Oyu Tolgoi –Strengthening and Growing Mongolia

Cameron McRaeChief Executive Officer – Oyu Tolgoi LLC

Country Director – Rio Tinto

8 September 2011

Demand – Where is the growth?

Supply – Where is it coming from?

Oyu Tolgoi’s Strategic Position

3

• The total global demand for refined copper is

expected to rise by more than 40 percent to 27

million tonnes by 2020.

• By 2025, it has been estimated that 221 Chinese

cities will have a population of at least one million

people. Of these, 23 will have over 5 million

people.

• China will have built between 4 and 5 million new

buildings between 2005 and 2025.

• This could be in the form of 50,000 skyscrapers –

the equivalent of constructing up to ten cities the

size of New York.

• In addition to China, India’s large population and

strong GDP projections also presents strong

potential for demand growth

There is significant scope for demand growth over the medium to long-term

Current demand for copper is driven by China

China and India copper consumption forecast

(kg per capita)

GDP per capita

China

2010

China

2016

India

2010

India

2016RoW

2010

RoW

2016

US

$43,000

China

$7,000

US

450

China

2010 GDP per capita

(2005 PPP$)

Vehicles (Passenger

cars per 1000 people)

Sources: Brook Hunt A Wood Mackenzie Company, International Copper Association,

International Energy Agency, Bloomsbury Mineral Economics

Demand – Where is the growth?

Supply – Where is it coming from?

Oyu Tolgoi’s Strategic Position

Note: Figures are based on declared resources.

Source: Metals Economics Group

Copper reserves and resources – 1.96Bt of copper in 866 deposits

10%

China

Australia

31%

Peru

3%Mexico

4%

Canada

Russia

Mongolia

Zambia

Others 11% Indonesia

2%

Philippines

KazakhstanPoland

DRC

Argentina

8%

Chile

USA

3%

2%

2%

4%

2%1%

3%

2%

6%

5%

Fourteen per cent of reported global resources are in Asia

Reserves

Weighted average grade: 0.53% copper

Total contained copper: 705Mt

Resources

Weighted average grade: 0.46% copper

Total contained copper: 482Mt

The largest 13% of deposits contain 77% of the copper

Demand – Where is the growth?

Supply – Where is it coming from?

Oyu Tolgoi’s Strategic Position

Oyu Tolgoi - significant additional low cost production and further growth potential

• Oyu Tolgoi will be a top five copper

producer and major gold producer1

• Average annual production of 450 kt of

copper and 330 koz of gold.

Large

Long life

Low cost

• 3.1bt resource & 1.4bt reserve.

• Potential for a > 50 year mine life.

• Highly prospective region with further

exploration potential.

• Significant by-product credits from gold.

• Expected to have first quartile net unit

cash costs.

Note: 1. Ranked using 2013 Brook Hunt mine production data and Oyu Tolgoi’s full capacity production.

Source: Brook Hunt a Wood Mackenzie Company, Rio Tinto, Oyu Tolgoi LLC

Oyu Tolgoi: Current Investment and Ownership Model

Rio Tinto has invested over US$3 billion in the Oyu Tolgoi project over

the past 5 years

Rio Tinto

48.5%

Other

Shareholders

Ivanhoe Mines

66%

Government of

Mongolia 34%

Oyu Tolgoi LLC

• In December 2010, Rio Tinto and Ivanhoe Mines

announced a number of key agreements.

• These agreements:

• Provide Rio Tinto with a clear pathway to

49% ownership in Ivanhoe Mines

• Secure additional funding for the project

• Established Rio Tinto as the development

and operating manager of Oyu Tolgoi

• Through its 48.5% stake in Ivanhoe, Rio Tinto has

a 32% indirect ownership of Oyu Tolgoi

Transition to Rio Tinto Management

Intellectual Property

Global Experience

The Oyu Tolgoi project now fully enjoys the benefits

of Rio Tinto’s world-class skills base

The Oyu Tolgoi project can call on the full suite of

Rio Tinto’s patented technical know-how

The Oyu Tolgoi project benefits from the ‘best-

practice’ systems and processes refined over

decades in over 40 countries worldwide

Functional and Technical Expertise

The Oyu Tolgoi Investment Agreement provides stability for future investment

• Long term investment

• Sustainable development

Terms of Investment

• Stable tax environment

• Tax and royalty revenue

Taxation

• Flexible energy options

• Provision for transport systems

Infrastructure

• 90% Mongolian employees

• 5 year training & strategy plan

• Scholarships for local students

Employment & Training

• Mongolia First Initiative

• Transparent community plans

Regional development

• Detailed environmental impact

assessments and protection plan

Environment

Source: Oyu Tolgoi LLC

Capital expenditure

Education & Training

Employment

• US$100m in taxes and fees were paid to GoM from 2000-2010

• We expect to pay over US$220m in taxes and equities to GoM in 2011

• Infrastructure plans include an airport, paved road to Gashuun Sukhait,

and 220kv power line

• 5 major construction projects are 100% managed by Mongolian

contractors

• US$10m annual budget for local community relations programs and

projects

• Work towards ISO 14001 certification – environmental standard

• US$85m committed to education and training

• Target of 90 per cent Mongolian workforce by 2013

• US$700m has been spent with over 1,000 Mongolian suppliers since the

project’s inception

• US$1m micro loan scheme to support the growth of South Gobi micro

businesses

The OT Investment Agreement is a catalyst for economic and social development

The Investment Agreement is enabling Mongolia to strengthen

Source: Oyu Tolgoi LLC

Because of Oyu Tolgoi, Mongolia’s economy is growing

Source: World Bank Quarterly Economic Update, August 2011

OT Economic Impact Assessment, School of Economic Studies NUM and BA Economics Pty Ltd

Mongolia’s economy is growing (Q2 2011 results compared to Q2 2010)

• Oyu Tolgoi will make up about one-third of Mongolia’s economy

by 2020.

• Oyu Tolgoi will lift GDP per person by MNT1.7 million (over

US$1000) by 2020 – an increase equivalent to over 60% of

today's GDP per person.

• The average growth rate from 2013-2020 is projected to be

12.7% - compared to 7.7% without Oyu Tolgoi.

• Economy grew by 17%, compared to ~10% in Q1

• Transportation up 39%

• Construction up 38%

• Retail and wholesale trade up 24%

• Manufacturing sectors up 13%

By 2020, Mongolia’s economy will increase by 35% because of Oyu Tolgoi

Rio Tinto is committed to investing in Mongolia for the long term

• Training the first of a new

generation of Mongolians

through Rio Tinto’s Graduate

Program

• First Gold Partner of the

Mongolian National Olympic

Committee

• Supporting biodiversity

protection through planning and

conservation projects in the

South Gobi

• Supporting health care

improvement in Mongolia and

taking care of basic needs like access to water

Thank you!