluminium (Mt) | 3.3 | 3.2 to 3.4 |
| Mined copper (consolidated basis) (kt)5 | 620 | 660 to 720 |
| Refined copper (kt) | 175 | 230 to 260 |
| Titanium dioxide slag (Mt) | 1.1 | 0.9 to 1.1 |
| Iron Ore Company of Canada iron ore pellets and concentrate (Mt) | 9.7 | 9.8 to 11.5 |
| Boric oxide equivalent (Mt) | 0.5 | ~0.5 |
Production guidance is consistent with our Fourth Quarter Operations Review, released on 16 January 2024.
• Iron ore shipments and bauxite production guidance remain subject to weather impacts. Pilbara shipments include SP10 products, which are expected to remain elevated until replacement projects are delivered. Levels are dependent on the timing of approvals for planned mining areas, including heritage clearances.
Footnotes set out in full on page 25.
Financial performance
Income Statement
Underlying EBITDA
To provide additional insight into the performance of our business, we report underlying EBITDA and underlying earnings. Underlying EBITDA and underlying earnings are non-IFRS measures. For definitions and a detailed reconciliation of underlying EBITDA and underlying earnings to the nearest IFRS measures, see pages 40 to 44, respectively.
The principal factors explaining the movements in underlying EBITDA are set out in this table.
| US$bn | |
| 2022 underlying EBITDA | 26.3 |
| Prices | (1.5) |
| Exchange rates | 0.6 |
| Volumes and mix | 0.4 |
| General inflation | (0.4) |
| Energy | 0.4 |
| Operating cash unit costs | (1.4) |
| Higher exploration and evaluation expenditure (net of profit from disposal of interests in undeveloped projects) | (0.3) |
| Non-cash costs/other | (0.2) |
| Change in underlying EBITDA | (2.4) |
| 2023 underlying EBITDA | 23.9 |
Resilient financial results, primarily impacted by commodity price movements
In general, we saw lower prices for our commodities, as supply improved, outpacing modest demand growth.
Movements in commodity prices resulted in a $1.5 billion decline in underlying EBITDA overall compared with 2022. This was primarily from lower pricing for our Aluminium business, driven by London Metal Exchange (LME) prices, lower premiums and lower alumina pricing. Higher realised pricing in our Iron Ore business was offset by lower pricing for copper, diamonds and industrial minerals. We have included a table of prices and exchange rates on page 50.
The monthly average Platts index for 62% iron fines converted to a Free on Board (FOB) basis was 0.5% higher, on average, compared with 2022.
The average LME price for copper was 3% lower, the average LME aluminium price was 17% lower while the gold price was 8% higher compared with 2022.
The Midwest premium duty paid for aluminium in the US averaged $512 per tonne, 22% lower than in 2022.
Benefit from weaker local currencies in 2023
Compared with 2022, on average, the US dollar strengthened by 4% against the Australian dollar and by 4% against the Canadian dollar. Currency movements increased underlying EBITDA by $0.6 billion relative to 2022.
Improvement in sales volumes but weaker mix
Higher sales volumes across the portfolio increased underlying EBITDA by $0.7 billion compared to 2022. This was mostly attributable to a 3% increase in Pilbara iron ore shipments, with the Gudai-Darri mine reaching full capacity, partly offset by lower portside sales volumes (down 4%). Higher copper sales were driven by the ramp-up of the Oyu Tolgoi underground mine. This was partly offset by lower margins achieved due to our product mix (-$0.3 billion) mainly associated with a reduced proportion of Aluminium VAP sales and following high quality diamond sales in 2022.
Impact of inflation offset by lower energy prices
We saw a $0.4 billion benefit to underlying EBITDA on the easing of energy prices compared to 2022, mainly related to lower diesel prices at our Pilbara iron ore operations, lower energy prices at our alumina refineries and aluminium smelters, along with lower fuel prices in our Marine business. General price inflation across our global operations resulted in a net $0.4 billion reduction in underlying EBITDA, which includes a $0.2 billion year-on-year benefit from the impact of inflation on closure provisions.
