Company: RTNTF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001628280-25-006642
Chunk: 348

Company: RIO TINTO LTD
Filing Date: 2025-02-20
Form: 20-F
Chunk 348
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 the income statement in the next 12 months. Any new environmental incidents may requirea material provision but cannot be predicted.Project-specific risks are embedded within the cash flows which are based on a central case estimate of closure activities assuming that theobligation is fulfilled by the Group. These cash flows are then discounted, as mentioned above, using a consistent discount rate applied to alllocations. |

| Impact of climate change on our business - close-down, restoration and environmental costsThe underlying costs for closure have been estimated with varying degrees of precision based on a function of the age of the underlyingasset and proximity to closure. For assets within 10 years of closure, closure plans and cost estimates are supported by detailed studieswhich are refined as the closure date approaches. These closure studies consider climate change and plan for resilience to expected climateconditions with a particular focus on precipitation rates. For new developments, consideration of climate change and ultimate closureconditions are an important part of the approval process. For longer-lived assets, closure provisions are typically based on conceptual levelstudies that are refreshed at least every 5 years; these are evolving to incorporate greater consideration of forecast climate conditions atclosure. |

| Annual Report on Form 20-F 2024 | 193 | riotinto.com |

Financial statements | Notes to the consolidated financial statements

14 Close-down, restoration and environmental provisions continued

Sensitivity analysis

Close-down, restoration and environmental provisions of US$ 15,731million ( 2023 : US$ 17,150million ) are based on risk-adjusted cash flows

expressed in real terms. The recent upward trajectory in interest rates has resulted in expectations of higher yields from long-dated bonds,

including the 30-year US Treasury Inflation Protected Securities, which is a key input to our closure provision discount rate. On 30 June 202 4 ,

we revised the closure discount rate from 2.0% to 2.5% (2023: from 1.5% to 2.0% on 30 June 2023) , applied prospectively from that date. This

assumption is based on the currency in which we plan to fund the closures and our expectation of long-term interest rate and exchange rate

parity in the locations of our operations.

The impact of discounting on the provision - and the corresponding amount capitalised within “Property, plant and equipment” (for operating

sites) or charged/(credited) to the income statement (for non-operating and fully impaired sites) - is illustrated below: