SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 20-F/A
 Amendment No. 1
  o
    
    Registration statement pursuant to Section 12 (b) or 12(g) of the Securities Exchange Act of
1934
 or
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the financial year ended: 31 December 2009
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from: _____________ to _____________
 or
 o
    
    Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of event requiring this shell company report _____________
 Commission file number: 1-10533
    
    Commission file number: 0-20122Rio Tinto plc
    
    Rio Tinto LimitedABN 96 004 458 404(Exact name of Registrant as specified in its charter)
    
    (Exact name of Registrant as specified in its charter)England and Wales
    
    Victoria, Australia(Jurisdiction of incorporation or organisation)
    
    (Jurisdiction of incorporation or organisation)2 Eastbourne Terrace
    
    Level 33, 120 Collins StreetLondon, W2 6LG, United Kingdom
    
    Melbourne, Victoria 3000, Australia(Address of principal executive offices)
    
    (Address of principal executive offices)
 
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Name of each exchange
    
    Name of each exchangeTitle of each class
    
    on which registered
    
    on which registered
    
    Title of each classAmerican Depositary Shares*
    
    New York Stock ExchangeOrdinary Shares of 10p each**
    
    New York Stock Exchange7.125% Notes due 2013
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    7.125% Notes due 20135.875% Notes due 2013
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    5.875% Notes due 20136.500% Notes due 2018
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    6.500% Notes due 20187.125% Notes due 2028
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    7.125% Notes due 20288.950% Notes due 2014
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    8.950% Notes due 20149.000% Notes due 2019
    
    New York Stock Exchange
    
    New York Stock Exchange
    
    9.000% Notes due 2019
 *
    
    Evidenced by American Depositary Receipts. Each American Depositary Share Represents one Rio
Tinto plc Ordinary Shares of 10p each.**
    
    Not for trading, but only in connection with the listing of American Depositary Shares,
pursuant to the requirements of the Securities and Exchange Commission
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
  Title of each class
    
    Title of each classNone
    
    Shares
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 None
    
    None
 Indicate the number of outstanding shares of each of the Issuers classes of capital or common stock as of the close of the
period covered by the annual report:
 Title of each class
    
    Number
    
    Number
    
    Title of each classOrdinary Shares of 10p each
    
    
    1,529,003,871
    
    
    
    606,831,240
    
    
    SharesDLC Dividend Share of 10p
    
    
    1
    
    
    
    1
    
    
    DLC Dividend ShareSpecial Voting Share of 10p
    
    
    1
    
    
    
    1
    
    
    Special Voting Share
  þ o
 
 o þ
 
 
 þ o
 þ o
 *
    
    This requirement does not apply to the registrant until its fiscal year ending December 31,
2011.
  Large accelerated filer þ   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ o
  o o
  o þ




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##### 



Explanatory Note




---



##### 



RIO TINTO
 PART III
 Item 18. Financial Statements
 2009 Financial statements 2009 Financial
statements
 Item 19. Exhibits
  INDEX
 ExhibitNumber
    
    Description1.1*
    
    Articles of Association of Rio Tinto plc (adopted by special
resolution passed on 20 April 2009 and amended on 1 October
2009)1.2*
    
    Constitution of Rio Tinto Limited (ACN 004 458 404) (as
adopted by special resolution passed on 24 May 2000 and
amended by special resolution on 18 April 2002, 29 April 2005,
27 April 2007, 24 April 2008 and 20 April 2009)2.1
    
    Facility Agreement, dated 12 July 2007, among Rio Tinto,
Credit Suisse, Deutsche Bank AG, London Branch, The Royal Bank
of Scotland plc, and Societe Generale (incorporated by
reference to Exhibit (b)(1) to the Schedule TO-T filed by Rio
Tinto plc and Rio Tinto Canada Holding Inc. on 24 July 2007,
File No. 1-10533)3.1
    
    DLC Merger Implementation Agreement, dated 3 November 1995
between CRA Limited and The RTZ Corporation PLC relating to
the implementation of the DLC merger (incorporated by
reference to Exhibit 2.1 of Rio Tinto plcs Annual report on
Form 20-F for the financial year ended 31 December 1995, File
No. 1-10533)3.2*
    
    DLC Merger Sharing Agreement, dated 21 December 1995 and
amended on 14 April 2005, 29 April 2005 and 18 December 2009
between CRA Limited and The RTZ Corporation PLC relating to
the ongoing relationship between CRA and RTZ following the DLC
merger3.3*
    
    RTZ Shareholder Voting Agreement, dated 21 December 1995 and
amended on 18 January 2010 between The RTZ Corporation PLC,
RTZ Shareholder SVC Pty. Limited, CRA Limited, R.T.Z.
Australian Holdings Limited and The Law Debenture Trust
Corporation p.l.c3.4*
    
    CRA Shareholder Voting Agreement, dated 21 December 1995 and
amended 18 January 2010 between CRA Limited, CRA Shareholder
SVC Limited, The RTZ Corporation PLC and The Law Debenture
Trust Corporation p.l.c., relating to the RTZ Special Voting
Share4.01
    
    Service Agreement dated 4 May 2007 between Mr T Albanese and
Rio Tinto London Limited (incorporated by reference to Exhibit
4.01 of Rio Tinto plcs Annual report on Form 20-F for the
financial year ended 31 December 2007, File No. 1-10533)4.02
    
    Memorandum effective 1 March 2008 to Service Agreement dated
12 April 2006 between Mr T Albanese and Rio Tinto London
Limited (incorporated by reference to Exhibit 4.02 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2007, File No. 1-10533)4.03
    
    Service Agreement dated 19 June 2002 between Mr G R Elliott
and Rio Tinto London Limited (incorporated by




---



##### 



ExhibitNumber
    
    Descriptionreference to
Exhibit 4.31 of Rio Tinto plcs Annual report on Form 20-F for
the financial year ended 31 December 2002, File No. 1-10533)4.04
    
    Memorandum effective 1 March 2008 to Service Agreement dated
19 June 2002 between Mr G R Elliott and Rio Tinto London
Limited (incorporated by reference to Exhibit 4.01 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2007, File No. 1-10533)4.05
    
    Rio Tinto plc  Share Option Plan 2004 (incorporated by
reference to Exhibit 4.3 of Rio Tintos Registration statement
on Form S-8, File No. 333-147914)4.06
    
    Rio Tinto plc  Mining Companies Comparative Plan 2004
(incorporated by reference to Exhibit 4.4 of Rio Tintos
Registration statement on Form S-8, File No. 333-147914)4.07
    
    Rio Tinto Limited  Share Option Plan 2004 (incorporated by
reference to Exhibit 4.6 of Rio Tintos Registration statement
on Form S-8, File No. 333-147914)4.08
    
    Rio Tinto Limited  Mining Companies Comparative Plan 2004
(incorporated by reference to Exhibit 4.7 of Rio Tintos
Registration statement on Form S-8, File No. 333-147914)4.09
    
    Medical expenses plan (incorporated by reference to Exhibit
4.67 of Rio Tinto plcs Annual report on Form 20-F for the
financial year ended 31 December 2000, File No. 1-10533)4.10
    
    Pension plan (incorporated by reference to Exhibit 4.68 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2000, File No. 1-10533)4.11
    
    Rules of The Rio Tinto plc 2008 Bonus Deferral Plan
(incorporated by reference to Exhibit 4.15 of Rio Tinto plcs
Annual report on Form 20-F for the financial year ended 31
December 2008, File No. 1-10533)4.12
    
    US Annex to the Rules of the Rio Tinto plc 2008 Bonus Deferral
Plan (incorporated by reference to Exhibit 4.16 of Rio Tinto
plcs Annual report on Form 20-F for the financial year ended
31 December 2008, File No. 1-10533)4.13
    
    Rules of The Rio Tinto Limited 2008 Bonus Deferral Plan
(incorporated by reference to Exhibit 4.17 of Rio Tinto plcs
Annual report on Form 20-F for the financial year ended 31
December 2008, File No. 1-10533)4.14
    
    US Annex to the Rules of the Rio Tinto Limited 2008 Bonus
Deferral Plan (incorporated by reference to Exhibit 4.18 of
Rio Tinto plcs Annual report on Form 20-F for the financial
year ended 31 December 2008, File No. 1-10533)4.15* **
    
    Implementation Agreement between Rio Tinto Limited, Rio Tinto
plc, BHP Billiton Limited and BHP Billiton plc dated 5
December 2009 (including the schedules).8.1*
    
    List of subsidiary companies.12.1***
    
    Certifications pursuant to Rule 13a-14(a) of the Exchange Act.13.1***
    
    Certifications furnished pursuant to Rule 13a-14(b) of the
Exchange Act (such certifications are not deemed filed for
purpose of Section 18 of the Exchange Act and not incorporated
by reference in any filing under the Securities Act).15.1***
    
    Consent of Independent Registered
Public Accounting Firm to the incorporation of the audit report
relating to the Rio Tinto Group and effectiveness of internal control
over financial reporting of the Rio Tinto Group by reference in
registration statements on Form F-3 and Form S-8.15.2***
    
    Consent of Independent Auditors to
the incorporation of the audit report relating to the Minera
Escondida Limitada by reference in registration statements on Form
F-3 and Form S-8.
 
 *
    
    Previously filed as an exhibit to the Annual Report on Form 20-F for the year ended 31
December 2009.**
    
    Pursuant to a request for confidential treatment filed with the Securities and Exchange, the
confidential portions of this exhibit have been omitted and filed seperately with the
Securities and Exchange Commission.***
    
    Filed herewith.




---



##### 



Signature
  Rio Tinto plc
    
    Rio Tinto Limited(Registrant)
    
    (Registrant)/s/
Tom Albanese
    
    /s/ Tom AlbaneseName: Tom Albanese
    
    Name: Tom AlbaneseTitle:
Chief Executive Officer
    
    Title: Chief Executive OfficerDate: 27 October 2010
    
    Date: 27 October 2010




---



##### 



2009 Financial statements
 Contents
 PagePrimary
financial statementsGroup
income statement
    
    
    A-2Group statement of comprehensive income
    
    
    A-3Group cash flow statement
    
    
    A-4Group statement of financial position
    
    
    A-5Group statement of changes in equity
    
    
    A-6Reconciliation with Australian IFRS
    
    
    A-7Outline of dual listed companies structure and basis of financial statements
    
    
    A-8Notes to the 2009 financial statementsNote 1 - Principal accounting policies
    
    
    A-9Group
income statementNote 2 - Reconciliation of Net earnings to Underlying earnings
    
    
    A-25Note 3 - Net operating costs
    
    
    A-26Note 4 - Employment costs
    
    
    A-26Note 5 - Impairment charges
    
    
    A-26Note 6 - Share of profit after tax of equity accounted units
    
    
    A-27Note 7 - Interest receivable and payable
    
    
    A-27Note 8 - Tax on profit
    
    
    A-28Note 9 - Earnings/(loss) per ordinary share
    
    
    A-30Note 10 - Dividends
    
    
    A-31Group
statement of financial positionNote 11 - Goodwill
    
    
    A-31Note 12 - Intangible assets
    
    
    A-33Note 13 - Property, plant and equipment
    
    
    A-34Note 14 - Investments in equity accounted units
    
    
    A-34Note
15 - Net debt of equity accounted units (excluding amounts due to Rio
Tinto)
    
    
    A-35Note 16 - Inventories
    
    
    A-35Note 17 - Trade and other receivables
    
    
    A-35Note 18 - Deferred taxation
    
    
    A-36Note 19 - Assets held for sale
    
    
    A-37Note 20 - Other financial assets
    
    
    A-37Note 21 - Cash and cash equivalents
    
    
    A-37Note 22 - Borrowings
    
    
    A-38Note 23 - Capitalised finance leases
    
    
    A-39Note 24 - Consolidated net debt
    
    
    A-39Note 25 - Trade and other payables
    
    
    A-39Note 26 - Other financial liabilities
    
    
    A-39Note 27 - Provisions (not including taxation)
    
    
    A-40Capital
and reservesNote 28 - Share capital  Rio Tinto plc
    
    
    A-41Note 29 - Share capital  Rio Tinto Limited
    
    
    A-41Note 30 -  Other
reserves and retained earnings
    
    
    A-42Additional
disclosuresNote 31 - Operating segments
    
    
    A-43Note 32 - Operating segments  additional information
    
    
    A-45Note 33 - Financial risk management
    
    
    A-47Note 34 - Financial instruments
    
    
    A-51Note 35 - Contingent liabilities and commitments
    
    
    A-57Note 36 - Average number of employees
    
    
    A-58Note 37 - Principal subsidiaries
    
    
    A-59Note 38 - Principal jointly controlled entities
    
    
    A-60Note 39 - Principal associates
    
    
    A-61Note 40 - Principal jointly controlled assets and other
proportionally consolidated units
    
    
    A-61Note 41 - Purchases and sales of subsidiaries,
joint ventures, associates and other
interests in businesses
    
    
    A-62Note 42 - Directors and key management remuneration
    
    
    A-64Note 43 - Auditors remuneration
    
    
    A-65Note 44 - Related party transactions
    
    
    A-66Note 45 - Exchange rates in US$
    
    
    A-66Note 46 - Rights issues
    
    
    A-66Note 47 - Bougainville Copper Limited (BCL)
    
    
    A-67Note
48 - Events after the statement of financial position date
    
    
    A-67Note 49 - Share based payments
    
    
    A-68Note 50 - Post retirement benefits
    
    
    A-74Note 51 - Rio Tinto financial information by business unit
    
    
    A-78Australian Corporations Act  summary of ASIC relief
    
    
    A-81Report of independent registered public accounting firms
    
    
    A-82
 A-1




---



##### 



Group income statement
 2009
    
    
    2008
    
    
    2007Note
    
    
    US$m
    
    
    US$m
    
    
    US$mContinuing operationsConsolidated sales revenue
    
    
    
    
    
    
    41,825
    
    
    
    54,264
    
    
    
    29,700Net operating costs (excluding items shown separately)
    
    
    3
    
    
    
    (33,818
    )
    
    
    (37,641
    )
    
    
    (20,752
    )Impairment charges
    
    
    5
    
    
    
    (1,573
    )
    
    
    (8,015
    )
    
    
    (58
    )Profits on disposal of interests in businesses
    
    
    41
    
    
    
    692
    
    
    
    2,231
    
    
    
    2Exploration and evaluation costs
    
    
    12
    
    
    
    (514
    )
    
    
    (1,134
    )
    
    
    (574
    )Profits on disposal of interests in undeveloped projects (b)
    
    
    12
    
    
    
    894
    
    
    
    489
    
    
    
    253Operating profit
    
    
    
    
    
    
    7,506
    
    
    
    10,194
    
    
    
    8,571Share of profit after tax of equity accounted units
    
    
    6
    
    
    
    786
    
    
    
    1,039
    
    
    
    1,584Profit before finance items and taxation
    
    
    
    
    
    
    8,292
    
    
    
    11,233
    
    
    
    10,155Finance itemsNet exchange gains/(losses) on external debt and intragroup balances
    
    
    24
    
    
    
    365
    
    
    
    (176
    )
    
    
    194Net gains/(losses) on derivatives not qualifying for hedge accounting
    
    
    
    
    
    
    261
    
    
    
    (173
    )
    
    
    57Interest receivable and similar income
    
    
    7
    
    
    
    120
    
    
    
    204
    
    
    
    134Interest payable and similar charges
    
    
    7
    
    
    
    (929
    )
    
    
    (1,618
    )
    
    
    (538
    )Amortisation of discount
    
    
    
    
    
    
    (249
    )
    
    
    (292
    )
    
    
    (166
    )(432
    )
    
    
    (2,055
    )
    
    
    (319
    )Profit before taxation
    
    
    
    
    
    
    7,860
    
    
    
    9,178
    
    
    
    9,836Taxation
    
    
    8
    
    
    
    (2,076
    )
    
    
    (3,742
    )
    
    
    (2,090
    )Profit from continuing operations
    
    
    
    
    
    
    5,784
    
    
    
    5,436
    
    
    
    7,746Discontinued operationsLoss after tax from discontinued operations
    
    
    19
    
    
    
    (449
    )
    
    
    (827
    )
    
    
    Profit for the year
    
    
    
    
    
    
    5,335
    
    
    
    4,609
    
    
    
    7,746- attributable to outside equity shareholders
    
    
    
    
    
    
    463
    
    
    
    933
    
    
    
    434- attributable to equity shareholders of Rio Tinto (Net earnings)
    
    
    
    
    
    
    4,872
    
    
    
    3,676
    
    
    
    7,312Basic earnings/(loss) per share (c)(2008 and 2007 restated)Profit from continuing operations
    
    
    9
    
    
    
    301.7
    c
    
    
    286.8
    c
    
    
    464.9
    cLoss from discontinued operations
    
    
    9
    
    
    
    (25.5
    )c
    
    
    (52.7
    )c
    
    
    Profit for the year
    
    
    9
    
    
    
    276.2
    c
    
    
    234.1
    c
    
    
    464.9
    cDiluted earnings/(loss) per share (c)(2008 and 2007 restated)Profit from continuing operations
    
    
    9
    
    
    
    300.7
    c
    
    
    285.5
    c
    
    
    462.9
    cLoss from discontinued operations
    
    
    9
    
    
    
    (25.4
    )c
    
    
    (52.4
    )c
    
    
    Profit for the year
    
    
    9
    
    
    
    275.3
    c
    
    
    233.1
    c
    
    
    462.9
    c
 (a)
    
    Consolidated revenue includes subsidiary sales to equity accounted units.(b)
    
    Profits arising on the disposal of interests in undeveloped projects are stated net of charges of nil (2008: US$156 million; 2007: nil),
related to such projects.c)
    
    The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on
which the shares were issued have been adjusted for the bonus element of the issues. The 2008 comparatives have been
restated accordingly. See note 46 for other information relating to the rights issues.  A-2




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##### 



Group statement of comprehensive income
 2009Attributable toshareholders
    
    Outsideof Rio Tinto
    
    interests
    
    TotalUS$m
    
    US$m
    
    US$mProfit after tax for the year
    
    
    4,872
    
    
    
    463
    
    
    
    5,335Other comprehensive incomeCurrency translation adjustment
    
    
    3,732
    
    
    
    429
    
    
    
    4,161Currency translation on companies disposed of transferred to the income statement
    
    
    (13
    )
    
    
    
    
    
    
    (13
    )Cash flow hedge fair value (losses)/gains:- Cash flow hedge fair value (losses)/gains
    
    
    (206
    )
    
    
    (107
    )
    
    
    (313
    )- Cash flow hedge losses transferred to the income statement
    
    
    16
    
    
    
    34
    
    
    
    50- Cash flow hedge gains on companies disposed of transferred to income statement
    
    
    (4
    )
    
    
    (1
    )
    
    
    (5
    )Gains/(losses) on revaluation of available for sale securities
    
    
    357
    
    
    
    1
    
    
    
    358Gains on revaluation of available for sale securities transferred to the income statement
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Actuarial (losses)/gains on post retirement benefit plans (note 30)
    
    
    (847
    )
    
    
    3
    
    
    
    (844
    )Share of other comprehensive income/(expense) of equity accounted units
    
    
    368
    
    
    
    
    
    
    
    368Tax relating to components of other comprehensive income (note 8)
    
    
    297
    
    
    
    24
    
    
    
    321Other comprehensive income/(expense) for the year, net of tax
    
    
    3,697
    
    
    
    383
    
    
    
    4,080Total comprehensive income/(expense) for the year
    
    
    8,569
    
    
    
    846
    
    
    
    9,415
 2008Attributable toshareholders
    
    Outsideof Rio Tinto
    
    interests
    
    TotalUS$m
    
    US$m
    
    US$mProfit after tax for the year
    
    
    3,676
    
    
    
    933
    
    
    
    4,609Other comprehensive incomeCurrency translation adjustment
    
    
    (4,383
    )
    
    
    (411
    )
    
    
    (4,794
    )Currency translation on companies disposed of transferred to the income statement
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Cash flow hedge fair value (losses)/gains:- Cash flow hedge fair value (losses)/gains
    
    
    28
    
    
    
    6
    
    
    
    34- Cash flow hedge losses transferred to the income statement
    
    
    245
    
    
    
    107
    
    
    
    352- Cash flow hedge gains on companies disposed of transferred to income statement
    
    
    
    
    
    
    
    
    
    
    Gains/(losses) on revaluation of available for sale securities
    
    
    (173
    )
    
    
    (1
    )
    
    
    (174
    )Gains on revaluation of available for sale securities transferred to the income statement
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Actuarial (losses)/gains on post retirement benefit plans (note 30)
    
    
    (1,294
    )
    
    
    (20
    )
    
    
    (1,314
    )Share of other comprehensive income/(expense) of equity accounted units
    
    
    (283
    )
    
    
    
    
    
    
    (283
    )Tax relating to components of other comprehensive income (note 8)
    
    
    280
    
    
    
    (36
    )
    
    
    244Other comprehensive income/(expense) for the year, net of tax
    
    
    (5,583
    )
    
    
    (355
    )
    
    
    (5,938
    )Total comprehensive income/(expense) for the year
    
    
    (1,907
    )
    
    
    578
    
    
    
    (1,329
    )
 2007Attributable toshareholders
    
    Outsideof Rio Tinto
    
    interests
    
    TotalUS$m
    
    US$m
    
    US$mProfit after tax for the year
    
    
    7,312
    
    
    
    434
    
    
    
    7,746Other comprehensive incomeCurrency translation adjustment
    
    
    1,765
    
    
    
    135
    
    
    
    1,900Currency translation on companies disposed of transferred to the income statement
    
    
    
    
    
    
    
    
    
    
    Cash flow hedge fair value (losses)/gains:- Cash flow hedge fair value (losses)/gains
    
    
    (199
    )
    
    
    (223
    )
    
    
    (422
    )- Cash flow hedge losses transferred to the income statement
    
    
    89
    
    
    
    76
    
    
    
    165- Cash flow hedge gains on companies disposed of transferred to income statement
    
    
    
    
    
    
    
    
    
    
    Gains/(losses) on revaluation of available for sale securities
    
    
    49
    
    
    
    2
    
    
    
    51Gains on revaluation of available for sale securities transferred to the income statement
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Actuarial (losses)/gains on post retirement benefit plans (note 30)
    
    
    139
    
    
    
    6
    
    
    
    145Share of other comprehensive income/(expense) of equity accounted units
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Tax relating to components of other comprehensive income (note 8)
    
    
    159
    
    
    
    40
    
    
    
    199Other comprehensive income/(expense) for the year, net of tax
    
    
    1,975
    
    
    
    36
    
    
    
    2,011Total comprehensive income/(expense) for the year
    
    
    9,287
    
    
    
    470
    
    
    
    9,757
 A-3




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##### 



Group cash flow statement
 2009
    
    2008
    
    2007Note
    
    US$m
    
    US$m
    
    US$mCash flow from consolidated operations (a)
    
    
    
    
    
    
    13,224
    
    
    
    19,195
    
    
    
    10,805Dividends from equity accounted units
    
    
    
    
    
    
    610
    
    
    
    1,473
    
    
    
    1,764Cash flows from operations
    
    
    
    
    
    
    13,834
    
    
    
    20,668
    
    
    
    12,569Net interest paid
    
    
    
    
    
    
    (1,136
    )
    
    
    (1,538
    )
    
    
    (489
    )Dividends paid to outside shareholders of subsidiaries
    
    
    
    
    
    
    (410
    )
    
    
    (348
    )
    
    
    (168
    )Tax paid
    
    
    
    
    
    
    (3,076
    )
    
    
    (3,899
    )
    
    
    (3,421
    )Net cash generated from operating activities
    
    
    
    
    
    
    9,212
    
    
    
    14,883
    
    
    
    8,491Cash flow from investing activitiesCash inflow from disposals/acquisitions of subsidiaries, joint ventures & associates
    
    
    41
    
    
    
    2,028
    
    
    
    2,563
    
    
    
    (37,526
    )Purchase of property, plant and equipment and intangible assets
    
    
    
    
    
    
    (5,388
    )
    
    
    (8,574
    )
    
    
    (5,000
    )Sales of financial assets
    
    
    
    
    
    
    253
    
    
    
    171
    
    
    
    49Purchases of financial assets
    
    
    
    
    
    
    (44
    )
    
    
    (288
    )
    
    
    (273
    )Other funding of equity accounted units
    
    
    
    
    
    
    (265
    )
    
    
    (334
    )
    
    
    (216
    )Other investing cash flows
    
    
    
    
    
    
    59
    
    
    
    281
    
    
    
    224Cash used in investing activities
    
    
    
    
    
    
    (3,357
    )
    
    
    (6,181
    )
    
    
    (42,742
    )Cash flow before financing activities
    
    
    
    
    
    
    5,855
    
    
    
    8,702
    
    
    
    (34,251
    )Cash flow from financing activitiesEquity dividends paid to Rio Tinto shareholders
    
    
    
    
    
    
    (876
    )
    
    
    (1,933
    )
    
    
    (1,507
    )Own shares purchased from Rio Tinto shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,648
    )Proceeds from issue of ordinary shares in Rio Tinto
    
    
    
    
    
    
    14,877
    
    
    
    23
    
    
    
    37Proceeds from additional borrowings
    
    
    
    
    
    
    5,775
    
    
    
    4,697
    
    
    
    39,195Repayment of borrowings
    
    
    
    
    
    
    (22,195
    )
    
    
    (12,667
    )
    
    
    (1,017
    )Finance lease repayments
    
    
    
    
    
    
    (25
    )
    
    
    (10
    )
    
    
    (17
    )Receipt from close out of interest rate swaps
    
    
    
    
    
    
    
    
    
    
    710
    
    
    
    Other financing cash flows
    
    
    
    
    
    
    (19
    )
    
    
    72
    
    
    
    54Cash used in financing activities
    
    
    
    
    
    
    (2,463
    )
    
    
    (9,108
    )
    
    
    35,097Effects of exchange rates on cash and cash equivalents
    
    
    
    
    
    
    (284
    )
    
    
    (101
    )
    
    
    (27
    )Net increase/(decrease) in cash and cash equivalents
    
    
    
    
    
    
    3,108
    
    
    
    (507
    )
    
    
    819Opening cash and cash equivalents less overdrafts
    
    
    
    
    
    
    1,034
    
    
    
    1,541
    
    
    
    722Closing cash and cash equivalents less overdrafts
    
    
    21
    
    
    
    4,142
    
    
    
    1,034
    
    
    
    1,541(a) Cash flow from consolidated operationsProfit from continuing operations
    
    
    
    
    
    
    5,784
    
    
    
    5,436
    
    
    
    7,746Adjustments for:Taxation
    
    
    8
    
    
    
    2,076
    
    
    
    3,742
    
    
    
    2,090Finance items
    
    
    
    
    
    
    432
    
    
    
    2,055
    
    
    
    319Share of profit after tax of equity accounted units
    
    
    6
    
    
    
    (786
    )
    
    
    (1,039
    )
    
    
    (1,584
    )Profit on disposal of interests in businesses
    
    
    41
    
    
    
    (692
    )
    
    
    (2,231
    )
    
    
    (2
    )Impairment charges
    
    
    5
    
    
    
    1,573
    
    
    
    8,015
    
    
    
    58Depreciation and amortisation
    
    
    
    
    
    
    3,427
    
    
    
    3,475
    
    
    
    2,115Provisions (including exchange losses/(gains) on provisions)
    
    
    27
    
    
    
    930
    
    
    
    265
    
    
    
    308Utilisation of provisions
    
    
    27
    
    
    
    (363
    )
    
    
    (464
    )
    
    
    (162
    )Utilisation of provision for post retirement benefits
    
    
    27
    
    
    
    (470
    )
    
    
    (448
    )
    
    
    (121
    )Change in inventories
    
    
    
    
    
    
    653
    
    
    
    (1,178
    )
    
    
    130Change in trade and other receivables
    
    
    
    
    
    
    908
    
    
    
    658
    
    
    
    (385
    )Change in trade and other payables
    
    
    
    
    
    
    (570
    )
    
    
    951
    
    
    
    375Other items
    
    
    
    
    
    
    322
    
    
    
    (42
    )
    
    
    (82
    )13,224
    
    
    
    19,195
    
    
    
    10,805
 A-4




---



##### 



Group statement of financial position
 2009
    
    
    2008Note
    
    
    US$m
    
    
    US$mNon current assetsGoodwill
    
    
    11
    
    
    
    14,268
    
    
    
    14,296Intangible assets
    
    
    12
    
    
    
    5,730
    
    
    
    6,285Property, plant and equipment
    
    
    13
    
    
    
    45,803
    
    
    
    41,753Investments in equity accounted units
    
    
    14
    
    
    
    6,735
    
    
    
    5,053Loans to equity accounted units
    
    
    
    
    
    
    170
    
    
    
    264Inventories
    
    
    16
    
    
    
    284
    
    
    
    166Trade and other receivables
    
    
    17
    
    
    
    1,375
    
    
    
    1,111Deferred tax assets
    
    
    18
    
    
    
    2,231
    
    
    
    1,367Tax recoverable
    
    
    
    
    
    
    85
    
    
    
    220Other financial assets
    
    
    20
    
    
    
    841
    
    
    
    66677,522
    
    
    
    71,181Current assetsInventories
    
    
    16
    
    
    
    4,889
    
    
    
    5,607Trade and other receivables
    
    
    17
    
    
    
    4,447
    
    
    
    5,401Loans to equity accounted units
    
    
    
    
    
    
    168
    
    
    
    251Tax recoverable
    
    
    
    
    
    
    501
    
    
    
    406Other financial assets
    
    
    20
    
    
    
    694
    
    
    
    264Cash and cash equivalents
    
    
    21
    
    
    
    4,233
    
    
    
    1,18114,932
    
    
    
    13,110Assets of disposal groups held for sale
    
    
    19
    
    
    
    4,782
    
    
    
    5,325Total assets
    
    
    
    
    
    
    97,236
    
    
    
    89,616Current liabilitiesBank overdrafts repayable on demand
    
    
    21
    
    
    
    (91
    )
    
    
    (147
    )Borrowings
    
    
    22
    
    
    
    (756
    )
    
    
    (9,887
    )Trade and other payables
    
    
    25
    
    
    
    (5,759
    )
    
    
    (7,197
    )Other financial liabilities
    
    
    26
    
    
    
    (412
    )
    
    
    (480
    )Tax payable
    
    
    
    
    
    
    (1,329
    )
    
    
    (1,442
    )Provisions
    
    
    27
    
    
    
    (1,182
    )
    
    
    (826
    )(9,529
    )
    
    
    (19,979
    )Non current liabilitiesBorrowings
    
    
    22
    
    
    
    (22,155
    )
    
    
    (29,724
    )Trade and other payables
    
    
    25
    
    
    
    (591
    )
    
    
    (452
    )Other financial liabilities
    
    
    26
    
    
    
    (601
    )
    
    
    (268
    )Tax payable
    
    
    
    
    
    
    (299
    )
    
    
    (450
    )Deferred tax liabilities
    
    
    18
    
    
    
    (4,304
    )
    
    
    (4,054
    )Provision for post retirement benefits
    
    
    27
    
    
    
    (4,993
    )
    
    
    (3,601
    )Other provisions
    
    
    27
    
    
    
    (7,519
    )
    
    
    (6,506
    )(40,462
    )
    
    
    (45,055
    )Liabilities of disposal groups held for sale
    
    
    19
    
    
    
    (1,320
    )
    
    
    (2,121
    )Total liabilities
    
    
    
    
    
    
    (51,311
    )
    
    
    (67,155
    )Net assets
    
    
    
    
    
    
    45,925
    
    
    
    22,461Capital and reservesShare capital- Rio Tinto plc
    
    
    28
    
    
    
    246
    
    
    
    160- Rio Tinto Limited (excluding Rio Tinto plc interest)
    
    
    29
    
    
    
    4,924
    
    
    
    961Share premium account (a)
    
    
    
    
    
    
    4,174
    
    
    
    4,705Other reserves
    
    
    30
    
    
    
    14,010
    
    
    
    (2,322
    )Retained earnings
    
    
    30
    
    
    
    20,477
    
    
    
    17,134Equity attributable to Rio Tinto shareholders
    
    
    30
    
    
    
    43,831
    
    
    
    20,638Attributable to outside equity shareholders (a)
    
    
    
    
    
    
    2,094
    
    
    
    1,823Total equity
    
    
    
    
    
    
    45,925
    
    
    
    22,461
 
 (a)
    
    Refer to statement of changes in equity. A-5




---



##### 



Group statement of changes in equity
 31 December 2009
 Attributable to shareholders of Rio TintoShare
    
    
    Share
    
    
    Retained
    
    
    Othercapital
    
    
    premium
    
    
    earnings
    
    
    reserves
    
    
    
    
    
    
    Outside
    
    
    Total(notes 28 and 29)
    
    
    (a)
    
    
    (note 30)
    
    
    (note 30)
    
    
    Total
    
    
    interests
    
    
    equityUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mOpening balance
    
    
    1,121
    
    
    
    4,705
    
    
    
    17,134
    
    
    
    (2,322
    )
    
    
    20,638
    
    
    
    1,823
    
    
    
    22,461Total comprehensive income
for the year (b)
    
    
    
    
    
    
    
    
    
    
    4,168
    
    
    
    4,401
    
    
    
    8,569
    
    
    
    846
    
    
    
    9,415Currency translation arising from Rio Tinto
Limiteds share capital (c)
    
    
    710
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    710
    
    
    
    
    
    
    
    710Dividends
    
    
    
    
    
    
    
    
    
    
    (876
    )
    
    
    
    
    
    
    (876
    )
    
    
    (410
    )
    
    
    (1,286
    )Own shares purchased from Rio
Tinto shareholders to
satisfy share options
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (35
    )
    
    
    (52
    )
    
    
    
    
    
    
    (52
    )Ordinary shares issued
    
    
    3,339
    
    
    
    (531
    )
    
    
    3
    
    
    
    11,936
    
    
    
    14,747
    
    
    
    
    
    
    
    14,747Shares issued to outside
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    53Subsidiaries now equity accounted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    (218
    )Employee share options and other
IFRS 2 charges taken to
the income statement
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    30
    
    
    
    95
    
    
    
    
    
    
    
    95Closing balance
    
    
    5,170
    
    
    
    4,174
    
    
    
    20,477
    
    
    
    14,010
    
    
    
    43,831
    
    
    
    2,094
    
    
    
    45,925
  Attributable to shareholders of Rio TintoShare
    
    
    
    
    
    
    Retained
    
    Othercapital
    
    
    Share
    
    
    earnings
    
    reserves
    
    
    
    Outside
    
    
    Total(notes 28 and 29)
    
    
    premium
    
    
    (note 30)
    
    (note 30)

    Total
    
    interests
    
    
    equityUS$m
    
    
    US$m
    
    
    US$m
    
    US$m

    US$m
    
    US$m
    
    
    US$mOpening balance
    
    
    1,391
    
    
    
    1,932
    
    
    
    19,033
    
    
    
    2,416
    
    
    
    24,772
    
    
    
    1,521
    
    
    
    26,293Total comprehensive income/
(expense) for the year (b)
    
    
    
    
    
    
    
    
    
    
    2,742
    
    
    
    (4,649
    )
    
    
    (1,907
    )
    
    
    578
    
    
    
    (1,329
    )Currency translation arising from Rio Tinto
Limiteds share capital (c)
    
    
    (258
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (258
    )
    
    
    
    
    
    
    (258
    )Dividends
    
    
    
    
    
    
    
    
    
    
    (1,933
    )
    
    
    
    
    
    
    (1,933
    )
    
    
    (348
    )
    
    
    (2,281
    )Own shares purchased from Rio
Tinto shareholders to
satisfy share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    (128
    )
    
    
    
    
    
    
    (128
    )Ordinary shares issued
    
    
    
    
    
    
    6
    
    
    
    25
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Own shares purchased and
cancelled
    
    
    (12
    )
    
    
    2,767
    
    
    
    (2,767
    )
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    Shares issued to outside
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    72Employee share options taken
to the income statement
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    27
    
    
    
    61
    
    
    
    
    
    
    
    61Closing balance
    
    
    1,121
    
    
    
    4,705
    
    
    
    17,134
    
    
    
    (2,322
    )
    
    
    20,638
    
    
    
    1,823
    
    
    
    22,461
  Attributable to shareholders of Rio TintoShare
    
    
    
    
    
    
    Retained
    
    Othercapital
    
    
    Share
    
    
    earnings
    
    reserves
    
    
    
    Outside
    
    
    Total(notes 28 and 29)
    
    
    premium
    
    
    (note 30)
    
    (note 30)

    Total
    
    interests
    
    
    equityUS$m
    
    
    US$m
    
    
    US$m
    
    US$m

    US$m
    
    US$m
    
    
    US$mOpening balance
    
    
    1,271
    
    
    
    1,919
    
    
    
    14,401
    
    
    
    641
    
    
    
    18,232
    
    
    
    1,153
    
    
    
    19,385Total comprehensive income/
(expense) for the year (b)
    
    
    
    
    
    
    
    
    
    
    7,468
    
    
    
    1,819
    
    
    
    9,287
    
    
    
    470
    
    
    
    9,757Currency translation arising from Rio Tinto
Limiteds share capital (c)
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    120Dividends
    
    
    
    
    
    
    
    
    
    
    (1,507
    )
    
    
    
    
    
    
    (1,507
    )
    
    
    (164
    )
    
    
    (1,671
    )Own shares purchased from Rio
Tinto shareholders to
satisfy share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64
    )
    
    
    (64
    )
    
    
    
    
    
    
    (64
    )Ordinary shares issued
    
    
    
    
    
    
    13
    
    
    
    24
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Shares issued to outside
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    38Employee share options taken
to the income statement
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    20
    
    
    
    39
    
    
    
    
    
    
    
    39Own shares
purchased under capital management programme
    
    
    
    
    
    
    
    
    
    
    (1,372
    )
    
    
    
    
    
    
    (1,372
    )
    
    
    
    
    
    
    (1,372
    )Outside
interest in acquired companies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    24Closing balance
    
    
    1,391
    
    
    
    1,932
    
    
    
    19,033
    
    
    
    2,416
    
    
    
    24,772
    
    
    
    1,521
    
    
    
    26,293
 
 (a)
    
    Charges to share premium in 2009 include underwriting fees and other fees for the Rio Tinto plc
rights issue together with the mark-to-market losses from inception to receipt of proceeds on forward contracts taken out by
Rio Tinto plc to provide confidence in the absolute dollar proceeds of the rights issue.(b)
    
    Refer to Statement of comprehensive income.(c)
    
    Refer to note 1 (d). A-6




---



##### 



Reconciliation with Australian IFRS
    A-7




---



##### 



Outline of dual listed companies structure and basis of financial statements
 The Rio Tinto Group
  Merger terms
        Accounting standards
   Australian Corporations Act
     A-8




---



##### 



Notes to the 2009 Financial statements
 
 1 Principal accounting policies
 Corporate information
 The financial statements of the Group were authorised for
issue in accordance with a directors resolution on 5
March 2010. The financial statements in the 20-F were authorised
for issue by the board of directors on 27 May 2010.
Rio Tinto plc and Rio Tinto Limited are listed and incorporated respectively on Stock Exchanges in the United Kingdom and Australia.
Rio Tinto plcs registered office is at 2 Eastbourne Terrace, London W2 6LG, United Kingdom. Rio Tinto Limiteds registered office
is at 120 Collins Street, Melbourne, Australia, 3000.Rio Tintos business is finding, mining and processing mineral resources. Major products are aluminium, copper, diamonds, coal,
uranium, gold, industrial minerals (borax, titanium dioxide, salt, talc), and iron ore. Activities span the world but are strongly
represented in Australia and North America with significant businesses in South America, Asia, Europe and Africa.Basis of preparationThe basis of preparation and accounting policies used in preparing the financial statements for the year ended 31 December 2009
are set out below.The financial statements for the year ended 31 December 2009 have been prepared in accordance with International Financial
Reporting Standards both as adopted by the EU (EU IFRS) and as issued by the International Accounting Standards Board (IFRS),
Interpretations issued from time to time by the International Financial Reporting Interpretations Committee (IFRIC) adopted by the
European Union that are mandatory for the year ended 31 December 2009, the Companies Act 2006 applicable to companies reporting
under IFRS and in accordance with applicable United Kingdom law, applicable Australian law as amended by the Australian Securities
and Investments Commission Order dated 27 January 2006 (as amended on 22 December 2006) and Article 4 of the European Union
IAS regulation.The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in
the financial statements for the year to 31 December 2008, except for the following:
 IFRS 8 Operating segmentsIFRS 7 Financial instruments  Disclosures (amendment)IAS 1 Presentation of financial statements (revised)IFRS 2 (amendment), Share-based payment  Vesting conditions and cancellationsAmendment to IAS 32 Financial instruments:Presentation and IAS 1 Presentation of financial statements Puttable financial instruments and obligations arising on liquidationAmendment to IAS 39  Eligible hedged itemsAmendment to IAS 39 and IFRS 7  Reclassification of financial assetsAmendment to IFRIC 9 and IAS 39 on embedded derivativesImprovements to IFRS2008  to the extent mandatory in 2009. This standard collates many minor changes to IFRS. The amendments most relevant to the Group relate to the classification of derivatives which are not hedges by maturity rather than as short term and the imputation of interest on government grants.IFRIC 12 Service concession arrangementsIFRIC 13 Customer loyalty programmesIFRIC 15 Agreements for construction of real estateIFRIC 16 Hedges of a net investment in a foreign operationIFRIC 18 Transfers of assets from customers
 The effect of adopting the above standards and interpretations is not material to Group earnings or to shareholders funds in the
current or prior year. Therefore, prior year information has not been restated. IFRS 7, IFRS 8 and IAS 1 (revised) relate to disclosure
only, prior year information has been reclassified to conform with the current presentation. The reclassifications do not affect prior year
statements of financial position.In addition, the Group has early adopted Amendment to IAS 32 Classification of rights issues. The amendment permits rights issues to
existing shareholders which allow those shareholders to receive a fixed number of shares at a fixed price in a currency other than the
entitys functional currency, to be classed as equity transactions provided the offer is pro rata to all shareholders. Prior to the amendment
such an offer was treated as giving rise to a derivative liability. As a consequence, the US$827 million gain in the income statement which
arose at the half year under the previous accounting rules has been removed with a corresponding credit to equity.The Group has not applied the following pronouncements: those which are expected to be most relevant to the Group are IFRS 3 and
IAS 27 (revised).
 IAS 1 (amendment), Presentation of financial
statements mandatory for year 2010IAS 27 (revised) Consolidated and separate financial statements- mandatory for year 2010. The standard requires the effects of
all increases or decreases in the ownership of subsidiaries to be recorded in equity if there is no change in control. They will
therefore no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost.Any remaining interest in the company is re-measured to fair value and a gain or loss is recognised in profit or loss.IAS 38 (amendment), Intangible Assets mandatory for year 2010IFRS 3 (amendment) Business combinations- mandatory for business combinations after 1 January 2010. Under the revised
standard, all payments to purchase a business are to be recorded at fair value at the acquisition date with contingent payments
classified as debt subsequently re-measured through the income statement. All acqusition related costs should be expensed.
When a business is acquired in which the Group previously held a non-controlling stake, or the Group increases its stake in a
business which it does not control, the existing stake is re-measured to fair value at the date of acquisition. Any difference
between fair value and carrying value is taken to the income statement.IFRS 5 (amendment), Non-current assets held for sale
and discontinued operations mandatory for year 2010Eligible Hedged Items (an amendment to IAS 39 Financial Instruments: Recognition and Measurement)- mandatory for year 2010IFRIC 17 Non cash distributions to owners- mandatory for year 2010IFRS 2 Share-based payment  Group cash settled share based payment transactions-mandatory for year 2010
 Improvements to IFRS 2009  mandatory for year  2010.This standard collates further minor changes to IFRS.Amendment to IFRIC 14, IAS 19  Prepayments of a minimum funding requirement-mandatory for year 2011Amendment to IAS 24 Related party disclosures- mandatory for year 2011IFRIC 19 Extinguishing financial liabilities with equity instruments- mandatory for year 2011IFRS 9, Financial instruments  mandatory for year 2013
 The Group is evaluating the impact of the above pronouncements. The above changes are not expected to be material to the
Groups earnings or to shareholders funds.
 A-9




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 Judgements in applying accounting policies and key sources of estimation uncertaintyMany of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and
estimates are based on managements best knowledge of the relevant facts and circumstances, having regard to previous
experience, but actual results may differ from the amounts included in the financial statements. Information about such
judgements and estimation is contained in the accounting policies and/or the Notes to the financial statements, and the key areas
are summarised below.Areas of judgement that have the most significant effect on the amounts recognised in the financial statements are:
 - Merger accounting for the 1995 merger of the economic interests of Rio Tinto plc and Rio Tinto Limited into the dual listed
companies (DLC) structure (page A-8).- Review of asset carrying values and impairment charges and reversals note 1(e) and (i), note 5 and note 11- Estimation of asset lives, note 1 (e and i)- Determination of ore reserve estimates  note 1(j)- Close down, restoration and clean up obligations  note 1(k)- Deferral of stripping costs  note 1(h)- Recognition of deferred tax on mineral rights recognised in acquisitions  note 1(m)- Capitalisation of exploration and evaluation costs -note 1(f)- Identification of functional currencies  note 1(d)- The definition of Underlying earnings  note 2- Acquisitions  note 1(b)
 Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are:
 - Review of asset carrying values and impairment charges and reversals note 1(e) and (i), note 5 and note 11- Estimation of close down and restoration costs and the timing of expenditure  note 1(k) and note 27- Estimation of environmental clean up costs and the timing of expenditure  note 1(k) and note 27- Estimation of liabilities for post retirement costs  note 50- Recoverability of potential deferred tax assets  note 1 (m) and note 18 (d)- Contingencies  note 35
 These areas of judgement and estimation are discussed further
on page A-19.(a)
    
    Accounting conventionThe financial information included in the financial statements for the year ended 31 December 2009, and for the related
comparative period, has been prepared under the historical cost convention, as modified by the revaluation of certain derivative contracts,
financial assets and post retirement assets and liabilities. The Groups policy in respect of these items is set out in the notes below.(b)
    
    Basis of consolidationThe financial statements consist of the consolidation of the accounts of Rio Tinto plc and Rio Tinto Limited (together the Companies)
and their respective subsidiaries (together the Group).All intragroup balances, transactions, income and expenses and profits or losses, including unrealised profits arising
from intragroup transactions, have been eliminated on consolidation. Unrealised losses are eliminated in the same way
as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.Subsidiaries:Subsidiaries are entities over which the Companies have the power to govern the financial and operating policies in
order to obtain benefits from their activities. Control is presumed to exist where the Companies own more than one half of the voting
rights (which does not always equate to percentage ownership) unless it can be demonstrated that ownership does not constitute
control. Control does not exist where other parties hold veto rights over significant operating and financial decisions. In assessing
control, potential voting rights that are currently exercisable or convertible are taken into account. The consolidated financial
statements include all the assets, liabilities, revenues, expenses and cash flows of the Companies and their subsidiaries after
eliminating intragroup transactions as noted above.For partly owned subsidiaries, the allocation of net assets and net earnings to outside shareholders is shown in the line Amounts
attributable to outside equity shareholders on the face of the Group statement of financial position and Group income statement.Associates:An associate is an entity, that is neither a subsidiary nor a joint venture, over whose operating and financial policies the
Group exercises significant influence. Significant influence is presumed to exist where the Group has between 20 per cent and 50
per cent of the voting rights, but can also arise where the Group holds less than 20 per cent if it has the power to be actively involved
and influential in policy decisions affecting the entity. The Groups share of the net assets, post tax results and reserves of associates
are included in the financial statements using the equity accounting method. This involves recording the investment initially at cost to
the Group, which therefore includes any goodwill on acquisition, and then, in subsequent periods, adjusting the carrying amount of
the investment to reflect the Groups share of the associates results less any impairment of goodwill and any other changes to the
associates net assets such as dividends. Unrealised gains on transactions between the Group and its associates are eliminated
to the extent of the Groups interest in the associates.Joint ventures:A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is
subject to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial
decisions require the unanimous consent of the parties sharing control. In some situations, joint control exists even though the
Group has an ownership interest of more than 50 per cent because of the veto rights held by joint venture partners. The Group has
two types of joint ventures:Jointly controlled entities (JCEs):A JCE is a joint venture that involves the establishment of a corporation, partnership or other
entity in which each venturer has a long term interest. JCEs are accounted for using the equity accounting method.
In addition, for both associates and jointly controlled entities, the carrying value will include any long term debt interests that in substance
form part of the Groups net investment.Jointly controlled assets (JCAs):A JCA is a joint venture in which the venturers have joint control over the assets contributed to or
acquired for the purposes of the joint venture. JCAs do not involve the establishment of a corporation, partnership or other entity.
This includes situations where the participants derive benefit from the joint activity through a share of the production, rather than by
receiving a share of the results of trading. The Groups proportionate interest in the assets, liabilities, revenues, expenses and
cash flows of JCAs are incorporated into the Groups financial statements under the appropriate headings.The Group uses the term Equity accounted units to refer to associates and jointly controlled entities collectively.Where necessary, adjustments are made to the results of subsidiaries, joint ventures and associates to bring their accounting
policies into line with those used by the Group.
 A-10




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 AcquisitionsOn the acquisition of a subsidiary, the purchase method of accounting is used whereby the purchase consideration is allocated to the
identifiable assets, liabilities and contingent liabilities (identifiable net assets) of the subsidiary on the basis of fair value at the date of
acquisition. Provisional fair values allocated at a reporting date are finalised within twelve months of the acquisition date.When part or all of the amount of purchase consideration is contingent on future events, the cost of the acquisition initially recorded
includes a reasonable estimate of the fair value of the contingent amounts expected to be payable in the future. The cost of the
acquisition is adjusted when revised estimates are made, with corresponding adjustments made to goodwill until the ultimate
outcome is known.The results of businesses acquired during the year are brought into the consolidated financial statements from the date on which
control, joint control or significant influence commences and taken out of the financial statements from the date on which control,
joint control or significant influence ceases.DisposalsIndividual non current assets or disposal groups (ie groups of assets and liabilities) to be disposed of, by sale or otherwise in a
single transaction, are classified as held for sale if the following criteria are met:- the carrying amount will be recovered principally through a sale transaction rather than through continuing use, and- the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary
for such sales, and- the sale is highly probable.Disposal groups held for sale are carried at the lower of their carrying amount and fair value less costs to sell and are
presented separately on the face of the statement of financial position with the related assets and liabilities being presented as
a single asset and a single liability respectively. Comparative statement of financial position information is not restated. Disposal
groups acquired with a view to resale are held at fair value determined at the acquisition date and no profits or losses are recognised
between acquisition date and disposal date.For a disposal group held for sale that continues to be carried at its carrying amount, the profit on disposal, calculated as net sales
proceeds less the carrying amount, is recognised in the income statement in the period during which control passes to the buyer.
Where the fair value less costs to sell of a disposal group is lower than the carrying amount at the time of classification as held for
sale, the resulting charge is recognised in the income statement in that period. On classification as held for sale, the assets are no
longer depreciated. When the fair value less costs to sell of a disposal group falls below the carrying amount during the period in
which it is classified as held for sale, the charge is included in the income statement at that time.If the disposal group or groups represent a separate major line of business or geographical area of operations, or are part of a single
coordinated plan to dispose of a separate major line of business or geographical area of operations, or are subsidiaries acquired
exclusively with a view to resale, they are classified as discontinued operations. The net results attributable to such discontinued
operations are shown separately and comparative figures in the income and cash flow statements are restated.The Group accounts for transactions with outside equity shareholders using the parent company model. Under this model, acquisitions
of an outside equity shareholders interest will generally give rise to additional goodwill and a disposal will give rise to a profit or loss
in the income statement.(c)
    
    Sales revenueSales revenue comprises sales to third parties at invoiced amounts, with most sales being priced ex works, free on board (f.o.b.)
or cost, insurance and freight (c.i.f.). Amounts billed to customers in respect of shipping and handling are classed as sales
revenue where the Group is responsible for carriage, insurance and freight. All shipping and handling costs incurred by the Group
are recognised as operating costs. If the Group is acting solely as an agent, amounts billed to customers are offset against the
relevant costs. Revenue from services is recognised as services are rendered and accepted by the customer.Sales revenue excludes any applicable sales taxes. Mining royalties are presented as an operating cost or, where they are in
substance a profit based tax, within taxes. Co-product revenues are included in sales revenue.A large proportion of Group production is sold under medium to long term contracts, but sales revenue is only recognised on
individual sales when persuasive evidence exists that all of the following criteria are met:- the significant risks and rewards of ownership of the product have been transferred to the buyer;- neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the
goods sold, has been retained;- the amount of revenue can be measured reliably;- it is probable that the economic benefits associated with the sale will flow to the Group; and- the costs incurred or to be incurred in respect of the sale can be measured reliably.These conditions are generally satisfied when title passes to the customer. In most instances sales revenue is recognised when
the product is delivered to the destination specified by the customer, which is typically the vessel on which it will be shipped, the
destination port or the customers premises.Sales revenue is commonly subject to adjustment based on an inspection of the product by the customer. In such cases, sales
revenue is initially recognised on a provisional basis using the Groups best estimate of contained metal, and adjusted
subsequently.Certain products are provisionally priced, ie the selling price is subject to final adjustment at the end of a period normally ranging
from 30 to 180 days after delivery to the customer, based on the market price at the relevant quotation point stipulated in the contract.As is customary in the industry, revenue on provisionally priced sales is recognised based on estimates of the fair value of the
consideration receivable based on forward market prices. At each reporting date provisionally priced metal is marked to market based on
the forward selling price for the quotational period stipulated in the contract. For this purpose, the selling price can be measured reliably
for those products, such as copper, for which there exists an active and freely traded commodity market such as the London Metals
Exchange and the value of product sold by the Group is directly linked to the form in which it is traded on that market.The marking to market of provisionally priced sales contracts is recorded as an adjustment to sales revenue. Information on provisionally
priced sales contracts is included in note 33.Certain other of the Groups products, such as iron ore, are sold under long term contracts at a benchmark price which is agreed annually.
 A-11




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 Where the benchmark price has not been finally agreed at the end of an accounting period, revenue is estimated based on the best
available information, having reference to the terms of the contractual agreement and, where appropriate, to sales with other customers.(d)
    
    Currency translationThe functional currency for each entity in the Group, and for jointly controlled entities and associates, is the currency of the primary
economic environment in which it operates. For many entities, this is the currency of the country in which they operate. Transactions
denominated in other currencies are converted to the functional currency at the exchange rate ruling at the date of the transaction
unless hedge accounting applies, in which case the contract rate is used. Generally, this applies when derivatives or embedded
derivatives are designated as cashflow hedges of the Groups sales. The Groups accounting policies for derivative financial instruments
and hedge accounting are explained in more detail in note (p) (iii) below. Monetary assets and liabilities denominated in foreign currencies
are retranslated at year end exchange rates.The US dollar is the currency in which the Groups Financial statements are presented, as it most reliably reflects the global business
performance of the Group as a whole.On consolidation, income statement items are translated from the functional currency into US dollars at average rates of exchange.
Statement of financial position items are translated into US dollars
at year end exchange rates. Exchange differences on the translation
of the net assets of entities with functional currencies other than the US dollar, and any offsetting exchange differences on net debt
hedging those net assets, are recognised directly in the foreign currency translation reserve via the statement of comprehensive
income (net of translation adjustments relating to Rio Tinto Limiteds share capital).Exchange gains and losses which arise on balances between Group entities are taken to the foreign currency translation reserve
where the intragroup balance is, in substance, part of the Groups net investment in the entity.The balance of the foreign currency translation reserve relating to an operation that is disposed of is transferred to the income
statement at the time of the disposal.The Group finances its operations primarily in US dollars but part of the Groups US dollar debt is located in subsidiaries having
functional currencies other than the US dollar. Except as noted above, exchange gains and losses relating to such US dollar debt
are charged or credited to the Groups income statement in the year in which they arise. This means that the impact of financing in
US dollars on the Groups income statement is dependent on the functional currency of the particular subsidiary where the debt is
located.Exchange differences arising on closure provisions are capitalised at operating mines. Except as noted above, or in note (p) below relating
to derivative contracts, all other exchange differences are charged or credited to the income statement in the year in which they arise.(e)
    
    Goodwill and intangible assets (excluding exploration and evaluation expenditure)Goodwill represents the difference between the cost of acquisition and the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Goodwill is initially determined based on provisional fair values. Fair values are finalised
within 12 months of the acquisition date. Goodwill on acquisition of subsidiaries is separately disclosed and goodwill on acquisitions
of associates and JCEs is included within investments in equity accounted units. For non wholly owned subsidiaries, interests
attributable to outside equity shareholders are initially recorded based on the proportion of the fair values of the identifiable assets
and liabilities and contingent liabilities recognised at acquisition attributable to outside equity shareholders. Where the Groups interest
in the net fair value of the acquired companys identifiable assets, liabilities and contingent liabilities exceeds costs, the values assigned
are reassessed. Any excess after that reassessment is recognised immediately in the income statement.In 1997 and previous years, goodwill was eliminated against reserves in the year of acquisition as a matter of accounting policy, as
was then permitted under UK GAAP. Such goodwill was not reinstated under subsequent UK accounting standards or on transition to
IFRS.Goodwill is not amortised; rather it is tested annually for impairment. Goodwill is allocated to the cash generating unit or group of cash
generating units expected to benefit from the related business combination for the purposes of impairment testing which is carried out in
accordance with accounting policy note 1(i). Goodwill impairments cannot be reversed. Investments in equity accounted units are tested
for impairment as a single asset. Goodwill included in the Groups investment in equity accounted units is not tested on an annual basis
therefore but only as part of the Groups overall testing for impairment when a trigger for impairment has been identified.Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the asset is separable
or arises from contractual or legal rights, and the fair value can be measured reliably on initial recognition.Purchased intangible assets are initially recorded at cost and finite life intangible assets are amortised over their useful economic
lives on a straight line or units of production basis, as appropriate. Intangible assets having indefinite lives and intangible assets that
are not yet ready for use are not amortised and are reviewed annually for impairment in accordance with accounting policy note 1(i).Intangible assets are considered to have indefinite lives when, based on an analysis of all of the relevant factors, there is no
foreseeable limit to the period over which the asset is expected to generate cash flows for the Group. The factors considered in
making this determination include the existence of contractual rights for unlimited terms; or evidence that renewal of the contractual
rights without significant incremental cost can be expected for indefinite periods into the future in view of the Groups future investment
intentions. The life cycles of the products and processes that depend on the asset are also considered.Where amortisation is calculated on a straight line basis, the following useful lives have been determined for classes of intangible
assets.Trademark, patented and non patented technologyTrademarks: 14 to 20 yearsPatented and non patented technology: 10 to 20 yearsOther intangible assetsInternally generated intangible assets and computer software: 2 to 5 years
 Other intangible assets: 2 to 20 yearsContract based intangible assetsPower contracts: 2 to 39 yearsOther purchase and customer contracts: 5 to 15 years
 A-12




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##### 



Notes to the 2009 Financial statements
 1 Principal accounting policies
 (f)
    
    Exploration and evaluationExploration and evaluation expenditure comprises costs that are directly attributable to:
 - researching and analysing existing exploration data;- conducting geological studies, exploratory drilling and sampling;- examining and testing extraction and treatment methods; and/or- compiling pre-feasibility and feasibility studies.
 Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a
detailed assessment of deposits or other projects that have been identified as having economic potential.Expenditure on exploration activity is not capitalised.Capitalisation of evaluation expenditure commences when there is a high degree of confidence in the projects viability and hence it
is probable that future economic benefits will flow to the Group.The carrying values of capitalised evaluation amounts are reviewed twice per annum by management and the results of these
reviews are reported to the Audit committee. In the case of
undeveloped projects, there may be only mineralised material to form a
basis for the impairment review. The review is based on a status report regarding the Groups intentions for development of the
undeveloped project. In some cases, the undeveloped projects are regarded as successors to ore bodies, smelters or refineries
currently in production. Where this is the case, it is intended that these will be developed and go into production when the current
source of ore is exhausted or to replace the reduced output, which results where existing smelters and/or refineries are closed. It
is often the case that technological and other improvements will allow successor smelters and/or refineries to more than replace the
capacity of their predecessors.Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project.
If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions
are written off.(g)
    
    Property, plant and equipmentProperty, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
The cost of property, plant and equipment comprises its purchase price, any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close
down and restoration costs associated with the asset. Once a mining project has been established as commercially viable,
expenditure other than that on land, buildings, plant and equipment is capitalised under Mining properties and leases together with
any amount transferred from Exploration and evaluation.In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals
can be extracted economically. The process of mining overburden and waste materials is referred to as stripping. During the
development of a mine (or pit), before production commences, stripping costs are capitalised as part of the investment in
construction of the mine.Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by
management, are capitalised. Development costs incurred after the commencement of production are capitalised to the extent they
are expected to give rise to a future economic benefit. Interest on borrowings related to construction or development projects is
capitalised until the point when substantially all the activities that are necessary to make the asset ready for its intended use are
complete.(h)
    
    Deferred strippingAs noted above, stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part
of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a units of production basis.Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping
costs are accounted for separately by reference to the ore from each separate pit. If, however, the pits are highly integrated for
the purpose of mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for
stripping costs. In such cases, the intial stripping (ie overburden and other waste removal) of the second and subsequent pits
is considered to be production phase stripping relating to the combined operation.The Groups determination of whether multiple pit mines are considered separate or integrated operations depends on each
mines specific circumstances. The following factors would point towards the stripping costs for the individual pits being accounted
for separately:- If mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently.- If separate investment decisions are made to develop each
pit, rather than a single investment decision being made at the outset.- If the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than
as an integrated unit.- If expenditures for additional infrastructure to support the second and subsequent pits are relatively large.- If the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.This additional factor would point to an integrated operation in accounting for stripping costs:- If the designs of the second and subsequent pits are significantly influenced by opportunities to optimise output from the
several pits combined, including the co-treatment or blending of the output from the pits.The relative importance of each of the above factors is considered in each case to determine whether, on balance, the stripping
costs should be attributed to the individual pit or to the combined output from the several pits. As this analysis requires judgment,
another company could make the determination that a mine is separate or integrated differently than the Group, even if the fact
pattern appears to be similar. To the extent the determination is different, the resulting accounting would also be different.The Group defers stripping costs incurred subsequently,
during the production stage of its operations, for those operations where this is the most appropriate basis for matching the costs against the related economic benefits and the effect is material. This is
generally the case where there are fluctuations in stripping costs over the life of the mine (or pit). The amount of stripping costs
deferred is based on the ratio (Ratio) obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the
quantity of minerals contained in the ore. Stripping costs incurred in the period are deferred to the extent that the current period Ratio
exceeds the life of mine (or pit) Ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent
periods, the current period Ratio falls short of the life of mine (or
pit) Ratio. The life of mine (or pit) Ratio is based on proven and
probable reserves of the mine (or pit).
 A-13




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 The life of mine (or pit) waste-to-ore ratio is a function of the pit design(s) and therefore changes to that design will generally
result in changes to the Ratio. Changes in other technical or economic parameters that impact on reserves will also have an impact
on the life of mine (or pit) Ratio even if they do not affect the pit design(s). Changes to the life of mine (or pit) Ratio are accounted for
prospectively.In the production stage of some mines (or pits), further development of the mine (or pit) requires a phase of unusually high
overburden removal activity that is similar in nature to preproduction mine development. The costs of such unusually high
overburden removal activity are deferred and charged against reported profits in subsequent periods on a units of production basis.
This accounting treatment is consistent with that for stripping costs incurred during the development phase of a mine (or pit), before
production commences.If the Group were to expense production stage stripping costs as incurred, there would be greater volatility in the year to year results
from operations and excess stripping costs would be expensed at an earlier stage of a mines operation.Deferred stripping costs are included in Mining properties and leases within property, plant and equipment or in investments in
equity accounted units, as appropriate. These form part of the total investment in the relevant cash generating unit, which is reviewed
for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. Amortisation of
deferred stripping costs is included in net operating costs or in the Groups share of the results of its equity accounted units, as
appropriate.(i)
    
    Depreciation and impairmentDepreciation of non current assetsProperty, plant and equipment is depreciated over its useful life, or over the remaining life of the mine if shorter. Depreciation commences
when an asset is available for use. The major categories of property, plant and equipment are depreciated on a units of production and/or
straight-line basis as follows:
 Units of production basisFor mining properties and leases and certain mining equipment, the economic benefits from the asset are consumed in
a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a units of
production basis.Straight line basisAssets within operations for which production is not expected to fluctuate significantly from one year to another or which
have a physical life shorter than the related mine are depreciated on a straight line basis as follows:
 Land and BuildingsLand
    
    Not depreciatedBuildings
    
    5 to 50 yearsPlant and equipmentOther plant and equipment
    
    3 to 35 yearsPower assets
    
    25 to 100 yearsCapital work in progress
    
    Not depreciated
 Residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Changes to
the estimated residual values or useful lives are accounted for prospectively. In applying the units of production method, depreciation is
normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material
to be extracted in current and future periods based on proven and
probable reserves and, for some mines, other mineralisation.
Such non reserve material may be included in depreciation calculations in limited circumstances and where there is a high degree
of confidence in its economic extraction. Development costs that relate to a discrete section of an ore body and which only provide
benefit over the life of those reserves, are depreciated over the estimated life of that discrete section. Development costs incurred
which benefit the entire ore body are depreciated over the estimated life of the ore body.Impairment of non current assetsProperty, plant and equipment and intangible assets with finite lives are reviewed for impairment if there is any indication that the
carrying amount may not be recoverable. Impairment is normally assessed at the level of cash-generating units which, in accordance
with IAS 36 Impairment of Assets, are identified as the smallest identifiable group of assets that generates cash inflows, which are
largely independent of the cash inflows from other assets.In addition, an impairment loss is recognised for any excess of carrying amount over the fair value less costs to sell of a non current
asset or disposal group held for sale.Goodwill and indefinite-life intangible assets are reviewed for impairment annually or at any time during the year if an indicator of
impairment is considered to exist. Goodwill acquired through business combinations is allocated to groups of cash-generating units that
are expected to benefit from the related business combination. The groups of cash-generating units represent the lowest level within the
Group at which goodwill is monitored for internal management purposes and these groups are not larger than the reporting segments
determined in accordance with IFRS 8 Operating segments.When an impairment review is undertaken, recoverable amount is assessed by reference to the higher of value in use (being the net
present value of expected future cash flows of the relevant cash generating unit) and fair value less costs to sell (fair value). The best
evidence of fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value is based
on the best information available to reflect the amount the Group could receive for the cash generating unit in an arms length
transaction. This is often estimated using discounted cash flow techniques.
 Where recoverable amount is assessed using discounted cash flow techniques, the resulting estimates are based on detailed mine
and/or production plans. For value in use, recent cost levels are considered, together with expected changes in costs that are
compatible with the current condition of the business and which meet the requirements of IAS 36.
 A-14




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 The cash flow forecasts are based on best estimates of expected future revenues and costs, including the future cash costs of
production, capital expenditure, close down, restoration and environmental clean up. These may include net cash flows expected to be
realised from extraction, processing and sale of mineralisation that
does not currently qualify for inclusion in proven or probable ore
reserves. Such non reserve material is included where there is a high degree of confidence in its economic extraction. This expectation
is usually based on preliminary drilling and sampling of areas of mineralisation that are contiguous with existing reserves. Typically,
the additional evaluation to achieve reserve status for such material has not yet been done because this would involve incurring costs
earlier than is required for the efficient planning and operation of the mine.Where the recoverable amount of a cash generating unit is dependent on the life of its associated ore body, expected future cash flows
reflect long term mine plans, which are based on detailed research, analysis and iterative modelling to optimise the level of return from
investment, output and sequence of extraction. The mine plan takes account of all relevant characteristics of the ore body, including
waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore impacting on process recoveries and
capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each
future year and for forecasting production costs.The Groups cash flow forecasts are based on estimates of future commodity prices, which assume market prices will revert to the
Groups assessment of the long term average price, generally over a period of three to five years. These long term commodity prices,
for most commodities, are derived from an analysis of the marginal costs of the producers of these commodities. These assessments
often differ from current price levels and are updated periodically. For the long run, the Group does not believe that forward prices quoted in
the metals markets provide a good indication of future price levels since forward prices tend to be strongly influenced by spot price levels.In some cases, prices applying to some part of the future sales volumes of a cash generating unit are predetermined by existing
sales contracts. The effects of such contracts are taken into account in forecasting future cash flows.The discount rates applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to
the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The
Groups weighted average cost of capital is used as a starting point for determining the discount rates, with appropriate adjustments
for the risk profile of the countries in which the individual cash generating units operate.For operations with a functional currency other than the US dollar, the impairment review is undertaken in the relevant functional
currency. The great majority of the Groups sales are based on prices denominated in US dollars. To the extent that the currencies
of countries in which the Group produces commodities strengthen against the US dollar without commodity price offset, cash flows
and, therefore, net present values are reduced.When calculating value in use, IAS 36 requires that calculations should be based on exchange rates current at the time of the
assessment.Non-financial assets other than goodwill that have suffered an impairment are tested for possible reversal of the impairment whenever
events or changes in circumstances indicate that the impairment may have reversed.(j)
    
    Determination of ore reserve estimatesThe Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December
2004 (the JORC code). Reserves, and for certain mines, other mineral resources, determined in this way are used in the calculation
of depreciation, amortisation and impairment charges, the assessment of life of mine stripping ratios and for forecasting the timing
of the payment of close down and restoration costs and clean up costs.For the purposes of this combined Annual report on Form 20-F estimates of ore reserves have been computed in accordance with the
SECs Industry Guide 7, rather than in accordance with the JORC code, and are shown on pages 29 to 38. Ore reserves presented in
accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices
were to be in line with the average of historical prices for the three years to 30 June 2009, or contracted prices where applicable. For this
purpose, contracted prices are applied only to future sales volumes for which the price predetermined by an existing contract; and the
average of historical prices is applied to expected sales volumes in excess of such amounts.  Moreover, reported ore reserve estimates
have not been increased above the levels expected to be economic based on Rio Tintos own long term price assumptions. Therefore, a
reduction in commodity prices from the three year average historical price levels would not necessarily give rise to a reduction in reported
ore reserves.In assessing the life of a mine for accounting purposes,
mineralisation is only taken into account where there is a high
degree of confidence of economic extraction.There are numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation may
change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates,
production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being
restated.(k)
    
    Provisions for close down and restoration and for environmental clean up costsClose down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials
and remediation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when
the obligation arising from the related disturbance occurs, whether this occurs during the mine development or during the
production phase, based on the net present value of estimated future costs. Provisions for close down and restoration costs do
not include any additional obligations which are expected to arise from future disturbance. The costs are estimated on the basis of
a closure plan. The cost estimates are updated annually during the life of the operation to reflect known developments,
eg revisions to cost estimates and to the estimated lives of operations, and are subject to formal review at regular intervals.Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure
is incurred at the end of the life of the mine. Although the ultimate cost to be incurred is uncertain, the Groups businesses estimate
their respective costs based on feasibility and engineering studies using current restoration standards and techniques.The amortisation or unwinding of the discount applied in establishing the net present value of provisions is charged to the income
statement in each accounting period. The amortisation of the discount is shown as a financing cost, rather than as an operating
cost.The initial closure provision together with other movements in the provisions for close down and restoration costs, including those
resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates
are capitalised within property, plant and equipment. These costs are
then depreciated over the lives of the assets to which they relate.
 Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made
for the estimated outstanding continuous rehabilitation work at each statement of financial position date and the cost is charged to the
income statement.
 A-15




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 Provision is made for the estimated present value of the
costs of environmental clean up obligations outstanding at the
statement of financial position date. These costs are
charged to the income statement. Movements in the environmental clean up provisions are presented as an operating cost, except for the unwind of the discount
which is shown as a financing cost. Remediation procedures may commence soon after the time the disturbance, remediation process and estimated remediation
costs become known, but can continue for many years depending on the nature of the disturbance and the remediation techniques.As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors including changes to the
relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected timing of expenditure can also change,
for example in response to changes in ore reserves or production rates. As a result there could be significant adjustments to the provision for close down
and restoration and environmental clean up, which would affect future financial results.(l)
    
    InventoriesInventories are valued at the lower of cost and net realisable value, primarily on a weighted average cost basis. Average costs are calculated by reference to
the cost levels experienced in the current month together with those in opening inventory. Cost for raw materials and stores is purchase price and for
partly processed and saleable products is generally the cost of production. For this purpose the costs of production include:

- labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore;
- the depreciation of mining properties and leases and of property, plant and equipment used in the extraction and processing of ore; and
- production overheads.Stockpiles represent ore that has been extracted and is available for further processing. If there is significant uncertainty as to when the stockpiled ore
will be processed it is expensed as incurred. Where the future processing of this ore can be predicted with confidence, eg because it exceeds the mines cut
off grade, it is valued at the lower of cost and net realisable value. If the ore will not be processed within the 12 months after the statement of financial
position date it is included within non current assets. Work in progress inventory includes ore stockpiles and other partly processed material. Quantities
are assessed primarily through surveys and assays.(m)
    
    TaxationCurrent tax is the tax expected to be payable on the taxable income for the year calculated using rates that have been enacted or substantively enacted by the
statement of financial position date. It includes adjustments for tax expected to be payable or recoverable in respect of previous periods.Temporary differences are the difference between the carrying value of an asset or liability and its tax base. Full provision is made for deferred taxation
on all temporary differences existing at the statement of financial position date with certain limited exceptions. The main exceptions to this principle are
as follows:- tax payable on the future remittance of the past earnings of subsidiaries, associates and jointly controlled entities is provided for except where the Group
is able to control the remittance of profits and it is probable that there will be no remittance in the foreseeable future;
- deferred tax is not provided on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit
and is not a business combination, such as on the recognition of a provision for close down and restoration costs and the related asset or on the recognition
of new finance leases. Furthermore, with the exception of the unwind of discount, deferred tax is not recognised on subsequent changes in the carrying value
of such assets and liabilities, for example where the related assets are depreciated or finance leases are repaid; and
- deferred tax assets are recognised only to the extent that it is probable that they will be recovered. Probable is defined as more likely than not.
Recoverability is assessed having regard to the reasons why the deferred tax asset has arisen and projected future taxable profits for the relevant entity (or
group of entities).Deferred tax is provided in respect of fair value adjustments on acquisitions. These adjustments may relate to assets such as mining rights that, in general,
are not eligible for income tax allowances. In such cases, the provision for deferred tax is based on the difference between the carrying value of the asset
and its nil income tax base. The existence of a tax base for capital gains tax purposes is not taken into account in determining the deferred tax provision
relating to such mineral rights because it is expected that the carrying amount will be recovered primarily through use and not from the disposal of mineral
rights. Also, the Group is only entitled to a deduction for capital gains tax purposes if the mineral rights are sold or formally relinquished.
Current and deferred tax relating to items recognised directly in equity are recognised in equity and not in the income statement.(n)
    
    Post employment benefitsFor defined benefit post employment plans, the difference between the fair value of the plan assets (if any) and the present value of the plan liabilities is
recognised as an asset or liability on the statement of financial position. Any asset recognised is restricted, if appropriate, to the present value of any
amounts the Group expects to recover by way of refunds from the plan or reductions in future contributions. Actuarial gains and losses arising in the year are
taken to the statement of comprehensive income. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and
experience adjustments arising because of differences between the
previous actuarial assumptions and what has actually
occurred.Other movements in the net surplus or deficit are recognised in the income statement, including the current service cost, any past service cost and the effect
of any curtailment or settlements. The interest cost less the expected return on assets is also charged to the income statement. The amount charged to the
income statement in respect of these plans is included within operating costs or in the Groups share of the results of equity accounted units as appropriate.The most significant assumptions used in accounting for pension plans are the long term rate of return on plan assets, the discount rate and the mortality
assumptions. The long term rate of return on plan assets is used to calculate interest income on pension assets, which is credited to the Groups income
statement. The discount rate is used to determine the net present value of future liabilities. The discount rate used is the yield on high quality corporate
bonds with maturity and terms that match those of the post employment obligations as closely as possible. Where there is no developed corporate bond market
in a country, the rate on government bonds is used. Each year, the unwinding of the discount on those liabilities is charged to the Groups income statement
as the interest cost. The mortality assumption is used to project the future stream of benefit payments, which is then discounted to arrive at a net present
value of liabilities.The values attributed to plan liabilities are assessed in accordance with the advice of independent qualified actuaries.The Groups contributions to defined contribution
pension plans are charged to the income statement in the period to which the contributions relate.
 A-16




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Notes to the 2009 Financial statements
 1 Principal accounting policies
 (o)
    
    Cash and cash equivalentsFor the purposes of the statement of financial position, cash and cash equivalents comprise cash on hand, deposits held on call with banks and short term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. For the
purposes of the cash flow statement, cash and cash equivalents are net of bank overdrafts that are repayable on demand which are shown as current liabilities
on the statement of financial position.(p)
    
    Financial instruments(i) Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and
held to maturity investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the
classification of financial assets at initial recognition.(a) Financial assets at fair
value through profit or lossDerivatives are included in this category unless they are designated as hedges. Assets in this category are classified based on their maturity. Generally, the
Group does not acquire financial assets for the purpose of selling in
the short term.Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement.(b) Loans and receivablesLoans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are classified as
current assets or non current assets based on their maturity date. Loans and receivables comprise trade and other receivables, other financial assets and
cash and cash equivalents in the statement of financial position. Loans and receivables are carried at amortised cost less any impairment.(c) Available-for-sale
financial assetsAvailable-for-sale financial assets are non derivatives that are either designated as available for sale or not classified in any of the other categories.
They are included in non current assets unless the Group intends to dispose of the investment within 12 months of the statement of financial position date.Changes in the fair value of available-for-sale financial assets denominated in a currency other than the functional currency of the holder other than equity
investments, are analysed between translation differences and other changes in the carrying amount of the security. The translation differences are recognised
in profit or loss. Any impairment charges are also recognised in
profit or loss, while other changes in fair value are recognised in
equity.When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income
statement within net operating costs.Dividends on available-for-sale equity instruments are also recognised in the income statement within interest receivable and similar income when the Groups
right to receive payments is established.Financial assets not carried at fair value through profit and loss are initially recognised on the trade date at fair value plus transaction costs.Financial assets are derecognised when the investments mature or are sold, and substantially all the risks and rewards of ownership have been transferred.(ii) Financial liabilitiesBorrowings and other financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised
cost. Any difference between the amounts originally received (net of transaction costs) and the redemption value is recognised in the income statement over the
period to maturity using the effective interest method.Borrowings and other financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial position date.(iii) Derivative financial instruments and hedge
accountingThe Groups policy with regard to Financial risk management is set out in note 33. When the Group enters into derivative contracts these transactions are
designed to reduce exposures related to assets and liabilities, firm commitments or anticipated transactions.Commodity based contracts that meet the definition of a derivative in IAS 39 but are entered into in accordance with the Groups expected purchase or sales
requirements are recognised in earnings as described in note 1(c) Sales revenue above.All other derivatives are initially recognised at their fair value on the date the derivative contract is entered into and are subsequently remeasured subject
to IAS 39 at their fair value at each statement of financial position date. The method of recognising the resulting gain or loss depends on whether or not the
derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives as either hedges of
the fair value of recognised assets or liabilities or of firm commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow
hedges).At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge
accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instruments effectiveness in offsetting the
exposure to changes in the hedged items fair value or cash flows attributable to the hedged risk. Hedges that are expected to be highly effective in achieving
offsetting changes in fair value or cash flows are assessed on an ongoing basis to determine that they actually have been highly effective throughout the
financial reporting periods for which they were designated.
 A-17




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##### 



Notes to the 2009 Financial statements
 1 Principal accounting policies
 
    
    Fair value hedges:Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement,
together with any changes in the fair value of the hedged asset or liability or firm commitment that is attributable to the hedged risk. Where derivatives
are held with different counterparties to the underlying asset or liability or firm commitment, the fair values of the derivative assets and liabilities are
shown separately in the statement of financial position as there is no legal right of offset. The gain or loss relating to the effective portion of interest
rate swaps hedging fixed rate borrowings is recognised in the income statement within interest payable and similar charges.
    
    Cash flow hedges:The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within net operating costs. Amounts
accumulated in equity are recycled in the income statement in the period when the hedged item affects profit or loss, for example when the forecast sale
that is being hedged takes place. The realised gain or loss relating to the effective portion of forward foreign exchange or commodity contracts hedging
sales is recognised in the income statement within sales revenue. When the forecast transaction that is being hedged results in the recognition of a
non financial asset the gains and losses previously deferred in equity are transferred from equity and adjust the cost of the asset. The gains and losses
are recognised subsequently in the income statement within net operating costs when the non financial asset is amortised.When a cash flow hedging instrument expires or is sold, or when a cash flow hedge no longer meets the criteria for hedge accounting, although the
forecasted transaction is still expected to occur, any cumulative gain or loss relating to the instrument which is held in equity at that time remains in
equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.When a fair value interest rate hedging instrument expires or is sold, or when a fair value interest rate hedge no longer meets the criteria for hedge
accounting, the fair value adjustments which have been made to the hedged item are amortised through the income statement over its remaining life.
    
    Derivatives that do not qualify for hedge accounting:Any derivative contracts that do not qualify for hedge accounting, are marked to market at the
statement of financial position date. In respect of currency swaps, the gain or loss on the swap and the offsetting gain or loss on the financial asset or
liability against which the swap forms an economic hedge are shown in separate lines in the income statement within the lines net gains/(losses) on
derivatives not qualifying for hedge accounting and net exchange gains/(losses) on external debt and intragroup balances. In respect of other
derivatives, the mark to market may give rise to charges or credits to the income statement in periods before the transaction against which the derivative
is held as an economic hedge is recognised. These charges or credits would be recognised in the line net gains/(losses) on derivatives not qualifying
for hedge accounting.
    
    Embedded derivatives:Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to their host contracts. In some cases, the embedded derivatives may be designated as hedges and will be accounted
for as described above.
 (iv) Fair valueFair value is the amount at which a financial instrument could be exchanged in an arms length transaction between informed and willing parties. Where
relevant market prices are available, these have been used to determine fair values. In other cases, fair values have been calculated using quotations from
independent financial institutions, or by using valuation techniques consistent with general market practice applicable to the instrument.(a) The fair values of cash, short term borrowings and loans to joint ventures and associates approximate to their carrying values, as a result of their
short maturity or because they carry floating rates of interest.(b) The fair values of medium and long term borrowings is calculated as the present value of the estimated future cash flows using an appropriate market based
yield curve. The carrying value of the borrowings is amortised cost.(c) Derivative financial assets and liabilities are carried at fair value based on published price quotations for the period for which a a liquid active
market exists. Beyond this period, the Groups own assumptions
are used.The fair values of the various derivative instruments used for hedging purposes are disclosed in note 34. Movements on the hedging reserve are disclosed
within note 30.(v) Impairment of financial assetsAvailable-for-sale financial assetsThe group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is
impaired. In the case of equity securities classified as available for sale, an evaluation is made as to whether a decline in fair value is significant or
prolonged based on an analysis of indicators such as significant adverse changes in the technological, market, economic or legal environment in which the
company invested in operates.If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation)
and its current fair value, less any impairment loss previously recognised in the income statement is transferred from equity to the income statement.
Reversals in respect of equity instruments classified as available-for-sale are not recognised in the income statement. Reversals of impairment losses on
debt instruments are reversed through the income statement, if the increase in fair value of the instrument can be objectively related to an event occurring
after the impairment loss was recognised.
 A-18




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##### 



Notes to the 2009 Financial statements
 1 Principal accounting policies
 (vi) De-recognition of financial assets and liabilitiesFinancial assetsA financial asset is derecognised when its contractual rights to the cash flows that comprise the financial asset expire or substantially all the risks and
rewards of the asset are transferred.Financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are
recognised within finance income and finance costs respectively.Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in the income statement.(vii) Trade receivablesTrade receivables are recognised initially at fair value and are subsequently measured at amortised cost reduced by any provision for impairment. A provision
for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due. Indicators of
impairment would include financial difficulties of the debtor, likelihood of the debtors insolvency, default in payment or a significant deterioration in
credit worthiness. Any impairment is recognised in the income statement within net operating costs. When a trade receivable is uncollectable, it is written
off against the allowance account. Subsequent recoveries of amounts previously written off are credited against net operating costs in the income statement.(viii) Trade payablesTrade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.(q)
    
    Share based paymentsThe fair value of cash-settled share plans is recognised as a liability over the vesting period of the awards. Movements in that liability between accounting
dates are recognised as an expense. The grant date fair value of the awards is determined from the market value of the shares at the date of award and
adjusted for any market based vesting conditions attached to the award e.g. relative Total Shareholder Return (TSR) performance. Fair values are
subsequently re-measured at each accounting date to reflect the market value of shares at the measurement date and, where relevant, the number of awards
expected to vest based on the current and anticipated TSR performance. If any awards are ultimately settled in shares, the liability is transferred directly
to equity as part of the consideration for the equity instruments issued.The Groups equity-settled share plans are settled either by the issue of shares by the relevant parent company, by the purchase of shares on market or by the
use of shares previously acquired as part of a share buyback. The fair value of the share plans is recognised as an expense over the expected vesting period
with a corresponding entry to retained earnings for Rio Tinto plc plans and to other reserves for Rio Tinto Limited plans. If the cost of shares acquired to
satisfy the plans exceeds the expense charged, the excess is taken to the appropriate reserve. The fair value of the share plans is determined at the date of
grant, taking into account any market based vesting conditions attached to the award (eg TSR). The Group uses fair values provided by independent
actuaries calculated using a lattice based option valuation model.Non market based vesting conditions (e.g. earnings per share targets) are taken into account in estimating the number of awards likely to vest. The estimate
of the number of awards likely to vest is reviewed at each statement of financial position date up to the vesting date, at which point the estimate is
adjusted to reflect the actual awards issued. No adjustment is made after the vesting date even if the awards are forfeited or not exercised.Further information about the treatment of individual share based
payment plans is provided in note 49.(r)
    
    ContingenciesContingent liabilities are not recognised in the financial statements but are disclosed by way of note unless their occurrence is remote.Contingent assets are not recognised in the financial statement but they are disclosed by way of note if they are deemed probable.(s)
    
    Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.Where any group company purchases the Groups equity share capital (treasury shares), the consideration paid, including any directly attributable incremental
costs (net of income taxes) is deducted from equity attributable to Rio Tintos equity shareholders. Where such shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to
Rio Tintos equity shareholders.Critical accounting policies and estimates(i)
    
    Dual listed company reportingAs explained in detail in the Outline of Dual Listed Companies Structure and basis of financial statements section on page A-8 the
consolidated financial statements of the Rio Tinto Group deal with the results, assets and liabilities of both of the dual listed companies, Rio
Tinto plc and Rio Tinto Limited, and their subsidiaries. In other words, Rio Tinto plc and Rio Tinto Limited are viewed as a single parent company with their
respective shareholders being the shareholders in that single company.The 2009 Annual report satisfies the obligations of Rio Tinto Limited to prepare consolidated accounts under Australian company law, as amended by an order
issued by the Australian Securities and Investments Commission on 27
January 2006 (as amended on 22 December 2006). The 2009 Financial statements disclose the
effect of the adjustments to consolidated IFRS profit, consolidated total comprehensive income and consolidated shareholders funds for the Group that would
be required under the version of IFRS that is applicable in Australia (Australian IFRS).The US dollar is the presentation currency used in these financial statements, as it most reliably reflects the Groups global business performance.
 A-19




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##### 



Notes to the 2009 Financial statements
 1 Principal accounting policies
 (ii)
    
    Asset carrying valuesEvents or changes in circumstances can give rise to significant impairment charges or reversals of impairment provisions in a particular year.When such events or changes in circumstances impact on a particular asset or cash generating unit, its carrying value is assessed by reference to its
recoverable amount, being the higher of fair value less costs to sell and value in use (being the net present value of expected future cash flows of the
relevant cash generating unit). This is often estimated using discounted cash flow techniques.Where the recoverable amounts of Group cash-generating units are assessed by analyses of discounted cash flows, the resulting valuations are particularly
sensitive to changes in long term commodity prices; exchange rates; operating costs; discount rates.The great majority of the Groups sales are based on prices denominated in US dollars. To the extent that the currencies of countries in which the Group
produces commodities strengthen against the US dollar without commodity price offset; cash flows and, therefore, net present values are reduced. Management
considers that over the long term, there is a tendency for movements in commodity prices to compensate to some extent for movements in the value of the US
dollar (and vice versa). However, such compensating changes are not synchronised and do not fully offset each other.Reviews of carrying values relate to cash generating units
which, in accordance with IAS 36 Impairment of Assets, are identified as the smallest identifiable
group of assets that generates cash inflows, which are largely independent of the cash inflows
from other assets. In some cases, the business units within the product groups consist of several operations with independent cash generating streams, which
therefore constitute separate cash generating units.Goodwill acquired through business combinations has been allocated to groups of cash generating units that are being managed as a combined business. These
groups of cash-generating units represent the lowest level within the Group at which goodwill is monitored for internal management purposes and these groups are
not larger than the Groups reporting segments, which are its product groups.The cash flow forecasts are based on best estimates of expected future revenues and costs. These may include net cash flows expected to be realised from
extraction, processing and sale of mineralised material that does not currently qualify for inclusion in proven or probable ore reserves. Such non reserve
material is included where there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and
sampling of areas of mineralisation that are contiguous with existing reserves. Typically, the additional evaluation to achieve reserve status for such material
has not yet been done because this would involve incurring costs earlier than is required for the efficient planning and operation of the mine.Where the recoverable amount of a cash generating unit is dependent on the life of its associated ore body, expected future cash flows reflect long term mine
plans, which are based on detailed research, analysis and iterative modelling to optimise the level of return from investment, output and sequence of
extraction. The mine plan takes account of all relevant characteristics of the ore body, including waste to ore ratios, ore grades, haul distances, chemical and
metallurgical properties of the ore impacting on process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the
basis for forecasting production output in each future year and for forecasting production costs.Rio Tintos cash flow forecasts are based on assessments of expected long term commodity prices, which for most commodities are derived from an analysis of the
marginal costs of the producers of the relevant commodities. These assessments often differ from current price levels and are updated regularly.In some cases, prices applying to some part of the future sales volumes of a cash generating unit are predetermined by existing sales contracts. The effects of
such contracts are taken into account in forecasting future cash flows.As denoted above, cost levels incorporated in the cash flow forecasts are based on the current long term mine plan or long term production plan for the cash
generating unit. For value in use calculations used in impairment reviews, recent cost levels are considered, together with expected changes in costs that are
compatible with the current condition of the business. Because future cash flows are estimates for the asset in its current condition, value in use does not
reflect future cash flows associated with improving or enhancing an assets performance.The useful lives of the major assets of a cash generating
unit are often dependent on the life of the orebody to which they relate. Where this is the case, the
lives of mining properties, and their associated refineries, concentrators and other long lived processing equipment generally relate to the expected life of
the orebody. The life of the orebody, in turn, is estimated on the basis of the long term mine plan. Where the major assets of a cash generating unit are not
dependent on the life of a related orebody, management applies
judgement in estimating the remaining service potential of long lived assets. In the case of
smelters, factors affecting the remaining service potential include smelter technology and electricity contracts when the power is not sourced
from the companys own electricity generating capacity.
 Forecast cash flows are discounted to present values using Rio Tintos weighted average cost of capital with appropriate adjustment for
the risks associated with the relevant cash flows, to the extent that such risks are not reflected in the forecast cash flows. For final feasibility
studies and ore reserve estimation, internal hurdle rates are used which are generally higher than the weighted average cost of capital.Value in use and ore reserve estimates are based on the exchange rates current at the time of the evaluation. In final feasibility studies and
estimates of fair value, a forecast of the long term exchange rate is made having regard to spot exchange rates, historical data and external
forecasts.
 A-20




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##### 



Notes to the 2009 Financial statements
 1
    
    Principal accounting policiescontinued
 Forecast cash flows for ore reserve estimation for JORC purposes and for impairment testing are generally based on Rio Tintos long term
price forecasts.All goodwill and intangible assets that are not yet ready for use or have an indefinite life are tested annually for impairment regardless of
whether there has been any change in events or circumstances.Further details  are contained within note
11.(iii)
    
    Asset livesIntangible assets are considered to have indefinite lives when, based on an analysis of all of the relevant factors, there is no foreseeable
limit to the period over which the asset is expected to generate cash flows for the Group. The factors considered in making this
determination include the existence of contractual rights for unlimited terms; or evidence that renewal of the contractual rights without
significant incremental cost can be expected for indefinite periods into the future in view of the Groups future investment intentions.The life cycles of the products and processes that depend on the asset are also considered. A change in the prospectus for
renewal of the contractual rights without a significant incremental cost could impact on the Groups depreciation and
amotisation rates and asset carrying values.(iv)
    
    Ore reserve estimatesRio Tinto estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December 2004 (the
JORC code). The amounts presented under IFRS and Australian IFRS are based on the reserves, and in some cases mineral resources,
determined under the JORC code.For the purposes of this combined Annual report on Form 20-F estimates of ore reserves have been computed in accordance with the
SECs Industry Guide 7, rather than in accordance with the JORC code, and are shown on pages 29 to 38. Ore reserves presented in
accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices
were to be in line with the average of historical prices for the three years to 30 June 2009, or contracted prices where applicable. For this
purpose, contracted prices are applied only to future sales volumes for which the price predetermined by an existing contract; and the
average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore reserve estimates
have not been increased above the levels expected to be economic based on Rio Tintos own long term price assumptions. Therefore, a
reduction in commodity prices from the three year average historical price levels would not necessarily give rise to a reduction in reported
ore reserves.There are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid at the time of estimation may
change significantly when new information becomes available.Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of
reserves and may, ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and
amortisation rates, asset carrying values, deferred stripping calculations and provisions for close down, restoration and environmental
clean up costs.(v)
    
    Close down, restoration and clean up obligationsProvision is made for environmental remediation costs when the related environmental disturbance occurs, based on the net present
value of estimated future costs.Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is
incurred at the end of the life of the mine. The costs are estimated on the basis of a closure plan. The cost estimates are calculated
annually during the life of the operation to reflect known developments, e.g. updated cost estimates and revisions to the estimated lives of
operations, and are subject to formal review at regular intervals. Although the ultimate cost to be incurred is uncertain, the Groups
businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and
techniques. The initial closure provisions together with changes, other than those arising from the unwind of the discount applied in
establishing the net present value of the provision, are capitalised within property, plant and equipment and depreciated over the lives
of the assets to which they relate.Clean up costs result from environmental damage that was not a necessary consequence of mining, including remediation,
compensation and penalties. These costs are charged to the income statement. Provisions are recognised at the time the damage,
remediation process and estimated remediation costs become known. Remediation procedures may commence soon after this point in
time but may continue for many years depending on the nature of the disturbance and the remediation techniques.As noted above, the ultimate cost of environmental disturbance is uncertain and cost estimates can vary in response to many
factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine
sites.The expected timing of expenditure can also change, for example in response to changes in ore reserves or production rates or
economic conditions. As a result there could be significant adjustments to the provision for close down and restoration and environmental
clean up, which would affect future financial results.(vi)
    
    Overburden removal costsIn open pit mining operations, it is necessary to remove overburden and other barren waste materials to access ore from which
minerals can economically be extracted. The process of mining overburden and waste materials is referred to as stripping. During the
development of a mine, before production commences, it is generally
accepted that stripping costs are capitalised as part of the investment in construction of the mine.
 Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping costs
are accounted for separately by reference to the ore from each separate pit. If, however, the pits are highly integrated for the purpose of
mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for stripping costs. In such cases,
the initial stripping of the second and subsequent pits is considered to be production phase stripping relating to the combined operation.Stripping of waste materials continues during the production stage of the mine or pit. Some mining companies expense these production
stage stripping costs as incurred, while others defer such stripping costs. In operations that experience material fluctuations in the ratio of
 A-21




---



##### 



Notes to the 2009 Financial statements
 1
    
    Principal accounting policiescontinuedwaste materials to ore or contained minerals on a year to year basis over the life of the mine or pit, deferral of stripping costs reduces the
volatility of the cost of stripping expensed in individual reporting periods. Those mining companies that expense stripping costs as incurred
will therefore report greater volatility in the results of their operations from period to period.Rio Tinto defers production stage stripping costs for those operations where this is the most appropriate basis for matching costs with the
related economic benefits and the effect is material. Stripping costs incurred in the period are deferred to the extent that the current period
ratio exceeds the life of mine or pit ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent
periods, the ratio falls short of the life of mine or pit ratio. The life of mine or pit ratio is based on the proven and probable reserves of the
mine or pit and is obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the quantity of minerals
contained in the ore. In some operations, the quantity of ore is a more practical basis for matching costs with the related economic
benefits where there are important co-products or where the grade of the ore is relatively stable from year to year.The life of mine or pit waste-to-ore ratio is a function of an individual mines pit design and therefore changes to that design will
generally result in changes to the ratio. Changes in other technical or economic parameters that impact on reserves will also have
an impact on the life of mine or pit ratio even if they do not affect the pit design. Changes to the life of mine or pit ratio are accounted for
prospectively.In the production stage of some operations, further development of the mine requires a phase of unusually high overburden removal
activity that is similar in nature to preproduction mine development. The costs of such unusually high overburden removal activity
are deferred and charged against reported profits in subsequent periods on a units-of-production basis. This accounting treatment is
consistent with that for stripping costs incurred during the development phase of a mine or pit, before production commences.Deferred stripping costs are included in property, plant and equipment or in investment in equity accounted units, as appropriate.These form part of the total investment in the relevant cash generating unit, which is reviewed for impairment if events or changes in
circumstances indicate that the carrying value may not be recoverable. Amortisation of deferred stripping costs is included in operating
costs or in the Groups share of the results of its jointly controlled entities and associates as appropriate.During 2009, production stage stripping costs incurred by subsidiaries and equity accounted operations were US$174 million higher
than the amounts charged against pre tax profit (2008: production stage costs exceeded the amounts charged against pre-tax profit
by US$175 million). In addition, US$59 million of deferred stripping has been written off in 2009 as part of the Diamonds businesses
impairment.The net book value carried forward in property, plant and equipment and in investments in jointly controlled entities and associates
at 31 December 2009 was US$1,171 million (2008: US$1,026 million).Information about the stripping ratios of the business units, including equity accounted units that account for the majority of the
deferred stripping balance at 31 December 2009, along with the year in which deferred stripping is expected to be fully amortised, is set out
in the following table:
 Actual stripping ratio for year
    
    
    Life of mine stripping ratio2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Kennecott
Utah Copper (2020) (a)
    
    
    2.13
    
    
    
    1.98
    
    
    
    1.99
    
    
    
    1.21
    
    
    
    1.24
    
    
    
    1.32Grasberg Joint Venture (2015) (a)
    
    
    3.42
    
    
    
    3.27
    
    
    
    3.47
    
    
    
    3.00
    
    
    
    2.87
    
    
    
    3.05Diavik (2012)(b)
    
    
    1.17
    
    
    
    1.23
    
    
    
    0.42
    
    
    
    1.02
    
    
    
    1.20
    
    
    
    0.91Escondida (2043)(c)
    
    
    0.11
    
    
    
    0.12
    
    
    
    0.07
    
    
    
    0.14
    
    
    
    0.10
    
    
    
    0.10
 
 Notes(a)
    
    Stripping ratios shown are waste to ore.(b)
    
    Diaviks stripping ratio is disclosed as bench cubic metre per carat. The 2009 deferred stripping ratio is based on a dual pit commercial
production (A154 and A418) with the A154 open pit scheduled to end commercial production in the first quarter of 2010 and the A418 open
pit scheduled to end commercial production in the third quarter of 2012.(c)
    
    Escondidas stripping ratio is based on waste tonnes to pounds of copper mined. Rio Tinto Borax capitalised stripping costs as part of a distinct period of new development during the production stage of the mine.
Capitalisation stopped in 2004. The capitalised costs will be fully amortised in 2034.(vii)
    
    Deferred tax on fair value adjustmentsOn transition to IFRS with effect from 1 January 2004, deferred tax was provided in respect of fair value adjustments on acquisitions in
previous years. No other adjustments were made to the assets and liabilities recognised in such prior year acquisitions and, accordingly,
shareholders funds were reduced by US$720 million on transition to IFRS primarily as a result of deferred tax on fair value adjustments
to mining rights. In general, these mining rights are not eligible for income tax allowances. In such cases, the provision for deferred tax was
based on the difference between their carrying value and their nil income tax base. The existence of a tax base for capital gains tax
purposes was not taken into account in determining the deferred tax provision relating to such mineral rights because it is expected that the
carrying amount will be recovered primarily through use and not from the disposal of the mineral rights. Also, the Group is only entitled to a
deduction for capital gains tax purposes if the mineral rights are sold or formally relinquished.For acquisitions after 1 January 2004 provision for such deferred tax on acquisition results in a corresponding increase in the amounts
attributed to acquired assets and/or goodwill under  IFRS.(viii)
    
    ExplorationUnder the Groups accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached at which there
is a high degree of confidence in the projects viability and it
is considered probable that future economic benefits will flow to the
Group.

The carrying values of exploration and evaluation assets are reviewed twice per annum by management and the results of these reviews
are reported to the Audit committee. In the case of undeveloped
projects, there may only be mineralisation to form a basis for the
impairment review. The review is based on a status report regarding the Groups intentions for development of the undeveloped project. In
some cases, the undeveloped projects are regarded as successors to ore bodies, smelters or refineries currently in production and may
therefore benefit from existing infrastructure and equipment.
 A-22




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##### 



Notes to the 2009 Financial statements
 1
    
    Principal accounting policiescontinued(ix)
    
    Functional currencyThe determination of functional currency affects the carrying value of non current assets included in the statement of financial position and,
as a consequence, the amortisation of those assets included in the income statement. It also impacts exchange gains and losses
included in the income statement.The functional currency for each entity in the Group, and for jointly controlled entities and associates, is the currency of the primary
economic environment in which it operates. For many of Rio Tintos entities, this is the currency of the country in which each operates.
Transactions denominated in currencies other than the functional currency are converted to the functional currency at the exchange
rate ruling at the date of the transaction unless hedge accounting applies. Monetary assets and liabilities denominated in foreign
currencies are retranslated at year end exchange rates.The US dollar is the currency in which the Groups financial statements are presented, as it most reliably reflects the global business
performance of the Group as a whole.On consolidation, income statement items are translated into US dollars at average rates of exchange. Statement of financial position
items are translated into US dollars at year end exchange rates. Exchange differences on the translation of the net assets of entities with
functional currencies other than the US dollar, and any offsetting exchange differences on net debt hedging those net assets, are
recognised directly in the foreign currency translation reserve. Exchange gains and losses which arise on balances between Group entities
are taken to the foreign currency translation reserve where the intragroup balance is, in substance, part of the Groups net investment in the
entity.The balance of the foreign currency translation reserve relating to an operation that is disposed of is transferred to the income
statement at the time of the disposal.The Group finances its operations primarily in US dollars but part of the Groups US dollar debt is located in subsidiaries having functional
currencies other than the US dollar. Except as noted above, exchange gains and losses relating to such US dollar debt are charged or
credited to the Groups income statement in the year in which they arise. This means that the impact of financing in US dollars on the
Groups income statement is dependent on the functional currency of the particular subsidiary where the debt is located.With the above exceptions, and except for derivative contracts which qualify as cash flow hedges, exchange differences are charged
or credited to the income statement in the year in which they arise.(x)
    
    Underlying earningsThe Group presents Underlying earnings as an additional measure to provide greater understanding of the underlying business
performance of its operations. The adjustments made to net earnings
to arrive at underlying earnings are explained in note 2.(xi)
    
    Post retirement benefitsThe difference between the fair value of the plan assets (if any) of post retirement plans and the present value of the plan obligations is
recognised as an asset or liability on the statement of financial position. The Group has adopted the option under IAS 19 to record actuarial
gains and losses directly in the Groups statement of comprehensive income.The most significant assumptions used in accounting for post retirement plans are the long term rate of return on plan assets, the
discount rate, the expected rate of long term inflation and the mortality assumptions.The long term rate of return on plan assets is used to calculate interest income on pension assets, which is credited to the Groups
income statement. The mortality assumption is used to project the length of time for which future pension payments will be made and the
inflation assumption is used in projecting future increases in those payments. The discount rate is used to determine the net present value
of those future payments and each year the unwinding of the discount on those liabilities is charged to the Groups income statement.Valuations are carried out using the projected unit method. The expected rate of return on pension plan assets is determined as
managements best estimate of the long term return on the major asset classes, i.e. equity, debt, property and other, weighted by the
actual allocation of assets among the categories at the measurement date. The expected rate of return is calculated using geometric
averaging.The sources used to determine managements best estimate of long term returns are numerous and include country specific bond
yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country specific
inflation and investment market expectations derived from market data and analysts or governments expectations as applicable.In particular, the Group estimates long term expected returns on equity based on the economic outlook, analysts views and those of
other market commentators. This is the most subjective of the assumptions used and it is reviewed regularly to ensure that it remains
consistent with best practice.The discount rate used in determining the service cost and interest cost charged to income is the market yield at the start of the year
on high quality corporate bonds. For countries where there is no deep market in such bonds the yield on government bonds is used.For determining the present value of obligations shown on the statement of financial position, market yields at the statement of financial
position date are used.Details of the key assumptions are set out in note 50.For 2009 the charge against income for post retirement benefits net of tax and minorities was US$383 million. This charge included both
pension and post retirement healthcare benefits. The charge is net of the expected return on assets which was US$396 million after tax
and minorities.
 In calculating the 2009 expense the average future increase in compensation levels was assumed to be three per cent and this will
increase to 3.6 per cent for 2010 reflecting higher assumed inflation in most territories. The average discount rate used for the Groups
plans in 2009 was 6.2 per cent and the average discount rate used in 2010 will be 5.8 per cent reflecting the net impact of changes in
corporate bond yields in the regions where the Group has pension obligations.The weighted average expected long term rate of return on assets used to determine 2009 pension cost was 5.9 per cent. This will
 A-23




---



##### 



Notes to the 2009 Financial statements
 1
    
    Principal accounting policies continuedincrease to 6.4 per cent for 2010. This improvement results mainly from higher government bond
yields in most territories which drives assured return on other asset
classesBased on the known changes in assumptions noted above and
other expected circumstances, the impact of post retirement costs on the
Groups IFRS net earnings in 2010 would be an expected decrease of some US$40
million to US$423 million. This decrease is mainly attributable to higher
expected return on assets. The actual charge may be impacted by other factors
that cannot be predicted, such as the effect of changes in benefits and
exchange rates.The table below sets out the potential change in the Groups
2009 net earnings (after tax and outside interests) that would result from
hypothetical changes to post retirement assumptions and estimates. The
sensitivities are viewed for each assumption in isolation although a change in
one assumption is likely to result in some offset elsewhere.The figures in the below table only show the impact on underlying and net earnings. Changing the
assumptions would also have an impact on the statement of financial position.
 IFRSUS$mSensitivity of Groups 2009 net earnings to changes in:Expected return on assetsincrease of 1 percentage point
    
    
    65decrease of 1 percentage point
    
    
    (65
    )Discount rateincrease of 0.5 percentage points
    
    
    3decrease of 0.5 percentage points
    
    
    (2
    )Salary increasesincrease of 0.5 percentage points
    
    
    (9
    )decrease of 0.5 percentage points
    
    
    8Demographic  allowance for additional future mortality improvementsparticipants assumed to be one year older
    
    
    15participants assumed to be one year younger
    
    
    (15
    )
 (xii)
    
    Deferred tax potentially recoverable on Group tax lossesThe Group has carried forward losses; mainly in the UK, French and Canadian tax
groups; that have the potential to reduce tax charges in future years. Deferred tax assets have
been recognised on these tax losses to the extent their recovery is probable, having regard to the
projected future taxable profits of the relevant tax groups.The possible tax assets on these losses totalled US$1,882 million at 31 December 2009
(2008: US$1,000 million). Of these, US$1,286 million have been recognised as deferred tax assets (2008: US$899
million), leaving US$596 million (2008: US$101 million) unrecognised, as recovery is not considered
probable. This amount excludes unrecognised capital losses which can only be recovered against
future capital gains.Within the UK tax group, US$303 million in tax losses have been recognised as
deferred tax assets (2008: US$246 million), with no amounts unrecognised. Within the French tax
group, US$419 million in tax losses have been recognised as deferred tax assets (2008: US$309
million) with US$503 million unrecognised. Within the Canadian tax group, US$393 million in tax
losses have been recognised as deferred tax assets (2008: US$172 million), with no amounts
unrecognised.(xiii)
    
    ContingenciesDisclosure is made of material contingent liabilities
unless the possibility of any loss arising is considered remote. Contingencies are disclosed in
note 35.(xiv)
    
    Acquisition accountingOn the acquisition of a subsidiary, the purchase
method of accounting is used whereby the purchase consideration is allocated to the identifiable
assets, liabilities and contingent liabilities (identifiable net assets) on the basis of fair value
at the date of acquisition.Rio Tinto acquired Alcan Inc during 2007. The Group commissioned
expert valuation consultants to advise on the fair values and asset lives of Alcans assets. The
residue of the purchase price not allocated to specific assets and liabilities has been attributed
to goodwill. The provisional values and asset lives incorporated in the 2007 Financial statements
have been revised in 2008 (within 12 months of the date of acquisition) as permitted by IFRS 3
Business Combinations.(xv)
    
    Temporary differences related to closure costs and finance
leasesUnder the initial recognition rules in paragraphs 15 and
24 of IAS 12 Income Taxes, deferred tax is not provided on the initial recognition of an asset
or liability in a transaction that does not affect accounting profit or taxable profit and is not a
business combination. The Groups interpretation of these initial recognition rules has the result
that no deferred tax asset is provided on the recognition of a provision for close down and
restoration costs and the related asset, or on recognition of assets held under finance leases and
the associated lease liability, except where these are recognised as a consequence of business
combinations.On creation of a closure provision, for instance, there is no
effect on accounting or taxable profit because the cost is capitalised. As a result, the initial
recognition rules would appear to prevent the recognition of a deferred tax asset in respect of the
provision and of a deferred tax liability in respect of the related capitalised amount.The temporary differences will reverse in future periods
as the closure asset is depreciated and when tax deductible payments are made that are charged
against the provision. Paragraph 22 of IAS 12 extends the initial recognition rules to the reversal
of temporary differences on assets and liabilities to which the initial recognition rules apply.
Therefore, deferred tax is not recognised on the changes in the carrying amount of the asset which
result from depreciation or from the changes in the provision resulting from expenditure. When tax
relief on expenditure is received this will be credited to the income statement as part of the
current tax charge.The unwinding of the discount applied in establishing the
present value of the closure costs does affect accounting profit. Therefore, this unwinding of
discount results in the recognition of deferred tax assets.The application of this initial recognition exemption has
given rise to diversity in practice: some companies do provide for deferred tax on closure cost
provisions and the related capitalised amounts.
The Exposure Draft on Income Tax released
by the IASB in 2009 would require the Group to provide for deferred
tax on closure cost provisions.
If the Group were to provide for deferred
tax on closure costs and finance leases under IFRS the benefit to
Underlying and Net earnings would have been US$41 million (2008: US$39
million) and to equity would have been US$232 million (2008: US$182
million).
 A-24




---



##### 



Notes to the 2009 Financial statements
 
 2
    
    Reconciliation of Net earnings to Underlying earnings Outside
    
    
    Discontinued
    
    
    Net
    
    
    Net
    
    
    NetPre-tax(i)
    
    
    Taxation
    
    
    interests
    
    
    operations(i)
    
    
    amount
    
    
    amount
    
    
    amount2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2007Exclusions from Underlying earnings
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mProfits less losses on disposal of interests in
businesses (a)
    
    
    692
    
    
    
    (193
    )
    
    
    
    
    
    
    
    
    
    
    499
    
    
    
    1,470
    
    
    
    1Impairment charges (b)
    
    
    (1,573
    )
    
    
    445
    
    
    
    25
    
    
    
    
    
    
    
    (1,103
    )
    
    
    (7,579
    )
    
    
    (113
    )Loss after tax from discontinued operations (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (449
    )
    
    
    (449
    )
    
    
    (827
    )
    
    
    Exchange differences and gains/(losses) on derivatives:- Exchange gains/(losses) on US dollar net debt and
intragroup balances (c)
    
    
    368
    
    
    
    (438
    )
    
    
    14
    
    
    
    
    
    
    
    (56
    )
    
    
    960
    
    
    
    156- (Losses)/gains on currency and interest rate
derivatives not qualifying for hedge accounting (d) (e)
    
    
    (21
    )
    
    
    12
    
    
    
    18
    
    
    
    
    
    
    
    9
    
    
    
    (22
    )
    
    
    34- Gains/(losses) on commodity derivatives not qualifying
for hedge accounting (f)
    
    
    181
    
    
    
    (106
    )
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    (95
    )
    
    
    Chinalco break fee
    
    
    (195
    )
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    (182
    )
    
    
    
    
    
    
    Restructuring costs from global headcount reduction (g)
    
    
    (321
    )
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    (231
    )
    
    
    (57
    )
    
    
    Other exclusions (h)
    
    
    (56
    )
    
    
    86
    
    
    
    (18
    )
    
    
    
    
    
    
    12
    
    
    
    (477
    )
    
    
    (209
    )Total excluded from Underlying earnings
    
    
    (925
    )
    
    
    (91
    )
    
    
    39
    
    
    
    (449
    )
    
    
    (1,426
    )
    
    
    (6,627
    )
    
    
    (131
    )Net earnings
    
    
    7,860
    
    
    
    (2,076
    )
    
    
    (463
    )
    
    
    (449
    )
    
    
    4,872
    
    
    
    3,676
    
    
    
    7,312Underlying earnings
    
    
    8,785
    
    
    
    (1,985
    )
    
    
    (502
    )
    
    
    
    
    
    
    6,298
    
    
    
    10,303
    
    
    
    7,443
 Underlying earnings is an alternative measure of earnings, which is reported by Rio Tinto to provide greater understanding of the underlying
business performance of its operations. Underlying earnings and Net earnings both represent amounts attributable to Rio Tinto shareholders.
Items (a) to (h) below are excluded from Net earnings in arriving at Underlying earnings.(a)
    
    Profits arising on the disposal of interests in businesses in 2009 relate principally to sales of the Corumba iron ore mine in Brazil, the Jacobs
Ranch coal mine, the sale of 52 per cent of Rio Tintos interest in Cloud Peak Energy Resources LLC (CPER) and are partially offset by a loss
from the sale of Alcan Composites.Profits arising on the disposal of interests in businesses in 2008 relate principally to the sales of the Cortez gold mine and the Greens Creek mine.Profits arising on the disposal of interests in undeveloped projects which in 2009 includes gains on disposal of undeveloped potash assets in Argentina
and Canada amounting to US$797 million, net of tax, are not excluded from Underlying earnings. The 2008 profits relate principally to the disposal
of the undeveloped Kintyre uranium project in Western Australia.(b)
    
    Charges relating to impairment of goodwill and other non-current assets other than undeveloped projects but including discontinued operations.The impairment charges of US$1,103 million for the year ended 31 December 2009 related mainly to Alcan Engineered Products: US$500
million, the Groups aluminium businesses: US$212 million, the Groups diamond businesses: US$348 million and US$43 million in other
impairments. All impairments have been measured based upon an assessment of fair value.An impairment of US$318 million (31 December 2008: US$960 million; 31 December 2007: nil) relating to the Alcan Packaging business has been recognised
during the year ended 31 December 2009, and is included in Loss after tax from discontinued operations. This impairment is based on an estimate of
fair value less costs to sell, which is based on the Groups best estimate of expected proceeds to be realised on sale of Alcan Packaging, less
an estimate of remaining costs to sell. Loss after tax from discontinued operations of US$449 million (31 December 2008: US$827
million) also includes a US$131 million tax charge (31 December 2008: US$133 million tax benefit) relating to an increase in the Groups estimate of
the tax to be paid on sale of the Alcan Packaging business.The weak economic environment continued to put downward pressure on the sales prices for these divestment businesses and resulted in the
impairment of the Alcan Packaging businesses and Alcan Engineered Products businesses. The impairment charge related to the Groups
aluminium businesses related mainly to the planned closure of certain smelters and was caused by a decrease in short term price assumptions
at the date of the impairment review.The impairment to the Groups diamond business was caused by weak demand for luxury items and increased input costs.The impairment charge of US$7,579 million for the year ended 31 December 2008 related mainly to the Groups aluminium businesses:
US$6,127 million and Alcan Engineered Products: US$980 million. This includes amounts relating to equity accounted units of US$15 million (2007: nil).(c)
    
    Exchange gains and losses on US dollar debt and intragroup balances.The 2009 tax on exchange gains and losses on external debt and intragroup balances includes tax charges on gains on US dollar denominated
debt. However, a significant proportion of the pre-tax losses on intragroup balances are not subject to tax.The 2008 tax on exchange gains and losses on external debt and intragroup balances included a benefit of US$254 million through recovery of
tax relating to prior years. It also included a tax relief for losses on US dollar denominated debt. The gains on intragroup balances were largely
not subject to tax.(d)
    
    Valuation changes on currency and interest rate derivatives which are ineligible for hedge accounting, other than those embedded in commercial
contracts.(e)
    
    The currency revaluation of embedded US dollar derivatives contained in contracts held by entities whose functional currency is not the
US dollar.(f)
    
    Valuation changes on commodity derivatives, including those embedded in commercial contracts, that are ineligible for hedge accounting, but for
which there will be an offsetting change in future Group earnings.(g)
    
    During 2009, the Group incurred further restructuring costs relating to the cost saving measures announced in December 2008.
 A-25




---



##### 



Notes to the 2009 Financial statements2
    
    Reconciliation of Net earnings to Underlying earningscontinued(h)
    
    Other credits and charges that, individually, or in aggregate if of a similar type, are of a nature or size to require exclusion in order to provide
additional insight into underlying business performance.During 2008, the Group incurred advisory and other costs related to the rejection by the Board of the pre-conditional takeover proposal
from BHP Billiton, which was withdrawn in November 2008. These costs totalled US$270 million (net of tax) in 2008 and have been excluded from
Underlying earnings. Other charges excluded from Underlying earnings in 2008 and 2009 comprise of costs relating to acquisitions, disposals
and similar corporate projects.(i)
    
    Exclusions from Underlying earnings relating to equity accounted units and discontinued operations are stated after tax.
 
 3
    
    Net operating costs 2009
    
    
    2008
    
    
    2007Note
    
    
    US$m
    
    
    US$m
    
    
    US$mRaw materials and consumables
    
    
    
    
    
    
    11,501
    
    
    
    16,248
    
    
    
    6,096Amortisation of intangible assets
    
    
    12
    
    
    
    387
    
    
    
    429
    
    
    
    114Depreciation of property, plant & equipment
    
    
    13
    
    
    
    3,040
    
    
    
    3,046
    
    
    
    2,001Employment costs
    
    
    4
    
    
    
    6,198
    
    
    
    6,603
    
    
    
    3,827Repairs and maintenance
    
    
    
    
    
    
    1,771
    
    
    
    1,960
    
    
    
    1,393Shipping costs
    
    
    
    
    
    
    1,828
    
    
    
    2,495
    
    
    
    1,874Other freight costs
    
    
    
    
    
    
    756
    
    
    
    815
    
    
    
    509Decrease/(increase) in finished goods and work in progress
    
    
    
    
    
    
    517
    
    
    
    (163
    )
    
    
    110Royalties
    
    
    
    
    
    
    1,539
    
    
    
    1,946
    
    
    
    1,093Amounts charged by jointly controlled entities (a)
    
    
    
    
    
    
    2,420
    
    
    
    2,473
    
    
    
    1,362Net foreign exchange losses/(gains)
    
    
    
    
    
    
    123
    
    
    
    (379
    )
    
    
    (45
    )Other external costs
    
    
    
    
    
    
    3,127
    
    
    
    2,230
    
    
    
    2,391Provisions (including exchange losses/(gains) on provisions)
    
    
    27
    
    
    
    930
    
    
    
    265
    
    
    
    308Research and development
    
    
    
    
    
    
    193
    
    
    
    307
    
    
    
    69Costs included above qualifying for capitalisation
    
    
    
    
    
    
    (136
    )
    
    
    (259
    )
    
    
    (78
    )Other operating income
    
    
    
    
    
    
    (376
    )
    
    
    (375
    )
    
    
    (272
    )Net operating costs (excluding items shown separately)
    
    
    
    
    
    
    33,818
    
    
    
    37,641
    
    
    
    20,752
 (a)
    
    Amounts charged by jointly controlled entities mainly relate to toll processing but also include purchases from jointly controlled entities of bauxite
and aluminium which are then processed by the product group or sold to third parties. Generally, purchases are in proportion to the Groups share of the jointly
controlled entity but in 2009, US$491 million (2008 and 2007: nil) related to purchases of the other venturers share of production.Information on auditors remuneration is included in note 43.
 
 4
    
    Employment costs 2009
    
    
    2008
    
    
    2007Note
    
    
    US$m
    
    
    US$m
    
    
    US$mEmployment costs- Wages and salaries
    
    
    
    
    
    
    6,130
    
    
    
    6,414
    
    
    
    3,618- Social security costs
    
    
    
    
    
    
    101
    
    
    
    113
    
    
    
    106- Net post retirement cost (a)
    
    
    50
    
    
    
    524
    
    
    
    502
    
    
    
    240- Share option charge/(credit) (b)
    
    
    49
    
    
    
    177
    
    
    
    (22
    )
    
    
    2206,932
    
    
    
    7,007
    
    
    
    4,184Less: charged within provisions
    
    
    
    
    
    
    (734
    )
    
    
    (404
    )
    
    
    (357
    )Total employment costs
    
    
    3
    
    
    
    6,198
    
    
    
    6,603
    
    
    
    3,827
 (a)
    
    Post retirement costs include the aggregate service and interest cost of providing post retirement benefits under defined benefit plans, net of
the related expected return on plan assets. Additional detail of the amount charged to the income statement in respect of post retirement plans,
and the treatment of actuarial gains and losses, is shown in note 50.(b)
    
    Further details of the Groups share options and other share based payment plans are given in note 49.
 
 5
    
    Impairment charges Outside
    
    
    Net
    
    
    Net
    
    
    NetPre-tax
    
    
    Taxation
    
    
    interests
    
    
    amount
    
    
    amount
    
    
    amount2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mAluminium (b)
    
    
    (304
    )
    
    
    67
    
    
    
    25
    
    
    
    (212
    )
    
    
    (6,127
    )
    
    
    Alcan Engineered Products (c)
    
    
    (687
    )
    
    
    187
    
    
    
    
    
    
    
    (500
    )
    
    
    (980
    )
    
    
    Diamonds (e)
    
    
    (525
    )
    
    
    177
    
    
    
    
    
    
    
    (348
    )
    
    
    (107
    )
    
    
    (328
    )Hismelt (f)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )
    
    
    Palabora (g)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Tarong coal mine (h)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Other
    
    
    (57
    )
    
    
    14
    
    
    
    
    
    
    
    (43
    )
    
    
    (168
    )
    
    
    (19
    )Total (a)
    
    
    (1,573
    )
    
    
    445
    
    
    
    25
    
    
    
    (1,103
    )
    
    
    (7,564
    )
    
    
    (113
    )
 (a)
    
    The majority of the 2009 pre-tax impairment charge relates to property, plant and equipment (US$1,290 million) and intangible assets (US$179 million),
with the remainder relating to investments in equity accounted units. The majority of the 2008 impairment charge related to goodwill
(US$6,621 million), property, plant and equipment (US$1,222 million) and intangible assets (US$129 million), with the remainder relating to
investments in equity accounted units.(b)
    
    The 2009 impairment charge related mainly to the planned closure of certain smelters, and was caused by a decrease in short term price assumptions
at the date of the impairment review. The recoverable amount was based on fair value less costs to sell, and was assessed in line with the policy in note 1(i).
The 2008 impairment charge related mainly to the write down of goodwill resulting from the annual impairment review, due to the deferral of growth projects
following significant weakening in economic and market circumstances, and increases in input costs.(c)
    
    Alcan Engineered Products is part of the Alcan group that was acquired in October 2007, and forms part of Other Operations. It manufactures
engineered or fabricated aluminum products.
 A-26




---



##### 



Notes to the 2009 Financial statements
 5
    
    Impairment charges continuedOn 1 December 2009, Rio Tinto announced that it had completed the sale of Alcan Composites for US$349 million. The Groups intention is to sell
the remaining businesses relating to Alcan Engineered Products. As such, the recoverable amount has been based on fair value less costs to sell,
which represents the Groups best estimate of the expected proceeds to be realised from the sale of the remaining Alcan Engineered Products businesses,
less an estimate of remaining costs to sell. The estimated proceeds are assessed in line with the policy in note 1(i).The weak economic environment continued to put downward pressure on the sales prices for these divestment businesses and resulted in the
impairment of the property, plant and equipment relating to the Alcan Engineered Products businesses.(d)
    
    The specific details of the impairment review relating to Alcan Packaging are set out in note 19.(e)
    
    The impairment to the Groups Diamonds business during 2009 was caused by weak demand for luxury items and higher input costs. Impairment
of property, plant and equipment was assessed by reference to the fair value less costs to sell of the cash generating units (CGUs). The determination
of fair value less costs to sell was based on the policy in note 1(i). This estimate was derived from discounting projections of cash flows, using
valuation assumptions that a buyer might be expected to apply.Large increases in the estimated capital cost of Argyles underground project triggered an assessment of its recoverable amount during 2007. Impairment of
property, plant and equipment was assessed by reference to fair value less costs to sell. The determination of fair value less costs to sell was based on the
estimated amount that would be obtained from sale in an arms length transaction between knowledgeable and willing parties. This estimate was derived from
discounting projections of cash flows, using valuation assumptions that a buyer might be expected to apply.(f)
    
    In 2008, full provision was made against the carrying value of the HIsmelt operation, which is within the Iron ore product group. Operations at the
Kwinana plant have been suspended and the Groups future role in developing this technology is under review, leading to doubt about the
recoverability of the amount invested.(g)
    
    An increase in the Groups long term copper price assumption triggered an assessment of the recoverable amount of Palabora during 2007. The value in use was
based on cash flows forecast in real terms and discounted at a
pre-tax rate of 12 per cent. This led to a full reversal of the
remainder of the impairment provision previously
recognised.(h)
    
    An announcement of the sale of Tarong led to full reversal in 2007 of the remainder of the impairment provision previously recognised.(i)
    
    Total impairment charges in 2008, excluded from Underlying earnings, includes US$15 million relating to equity accounted units, which is not
included in the table above.
 
 6
    
    Share of profit after tax of equity accounted units 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mSales revenue (a)
    
    
    3,020
    
    
    
    3,801
    
    
    
    3,818Operating costs
    
    
    (1,717
    )
    
    
    (2,158
    )
    
    
    (1,261
    )Profit before finance items and taxation
    
    
    1,303
    
    
    
    1,643
    
    
    
    2,557Exchange gains on net debt
    
    
    4
    
    
    
    37
    
    
    
    7Gains/(losses) on currency and interest rate derivatives not qualifying for hedge accounting
    
    
    9
    
    
    
    (19
    )
    
    
    (5
    )Net interest payable
    
    
    (55
    )
    
    
    (45
    )
    
    
    (49
    )Amortisation of discount
    
    
    (7
    )
    
    
    (17
    )
    
    
    (9
    )Share of profit after tax of equity accounted units
    
    
    23
    
    
    
    36
    
    
    
    Profit before taxation
    
    
    1,277
    
    
    
    1,635
    
    
    
    2,501Taxation
    
    
    (491
    )
    
    
    (596
    )
    
    
    (917
    )Profit for the year (Rio Tinto share)
    
    
    786
    
    
    
    1,039
    
    
    
    1,584
 (a)
    
    The sales revenue of equity accounted units excludes charges by jointly controlled entities to Group subsidiaries.
 
 7
    
    Interest receivable and payable 2009
    
    
    2008
    
    
    2007Note
    
    
    US$m
    
    
    US$m
    
    
    US$mInterest receivable and similar income from:- Equity accounted units
    
    
    
    
    
    
    36
    
    
    
    43
    
    
    
    28- Other investments (a)
    
    
    
    
    
    
    66
    
    
    
    107
    
    
    
    101102
    
    
    
    150
    
    
    
    129Other interest receivable
    
    
    
    
    
    
    18
    
    
    
    54
    
    
    
    5Total interest receivable and similar income
    
    
    
    
    
    
    120
    
    
    
    204
    
    
    
    134Interest payable and similar charges (b)
    
    
    
    
    
    
    (1,127
    )
    
    
    (1,821
    )
    
    
    (660
    )Amounts capitalised
    
    
    13
    
    
    
    198
    
    
    
    203
    
    
    
    122Total interest payable and similar charges
    
    
    
    
    
    
    (929
    )
    
    
    (1,618
    )
    
    
    (538
    )
 (a)
    
    Interest income from other investments comprises US$45 million (2008: US$72 million; 2007: US$80 million) of interest income from bank deposits and
US$21 million (2008: US$35 million; 2007: US$21 million) from other financial assets.(b)
    
    Interest payable and similar charges relates to interest on bank loans and other borrowings. This includes a fair value loss on the interest rate swaps
designated as hedges of US$59 million and an offseting fair value gain on bank borrowings attributable to interest rate risk of US$59 million (2008: fair value
gain on the interest rate swaps of US$669 million and a US$655 million fair value loss on bank borrowings attributable to interest rate risk; 2007: fair value gain
on the interest rate swaps of US$35 million and a US$38 million fair value loss on bank borrowings attributable to interest rate risk).
 A-27




---



##### 



Notes to the 2009 Financial statements
 
 8
    
    Tax on profit
 2009
    
    
    2008
    
    
    2007Note
    
    
    US$m
    
    
    US$m
    
    
    US$mUK taxationCorporation
tax at 28% (2007: 30%)- Current
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    - Deferred
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    (150
    )1
    
    
    
    (46
    )
    
    
    (150
    )Australian taxationCorporation tax at 30%- Current
    
    
    
    
    
    
    1,829
    
    
    
    3,005
    
    
    
    1,396- Deferred
    
    
    
    
    
    
    391
    
    
    
    (812
    )
    
    
    (18
    )2,220
    
    
    
    2,193
    
    
    
    1,378Other countries taxation- Current
    
    
    
    
    
    
    763
    
    
    
    1,711
    
    
    
    897- Deferred
    
    
    
    
    
    
    (908
    )
    
    
    (116
    )
    
    
    (35
    )(145
    )
    
    
    1,595
    
    
    
    862Total taxation charge- Current
    
    
    
    
    
    
    2,593
    
    
    
    4,716
    
    
    
    2,293- Deferred
    
    
    18
    
    
    
    (517
    )
    
    
    (974
    )
    
    
    (203
    )2,076
    
    
    
    3,742
    
    
    
    2,090
 2009
    
    
    2008
    
    
    2007Prima facie tax reconciliation
    
    US$m
    
    
    US$m
    
    
    US$mProfit before taxation
    
    
    7,860
    
    
    
    9,178
    
    
    
    9,836Deduct: share of profit after tax of equity accounted units
    
    
    (786
    )
    
    
    (1,039
    )
    
    
    (1,584
    )Parent companies and subsidiaries profit before tax
    
    
    7,074
    
    
    
    8,139
    
    
    
    8,252Prima facie
tax payable at UK rate of 28% (2007: 30%)
    
    
    1,981
    
    
    
    2,279
    
    
    
    2,476Higher rate of taxation on Australian earnings at 30%
    
    
    136
    
    
    
    226
    
    
    
    Impact of items excluded in arriving at Underlying earnings (a)
    
    
    347
    
    
    
    919
    
    
    
    (28
    )Adjustments to deferred tax liabilities following changes in tax rates
    
    
    (22
    )
    
    
    (25
    )
    
    
    (392
    )Other tax rates applicable outside the UK and Australia
    
    
    113
    
    
    
    206
    
    
    
    271Resource depletion and other depreciation allowances
    
    
    (132
    )
    
    
    (129
    )
    
    
    (173
    )Research, development and other investment allowances
    
    
    (55
    )
    
    
    (72
    )
    
    
    (81
    )Utilisation of previously unrecognised deferred tax assets
    
    
    (36
    )
    
    
    (160
    )
    
    
    Unrecognised current year operating losses
    
    
    105
    
    
    
    163
    
    
    
    70Foreign exchange differences
    
    
    (167
    )
    
    
    197
    
    
    
    11Withholding taxes
    
    
    73
    
    
    
    95
    
    
    
    46Non-taxable gains on asset disposals (b)
    
    
    (208
    )
    
    
    
    
    
    
    Other items
    
    
    (59
    )
    
    
    43
    
    
    
    (110
    )Total taxation charge(c)
    
    
    2,076
    
    
    
    3,742
    
    
    
    2,090
 (a)
    
    An analysis of the impact on the tax reconciliation of items excluded in arriving at Underlying earnings is given below:
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mImpairment charges
    
    
    (5
    )
    
    
    1,806
    
    
    
    (1
    )Disposal of interests in businesses
    
    
    
    
    
    
    136
    
    
    
    Exchange losses/(gains) on intragroup balances
    
    
    332
    
    
    
    (723
    )
    
    
    11Exchange gains on external debt
    
    
    
    
    
    
    (332
    )
    
    
    (33
    )Exchange losses)/(gains) derivatives and others
    
    
    25
    
    
    
    (19
    )
    
    
    3Other exclusions
    
    
    (5
    )
    
    
    51
    
    
    
    (8
    )347
    
    
    
    919
    
    
    
    (28
    )
 (b)
    
    The non taxable gains on asset disposals relate to undeveloped potash assets in Argentina.(c)
    
    This tax reconciliation relates to the parent companies, subsidiaries and proportionally consolidated units. The Groups share of profit of equity
accounted units is net of tax charges of US$491 million (2008: US$596 million; 2007: US$917 million).
 A-28




---



##### 



Notes to the 2009 Financial statements
 8
    
    Tax on profitcontinued(d)
    
    The tax credit/(charge) relating to components of other comprehensive income is as follows:
 2009Attributable toshareholders
    
    
    Outsideof Rio Tinto
    
    
    interests
    
    
    TotalUS$m
    
    
    US$m
    
    
    US$mTax on exchange adjustments
    
    
    
    
    
    
    
    
    
    
    Cash flow hedge fair value losses/(gains):- Cash flow hedge fair value losses/(gains)
    
    
    62
    
    
    
    35
    
    
    
    97- Cash flow hedge losses transferred to the income statement
    
    
    (10
    )
    
    
    (10
    )
    
    
    (20
    )Gains/(losses) on available for sale securities
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Gains on revaluation of available for sale securities transferred to the income statement
    
    
    1
    
    
    
    
    
    
    
    1Actuarial losses on post retirement benefit plans
    
    
    233
    
    
    
    (1
    )
    
    
    232Deferred tax on share options
    
    
    50
    
    
    
    
    
    
    
    50335
    
    
    
    24
    
    
    
    359Share of tax on other comprehensive income/(expense) of equity accounted units
    
    
    (38
    )
    
    
    
    
    
    
    (38
    )Tax relating to components of other comprehensive income/(expense) for the year (a)
    
    
    297
    
    
    
    24
    
    
    
    321
 2008Attributable toshareholders
    
    
    Outsideof Rio Tinto
    
    
    interests
    
    
    TotalUS$m
    
    
    US$m
    
    
    US$mTax on exchange adjustments
    
    
    99
    
    
    
    
    
    
    
    99Cash flow hedge fair value losses/(gains):- Cash flow hedge fair value losses/(gains)
    
    
    (11
    )
    
    
    (8
    )
    
    
    (19
    )- Cash flow hedge losses transferred to the income statement
    
    
    (77
    )
    
    
    (35
    )
    
    
    (112
    )Gains/(losses) on available for sale securities
    
    
    10
    
    
    
    
    
    
    
    10Gains on revaluation of available for sale securities transferred to the income statement
    
    
    
    
    
    
    
    
    
    
    Actuarial losses on post retirement benefit plans
    
    
    457
    
    
    
    7
    
    
    
    464Deferred tax on share options
    
    
    (179
    )
    
    
    
    
    
    
    (179
    )299
    
    
    
    (36
    )
    
    
    263Share of tax on other comprehensive income/(expense) of equity accounted units
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )Tax relating to components of other comprehensive income/(expense) for the year (a)
    
    
    280
    
    
    
    (36
    )
    
    
    244
 2007Attributable toshareholders
    
    
    Outsideof Rio Tinto
    
    
    interests
    
    
    TotalUS$m
    
    
    US$m
    
    
    US$mTax on exchange adjustments
    
    
    13
    
    
    
    
    
    
    
    13Cash flow hedge fair value losses/(gains):- Cash flow hedge fair value losses/(gains)
    
    
    99
    
    
    
    67
    
    
    
    166- Cash flow hedge losses transferred to the income statement
    
    
    (28
    )
    
    
    (25
    )
    
    
    (53
    )Gains/(losses) on available for sale securities
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Gains on revaluation of available for sale securities transferred to the income statement
    
    
    2
    
    
    
    
    
    
    
    2Actuarial losses on post retirement benefit plans
    
    
    (42
    )
    
    
    (2
    )
    
    
    (44
    )Deferred tax on share options
    
    
    118
    
    
    
    
    
    
    
    118153
    
    
    
    40
    
    
    
    193Share of tax on other comprehensive income/(expense) of equity accounted units
    
    
    6
    
    
    
    
    
    
    
    6Tax relating to components of other comprehensive income/(expense) for the year (a)
    
    
    159
    
    
    
    40
    
    
    
    199
 (a)
    
    This includes US$319 million (2008: US$205 million) of deferred tax and US$2 million (2008: US$39 million; 2007: US$(4) million) of current tax. See note 18.
 A-29




---



##### 



Notes to the 2009 Financial statements
 
 9
    
    Earnings/(loss) per ordinary share
 2009Weighted
    
    
    2009average
    
    
    Per share2009
    
    
    number of
    
    
    amountEarnings
    
    
    shares
    
    
    (a)US$m
    
    
    (millions)
    
    
    (cents)Basic earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    5,321
    
    
    
    1,763.6
    
    
    
    301.7Basic loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    (449
    )
    
    
    1,763.6
    
    
    
    (25.5
    )Total basic earnings per share  profit for the year (b)
    
    
    4,872
    
    
    
    1,763.6
    
    
    
    276.2Diluted earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    5,321
    
    
    
    1,769.6
    
    
    
    300.7Diluted loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    (449
    )
    
    
    1,769.6
    
    
    
    (25.4
    )Total diluted earnings per share  profit for the year (c)
    
    
    4,872
    
    
    
    1,769.6
    
    
    
    275.3Underlying earnings per share attributable to ordinary shareholders (d)- Basic (b)
    
    
    6,298
    
    
    
    1,763.6
    
    
    
    357.1- Diluted (c)
    
    
    6,298
    
    
    
    1,769.6
    
    
    
    355.9
 2008Weighted
    
    
    2008average
    
    
    Per share2008
    
    
    number of
    
    
    amountEarnings
    
    
    shares
    
    
    (a)US$m
    
    
    (millions)
    
    
    (cents)Basic earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    4,503
    
    
    
    1,570.1
    
    
    
    286.8Basic loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    (827
    )
    
    
    1,570.1
    
    
    
    (52.7
    )Total basic earnings per share  profit for the year (b)
    
    
    3,676
    
    
    
    1,570.1
    
    
    
    234.1Diluted earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    4,503
    
    
    
    1,577.3
    
    
    
    285.5Diluted loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    (827
    )
    
    
    1,577.3
    
    
    
    (52.4
    )Total diluted earnings per share  profit for the year (c)
    
    
    3,676
    
    
    
    1,577.3
    
    
    
    233.1Underlying earnings per share attributable to ordinary shareholders (d)- Basic (b)
    
    
    10,303
    
    
    
    1,570.1
    
    
    
    656.2- Diluted (c)
    
    
    10,303
    
    
    
    1,577.3
    
    
    
    653.2
 2007Weighted
    
    
    2007average
    
    
    Per share2007
    
    
    number of
    
    
    amountEarnings
    
    
    shares
    
    
    (a)US$m
    
    
    (millions)
    
    
    (cents)Basic earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    7,312
    
    
    
    1,572.9
    
    
    
    464.9Basic loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    
    
    
    
    1,572.9
    
    
    
    Total basic earnings per share  profit for the year (b)
    
    
    7,312
    
    
    
    1,572.9
    
    
    
    464.9Diluted earnings per share attributable to ordinary shareholders of Rio Tinto  continuing operations
    
    
    7,312
    
    
    
    1,579.6
    
    
    
    462.9Diluted loss per share attributable to ordinary shareholders of Rio Tinto  discontinued operations
    
    
    
    
    
    
    1,579.6
    
    
    
    Total diluted earnings per share  profit for the year (c)
    
    
    7,312
    
    
    
    1,579.6
    
    
    
    462.9Underlying earnings per share attributable to ordinary shareholders (d)- Basic (b)
    
    
    7,443
    
    
    
    1,572.9
    
    
    
    473.2- Diluted (c)
    
    
    7,443
    
    
    
    1,579.6
    
    
    
    471.2
 (a)
    
    The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on which the shares were
issued have been adjusted for the bonus element of the issues. The bonus factor for Rio Tinto plc was 1.2105 and for Rio Tinto Limited was 1.2679.
The 2008 and 2007 comparatives have been restated accordingly. Other information relating to the rights issues is shown in note 46.(b)
    
    The weighted average number of shares is calculated as the average number of Rio Tinto plc shares outstanding not held as treasury shares
of 1,366.1 million (2008 restated: 1,207.8 million; 2007 restated: 1,210.6 million) plus the average number of Rio Tinto Limited shares outstanding not held by Rio
Tinto plc of 397.5 million (2008 and 2007 restated: 362.3 million).(c)
    
    For the purposes of calculating diluted earnings per share,
the effect of dilutive securities of 6.0 million shares in 2009
(2008 restated: 7.2 million shares; 2007 restated: 6.7 million shares)
is added to the weighted average number of shares described in (b) above. This effect is calculated under the treasury stock method. The Groups only
potential dilutive ordinary shares are share options for which terms and conditions are described in note 49.(d)
    
    Underlying earnings per share is calculated from Underlying earnings, detailed information on which is given in note 2.
 A-30




---



##### 



Notes to the 2009 Financial statements
 
 10
    
    Dividends
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mRio Tinto plc previous year Final dividend paid
    
    
    670
    
    
    
    838
    
    
    
    646Rio Tinto plc Interim dividend paid
    
    
    
    
    
    
    679
    
    
    
    518Rio Tinto Limited previous year Final dividend paid
    
    
    206
    
    
    
    228
    
    
    
    198Rio Tinto Limited Interim dividend paid
    
    
    
    
    
    
    188
    
    
    
    145Dividends paid during the year
    
    
    876
    
    
    
    1,933
    
    
    
    1,507Dividends per share: paid during the year (restated)
    
    
    55.6c
    
    
    
    124.3c
    
    
    
    94.8cDividends per share: proposed in the announcement of the results for the year (2008 and 2007 restated)
    
    
    45.0c
    
    
    
    55.6c
    
    
    
    68.7c
 Restated
    
    
    Restated
    
    
    Restateddividends
    
    
    dividends
    
    
    dividendsper share
    
    
    per share
    
    
    per share2009
    
    
    2008
    
    
    2007Rio Tinto plc previous year Final (pence)
    
    
    37.85p
    
    
    
    35.27p
    
    
    
    26.69pRio Tinto plc Interim (pence)
    
    
    
    
    
    
    29.64p
    
    
    
    20.93pRio Tinto Limited previous year Final  fully franked at 30% (Australian cents)
    
    
    82.97c
    
    
    
    76.08c
    
    
    
    67.75cRio Tinto Limited Interim  fully franked at 30% (Australian cents)
    
    
    
    
    
    
    63.25c
    
    
    
    49.64c
 Restated
    
    
    Restated
    
    
    Restatednumber
    
    
    number
    
    
    numberof shares
    
    
    of shares
    
    
    of shares2009
    
    
    2008
    
    
    2007(millions)
    
    
    (millions)
    
    
    (millions)Rio Tinto plc previous year Final
    
    
    1,208.4
    
    
    
    1,207.8
    
    
    
    1,219.3Rio Tinto plc Interim
    
    
    
    
    
    
    1,208.2
    
    
    
    1,206.5Rio Tinto Limited previous year Final  fully franked at 30%
    
    
    362.3
    
    
    
    362.3
    
    
    
    362.3Rio Tinto Limited Interim  fully franked at 30%
    
    
    
    
    
    
    362.3
    
    
    
    362.3
 The dividends paid in 2009 are based on the following US cents per share amounts: 2008 final (restated)  55.6 cents, 2009 interim  nil (2008 dividends
paid: 2007 final (restated)  68.7 cents, 2008 interim (restated)  55.6 cents; 2007 dividends paid: 2006 final (restated)  52.3 cents, 2007 interim (restated)  42.5
cents). The 2008 and 2007 dividends per share have been restated using a number of shares which reflects the discounted price of the 2009 July rights issue
(the bonus factor). Refer to note 46 for further details.The number of shares on which the Rio Tinto Limited dividends are based excludes those shares held by Rio Tinto plc, in order that the dividends
shown represent those paid to public shareholders. The number of shares on which Rio Tinto plc dividends are based excludes those held
as treasury shares.In addition, the Directors of Rio Tinto announced a final dividend of 45.0 cents per share on 11 February 2010. This is expected to result in
payments of US$882 million (Rio Tinto plc: US$686 million, Rio Tinto Limited US$196 million). The dividends will be paid on 1 April 2010 to
Rio Tinto plc shareholders on the register at the close of business on 26 February 2010 and to Rio Tinto Limited shareholders on the register at the
close of business on 2 March 2010.The proposed Rio Tinto Limited dividends will be franked out of existing franking credits or out of franking credits arising from the payment of
income tax during 2010.The approximate amount of the Rio Tinto Limited consolidated tax groups retained profits and reserves that could be distributed as dividends and
franked out of credits, that arose from net payments of income tax in respect of periods up to 31 December 2009 (after deducting franking credits
expected to be utilised on the 2009 final dividend declared), is US$13,035 million.
 
 11
    
    Goodwill
 2009
    
    
    2008US$m
    
    
    US$mNet book valueAt 1 January
    
    
    14,296
    
    
    
    21,105Adjustment on currency translation
    
    
    156
    
    
    
    (196
    )Additions
    
    
    
    
    
    
    8Disposals
    
    
    (184
    )
    
    
    Impairment charges
    
    
    
    
    
    
    (6,621
    )At 31 December
    
    
    14,268
    
    
    
    14,296- cost
    
    
    20,854
    
    
    
    21,123- accumulated impairment
    
    
    (6,586
    )
    
    
    (6,827
    )At 1 January- cost
    
    
    21,123
    
    
    
    21,366- accumulated impairment
    
    
    (6,827
    )
    
    
    (261
    )
 Impairment tests for goodwillAt 31 December 2009, goodwill has been allocated as follows:
 2009
    
    
    2008US$m
    
    
    US$mNet book valueAluminium
    
    
    13,691
    
    
    
    13,563Australian Iron Ore
    
    
    446
    
    
    
    345Other
    
    
    131
    
    
    
    38814,268
    
    
    
    14,296
 A-31




---



##### 



Notes to the 2009 Financial statements
 11
    
    GoodwillcontinuedAluminiumThe majority of the Groups goodwill has been allocated to cash generating units within the Aluminium group of cash generating units
(Aluminium), which includes both Alcan and the aluminium businesses previously owned by Rio Tinto, which are now managed as a single
business. A large component of Aluminiums carrying value relates to the former Alcan businesses purchased in 2007.Aluminiums annual impairment review resulted in no impairment charge for 2009 (2008: US$6,127 million after taxation). The recoverable
amount has been assessed by reference to fair value less costs to sell, using discounted cash flows, in line with the policy in note 1(i).In arriving at fair value less costs to sell, a post-tax discount rate of 6.8 per cent has been applied to the post-tax cash flows expressed in real
terms. Fair value less costs to sell was determined by estimating cash flows for a period of twelve years. The cash flow projections are based on
long term production plans. These cash flows are then aggregated with a terminal value. The terminal value represents the value of cash flows
beyond the twelfth year, incorporating an annual real term growth rate of one and a half percent, with a corresponding increase in capital expenditure
to support the real term growth rate. Aluminium benefits from a global marketplace with substantial barriers to entry and there are a limited number
of competitors who are able to access effectively the key resources necessary to make aluminium. In addition, continued global industrialisation
is expected to support demand for aluminium. The operating cost levels included in the fair value assessment are calculated based on Aluminiums long term
production plans. Price assumptions for inputs into the aluminium smelting process are based on analysis of market fundamentals and are made
consistent with related output price assumptions. Approximately, 80 per cent of Aluminiums production is located in the first half of the industry cost curve.
Aluminiums intention is to maintain and, where possible, improve its relative position on the industry cash cost curve.The key assumptions to which the calculation of fair value less costs to sell for Aluminium is most sensitive are the long term aluminium price;
the Canadian dollar and Australian dollar exchange rates against the US dollar; operating costs; and discount rates. Cash flows for the periods
included in the projections were translated into the functional currency using the Groups estimate of future exchange rates. Future selling prices
and operating costs have been estimated in line with the policy in note 1(i). Management believes that, currently, there are no reasonably possible changes in
any of the key assumptions, that would lead to the recoverable amount being below the carrying amount, except for the long term aluminium price.The long term aluminium price used in the terminal year of the fair value calculations include a component to reflect the impact of carbon pricing. The Groups
price without this carbon element is within the range of market consensus of US$2,014 to US$2,578 per tonne, with an average of US$2,347 per tonne, in real
terms. The carbon element within the long term price used in the fair value calculations is based on a price per tonne of carbon dioxide (CO2) emissions.
The price is also comparable to the range published by market commentators of between US$10 and US$35 per tonne of carbon dioxide emissions in real
terms. The relationship between the price per tonne of carbon dioxide emissions and the price per tonne of aluminium is dependent on how many tonnes of
carbon dioxide are used per tonne of aluminium produced by marginal cost smelters. Industry data show that emissions for all producers range from about
two tonnes to in excess of 15 tonnes of CO2 per tonne of aluminium produced, depending on the primary energy source used to generate the consumed
electric power. The weighted industry average for all producers is approximately 8-10 tonnes of CO2 per tonne of aluminium. The assumptions used in the
Groups long term aluminium price used in the terminal year imply a carbon emission intensity for the marginal producers above the weighted industry
average but below the top end of the industry range.Based on the assessment of fair value less costs to sell, the recoverable amount exceeds the carrying value by approximately 21 per cent. The calculation
is highly sensitive to changes in the long term aluminium price, and an eight per cent decrease in the long term aluminium price, in isolation, would lead
to the fair value less costs to sell of Aluminium being equal to its carrying amount. However, management believe that a decrease in the long term
aluminium price would have an associated beneficial impact on input costs which would, to a certain extent, offset the impact of the change in the long term
aluminium price. In addition, the assumed relationship between the long term aluminium price and the Australian and Canadian currencies provides further
natural protection in the long term (see also note 33  Financial risk management).Australian Iron OreThe recoverable amount of the goodwill relating to Australian Iron Ore has been assessed by reference to fair value less costs to sell. Valuations are based
on cash flow projections that incorporate best estimates of selling prices, ore grades, production rates, future sustaining capital expenditure and production
costs over the life of each mine. In line with normal practice in the mining industry, the cash flow projections are based on long term mine plans
covering the expected life of each operation. Therefore, the projections generally cover periods well in excess of five years.Assumptions about selling prices, operating costs, exchange rates, and discount rates are particularly important in these valuations.Future selling prices and operating costs have been estimated in line with the policy in note 1(i). Long term average selling prices are forecast taking
account of estimates of the costs of producers of each commodity. Forecasts of operating costs are based on detailed mine plans which take account
of all relevant characteristics of the ore body.Goodwill relating to Australian Iron Ore has been reviewed applying a discount rate of 6.8 per cent to the post-tax cash flows expressed in real terms.
If assessed based on pre-tax cash flows expressed in real terms, the equivalent pre-tax discount rate would be around 9.5 per cent.There are no reasonably possible changes in key assumptions, which would cause the goodwill allocated to Australian Iron Ore to be impaired.OtherThe recoverability of the remaining goodwill, which is included within Other in the table above, has been assessed by reference to fair value,
using assumptions consistent with those described above. The recoverable amounts were determined to be in excess of carrying
value, and there are no reasonably possible changes in key assumptions that would cause the remaining goodwill to be impaired by a significant
amount.
 A-32




---



##### 



Notes to the 2009 Financial statements
 
 12 Intangible assets
 Trademarks,
    
    
    ContractExploration
    
    
    patented and
    
    
    based
    
    
    Otherand
    
    
    non patented
    
    
    intangible
    
    
    intangibleevaluation (a)
    
    
    technology
    
    
    assets (b)
    
    
    assets
    
    
    TotalYear ended 31 December 2009
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mNet book valueAt 1 January 2009
    
    
    133
    
    
    
    444
    
    
    
    5,208
    
    
    
    500
    
    
    
    6,285Adjustment on currency translation
    
    
    10
    
    
    
    6
    
    
    
    2
    
    
    
    71
    
    
    
    89Expenditure during the year
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    55Amortisation for the year
    
    
    
    
    
    
    (25
    )
    
    
    (188
    )
    
    
    (174
    )
    
    
    (387
    )Impairment charges
    
    
    
    
    
    
    (23
    )
    
    
    (156
    )
    
    
    
    
    
    
    (179
    )Subsidiaries now equity accounted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Subsidiaries no longer consolidated
    
    
    
    
    
    
    (113
    )
    
    
    (54
    )
    
    
    
    
    
    
    (167
    )Disposals, transfers and other movements
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    46
    
    
    
    36At 31 December 2009
    
    
    145
    
    
    
    289
    
    
    
    4,802
    
    
    
    494
    
    
    
    5,730- cost
    
    
    145
    
    
    
    398
    
    
    
    5,445
    
    
    
    1,062
    
    
    
    7,050- accumulated amortisation
    
    
    
    
    
    
    (109
    )
    
    
    (643
    )
    
    
    (568
    )
    
    
    (1,320
    )
 Trademarks,
    
    
    ContractExploration
    
    
    patented and
    
    
    based
    
    
    Otherand
    
    
    non patented
    
    
    intangible
    
    
    intangibleevaluation (a)
    
    
    technology
    
    
    assets (b)
    
    
    assets
    
    
    TotalYear ended 31 December 2008
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mNet book valueAt 1 January 2008
    
    
    152
    
    
    
    568
    
    
    
    5,500
    
    
    
    584
    
    
    
    6,804Adjustment on currency translation
    
    
    (10
    )
    
    
    (9
    )
    
    
    (6
    )
    
    
    (69
    )
    
    
    (94
    )Expenditure during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105
    
    
    
    105Amortisation for the year
    
    
    
    
    
    
    (44
    )
    
    
    (230
    )
    
    
    (155
    )
    
    
    (429
    )Impairment charges
    
    
    
    
    
    
    (57
    )
    
    
    (69
    )
    
    
    (3
    )
    
    
    (129
    )Disposals, transfers and other movements
    
    
    (9
    )
    
    
    (14
    )
    
    
    13
    
    
    
    38
    
    
    
    28At 31 December 2008
    
    
    133
    
    
    
    444
    
    
    
    5,208
    
    
    
    500
    
    
    
    6,285- cost
    
    
    133
    
    
    
    565
    
    
    
    5,532
    
    
    
    829
    
    
    
    7,059- accumulated amortisation
    
    
    
    
    
    
    (121
    )
    
    
    (324
    )
    
    
    (329
    )
    
    
    (774
    )At 1 January 2008- cost
    
    
    152
    
    
    
    576
    
    
    
    5,529
    
    
    
    820
    
    
    
    7,077- accumulated amortisation
    
    
    
    
    
    
    (8
    )
    
    
    (29
    )
    
    
    (236
    )
    
    
    (273
    )
 
 (a)
    
    Exploration and evaluation: useful life not determined until transferred to property, plant &
equipment.(b)
    
    The Group benefits from certain intangible assets acquired with Alcan including power supply
contracts, customer contracts and water rights.The water rights are expected to contribute to the efficiency and cost effectiveness of
operations for the foreseeable future: accordingly, these rights are considered to have indefinite
lives and are not subject to amortisation. These water rights constitute the majority of the
amounts in the column of the above table entitled Contract based intangible assets.Intangible assets with indefinite lives were provisionally valued at acquisition based on the
advice of expert valuation consultants and, subsequently this
valuation was finalised in 2008.
The carrying values are reviewed for impairment annually or at any time an indicator of impairment
is considered to exist. They are reviewed for impairment as part of the cash generating units to
which they relate. The water rights have been allocated to cash generating units within Aluminium.In 2009, the recoverable amount of these cash generating units was determined based on fair
value less costs to sell, using a methodology and assumptions consistent with those described in
note 1(i) and note 11. No impairment of these indefinite-lived intangible assets was recognised
during 2009, as the fair value less costs to sell of the related cash generating units was in
excess of their carrying amounts.In 2008, the recoverable amount of these cash generating units was determined based on value
in use, using a methodology and assumptions consistent with those described in note 1(i). No impairment of these indefinite-lived
intangible assets was recognised during 2008, as the value in use of the related cash generating
units was in excess of their carrying amounts.(c)
    
    There are no intangible assets either pledged as security or held under restriction of title. Exploration and evaluation expenditure
  2009
    
    2008
    
    2007US$m
    
    US$m
    
    US$mNet proceeds/(expenditure) in the year (net of proceeds of US$932 million (2008: US$673 million; 2007: US$171 million) on
disposal of undeveloped projects)
    
    
    486
    
    
    
    (440
    )
    
    
    (576
    )Changes in accruals (including impairment of undeveloped projects of nil
(2008: US$156 million; 2007: nil) and non cash proceeds on disposal of undeveloped projects)
    
    
    (104
    )
    
    
    (205
    )
    
    
    61Amount capitalised during the year
    
    
    (2
    )
    
    
    
    
    
    
    194Net credit/(charge) for the year
    
    
    380
    
    
    
    (645
    )
    
    
    (321
    )Reconciliation to income statementExploration and evaluation costs
    
    
    (514
    )
    
    
    (1,134
    )
    
    
    (574
    )Profit on disposal of interests in undeveloped projects
    
    
    894
    
    
    
    489
    
    
    
    253Net credit/(charge) for the year
    
    
    380
    
    
    
    (645
    )
    
    
    (321
    )
 A-33




---



##### 



Notes to the 2009 Financial statements
 
 13     Property, plant and equipment
 Mining
    
    
    Land
    
    
    Plant
    
    
    Capitalproperties
    
    
    and
    
    
    and
    
    
    works inand leases (a)
    
    
    buildings (b)
    
    
    equipment
    
    
    progress
    
    
    TotalYear ended 31 December 2009
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mNet book valueAt 1 January 2009
    
    
    6,118
    
    
    
    5,706
    
    
    
    22,112
    
    
    
    7,817
    
    
    
    41,753Adjustment on currency translation
    
    
    1,130
    
    
    
    349
    
    
    
    2,890
    
    
    
    1,257
    
    
    
    5,626Capitalisation of additional closure costs (note 27)
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268Interest capitalised (c) (note 7)
    
    
    8
    
    
    
    
    
    
    
    9
    
    
    
    181
    
    
    
    198Additions
    
    
    242
    
    
    
    115
    
    
    
    1,346
    
    
    
    3,108
    
    
    
    4,811Depreciation for the year (a)
    
    
    (412
    )
    
    
    (364
    )
    
    
    (2,264
    )
    
    
    
    
    
    
    (3,040
    )Impairment charges, net of reversals
    
    
    (170
    )
    
    
    (308
    )
    
    
    (473
    )
    
    
    (321
    )
    
    
    (1,272
    )Disposals
    
    
    4
    
    
    
    (16
    )
    
    
    (49
    )
    
    
    (21
    )
    
    
    (82
    )Subsidiaries now equity accounted
    
    
    (250
    )
    
    
    (156
    )
    
    
    (476
    )
    
    
    (349
    )
    
    
    (1,231
    )Subsidiaries no longer consolidated
    
    
    (319
    )
    
    
    (184
    )
    
    
    (503
    )
    
    
    (6
    )
    
    
    (1,012
    )Transfers and other movements (d)
    
    
    119
    
    
    
    816
    
    
    
    3,003
    
    
    
    (4,154
    )
    
    
    (216
    )At 31 December 2009
    
    
    6,738
    
    
    
    5,958
    
    
    
    25,595
    
    
    
    7,512
    
    
    
    45,803- cost
    
    
    11,028
    
    
    
    8,973
    
    
    
    41,990
    
    
    
    8,154
    
    
    
    70,145- accumulated depreciation
    
    
    (4,290
    )
    
    
    (3,015
    )
    
    
    (16,395
    )
    
    
    (642
    )
    
    
    (24,342
    )Fixed assets held under finance leases (e)
    
    
    
    
    
    
    21
    
    
    
    67
    
    
    
    
    
    
    
    88Other fixed assets pledged as security (f)
    
    
    6
    
    
    
    15
    
    
    
    1,703
    
    
    
    27
    
    
    
    1,751
 Mining
    
    
    Land
    
    
    Plant
    
    
    Capitalproperties
    
    
    and
    
    
    and
    
    
    works inand leases (a)
    
    
    buildings (b)
    
    
    equipment
    
    
    progress
    
    
    TotalYear ended 31 December 2008
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mNet book valueAt 1 January 2008
    
    
    7,131
    
    
    
    5,384
    
    
    
    23,955
    
    
    
    5,498
    
    
    
    41,968Adjustment on currency translation
    
    
    (1,075
    )
    
    
    (374
    )
    
    
    (2,787
    )
    
    
    (1,050
    )
    
    
    (5,286
    )Capitalisation of additional closure costs (note 27)
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    393Interest
capitalized (c) (note 7)
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    190
    
    
    
    203Additions
    
    
    234
    
    
    
    296
    
    
    
    1,861
    
    
    
    6,581
    
    
    
    8,972Depreciation for the year (a)
    
    
    (517
    )
    
    
    (336
    )
    
    
    (2,178
    )
    
    
    (15
    )
    
    
    (3,046
    )Impairment charges, net of reversals
    
    
    (99
    )
    
    
    (219
    )
    
    
    (792
    )
    
    
    (112
    )
    
    
    (1,222
    )Disposals
    
    
    
    
    
    
    (16
    )
    
    
    (64
    )
    
    
    (15
    )
    
    
    (95
    )Subsidiaries no longer consolidated
    
    
    (48
    )
    
    
    (4
    )
    
    
    (56
    )
    
    
    (6
    )
    
    
    (114
    )Transfers and other movements (d)
    
    
    99
    
    
    
    975
    
    
    
    2,173
    
    
    
    (3,267
    )
    
    
    (20
    )At 31 December 2008
    
    
    6,118
    
    
    
    5,706
    
    
    
    22,112
    
    
    
    7,817
    
    
    
    41,753- cost
    
    
    9,496
    
    
    
    7,894
    
    
    
    35,140
    
    
    
    8,091
    
    
    
    60,621- accumulated depreciation
    
    
    (3,378
    )
    
    
    (2,188
    )
    
    
    (13,028
    )
    
    
    (274
    )
    
    
    (18,868
    )At 1 January 2008- cost
    
    
    10,911
    
    
    
    7,347
    
    
    
    36,265
    
    
    
    5,858
    
    
    
    60,381- accumulated depreciation
    
    
    (3,780
    )
    
    
    (1,963
    )
    
    
    (12,310
    )
    
    
    (360
    )
    
    
    (18,413
    )Fixed assets held under finance leases (e)
    
    
    
    
    
    
    21
    
    
    
    19
    
    
    
    
    
    
    
    40Other fixed assets pledged as security (f)
    
    
    20
    
    
    
    
    
    
    
    1,400
    
    
    
    7
    
    
    
    1,427
 (a)
    
    Mining properties include deferred stripping costs of US$900 million (2008: US$820 million).
Amortisation of deferred stripping costs of US$3 million (2008: US$35 million; 2007: US$34 million) is included within Depreciation for
the year. There was also US$59 million (2008 and 2007: nil) impairment of deferred stripping costs charged to the income statement.(b)
    
    At 31 December 2009, the net balance sheet amount for land and buildings includes freehold
US$5,834 million (2008: US$5,557 million); long leasehold US$83 million (2008: US$76 million); and short leasehold US$41 million (2008:
US$73 million).(c)
    
    Interest is capitalised at a rate based on the Groups cost of borrowing or at the rate on
project specific debt, where applicable. The Groups average borrowing rate used for capitalisation of interest is 4.2 per cent (2008: 3.9 per cent, 2007:
5.0 per cent).(d)
    
    Transfers and other movements includes reclassifications between categories.(e)
    
    The finance leases under which these assets are held are disclosed in note 23.(f)
    
    Excludes assets held under finance leases. Fixed assets pledged as security represent amounts
pledged as collateral against US$224 million (2008: US$234 million) of loans, which are included in note 22. 
 14     Investments in equity accounted units
 2009
    
    2008Summary balance sheet (Rio Tinto share)
    
    US$m
    
    US$mRio Tintos share of assetsNon current assets
    
    
    9,707
    
    
    
    7,733Current assets
    
    
    2,329
    
    
    
    1,92112,036
    
    
    
    9,654Rio Tintos share of liabilitiesCurrent liabilities
    
    
    (1,089
    )
    
    
    (1,551
    )Non current liabilities
    
    
    (4,212
    )
    
    
    (3,050
    )(5,301
    )
    
    
    (4,601
    )Rio Tintos share of net assets (a)
    
    
    6,735
    
    
    
    5,053
 (a)
    
    Further details of investments in jointly controlled entities and associates are set out in
notes 38 and 39.At 31 December 2009, the quoted value of the Groups share in associates having shares listed
on recognised stock exchanges was US$1,230 million (2008: US$149 million).Investments in equity accounted units at 31 December 2009 include goodwill of US$1,782
million (2008: US$1,582 million). A-34




---



##### 



Notes to the 2009 Financial statements
 
 15 Net
debt of equity accounted units (excluding amounts due to Rio
Tinto)
 Rio Tinto
    
    
    
    
    
    
    Rio TintoGroup
    
    
    share of
    
    
    Group
    
    
    share ofinterest
    
    
    net debt
    
    
    interest
    
    
    net debt2009
    
    
    2009
    
    
    2008
    
    
    2008%
    
    
    US$m
    
    
    %
    
    
    US$mJointly controlled entitiesMinera Escondida Limitada
    
    
    30.0
    
    
    
    226
    
    
    
    30.0
    
    
    
    427Sohar Aluminium Company LLC
    
    
    20.0
    
    
    
    343
    
    
    
    20.0
    
    
    
    336Queensland Alumina Limited (QAL)
    
    
    80.0
    
    
    
    18
    
    
    
    80.0
    
    
    
    (13
    )Halco Mining Inc.
    
    
    45.0
    
    
    
    37
    
    
    
    45.0
    
    
    
    28Alcan Ningxia Aluminium Company Limited
    
    
    
    
    
    
    
    
    
    
    50.0
    
    
    
    45Richards Bay Minerals (d)
    
    
    37.0
    
    
    
    199
    
    
    
    
    
    
    
    AssociatesTisand (Pty) Limited (d)
    
    
    
    
    
    
    
    
    
    
    50.0
    
    
    
    50Ivanhoe Mines Ltd
    
    
    19.7
    
    
    
    (58
    )
    
    
    9.9
    
    
    
    (10
    )Port Waratah Coal Services
    
    
    27.6
    
    
    
    225
    
    
    
    27.6
    
    
    
    184Mineração Rio do Norte S.A.
    
    
    12.0
    
    
    
    36
    
    
    
    12.0
    
    
    
    29Cloud Peak Energy Resources LLC
    
    
    48.3
    
    
    
    170
    
    
    
    
    
    
    
    Other equity accounted units
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    (83
    )1,097
    
    
    
    
    
    
    
    993
 (a)
    
    In accordance with IAS 28 and IAS 31, the Group includes its net investment in equity accounted
units in its consolidated statement of financial position. This investment is net of the Groups
share of the net debt of such units, which is set out above. Further details of investments in
jointly controlled entities and associates are set out in notes 38 and 39.(b)
    
    Some of the debt of equity accounted units is subject to financial and general covenants.(c)
    
    None of the debt shown above is with recourse to Rio Tinto at 31 December 2009 (2008: US$292
million).(d)
    
    On 9 December, an agreement was signed with a Broad-Based Black Economic Empowerment (BBBEE)
Consortium transferring 26 per cent of the Groups interest in Richards Bay Minerals (RBM) to a
group comprising local communities, investors and RBM employees. At the same time, the Groups
interest in RBM was restructured such that the 2009 net debt balance relates to the restructured
holding in RBM which includes Tisand (Pty) Limited. The 2008 balance relates only to Tisand (Pty)
Limited. 
 16
Inventories
 2009
    
    
    2008US$m
    
    
    US$mRaw materials and purchased components
    
    
    1,120
    
    
    
    1,100Consumable stores
    
    
    1,278
    
    
    
    1,108Work in progress
    
    
    1,410
    
    
    
    1,800Finished goods and goods for resale
    
    
    1,365
    
    
    
    1,7655,173
    
    
    
    5,773Comprising:Expected to be used within one year
    
    
    4,889
    
    
    
    5,607Expected to be used after more than one year
    
    
    284
    
    
    
    1665,173
    
    
    
    5,773
  
 17
Trade and other receivables
 Non current
    
    
    Current
    
    
    Non current
    
    
    Current2009
    
    
    2009
    
    
    2008
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mTrade receivables
    
    
    14
    
    
    
    3,442
    
    
    
    
    
    
    
    3,792Provision
for doubtful debts
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (71
    )Trade receivables  net
    
    
    14
    
    
    
    3,380
    
    
    
    
    
    
    
    3,721Amounts due
from equity accounted units
    
    
    320
    
    
    
    197
    
    
    
    
    
    
    
    253Other receivables
    
    
    247
    
    
    
    641
    
    
    
    166
    
    
    
    962Pension
surpluses (note 50)
    
    
    15
    
    
    
    2
    
    
    
    137
    
    
    
    23Prepayment
of tolling charges to jointly
controlled entities
(a)
    
    
    424
    
    
    
    
    
    
    
    435
    
    
    
    Other prepayments
    
    
    355
    
    
    
    227
    
    
    
    373
    
    
    
    4421,375
    
    
    
    4,447
    
    
    
    1,111
    
    
    
    5,401
 
 (a)
    
    Rio Tinto Aluminium has made certain prepayments to jointly controlled entities for toll
processing of bauxite and alumina. These prepayments will be charged to Group operating costs as
processing takes place.There is no material element of trade and other receivables that is interest bearing.Due to their short term maturities, the fair value of trade and other receivables approximates
their carrying value.At 31 December 2009, trade and other receivables of US$62 million (2008: US$71 million) were
impaired. The majority of these receivables were more than 90 days overdue. A-35




---



##### 



Notes to the 2009 Financial statements
 17
Trade and other receivables
  2009
    
    
    2008US$m
    
    
    US$mless than 30 days overdue
    
    
    262
    
    
    
    242between 30 and 60 days overdue
    
    
    93
    
    
    
    101between 60 and 90 days overdue
    
    
    18
    
    
    
    40more than 90 days overdue
    
    
    81
    
    
    
    44454
    
    
    
    427
    
 18
Deferred taxation
 2009
    
    
    2008US$m
    
    
    US$mAt 1 January
    
    
    2,687
    
    
    
    4,327Adjustment on currency translation
    
    
    297
    
    
    
    (287
    )Credited to the income statement
    
    
    (517
    )
    
    
    (974
    )Credited to Statement of comprehensive income (a)
    
    
    (319
    )
    
    
    (205
    )Subsidiaries no longer consolidated
    
    
    (82
    )
    
    
    Subsidiaries now equity accounted
    
    
    (14
    )
    
    
    Transfer from asset held for sale
    
    
    (190
    )
    
    
    Other movements (b)
    
    
    211
    
    
    
    (174
    )At 31 December
    
    
    2,073
    
    
    
    2,687Comprising:- deferred tax liabilities (c)
    
    
    4,304
    
    
    
    4,054- deferred tax assets (c)
    
    
    (2,231
    )
    
    
    (1,367
    )
  UK
    
    
    Australian
    
    
    Other
countries
    
    
    Total
    
    
    Totaltax
    
    
    tax
    
    
    tax
    
    
    2009
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mDeferred tax liabilities arising from:Accelerated capital allowances
    
    
    94
    
    
    
    1,750
    
    
    
    4,138
    
    
    
    5,982
    
    
    
    6,468Post retirement benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Unremitted earnings
    
    
    
    
    
    
    
    
    
    
    616
    
    
    
    616
    
    
    
    340Unrealised exchange losses
    
    
    
    
    
    
    47
    
    
    
    37
    
    
    
    84
    
    
    
    493Other temporary differences
    
    
    1
    
    
    
    347
    
    
    
    246
    
    
    
    594
    
    
    
    16195
    
    
    
    2,144
    
    
    
    5,037
    
    
    
    7,276
    
    
    
    7,491Deferred tax assets arising from:Capital allowances
    
    
    
    
    
    
    (48
    )
    
    
    (15
    )
    
    
    (63
    )
    
    
    (202
    )Provisions
    
    
    (71
    )
    
    
    (737
    )
    
    
    (1,100
    )
    
    
    (1,908
    )
    
    
    (1,468
    )Post retirement benefits
    
    
    (167
    )
    
    
    (30
    )
    
    
    (1,359
    )
    
    
    (1,556
    )
    
    
    (1,129
    )Tax losses
    
    
    (303
    )
    
    
    (132
    )
    
    
    (851
    )
    
    
    (1,286
    )
    
    
    (899
    )Unrealised exchange losses
    
    
    
    
    
    
    (149
    )
    
    
    
    
    
    
    (149
    )
    
    
    (1,076
    )Other temporary differences
    
    
    (11
    )
    
    
    (95
    )
    
    
    (135
    )
    
    
    (241
    )
    
    
    (30
    )(552
    )
    
    
    (1,191
    )
    
    
    (3,460
    )
    
    
    (5,203
    )
    
    
    (4,804
    )(Credited)/charged to the income statement(Decelerated)/accelerated capital allowances
    
    
    (11
    )
    
    
    177
    
    
    
    (554
    )
    
    
    (388
    )
    
    
    (132
    )Provisions
    
    
    (32
    )
    
    
    (231
    )
    
    
    35
    
    
    
    (228
    )
    
    
    203Post retirement benefits
    
    
    11
    
    
    
    8
    
    
    
    (13
    )
    
    
    6
    
    
    
    100Tax losses
    
    
    15
    
    
    
    (119
    )
    
    
    (344
    )
    
    
    (448
    )
    
    
    20Tax on unremitted earnings
    
    
    
    
    
    
    4
    
    
    
    (22
    )
    
    
    (18
    )
    
    
    22Unrealised exchange losses
    
    
    
    
    
    
    577
    
    
    
    41
    
    
    
    618
    
    
    
    (1,039
    )Other temporary differences
    
    
    17
    
    
    
    (25
    )
    
    
    (51
    )
    
    
    (59
    )
    
    
    (148
    )
    
    
    
    391
    
    
    
    (908
    )
    
    
    (517
    )
    
    
    (974
    )
 A-36




---



##### 



Notes to the 2009 Financial statements
 18
Deferred taxation
 (a)
    
    The amounts credited directly to the Statement of comprehensive income relate to tax relief on
share options, provisions for tax on exchange differences on intragroup loans qualifying for
reporting as part of the net investment in subsidiaries, on cash flow hedges and on actuarial
gains and losses on pension schemes and post retirement healthcare plans.(b)
    
    Other movements include deferred tax relating to tax payable recognised by subsidiary
holding companies on the profits of the equity accounted units to which it relates, as well as the
movements in the estimated tax accrual relating to the divestment of the Alcan Packaging
businesses.(c)
    
    The deferred tax liability of US$4,304 million (2008: US$4,054 million) includes US$4,091
million (2008: US$3,866 million) due in more than one year. The deferred tax asset of US$2,231
million (2008: US$1,367 million) includes US$2,109 million (2008: US$594 million) receivable in
more than one year.(d)
    
    US$1,426 million (2008: US$1,311 million) of potential deferred tax assets have not been
recognised as assets in these accounts. There is a time limit for the recovery of US$20 million of
these potential assets (2008: US$32 million). US$620 million (2008: US$1,067 million) of the
potential assets relates to realised or unrealised capital losses, recovery of which depends on
the existence of capital gains in future years. US$503 million (2008: US$543 million) of the
potential assets relates to trading losses in France, which were acquired as part of the Alcan
acquisition.(e)
    
    Deferred tax is not recognised on the unremitted earnings of subsidiaries and jointly
controlled entities where the Group is able to control the timing of the remittance and it is
probable that there will be no remittance in the foreseeable future. If these earnings were
remitted, tax of US$888 million (2008: US$1,130 million) would be payable. The reduction from
prior year is due to the introduction of an exemption from taxation for foreign dividends in the
UK in 2009.(f)
    
    There is a limited time period for the recovery of US$401 million (2008:US$187 million) of tax
losses which have been recognised as deferred tax assets in the financial statements. 
 19 Assets held for sale
    
  
 20 Other financial assets
 Non current
    
    
    Current
    
    
    Non current
    
    
    Current2009
    
    
    2009
    
    
    2008
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mCurrency and commodity contracts: designated as hedges
    
    
    
    
    
    
    8
    
    
    
    38
    
    
    
    60Derivatives and embedded derivatives not related to net
debt: not designated as hedges (a)
    
    
    65
    
    
    
    226
    
    
    
    
    
    
    
    87Equity shares and quoted funds
    
    
    439
    
    
    
    219
    
    
    
    150
    
    
    
    111Other investments, including loans
    
    
    337
    
    
    
    168
    
    
    
    478
    
    
    
    2Other liquid resources (non cash equivalent)
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    4841
    
    
    
    694
    
    
    
    666
    
    
    
    264
 (a)
    
    Derivatives and embedded derivatives not designated as hedges include amounts of US$65 million
(2008: US$21 million) which mature beyond one year.Detailed information relating to other financial assets is given in note 34. 
 21 Cash and cash equivalents
 2009
    
    
    2008US$m
    
    
    US$mCash at bank and in hand
    
    
    831
    
    
    
    629Short term bank deposits
    
    
    3,402
    
    
    
    5524,233
    
    
    
    1,181Bank overdrafts repayable on demand (unsecured)
    
    
    (91
    )
    
    
    (147
    )Balance per Group cash flow statement
    
    
    4,142
    
    
    
    1,034
  A-37




---



##### 



Notes
to the 2009 Financial statements
 
 22 Borrowings
 Non-current
    
    
    Current
    
    
    Non-current
    
    
    Current2009
    
    
    2009
    
    
    2008
    
    
    2008Borrowings at 31 December
    
    Note
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mSyndicated bank loans (a)
    
    
    
    
    
    
    8,480
    
    
    
    
    
    
    
    19,050
    
    
    
    8,846Other bank loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    582Commercial paper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90Other loansFinance leases
    
    
    23
    
    
    
    104
    
    
    
    19
    
    
    
    61
    
    
    
    28Rio Tinto Finance (USA) Limited Bonds 7.125% 2013
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    Rio Tinto Finance (USA) Limited Bonds 5.875% 2013 (c)
    
    
    
    
    
    
    2,622
    
    
    
    
    
    
    
    2,664
    
    
    
    Rio Tinto Finance (USA) Limited Bonds 6.5% 2018 (c)
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    1,953
    
    
    
    Rio Tinto Finance (USA) Limited Bonds 7.125% 2028 (c)
    
    
    
    
    
    
    871
    
    
    
    
    
    
    
    912
    
    
    
    Rio Tinto Finance (USA) Limited Bonds 8.900% 2014
    
    
    
    
    
    
    1,967
    
    
    
    
    
    
    
    
    
    
    
    Rio Tinto Finance (USA) Limited Bonds 9.250% 2019
    
    
    
    
    
    
    1,449
    
    
    
    
    
    
    
    
    
    
    
    Colowyo Coal Company L.P. Bonds 9.56% 2011
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    9Colowyo Coal Company L.P. Bonds 10.19% 2016
    
    
    
    
    
    
    69
    
    
    
    5
    
    
    
    100
    
    
    
    Alcan Inc. Debentures 6.45% due 2011
    
    
    
    
    
    
    406
    
    
    
    
    
    
    
    410
    
    
    
    Alcan Inc. Global Notes 4.875% due 2012
    
    
    
    
    
    
    494
    
    
    
    
    
    
    
    497
    
    
    
    Alcan Inc. Global Notes 4.50% due 2013
    
    
    
    
    
    
    486
    
    
    
    
    
    
    
    481
    
    
    
    Alcan Inc. Global Notes 5.20% due 2014
    
    
    
    
    
    
    495
    
    
    
    
    
    
    
    493
    
    
    
    Alcan Inc. Global Notes 5.00% due 2015
    
    
    
    
    
    
    485
    
    
    
    
    
    
    
    496
    
    
    
    Alcan Inc. Debentures 7.25% due 2028
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    109
    
    
    
    Alcan Inc. Debentures 7.25% due 2031
    
    
    
    
    
    
    437
    
    
    
    
    
    
    
    439
    
    
    
    Alcan Inc. Global Notes 6.125% due 2033
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    737
    
    
    
    Alcan Inc. Global Notes 5.75% due 2035
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    281
    
    
    
    European Medium Term Notes (b)
    
    
    
    
    
    
    
    
    
    
    322
    
    
    
    295
    
    
    
    Other secured loans
    
    
    
    
    
    
    325
    
    
    
    63
    
    
    
    310
    
    
    
    10Other unsecured loans
    
    
    
    
    
    
    337
    
    
    
    347
    
    
    
    313
    
    
    
    322Total borrowings
    
    
    
    
    
    
    22,155
    
    
    
    756
    
    
    
    29,724
    
    
    
    9,887
 
 (a)
    
    In support of its acquisition of Alcan Inc. in 2007, the Group arranged for US$40 billion in
term loans and revolving credit facilities, which were fully underwritten and subsequently
syndicated (the Syndicated bank loans). The Syndicated bank loans were divided into four
facilities, as follows: Facility A
    
    
    Facility B
    
    
    Facility C
    
    
    Facility DFacility amount (US$ billions)
    
    
    
    
    
    15
    
    
    10
    
    
    5
    
    
    10Type
    
    
    
    
    
    Term Loan
    
    
    Revolving
    
    
    Revolving
    
    
    Term LoanDue
    
    
    
    
    
    October 2009
    
    
    October 2010
    
    
    October 2012
    
    
    December 2012Repayment
    
    
    
    
    
    Bullet
    
    
    Bullet
    
    
    Bullet
    
    
    BulletOutstanding balance (US$ billions)
    
    TotalAt 31 December 2009
    
    
    8.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.5At 31 December 2008
    
    
    28.0
    
    
    
    8.9
    
    
    
    9.1
    
    
    
    
    
    
    
    10.0Undrawn facilities (US$ billions)At 31 December 2009
    
    
    
    
    
    
    
    
    
    
    2.1
    
    
    
    5.0
    
    
    
    At 31 December 2008
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    5.0
    
    
    
    
 The amounts outstanding under these facilities are shown net of the unamortised costs of
obtaining the facilities. In addition to the syndicated bank loan facilities shown above, there are
US$2.3 billion of unused committed bilateral banking facilities of which US$1.0 billion matures
December 2011 and US$1.3 billion matures December 2012.Facilities A and B were subject to mandatory prepayment and cancellation to the extent of the net
proceeds from disposals of assets and from the raising of funds through equity or capital markets,
subject to specific thresholds and conditions. All of Facilities A and B have been repaid from the
proceeds of the rights issues and disposal proceeds in 2009. The mandatory prepayments also reduced
the available limit on Facility B to US$2.1 billion at 31 December 2009. Refer to note 48 for
partial repayment of Facility D and cancellation of Facility B subsequent to year end.The main financial covenant to which the Group is subject is the covenant contained in the Alcan
facilities which requires it to maintain a ratio of net borrowings to EBITDA of no greater than 4.5
times. A compliance certificate must be produced for this ratio on a semi annual basis. In
addition, the Facility Agreement contains restrictions on the Group, including that it be required
to observe certain customary covenants including but not limited to (i) maintenance of
authorisations; (ii) compliance with laws; (iii) change of business; (iv) negative pledge (subject
to certain carve outs); (v) environmental laws and licences; and (vi) subsidiaries incurring
financial indebtedness. At 31 December 2009, the Group is in compliance with the covenants
contained in the Alcan facilities.
 (b)
    
    Rio Tinto has a US$10 billion (2008: US$10 billion) European Medium Term Note (EMTN) programme
for the issuance of debt, of which approximately US$0.3 billion was outstanding at 31 December 2009
(2008: US$0.3 billion). The Groups EMTNs are swapped to US dollars. The fair value of currency
swap liabilities at 31 December 2009 was US$68 million (2008: US$99 million). These are included in
other financial liabilities in the statement of financial position. Details of the major currency
swaps are shown in note 34-B(d).(c)
    
    As at 31 December 2009, US$5 billion of the fixed rate borrowings shown were swapped to
floating rates (2008: none). The fair value of interest rate swap liabilities at 31 December 2009
was US$97 million (2008: nil). These are included in other financial liabilities in the statement
of financial position.  Details of the major interest rate swaps are shown in note 34 - B (d). In December 2008, the Group unwound interest rate swaps with a principal of  US$5.9 billion to take advantage of market conditions. US$5.0 billion of this amount was designated
as a fair value hedge. As a consequence, the fair value adjustments which had been made to the
hedged debt are being amortised to the income statement over the remaining life of the debt. At 31
December 2009, the carrying value of the debt was US$506 million (2008: US$565 million) higher than
the principal as a result of the unamortised fair value adjustment.(d)
    
    The Groups borrowings of US$22.9 billion (2008: US$39.6 billion) include some US$4.6 billion
(2008: US$4.6 billion) which relates to borrowings of subsidiaries that are without recourse to the
Group, some of which are subject to various financial and general covenants with which the
respective borrowers were in compliance as at 31 December 2009. A-38




---



##### 



Notes to the 2009 Financial statements
 
 23 Capitalised finance leases
 2009
    
    
    2008US$m
    
    
    US$mPresent value of minimum lease paymentsTotal minimum lease payments
    
    
    131
    
    
    
    97Effect of discounting
    
    
    (8
    )
    
    
    (8
    )123
    
    
    
    89Payments under capitalised finance leasesDue within one year
    
    
    19
    
    
    
    28Between 1 and 3 years
    
    
    40
    
    
    
    11Between 3 and 5 years
    
    
    29
    
    
    
    10More than 5 years
    
    
    35
    
    
    
    40123
    
    
    
    89
 
 24 Consolidated net debt
 2009
    
    
    2008US$m
    
    
    US$mAnalysis of changes in consolidated net debtAt 1 January
    
    
    (38,672
    )
    
    
    (45,191
    )Adjustment on currency translation
    
    
    (2,265
    )
    
    
    1,296Exchange gains/(losses) taken to the income statement (a)
    
    
    2,222
    
    
    
    (1,701
    )Gains on derivatives related to net debt
    
    
    20
    
    
    
    105Cash movements excluding exchange movements
    
    
    19,909
    
    
    
    6,864Other movements
    
    
    (75
    )
    
    
    (45
    )At 31 December
    
    
    (18,861
    )
    
    
    (38,672
    )Reconciliation to statement of financial position categoriesBorrowings (note 22)
    
    
    (22,911
    )
    
    
    (39,611
    )Bank overdrafts repayable on demand (note 21)
    
    
    (91
    )
    
    
    (147
    )Cash and cash equivalents (note 21)
    
    
    4,233
    
    
    
    1,181Other liquid resources (note 20)
    
    
    73
    
    
    
    4Derivatives related to net debt (note 34)
    
    
    (165
    )
    
    
    (99
    )(18,861
    )
    
    
    (38,672
    )
 2009
    
    
    2008US$m
    
    
    US$mExchange gains/(losses) on US dollar net debt and
intragroup balances excluded from Underlying earningsExchange gains/(losses) on US dollar net debt
    
    
    2,211
    
    
    
    (1,675
    )Exchange (losses)/gains on intragroup balances
    
    
    (1,912
    )
    
    
    1,523Exchange  gains/(losses) on loans from equity accounted units
    
    
    36
    
    
    
    (36
    )Exchange gain on settlement of dividend
    
    
    30
    
    
    
    12Credited/charged to income statement
    
    
    365
    
    
    
    (176
    )
 (a)
    
    Exchange gains/(losses) taken to the income statement include amounts taken to Underlying
earnings.Further information relating to the currency and interest rate exposures arising from net debt and
related derivatives is given in note
34-B(d) on Financial Instruments. 
 25 Trade and other payables
 Non current
    
    
    Current
    
    
    Non current
    
    
    Current2009
    
    
    2009
    
    
    2008
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mTrade creditors
    
    
    
    
    
    
    1,959
    
    
    
    
    
    
    
    2,875Amounts owed to equity accounted units
    
    
    197
    
    
    
    205
    
    
    
    11
    
    
    
    269Other creditors (a)
    
    
    128
    
    
    
    512
    
    
    
    243
    
    
    
    641Employee entitlements
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    770Royalties and mining taxes
    
    
    
    
    
    
    325
    
    
    
    
    
    
    
    471Accruals and deferred income
    
    
    125
    
    
    
    1,865
    
    
    
    79
    
    
    
    2,130Government grants deferred
    
    
    141
    
    
    
    37
    
    
    
    119
    
    
    
    41591
    
    
    
    5,759
    
    
    
    452
    
    
    
    7,197
 (a)
    
    Other creditors include deferred consideration of US$119 million (2008: US$318 million)
relating to certain assets acquired. The deferred consideration is included at its net present
value. The amortisation of the discount applied in establishing the
net present value is treated as a finance cost. All other accounts payable and accruals are non interest bearing.Due to their short term maturities, the fair value of trade and other payables approximates their
carrying value. 
 26 Other financial liabilities
 Non current
    
    
    Current
    
    
    Non current
    
    
    Current2009
    
    
    2009
    
    
    2008
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mForward commodity contracts: designated as hedges
    
    
    371
    
    
    
    128
    
    
    
    173
    
    
    
    84Derivatives related to net debt
    
    
    97
    
    
    
    68
    
    
    
    95
    
    
    
    4Other derivatives and embedded derivatives: not
designated as hedges
    
    
    133
    
    
    
    167
    
    
    
    
    
    
    
    355Other financial liabilities
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    37601
    
    
    
    412
    
    
    
    268
    
    
    
    480
  A-39




---



##### 



Notes to the 2009 Financial statements
 
 27
Provisions (not including taxation)
 Close downPensions
    
    
    
    
    
    
    andand post
    
    
    Other
    
    
    restoration/retirement
    
    
    employee
    
    
    environmental
    
    
    
    
    
    
    Total
    
    
    Totalhealthcare(a)
    
    
    entitlements(b)
    
    
    (c),(d),(e)
    
    
    Other(f)
    
    
    2009
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mAt 1 January
    
    
    3,713
    
    
    
    523
    
    
    
    6,011
    
    
    
    686
    
    
    
    10,933
    
    
    
    11,101Adjustment on currency translation
    
    
    123
    
    
    
    103
    
    
    
    638
    
    
    
    49
    
    
    
    913
    
    
    
    (959
    )Amounts capitalised
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    268
    
    
    
    393Subsidiaries no longer consolidated
    
    
    
    
    
    
    (1
    )
    
    
    (94
    )
    
    
    (12
    )
    
    
    (107
    )
    
    
    (42
    )Subsidiaries now equity accounted
    
    
    (16
    )
    
    
    
    
    
    
    (260
    )
    
    
    (1
    )
    
    
    (277
    )
    
    
    Charged/(credited) to profit:- new provisions
    
    
    
    
    
    
    23
    
    
    
    1
    
    
    
    38
    
    
    
    62
    
    
    
    53- increases to existing provisions
    
    
    326
    
    
    
    356
    
    
    
    57
    
    
    
    30
    
    
    
    769
    
    
    
    629- unused amounts reversed
    
    
    
    
    
    
    (23
    )
    
    
    (26
    )
    
    
    (33
    )
    
    
    (82
    )
    
    
    (144
    )- exchange losses/(gains) on provisions
    
    
    
    
    
    
    5
    
    
    
    169
    
    
    
    7
    
    
    
    181
    
    
    
    (273
    )Amortisation of discount
    
    
    
    
    
    
    1
    
    
    
    244
    
    
    
    10
    
    
    
    255
    
    
    
    297Utilised in year
    
    
    (470
    )
    
    
    (155
    )
    
    
    (123
    )
    
    
    (85
    )
    
    
    (833
    )
    
    
    (912
    )Actuarial losses recognised in equity
    
    
    693
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    693
    
    
    
    809Transfer from asset held for sale
    
    
    774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    774
    
    
    
    Transfers and other movements
    
    
    7
    
    
    
    (37
    )
    
    
    31
    
    
    
    144
    
    
    
    145
    
    
    
    (19
    )At 31
December
    
    
    5,150
    
    
    
    795
    
    
    
    6,916
    
    
    
    833
    
    
    
    13,694
    
    
    
    10,933Balance sheet analysis:Current
    
    
    157
    
    
    
    465
    
    
    
    211
    
    
    
    349
    
    
    
    1,182
    
    
    
    826Non-current
    
    
    4,993
    
    
    
    330
    
    
    
    6,705
    
    
    
    484
    
    
    
    12,512
    
    
    
    10,107Total
    
    
    5,150
    
    
    
    795
    
    
    
    6,916
    
    
    
    833
    
    
    
    13,694
    
    
    
    10,933
 
 (a)
    
    The main assumptions used to determine the provision for pensions and post retirement healthcare, and other information, including
the expected level of future funding payments in respect of those arrangements, are given in note 50.(b)
    
    The provision for other employee entitlements includes a provision for long service leave of
US$205 million (2008: US$142 million), based on the relevant entitlements in certain Group
operations. It also includes the provisions relating to the Groups cash-settled share based
payment plans of US$111 million (2008: US$43 million), which are described in note 49.
Furthermore, this includes US$229 million (2008: US$118 million) of provision for redundancy and
severance payments.(c)
    
    The Groups policy on close down and restoration costs is described in note 1(k). Close down
and restoration costs are a normal consequence of mining, and the majority of close down and
restoration expenditure is incurred at the end of the relevant operation. Remaining lives of
mines and infrastructure range from one to over 50 years with an average, weighted by closure
provision, of around 23 years (2008: 18 years). Although the ultimate cost to be incurred is
uncertain, the Groups businesses estimate their respective costs based on feasibility and
engineering studies using current restoration standards and techniques. Provisions of US$6,916
million (2008: US$6,011 million) for close down and restoration costs and environmental clean up
obligations, include estimates of the effect of future inflation and have been adjusted to reflect
risk. These estimates have been discounted to their present value at an average rate of
approximately four per cent per annum, being an estimate of the long term, risk free, pre-tax
cost of borrowing. Excluding the effects of future inflation, and before discounting, this
provision is equivalent to some US$10.1 billion (2008: US$8.2 billion).(d)
    