Unit cost pressures persist due to temporary operational factors and weaker markets: some easing of market-linked raw material prices in second half
We remain focused on cost control, in particular maintaining discipline on fixed costs, which are expected to be broadly flat in 2024. While inflation has eased, we continued to see lag effects in its impact on our third party costs, such as contractor rates, consumables and some raw materials; we expect this to stabilise in 2024.
In the second half of 2023, we started to see some easing of market-linked prices for key raw materials such as caustic, coke and pitch: these benefited underlying EBITDA by $0.2 billion.
Temporary operational issues reduced underlying EBITDA by $0.6 billion. We saw a 20% rise in Copper C1 unit costs, primarily driven by lower refined volumes at Kennecott following the planned rebuild of the smelter and refinery. In Minerals, fixed unit cash costs increased at Iron Ore Company of Canada (IOC), driven by lower production following the wildfires in Northern Quebec in June as well as extended plant downtime and conveyor belt failures in the third quarter.
Other cost pressures and weaker market demand lowered underlying EBITDA by $1.0 billion. In Minerals, we experienced market weakness for many of our products, in particular for TiO2 feedstock, which gave rise to lower volumes and resulting higher unit costs. In the Pilbara, a higher mine work index and investment in mine maintenance and system health were in part offset by cost efficiencies on delivering increased volumes. In Aluminium, we invested in improving the integrity across our integrated operations.
Overall, we continue to experience tightness in our key labour markets, in Western Australia, Quebec and Utah, which raised costs above general inflation. We also entered into a new collective bargaining agreement at IOC and applied the new labour law in Mongolia.
We have also increased our investment in decarbonisation, research & development, technology, along with communities and social investment to deliver on our four objectives.
Increasing our global exploration and evaluation activity
Our ongoing exploration and evaluation expenditure in 2023 was $0.9 billion, compared with guidance of $1.0 billion and $0.7 billion in 2022. The increase was mainly attributable to increased activity at the Rincon lithium project in Argentina and across the other product group projects. We also expensed costs associated with the Simandou iron ore project in Guinea (included in underlying EBITDA on a 100% basis): these increased from $0.2 billion to $0.5 billion, with qualifying Simandou costs being capitalised from the fourth quarter of 2023. These expenditures were partly offset by a $0.2 billion gain on disposal of 55% of our interest in the La Granja copper project in Peru to First Quantum Minerals in 2023, leading to a net charge to the Income Statement of $1.2 billion (2022: $0.9 billion).
Net earnings
The principal factors explaining the movements in underlying earnings and net earnings are set out below.
| US$bn | |
| 2022 net earnings | 12.4 |
| Changes in underlying EBITDA (see above) | (2.4) |
| Increase in depreciation and amortisation (pre-tax) in underlying earnings | (0.1) |
| Decrease in interest and finance items (pre-tax) in underlying earnings | 0.2 |
| Increase in tax on underlying earnings | (0.2) |
| Decrease in underlying earnings attributable to outside interests | 0.8 |
| Total changes in underlying earnings | (1.6) |
| Changes in items excluded from underlying earnings (see below) | (0.7) |
| 2023 net earnings | 10.1 |
Financial figures are rounded to the nearest million, hence small differences may result in the totals. Comparative information has been restated to reflect the adoption of narrow scope amendments to IAS12 ‘Income Taxes’.
Increase in tax on underlying earnings
The effective tax rate on underlying earnings in 2023 was 30% compared with 26% in 2022. Consequently the tax on underlying earnings increased by $0.2 billion despite a decrease in underlying EBITDA. The rate in 2023 was in line with guidance, whereas the 2022 rate was lower due to the recognition of additional deferred tax assets in respect of Oyu Tolgoi and adjustments in respect of prior periods.
