Strong Foundation for Growth, Decarbonisation and Shareholder Returns
Copper
Higher prices, volume impacted by COVID-19
Underlying EBITDA 2021 vs 2020
$ million
4,500
3,000
2,084
2,190
4,089
(1)
(101)
(83)
(1)
(68)
(22)
(29)
3,969
1,500
2020
underlying
Price
Exchange rates
Energy
Inflation
EBITDA
Flexed 2020
underlying
EBITDA
Volumes
& Mix
Cash costs
One-offs
Other
2021
underlying
EBITDA
At $4.0 billion, underlying EBITDA was up 90%, with margins rising to 59%, driven by the strong
recovery in prices and an improved smelter performance at Kennecott in the US.
The improvement in our financial performance was primarily attributable to strong market
conditions, with the copper price driven higher by renewed speculative interest, declining LME
stocks, a weaker US dollar and COVID-related supply constraints.
We also benefited from higher sales volumes of refined metal at Kennecott and temporarily higher
gold grades at Oyu Tolgoi in Mongolia. These compensated for lower volumes at Escondida in
Chile, where ongoing preventive measures in response to COVID-19 continued to impact
workforce availability.
Our average realised copper price increased by 50% to 424 US cents per pound, even before
taking into account the provisional pricing benefit to revenues of $246 million in 2021, while the
benchmark gold price rose just 2% to $1,799 per ounce.
-
We incurred additional costs related to our response to COVID-19, higher energy costs and higher
unit costs at Escondida due to lower concentrator throughput.
We generated $2.6 billion in net cash from our operating activities, a 168% increase on 2020, from
the same drivers as underlying EBITDA and a $0.8 billion increase in dividends from our 30%
equity holding in Escondida to $1.4 billion, partly offset by a $0.4 billion tax payment in Mongolia.
Free cash flow of $1.3 billion reflected the higher operating cash flow and high level of capital
investment ($1.3 billion), mainly relating to the ongoing development of the Oyu Tolgoi
underground project, where we have a 34% effective interest but fully consolidate on the basis of
management control.
Our copper unit costs, at 82 cents per pound in 2021, were 26% lower than in 2020, but marginally
above guidance of 75 to 80 cents per pound. Lower throughput and grades at Escondida and
higher royalties, in line with stronger prices, at Kennecott and Oyu Tolgoi were offset by higher
production of copper and, in particular, gold at Oyu Tolgoi, driven by higher grades.
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