    Some US$505 million (2008: US$495 million) of environmental clean up expenditure is expected
to take place within the next five years. The remainder includes amounts for the operation and
maintenance of remediation facilities in later years. The provision for environmental clean up
expenditure includes the issue described in (e) below.(e)
    
    In 1995, Kennecott Utah Copper (KUC) agreed with the US Environmental Protection Agency
(EPA) and the State of Utah to complete certain source control projects and perform specific
environmental studies regarding contamination of ground water in the vicinity of the Bingham
Canyon mine. A remedial investigation and feasibility study on the South Zone ground water
contamination, completed in March 1998, identified a range of alternative measures to address this
issue. Additional studies were conducted to refine the workable alternatives. A remedial design
document was completed in 2002. A joint proposal and related agreements with the State of Utah
Natural Resource Damage Trustee, the State of Utah and the Jordan Valley Water Conservancy
District were approved in 2004. KUC entered into a formal agreement with the EPA in 2007 on the
remedial action. In September 2008, the EPA withdrew its proposal to list the Kennecott South
Zone Site on the Superfund National Priorities List. This action recognises that soil clean up
work is complete and that groundwater cleanup is adequately initiated and financial assurance is
in place to assure completion of the work.(f)
    
    Other provisions deal with a variety of issues and include US$101 million (2008: US$103
million) relating to the Rio Tinto Alcan Foundation commitment in Canada made at the time of the
Alcan acquisition. This involves payments of C$200 million over a five year period. A-40




---



##### 



No s to the 2009 Financial statements
 
 28
Share capital  Rio Tinto plc
 2009Number
    
    
    2008Number
    
    
    2007Number
    
    
    2009
    
    
    2008
    
    
    2007(million)
    
    
    (million)
    
    
    (million)
    
    
    US$m
    
    
    US$m
    
    
    US$mIssued and fully paid up share capitalAt 1 January
    
    
    1,004.10
    
    
    
    1,071.80
    
    
    
    1,071.49
    
    
    
    160
    
    
    
    172
    
    
    
    172Ordinary shares issued (a), (c)
    
    
    524.90
    
    
    
    0.18
    
    
    
    0.31
    
    
    
    86
    
    
    
    
    
    
    
    Own shares purchased and cancelled (b)
    
    
    
    
    
    
    (67.88
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    At 31 December
    
    
    1,529.00
    
    
    
    1,004.10
    
    
    
    1,071.80
    
    
    
    246
    
    
    
    160
    
    
    
    172- Special Voting Share of 10p (d)
    
    1 only
    
    
    1 only
    
    
    1 only- DLC Dividend Share of 10p (d)
    
    1 only
    

    1 only
    
    
    1 only- shares repurchased and held in treasury (b)
    
    
    5.03
    
    
    
    5.91
    
    
    
    74.55- shares held by public
    
    
    1,523.97
    
    
    
    998.19
    
    
    
    997.25Shares held by publicAt 1 January
    
    
    998.19
    
    
    
    997.25
    
    
    
    1,023.67Ordinary shares issued (a)
    
    
    524.90
    
    
    
    0.18
    
    
    
    0.31Shares reissued from treasury (b)
    
    
    0.88
    
    
    
    0.76
    
    
    
    0.97Shares repurchased and held in treasury
    
    
    
    
    
    
    
    
    
    
    (27.70
    )At 31 December
    
    
    1,523.97
    
    
    
    998.19
    
    
    
    997.25Unissued share capitalOrdinary shares of 10p each
    
    
    171.00
    
    
    
    417.13
    
    
    
    349.43
    
    
    
    27
    
    
    
    63
    
    
    
    51Equalisation Share of 10p (d)
    
    1 only
    

    1 only
    
    
    1 only 
    
    
    
    
    
    
    
    
    
    
    Total authorised share capital
    
    
    1,700.00
    
    
    
    1,421.23
    
    
    
    1,421.23
    
    
    
    273
    
    
    
    223
    
    
    
    223
 
 (a)
    
    524,460,478 Ordinary shares were issued in July 2009 as a result of the Rio Tinto plc rights
issue. Further details on the rights issues are provided in note 46. 440,018 Ordinary shares were
issued, and 874,925 Ordinary shares reissued from treasury during the year resulting from the
exercise of options under Rio Tinto plc employee share based payment plans with exercise prices
between £7.98p and £29.38p per share (2008: 183,714 shares issued, and 763,919 shares reissued from
treasury with exercise prices between £8.09p and £35.57p per share; 2007: 1,280,893 shares issued
with exercise prices between £8.09p and £27.99p per share).(b)
    
    The authority for the Company to buy back its Ordinary shares was renewed at the 2008 annual
general meeting. No shares were bought back and held in treasury during 2009 (2008: nil; 2007:
27,700,000 shares at an average buy back price of £30.05p per share).During 2008, as part of the Groups internal capital management programme, Rio Tinto undertook a
series of transactions, whereby 67,880,000 shares held by Rio Tinto plc in treasury were sold to
Rio Tinto Limited at market value, before being immediately repurchased by Rio Tinto plc for a
nominal amount, pursuant to the share purchase approval granted by Rio Tinto plc shareholders at
the 2008 Rio Tinto plc annual general meeting. The shares were then cancelled upon their repurchase
by Rio Tinto plc.(c)
    
    The aggregate gross consideration received for new shares issued arising from the right issue
during 2009 was US$12.0 billion (2008 and 2007: nil). The difference between the nominal value and
issue price of the shares issued was credited to merger reserve and expenses associated with the
rights issue were charged against the share premium account.The aggregate consideration received for treasury shares reissued was US$3 million (2008: US$25
million; 2007: US$24 million) and US$32 million (2008:US$6 million; 2007: US$13 million) for new shares issued resulting from the exercise of options
under Rio Tinto plc employee share based payment plans.(d)
    
    The Special Voting Share was issued to facilitate the joint voting by shareholders of Rio
Tinto plc and Rio Tinto Limited on Joint Decisions, following the DLC merger. Directors have the
ability to issue an Equalisation Share if that is required under the terms of the DLC Merger
Sharing Agreement. The DLC Dividend Share was issued to facilitate the efficient management of
funds within the DLC structure.During 2009, US$17 million of shares were purchased by the Employee Share Ownership Trust on behalf
of Rio Tinto plc to satisfy future share options and awards as they vest (2008 and 2007: nil).Information relating to share options and other share based incentive schemes is given in note 49
on share based payments. 
 29
Share capital  Rio Tinto Limited
 2009 Number
    
    
    2008Number
    
    
    2007Number
    
    
    2009
    
    
    2008
    
    
    2007(million)
    
    
    (million)
    
    
    (million)
    
    
    US$m
    
    
    US$m
    
    
    US$mIssued and fully paid up share capitalAt 1 January
    
    
    285.75
    
    
    
    285.75
    
    
    
    285.75
    
    
    
    961
    
    
    
    1,219
    
    
    
    1,099Adjustment on currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    710
    
    
    
    (258
    )
    
    
    120Ordinary shares issued (a)
    
    
    150.01
    
    
    
    
    
    
    
    
    
    
    
    3,253
    
    
    
    
    
    
    
    At 31 December
    
    
    435.76
    
    
    
    285.75
    
    
    
    285.75
    
    
    
    4,924
    
    
    
    961
    
    
    
    1,219- Share capital held by Rio Tinto plc
    
    
    171.07
    
    
    
    171.07
    
    
    
    171.07- Special Voting Share of 10p (b)
    
    1 only
    

    1 only
    
    
    1 only- DLC Dividend Share of 10p (b)
    
    1 only
    

    1 only
    
    
    1 onlyTotal share capital (b)
    
    
    606.83
    
    
    
    456.82
    
    
    
    456.82
 
 (a)
    
    150,015,297 Ordinary shares were issued during 2009 as a result of the Rio Tinto Limited rights
issue. The aggregate gross consideration received for new shares issued during 2009 was US$3.2
billion. Further details on the rights issue are provided in note 46.(b)
    
    The Special Voting Share was issued to facilitate the joint voting by shareholders of Rio
Tinto Limited and Rio Tinto plc on Joint Decisions following the DLC merger. Directors have the
ability to issue an Equalisation Share if that is required under the terms of the DLC Merger
Sharing Agreement.The DLC Dividend Share was issued to facilitate the efficient management of funds within the DLC
structure.(c)
    
    The authority for the Company to buy back shares was renewed at the 2008 annual general meeting. No
shares were bought back during 2009 (2008 and 2007 nil).(d)
    
    Share options exercised during the year to 31 December 2009 under various Rio Tinto Limited
employee share option schemes were satisfied by the on-market purchase of Rio Tinto Limited shares
by a third party on the Groups behalf.(e)
    
    Information relating to share options and other share based incentive schemes is given in note 49
on share based payments. A-41




---



##### 



Notes to the 2009 Financial statements
 
 30
Other reserves and retained earnings
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mCapital redemption reserve(a)At 1 January
    
    
    12
    
    
    
    
    
    
    
    Own shares purchased and cancelled
    
    
    
    
    
    
    12
    
    
    
    At 31 December
    
    
    12
    
    
    
    12
    
    
    
    Hedging reserves(b)At 1 January
    
    
    14
    
    
    
    (174
    )
    
    
    (133
    )Parent and subsidiaries net cash flow hedge fair value (losses)/gains
    
    
    (206
    )
    
    
    28
    
    
    
    (197
    )Equity accounted units cash flow hedge fair value (losses)/gains
    
    
    (7
    )
    
    
    3
    
    
    
    (4
    )Parent and subsidiaries net cash flow hedge losses transferred to the income statement
    
    
    16
    
    
    
    245
    
    
    
    89Equity accounted units cash flow hedge losses transferred to the income statement
    
    
    7
    
    
    
    
    
    
    
    Cash flow hedge gains reclassified on disposal
    
    
    (4
    )
    
    
    
    
    
    
    Tax on the above
    
    
    52
    
    
    
    (88
    )
    
    
    71At 31 December
    
    
    (128
    )
    
    
    14
    
    
    
    (174
    )Available for sale revaluation reserves(c)At 1 January
    
    
    (107
    )
    
    
    57
    
    
    
    31Gains/(losses) on available for sale securities
    
    
    357
    
    
    
    (173
    )
    
    
    49Gains on available for sale securities transferred to the income statement
    
    
    (3
    )
    
    
    (1
    )
    
    
    (16
    )Tax on the above
    
    
    
    
    
    
    10
    
    
    
    (7
    )At 31 December
    
    
    247
    
    
    
    (107
    )
    
    
    57Other reserves(d)At 1 January
    
    
    (169
    )
    
    
    19
    
    
    
    8Own shares purchased from Rio Tinto Limited shareholders to satisfy share options
    
    
    (35
    )
    
    
    (128
    )
    
    
    (64
    )Employee share options: value of services
    
    
    30
    
    
    
    27
    
    
    
    20Merger reserve arising from Rio Tinto plcs rights issue (d)
    
    
    11,936
    
    
    
    
    
    
    
    Deferred tax on share options
    
    
    14
    
    
    
    (87
    )
    
    
    55At 31 December
    
    
    11,776
    
    
    
    (169
    )
    
    
    19Foreign currency translation reserve(e)At 1 January
    
    
    (2,072
    )
    
    
    2,514
    
    
    
    735Parent and subsidiaries currency translation adjustments
    
    
    3,745
    
    
    
    (4,168
    )
    
    
    1,795Equity accounted units currency translation adjustments
    
    
    456
    
    
    
    (300
    )
    
    
    1Exchange losses
    
    
    (13
    )
    
    
    (215
    )
    
    
    (30
    )Currency translation reclassified on disposal
    
    
    (13
    )
    
    
    (2
    )
    
    
    Tax on exchange adjustments
    
    
    
    
    
    
    99
    
    
    
    13At 31 December
    
    
    2,103
    
    
    
    (2,072
    )
    
    
    2,514Total other reserves per statement of financial position
    
    
    14,010
    
    
    
    (2,322
    )
    
    
    2,416
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mRetained earnings(f)At 1 January
    
    
    17,134
    
    
    
    19,033
    
    
    
    14,401Parent and subsidiaries profit for the year
    
    
    4,497
    
    
    
    3,879
    
    
    
    7,058Equity accounted units retained profit/(loss) for the year
    
    
    375
    
    
    
    (203
    )
    
    
    254Actuarial losses/(gains) (g)
    
    
    (973
    )
    
    
    (1,299
    )
    
    
    135Tax relating to components of other comprehensive income
    
    
    269
    
    
    
    365
    
    
    
    21Total comprehensive income for the year
    
    
    4,168
    
    
    
    2,742
    
    
    
    7,468Dividends paid
    
    
    (876
    )
    
    
    (1,933
    )
    
    
    (1,507
    )Own shares purchased and cancelled
    
    
    
    
    
    
    (2,767
    )
    
    
    Own shares purchased from Rio Tinto shareholders under capital management programme
    
    
    
    
    
    
    
    
    
    
    (1,372
    )Own shares purchased from Rio Tinto plc shareholders to satisfy share options
    
    
    (17
    )
    
    
    
    
    
    
    Ordinary shares held in treasury, reissued to satisfy share options
    
    
    3
    
    
    
    25
    
    
    
    24Employee share options and other IFRS 2 charges taken to the income statement (h)
    
    
    65
    
    
    
    34
    
    
    
    19At 31 December
    
    
    20,477
    
    
    
    17,134
    
    
    
    19,033
 
 (a)
    
    The capital redemption reserve was set up to comply with section 170 of the Companies Act
1985, when shares of a company are redeemed or purchased wholly out of the companys profits. The
amount at 31 December 2009 reflects the amount by which the Companys issued share capital is
diminished in accordance with section 733 of the Companies Act 2006.(b)
    
    The hedging reserve records gains or losses on cash flow hedges that are recognised initially
in equity, as described in note 1(p.iii).(c)
    
    The available for sale revaluation reserves record fair value gains or losses relating to
available for sale securities, as described in note 1(p.i).(d)
    
    Other reserves record the cumulative amount recognised under IFRS 2 in respect of options
granted but not exercised to acquire shares in Rio Tinto Limited, less, where applicable, the cost
of shares purchased to satisfy share options exercised. The cumulative amount recognised under
IFRS 2 in respect of options granted but not exercised to acquire shares in Rio Tinto plc is
recorded in retained earnings.Other reserves includes US$11,936 million which represents the difference between the nominal
value and issue price of the shares issued arising from Rio Tinto plcs rights issue. No share
premium was recorded in the Rio Tinto plc financial statements through the operation of the merger
relief provisions of the Companies Act 1985.(e)
    
    Exchange differences arising on the translation of the Groups net investment in foreign
controlled companies are taken to the foreign currency translation reserve, as described in note
1(d). The cumulative differences relating to an investment are transferred to the income statement
when the investment is disposed of.(f)
    
    Retained profit and movements in reserves of subsidiaries include those arising from the
Groups share of proportionally consolidated units.(g)
    
    This includes actuarial losses relating to equity accounted units of US$126 million (2008:
US$5 million; 2007: US$4 million).(h)
    
    Includes IFRS 2 charges arising from a Broad Based Black Economic Empowerment (BBBEE)
transaction. The discount to fair value arising from this transaction is treated as a share based
payment in accordance with IFRIC 8 Scope of IFRS 2 (Share based Payments) and AC 503 Accounting
for BEE Transactions. A-42




---



##### 



Notes to the 2009 Financial statements
 
 31
Operating segments
 2009
    
    
    2008
    
    
    2007Sales revenue (a)
    
    
    
    
    
    US$m
    
    
    US$m
    
    
    US$mIron Ore
    
    
    
    
    
    
    12,598
    
    
    
    16,527
    
    
    
    9,193Aluminium
    
    
    
    
    
    
    12,038
    
    
    
    18,297
    
    
    
    6,200Copper
    
    
    
    
    
    
    6,206
    
    
    
    5,748
    
    
    
    8,163Energy
    
    
    
    
    
    
    6,709
    
    
    
    8,018
    
    
    
    4,650Diamonds & Minerals
    
    
    
    
    
    
    2,618
    
    
    
    3,820
    
    
    
    3,773Other Operations
    
    
    
    
    
    
    4,743
    
    
    
    7,378
    
    
    
    1,598Reportable segments total
    
    
    
    
    
    
    44,912
    
    
    
    59,788
    
    
    
    33,577Inter-segment transactions
    
    
    
    
    
    
    (876
    )
    
    
    (1,723
    )
    
    
    (59
    )Gross sales revenue
    
    
    
    
    
    
    44,036
    
    
    
    58,065
    
    
    
    33,518Less share of equity accounted units sales revenue
    
    
    
    
    
    
    (2,211
    )
    
    
    (3,801
    )
    
    
    (3,818
    )Consolidated
sales revenue
    
    
    
    
    
    
    41,825
    
    
    
    54,264
    
    
    
    29,700Underlying earnings (b)Iron Ore
    
    
    
    
    
    
    4,126
    
    
    
    6,017
    
    
    
    2,664Aluminium
    
    
    
    
    
    
    (578
    )
    
    
    1,271
    
    
    
    1,051Copper
    
    
    
    
    
    
    1,866
    
    
    
    1,597
    
    
    
    3,373Energy
    
    
    
    
    
    
    1,420
    
    
    
    2,581
    
    
    
    498Diamonds & Minerals
    
    
    
    
    
    
    800
    
    
    
    474
    
    
    
    475Other Operations
    
    
    
    
    
    
    (188
    )
    
    
    (133
    )
    
    
    167Reportable segments total
    
    
    
    
    
    
    7,446
    
    
    
    11,807
    
    
    
    8,228Inter-segment transactions
    
    
    
    
    
    
    (28
    )
    
    
    25
    
    
    
    Other items
    
    
    
    
    
    
    (547
    )
    
    
    (366
    )
    
    
    (540
    )Exploration and evaluation not attributed to product groups
    
    
    
    
    
    
    5
    
    
    
    (133
    )
    
    
    20Net interest
    
    
    
    
    
    
    (578
    )
    
    
    (1,030
    )
    
    
    (265
    )Underlying earnings
    
    
    
    
    
    
    6,298
    
    
    
    10,303
    
    
    
    7,443Items excluded from Underlying earnings (note 2)
    
    
    
    
    
    
    (1,426
    )
    
    
    (6,627
    )
    
    
    (131
    )Net earnings per income statement
    
    
    
    
    
    
    4,872
    
    
    
    3,676
    
    
    
    7,312Depreciation and amortisation (c)Iron Ore
    
    
    
    
    
    
    763
    
    
    
    705
    
    
    
    567Aluminium
    
    
    
    
    
    
    1,551
    
    
    
    1,543
    
    
    
    564Copper
    
    
    
    
    
    
    541
    
    
    
    442
    
    
    
    437Energy
    
    
    
    
    
    
    395
    
    
    
    415
    
    
    
    359Diamonds & Minerals
    
    
    
    
    
    
    290
    
    
    
    361
    
    
    
    361Other Operations
    
    
    
    
    
    
    216
    
    
    
    332
    
    
    
    80Reportable segments total
    
    
    
    
    
    
    3,756
    
    
    
    3,798
    
    
    
    2,368Other items
    
    
    
    
    
    
    111
    
    
    
    91
    
    
    
    57Less: depreciation and amortisation of equity accounted units
    
    
    
    
    
    
    (440
    )
    
    
    (414
    )
    
    
    (310
    )Depreciation and amortisation per note 3
    
    
    
    
    
    
    3,427
    
    
    
    3,475
    
    
    
    2,115Tax charge (d)Iron Ore
    
    
    
    
    
    
    1,868
    
    
    
    2,869
    
    
    
    1,202Aluminium
    
    
    
    
    
    
    (565
    )
    
    
    875
    
    
    
    (73
    )Copper
    
    
    
    
    
    
    582
    
    
    
    261
    
    
    
    845Energy
    
    
    
    
    
    
    646
    
    
    
    1,016
    
    
    
    214Diamonds & Minerals
    
    
    
    
    
    
    37
    
    
    
    287
    
    
    
    179Other Operations
    
    
    
    
    
    
    (55
    )
    
    
    (68
    )
    
    
    36Reportable segments total
    
    
    
    
    
    
    2,513
    
    
    
    5,240
    
    
    
    2,403Other items
    
    
    
    
    
    
    (270
    )
    
    
    (99
    )
    
    
    (157
    )Exploration and evaluation not attributed to product groups
    
    
    
    
    
    
    (30
    )
    
    
    (31
    )
    
    
    35Net interest
    
    
    
    
    
    
    (228
    )
    
    
    (380
    )
    
    
    (131
    )1,985
    
    
    
    4,730
    
    
    
    2,150Tax charge excluded from Underlying earnings (note 2)
    
    
    
    
    
    
    91
    
    
    
    (988
    )
    
    
    (60
    )Tax charge per income statement
    
    
    
    
    
    
    2,076
    
    
    
    3,742
    
    
    
    2,090Additions to non-current assets (other than financial
instruments and deferred tax assets)Iron Ore
    
    
    
    
    
    
    2,034
    
    
    
    3,494Aluminium
    
    
    
    
    
    
    1,487
    
    
    
    2,206Copper
    
    
    
    
    
    
    828
    
    
    
    836Energy
    
    
    
    
    
    
    718
    
    
    
    1,206Diamonds & Minerals
    
    
    
    
    
    
    478
    
    
    
    1,379Other Operations
    
    
    
    
    
    
    227
    
    
    
    470Reportable segments total
    
    
    
    
    
    
    5,772
    
    
    
    9,591Other items
    
    
    
    
    
    
    81
    
    
    
    179Reconciling items (e)
    
    
    
    
    
    
    (497
    )
    
    
    (1,282
    )Purchase of property, plant & equipment and intangible
assets per note 51
    
    
    
    
    
    
    5,356
    
    
    
    8,488Proceeds of disposal of property, plant and equity and
intangible assets
    
    
    
    
    
    
    32
    
    
    
    90Funding of equity accounted units for major capital expenditure
    
    
    
    
    
    
    
    
    
    
    (4
    )Purchase of property, plant & equipment and intangible assets per
statement of cash flow
    
    
    
    
    
    
    5,388
    
    
    
    8,574
 A-43




---



##### 



Notes to the 2009 Financial statements
 31
Operating segments
 At 31
    
    
    At 31December
    
    
    December2009
    
    
    2008Operating assets (f)
    
    US$m
    
    
    US$mIron Ore
    
    
    11,263
    
    
    
    7,632Aluminium
    
    
    35,992
    
    
    
    34,735Copper
    
    
    5,028
    
    
    
    4,223Energy
    
    
    2,538
    
    
    
    2,665Diamonds & Minerals
    
    
    4,612
    
    
    
    4,287Other Operations
    
    
    1,756
    
    
    
    3,375Reportable segments total
    
    
    61,189
    
    
    
    56,917Net assets held for sale
    
    
    3,462
    
    
    
    3,204Other items
    
    
    (1,959
    )
    
    
    (811
    )62,692
    
    
    
    59,310Reconciling items:Liabilities of disposal groups held for sale
    
    
    1,320
    
    
    
    2,121Trade and other payables
    
    
    6,350
    
    
    
    7,649Tax payable
    
    
    1,628
    
    
    
    1,892Deferred tax liabilities
    
    
    4,304
    
    
    
    4,054Other financial liabilities (excluding derivatives related to net debt)
    
    
    848
    
    
    
    649Provisions
    
    
    13,694
    
    
    
    10,933Cash and cash equivalents
    
    
    4,233
    
    
    
    1,181Other liquid resources
    
    
    73
    
    
    
    4Outside interests
    
    
    2,094
    
    
    
    1,82334,544
    
    
    
    30,306Total assets
    
    
    97,236
    
    
    
    89,616
      a) Gross sales revenue
   b) Underlying earnings
     A-44




---



##### 



Notes to the 2009 Financial statements
 31 Operating segments
 c) Depreciation and amortisation
  d) Tax charge
  e)
Additions to non current assets (other than financial instruments and deferred tax assets)
   Year ended
    
    
    Year ended31 December
    
    
    31 December2009
    
    
    2008US$m
    
    
    US$mCapitalised interest costs
    
    
    (198
    )
    
    
    (203
    )Capitalised closure costs and other provisions
    
    
    (268
    )
    
    
    (393
    )Movement in payables for capital expenditure
    
    
    595
    
    
    
    (503
    )Goodwill cash additions
    
    
    
    
    
    
    (8
    )Additions to investments in equity accounted units
    
    
    (412
    )
    
    
    (29
    )Increase in
non current inventories
    
    
    (109
    )
    
    
    (10
    )Increase in
non current prepayments
    
    
    
    
    
    
    (50
    )Finance leases taken out
    
    
    (73
    )
    
    
    Proceeds of disposal of property, plant and equity and intangible assets
    
    
    (32
    )
    
    
    (90
    )Funding of equity accounted units for major capital expenditure
    
    
    
    
    
    
    4Total
    
    
    (497
    )
    
    
    (1,282
    )
 f) Operating assets
   
 32 Operating segments  additional information
 2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Gross sales revenue by destination (a)
    
    %
    
    
    %
    
    
    %
    
    
    US$m
    
    
    US$m
    
    
    US$mChina
    
    
    24.3
    
    
    
    18.8
    
    
    
    18.2
    
    
    
    10,691
    
    
    
    10,934
    
    
    
    6,115North America (b)
    
    
    23.1
    
    
    
    22.4
    
    
    
    22.6
    
    
    
    10,190
    
    
    
    12,984
    
    
    
    7,582Other Europe (excluding United Kingdom)
    
    
    14.4
    
    
    
    20.7
    
    
    
    17.9
    
    
    
    6,337
    
    
    
    12,015
    
    
    
    6,012Japan
    
    
    13.5
    
    
    
    15.2
    
    
    
    16.8
    
    
    
    5,921
    
    
    
    8,825
    
    
    
    5,633Other Asia
    
    
    13.2
    
    
    
    11.1
    
    
    
    12.0
    
    
    
    5,822
    
    
    
    6,453
    
    
    
    4,011Australia
    
    
    3.1
    
    
    
    3.0
    
    
    
    5.2
    
    
    
    1,373
    
    
    
    1,737
    
    
    
    1,742United Kingdom
    
    
    2.6
    
    
    
    3.6
    
    
    
    1.9
    
    
    
    1,161
    
    
    
    2,112
    
    
    
    629Other
    
    
    5.8
    
    
    
    5.2
    
    
    
    5.4
    
    
    
    2,541
    
    
    
    3,005
    
    
    
    1,794Gross sales revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    44,036
    
    
    
    58,065
    
    
    
    33,518Share of
equity accounted units sales and intra-subsidiary/equity accounted units sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,211
    )
    
    
    (3,801
    )
    
    
    (3,818
    )Consolidated sales revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,825
    
    
    
    54,264
    
    
    
    29,700
 (a)
    
    Sales by geographical destination are based on the ultimate country of destination of the
product if known. If the eventual destination of the product sold through
traders is not known, then revenue is allocated to the location of the product at the time when the
risks and rewards of ownership are passed. Rio Tinto is
domiciled in both the United Kingdom and Australia.(b)
    
    The United States of America and Canada have been combined to form the North America
geographical segment, having regard to the similarity of economic and political conditions in these countries. Gross sales revenue by product
  2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mIron Ore
    
    
    12,096
    
    
    
    15,975
    
    
    
    8,799Aluminium
    
    
    11,126
    
    
    
    16,542
    
    
    
    7,309Coal
    
    
    5,683
    
    
    
    7,011
    
    
    
    3,832Copper
    
    
    4,775
    
    
    
    4,495
    
    
    
    6,158Industrial Minerals
    
    
    2,677
    
    
    
    3,388
    
    
    
    3,011Gold
    
    
    972
    
    
    
    379
    
    
    
    922Diamonds
    
    
    450
    
    
    
    840
    
    
    
    1,020Other
    
    
    6,257
    
    
    
    9,435
    
    
    
    2,467Gross sales revenue
    
    
    44,036
    
    
    
    58,065
    
    
    
    33,518Share of equity accounted units sales and intra-subsidiary/equity accounted units sales
    
    
    (2,211
    )
    
    
    (3,801
    )
    
    
    (3,818
    )Consolidated sales revenue
    
    
    41,825
    
    
    
    54,264
    
    
    
    29,700
 A-45




---



##### 



Notes to the 2009 Financial statements
 32
    
    Operating segments  additional informationcontinuedNon current assets other than financial instruments and deferred tax assets

The total of non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets and assets held for sale
by location is shown below. This is allocated based on the location of the business units holding the assets.
 2009
    
    
    2008US$m
    
    
    US$mNon current assets other than financial instruments and deferred tax assets (a)Australia
    
    
    31,543
    
    
    
    24,080United Kingdom
    
    
    928
    
    
    
    1,034North America (b)
    
    
    29,486
    
    
    
    32,197France
    
    
    2,298
    
    
    
    2,507Europe (excluding France)
    
    
    2,041
    
    
    
    2,813South America
    
    
    2,419
    
    
    
    1,882Africa
    
    
    1,665
    
    
    
    1,731Indonesia
    
    
    587
    
    
    
    555Other countries
    
    
    1,212
    
    
    
    96172,179
    
    
    
    67,760Non-current assets excluded from analysis above:Deferred tax assets
    
    
    2,231
    
    
    
    1,367Tax recoverable
    
    
    85
    
    
    
    220Derivative assets
    
    
    841
    
    
    
    666Loans to equity accounted units (c)
    
    
    1,593
    
    
    
    862Accounts receivable
    
    
    593
    
    
    
    306Total non-current assets per statement of financial position
    
    
    77,522
    
    
    
    71,181
 
 (a)
    
    Includes investments in equity accounted units totalling US$5,312 million (2008: US$4,455
million) which represents the Groups share of net assets
excluding quasi equity loans shown separately within Loans to equity accounted units above.(b)
    
    The United States of America and Canada have been combined to form the North America
geographical segment, having regard to the similarity of economic and political conditions in these countries.(c)
    
    Loans to equity accounted units comprise quasi equity loans of US$1,423 million (2008:
US$598million) included in Investments in equity accounted units on the face of the statement of financial position and non-quasi equity loans of
US$170 million (2008: US$264 million) shown separately. A-46




---



##### 



Notes to the 2009 Financial statements
 
 33
    
    Financial risk management
 The Groups policies with regard to financial risk management are clearly defined and consistently
applied. They are a fundamental part of the Groups long term strategy covering areas such as
foreign exchange risk, interest rate risk, commodity price risk, credit risk, liquidity risk and
capital management.Generally, the Group only sells commodities it has produced but also enters into third party direct
transactions and physical swaps on Alumina to balance the regional positions and to balance the
loading on production facilities. In the long term, natural hedges operate in a number of ways to
help protect and stabilise earnings and cash flow.The Group has a diverse portfolio of commodities and markets, which have varying responses to the
economic cycle. The relationship between commodity prices and the currencies of most of the
countries in which the Group operates provides further natural protection in the long term.
Production of minerals is an important contributor to the Gross Domestic Products of Australia and
Canada, countries in which the Group has a large presence. As a consequence, the Australian and
Canadian currencies have historically tended to strengthen when commodity prices are high. In
addition, the Groups policy of borrowing primarily at floating US dollar interest rates helps to
counteract the effect of economic and commodity price cycles. These natural hedges significantly
reduce the necessity for using derivatives or other forms of synthetic hedging. Such hedging is
therefore undertaken to a strictly limited degree, as described below.Treasury operates as a service to the business of the Rio Tinto Group and not as a profit centre.
Strict limits on the size and type of transaction permitted are laid down by the Rio Tinto board
and are subject to rigorous internal controls. Senior management is advised of corporate debt and
currency, commodity and interest rate derivatives through a monthly reporting framework.Rio Tinto does not acquire or issue derivative financial instruments for trading or speculative
purposes; nor does it believe that it has material exposure to such trading or speculative holdings
through its investments in joint ventures and associates. Derivatives are used to separate funding
and cash management decisions from currency exposure and interest rate management. The Group uses
interest rate and cross currency interest rate swaps in conjunction with longer term funds raised
in the capital markets to achieve a predominantly floating rate obligation which is consistent with
the Groups interest and exchange rate policies, ie. primarily US dollar LIBOR. However, the group
reserves the right to realise swap
positions to take advantage of favourable market conditions and to manage counterparty credit risk.
No material exposure is considered to exist by virtue of the possible non performance of the
counterparties to financial instruments held by the Group.Derivative contracts are carried at fair value based on published quotations for the period for
which a liquid active market exists. Beyond this period, Rio Tintos own assumptions are used.(i) Foreign exchange riskRio Tintos shareholders equity, earnings and cash flows are influenced by a wide variety of
currencies due to the geographic diversity of the Groups sales and the countries in which it
operates. The US dollar, however, is the currency in which the great majority of the Groups sales
are denominated. Operating costs are influenced by the currencies of those countries where the
Groups mines and processing plants are located and also by those currencies in which the costs of
imported equipment and services are determined. The Australian and Canadian dollars and the Euro
are the most important currencies (apart from the US dollar) influencing costs. In any particular
year, currency fluctuations may have a significant impact on Rio Tintos financial results. A
strengthening of the US dollar against the currencies in which the Groups costs are partly
determined has a positive effect on Rio Tintos Underlying earnings.Given the dominant role of the US currency in the Groups affairs, the US dollar is the currency in
which financial results are presented both internally and externally. It is also the most
appropriate currency for borrowing and holding surplus cash, although a portion of surplus cash may
also be held in other currencies, most notably Australian dollars, Canadian dollars and the Euro.
This cash is held in order to meet short term operational and capital commitments and, for the
Australian dollar, dividend payments. The Group finances its operations primarily in US dollars,
either directly or using cross currency interest rate swaps. A substantial part of the Groups US
dollar debt is located in subsidiaries having a US dollar functional currency.However, certain US dollar debt and other financial assets and liabilities including intragroup
balances are not held in the functional currency of the relevant subsidiary. This results in an
accounting exposure to exchange gains and losses as the financial assets and liabilities are
translated into the functional currency of the subsidiary that accounts for those assets and
liabilities. These exchange gains and losses are recorded in the Groups income statement except to
the extent that they can be taken to equity under the Groups accounting policy which is explained
in note 1(d). Gains and losses on US dollar net debt and on intragroup balances are excluded from
Underlying earnings. Other exchange gains and losses are included in Underlying earnings.As noted above, Rio Tinto hedges interest rate and currency risk on most of its foreign currency
borrowings by entering into cross currency interest rate swaps, and/or interest rate swaps when
required. These have the economic effect of converting fixed rate foreign currency borrowings to
floating rate US dollar borrowings. See section B (d) of note 34  Financial instruments for the
details of currency and interest rate contracts relating to borrowings.After taking into account relevant swap instruments, almost all of the Groups net debt is either
denominated in US dollars or in the functional currency of the entity holding the debt. The table
below summarises the net debt by currency.
 2009
    
    
    2008Net (debt)/funds by currency
    
    US$m
    
    
    US$mUnited States dollar
    
    
    (18,466
    )
    
    
    (38,111
    )Australian dollar
    
    
    (232
    )
    
    
    (351
    )South African rand
    
    
    60
    
    
    
    52UK sterling
    
    
    (35
    )
    
    
    (34
    )Euro
    
    
    (140
    )
    
    
    (77
    )Canadian dollar
    
    
    (137
    )
    
    
    (122
    )Other
    
    
    89
    
    
    
    (29
    )Total
    
    
    (18,861
    )
    
    
    (38,672
    )
 A-47




---



##### 



Notes to the 2009 Financial statements33
    
    Financial risk managementcontinuedCurrency hedgingUnder normal market conditions, the Group does not generally believe that active currency hedging
of transactions would provide long term benefits to shareholders. The Group reviews on a regular
basis its exposure and reserves the right to enter into hedges to maintain financial stability.
Currency protection measures may be deemed appropriate in specific commercial circumstances and are
subject to strict limits laid down by the Rio Tinto board, typically hedging of capital
expenditures and other significant financial items such as tax and dividends. There is a legacy of
currency forward contracts used to hedge operating cash flow exposures which was acquired with the
North companies. Refer to section B ((a) to (d)) of note 34
- Financial instruments for the currency forward and option contracts used to manage the currency
risk exposures of the Group at 31 December 2009.Foreign exchange sensitivity: Risks associated with exposure to financial instrumentsThe sensitivities below give the estimated effect of a ten per cent strengthening in the full year
closing US dollar exchange rate on the value of financial instruments. The impact is expressed in
terms of the effect on net earnings, Underlying earnings and equity, assuming that each exchange
rate moves in isolation. The sensitivities are based on financial assets and liabilities held at
31 December 2009, where balances are not denominated in the functional currency of the subsidiary
and exclude financial assets and liabilities held by equity accounted
units (see note b below). They also exclude
exchange movements on local currency deferred tax balances and provisions. These balances will not
remain constant throughout 2010, and therefore these numbers should be used with care.At 31 December 2009Gains/(losses) associated with 10% strengthening of the US dollar
 Of whichamountClosing
    
    
    Effect on
    
    
    impactingexchange
    
    
    net
    
    
    Underlying
    
    
    Impact directlyrate
    
    
    earnings
    
    
    earnings
    
    
    on equityCurrency Exposure
    
    US cents
    
    
    US$m
    
    
    US$m
    
    
    US$mAustralian dollar (a)
    
    
    89
    
    
    
    178
    
    
    
    66
    
    
    
    (1
    )Canadian dollar
    
    
    95
    
    
    
    5
    
    
    
    61
    
    
    
    South African rand
    
    
    14
    
    
    
    13
    
    
    
    2
    
    
    
    (42
    )Euro
    
    
    144
    
    
    
    252
    
    
    
    13
    
    
    
    New Zealand dollar
    
    
    73
    
    
    
    2
    
    
    
    
    
    
    
    
 At 31 December 2008Gains/(losses) associated with 10% strengthening of the US dollar
 Of whichamountClosing
    
    
    Effect on
    
    
    impactingexchange
    
    
    net
    
    
    Underlying
    
    
    Impact directlyrate
    
    
    earnings
    
    
    earnings
    
    
    on equityCurrency Exposure
    
    US cents
    
    
    US$m
    
    
    US$m
    
    
    US$mAustralian dollar (a)
    
    
    69
    
    
    
    (27
    )
    
    
    63
    
    
    
    3Canadian dollar
    
    
    82
    
    
    
    53
    
    
    
    99
    
    
    
    South African rand
    
    
    11
    
    
    
    13
    
    
    
    19
    
    
    
    Euro
    
    
    141
    
    
    
    239
    
    
    
    18
    
    
    
    New Zealand dollar
    
    
    58
    
    
    
    21
    
    
    
    2
    
    
    
    
 (a)
    
    The sensitivities show the net sensitivity of US$ exposures in A$ functional currency
companies, for example, and A$ exposures in US$ functional currency companies.(b)
    
    The sensitivities presented are on financial assets and liabilities of subsidiaries and
proportionally consolidated entities, and do not include non-financial instruments such as
provisions or post retirement benefits, or sensitivities arising from financial assets and
liabilities within equity accounted units. The impact of reflecting these items primarily impacts
the Canadian dollar sensitivity, with a US$69 million reduction in net earnings (2008: US$9 million
reduction), a US$67 million reduction in Underlying earnings (2008: US$21 million reduction), and a
US$114 million increase recorded directly in equity (2008: US$56 million increase).(c)
    
    Rio Tinto Alcan Inc., which has a US functional currency for accounting purposes, has a
significant amount of US dollar denominated external and intragroup debt held in Canada and is
taxed on a Canadian currency basis. The above sensitivities as at 31 December 2009 for a 10 per
cent strengthening of the US dollar do not include any tax benefit related to this debt because the
capital losses generated would not be recognised. If the US dollar weakened below 97 Canadian cents
then tax charges would begin to be recognised at 15 per cent. Similarly at 31 December 2008, the above sensitivities for a 10 per cent strengthening of the US
dollar did not include any tax benefit related to this debt because the capital losses generated
would not have been recognised. If the US dollar had weakened below 97 Canadian cents then tax
charges would have begun to be recognised at 15 per cent.(ii) Interest rate riskInterest rate risk refers to the risk that the value of a financial instrument or cash flows
associated with the instruments will fluctuate due to changes in market interest rates. Rio
Tintos interest rate management policy is generally to borrow and invest at floating interest
rates. This approach is based on historical correlation between interest rates and commodity
prices. In some circumstances, an element of fixed rate funding may be considered appropriate. As
noted above, Rio Tinto hedges interest rate and currency risk on most of its foreign currency
borrowings by entering into cross currency interest rate swaps in order to convert fixed rate
foreign currency borrowings to floating rate US dollar borrowings. The market value of these
interest rate and cross currency interest rate swaps moves in alignment with the market and at
times can act as alternative sources of funding. The Group reviews the positions on a regular basis
and may act to either monetise in-the-money value or achieve lower costs of funding. See section B
(d) of note 34  Financial instruments for the details of currency and interest rate contracts
relating to borrowings. At the end of 2009, US$8.3 billion (2008: US$10.6 billion) of the Groups
debt was at fixed rates after taking into account interest rate swaps and finance leases, making
the fixed to floating debt ratio 36 per cent fixed to 64 per cent floating.A monthly Treasury report is provided to senior management which summarises corporate debt exposed
to currency risks and, where applicable, the offsetting derivatives. See section B (d) of note 34
- Financial instruments for the details of currency and interest rate contracts relating to
borrowings. See note 22  Borrowings for the details of debt outstanding at 31 December 2009.Based on the Groups net debt and other floating rate financial instruments outstanding as at 31
December 2009, the effect on net earnings of a half percentage point increase in US dollar LIBOR
interest rates, with all other variables held constant, would be a reduction of US$37 million
(2008: US$100 million). These balances will not remain constant throughout 2010, however, and
therefore these numbers should be used with care.
 A-48




---



##### 



Notes to the 2009 Financial statements33
    
    Financial risk managementcontinued(iii) Commodity price riskThe Groups normal policy is to sell its products at prevailing market prices. Exceptions to this
rule are subject to strict limits laid down by the Rio Tinto board and to rigid internal controls.
Rio Tintos exposure to commodity prices is diversified by virtue of its broad commodity base and
the Group does not generally believe commodity price hedging would provide long term benefit to
shareholders. The Group may hedge certain commitments with some of its customers or suppliers.
Details of commodity derivatives held at 31 December 2009 are set out in note 34  B a) to c)
Financial instruments.Metals such as copper and aluminium are generally sold under contract, often long term, at prices
determined by reference to prevailing
market prices on terminal markets, such as the London Metal Exchange (LME) and COMEX in New York,
usually at the time of delivery.
Prices fluctuate widely in response to changing levels of supply and demand but, in the long run,
prices are related to the marginal cost of
supply. Gold is also priced in an active market in which prices respond to daily changes in
quantities offered and sought. Newly mined
gold is only one source of supply; investment and disinvestment can be important elements of supply
and demand. Contract prices for
many other natural resource products including iron ore and coal are generally agreed annually or
for longer periods with customers,
although volume commitments vary by product.Certain products, predominantly copper concentrate, are provisionally priced, ie the selling
price is subject to final adjustment at the end of a
period normally ranging from 30 to 180 days after delivery to the customer, based on the market
price at the relevant quotation point stipulated
in the contract. Revenue on provisionally priced sales is recognised based on estimates of fair
value of the consideration receivable based
on forward market prices. At each reporting date provisionally priced metal is marked to market
based on the forward selling price for the period
stipulated in the contract. For this purpose, the selling price can be measured reliably for those
products, such as copper for which there
exists an active and freely traded commodity market such as the London Metal Exchange and the value
of product sold by the Group is directly
linked to the form in which it is traded on that market.The marking to market of provisionally priced sales contracts is recorded as an adjustment to sales
revenue.At the end of 2009, the Group had 267 million pounds of copper sales (2008: 183 million pounds)
that were provisionally priced at US 335 cents
per pound (2008: US 133 cents per pound). The final price of these sales will be determined during
the first half of 2010. A ten per cent
change in the price of copper realised on the provisionally priced sales would increase or reduce
net earnings by US$55 million (2008:
US$15 million).Approximately 27 per cent of Rio Tintos 2009 Underlying earnings from operating businesses came
from products whose prices were terminal
market related and the remainder came from products priced by direct negotiation.Commodity price sensitivity: Risks associated with derivativesThe table below summarises the impact of changes in the market price on the following commodity
derivatives including those aluminium forward
and option contracts embedded in electricity purchase contracts outstanding at 31 December 2009,
but excluding the impact of commodity and
embedded derivatives held by equity accounted units (see note a). The impact is expressed in terms
of the resulting change in the Groups net earnings for the
year or, where applicable, the change in equity. The sensitivities are based on the assumption
that the market price increases by ten per cent with all
other variables held constant. The Groups own use contracts are excluded from the sensitivity
analysis below as they are outside the scope of IAS 39.
Such contracts to buy or sell non financial items can be net settled but were entered into and
continue to be held for the purpose of the receipt or
delivery of the non financial item in accordance with the business units expected purchase, sale or
usage requirements.These sensitivities should be used with care. The relationship between currencies and commodity
prices is a complex one; changes in exchange
rates can influence commodity prices and vice versa.At 31 December 2009Gains/(losses) associated with 10% increase from year end price
 Effect on
    
    
    Effect directly on equitynet earnings
    
    
    attributable to Rio TintoProducts
    
    US$m
    
    
    US$mCopper
    
    
    (1
    )
    
    
    (18
    )Aluminium
    
    
    (19
    )
    
    
    (24
    )Oil
    
    
    3
    
    
    
    Total
    
    
    (17
    )
    
    
    (42
    )
 At 31 December 2008Gains/(losses) associated with 10% increase from year end price
 Effect on
    
    
    Effect directly on equitynet earnings
    
    
    attributable to Rio TintoProducts
    
    US$m
    
    
    US$mCopper
    
    
    
    
    
    
    (13
    )Coal
    
    
    
    
    
    
    (8
    )Aluminium
    
    
    21
    
    
    
    (16
    )Total
    
    
    21
    
    
    
    (37
    )
 (a)
    
    The sensitivities presented do not include those arising from balances within equity accounted
units. The impact of reflecting equity accounted units primarily
relates to the aluminium sensitivity, with a US$55 million reduction in net earnings (2008:US$83
million reduction). A-49




---



##### 



Notes to the 2009 Financial statements33
    
    Financial risk managementcontinued(iv) Credit riskCredit risk is the risk that a counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating activities (primarily from customer
receivables) and from its financing activities, including
deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments.Credit risks related to receivablesCustomer credit risk is managed by each business unit subject to Rio Tintos established policy,
procedures and controls relating to customer
credit risk management. Credit limits are established for all customers based on internal or
external rating criteria. Where customers are
rated by an independent credit rating agency, these ratings are used to set credit limits. In
circumstances where no independent credit
rating exists, the credit quality of the customer is assessed based on an extensive credit rating
scorecard. Outstanding customer receivables
are regularly monitored and any credit concerns highlighted to senior management. High risk
shipments to major customers are generally
covered by letters of credit or other forms of credit insurance.At 31 December 2009, the Group had approximately 70 customers (2008: 86 customers) that owed the
Group more than US$5 million
each and these balances accounted for approximately 52 per cent (2008: 75 per cent) of all
receivables owing. There were 17 customers (2008:
21 customers) with balances greater than US$20 million accounting for just over 30 per cent (2008:
49 per cent) of total amounts receivable.The maximum exposure to credit risk at the reporting date is the carrying value of each class of
financial assets mentioned on page A-55.
The Group does not hold collateral as security for any trade receivables.Credit risk related to financial instruments and cash depositsCredit risk from balances with banks and financial institutions is managed by Group Treasury in
accordance with a Board approved policy.
Investments of surplus funds are made only with approved counterparties and within credit limits
assigned to each counterparty.
Counterparty credit limits are reviewed by the Rio Tinto Board on an annual basis, and may be
updated throughout the year subject to
approval of the Rio Tinto Finance Committee. The limits are set to minimise the concentration of
risks and therefore mitigate the potential for
financial loss through counterparty failure.No material exposure is considered to exist by virtue of the possible non performance of the
counterparties to financial instruments.(v) Liquidity and Capital risk managementThe Groups total capital is defined as Rio Tintos shareholders funds plus funds attributable to
outside equity shareholders plus net debt,
and amounted to US$65 billion at 31 December 2009 (2008: US$61 billion).The Groups over-riding objectives when managing capital are to safeguard the business as a going
concern; to maximise returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure in
order to provide a high degree of financial
flexibility at the lowest cost of capital.The unified credit status of the Group is maintained through cross guarantees whereby contractual
obligations of Rio Tinto plc and Rio
Tinto Limited are automatically guaranteed by the other. Following the successful US$15.2 billion
rights issues in July 2009, Moodys and Standard & Poors
(S&P) improved the Groups credit rating. S&P
upgraded the long term rating to BBB+ from BBB and
its short term credit ratings to A-2 from A-3, the outlook
improved from negative to stable. Moodys affirmed the long term rating of Baa1 and short-term
corporate credit rating of P-2 also with a stable outlook.Credit ratings are not a recommendation to purchase, hold or
sell  securities, and are subject to  revision or withdrawal at any
time by the rating organization.In 2007, Rio Tinto acquired Alcan which was financed using a US$40 billion syndicated bank
facility. As at 31 December 2009, there was US$8.5 billion
drawn on this facility compared to US$28 billion at 31 December 2008. The facility had two term
facilities (Facilities A and D) of which Facility A was
fully repaid in 2009 and US$8.5 billion remained on Facility D at 31 December 2009. Revolving
Facility B had an initial capacity of US$10 billion. As at 31
December 2009, only US$2.1 billion of the facility remained available to draw upon. The maturity
date for Facility B is October 2010. Revolving Facility C is for
an amount of up to US$5 billion, all of which is undrawn. The maturity date for Facility C is
October 2012. The maturity date for Facility D is December 2012.
Advances under each Facility generally bear interest at rates per annum equal to the margin for
that Facility plus LIBOR and any mandatory costs. Refer to note
48  Events after the statement of financial position date for the partial repayment of Facility D
and cancellation of Facility B post year end.The Groups back-up facilities consist of revolving tranches of the syndicated bank facility and a
series of standby bi-lateral bank facilites. These standby
bi-lateral bank facilities contain no financial covenants and are not affected to any material
extent by a change in the Groups credit rating. The syndicated
bank facility contains a financial covenant requiring the maintenance of a ratio of no greater than
4.5 times of net borrowings to EBITDA.
At 31 December 2009, the Group has available committed financing of US$5.0 billion under Alcan
Facility C, US$2.1 billion under Facility B and US$2.3
billion unused committed bilateral banking facilities. Refer to note 22  Borrowings for further
details. Refer to note 48  Events after the statement of financial position
date for the partial repayment of Facility D and cancellation of Facility B post year end.The Groups net debt as a percentage of total capital was 29 per cent at 31 December 2009 (2008: 63
per cent).
 A-50




---



##### 



Notes to the 2009 Financial statements33
    
    Financial risk managementcontinuedThe table below analyses the Groups financial liabilities into relevant maturity groupings based on the remaining period from the
statement of financial position date to the contractual maturity date. As the amounts disclosed in the table are the contractual undiscounted cash flows, these balances
will not necessarily agree with the amounts disclosed in the statement of financial position.At 31 December 2009
 Trade
    
    
    Borrowings
    
    
    Expected
    
    
    Derivatives
    
    
    Other
    
    
    Totaland other
    
    
    before
    
    
    future interest
    
    
    related to
    
    
    financial
    
    
    financialpayables
    
    
    swaps
    
    
    payments (a)
    
    
    net debt
    
    
    liabilities
    
    
    liabilitiesUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mFinancial liabilitiesWithin 1 year, or on demand
    
    
    (4,416
    )
    
    
    (878
    )
    
    
    (942
    )
    
    
    (52
    )
    
    
    (365
    )
    
    
    (6,653
    )Between 1 and 2 years
    
    
    
    
    
    
    (463
    )
    
    
    (884
    )
    
    
    
    
    
    
    (203
    )
    
    
    (1,550
    )Between 2 and 3 years
    
    
    
    
    
    
    (9,087
    )
    
    
    (910
    )
    
    
    2
    
    
    
    (204
    )
    
    
    (10,199
    )Between 3 and 4 years
    
    
    
    
    
    
    (3,269
    )
    
    
    (840
    )
    
    
    
    
    
    
    (177
    )
    
    
    (4,286
    )Between 4 and 5 years
    
    
    
    
    
    
    (2,767
    )
    
    
    (591
    )
    
    
    
    
    
    
    (58
    )
    
    
    (3,416
    )After 5 years
    
    
    
    
    
    
    (6,725
    )
    
    
    (3,857
    )
    
    
    (162
    )
    
    
    (54
    )
    
    
    (10,798
    )(4,416
    )
    
    
    (23,189
    )
    
    
    (8,024
    )
    
    
    (212
    )
    
    
    (1,061
    )
    
    
    (36,902
    )
 At 31 December 2008
 Trade
    
    
    Borrowings
    
    
    Expected
    
    
    Derivatives
    
    
    Other
    
    
    Totaland other
    
    
    before
    
    
    future interest
    
    
    related to
    
    
    financial
    
    
    financialpayables
    
    
    swaps
    
    
    payments (a)
    
    
    net debt
    
    
    liabilities
    
    
    liabilitiesUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mFinancial liabilitiesWithin 1 year, or on demand
    
    
    (5,478
    )
    
    
    (10,079
    )
    
    
    (1,375
    )
    
    
    
    
    
    
    (414
    )
    
    
    (17,346
    )Between 1 and 2 years
    
    
    
    
    
    
    (9,485
    )
    
    
    (1,139
    )
    
    
    (85
    )
    
    
    (129
    )
    
    
    (10,838
    )Between 2 and 3 years
    
    
    
    
    
    
    (417
    )
    
    
    (914
    )
    
    
    
    
    
    
    (130
    )
    
    
    (1,461
    )Between 3 and 4 years
    
    
    
    
    
    
    (10,525
    )
    
    
    (744
    )
    
    
    
    
    
    
    (113
    )
    
    
    (11,382
    )Between 4 and 5 years
    
    
    
    
    
    
    (3,112
    )
    
    
    (486
    )
    
    
    
    
    
    
    (106
    )
    
    
    (3,704
    )After 5 years
    
    
    
    
    
    
    (5,760
    )
    
    
    (3,366
    )
    
    
    
    
    
    
    (123
    )
    
    
    (9,249
    )(5,478
    )
    
    
    (39,378
    )
    
    
    (8,024
    )
    
    
    (85
    )
    
    
    (1,015
    )
    
    
    (53,980
    )
 (a)
    
    Interest payments have been projected using interest rates applicable at 31 December, including the impact of interest rate swap agreements,
where appropriate. Much of the debt is subject to variable interest rates. Future interest payments are therefore subject to change in line with
market rates.
 