Decrease in underlying earnings attributable to outside interests
We completed the acquisition of Turquoise Hill Resources’ non-controlling interests in December 2022, which resulted in a reduction of Oyu Tolgoi’s earnings being attributable to outside interests and therefore a higher share of income being attributable to Rio Tinto. The ramp-up of exploration and evaluation spend at Simandou resulted in greater charges attributable to outside interests given our 45.05% effective interest in the project.
Items excluded from underlying earnings
The differences between underlying earnings and net earnings are set out in this table (all numbers are after tax and exclude amounts attributable to non-controlling interests).
| 2023 | 2022 | |
| Year ended 31 December | US$bn | US$bn |
| Underlying earnings | 11.8 | 13.4 |
| Items excluded from underlying earnings | ||
| Net impairment charges | (0.7) | (0.1) |
| Change in closure estimates (non-operating and fully impaired sites) | (1.1) | (0.2) |
| Foreign exchange and derivative gains on net debt and intragroup balances and derivatives not qualifying for hedge accounting | (0.3) | (0.1) |
| Deferred tax arising on internal sale of assets in Canadian operations | 0.4 | – |
| Gains recognised by Kitimat relating to LNG Canada’s project | – | 0.1 |
| Loss on disposal of interest in subsidiary | – | (0.1) |
| Gain on sale of Cortez royalty | – | 0.3 |
| Write-off of Federal deferred tax assets in the United States | – | (0.9) |
| Total items excluded from underlying earnings | (1.7) | (1.0) |
| Net earnings | 10.1 | 12.4 |
Financial figures are rounded to the nearest million, hence small differences may result in the totals. Comparative information has been restated to reflect the adoption of narrow scope amendments to IAS12 ‘Income Taxes’.
On pages 43 to 44 there is a detailed reconciliation from net earnings to underlying earnings, including pre-tax amounts and additional explanatory notes. The differences between profit after tax and underlying EBITDA are set out in the table on page 40.
We recognised net impairment charges of $0.7 billion (after tax), mainly related to our alumina refineries in Queensland, taken in the first half of 2023. This was triggered by the challenging market conditions facing these assets, together with our improved understanding of the capital requirements for decarbonisation and the recently legislated cost escalation for carbon emissions. For a detailed explanation of the impairment process, refer to note 4 to the Financial Statements in the 2023 Annual Report. The signing of key agreements with the Government of Guinea and other joint venture partners for co-development of the infrastructure for the Simandou iron ore project gave rise to an impairment reversal trigger, for amounts which had been fully impaired in 2015. Previously capitalised exploration and evaluation costs associated with the mine and retained items of property, plant and equipment totalling $0.2 billion (after tax and outside interests) have therefore been reversed.
We excluded $1.1 billion of closure cost charges from underlying earnings, of which $850 million related to the closure update announced by Energy Resources of Australia (ERA) on 12 December 2023. This was considered material and was therefore aggregated with other closure study updates in the second half of 2023 which were similar in nature. These other updates were at legacy sites and at the Yarwun alumina refinery, which was expensed due to the impairment earlier in the year.
We recognised an exchange and derivative loss of $0.3 billion (2022: loss of $0.1 billion). The exchange losses are largely offset by currency translation gains recognised in equity. The quantum of US dollar debt is largely unaffected and we will repay it from US dollar sales receipts.
Our Canadian aluminium business completed an internal sale of assets. This resulted in the utilisation of previously unrecognised capital losses and an uplift in the tax depreciable value of assets on which a deferred tax asset of $0.4 billion has been recognised.
Net earnings and underlying earnings refer to amounts attributable to the owners of Rio Tinto. The net profit attributable to the owners of Rio Tinto in 2023 was $10.1 billion (2022: $12.4 billion). We recorded a profit after tax in 2023 of $10.0 billion (2022: $13.0 billion) of which a loss of $0.1 billion was attributable to non-controlling interests (2022 profit: $0.7 billion).
Underlying EBITDA and underlying earnings by product group
| Underlying EBITDA | Underlying earnings | |||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Year ended 31 December | US$bn | US$bn | % | US$bn | US$bn | % |
| Iron Ore | 20.0 | 18.6 | 7 % | 11.9 | 11.2 | 6 % |
| Aluminium | 2.3 | 3.7 | (38) % | 0.5 | 1.5 | (64) % |
| Copper | 1.9 | 2.6 | (26) % | 0.1 | 0.7 | (81) % |
| Minerals | 1.4 | 2.4 | (42) % | 0.3 | 0.9 | (63) % |
| Reportable segment total | 25.6 | 27.3 | (6) % | 12.9 | 14.3 | (10) % |
| Simandou iron ore project | (0.5) | (0.2) | 185 % | (0.2) | (0.1) | 10 % |
| Other operations | – | – | – % | (0.3) | (0.3) | (28) % |
| Central pension costs, share-based payments, insurance and derivatives | 0.2 | 0.4 | (55) % | – | 0.4 | (87) % |
| Restructuring, project and one-off costs | (0.2) | (0.2) | 10 % | (0.1) | (0.1) | 32 % |
| Other central costs | (1.0) | (0.8) | 29 % | (0.9) | (0.7) | 29 % |
| Central exploration and evaluation | (0.1) | (0.3) | (60) % | (0.1) | (0.2) | (71) % |
| Net interest | 0.3 | 0.1 | 130 % | |||
| Total | 23.9 | 26.3 | (9) % | 11.8 | 13.4 | (12) % |
Financial figures are rounded to the nearest million, hence small differences may result in the totals and period-on-period change. Underlying EBITDA and underlying earnings are non-IFRS measures used by management to assess the performance of the business and provide additional information which investors may find useful. For more information on our use of non-IFRS financial measures in this report, see the section entitled “Alternative performance measures” (APMs) and the detailed reconciliations on pages 40 to 49.
Simandou iron ore project
Costs attributable to the Simandou project in Guinea increased from $0.2 billion to $0.5 billion (100% basis at underlying EBITDA level) on ramp-up of project activity in 2023. We commenced capitalising qualifying spend on Simandou from the fourth quarter of 2023, with $0.3 billion included in capital expenditure (100% basis).
Central and other costs
Pre-tax central pension costs, share-based payments, insurance and derivatives were a $0.2 billion credit compared with a $0.4 billion credit in 2022, reflecting movement on derivatives in the two years.
On a pre-tax basis, restructuring, project and one-off central costs were mainly associated with corporate projects and were comparable to 2022.
Other central costs of $1.0 billion were 29% higher than 2022, reflecting increased investment in decarbonisation, research & development and technology. Our core central costs increased in line with inflation.
On an underlying earnings basis, net interest was a credit of $0.3 billion (2022: credit of $0.1 billion),
reflecting Rio Tinto’s increased interest in Oyu Tolgoi and the related financing items following the acquisition of Turquoise Hill minorities in 2022.
Continuing to invest in greenfield exploration
We have a strong portfolio of greenfield exploration projects in early exploration and studies stages, with activity in 18 countries across eight commodities. This is reflected in our pre-tax central spend of $0.3 billion. The bulk of this expenditure in 2023 focused on copper in Australia, Chile, Colombia, Namibia, the United States and Zambia; diamonds in Canada; nickel in Brazil, Canada and Peru; heavy mineral sands in South Africa; and potash in Canada. We recently partnered with Codelco on the Nuevo Cobre copper project in the prospective Atacama region in Chile and with Charger Metals on the Lake Johnston lithium project in the Yilgarn, Western Australia. This spend is offset by the gain recognised on disposal of 55% of our interest in the La Granja copper project ($0.2 billion, pre-tax).
Cash flow
| 2023 | 2022 | |
| Year ended 31 December | US$bn | US$bn |
| Net cash generated from operating activities | 15.2 | 16.1 |
| Purchases of property, plant and equipment and intangible assets | (7.1) | (6.8) |
| Lease principal payments | (0.4) | (0.4) |
| Free cash flow¹ | 7.7 | 9.0 |
| Dividends paid to equity shareholders | (6.5) | (11.7) |
| Acquisitions | (0.8) | (0.9) |
| Purchase of the minority interest in Turquoise Hill Resources Ltd | – | (3.0) |
| Disposals | – | 0.1 |
| Cash receipt from sale of Cortez royalty | – | 0.5 |
| Other | (0.4) | 0.2 |
| Movement in net debt/cash¹ | – | (5.8) |
Financial figures are rounded to the nearest million, hence small differences may result in the totals.