 34
    
    Financial instruments Except where stated, the information given below relates to the financial instruments of the parent companies and their subsidiaries and
proportionally consolidated units, and excludes those of equity accounted units. The information is grouped in the following sections:A  Financial assets and liabilities by categoriesB  Derivative financial instrumentsC  Fair values(A) Financial assets and liabilities by categoriesAt 31 December 2009 OtherAvailable
    
    
    
    
    
    
    financialLoans and
    
    
    for sale
    
    
    Held at
    
    
    assets andTotal
    
    
    receivables
    
    
    securities
    
    
    fair value
    
    
    liabilitiesUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mFinancial AssetsCash and cash equivalents (note 21)
    
    
    4,233
    
    
    
    4,233
    
    
    
    
    
    
    
    
    
    
    
    Trade and other receivables (note 17)(a)
    
    
    4,739
    
    
    
    4,739
    
    
    
    
    
    
    
    
    
    
    
    Equity shares and quoted funds (note 20)
    
    
    658
    
    
    
    
    
    
    
    658
    
    
    
    
    
    
    
    Other investments, including loans (note 20)
    
    
    505
    
    
    
    270
    
    
    
    77
    
    
    
    158
    
    
    
    Other liquid resources (note 20)
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73Currency and
commodity contracts not designated as hedges (note 20)
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    Derivatives
and embedded derivatives not related to net debt:
not designated as hedges (note 20)
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    291
    
    
    
    Loans to equity accounted units including quasi equity loans
    
    
    1,761
    
    
    
    1,761
    
    
    
    
    
    
    
    
    
    
    
    Total financial assets
    
    
    12,268
    
    
    
    11,003
    
    
    
    735
    
    
    
    457
    
    
    
    73Financial liabilitiesTrade and other payables (note 25)(b)
    
    
    (4,416
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,416
    )Short term
borrowings and bank overdrafts (notes 21 and 22)
    
    
    (847
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (847
    )Medium and long term borrowings (note 22)
    
    
    (22,155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,155
    )Deferred
consideration (note 25)(a)
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (119
    )Forward commodity contracts: designated as hedges (note 26)
    
    
    (499
    )
    
    
    
    
    
    
    
    
    
    
    (499
    )
    
    
    Derivatives related to net debt (note 26)
    
    
    (165
    )
    
    
    
    
    
    
    
    
    
    
    (165
    )
    
    
    Other derivatives and embedded derivatives not designated
as hedges (note 26)
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    Other financial liabilities (note 26)
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )Total financial liabilities
    
    
    (28,550
    )
    
    
    
    
    
    
    
    
    
    
    (964
    )
    
    
    (27,586
    )
 A-51




---



##### 



Notes to the 2009 Financial statements34
    
    Financial instrumentscontinuedAt 31 December 2008
 OtherAvailable
    
    
    
    
    
    
    financialLoans and
    
    
    for sale
    
    
    Held at
    
    
    assets andTotal
    
    
    receivables
    
    
    securities
    
    
    fair value
    
    
    liabilitiesUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mFinancial AssetsCash and cash equivalents (note 21)
    
    
    1,181
    
    
    
    1,181
    
    
    
    
    
    
    
    
    
    
    
    Trade and other receivables (note 17)(a)
    
    
    5,054
    
    
    
    5,054
    
    
    
    
    
    
    
    
    
    
    
    Equity shares and quoted funds (note 20)
    
    
    261
    
    
    
    
    
    
    
    261
    
    
    
    
    
    
    
    Other investments, including loans (note 20)
    
    
    480
    
    
    
    480
    
    
    
    
    
    
    
    
    
    
    
    Other liquid resources (note 20)
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Currency and commodity contracts: designated as hedges (note 20)
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98Derivatives
and embedded derivatives not related to net debt: not designated as hedges (note 20)
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    Loans to equity accounted units including quasi equity loans
    
    
    1,113
    
    
    
    1,113
    
    
    
    
    
    
    
    
    
    
    
    Total financial assets
    
    
    8,278
    
    
    
    7,828
    
    
    
    261
    
    
    
    87
    
    
    
    102Financial liabilitiesTrade and other payables (note 25)(b)
    
    
    (5,478
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,478
    )Short term borrowings and bank overdrafts (notes 21 and 22)
    
    
    (10,034
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,034
    )Medium and long term borrowings (note 22)
    
    
    (29,724
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,724
    )Deferred
consideration (note 25)(a)
    
    
    (318
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (318
    )Forward commodity contracts: designated as hedges (note 26)
    
    
    (257
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (257
    )Derivatives related to net debt (note 26)
    
    
    (99
    )
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    Other derivatives and embedded derivatives not designated
as hedges (note 26)
    
    
    (355
    )
    
    
    
    
    
    
    
    
    
    
    (355
    )
    
    
    Other financial liabilities (note 26)
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37
    )Total financial liabilities
    
    
    (46,302
    )
    
    
    
    
    
    
    
    
    
    
    (454
    )
    
    
    (45,848
    )
 (a)
    
    This excludes pension surpluses, prepayment of tolling charges to jointly controlled entities and other prepayments and accrued income.(b)
    
    Trade and other payables includes trade creditors, amounts owed to equity accounted units, other creditors excluding deferred
consideration shown separately and accruals.(B) Derivative financial instrumentsThe Groups derivatives, including embedded derivatives, as at 31 December 2009, are summarised below:(a) Forward contracts relating to operating transactions: designated as hedgesAssets (note 20)
 Total fair
    
    
    Total fairvalue
    
    
    value2009
    
    
    2008Buy Australian dollar; sell US dollar
    
    US$m
    
    
    US$mLess than 1 year
    
    
    8
    
    
    
    7Between 1 and 5 years
    
    
    
    
    
    
    2Total
    
    
    8
    
    
    
    9Other currency forward contracts
    
    
    
    
    
    
    12Total currency forward contracts
    
    
    8
    
    
    
    21
 The above currency forward contracts were acquired with companies purchased in 2000 and were entered into by those companies in order to
reduce their exposure to the US dollar through forecast sales.
 Aluminium price exposures embedded in electricity purchase contractsLess than 1 year
    
    
    
    
    
    
    6Between 1 and 5 years
    
    
    
    
    
    
    36Total
    
    
    
    
    
    
    42
 Coal forward contractsLess than 1 year
    
    
    
    
    
    
    35Between 1 and 5 years
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    35Total commodity forward contracts
    
    
    
    
    
    
    77Total assets related to forward contracts designated as hedges
    
    
    8
    
    
    
    98
 Coal commodity contracts have been entered into in order to reduce exposure to movements in the coal price.
 A-52




---



##### 



Notes to the 2009 Financial statements34
    
    Financial instrumentscontinuedLiabilities (note 26)
 Total fair
    
    
    Total fairvalue
    
    
    value2009
    
    
    2008Copper forward contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    (118
    )
    
    
    (34
    )Between 1 and 5 years
    
    
    (317
    )
    
    
    (146
    )Total
    
    
    (435
    )
    
    
    (180
    )
 Coal (API #2) forward contractsLess than 1 year
    
    
    (4
    )
    
    
    (18
    )Between 1 and 5 years
    
    
    
    
    
    
    (4
    )Total
    
    
    (4
    )
    
    
    (22
    )
 Coal (GC NewC) forward contractsLess than 1 year
    
    
    
    
    
    
    (31
    )Total
    
    
    
    
    
    
    (31
    )
 Aluminium forward contracts embedded in electricity purchase contractsBetween 1 and 5 years
    
    
    (4
    )
    
    
    Total liabilities related to forward contracts designated as hedges
    
    
    (443
    )
    
    
    (233
    )
 The above copper forward contracts were entered into as a condition of the refinancing of Palabora in 2005, and reduce the Groups exposure to
movements in the copper price. Coal forward contracts have been entered into in order to reduce exposure to movements in
the coal price.Aluminium price exposures are embedded within certain aluminium smelter electricity purchase contracts. These contracts reduce the
Groups exposure to movements in the aluminium price.b) Options relating to operating transactions: designated as hedgesLiabilities (note 26)
 Total
    
    
    Totalfair value
    
    
    fair value2009
    
    
    2008Aluminium options embedded in electricity purchase contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    (6
    )
    
    
    (1
    )Between 1 and 5 years
    
    
    (50
    )
    
    
    (23
    )Total
    
    
    (56
    )
    
    
    (24
    )
 Embedded options exist within an electricity purchase contract for a smelter. These derivatives reduce the Groups exposure
to movements in the aluminium price. A number of put and call options were combined to form synthetic forward contracts that were designated
as hedges of variable priced aluminium sales.
 Reconciliation to statement of financial position categories for derivatives designated as hedges
    
    2009
    
    
    2008US$m
    
    
    US$m- non current assets (note 20)
    
    
    
    
    
    
    38- current assets (note 20)
    
    
    8
    
    
    
    60- current liabilities (note 26)
    
    
    (128
    )
    
    
    (84
    )- non current liabilities (note 26)
    
    
    (371
    )
    
    
    (173
    )Total derivatives designated as hedges, detailed above
    
    
    (491
    )
    
    
    (159
    )
 The hedged forecast transactions denominated in foreign currencies and the hedged commodity purchase or sales contracts are expected
to occur in line with the maturity dates of the derivatives hedging these particular exposures. Gains and losses recognised in equity for these cash
flow hedges will be recycled into the income statement in the period during which the hedged transaction affects the income statement. Where the
hedged transaction relates to capital expenditures, the gain or loss on the derivative will be recognised in the income statement within depreciation
as the fixed asset is amortised.Gains and losses recognised in the hedging reserve in equity, net of tax and outside interests, for the year to 31 December 2009, comprised
cash flow hedge fair value losses of US$151 million including equity accounted units (2008: gains of US$20 million) and net cash flow hedge losses
reclassified from equity and included in the income statement for the period amounted to US$13 million (2008: US$168 million; 2007: US$61 million).The ineffective portion arising from cash flow hedges recognised in the income statement was US$2 million (2008: US$6 million; 2007: US$(1) million).
 A-53




---



##### 



Notes to the 2009 Financial statements34
    
    Financial instrumentscontinuedc) Forward and option contracts relating to operating transactions: not designated as hedges
 Total
    
    
    TotalAssets
    
    fair value
    
    
    fair valueForward contracts
    
    2009
    
    
    2008Buy New Zealand dollar; sell US dollar
    
    US$m
    
    
    US$mLess than 1 year
    
    
    35
    
    
    
    15Between 1 and 5 years
    
    
    
    
    
    
    15Total
    
    
    35
    
    
    
    30
 The above currency forward contracts relating to the New Zealand dollar were taken out to manage exposures impacting on operating costs.
 Total
    
    
    Totalfair value
    
    
    fair value2009
    
    
    2008Aluminium forward contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    153
    
    
    
    Between 1 and 5 years
    
    
    63
    
    
    
    Total
    
    
    216
    
    
    
    
 The above aluminium forward contracts were taken out to manage exposure to movements in the aluminium price.
 Total
    
    
    Totalfair value
    
    
    fair valueOption contracts
    
    2009
    
    
    2008Aluminium options embedded in electricity purchase contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    
    
    
    
    1Between 1 and 5 years
    
    
    
    
    
    
    26More than 5 years
    
    
    
    
    
    
    18Total
    
    
    
    
    
    
    45
 The above aluminium options embedded in electricity purchase contracts reduce exposure to movements in the aluminium price.
 Others:
Less than 1 yearOther embedded derivatives
    
    
    
    
    
    
    6Other commodity contracts
    
    
    12
    
    
    
    2Other currency forward contracts and swaps
    
    
    26
    
    
    
    4Between 1 and 5 yearsOther commodity contracts
    
    
    2
    
    
    
    Total
    
    
    40
    
    
    
    12Total assets relating to derivatives not designated as hedges (note 20)
    
    
    291
    
    
    
    87
 Total fair
    
    
    Total fairLiabilities
    
    value
    
    
    valueForward contracts
    
    2009
    
    
    2008Aluminium forward contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    (44
    )
    
    
    (158
    )Between 1 and 5 years
    
    
    (3
    )
    
    
    (7
    )Total
    
    
    (47
    )
    
    
    (165
    )
 The above aluminium forward contracts were taken out to manage exposure to movements in the aluminium price. These contracts are
not designated as hedges as they are predominantly offset by other aluminium forward contracts.
 Total fair
    
    
    Total fairvalue
    
    
    valueOption contracts
    
    2009
    
    
    2008Aluminium options embedded in electricity purchase contracts
    
    US$m
    
    
    US$mLess than 1 year
    
    
    (29
    )
    
    
    (10
    )Between 1 and 5 years
    
    
    (103
    )
    
    
    (79
    )More than 5 years
    
    
    (14
    )
    
    
    (73
    )Total
    
    
    (146
    )
    
    
    (162
    )
 The above aluminium options embedded in electricity purchase contracts reduce exposure to movements in the aluminium price.
 Others:
Less than 1 yearOther currency derivative contracts
    
    
    
    
    
    
    (3
    )Other embedded derivatives
    
    
    (87
    )
    
    
    (20
    )Other commodity contracts
    
    
    (7
    )
    
    
    (5
    )Between 1 and 5 yearsOther embedded derivatives
    
    
    (11
    )
    
    
    Other derivatives
    
    
    (2
    )
    
    
    Total
    
    
    (107
    )
    
    
    (28
    )Total liabilities relating to derivatives not designated as hedges (note 26)
    
    
    (300
    )
    
    
    (355
    )
 A-54




---



##### 



Notes to the 2009 Financial statements34
    
    Financial instrumentscontinuedReconciliation to statement of financial position categories for derivatives not designated as hedges
 2009
    
    
    2008US$m
    
    
    US$m- non-current assets (note 20)
    
    
    65
    
    
    
    - current assets (note 20)
    
    
    226
    
    
    
    87- current liabilities (note 26)
    
    
    (167
    )
    
    
    - non-current liabilities (note 26)
    
    
    (133
    )
    
    
    (355
    )Total derivatives not designated as hedges, detailed above
    
    
    (9
    )
    
    
    (268
    )
 d) Currency and interest contracts relating to borrowings
 Total fair
    
    
    Total fairvalue
    
    
    value2009
    
    
    2008US$m
    
    
    US$mLiabilitiesBuy US dollar: sell GBPLess than 1 year
    
    
    (68
    )
    
    
    (95
    )Other currency swaps
    
    
    
    
    
    
    (4
    )Total currency swaps
    
    
    (68
    )
    
    
    (99
    )Interest contracts relating to borrowingsBetween 1 and 5 years
    
    
    (8
    )
    
    
    More than 5 years
    
    
    (89
    )
    
    
    Total interest rate swaps
    
    
    (97
    )
    
    
    Total derivatives related to net debt
    
    
    (165
    )
    
    
    (99
    )Designated as fair value hedges
    
    
    (165
    )
    
    
    (99
    )
 Reconciliation to statement of financial position categories for currency and interest derivatives
 2009
    
    
    2008US$m
    
    
    US$m- current liabilities (note 26)
    
    
    (68
    )
    
    
    (4
    )- non-current liabilities (note 26)
    
    
    (97
    )
    
    
    (95
    )Total currency and interest rate contracts, detailed above
    
    
    (165
    )
    
    
    (99
    )
   (C) Fair values
  31 December 2009
    
    
    31 December 2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fairvalue
    
    
    value
    
    
    value
    
    
    valueUS$m
    
    
    US$m
    
    
    US$m
    
    
    US$mPrimary financial instruments held or issued to
finance the Groups operationsEquity shares and quoted funds (note 20)
    
    
    658
    
    
    
    658
    
    
    
    261
    
    
    
    261Other investments, including loans (note 20)
    
    
    505
    
    
    
    505
    
    
    
    480
    
    
    
    480Cash and cash equivalents (note 21)
    
    
    4,233
    
    
    
    4,233
    
    
    
    1,181
    
    
    
    1,181Other liquid resources (note 20)
    
    
    73
    
    
    
    73
    
    
    
    4
    
    
    
    4Short term borrowings and bank overdrafts (notes 21 and 22)
    
    
    (847
    )
    
    
    (847
    )
    
    
    (10,034
    )
    
    
    (10,059
    )Medium and long term borrowings (note 22)
    
    
    (22,155
    )
    
    
    (23,318
    )
    
    
    (29,724
    )
    
    
    (29,752
    )Loans to equity accounted units including quasi equity
    
    
    1,761
    
    
    
    1,761
    
    
    
    1,113
    
    
    
    1,113Deferred consideration (note 25)
    
    
    (119
    )
    
    
    (119
    )
    
    
    (318
    )
    
    
    (318
    )Other financial liabilities (note 26)
    
    
    (49
    )
    
    
    (49
    )
    
    
    (37
    )
    
    
    (37
    )(15,940
    )
    
    
    (17,103
    )
    
    
    (37,074
    )
    
    
    (37,127
    )Derivatives:Forward contracts: designated as hedges (Section B (a) of note 34)
    
    
    (435
    )
    
    
    (435
    )
    
    
    (135
    )
    
    
    (135
    )Option contracts: designated as hedges (Section B (b) of note 34)
    
    
    (56
    )
    
    
    (56
    )
    
    
    (24
    )
    
    
    (24
    )Forward
contracts and option contracts not designated as hedges (Section B (c) of note 34)

    
    
    (9
    )
    
    
    (9
    )
    
    
    (268
    )
    
    
    (268
    )Currency swaps hedging borrowings (Section B (d) of note 34)
    
    
    (68
    )
    
    
    (68
    )
    
    
    (99
    )
    
    
    (99
    )Interest rate swap agreements (Section B (d) of note 34)
    
    
    (97
    )
    
    
    (97
    )
    
    
    
    
    
    
    (16,605
    )
    
    
    (17,768
    )
    
    
    (37,600
    )
    
    
    (37,653
    )
 A-55




---



##### 



Notes to the 2009 Financial statements34
    
    Financial instrumentscontinuedValuation hierarchyThe table below shows the financial instruments carried at fair value by valuation method at 31 December 2009.
 Not heldTotal
    
    
    Level 1(a)
    
    
    Level 2(b)
    
    
    Level 3(c)
    
    
    at fair valueAssetsEquity shares and quoted funds (note 20)
    
    
    658
    
    
    
    644
    
    
    
    14
    
    
    
    
    
    
    
    Other investments, including loans (note 20)
    
    
    505
    
    
    
    129
    
    
    
    
    
    
    
    106
    
    
    
    270Cash and cash equivalents (note 21)
    
    
    4,233
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,233Other liquid resources (note 20)
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73Loans to equity accounted units including quasi equity
    
    
    1,761
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,761LiabilitiesShort term borrowings and bank overdrafts (notes 21 and 22)
    
    
    (847
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (847
    )Medium and long term borrowings (note 22)
    
    
    (22,155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,155
    )Deferred consideration (note 25)
    
    
    (119
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (119
    )Other financial liabilities (note 26)
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )(15,940
    )
    
    
    773
    
    
    
    14
    
    
    
    106
    
    
    
    (16,833
    )DerivativesForward contracts: designated as hedges (Section B (a) of note 34)
    
    
    (435
    )
    
    
    
    
    
    
    (430
    )
    
    
    (5
    )
    
    
    Option contracts: designated as hedges (Section B (b) of note 34)
    
    
    (56
    )
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    Forward contracts and option contracts not designated as hedges (Section B (c) of note 34)
    
    
    (9
    )
    
    
    
    
    
    
    132
    
    
    
    (141
    )
    
    
    Currency swaps hedging borrowings (Section B (d) of note 34)
    
    
    (68
    )
    
    
    
    
    
    
    (68
    )
    
    
    
    
    
    
    Interest rate swap agreements (Section B (d) of note 34)
    
    
    (97
    )
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    (16,605
    )
    
    
    773
    
    
    
    (449
    )
    
    
    (96
    )
    
    
    (16,833
    )
 (a)
    
    Valuation is based on unadjusted quoted prices in active markets for identical financial instruments. This category includes listed equity shares and other
quoted funds.(b)
    
    Valuation is based on inputs that are observable for the financial instruments which includes quoted prices for similar instruments or identical
instruments in markets which are not considered to be active or either directly or indirectly based on observable market data.(c)
    
    Valuation is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).Level 3 Financial assets and Financial liabilitiesThe table below shows the summary of changes in the fair value of the Groups level 3 financial assets and financial liabilities for the year ended
31 December 2009.
 Level 3 financial assetsand financial liabilitiesOpening balance
    
    
    (50
    )Currency translation adjustments
    
    
    (1
    )Realised gains to income statement
    
    
    24Unrealised losses to income statement
    
    
    (35
    )Unrealised losses to comprehensive income
    
    
    (66
    )Additions
    
    
    38Disposals
    
    
    (6
    )Closing balance
    
    
    (96
    )Total losses for the year included in the income statement for assets and liabilities held at year end
    
    
    (31
    )
 A-56




---



##### 



Notes to the 2009 Financial statements
 
 35
    
    Contingent liabilities and commitments 2009
    
    
    2008US$m
    
    
    US$mCapital commitments (including those related to joint ventures and associates)Within 1 year
    
    
    2,439
    
    
    
    3,568Between 1 and 3 years
    
    
    1,050
    
    
    
    487Between 3 and 5 years
    
    
    308
    
    
    
    228After 5 years
    
    
    78
    
    
    
    71Total
    
    
    3,875
    
    
    
    4,354
 (a)
    
    Included in the above table is other commitments of US$117 million (2008: US$18 million). Capital commitments incurred by the Group relating to
joint ventures and associates amount to US$261 million (2008: US$376 million). Capital commitments incurred jointly with other venturers (Rio Tinto share)
relating to joint ventures amount to US$539 million (2008: US$713 million).Operating leasesThe aggregate amount of minimum lease payments under non cancellable operating leases are as follows:
 2009
    
    
    2008US$m
    
    
    US$mWithin 1 year
    
    
    484
    
    
    
    336Between 1 and 3 years
    
    
    628
    
    
    
    565Between 3 and 5 years
    
    
    287
    
    
    
    345After 5 years
    
    
    451
    
    
    
    3151,850
    
    
    
    1,561
 Unconditional purchase obligations
  2009
    
    
    2008US$m
    
    
    US$mWithin 1 year
    
    
    1,339
    
    
    
    1,245Between 1 and 2 years
    
    
    1,054
    
    
    
    870Between 2 and 3 years
    
    
    1,113
    
    
    
    773Between 3 and 4 years
    
    
    1,006
    
    
    
    648Between 4 and 5 years
    
    
    891
    
    
    
    505After 5 years
    
    
    7,404
    
    
    
    6,30412,807
    
    
    
    10,345
  2009
    
    
    2008US$m
    
    
    US$mContingent liabilities (excluding those relating to joint ventures and associates)Indemnities and other performance guarantees
    
    
    316
    
    
    
    329Contingent liabilities relating to joint ventures and associates (a)Share of contingent liabilities of joint ventures and associates
    
    
    
    
    
    
    5Incurred in relation to interests in joint ventures
    
    
    233
    
    
    
    187Incurred in relation to other venturers contingent liabilities
    
    
    73
    
    
    
    67
 (a)
    
    Amounts disclosed include those arising as a result of the Groups investments in both jointly controlled assets and jointly controlled entities.(b)
    
    There are a number of legal claims currently outstanding against the Group. No material loss to the Group is expected to result from these claims.
 A-57




---



##### 



Notes to the 2009 Financial statements
 
 36
    
    Average number of employees Subsidiaries and proportionallyconsolidated units2009
    
    
    2008
    
    
    2007The principal locations of employment were:Australia and New Zealand
    
    
    17,537
    
    
    
    17,875
    
    
    
    14,065North America
    
    
    21,787
    
    
    
    23,167
    
    
    
    13,363Africa
    
    
    6,539
    
    
    
    6,329
    
    
    
    5,548Europe
    
    
    16,965
    
    
    
    16,909
    
    
    
    4,623South America
    
    
    2,039
    
    
    
    2,909
    
    
    
    1,348Indonesia
    
    
    2,165
    
    
    
    2,206
    
    
    
    2,125Other countries
    
    
    844
    
    
    
    942
    
    
    
    286Discontinued operations
    
    
    27,732
    
    
    
    28,386
    
    
    
    5,68095,608
    
    
    
    98,723
    
    
    
    47,038
 Equity accounted units(Rio Tinto share) (a)2009
    
    
    2008
    
    
    2007The principal locations of employment were:Australia and New Zealand
    
    
    2,355
    
    
    
    2,471
    
    
    
    2,289North America
    
    
    580
    
    
    
    370
    
    
    
    376Africa
    
    
    1,673
    
    
    
    1,980
    
    
    
    585Europe
    
    
    274
    
    
    
    520
    
    
    
    367South America
    
    
    1,148
    
    
    
    1,116
    
    
    
    905Other countries
    
    
    356
    
    
    
    605
    
    
    
    1176,386
    
    
    
    7,062
    
    
    
    4,639
 Group Total2009
    
    
    2008
    
    
    2007The principal locations of employment were:Australia and New Zealand
    
    
    19,892
    
    
    
    20,346
    
    
    
    16,354North America
    
    
    22,367
    
    
    
    23,537
    
    
    
    13,739Africa
    
    
    8,212
    
    
    
    8,309
    
    
    
    6,133Europe
    
    
    17,239
    
    
    
    17,429
    
    
    
    4,990South America
    
    
    3,187
    
    
    
    4,025
    
    
    
    2,253Indonesia
    
    
    2,165
    
    
    
    2,206
    
    
    
    2,125Other countries
    
    
    1,200
    
    
    
    1,547
    
    
    
    403Discontinued operations
    
    
    27,732
    
    
    
    28,386
    
    
    
    5,680101,994
    
    
    
    105,785
    
    
    
    51,677
    A-58




---



##### 



Notes to the 2009 Financial statements
 
 37
    
    Principal subsidiaries At 31 December 2009 Company and country of
    
    
    
    Class of
    
    Proportion of
    
    Groupincorporation/operation
    
    Principal activities
    
    shares held
    
    class held (%)
    
    interest (%)AustraliaArgyle Diamond Mines
    
    Mining and processing of diamonds
    
    (a)
    
    
    100
    
    
    
    100Coal & Allied Industries Limited
    
    Coal mining
    
    Ordinary
    
    
    75.71
    
    
    
    75.71Dampier Salt Limited
    
    Salt production
    
    Ordinary
    
    
    68.40
    
    
    
    68.40Energy Resources of Australia Limited
    
    Uranium mining
    
    Class A
    
    
    68.39
    
    
    
    68.39Hamersley Iron Pty Limited
    
    Iron ore mining
    
    Ordinary
    
    
    100
    
    
    
    100Queensland Coal Pty Limited (b)
    
    Coal mining
    
    Ordinary
    
    
    100
    
    
    
    100Rio Tinto Aluminium (Holdings) 
Limited
    
    Bauxite mining; alumina production;
primary aluminium smelting
    
    Ordinary
    
    
    100
    
    
    
    100CanadaIron Ore Company of Canada Inc.
    
    Iron ore mining; iron ore pellets
    
    Series A, E & F
    
    
    58.72
    
    
    
    58.72QIT-Fer et Titane Inc.
    
    Titanium dioxide feedstock; high purity iron and steel
    
    Common shares
    
    
    100
    
    
    
    100Class B preference shares
    
    
    100
    
    
    
    100Rio Tinto Alcan Inc.
    
    Bauxite mining; alumina refining;
production of specialty alumina;
aluminium smelting, manufacturing
and recycling; engineered products;
flexible and specialty packaging
    
    Common shares
    
    
    100
    
    
    
    100FranceTalc de Luzenac France SA
    
    Mining, refining and marketing of talc
    
    Ordinary 15.25
    
    
    100
    
    
    
    100IndonesiaP.T. Kelian Equatorial Mining
    
    Gold mining (now in close down phase)
    
    Ordinary US$1
    
    
    90
    
    
    
    90MadagascarQIT Madagascar Minerals SA
    
    Ilmenite mining
    
    Common shares
    
    
    80
    
    
    
    80NamibiaRössing Uranium Limited (c)
    
    Uranium mining
    
    B N$1
    
    
    71.16


    
    
    68.58C N10c
    
    
    70.59
}Papua New GuineaBougainville Copper Limited (d)
    
    Copper and gold mining
    
    Ordinary 1 Kina
    
    
    53.58
    
    
    
    53.58South AfricaPalabora Mining Company Limited
    
    Copper mining, smelting and refining
    
    R1
    
    
    72.03
    
    
    
    57.67United States of AmericaKennecott Holdings Corporation
(including Kennecott Utah Copper,
Kennecott Land and Kennecott
Exploration)
    
    Copper and gold mining,
smelting and refining, land
development and exploration
activities
    
    Common US$0.01
    
    
    100
    
    
    
    100U.S. Borax Inc.
    
    Mining, refining and marketing
of borates
    
    Common US$0.10
    
    
    100
    
    
    
    100
 
 (a)
    
    This entity is unincorporated.(b)
    
    Queensland Coal Pty Limited is the main legal entity that owns the shares shown in note 40 of Hail Creek, Blair Athol and Kestrel.(c)
    
    The Groups shareholding in Rössing Uranium Limited carries 35.54 per cent of the total voting rights. Rössing is consolidated by virtue
of Board control.(d)
    
    The results of Bougainville Copper Limited are not consolidated. See note 47.(e)
    
    The Group comprises a large number of companies and it is not practical to include all of them in this list. The list therefore only includes those
companies that have a more significant impact on the profit or assets of the Group.(f)
    
    The Groups principal subsidiaries are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.(g)
    
    Companies operate mainly in the countries in which they are incorporated.
 A-59




---



##### 



Notes to the 2009 Financial statements
 
 38
    
    Principal jointly controlled entities At 31 December 2009 Company and country of
    
    
    
    Number of
    
    
    Class of
    
    
    Proportion of
    
    
    Groupincorporation/operation
    
    Principal activities
    
    shares held
    
    
    shares held
    
    
    class held (%)
    
    
    interest (%)| | | | |AustraliaBoyne Smelters Limited (a)
    
    Aluminium smelting
    
    
    153,679,560
    
    
    Ordinary
    
    
    59.4
    
    
    
    59.4Leichhardt Coal Pty Limited (b)
    
    Coal mining
    
    
    20,115,000
    
    
    Ordinary
    
    
    44.7
    
    
    
    44.7Queensland Alumina Limited (a)
    
    Alumina production
    
    
    1,769,600
    
    
    Ordinary
    
    
    80
    
    
    
    80ChileMinera Escondida Limitada (c)
    
    Copper mining and refining
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    30New ZealandNew Zealand Aluminium SmeltersLimited (a)
    
    Aluminium smelting
    
    
    24,998,400
    
    
    Ordinary
    
    
    79.4
    
    
    
    79.4NorwaySor-Norge Aluminium A.S.
    
    Aluminium smelting
    
    
    500,000
    
    
    Ordinary
    
    
    50
    
    
    
    50OmanSohar Aluminium Company LLC
    
    Aluminium smelting /
    
    
    37,500
    
    
    
    OMR1
    
    
    
    20
    
    
    
    20power generationSouth AfricaRichards Bay Titanium (Pty) Ltd (d)
    
    Ilmenite, rutile and zircon mining
    
    
    
    
    
    Preferred Ordinary
    
    
    
    
    
    A Ordinary
    
    
    

    
    
    37.7150,960
    
    
    B Ordinary
    
    
    51
}
    
    
    A Preference
    
    
    140,046
    
    
    B Preference
    
    
    51
}
    
    
    38.5Richards Bay Mining (Pty) Ltd (d)
    
    Ilmenite, rutile and zircon mining
    
    
    
    
    
    Preferred Ordinary
    
    
    
    
    
    A Ordinary
    
    
    
    
    
    
    36.336,260
    
    
    B Ordinary
    
    
    49
}
    
    
    A Preference
    
    
    31,335
    
    
    B Preference
    
    
    49
}
    
    
    37.0United KingdomAnglesey Aluminium Metal Limited (a)
    
    Aluminium smelting
    
    
    13,387,500
    
    
    Ordinary £1
    
    
    51
    
    
    
    51United States of AmericaHalco (Mining) Inc.
    
    (e)
    
    
    4,500
    
    
    Common
    
    
    45
    
    
    
    45Pechiney Reynolds Quebec Inc.
    
    (f)
    
    
    100
    
    
    Common
    
    
    50
    
    
    
    50.31
    
    
    Preferred
    
    
    100Hydrogen Energy California LLC (g)
    
    Alternative energy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50.0
 
 The Group has joint control of the above operations which, except as disclosed in note (d) below, are independent legal entities. It therefore
includes them in its accounts using the equity accounting method.The Group comprises a large number of operations and it is not practical to include all of them in this list. The list therefore only includes those
jointly controlled entities that have a more significant impact on the profit or operating assets of the Group.The Groups principal jointly controlled entities are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto

Limited.With the exception of (e) and (f) above, all jointly controlled entities operate mainly in the countries in which they are

incorporated.(a)
    
    While the Group holds more than a 50 per cent interest in these entities, other participants have veto rights over operating, financing and
strategic decision making. Accordingly, the Group does not have the ability to unilaterally control, and therefore does not consolidate these
entities.(b)
    
    Leichhardt has a 31.4 per cent interest in the Blair Athol joint venture. As a result, the Group has a further beneficial interest of 14 per cent in
addition to its direct interest of 57.2 per cent, which is owned via a subsidiary of Rio Tinto Limited. The Blair Athol joint venture is disclosed
as a jointly controlled asset in note 40.(c)
    
    The year end of Minera Escondida Limitada is 30 June. However, the amounts included in the consolidated financial statements of Rio Tinto are
based on accounts of Minera Escondida Limitada that are coterminous with those of the Group.(d)
    
    On 9 December, an agreement was signed with a Broad-Based Black Economic Empowerment (BBBEE) Consortium transferring 26 per cent of the
Groups interest in Richards Bay Minerals (RBM) to a group comprising local communities, investors and RBM employees. At the same time an
agreement was signed with the joint venture partner BHP Billiton, to restructure the joint venture while maintaining the Groups remaining interest in

RBM.
This transaction has reduced the Groups interest from 50 per cent to 37 per cent allocated between two entities.(e)
    
    Halco has a 51 per cent indirect interest in Compagnie des Bauxites de Guinée, a bauxite mine, the core assets of which are located in

Guinea.(f)
    
    Pechiney Reynolds Quebec has a 50.1 per cent interest in the Aluminerie de Becancour aluminium smelter, which is located in
Canada.(g)
    
    This entity has been incorporated but its capital has not been divided into shares. A-60




---



##### 



Notes to the 2009 Financial statements
 
 39
    
    Principal associates At 31 December 2009 Company and country of
    
    
    
    Number of
    
    
    Class of
    
    
    Proportion of
    
    
    Groupincorporation/operation
    
    Principal activities
    
    shares held
    
    
    shares held
    
    
    class held (%)
    
    
    interest (%)BrazilMineração Rio do Norte SA (a)
    
    Bauxite mining
    
    
    25,000,000
    
    
    Ordinary
    
    
    12.5

    
    
    
    1247,000,000
    
    
    Preferred
    
    
    11.8
}CameroonCompagnie
Camerounaise de lAluminum
    
    Aluminium smelting
    
    
    1,623,127
    
    
    XAF
    
    
    46.7
    
    
    
    46.7CanadaIvanhoe Mines Ltd (b)
    
    Copper and gold mining
    
    
    83,638,128
    
    
    Common
    
    
    19.7
    
    
    
    19.7United StatesCloud Peak Energy Resources LLC
    
    Coal mining
    
    
    29,400,000
    
    
    
    (c
    )
    
    
    48.3
    
    
    
    48.3
 
 The Groups principal associates are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.The Group comprises a large number of operations and it is not practical to include all of them in this list. The list therefore only includes those
associates that have a more significant impact on the profit or operating assets of the Group.With the exception of Ivanhoe Mines Ltd, the core assets of which are located in Mongolia, all associates operate mainly in the countries in which
they are incorporated.(a)
    
    Mineração Rio do Norte SA is accounted for as an associated company because the Group has significant influence through representation on its
Board of Directors.(b)
    
    Ivanhoe Mines Ltd is accounted for as an associated company because the Group has significant influence through representation on its Board
of Directors and participation in the technical committee that is responsible for its Oyu Tolgoi project. On 28 October 2009, Rio Tinto completed
the second tranche of its private placement investment in Ivanhoe Mines Ltd, increasing its ownership by 9.8 per cent to 19.7 per cent of Ivanhoes
common shares. The second tranche consisted of 46,304,473 common shares at a subscription price of US$8.38 per share for a total consideration
of US$388 million. If Rio Tinto were to exercise and convert all of its remaining warrants and securities of Ivanhoe, it would own 257,931,578 common
shares of Ivanhoe representing 43.1 per cent of Ivanhoes common shares. Refer to note 48- Events after the statement of financial position date.(c)
    
    Through its holdings in Rio Tinto Energy America Inc. and Kennecott Management Services Company, the Group holds 48 per cent of membership
interest in Cloud Peak Energy Resources LLC. The remaining 52 per cent ownership interest is held by Cloud Peak Energy Inc., whose stock is traded
on the New York Stock Exchange. 
 40
    
    
    Principal jointly controlled assets and other proportionally consolidated units
 At 31 December 2009
 Name and country
    
    
    
    Groupof operation
    
    Principal activities
    
    interest (%)AustraliaTomago Aluminium Joint Venture
    
    Aluminium smelting
    
    
    51.6Bengalla (a)
    
    Coal mining
    
    
    30.3Blair Athol Coal (b)
    
    Coal mining
    
    
    71.2Hail Creek
    
    Coal mining
    
    
    82Kestrel
    
    Coal mining
    
    
    80Mount Thorley (c)
    
    Coal mining
    
    
    60.6Warkworth
    
    Coal mining
    
    
    42.1Northparkes Mine
    
    Copper/gold mining and processing
    
    
    80Gladstone Power Station
    
    Power generation
    
    
    42.1Robe River Iron Associates
    
    Iron ore mining
    
    
    53Hope Downs Joint Venture
    
    Iron ore mining
    
    
    50HIsmelt®
    
    Iron technology
    
    
    60BrazilConsórcio de Alumínio Maranhão
    
    Alumina production
    
    
    10CanadaAlouette
    
    Aluminium production
    
    
    40Diavik
    
    Mining and processing of diamonds
    
    
    60IndonesiaGrasberg expansion
    
    Copper and gold mining
    
    
    40
 
 The Group comprises a large number of operations, and it is not practical to include all of them in this list. The list therefore only includes those
proportionally consolidated units that have a more significant impact on the profit or operating assets of the Group.The Groups proportionally consolidated units are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.(a)
    
    The Group owns a 40 per cent interest in Bengalla through its 75.71 per cent investment in Coal and Allied, giving a beneficial interest
to the Group of 30.3 per cent.(b)
    
    The Group has a direct interest of 57.2 per cent in Blair Athol Coal, and an additional 14 per cent interest through its investment in
Leichhardt Coal Pty Limited, which is disclosed as a jointly controlled entity in note 38.(c)
    
    The Group owns an 80 per cent interest in Mount Thorley through its 75.71 per cent investment in Coal and Allied, giving a beneficial interest
to the Group of 60.6 per cent. A-61




---



##### 



Notes to the 2009 Financial statements
 
 41 Purchases and sales of subsidiaries, joint ventures, associates and other interests in
businesses
 2009 Acquisitions
    2008 Acquisitions
  2007 Acquisitions
 Alcan acquisition
      Provisional
    
    
    
    
    
    
    Finalfair value
    
    
    Further
    
    
    fair valueto Group
    
    
    adjustments
    
    
    to GroupAt 23 October 2007
    
    US$m
    
    
    US$m
    
    
    US$mIntangible assets
    
    
    7,467
    
    
    
    (1,106
    )
    
    
    6,361Property, plant & equipment
    
    
    18,282
    
    
    
    (3,679
    )
    
    
    14,603Equity method investments
    
    
    4,185
    
    
    
    (1,294
    )
    
    
    2,891Inventories
    
    
    2,856
    
    
    
    15
    
    
    
    2,871Assets held for sale
    
    
    6,984
    
    
    
    
    
    
    
    6,984Cash
    
    
    991
    
    
    
    
    
    
    
    991Deferred tax assets
    
    
    228
    
    
    
    
    
    
    
    228Other assets
    
    
    4,584
    
    
    
    156
    
    
    
    4,740Loans and borrowings
    
    
    (5,465
    )
    
    
    (42
    )
    
    
    (5,507
    )Liabilities of disposal groups held for sale
    
    
    (2,642
    )
    
    
    
    
    
    
    (2,642
    )Deferred tax liabilities
    
    
    (4,182
    )
    
    
    1,574
    
    
    
    (2,608
    )Provisions for liabilities and charges
    
    
    (4,638
    )
    
    
    (1,083
    )
    
    
    (5,721
    )Other liabilities
    
    
    (4,476
    )
    
    
    (180
    )
    
    
    (4,656
    )Minority interest
    
    
    (55
    )
    
    
    31
    
    
    
    (24
    )Goodwill
    
    
    14,533
    
    
    
    5,608
    
    
    
    20,141Net attributable assets including goodwill
    
    
    38,652
    
    
    
    
    
    
    
    38,652Total consideration:Cost of shares
    
    
    
    
    
    
    
    
    
    
    37,996Acquisition costs
    
    
    
    
    
    
    
    
    
    
    74Liabilities assumed
    
    
    
    
    
    
    
    
    
    
    132Loans to acquired subsidiary
    
    
    
    
    
    
    
    
    
    
    450Total consideration  Alcan
    
    
    
    
    
    
    
    
    
    
    38,652Other subsidiaries and equity accounted units acquired
    
    
    
    
    
    
    
    
    
    
    54Total consideration
    
    
    
    
    
    
    
    
    
    
    38,706Cash outflow on acquisitions:Total consideration
    
    
    
    
    
    
    
    
    
    
    38,706Net cash of acquired companies
    
    
    
    
    
    
    
    
    
    
    (991
    )Liabilities assumed
    
    
    
    
    
    
    
    
    
    
    (132
    )Other (including disposal proceeds of US$13 million)
    
    
    
    
    
    
    
    
    
    
    (57
    )Net acquisitions per cash flow statement
    
    
    
    
    
    
    
    
    
    
    37,526
   -
    
    The fair value of the Engineered Products business was reduced based on a further assessment of
the amount for which such businesses could be sold at the date of the acquisition.-
    
    The fair value attributed to the facilities within Bauxite & Alumina was reduced based on further
analysis of the operating capability of related expansion projects.-
    
    Provisions for environmental clean up and closure obligations were increased following a detailed
assessment of the costs and timing of closure of smelters, refineries and mines. The timing of closure was assessed
having regard to the prospects for continued access to economic sources of power beyond the term of existing contracts.-
    
    The value attributed to water rights in Canada was reduced after a further assessment of the
capital investment, which will be required to benefit from these sources of hydro-electric power.
  A-62




---



##### 



Notes to the 2009 Financial statements
 41 Purchases and sales of subsidiaries, joint ventures, associates and other interests in
businesses
  Restated31 December2007US$mConsolidated sales revenue
    
    
    45,590Profit for the year (including amounts attributable to outside equity shareholders)
    
    
    7,473
 2009 Disposals
        2009US$mGoodwill
    
    
    184Intangible assets
    
    
    169Property, plant & equipment
    
    
    2,021Investments in equity accounted units
    
    
    11Inventories
    
    
    288Other financial assets
    
    
    251Borrowings
    
    
    (12
    )Deferred tax liabilities
    
    
    (82
    )Provisions
    
    
    (796
    )Outside equity shareholders
    
    
    (1
    )Net assets
    
    
    2,033Add: Divestment of investment in associate
    
    
    80Less: Retained investment in associates
    
    
    (359
    )Less: Recycled gains and losses and movements in other comprehensive income
    
    
    (18
    )Net assets and investments in associates disposed of
    
    
    1,736ConsiderationCash proceeds (net of transactions costs)(a)
    
    
    2,424Deferred consideration
    
    
    46Disposal costs
    
    
    (42
    )Net consideration
    
    
    2,428Gain on disposal
    
    
    692Net cash inflow from disposals
    
    
    2,424Acquisitions of subsidiaries, joint ventures and associates
    
    
    (396
    )Cash flow from disposals/acquisitions of subsidiaries, joint ventures and associates
    
    
    2,028
 (a)
    
    Cash proceeds were stated net of US$20 million cash and cash equivalents transferred on sale of subsidiaries A-63




---



##### 



Notes to the 2009 Financial statements
 41
    
    Purchases and sales of subsidiaries, joint ventures, associates and other interests in businessescontinued2008 DisposalsOn 5 March 2008, the Group completed the sale of its interest (Rio Tinto share 40 per cent) in the Cortez gold mine (previously in the Copper product group)
for a sales price which included cash consideration of US$1,695 million. The Group benefits from a deferred bonus payment in the event of a significant
discovery of additional reserves and mineralisation at the Cortez mine and also retains a contingent royalty interest in the future production of the property.On 16 April 2008, the Group completed the sale of its joint venture interest (Rio Tinto share 70.3 per cent) in the Greens Creek mine to Hecla Mining
Company. Greens Creek, which mines silver, gold, zinc and lead, was previously part of the Copper product group. The sale price was US$750 million,
comprising a cash component of US$700 million with the balance in the common stock of Hecla Mining Company.The aggregate profit on disposal of interests in businesses (including investments) in 2008 was US$2,231 million (US$1,470 million net of tax).
These gains have been excluded from Underlying earnings, as shown in note 2.The Cash flow statement includes US$2,563 million in Net disposals/(acquisitions) of subsidiaries, joint ventures & associates, comprising
US$2,572 million in disposal proceeds, net of US$9 million paid for acquisitions. In accordance with IAS 7, these proceeds were stated net of
US$5 million cash and cash equivalents transferred on sale of subsidiaries.Non-cash disposal proceeds of US$88 million were received during the year.2007 DisposalsThere were no significant disposals in 2007.
 