Footnotes are set out in full on page 25.
• $15.2 billion in net cash generated from operating activities, 6% lower than 2022, primarily driven by price movements for our major commodities and a $0.9 billion rise in working capital, partly offset by lower taxes paid. The cash outflow from the working capital increase was driven by healthy stocks in the Pilbara, still elevated in-process inventory at Kennecott following the extended smelter rebuild and higher working capital at Iron & Titanium, reflective of weaker market conditions. Receivables also reflected a 20% higher iron ore price at 2023 year end (vs 2022) that will be monetised in 2024. Operating cash flow was also impacted by lower dividends, primarily from Escondida ($0.6 billion in 2023; $0.9 billion in 2022).
• Taking into account the timing of payments in Australia, taxes paid of $4.6 billion in 2023 were at a similar level to 2022, which included around $1.5 billion of payments related to prior years.
• Our capital expenditure of $7.1 billion was comprised of $1.0 billion of growth ($0.9 billion on a Rio Tinto share basis), $1.6 billion of replacement, $4.3 billion of sustaining and $0.2 billion of decarbonisation capital (in addition to $0.2 billion of decarbonisation spend in operating costs). We expect to spend around $4.0 billion each year on sustaining capital; spend in 2023 included the smelter and refinery rebuild at Kennecott ($0.3 billion) and targeted investment in asset health in Iron Ore and Aluminium. We funded our capital expenditure from operating activities and generally expect to continue funding our capital program from internal sources.
• $6.5 billion of dividends paid in 2023, being the 2022 final ordinary and the 2023 interim ordinary dividends.
• $0.8 billion of acquisitions related to the Matalco recycling joint venture and the Nuevo Cobre exploration joint venture with Codelco.
• The above movements, together with $0.4 billion of other movements, resulted in net debt1 remaining stable year-on-year at $4.2 billion at 31 December 2023.
Balance sheet
Net debt1 of $4.2 billion was unchanged at 31 December 2023 compared to the prior year end.
Our net gearing ratio1 (net debt/(cash) to total capital) was 7% at 31 December 2023 (31 December 2022: 7%). See page 49.
Our total financing liabilities excluding net debt derivatives at 31 December 2023 (see page 48) were $14.4 billion (31 December 2022: $12.3 billion) and the weighted average maturity was around 12 years. At 31 December 2023, approximately 68% of these liabilities were at floating interest rates (75% excluding leases). The maximum amount within non-current borrowings maturing in any one calendar year is $1.65 billion, which matures in 2033.
On 7 March 2023, we priced $650 million of 10-year fixed rate SEC-registered debt securities and $1.1 billion of 30-year fixed rate SEC-registered debt securities. The 10-year notes will pay a coupon of 5.000 per cent and will mature 9 March 2033 and the 30-year notes will pay a coupon of 5.125 per cent and will mature 9 March 2053.
We had $10.5 billion in cash and cash equivalents plus other short-term cash investments at 31 December 2023 (31 December 2022: $8.8 billion).
Provision for closure costs
At 31 December 2023, provisions for close-down and restoration costs and environmental clean-up obligations were $17.2 billion (31 December 2022: $15.8 billion). The increase was largely due to revised closure estimates following new studies at certain operations and legacy sites, including ERA, together with the amortisation of discount ($1.0 billion), which includes the effect of elevated inflation for the year. This was partly offset by a revision of the closure discount rate to 2.0% (from 1.5%), reflecting expectations of higher yields from long-dated bonds, which resulted in a $1.1 billion decrease in the provision. $0.8 billion of the provision was also utilised through spend in 2023.