 42
    
    Directors and key management remuneration Aggregate remuneration, calculated in accordance with the Companies Act 2006, of the directors of the parent companies
was as follows: 2009
    
    
    2008
    
    
    2007US$000
    
    
    US$000
    
    
    US$'000Emoluments
    
    
    18,021
    
    
    
    10,620
    
    
    
    11,103Long term incentive plans
    
    
    3,092
    
    
    
    2,647
    
    
    
    9,57321,113
    
    
    
    13,267
    
    
    
    20,676Pension contributions: defined contribution plans
    
    
    389
    
    
    
    338
    
    
    
    130Gains made on exercise of share options
    
    
    20
    
    
    
    
    
    
    
    
 The aggregate remuneration incurred by Rio Tinto plc in respect of its directors was US$17,784,000 (2008: US$13,214,000; 2007: US$13,678,000). The aggregate
pension contribution to defined contribution plans was US$342,000 (2008: US$338,000; 2007: US$56,000). The aggregate remuneration, including pension
contributions and other retirement benefits, incurred by Rio Tinto Limited in respect of its directors was US$3,718,000 (2008: US$391,000; 2007: US$7,128,500).
The aggregate pension contribution to defined contribution plans was US$47,000 (2008: US$43,000; 2007: US$74,000).During 2009, three directors (2008: two; 2007: three) accrued retirement benefits under defined benefit arrangements, and two directors (2008 and 2007: one)
accrued retirement benefits under defined contribution arrangements.Emoluments included in the table above have been translated from local currency at the average rate for the year with the exception of bonus
payments which, together with amounts payable under long term incentive plans, have been translated at the year end rate.Detailed information concerning directors remuneration, shareholdings and options is shown in the Remuneration report, including
Tables 1 to 5, on pages 101 to 133.Aggregate compensation, representing the expense recognised under  IFRS, of the Groups key management, including directors,
was as follows:
 2009
    
    
    2008
    
    
    2007US$000
    
    
    US$000
    
    
    US$000Short term employee benefits and costs
    
    
    35,881
    
    
    
    21,086
    
    
    
    25,826Post employment benefits
    
    
    3,692
    
    
    
    3,664
    
    
    
    4,480Other long term benefits
    
    
    
    
    
    
    
    
    
    
    2,537Termination benefits
    
    
    1,357
    
    
    
    
    
    
    
    817Share based payments
    
    
    34,476
    
    
    
    (5,360
    )
    
    
    41,54075,406
    
    
    
    19,390
    
    
    
    75,200
 The figures shown above include employment costs which comprise of social security and accident premiums in the UK and US and payroll
taxes in Australia paid by the employer as a direct additional cost of hire. In total, they amount to US$2,269,000 (2008: US$1,389,000; 2007: US$2,481,000) and
although disclosed here, are not included in Table 1 of the Remuneration report.More detailed information concerning the remuneration of key management is shown in the Remuneration report, including Tables 1 to 5 on
pages 101 to 133.
 A-64




---



##### 



Notes to the 2009 Financial statements
 
 43
    
    Auditors remuneration
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mGroup Auditors remuneration(a)Audit services pursuant to legislation- audit of the Groups annual accounts
    
    
    2.3
    
    
    
    3.2
    
    
    
    3.0- audit of the accounts of the Groups subsidiaries (b)
    
    
    20.9
    
    
    
    26.5
    
    
    
    27.7Audit services in connection with divestment programme (f)
    
    
    22.0
    
    
    
    24.4
    
    
    
    2.845.2
    
    
    
    54.1
    
    
    
    33.5Other services- services in connection with capital raising
    
    
    4.2
    
    
    
    
    
    
    
    - services in connection with bid defence
    
    
    
    
    
    
    9.4
    
    
    
    2.5-services in connection with divestment programme
    
    
    8.4
    
    
    
    25.8
    
    
    
    0.9- taxation services (c)
    
    
    2.1
    
    
    
    3.3
    
    
    
    0.8- other services
    
    
    2.2
    
    
    
    2.6
    
    
    
    4.0Total other services
    
    
    16.9
    
    
    
    41.1
    
    
    
    8.262.1
    
    
    
    95.2
    
    
    
    41.7Remuneration payable to other accounting firms(d)Audit services pursuant to legislation- audit of accounts of the Groups subsidiaries (b)
    
    
    0.5
    
    
    
    0.2
    
    
    
    0.4Non audit services- taxation services (c)
    
    
    9.1
    
    
    
    15.8
    
    
    
    3.7- financial systems design and implementation
    
    
    
    
    
    
    0.2
    
    
    
    0.3- internal audit
    
    
    8.4
    
    
    
    7.1
    
    
    
    4.4- litigation services
    
    
    0.1
    
    
    
    
    
    
    
    0.1- other services (e)
    
    
    12.2
    
    
    
    42.0
    
    
    
    7.030.3
    
    
    
    65.3
    
    
    
    15.9Fees in respect of pension scheme audits
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.330.4
    
    
    
    65.6
    
    
    
    16.292.5
    
    
    
    160.8
    
    
    
    57.9
 (a)
    
    The remuneration payable to PricewaterhouseCoopers, the Group Auditors, is approved by the Audit committee. The committee sets the
policy for the award of non audit work to the auditors and approves the nature and extent of such work, and the amount of the related fees,
to ensure that independence is maintained. The fees disclosed above consolidate all payments made to PricewaterhouseCoopers by the
Companies and their subsidiaries, together with the Groups share of the payments made by proportionally consolidated units. Non-audit
services arise largely from assurance and/or regulation related work.(b)
    
    Fees payable for the audit of the accounts of the Groups subsidiaries includes the statutory audit of subsidiaries and other audit work
performed to support the audit of the Group financial statements.(c)
    
    Taxation services includes tax compliance and advisory services. Tax compliance involves the preparation or review of returns for corporation,
income, sales and excise taxes. Tax advisory services includes advice on non recurring acquisitions and disposals, advice on transfer pricing and
advice on employee global mobility.(d)
    
    Remuneration payable to other accounting firms does not include fees for similar services payable to suppliers of consultancy services
other than accountancy firms.(e)
    
    Other services in 2009 and 2008 in respect of other accounting firms includes costs relating to capital raising, divestments and similar corporate
services, pension fund and payroll administration, advice on accounting matters, secondments of accounting firms staff, forensic audit and other consultancy.Other services in 2008 in respect of other accounting firms includes one off costs related to the rejection by the Board of the pre-conditional takeover proposal
from BHP Billiton which was withdrawn in November 2008.(f)
    
    Audit services represent assurance provided in respect of carve-out financial statements.
 A-65




---



##### 



Notes to the 2009 Financial statements
 
 44
    
    Related party transactions
 Information about material related party transactions of the Rio Tinto Group is set out below:Subsidiary companies and proportionally consolidated units
Details of investments in principal subsidiary companies are disclosed in note 37.
Information relating to proportionally consolidated units can be found in
note 40.Equity accounted unitsTransactions and balances with equity accounted units are summarised below. Purchases relate largely to amounts charged by jointly controlled
entities for toll processing of bauxite and alumina. Sales relate largely to charges for supply of coal to jointly controlled marketing entities for
onward sale to third party customers.
 2009
    
    
    2008
    
    
    2007Income statement items
    
    US$m
    
    
    US$m
    
    
    US$mPurchases from equity accounted units
    
    
    (2,558
    )
    
    
    (2,770
    )
    
    
    (1,538
    )Sales to equity accounted units
    
    
    2,088
    
    
    
    3,011
    
    
    
    1,338
 2009
    
    

    2008Balance sheet items
    
    US$m
    
    
    US$mInvestments in equity accounted units (note 14) (a)
    
    
    6,735
    
    
    
    5,053Loans to equity accounted units
    
    
    338
    
    
    
    515Loans from equity accounted units
    
    
    (157
    )
    
    
    (195
    )Trade and other receivables: amounts due from equity accounted units (note 17)
    
    
    941
    
    
    
    688Trade and other payables: amounts due to equity accounted units (note 25)
    
    
    (402
    )
    
    
    (280
    )
 Cash flow statement items
    
    US$m

    
    US$m
    

    US$mNet funding of equity accounted units
    
    
    (265
    )
    
    
    (334
    )
    
    
    (216
    )
 (a)
    
    Further information about investments in equity accounted units is set out in notes 38 and 39.In November 2009, as part of the disposal process of Cloud Peak, Rio Tinto Energy America Inc. and Cloud Peak Energy Resources LLC (CPER) agreed
for existing Rio Tinto plc guaranteed surety bonds and letters of credit, principally securing the reclamation obligations for the Cloud Peak business, to
continue for a transition period. The surety bonds are expected to be replaced by CPER during the first half of 2010. The amount outstanding on these
guarantees at the year end is US$449 million.Pension fundsInformation relating to pension fund arrangements is disclosed in note 50.Directors and key managementDetails of directors and key management remuneration are set out in note 42 and in the Remuneration report on pages 101 to 133.
 
 45
    
    Exchange rates in US$ The principal exchange rates used in the preparation of the 2009 financial statements are: Annual average
    
    

    
    
    
    
    
    
    Year end2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Sterling
    
    
    1.57
    
    
    
    1.86
    
    
    
    2.00
    
    
    
    1.61
    
    
    
    1.44
    
    
    
    1.99Australian dollar
    
    
    0.79
    
    
    
    0.86
    
    
    
    0.84
    
    
    
    0.89
    
    
    
    0.69
    
    
    
    0.88Canadian dollar
    
    
    0.88
    
    
    
    0.94
    
    
    
    0.93
    
    
    
    0.95
    
    
    
    0.82
    
    
    
    1.01South African rand
    
    
    0.12
    
    
    
    0.12
    
    
    
    0.14
    
    
    
    0.14
    
    
    
    0.11
    
    
    
    0.15Euro
    
    
    1.39
    
    
    
    1.47
    
    
    
    1.37
    
    
    
    1.44
    
    
    
    1.41
    
    
    
    1.47
 
 46
    
    Rights issues
 The terms of the rights issues were 21 New Rio Tinto plc Shares offered for every 40 existing shares at 1,400 pence per share and 21 New Rio Tinto
Limited Shares offered for every 40 existing shares at A$28.29 per share. The rights issues were fully underwritten and were completed on 2 July 2009
and 3 July 2009 respectively. The net proceeds from the rights issues of US$14.8 billion were used to pay down Group borrowings.Although Rio Tinto plcs functional currency is the US dollar, the UK element of the rights issue was denominated in Sterling. At the time the Group
announced its half year results, the offer of rights was treated as a derivative financial liability under IFRS prevailing at that time because the company
was not issuing a fixed number of shares for a fixed amount of US dollars (Rio Tinto Limiteds functional currency is the Australian dollar and the
Australian element of the rights issue was denominated in Australian dollars so there was no equivalent issue for Rio Tinto Limited). This gave rise to a
gain of US$827 million in the Groups half year income statement. In October 2009, the IASB approved an amendment to IAS 32 which allows the
offer of rights to be treated as an equity instrument, provided they are offered pro rata to all shareholders. The EU endorsed this amendment in
January 2010 and the gain of US$827 million was therefore reversed in the second half of 2009.Both Rio Tinto plc and Rio Tinto Limited entered into a series of forward US dollar derivative exchange contracts to minimise exposure to foreign
exchange rates and to provide confidence in the absolute dollar proceeds from the rights issues. Proceeds from the rights issues were used for a partial
prepayment of the US dollar denominated Alcan acquisition facility. The forward contracts taken out by both companies are accounted for as derivatives.
The contracts entered into by Rio Tinto plc to fix the Sterling proceeds in US dollars, which is the companys functional currency, are considered to be,
in substance, share issue costs and accordingly, the losses on these contracts from inception to receipt of proceeds have been recognised in equity,
within share premium. Rio Tinto Limiteds functional currency is the Australian dollar and, therefore, the losses on the contracts entered into by Rio Tinto
Limited have been recognised in the income statement and excluded from Underlying earnings. The losses on Rio Tinto plc and Rio Tinto Limited
contracts are included within Other investing cash flows in the statement of cash flow.The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on which the shares were
issued have been adjusted for the bonus element of the rights issues. The bonus factor for Rio Tinto plc was 1.2105 and for Rio Tinto Limited was
1.2679. 2008 comparatives for both earnings per share and ordinary dividends per share have been restated accordingly.
 A-66




---



##### 



Notes to the 2009 Financial statements
 
 47
    
    Bougainville Copper Limited (BCL)
 Mining has been suspended at the Panguna mine since 1989. Safe mine access by company employees has not been possible since that time and an
accurate assessment of the condition of the assets cannot therefore be made. Considerable funding would be required to recommence operations to the
level which applied at the time of the mines closure in 1989. An Order of Magnitude study undertaken in 2008 indicates that costs in a range of
US$2 billion to US$4 billion would be required to reopen the mine assuming all site infrastructure is replaced. The directors consider that the Group
does not currently realise a benefit from its interest in BCL and therefore BCL information continues to be excluded from the financial statements.
BCL reported a net profit of US$3 million for the financial year (2008: net loss of US$2 million; 2007: net profit of US$1 million). This is based upon actual transactions for the financial year. The aggregate amount of capital and reserves reported by BCL as at 31 December 2009 was US$138 million (2008:
US$113 million). The Group owns 214,887,966 shares in BCL, representing 53.6 per cent of the issued share capital. The investment of US$195 million was
fully provided against in 1991. At 31 December 2009, the number of shares in BCL held by the Group, multiplied by the share price, resulted in an amount of
US$114 million (2008: US$101 million).
 
 48
    
    Events after the statement of financial position date On 29 January 2010, US$2.0 billion of Facility D of the Alcan facility was paid. An additional US$2.0 billion was paid on 26 February 2010,
and a further US$1.0 billion was paid on both 31 March 2010 and  30
April 2010,
leaving US$2.5 billion outstanding on the facility.All of Tranches A and B of the Alcan facility have now been repaid. Facility B of the acquisition facility is a revolving facility of which
US$2.1 billion was undrawn at 31 December 2009. On 5 February 2010, in accordance with the acquisition facility agreement, proceeds from
the sale of the majority of Alcan Packaging to Amcor were used to cancel US$2.0 billion of the outstanding capacity. At the same time, the
Group voluntarily surrendered the remaining US$0.1 billion of the facility.Rio Tinto completed the sale of Alcan Packaging global pharmaceuticals, global tobacco, food Europe and food Asia divisions to Amcor for
a total consideration of US$1,948 million on 1 February 2010. The consideration has been adjusted to exclude the Medical Flexibles operations
and to reflect the actual business performance over the past six months. The final consideration remains subject to certain customary post-close
adjustments.The sale of Maules Creek to Aston Resources was completed on 18 February 2010.The sale of the Alcan Packaging Food Americas division to Bemis Company Inc., for a total all-cash consideration of US$1.2 billion was completed
on 1 March 2010.These divestments have not been reflected in the 2009 results, and will be reflected in the period in which the sales are completed.On 1 March 2010, Rio Tinto announced that it has agreed to acquire 15 million shares in Ivanhoe Mines Ltd. at a subscription price of
Cdn$16.31 per share, increasing its ownership in Ivanhoe Mines by 2.7 per cent to 22.4 per cent. The total consideration for this acquisition
is Cdn$244.7 million (US$241 million). The shares are being issued to Rio Tinto in satisfaction of an agreement with Ivanhoe Mines in 2008 to finance equipment
for the Oyu Tolgoi copper-gold complex in Mongolias South Gobi region. After the completion of the acquisition, Rio Tinto will own 98.6 million shares
of Ivanhoe Mines. If Rio Tinto were to execute all of its shares purchase warrants and convert its US$350 million loan into shares it would
own approximately 267.6 million shares of Ivanhoe Mines representing 44.0 per cent of Ivanhoe Mines.On 19 March 2010, Rio Tinto signed a memorandum of
understanding with Chinalco to establish a joint venture covering the
development and operation of the Simandou iron ore project in Guinea
of which Rio Tinto currently own 95 per cent. Chinalco will acquire a
47 per cent interest in the new joint venture by providing US$1.35
billion on an earn-in basis through sole funding of ongoing
development work over the next two to three years. Once the funding
is complete Rio Tinto and Chinalcos effective interests in the
Simandou project will be 50.35 per cent and 44.65 per cent
respectively.On 31 March 2010, Rio Tinto announced that it had received a binding offer from Sun Capital Partners to acquire the Alcan Beauty Packaging business. The terms of the offer are
confidential. A period of exclusivity with Sun Capital Partners has been agreed, and Rio Tinto will respond to this binding offer following consultation with the relevant European works councils. Alcan Beauty Packaging is the only part of Alcan Packaging
still owned by Rio Tinto, with the exception of the Medical Flexible operations in the US which are the subject of an agreed transaction with Amcor
that is currently under review by the US Department of Justice.On April 22, 2010 the European Court of Justice issued a judgment that effectively results in Rio
Tintos plant in Lynemouth not meeting emission requirements set out in the Large Combustion Plant
Directive (LCPD) (2001/80/EC). The result of the ruling requires the United Kingdom to ensure
Lynemouth is included in the implementation of the directive with a revised National Emission
Reduction Plan to be provided by 22 June 2010. The group is currently assessing a number of
different available options and therefore the economic impact is
uncertain. A-67




---



##### 



Notes to the 2009 Financial statements
 
 49 Share based payments
   Charge/(credit)
    
    
    
    
    
    
    Liability at therecognised for the year
    
    
    
    
    
    
    end of the year2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mEquity-settled plans
    
    
    76
    
    
    
    61
    
    
    
    39
    
    
    
    
    
    
    
    Cash-settled plans
    
    
    101
    
    
    
    (83
    )
    
    
    181
    
    
    
    111
    
    
    
    43Total
    
    
    177
    
    
    
    (22
    )
    
    
    220
    
    
    
    111
    
    
    
    43
 Effect of the rights issues
    Lattice-based option valuation model
  Summary of options outstanding
  WeightedWeighted
    
    
    average
    
    
    Aggregateaverage
    
    
    remaining
    
    
    intrinsicexercise price
    
    
    contractual
    
    
    valueper option
    
    
    life
    
    
    2009Options outstanding at 31 December 2009
    
    Number
    
    
    £ / A$
    
    
    Years
    
    
    US$mRio Tinto plc Share Savings Plan (£9 - £27)
    
    
    1,474,390
    
    
    
    20.90
    
    
    
    2.2
    
    
    
    31Rio Tinto Limited Share Savings Plan (A$12 - A$67)
    
    
    2,139,259
    
    
    
    48.17
    
    
    
    3.2
    
    
    
    51Rio Tinto plc Share Option Plan (£7 - £48)
    
    
    5,902,934
    
    
    
    17.60
    
    
    
    5.9
    
    
    
    161Rio Tinto Limited Share Option Plan (A$16 - A$119)
    
    
    2,439,297
    
    
    
    42.04
    
    
    
    6.4
    
    
    
    7311,955,880
    
    
    
    
    
    
    
    
    
    
    
    316
  Options exercisable at 31 December 2009Rio Tinto plc Share Option Plan (£7 - £23)
    
    
    3,523,088
    
    
    
    14.19
    
    
    
    4.2
    
    
    
    112Rio Tinto Limited Share Option Plan (A$16 - A$55)
    
    
    1,383,290
    
    
    
    36.66
    
    
    
    5.0
    
    
    
    474,906,378
    
    
    
    
    
    
    
    
    
    
    
    159
  A-68




---



##### 



Notes to the 2009 Financial statements
 49 Share based payments
 Share Savings Plans
  Risk-free
    
    
    Expected
    
    
    Dividend
    
    
    Forfeiture
    
    
    Cancellation
    
    
    Impliedinterest rate
    
    
    volatility
    
    
    yield
    
    
    rates
    
    
    rates (a)
    
    
    lifetime%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    YearsAwards made in 2009- Rio Tinto plc
    
    
    1.5-2.8
    
    
    
    47.0
    
    
    
    1.8
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    2.2-5.2- Rio Tinto Limited
    
    
    5.4-5.6
    
    
    
    38.0
    
    
    
    1.5
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    3.2-5.2
 
 (a)
    
    In addition to the regular cancellation rates above it is assumed that on the anniversary of date of grant a proportion of employees will cancel their awards in favour of new awards if the then share price is less than the exercise price. The proportion assumed is
a sliding scale from 20 per cent cancelling if the then share price equals the exercise price to 100 per cent cancelling if the then share
price is 75 per cent of the exercise price or less. Rio Tinto plc  Share Savings Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Options outstanding at 1 January
    
    
    1,661,006
    
    
    
    18.88
    
    
    
    1,718,565
    
    
    
    15.20
    
    
    
    1,812,679
    
    
    
    11.78Granted
    
    
    453,616
    
    
    
    22.20
    
    
    
    532,423
    
    
    
    22.98
    
    
    
    392,408
    
    
    
    25.17Forfeited
    
    
    (57,375
    )
    
    
    20.32
    
    
    
    (45,695
    )
    
    
    16.13
    
    
    
    (39,363
    )
    
    
    11.82Exercised
    
    
    (269,227
    )
    
    
    12.02
    
    
    
    (465,378
    )
    
    
    9.96
    
    
    
    (377,020
    )
    
    
    9.79Cancellations
    
    
    (160,546
    )
    
    
    23.93
    
    
    
    (66,597
    )
    
    
    22.10
    
    
    
    (43,669
    )
    
    
    16.63Expired
    
    
    (153,084
    )
    
    
    15.53
    
    
    
    (12,312
    )
    
    
    12.80
    
    
    
    (26,470
    )
    
    
    8.56Options outstanding at 31 December
    
    
    1,474,390
    
    
    
    20.90
    
    
    
    1,661,006
    
    
    
    18.88
    
    
    
    1,718,565
    
    
    
    15.20
 2009
    
    
    2008
    
    
    2007£
    
    
    £
    
    
    £Weighted average fair value, at date of grant, of options granted during the year (£)
    
    
    9.27
    
    
    
    1.55
    
    
    
    10.87Share price, at date of grant, of options granted during the year (£)
    
    
    29.72
    
    
    
    16.94
    
    
    
    34.13Weighted average share price at the time the options were exercised during the year (£)
    
    
    18.29
    
    
    
    39.45
    
    
    
    23.58
  Rio Tinto Limited  Share Savings Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    A$
    
    
    Number
    
    
    A$
    
    
    Number
    
    
    A$Options outstanding at 1 January
    
    
    1,901,417
    
    
    
    43.40
    
    
    
    2,634,607
    
    
    
    30.25
    
    
    
    2,748,026
    
    
    
    19.89Granted
    
    
    1,183,090
    
    
    
    48.73
    
    
    
    413,271
    
    
    
    66.08
    
    
    
    548,549
    
    
    
    63.16Forfeited
    
    
    (95,677
    )
    
    
    51.17
    
    
    
    (285,641
    )
    
    
    43.31
    
    
    
    (121,590
    )
    
    
    20.94Exercised
    
    
    (340,646
    )
    
    
    20.96
    
    
    
    (797,744
    )
    
    
    11.25
    
    
    
    (480,955
    )
    
    
    11.64Cancellations
    
    
    (374,471
    )
    
    
    58.39
    
    
    
    (46,602
    )
    
    
    64.05
    
    
    
    (39,126
    )
    
    
    25.65Expired
    
    
    (134,454
    )
    
    
    23.94
    
    
    
    (16,474
    )
    
    
    9.46
    
    
    
    (20,297
    )
    
    
    11.61Options outstanding at 31 December
    
    
    2,139,259
    
    
    
    48.17
    
    
    
    1,901,417
    
    
    
    43.40
    
    
    
    2,634,607
    
    
    
    30.25
 2009
    
    
    2008
    
    
    2007A$
    
    
    A$
    
    
    A$Weighted average fair value, at date of grant, of options granted during the year (A$)
    
    
    20.89
    
    
    
    5.15
    
    
    
    34.13Share price, at date of grant, of options granted during the year (A$)
    
    
    64.68
    
    
    
    52.06
    
    
    
    83.82Weighted average share price at the time the options were exercised during the year (A$)
    
    
    46.43
    
    
    
    101.10
    
    
    
    63.99
  A-69




---



##### 



Notes to the 2009 Financial statements
 49 Share based payments
 Share Option Plans
  Risk-free
    
    
    Expected
    
    
    Dividend
    
    
    Turnover
    
    
    Impliedinterest rate
    
    
    volatility
    
    
    yield
    
    
    rates
    
    
    lifetime%
    
    
    %
    
    
    %
    
    
    %
    
    
    YearsAwards made in 2009- Rio Tinto plc
    
    
    2.3
    
    
    
    46.0
    
    
    
    4.6
    
    
    
    3.0
    
    
    
    4.4- Rio Tinto Limited
    
    
    3.8
    
    
    
    36.0
    
    
    
    4.1
    
    
    
    3.0
    
    
    
    4.6
 
 Rio Tinto plc  Share Option Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Options outstanding at 1 January
    
    
    5,647,992
    
    
    
    17.25
    
    
    
    6,004,326
    
    
    
    15.49
    
    
    
    6,277,468
    
    
    
    13.49Granted
    
    
    1,284,749
    
    
    
    16.53
    
    
    
    332,519
    
    
    
    47.28
    
    
    
    951,455
    
    
    
    22.55Forfeited
    
    
    (112,917
    )
    
    
    17.30
    
    
    
    (152,870
    )
    
    
    26.59
    
    
    
    (51,096
    )
    
    
    20.43Exercised
    
    
    (916,890
    )
    
    
    14.03
    
    
    
    (535,983
    )
    
    
    13.47
    
    
    
    (1,173,501
    )
    
    
    10.33Options outstanding at 31 December
    
    
    5,902,934
    
    
    
    17.60
    
    
    
    5,647,992
    
    
    
    17.25
    
    
    
    6,004,326
    
    
    
    15.49
 2009
    
    
    2008
    
    
    2007£
    
    
    £
    
    
    £Weighted average fair value, at date of grant, of options granted during the year (£)
    
    
    5.49
    
    
    
    17.04
    
    
    
    5.16Weighted average share price, at date of grant, of options granted during the year (£)
    
    
    17.44
    
    
    
    46.21
    
    
    
    22.70Weighted average share price at the time the options were exercised during the year (£)
    
    
    26.89
    
    
    
    42.26
    
    
    
    32.43
   Rio Tinto Limited  Share Option Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    A$
    
    
    Number
    
    
    A$
    
    
    Number
    
    
    A$Options outstanding at 1 January
    
    
    2,711,678
    
    
    
    38.82
    
    
    
    3,351,754
    
    
    
    34.73
    
    
    
    3,540,588
    
    
    
    27.42Granted
    
    
    540,422
    
    
    
    33.45
    
    
    
    63,633
    
    
    
    118.07
    
    
    
    568,638
    
    
    
    59.02Forfeited
    
    
    (43,559
    )
    
    
    40.24
    
    
    
    (45,231
    )
    
    
    80.12
    
    
    
    (20,504
    )
    
    
    55.46Exercised
    
    
    (769,244
    )
    
    
    24.73
    
    
    
    (658,478
    )
    
    
    22.83
    
    
    
    (736,968
    )
    
    
    15.77Options outstanding at 31 December
    
    
    2,439,297
    
    
    
    42.04
    
    
    
    2,711,678
    
    
    
    38.82
    
    
    
    3,351,754
    
    
    
    34.73
 2009
    
    
    2008
    
    
    2007A$
    
    
    A$
    
    
    A$Weighted average fair value, at date of grant, of options granted during the year (A$)
    
    
    13.35
    
    
    
    44.04
    
    
    
    14.37Weighted average share price, at date of grant, for options granted during the year (A$)
    
    
    40.03
    
    
    
    103.48
    
    
    
    59.60Weighted average share price at the time the options were exercised during the year (A$)
    
    
    54.35
    
    
    
    108.92
    
    
    
    80.48
   Share Ownership Plan
  A-70




---



##### 



Notes to the 2009 Financial statements
 49 Share based payments
 Mining Companies Comparative Plan
   Rio Tinto plc  Mining Companies Comparative Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averagefair value
    
    
    
    
    
    
    fair value
    
    
    
    
    
    
    fair valueat grant
    
    
    
    
    
    
    at grant
    
    
    
    
    
    
    at grantdate
    
    
    
    
    
    
    date
    
    
    
    
    
    
    date2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Non vested shares at 1 January
    
    
    3,148,648
    
    
    
    12.21
    
    
    
    3,847,057
    
    
    
    7.11
    
    
    
    3,362,011
    
    
    
    6.08Awarded
    
    
    191,887
    
    
    
    13.56
    
    
    
    471,804
    
    
    
    39.71
    
    
    
    871,437
    
    
    
    10.41Forfeited
    
    
    (31,116
    )
    
    
    16.19
    
    
    
    (173,640
    )
    
    
    13.43
    
    
    
    (54,920
    )
    
    
    8.59Failed performance conditions
    
    
    (145,215
    )
    
    
    5.81
    
    
    
    (534,881
    )
    
    
    5.33
    
    
    
    (268,315
    )
    
    
    5.17Vested
    
    
    (840,023
    )
    
    
    5.81
    
    
    
    (461,692
    )
    
    
    5.33
    
    
    
    (63,156
    )
    
    
    5.17Non-vested shares at 31 December
    
    
    2,324,181
    
    
    
    14.98
    
    
    
    3,148,648
    
    
    
    12.21
    
    
    
    3,847,057
    
    
    
    7.11Weighted average share price at date of vesting (£)
    
    
    
    
    
    
    16.13
    
    
    
    
    
    
    
    45.38
    
    
    
    
    
    
    
    23.12
 2009
    
    
    2008
    
    
    2007£000
    
    
    £000
    
    
    £000Total fair value of shares issued in settlement of awards vested during the year
    
    
    4,801
    
    
    
    6,486
    
    
    
    457Total cash payments made in settlement of shares vested during the year
    
    
    9,236
    
    
    
    14,628
    
    
    
    1,003
 2009
    
    
    2008
    
    
    2007Total number of shares issued in settlement of awards vested during the year
    
    
    292,719
    
    
    
    141,146
    
    
    
    19,774
  Rio Tinto Limited  Mining Companies Comparative Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averagefair value
    
    
    
    
    
    
    fair value
    
    
    
    
    
    
    fair valueat grant
    
    
    
    
    
    
    at grant
    
    
    
    
    
    
    at grantdate
    
    
    
    
    
    
    date
    
    
    
    
    
    
    date2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    A$
    
    
    Number
    
    
    A$
    
    
    Number
    
    
    A$Non-vested shares at 1 January
    
    
    2,162,867
    
    
    
    26.97
    
    
    
    2,674,827
    
    
    
    19.03
    
    
    
    2,296,328
    
    
    
    15.99Awarded
    
    
    32,284
    
    
    
    32.74
    
    
    
    209,521
    
    
    
    88.42
    
    
    
    645,469
    
    
    
    28.84Forfeited
    
    
    (36,541
    )
    
    
    35.13
    
    
    
    (40,807
    )
    
    
    45.31
    
    
    
    (48,166
    )
    
    
    25.90Failed performance conditions
    
    
    (87,442
    )
    
    
    15.03
    
    
    
    (384,978
    )
    
    
    13.58
    
    
    
    (180,418
    )
    
    
    14.46Vested
    
    
    (555,525
    )
    
    
    15.03
    
    
    
    (295,696
    )
    
    
    13.58
    
    
    
    (38,386
    )
    
    
    14.53Non-vested shares at 31 December
    
    
    1,515,643
    
    
    
    31.97
    
    
    
    2,162,867
    
    
    
    26.97
    
    
    
    2,674,827
    
    
    
    19.03Weighted average share price at date of vesting (A$)
    
    
    
    
    
    
    39.80
    
    
    
    
    
    
    
    108.13
    
    
    
    
    
    
    
    61.48
 2009
    
    
    2008
    
    
    2007A$000
    
    
    A$000
    
    
    A$000Total fair value of shares issued in settlement of awards vested during the year
    
    
    7,261
    
    
    
    14,706
    
    
    
    879Total cash payments made in settlement of shares vested during the year
    
    
    17,088
    
    
    
    19,217
    
    
    
    1,604Total cash payments made in settlement of shares vested during previous years
    
    
    
    
    
    
    141
    
    
    
    
 2009
    
    
    2008
    
    
    2007Total number of shares issued in settlement of awards vested during the year
    
    
    175,916
    
    
    
    129,845
    
    
    
    13,648
  A-71




---



##### 



Notes
to the 2009 Financial statements
 49 Share based payments
 Management Share Plan
   Rio Tinto plc  Management Share Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averagefair value
    
    
    
    
    
    
    fair value
    
    
    
    
    
    
    fair valueat grant
    
    
    
    
    
    
    at grant
    
    
    
    
    
    
    at grantdate
    
    
    
    
    
    
    date
    
    
    
    
    
    
    date2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Non-vested awards at 1 January
    
    
    862,850
    
    
    
    36.89
    
    
    
    416,673
    
    
    
    24.95
    
    
    
    
    
    
    
    Awarded
    
    
    1,593,271
    
    
    
    17.84
    
    
    
    533,569
    
    
    
    45.56
    
    
    
    442,644
    
    
    
    24.85Forfeited
    
    
    (196,816
    )
    
    
    25.77
    
    
    
    (57,603
    )
    
    
    33.30
    
    
    
    (23,462
    )
    
    
    23.41Vested
    
    
    (127,497
    )
    
    
    31.50
    
    
    
    (29,789
    )
    
    
    32.15
    
    
    
    (2,509
    )
    
    
    22.43Non-vested awards at 31 December
    
    
    2,131,808
    
    
    
    24.00
    
    
    
    862,850
    
    
    
    36.89
    
    
    
    416,673
    
    
    
    24.95
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageshare price
    
    
    
    
    
    
    share price
    
    
    
    
    
    
    share price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    £
    
    
    Number
    
    
    £
    
    
    Number
    
    
    £Shares issued in respect of vested awards during the year
    
    
    127,497
    
    
    
    22.77
    
    
    
    4,605
    
    
    
    40.19
    
    
    
    2,508
    
    
    
    36.14
   Rio Tinto Limited  Management Share Plan
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averagefair value
    
    
    
    
    
    
    fair value
    
    
    
    
    
    
    fair valueat grant
    
    
    
    
    
    
    at grant
    
    
    
    
    
    
    at grantdate
    
    
    
    
    
    
    date
    
    
    
    
    
    
    date2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    A$
    
    
    Number
    
    
    A$
    
    
    Number
    
    
    A$Non-vested awards at 1 January
    
    
    511,643
    
    
    
    84.06
    
    
    
    328,288
    
    
    
    67.65
    
    
    
    
    
    
    
    Awarded
    
    
    735,282
    
    
    
    43.30
    
    
    
    222,542
    
    
    
    106.87
    
    
    
    342,045
    
    
    
    67.45Forfeited
    
    
    (119,565
    )
    
    
    65.25
    
    
    
    (35,123
    )
    
    
    77.18
    
    
    
    (12,072
    )
    
    
    62.80Vested
    
    
    (36,557
    )
    
    
    71.77
    
    
    
    (4,064
    )
    
    
    67.51
    
    
    
    (1,685
    )
    
    
    61.83Non-vested awards at 31 December
    
    
    1,090,803
    
    
    
    59.06
    
    
    
    511,643
    
    
    
    84.06
    
    
    
    328,288
    
    
    
    67.65
 Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageshare price
    
    
    
    
    
    
    share price
    
    
    
    
    
    
    share price2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007
    
    
    2007Number
    
    
    A$
    
    
    Number
    
    
    A$
    
    
    Number
    
    
    A$Shares issued in respect of vested awards during the year
    
    
    36,557
    
    
    
    50.42
    
    
    
    3,503
    
    
    
    95.27
    
    
    
    1,685
    
    
    
    77.83
   A-72




---



##### 



Notes to the 2009 Financial statements
 49 Share based payments
 Bonus Deferral Plan
   Rio Tinto plc  Bonus Deferral Plan
 Weightedaveragefair valueat grantdate2009
    
    
    2009Number
    
    
    £Non-vested awards at 1 January
    
    
    
    
    
    
    Awarded
    
    
    536,149
    
    
    
    17.32Forfeited
    
    
    (4,907
    )
    
    
    17.32Vested
    
    
    (43,329
    )
    
    
    17.32Non-vested awards at 31 December
    
    
    487,913
    
    
    
    17.32
 Weightedaverageshare priceat grantdate2009
    
    
    2009Number
    
    
    £Shares issued in respect of vested awards during the year
    
    
    9,171
    
    
    
    29.75
  Rio
Tinto Limited  Bonus Deferral Plan
 Weightedaveragefair valueat grantdate2009
    
    
    2009Number
    
    
    A$Non-vested awards at 1 January
    
    
    
    
    
    
    Awarded
    
    
    278,405
    
    
    
    41.75Forfeited
    
    
    (13,460
    )
    
    
    41.75Vested
    
    
    (13,006
    )
    
    
    41.75Non-vested awards at 31 December
    
    
    251,939
    
    
    
    41.75
 Weightedaverageshare priceat grantdate2009
    
    
    2009Number
    
    
    A$Shares issued in respect of vested awards during the year
    
    
    9,714
    
    
    
    53.13
 A-73




---



##### 



Notes to the 2009 Financial statements
 
 50
    
    Post retirement benefits
 Description of plansThe Group operates a number of pension and post retirement healthcare plans around the world. Some of these plans are defined contribution
and some are defined benefit, with assets held in separate trusts, foundations and similar entities. Valuations of these plans are produced and
updated annually to 31 December by qualified actuaries. Plans that were previously sponsored by the Alcan Packaging business were
previously excluded from this note and reflected in the value of the assets held for sale. Any plans that are not now expected to be sold with these
businesses are now reflected in this note rather than within Assets held for sale.Rio Tinto has a number of retirement plans which, within the same legal arrangement, have sections providing benefits on a defined benefit basis
and sections providing benefits on a defined contribution basis. In prior years these arrangements were presented as a defined benefit plan
only, although they had characteristics of both types of plan. Those sections providing benefits on a defined contribution basis are now presented
as defined contribution plans. The comparative information in all of the tables in this note has been adjusted to conform to the current year
presentation. The comparative statements of financial position, income statements and statements of comprehensive income were not
affected by this change.Pension plansThe majority of the Groups pension obligations are in Canada, the UK, the US, Switzerland and the Eurozone. There are some defined benefit
obligations in Australia but the retirement arrangements there are predominantly defined contribution. In general the Group has a policy of
moving towards defined contribution provision.There are a number of pension arrangements in the UK. The defined benefit sections of these arrangements are linked to final pay and are closed
to new members, with new employees being admitted to defined contribution sections.In Australia, the main arrangements are principally defined contribution in nature but there are sections providing defined benefits
linked to final pay, typically paid in lump sum form.A number of defined benefit pension plans are sponsored by the US and Canadian entities. The main plans are two Canadian plans for
salaried and bargaining employees. Benefits for salaried staff are generally linked to final average pay, while benefits for bargaining
employees are reviewed in negotiation with unions.In Europe, there are defined benefit plans in Switzerland, the Netherlands, Germany and France. The largest single plan is in
Switzerland and provides benefits linked to final average pay.The Group also operates a number of unfunded defined benefit plans, which are included in the figures below.Post retirement healthcare plansCertain subsidiaries of the Group, mainly in the US and Canada, provide health and life insurance benefits to retired employees and in
some cases to their beneficiaries and covered dependants. Eligibility for cover is dependent upon certain age and service criteria. These
arrangements are unfunded, and are included in the figures below.Plan assetsThe proportions of the total fair value of assets in the pension plans for each asset class at the balance sheet date were:
 2009
    
    
    2008 (a)Equities
    
    
    54.9
    %
    
    
    51.3
    %Bonds
    
    
    33.6
    %
    
    
    36.6
    %Property
    
    
    5.5
    %
    
    
    7.1
    %Other
    
    
    6.0
    %
    
    
    5.0
    %100.0
    %
    
    
    100.0
    %
 
 (a)
    
    Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans. Further details are provided above. The assets of the plans are generally managed on a day-to-day basis by external specialist fund managers. These managers may
invest in the Groups securities subject to limits imposed by the relevant fiduciary committees and local legislation. The approximate
total holding of Group securities within the plans is US$19 million (2008: $6 million).Main assumptions (rates per annum)The main assumptions for the valuations of the plans under IAS 19 are set out below. Information on the sensitivity of the results to the main
assumptions is set out in the sensitivity section on page A-77.
 Other(mainlyUK
    
    
    Australia(a)
    
    
    US
    
    
    Canada
    
    
    Eurozone
    
    
    Switzerland
    
    
    Africa)(b)| | | | | | |At 31 December 2009Rate of increase in salaries
    
    
    5.0
    %
    
    
    4.1
    %
    
    
    4.0
    %
    
    
    3.5
    %
    
    
    2.4
    %
    
    
    2.7
    %
    
    
    7.7
    %Rate of increase in pensions
    
    
    3.4
    %
    
    
    2.4
    %
    
    
    
    
    
    
    0.8
    %
    
    
    1.5
    %
    
    
    
    
    
    
    5.7
    %Discount rate
    
    
    5.5
    %
    
    
    4.8
    %
    
    
    5.9
    %
    
    
    6.5
    %
    
    
    5.2
    %
    
    
    2.9
    %
    
    
    8.9
    %Inflation
    
    
    3.5
    %
    
    
    2.4
    %
    
    
    2.5
    %
    
    
    2.3
    %
    
    
    2.1
    %
    
    
    1.5
    %
    
    
    5.7
    %At 31 December 2008Rate of increase in salaries
    
    
    4.4
    %
    
    
    3.9
    %
    
    
    3.0
    %
    
    
    2.7
    %
    
    
    2.4
    %
    
    
    2.7
    %
    
    
    6.2
    %Rate of increase in pensions
    
    
    2.7
    %
    
    
    1.5
    %
    
    
    
    
    
    
    0.4
    %
    
    
    1.6
    %
    
    
    
    
    
    
    4.2
    %Discount rate
    
    
    6.3
    %
    
    
    3.3
    %
    
    
    6.1
    %
    
    
    7.4
    %
    
    
    5.6
    %
    
    
    3.3
    %
    
    
    7.3
    %Inflation
    
    
    2.8
    %
    
    
    2.0
    %
    
    
    1.5
    %
    
    
    1.4
    %
    
    
    1.8
    %
    
    
    1.5
    %
    
    
    4.2
    %
 
 (a)
    
    The discount rate shown for Australia is after tax.(b)
    
    The assumptions vary by location for the Other plans. Assumptions shown are for Southern Africa. The main financial assumptions used for the healthcare plans,
which are predominantly in the US and Canada, were: discount rate: 6.0 per cent (2008: 6.5 per cent), medical trend rate: 7.5 per cent reducing to 5.1 per cent by the year 2015 broadly on a straight line basis (2008: 7.0 per cent,
reducing to 5.0 per cent by the year 2015), claims costs based on individual company experience.For both the pension and healthcare arrangements the post retirement mortality assumptions allow for future improvements in longevity.
The mortality tables used imply that a man aged 60 at the balance sheet date has a weighted average expected future lifetime of 24 years
(2008: 24 years) and that a man aged 60 in 2029 would have a weighted average expected future lifetime of 26 years (2008: 26 years).
 A-74




---



##### 



Notes to the 2009 Financial statements50
    
    Post retirement benefitscontinued
 Other(mainlyUK
    
    
    Australia
    
    
    US
    
    
    Canada
    
    
    Eurozone
    
    
    Switzerland
    
    
    Africa)(a)Long term rate of return expected at 1 January 2009Equities
    
    
    7.4
    %
    
    
    7.0
    %
    
    
    7.6
    %
    
    
    7.2
    %
    
    
    7.4
    %
    
    
    6.5
    %
    
    
    11.1
    %Bonds
    
    
    4.5
    %
    
    
    3.9
    %
    
    
    4.0
    %
    
    
    5.2
    %
    
    
    3.8
    %
    
    
    3.1
    %
    
    
    7.1
    %Property
    
    
    5.5
    %
    
    
    5.0
    %
    
    
    5.1
    %
    
    
    5.2
    %
    
    
    5.4
    %
    
    
    4.5
    %
    
    
    9.1
    %Other
    
    
    3.6
    %
    
    
    2.4
    %
    
    
    2.3
    %
    
    
    2.2
    %
    
    
    2.5
    %
    
    
    2.4
    %
    
    
    5.0
    %Long term rate of return expected at 1 January 2008Equities
    
    
    7.7
    %
    
    
    9.1
    %
    
    
    7.7
    %
    
    
    7.4
    %
    
    
    7.7
    %
    
    
    6.6
    %
    
    
    11.4
    %Bonds
    
    
    4.9
    %
    
    
    5.9
    %
    
    
    5.0
    %
    
    
    4.4
    %
    
    
    4.5
    %
    
    
    3.4
    %
    
    
    7.9
    %Property
    
    
    6.0
    %
    
    
    7.2
    %
    
    
    6.0
    %
    
    
    5.7
    %
    
    
    6.0
    %
    
    
    4.9
    %
    
    
    9.7
    %Other
    
    
    4.2
    %
    
    
    3.7
    %
    
    
    3.2
    %
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    2.3
    %
    
    
    6.3
    %
 
 (a)
    
    The assumptions vary by location for the Other plans. Assumptions shown are for Southern Africa. The expected rate of return on pension plan assets is determined as managements best estimate of the long term returns of the major
asset classes  equities, bonds, property and other  weighted by the allocation of assets among the categories at the
measurement date. The expected rate of return is calculated using geometric averaging. The expected rates of return shown
have been reduced to allow for plan expenses including, where appropriate, taxes incurred within pension plans on investment returns.
Based on the assumptions made and the distribution of assets the weighted average expected return on assets as at 1 January 2009 was
5.9 per cent (2008: 6.4 per cent) and is expected to be 6.4 per cent as at 1 January 2010.The sources used to determine managements best estimate of long term returns are numerous and include country-specific bond
yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country-specific
inflation and investment market expectations derived from market data and analysts or governments expectations as applicable.Total expense recognised in the income statement
 2009
    
    
    2008
    
    
    2007Pension
    
    
    Other
    
    
    Total
    
    
    Total
    
    
    Totalbenefits
    
    
    benefits
    
    
    US$m
    
    
    US$m
    
    
    US$mCurrent
employer service cost for defined benefit plans
    
    
    (178
    )
    
    
    (15
    )
    
    
    (193
    )
    
    
    (285
    )
    
    
    (251
    )Interest cost
    
    
    (771
    )
    
    
    (55
    )
    
    
    (826
    )
    
    
    (882
    )
    
    
    (402
    )Expected return on assets
    
    
    581
    
    
    
    
    
    
    
    581
    
    
    
    857
    
    
    
    436Past service cost
    
    
    (15
    )
    
    
    4
    
    
    
    (11
    )
    
    
    (3
    )
    
    
    17Gains on curtailment and settlement
    
    
    72
    
    
    
    52
    
    
    
    124
    
    
    
    5
    
    
    
    Total defined benefit expense
    
    
    (311
    )
    
    
    (14
    )
    
    
    (325
    )
    
    
    (308
    )
    
    
    (200
    )Current employer service cost for Defined Contribution and Industry-wide plans
    
    
    (199
    )
    
    
    
    
    
    
    (199
    )
    
    
    (194
    )
    
    
    (40
    )Total expense recognised in the income statement
    
    
    (510
    )
    
    
    (14
    )
    
    
    (524
    )
    
    
    (502
    )
    
    
    (240
    )
 The above expense amounts are included as an employee cost within net operating costs. In 2009, US$61 million (pre-tax) of curtailment and
settlement gains relating to the sale of businesses have been excluded from Underlying earnings (2008 and 2007: nil).Total amount recognised in other comprehensive income before tax
 2009
    
    
    2008
    
    
    2007US$m
    
    
    US$m
    
    
    US$mActuarial losses
    
    
    (919
    )
    
    
    (1,666
    )
    
    
    141(Loss)/gain on currency translation on plans using US dollar functional currency
    
    
    (70
    )
    
    
    321
    
    
    
    Gain on application of asset limit
    
    
    19
    
    
    
    26
    
    
    
    Total loss recognised in other comprehensive income (a)
    
    
    (970
    )
    
    
    (1,319
    )
    
    
    141Cumulative amount recognised in other comprehensive income at 31 December
    
    
    (1,800
    )
    
    
    (830
    )
    
    
    489
 
 (a)
    
    Actuarial loss includes US$126 million loss related to equity accounted units (2008: US$5 million loss; 2007: US$4 million loss). (Deficits)/surpluses in the plansThe following amounts were measured in accordance with IAS 19 at 31 December:
 2009
    
    
    2008(a)
    
    
    2007(a)
    
    
    2006(a)
    
    
    2005(a)Pension
    
    
    Other
    
    
    Total
    
    
    Total
    
    
    Total
    
    
    Total
    
    
    Totalbenefits
    
    
    benefits
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$m
    
    
    US$mTotal fair value of plan assets
    
    
    12,406
    
    
    
    1
    
    
    
    12,407
    
    
    
    9,306
    
    
    
    14,350
    
    
    
    4,656
    
    
    
    4,069Present value of obligations  funded
    
    
    (15,138
    )
    
    
    (10
    )
    
    
    (15,148
    )
    
    
    (11,044
    )
    
    
    (14,822
    )
    
    
    (4,472
    )
    
    
    (4,269
    )Present value of obligations  unfunded
    
    
    (1,071
    )
    
    
    (1,314
    )
    
    
    (2,385
    )
    
    
    (1,784
    )
    
    
    (2,089
    )
    
    
    (597
    )
    
    
    (596
    )Present value of obligations  total
    
    
    (16,209
    )
    
    
    (1,324
    )
    
    
    (17,533
    )
    
    
    (12,828
    )
    
    
    (16,911
    )
    
    
    (5,069
    )
    
    
    (4,865
    )Unrecognised past service cost
    
    
    
    
    
    
    (7
    )
    
    
    (7
    )
    
    
    (12
    )
    
    
    (2
    )
    
    
    3
    
    
    
    Effect of asset limit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (45
    )
    
    
    
    
    
    
    Aggregate (deficit) to be shown in the
statement of financial position
    
    
    (3,803
    )
    
    
    (1,330
    )
    
    
    (5,133
    )
    
    
    (3,553
    )
    
    
    (2,608
    )
    
    
    (410
    )
    
    
    (796
    )Comprising:- Deficits
    
    
    (3,820
    )
    
    
    (1,330
    )
    
    
    (5,150
    )
    
    
    (3,713
    )
    
    
    (3,313
    )
    
    
    (770
    )
    
    
    (996
    )- Surpluses
    
    
    17
    
    
    
    
    
    
    
    17
    
    
    
    160
    
    
    
    705
    
    
    
    360
    
    
    
    200Net (deficits)/surpluses on pension plans
    
    
    (3,803
    )
    
    
    
    
    
    
    (3,803
    )
    
    
    (2,648
    )
    
    
    (1,519
    )
    
    
    48
    
    
    
    (324
    )Unfunded post retirement healthcare obligation
    
    
    
    
    
    
    (1,330
    )
    
    
    (1,330
    )
    
    
    (905
    )
    
    
    (1,089
    )
    
    
    (458
    )
    
    
    (472
    )
 
 (a)
    
    Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans.
Further details are provided on page A-74. The surplus amounts shown above are included in the statement of financial position as Trade and other receivables. See note 17.
Deficits are shown in the statement of financial position as Post retirement benefits. See note 27.
 A-75




---



##### 



Notes to the 2009 Financial statements
 50
    
    Post retirement benefitscontinuedContributions to plans
Contributions to defined benefit pension plans during 2009 totalled US$560 million (2008: US$421 million; 2007: US$90 million). Contributions of
US$190 million (2008: US$184 million; 2007: US$146 million) were made to defined contribution arrangements and US$9 million (2008: US$10
million; 2007: US$10 million) to industry-wide plans; these are charged against profits and are included in the figures for defined contribution current
employer service costs shown above.Contributions for other benefits totalled US$46 million (2008: US$53 million; 2007: US$30 million).Contributions to defined benefit pension plans for 2010 are estimated to be around US$200 million higher than for 2009. The increase relates to UK,
Canada and the US where the impact of the global financial crisis is now included in the funding valuations. Furthermore, the inclusion of plans which
were previously classified within Assets and liabilities held for sale contributed to the increase. Healthcare plans are generally unfunded and
contributions for future years will be equal to benefit payments and therefore cannot be predetermined.Movements in the present value of the defined benefit
obligation and in the fair value of assets

The amounts shown below include, where appropriate, 100 per cent of the costs, contributions, gains and losses in respect of
employees who participate in the plans and who are employed in operations that are proportionally consolidated or equity
accounted. Consequently, the costs, contributions, gains and losses do not correspond directly to the amounts disclosed above in
respect of the Group. Defined contribution plans and industry-wide plans are excluded from the movements below.
 2009
    
    
    2008(a)Pension
    
    
    Other
    
    
    Total
    
    
    Totalbenefits
    
    
    benefits
    
    
    US$m
    
    
    US$mChange in present value of obligation:Present value of obligation at start of the year
    
    
    (11,935
    )
    
    
    (893
    )
    
    
    (12,828
    )
    
    
    (16,911
    )Current employer service cost
    
    
    (189
    )
    
    
    (15
    )
    
    
    (204
    )
    
    
    (285
    )Interest cost
    
    
    (771
    )
    
    
    (55
    )
    
    
    (826
    )
    
    
    (882
    )Contributions by plan participants
    
    
    (119
    )
    
    
    (2
    )
    
    
    (121
    )
    
    
    (93
    )Experience (loss)/gain
    
    
    (155
    )
    
    
    16
    
    
    
    (139
    )
    
    
    (37
    )Changes in actuarial assumptions (loss)/gain
    
    
    (1,601
    )
    
    
    (70
    )
    
    
    (1,671
    )
    
    
    1,684Benefits paid
    
    
    903
    
    
    
    48
    
    
    
    951
    
    
    
    1,014Previously in Assets held for sale (b)
    
    
    (1,291
    )
    
    
    (365
    )
    
    
    (1,656
    )
    
    
    Inclusion of arrangements
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    (3
    )No longer consolidated
    
    
    
    
    
    
    21
    
    
    
    21
    
    
    
    Past service cost
    
    
    (15
    )
    
    
    4
    
    
    
    (11
    )
    
    
    8Curtailments
    
    
    48
    
    
    
    32
    
    
    
    80
    
    
    
    6Settlements
    
    
    161
    
    
    
    20
    
    
    
    181
    
    
    
    28Currency exchange rate (loss)/gain
    
    
    (1,245
    )
    
    
    (62
    )
    
    
    (1,307
    )
    
    
    2,643Present value of obligation at end of the year
    
    
    (16,209
    )
    
    
    (1,324
    )
    
    
    (17,533
    )
    
    
    (12,828
    )
 Gains and losses on obligations
    
    2009
    
    
    2008(a)
    
    
    2007(a)
    
    
    2006(a)
    
    
    2005(a)Experience
(losses)/gains: (i.e. variances between the estimate of obligations and the subsequent outcome)
    
    
    (139
    )
    
    
    (37
    )
    
    
    (41
    )
    
    
    (7
    )
    
    
    246As a percentage of the present value of the year end obligations
    
    
    (1
    )%
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    6
    %Change in assumptions (loss)/gain (US$m)
    
    
    (1,671
    )
    
    
    1,684
    
    
    
    315
    
    
    
    124
    
    
    
    (180
    )
 (a)
    
    Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined contribution
basis are now presented as defined contribution plans. Further
details are provided on page A-74.(b)
    
    Plans that were previously sponsored by the Rio Tinto Alcan Packaging business were previously excluded from this note and reflected in the
value of the assets and liabilities held for sale. Any plans that are not now expected to be sold with these businesses are now reflected in this note
rather than within Assets held for sale.
 2009
    
    
    2008(a)Pension
    
    
    Other
    
    
    Total
    
    
    Totalbenefits
    
    
    benefits
    
    
    US$m
    
    
    US$mChange in plan assets:Fair value of plan assets at the start of the year
    
    
    
    
    
    
    9,306
    
    
    
    
    
    
    
    9,306
    
    
    
    14,350Expected return on plan assets
    
    
    
    
    
    
    581
    
    
    
    
    
    
    
    581
    
    
    
    857Actuarial gain/(loss) on plan assets
    
    
    
    
    
    
    891
    
    
    
    
    
    
    
    891
    
    
    
    (3,308
    )Contributions by plan participants
    
    
    
    
    
    
    119
    
    
    
    2
    
    
    
    121
    
    
    
    93Contributions by employer
    
    
    
    
    
    
    581
    
    
    
    46
    
    
    
    627
    
    
    
    482Benefits paid
    
    
    
    
    
    
    (903
    )
    
    
    (48
    )
    
    
    (951
    )
    
    
    (1,014
    )Previously in Assets held for sale (b)
    
    
    
    
    
    
    881
    
    
    
    1
    
    
    
    882
    
    
    
    Inclusion of arrangements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Refunds of contributions
    
    
    
    
    
    
    (27
    )
    
    
    
    
    
    
    (27
    )
    
    
    Settlements
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )
    
    
    (29
    )Currency exchange rate gain/(loss)
    
    
    
    
    
    
    1,114
    
    
    
    
    
    
    
    1,114
    
    
    
    (2,133
    )Fair value of plan assets at the end of the year
    
    
    
    
    
    
    12,406
    
    
    
    1
    
    
    
    12,407
    
    
    
    9,306Actual return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,472
    
    
    
    (2,451
    )
 2009
    
    
    2008(a)
    
    
    2007(a)
    
    
    2006(a)
    
    
    2005(a)Difference between the expected and actual return on plan assets:Gain/(loss) (US$m)
    
    
    891
    
    
    
    (3,308
    )
    
    
    (129
    )
    
    
    256
    
    
    
    116As a percentage of year end plan assets
    
    
    7
    %
    
    
    (36
    %)
    
    
    (1
    %)
    
    
    5
    %
    
    
    3
    %
 (a)
    
    Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans. Further details are provided on page A-74.
 (b)
    
    Plans that were previously sponsored by the Rio Tinto Alcan Packaging business were previously excluded from this note and reflected in the
value of the assets and liabilities held for sale. Any plans that are not now expected to be sold with these businesses are now reflected in this note
rather than within Assets and liabilities held for sale.
 A-76




---



##### 



Notes to the 2005 Financial statements
 50
    
    Post retirement benefitscontinuedSensitivityThe values reported for the defined benefit pension obligations are sensitive to the actuarial assumptions used for projecting future benefit
payments and discounting those payments. The approximate sensitivities to the principal assumptions used to measure the
obligations are:
 Approximate decrease/(increase) in obligationsPensions
    
    OtherAssumption
    
    Change in assumption
    
    US$m
    
    US$mDiscount rate
    
    increase of 0.5 percentage points
    
    
    892
    
    
    
    70decrease of 0.5 percentage points
    
    
    (949
    )
    
    
    (74
    )Inflation
    
    increase of 0.5 percentage points
    
    
    (540
    )
    
    
    (51
    )decrease of 0.5 percentage points
    
    
    513
    
    
    
    43Salary increases
    
    increase of 0.5 percentage points
    
    
    (120
    )
    
    
    (2
    )decrease of 0.5 percentage points
    
    
    116
    
    
    
    2Demographic  allowance for future 
improvements in longevity
    
    participants assumed to have the mortality rates of
individuals who are one year older
    
    
    356
    
    
    
    27participants assumed to have the mortality rates of
individuals who are one year younger
    
    
    (356
    )
    
    
    (27
    )
 Post retirement healthcare  sensitivity to changes in assumptionsAn increase of one per cent in the assumed medical cost trend rates would increase the aggregate of the current service cost and interest
cost components of the post retirement healthcare expense by US$6 million (2008: US$8 million; 2007: US$5 million), and increase the benefit
obligation for these plans by US$98 million (2008:US$85 million; 2007: US$89 million). A decrease of one per cent in the assumed medical cost trend
rates would decrease the aggregate of the current service cost and interest cost components of the post retirement healthcare expense by
US$5 million (2008:US$7 million; 2007: US$5 million), and decrease the benefit obligation for these plans by US$83 million (2008: US$75 million;
2007: US$77 million).
 A-77




---



##### 



Notes to the 2009 Financial statements
 
 51
    
    Rio Tinto Financial information by business unit
Years ended 31 December    
US$ millions
 Rio Tintointerest
    
    
    Gross Revenue
    
    
    
    
    
    
    
    
    
    
    
    EBITDA (b)
    
    
    
    
    
    Net earnings(c)%
    
    2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007Iron OreHamersley (inc. HIsmelt®) (d)
    
    
    100.0
    
    
    
    8,874
    
    
    
    11,006
    
    
    
    6,155
    
    
    
    5,190
    
    
    
    7,038
    
    
    
    3,427
    
    
    
    3,283
    
    
    
    4,642
    
    
    
    2,151Robe River (e)
    
    
    53.0
    
    
    
    2,186
    
    
    
    2,728
    
    
    
    1,640
    
    
    
    1,422
    
    
    
    1,983
    
    
    
    991
    
    
    
    718
    
    
    
    1,062
    
    
    
    503Iron Ore Company of Canada
    
    
    58.7
    
    
    
    1,006
    
    
    
    2,065
    
    
    
    943
    
    
    
    344
    
    
    
    1,251
    
    
    
    298
    
    
    
    112
    
    
    
    443
    
    
    
    104Rio Tinto Brasil
    
    
    (f
    )
    
    
    30
    
    
    
    176
    
    
    
    61
    
    
    
    (15
    )
    
    
    73
    
    
    
    (1
    )
    
    
    (19
    )
    
    
    44
    
    
    
    (12
    )Dampier Salt
    
    
    68.4
    
    
    
    453
    
    
    
    377
    
    
    
    269
    
    
    
    203
    
    
    
    95
    
    
    
    51
    
    
    
    88
    
    
    
    40
    
    
    
    13Product group operations
    
    
    
    
    
    
    12,549
    
    
    
    16,352
    
    
    
    9,068
    
    
    
    7,144
    
    
    
    10,440
    
    
    
    4,766
    
    
    
    4,182
    
    
    
    6,231
    
    
    
    2,759Evaluation projects/other
    
    
    
    
    
    
    49
    
    
    
    175
    
    
    
    125
    
    
    
    (32
    )
    
    
    (228
    )
    
    
    (98
    )
    
    
    (56
    )
    
    
    (214
    )
    
    
    (95
    )12,598
    
    
    
    16,527
    
    
    
    9,193
    
    
    
    7,112
    
    
    
    10,212
    
    
    
    4,668
    
    
    
    4,126
    
    
    
    6,017
    
    
    
    2,664Aluminium
    
    
    (g
    )Product group operations
    
    
    
    
    
    
    11,992
    
    
    
    18,253
    
    
    
    6,150
    
    
    
    582
    
    
    
    4,023
    
    
    
    1,607
    
    
    
    (587
    )
    
    
    1,342
    
    
    
    1,073Evaluation projects/other
    
    
    
    
    
    
    46
    
    
    
    44
    
    
    
    50
    
    
    
    12
    
    
    
    (87
    )
    
    
    (28
    )
    
    
    9
    
    
    
    (71
    )
    
    
    (22
    )12,038
    
    
    
    18,297
    
    
    
    6,200
    
    
    
    594
    
    
    
    3,936
    
    
    
    1,579
    
    
    
    (578
    )
    
    
    1,271
    
    
    
    1,051CopperKennecott Utah Copper
    
    
    100.0
    
    
    
    2,368
    
    
    
    2,609
    
    
    
    3,539
    
    
    
    1,449
    
    
    
    1,587
    
    
    
    2,614
    
    
    
    818
    
    
    
    998
    
    
    
    1,649Escondida
    
    
    30.0
    
    
    
    2,039
    
    
    
    2,402
    
    
    
    3,103
    
    
    
    1,327
    
    
    
    1,464
    
    
    
    2,510
    
    
    
    748
    
    
    
    836
    
    
    
    1,525Grasberg joint venture
    
    
    (h
    )
    
    
    991
    
    
    
    53
    
    
    
    461
    
    
    
    706
    
    
    
    38
    
    
    
    296
    
    
    
    385
    
    
    
    4
    
    
    
    159Palabora
    
    
    57.7
    
    
    
    635
    
    
    
    560
    
    
    
    689
    
    
    
    123
    
    
    
    167
    
    
    
    202
    
    
    
    17
    
    
    
    49
    
    
    
    58Northparkes
    
    
    80.0
    
    
    
    173
    
    
    
    124
    
    
    
    371
    
    
    
    98
    
    
    
    (1
    )
    
    
    212
    
    
    
    53
    
    
    
    (12
    )
    
    
    137Product group operations
    
    
    
    
    
    
    6,206
    
    
    
    5,748
    
    
    
    8,163
    
    
    
    3,703
    
    
    
    3,255
    
    
    
    5,834
    
    
    
    2,021
    
    
    
    1,875
    
    
    
    3,528Evaluation projects/other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    (395
    )
    
    
    (200
    )
    
    
    (155
    )
    
    
    (278
    )
    
    
    (155
    )6,206
    
    
    
    5,748
    
    
    
    8,163
    
    
    
    3,474
    
    
    
    2,860
    
    
    
    5,634
    
    
    
    1,866
    
    
    
    1,597
    
    
    
    3,373EnergyUS Coal
    
    
    (i
    )
    
    
    1,813
    
    
    
    1,869
    
    
    
    1,560
    
    
    
    497
    
    
    
    397
    
    
    
    331
    
    
    
    257
    
    
    
    147
    
    
    
    132Rio Tinto Coal Australia
    
    
    (j
    )
    
    
    3,870
    
    
    
    5,142
    
    
    
    2,272
    
    
    
    1,799
    
    
    
    2,900
    
    
    
    510
    
    
    
    1,013
    
    
    
    1,721
    
    
    
    246Rössing
    
    
    68.6
    
    
    
    403
    
    
    
    548
    
    
    
    486
    
    
    
    83
    
    
    
    260
    
    
    
    235
    
    
    
    24
    
    
    
    101
    
    
    
    95Energy Resources of Australia
    
    
    68.4
    
    
    
    620
    
    
    
    418
    
    
    
    303
    
    
    
    358
    
    
    
    352
    
    
    
    135
    
    
    
    138
    
    
    
    141
    
    
    
    38Product group operations
    
    
    
    
    
    
    6,706
    
    
    
    7,977
    
    
    
    4,621
    
    
    
    2,737
    
    
    
    3,909
    
    
    
    1,211
    
    
    
    1,432
    
    
    
    2,110
    
    
    
    511Evaluation projects/other
    
    
    
    
    
    
    3
    
    
    
    41
    
    
    
    29
    
    
    
    (15
    )
    
    
    461
    
    
    
    (29
    )
    
    
    (12
    )
    
    
    471
    
    
    
    (13
    )6,709
    
    
    
    8,018
    
    
    
    4,650
    
    
    
    2,722
    
    
    
    4,370
    
    
    
    1,182
    
    
    
    1,420
    
    
    
    2,581
    
    
    
    498Diamonds & MineralsDiamonds
    
    
    (k
    )
    
    
    450
    
    
    
    840
    
    
    
    1,020
    
    
    
    (7
    )
    
    
    395
    
    
    
    539
    
    
    
    (68
    )
    
    
    137
    
    
    
    280Rio Tinto Iron and Titanium
    
    
    (l
    )
    
    
    1,284
    
    
    
    1,919
    
    
    
    1,673
    
    
    
    209
    
    
    
    755
    
    
    
    471
    
    
    
    (9
    )
    
    
    295
    
    
    
    164Rio Tinto Minerals
    
    
    (m
    )
    
    
    882
    
    
    
    1,061
    
    
    
    965
    
    
    
    187
    
    
    
    183
    
    
    
    176
    
    
    
    78
    
    
    
    86
    
    
    
    71Product group operations
    
    
    
    
    
    
    2,616
    
    
    
    3,820
    
    
    
    3,658
    
    
    
    389
    
    
    
    1,333
    
    
    
    1,186
    
    
    
    1
    
    
    
    518
    
    
    
    515Evaluation projects/other
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    115
    
    
    
    820
    
    
    
    (41
    )
    
    
    (46
    )
    
    
    799
    
    
    
    (44
    )
    
    
    (40
    )2,618
    
    
    
    3,820
    
    
    
    3,773
    
    
    
    1,209
    
    
    
    1,292
    
    
    
    1,140
    
    
    
    800
    
    
    
    474
    
    
    
    475Other Operations
    
    
    
    
    
    
    4,743
    
    
    
    7,378
    
    
    
    1,598
    
    
    
    (30
    )
    
    
    127
    
    
    
    327
    
    
    
    (188
    )
    
    
    (133
    )
    
    
    167Inter-segment transactions
    
    
    
    
    
    
    (876
    )
    
    
    (1,723
    )
    
    
    (59
    )
    
    
    (28
    )
    
    
    58
    
    
    
    
    
    
    
    (28
    )
    
    
    25
    
    
    
    Other items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (719
    )
    
    
    (378
    )
    
    
    (635
    )
    
    
    (547
    )
    
    
    (366
    )
    
    
    (540
    )Central exploration and evaluation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    (160
    )
    
    
    25
    
    
    
    5
    
    
    
    (133
    )
    
    
    20Net interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (578
    )
    
    
    (1,030
    )
    
    
    (265
    )Underlying earnings
    
    
    
    
    
    
    44,036
    
    
    
    58,065
    
    
    
    33,518
    
    
    
    14,312
    
    
    
    22,317
    
    
    
    13,920
    
    
    
    6,298
    
    
    
    10,303
    
    
    
    7,443Items excluded from Underlying earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159
    
    
    
    1,553
    
    
    
    (309
    )
    
    
    (1,426
    )
    
    
    (6,627
    )
    
    
    (131
    )Less share of equity accounted units sales revenue
    
    
    (2,211
    )
    
    
    (3,801
    )
    
    
    (3,818
    )Total
    
    
    
    
    
    
    41,825
    
    
    
    54,264
    
    
    
    29,700
    
    
    
    14,471
    
    
    
    23,870
    
    
    
    13,611
    
    
    
    4,872
    
    
    
    3,676
    
    
    
    7,312Depreciation and amortisation in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,427
    )
    
    
    (3,475
    )
    
    
    (2,115
    )Impairment charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,573
    )
    
    
    (8,030
    )
    
    
    (58
    )Depreciation and amortisation in equity accounted units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (440
    )
    
    
    (414
    )
    
    
    (310
    )Taxation and finance items in equity accounted units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (739
    )
    
    
    (718
    )
    
    
    (973
    )Profit before finance items and taxation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,292
    
    
    
    11,233
    
    
    
    10,155
 Refer to notes a) to m) on page A-79.
 A-78




---



##### 



51
    
    Rio Tinto Financial information by business unitcontinued
Years ended 31 December
 Depreciation &
    
    
    
    
    
    OperatingRio Tinto
    
    Capital expenditure (n)
    
    
    
    
    
    Amortisation
    
    
    
    
    
    assets (o)
    
    Employeesinterest
    
    2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2009
    
    2008
    
    2007%
    
    US$m
    
    US$m
    
    US$m
    
    US$m
    
    US$m
    
    US$m
    
    US$m
    
    US$m
    
    Number
    
    Number
    
    NumberIron OreHamersley (inc. HIsmelt®) (d)
    
    
    100.0
    
    
    
    1,337
    
    
    
    1,860
    
    
    
    1,597
    
    
    
    506
    
    
    
    466
    
    
    
    352
    
    
    
    7,530
    
    
    
    5,170
    
    
    
    6,556
    
    
    
    6,321
    
    
    
    4,786Robe River (e)
    
    
    53.0
    
    
    
    599
    
    
    
    683
    
    
    
    241
    
    
    
    140
    
    
    
    111
    
    
    
    104
    
    
    
    2,751
    
    
    
    1,622
    
    
    
    1,114
    
    
    
    1,011
    
    
    
    873Iron Ore Company of Canada
    
    
    58.7
    
    
    
    180
    
    
    
    256
    
    
    
    163
    
    
    
    86
    
    
    
    83
    
    
    
    78
    
    
    
    808
    
    
    
    482
    
    
    
    2,027
    
    
    
    2,094
    
    
    
    1,939Rio Tinto Brasil
    
    
    (f
    )
    
    
    11
    
    
    
    146
    
    
    
    30
    
    
    
    3
    
    
    
    14
    
    
    
    9
    
    
    
    5
    
    
    
    207
    
    
    
    666
    
    
    
    841
    
    
    
    657Dampier Salt
    
    
    68.4
    
    
    
    21
    
    
    
    27
    
    
    
    20
    
    
    
    18
    
    
    
    21
    
    
    
    21
    
    
    
    179
    
    
    
    154
    
    
    
    405
    
    
    
    394
    
    
    
    376Other
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    34
    
    
    
    10
    
    
    
    10
    
    
    
    3
    
    
    
    (10
    )
    
    
    (3
    )
    
    
    607
    
    
    
    448
    
    
    
    3752,148
    
    
    
    2,996
    
    
    
    2,085
    
    
    
    763
    
    
    
    705
    
    
    
    567
    
    
    
    11,263
    
    
    
    7,632
    
    
    
    11,375
    
    
    
    11,109
    
    
    
    9,006Aluminium
    
    
    (g
    )
    
    
    1,690
    
    
    
    2,417
    
    
    
    549
    
    
    
    1,551
    
    
    
    1,543
    
    
    
    564
    
    
    
    35,992
    
    
    
    34,735
    
    
    
    22,919
    
    
    
    24,634
    
    
    
    8,563CopperKennecott Utah Copper
    
    
    100.0
    
    
    
    176
    
    
    
    316
    
    
    
    282
    
    
    
    296
    
    
    
    246
    
    
    
    251
    
    
    
    1,533
    
    
    
    1,750
    
    
    
    1,878
    
    
    
    1,915
    
    
    
    1,854Escondida
    
    
    30.0
    
    
    
    213
    
    
    
    120
    
    
    
    170
    
    
    
    104
    
    
    
    98
    
    
    
    98
    
    
    
    1,399
    
    
    
    849
    
    
    
    997
    
    
    
    960
    
    
    
    876Grasberg joint venture
    
    
    (h
    )
    
    
    79
    
    
    
    32
    
    
    
    76
    
    
    
    47
    
    
    
    25
    
    
    
    24
    
    
    
    378
    
    
    
    426
    
    
    
    2,162
    
    
    
    2,185
    
    
    
    2,047Palabora
    
    
    57.7
    
    
    
    16
    
    
    
    40
    
    
    
    27
    
    
    
    67
    
    
    
    57
    
    
    
    41
    
    
    
    (2
    )
    
    
    117
    
    
    
    2,030
    
    
    
    2,116
    
    
    
    2,072Northparkes
    
    
    80.0
    
    
    
    17
    
    
    
    105
    
    
    
    55
    
    
    
    25
    
    
    
    15
    
    
    
    22
    
    
    
    301
    
    
    
    187
    
    
    
    186
    
    
    
    210
    
    
    
    208Other
    
    
    
    
    
    
    52
    
    
    
    191
    
    
    
    22
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    1,419
    
    
    
    894
    
    
    
    359
    
    
    
    143
    
    
    
    162553
    
    
    
    804
    
    
    
    632
    
    
    
    541
    
    
    
    442
    
    
    
    437
    
    
    
    5,028
    
    
    
    4,223
    
    
    
    7,612
    
    
    
    7,529
    
    
    
    7,219EnergyUS Coal
    
    
    (i
    )
    
    
    176
    
    
    
    204
    
    
    
    226
    
    
    
    99
    
    
    
    150
    
    
    
    131
    
    
    
    (89
    )
    
    
    1,090
    
    
    
    2,388
    
    
    
    2,477
    
    
    
    2,435Rio Tinto Coal Australia
    
    
    (j
    )
    
    
    456
    
    
    
    449
    
    
    
    226
    
    
    
    205
    
    
    
    194
    
    
    
    165
    
    
    
    2,040
    
    
    
    1,134
    
    
    
    3,289
    
    
    
    3,206
    
    
    
    2,832Rössing
    
    
    68.6
    
    
    
    24
    
    
    
    73
    
    
    
    57
    
    
    
    27
    
    
    
    20
    
    
    
    13
    
    
    
    324
    
    
    
    229
    
    
    
    1,415
    
    
    
    1,307
    
    
    
    1,175Energy Resources of Australia
    
    
    68.4
    
    
    
    30
    
    
    
    144
    
    
    
    80
    
    
    
    64
    
    
    
    51
    
    
    
    50
    
    
    
    263
    
    
    
    212
    
    
    
    521
    
    
    
    448
    
    
    
    365686
    
    
    
    870
    
    
    
    589
    
    
    
    395
    
    
    
    415
    
    
    
    359
    
    
    
    2,538
    
    
    
    2,665
    
    
    
    7,613
    
    
    
    7,438
    
    
    
    6,807Diamonds & MineralsDiamonds
    
    
    (k
    )
    
    
    250
    
    
    
    652
    
    
    
    525
    
    
    
    104
    
    
    
    175
    
    
    
    181
    
    
    
    1,293
    
    
    
    1,340
    
    
    
    1,040
    
    
    
    1,401
    
    
    
    1,291Rio
Tinto Iron and Titanium
    
    
    (l
    )
    
    
    247
    
    
    
    563
    
    
    
    494
    
    
    
    129
    
    
    
    118
    
    
    
    119
    
    
    
    2,626
    
    
    
    2,125
    
    
    
    4,121
    
    
    
    4,105
    
    
    
    3,854Rio Tinto Minerals
    
    
    (m
    )
    
    
    22
    
    
    
    63
    
    
    
    51
    
    
    
    57
    
    
    
    68
    
    
    
    61
    
    
    
    693
    
    
    
    792
    
    
    
    2,214
    
    
    
    2,580
    
    
    
    2,512Other
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    103
    
    
    
    64519
    
    
    
    1,283
    
    
    
    1,087
    
    
    
    290
    
    
    
    361
    
    
    
    361
    
    
    
    4,612
    
    
    
    4,287
    
    
    
    7,375
    
    
    
    8,189
    
    
    
    7,721Other Operations
    
    
    
    
    
    
    228
    
    
    
    458
    
    
    
    184
    
    
    
    216
    
    
    
    332
    
    
    
    80
    
    
    
    1,756
    
    
    
    3,375
    
    
    
    14,021
    
    
    
    14,901
    
    
    
    3,525Net assets held for sale
    
    
    (p
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,462
    
    
    
    3,204
    
    
    
    27,732
    
    
    
    28,386
    
    
    
    5,680Other items
    
    
    
    
    
    
    54
    
    
    
    151
    
    
    
    144
    
    
    
    111
    
    
    
    91
    
    
    
    57
    
    
    
    (1,959
    )
    
    
    (811
    )
    
    
    3,347
    
    
    
    3,599
    
    
    
    3,156Less: equity accounted units
    
    
    
    
    
    
    (522
    )
    
    
    (491
    )
    
    
    (302
    )
    
    
    (440
    )
    
    
    (414
    )
    
    
    (310
    )Total
    
    
    
    
    
    
    5,356
    
    
    
    8,488
    
    
    
    4,968
    
    
    
    3,427
    
    
    
    3,475
    
    
    
    2,115
    
    
    
    62,692
    
    
    
    59,310
    
    
    
    101,994
    
    
    
    105,785
    
    
    
    51,677Less: Net debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,861
    )
    
    
    (38,672
    )Total Rio Tinto shareholders equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,831
    
    
    
    20,638
    (a)
    
    Gross sales revenue includes 100 per cent of subsidiaries sales revenue and the Groups
share of the sales revenue of equity accounted units (after adjusting for intra-subsidiary/equity
accounted unit sales).(b)
    
    EBITDA of subsidiaries and the Groups share of EBITDA relating to equity accounted units
represents profit before: tax, net finance items, depreciation and amortisation.Underlying EBITDA excludes the same items that are excluded from Underlying earnings(c)
    
    Net earnings represent profit after tax for the year attributable to the shareholders of
the Rio Tinto Group. Earnings of subsidiaries are stated before finance items but after the amortisation of discount related to provisions. Earnings attributable to equity accounted
units include interest charges and amortisation of discount except that, from 2009 onwards, RBM earnings are before charging interest on third party debt. Earnings attributed
to business units do not include amounts that are excluded in arriving at Underlying earnings.(d)
    
    Includes Rio Tintos interests in Hamersley (100 per cent) and HIsmelt(R) (60 per cent).(e)
    
    The Group holds 65 per cent of Robe River Iron Associates, of which 30 per cent is held
through a 60 per cent owned subsidiary. The Groups net beneficial interest is, therefore, 53 per cent, net of amounts attributable to outside equity shareholders.(f)
    
    Rio Tinto completed the sale of its 100 per cent interest in the Corumbá mine, effective 18 September 2009.(g)
    
    Includes the Alcan group acquired in 2007, excluding Alcan Packaging which is shown as an
Asset held for sale, and excluding Alcan Engineered
Products which is shown as part of Other Operations, together with the aluminium businesses previously owned by Rio Tinto.(h)
    
    Under the terms of a joint venture agreement, Rio Tinto is entitled to 40 per cent of
additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998.(i)
    
    As a result of the IPO of Cloud Peak Energy Inc., on 20 November 2009, Rio Tinto now holds
a 48.3 per cent interest in the Antelope, Cordero Rojo and Spring Creek mines and a 24.1 percent interest in the Decker mine. These interests were formerly reported under Rio
Tinto Energy America but are now managed by Cloud Peak Energy. Rio Tinto completed the sale of its 100 per cent interest in the Jacobs Ranch mine on 1 October 2009. US Coal also includes the Groups 100 per cent interest in Colowyo mine.(j)
    
    Includes Rio Tintos 75.7 per cent interest in Coal and Allied, which is managed by Rio
Tinto Coal Australia, a 100 per cent subsidiary of Rio Tinto. The Group owns a 40 per cent interest in Bengalla and an 80 per cent interest in Mount Thorley through its investment in
Coal and Allied, giving a beneficial interest in those companies to the Group of 30.3 per cent and 60.6 per cent, respectively.(k)
    
    Diamonds includes Rio Tintos interests in Argyle (100 per cent), Diavik (60 per cent) and Murowa (77.8 per cent).(l)
    
    Includes Rio Tintos interests in Rio Tinto Fer et Titane (RTFT) (100 per cent), QMM (80
per cent) and Richards Bay Minerals (RBM) (attributable interest of 37 per cent). RBMs net earnings for 2009 onwards exclude interest charges on third party debt and its operating assets are shown before deducting net debt.(m)
    
    Includes Rio Tintos interests in Rio Tinto Borax (100 per cent) and Luzenac Talc (100 per cent).(n)
    
    Capital expenditure comprises the net cash outflow on purchases less disposals of
property, plant and equipment, capitalised evaluation costs and purchases less disposals of other intangible assets. The details provided include 100 per cent of subsidiaries capital
expenditure and Rio Tintos share of the capital expenditure of equity accounted units. Amounts relating to equity accounted units not specifically funded by Rio Tinto are deducted
before arriving at total capital expenditure for the Group. A-79




---



##### 



(o)
    
    Operating assets of subsidiaries comprise net assets excluding post retirement assets and
liabilities, net of tax, and are before deducting net debt. Operating assets are less outside shareholders interests, which are calculated by reference to the net assets of the
relevant companies (i.e. net of such companies debt). For equity accounted units, Rio Tintos net investment excluding post retirement assets and liabilities (net of tax), is shown.(p)
    
    Net assets held for sale include Alcan Packaging and other assets held for sale. A-80




---



##### 



Australian Corporations Act  summary of ASIC relief
       Directors report Remuneration report Directors report Directors report Remuneration report Remuneration report Remuneration report
 Directors report Remuneration report Remuneration report Directors report Remuneration report Remuneration report
 Remuneration report
     A-81




---



##### 



Report of Independent Registered Public Accounting Firm
 To the Boards of Directors and Shareholders of Rio Tinto plc and Rio Tinto Limited:
 Internal Control -
Integrated Framework
 Operating Segments, IAS 1, Presentation of Financial
Statements (revised) and Classification of Rights Issues.
   PricewaterhouseCoopers LLP
    
    
    
    PricewaterhouseCoopersLondon, United Kingdom
    
    
    
    Brisbane, Australia27 May 2010
    
    
    
    27 May 2010In respect of the Board of Directors and
    
    
    
    In respect of the Board of Directors andShareholders of Rio Tinto plc
    
    
    
    Shareholders of Rio Tinto Limited
 A-82




---



##### 



MINERA
ESCONDIDA LIMITADA
 
  A-83




---



##### 



MINERA ESCONDIDA LIMITADA
  Independent Auditors Report
  
  A-85Statements of Financial Position
  
  A-88Statements of Comprehensive Income
  
  A-90Statements of Changes in Members Equity
  
  A-91Statements of Cash Flows
  
  A-92Notes to the Financial Statements
  
  A-93ThUS$: Thousands of United States dollarsCLP$: Chilean pesos A-84




---



##### 



Independent Auditors Report
        A-85




---



##### 



TABLE OF CONTENTS
 PageStatements of Financial Position
    
    
    A-88Statements of Comprehensive Income
    
    
    A-90Statements of Changes in Members Equity
    
    
    A-91Statements of Cash Flows (direct method)
    
    
    A-92Notes to the Financial Statements1 Reporting entity
    
    
    A-932 Basis of preparation
    
    
    A-933 Significant accounting policies
    
    
    A-954 Transition to IFRS
    
    
    A-1095 Financial risk management
    
    
    A-1106 Determination of fair value
    
    
    A-1197 Cash and cash equivalents
    
    
    A-1208 Reconciliation of cash flows from operating activities
    
    
    A-1209 Financial instruments
    
    
    A-12110 Trade and other receivables
    
    
    A-12311 Balances and transactions with related companies
    
    
    A-12412 Inventories
    
    
    A-12713 Income taxes and deferred income taxes
    
    
    A-12714 Property, plant and equipment
    
    
    A-12815 Intangible assets
    
    
    A-13116 Current tax assets and liabilities
    
    
    A-13217 Other financial assets
    
    
    A-13218 Other assets
    
    
    A-13319 Trade and other payables
    
    
    A-13420 Interest bearing liabilities
    
    
    A-13421 Other financial liabilities
    
    
    A-13822 Provisions
    
    
    A-13923 Paid-in capital
    
    
    A-14024 Revenue
    
    
    A-14125 Other income
    
    
    A-14226 Cost of sales
    
    
    A-14227 Personnel remuneration and benefits
    
    
    A-14328 Other income (expense)
    
    
    A-14329 Finance expense
    
    
    A-14430 Contingencies
    
    
    A-14431 Commitments
    
    
    A-14432 Exploration and evaluation expenses
    
    
    A-145
  A-86




---



##### 



TABLE OF CONTENTS, continued
 Page33 Fair value change on derivatives
    
    
    A-14534 Leased assets
    
    
    A-14535 Subsequent events
    
    
    A-146
 A-87




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 As at December 31,
    
    As at December 31,
    
    As at January 1,2009
    
    2008
    
    2008Notes
    
    ThUS$
    
    ThUS$
    
    ThUS$AssetsCurrent assets:Cash and cash equivalents
    
    
    7
    
    
    
    289,775
    
    
    
    112,127
    
    
    
    26,941Other financial assets
    
    
    17
    
    
    
    126,281
    
    
    
    223,665
    
    
    
    85,187Trade and other receivables
    
    
    10
    
    
    
    1,328,021
    
    
    
    304,657
    
    
    
    1,007,455Due from related companies
    
    
    11
    
    
    
    73,403
    
    
    
    34,483
    
    
    
    29,889Inventories
    
    
    12
    
    
    
    1,074,788
    
    
    
    741,941
    
    
    
    433,290Current tax assets
    
    
    16
    
    
    
    77,270
    
    
    
    391,684
    
    
    
    18,161Other assets
    
    
    18
    
    
    
    14,711
    
    
    
    402,111
    
    
    
    72,713Total current assets
    
    
    
    
    
    
    2,984,249
    
    
    
    2,210,668
    
    
    
    1,673,636Non-current assets:Other financial assets
    
    
    17
    
    
    
    4,517
    
    
    
    87,971
    
    
    
    6,975Trade and other receivables
    
    
    10
    
    
    
    25,671
    
    
    
    11,909
    
    
    
    16,563Intangible assets
    
    
    15
    
    
    
    3,268
    
    
    
    3,540
    
    
    
    Property, plant and equipment
    
    
    14
    
    
    
    4,940,872
    
    
    
    4,650,728
    
    
    
    4,364,997Other assets
    
    
    18
    
    
    
    9,848
    
    
    
    139,439
    
    
    
    97,409Total non-current assets
    
    
    
    
    
    
    4,984,176
    
    
    
    4,893,587
    
    
    
    4,485,944Total assets
    
    
    
    
    
    
    7,968,425
    
    
    
    7,104,255
    
    
    
    6,159,580
  A-88




---



##### 



MINERA ESCONDIDA LIMITADA
 
 As at December 31,
    
    As at December 31,
    
    As at January 1,2009
    
    2008
    
    2008Notes
    
    ThUS$
    
    ThUS$
    
    ThUS$Liabilities and Members EquityCurrent liabilities:Interest bearing liabilities
    
    
    20
    
    
    
    176,250
    
    
    
    728,200
    
    
    
    85,000Other financial liabilities
    
    
    21
    
    
    
    96,936
    
    
    
    737,128
    
    
    
    99,210Trade and other payables
    
    
    19
    
    
    
    352,963
    
    
    
    723,371
    
    
    
    250,884Due to related companies
    
    
    11
    
    
    
    89,022
    
    
    
    113,037
    
    
    
    99,756Provisions
    
    
    22
    
    
    
    158,697
    
    
    
    111,239
    
    
    
    112,841Current tax liabilities
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    37,018Other liabilities
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    Total current liabilities
    
    
    
    
    
    
    874,009
    
    
    
    2,412,975
    
    
    
    684,709Non-current liabilities:Interest bearing liabilities
    
    
    20
    
    
    
    588,750
    
    
    
    765,000
    
    
    
    850,000Other financial liabilities
    
    
    21
    
    
    
    2,457
    
    
    
    92,533
    
    
    
    6,874Trade and other payables
    
    
    19
    
    
    
    35,652
    
    
    
    41,230
    
    
    
    46,380Due to related companies
    
    
    11
    
    
    
    194,000
    
    
    
    242,000
    
    
    
    290,000Provisions
    
    
    22
    
    
    
    145,026
    
    
    
    131,267
    
    
    
    132,788Deferred income taxes
    
    
    13
    
    
    
    559,941
    
    
    
    250,255
    
    
    
    226,796Total non-current
liabilities
    
    
    
    
    
    
    1,525,826
    
    
    
    1,522,285
    
    
    
    1,552,838Total liabilities
    
    
    
    
    
    
    2,399,835
    
    
    
    3,935,260
    
    
    
    2,237,547Membersequity:Paid-in capital
    
    
    23
    
    
    
    731,242
    
    
    
    647,902
    
    
    
    647,902Retained earnings
    
    
    
    
    
    
    4,837,348
    
    
    
    2,521,093
    
    
    
    3,274,131Total members equity
    
    
    
    
    
    
    5,568,590
    
    
    
    3,168,995
    
    
    
    3,922,033Total liabilities and
members equity
    
    
    
    
    
    
    7,968,425
    
    
    
    7,104,255
    
    
    
    6,159,580
  A-89




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 2009
    
    2008Notes
    
    ThUS$
    
    ThUS$Revenue
    
    
    24
    
    
    
    7,071,049
    
    
    
    8,319,875Cost of sales
    
    
    26
    
    
    
    (2,520,750
    )
    
    
    (2,585,973
    )Gross profit
    
    
    
    
    
    
    4,550,299
    
    
    
    5,733,902Other income
    
    
    25
    
    
    
    14,196
    
    
    
    12,081Marketing expenses
    
    
    
    
    
    
    (26,057
    )
    
    
    (30,907
    )Distribution expenses
    
    
    
    
    
    
    (154,061
    )
    
    
    (256,628
    )Administrative expenses
    
    
    
    
    
    
    (124,302
    )
    
    
    (109,878
    )Exploration and evaluation expenses
    
    
    32
    
    
    
    (109,446
    )
    
    
    (61,015
    )Other operating expenses
    
    
    
    
    
    
    (147,259
    )
    
    
    (56,126
    )Exchange (loss)/gain
    
    
    
    
    
    
    (54,264
    )
    
    
    37,048Other income/(expense)
    
    
    28
    
    
    
    75,645
    
    
    
    (775,960
    )Profit before taxes
    
    
    
    
    
    
    4,024,751
    
    
    
    4,492,517Income tax expense
    
    
    13
    
    
    
    (825,156
    )
    
    
    (919,370
    )Profit from continuing operations
    
    
    
    
    
    
    3,199,595
    
    
    
    3,573,147Other income and expense debited or credited to
members equity
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income for the period
    
    
    
    
    
    
    3,199,595
    
    
    
    3,573,147
  A-90




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 Paid-in capital
    
    Retained earnings
    
    Members equityThUS$
    
    ThUS$
    
    ThUS$Balance January 1, 2009
    
    
    647,902
    
    
    
    2,521,093
    
    
    
    3,168,995Total comprehensive income for the period
    
    
    
    
    
    
    3,199,595
    
    
    
    3,199,595Dividends declared
    
    
    
    
    
    
    (800,000
    )
    
    
    (800,000
    )Capitalization of retained earnings
    
    
    83,340
    
    
    
    (83,340
    )
    
    
    Balance December 31, 2009
    
    
    731,242
    
    
    
    4,837,348
    
    
    
    5,568,590Balance January 1, 2008
    
    
    647,902
    
    
    
    3,274,131
    
    
    
    3,922,033Total comprehensive income for the period
    
    
    
    
    
    
    3,573,147
    
    
    
    3,573,147Dividends declared
    
    
    
    
    
    
    (4,326,185
    )
    
    
    (4,326,185
    )Balance December 31, 2008
    
    
    647,902
    
    
    
    2,521,093
    
    
    
    3,168,995
  A-91




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 2009
    
    2008Notes
    
    ThUS$
    
    ThUS$Statement of cash flows (direct method)Cash flows from operating activities:Cash receipts from customers
    
    
    
    
    
    
    6,206,104
    
    
    
    9,273,332Cash paid to suppliers
    
    
    
    
    
    
    (2,055,854
    )
    
    
    (2,454,908
    )Cash paid to employees
    
    
    
    
    
    
    (361,849
    )
    
    
    (273,629
    )Valued added tax and other tax paid
    
    
    
    
    
    
    (30,030
    )
    
    
    (28,484
    )Interest received
    
    
    
    
    
    
    635
    
    
    
    3,600Interest paid
    
    
    
    
    
    
    (62,894
    )
    
    
    (67,697
    )Income tax paid
    
    
    
    
    
    
    (262,828
    )
    
    
    (1,236,079
    )Cash used in other operating activities
    
    
    
    
    
    
    (559,717
    )
    
    
    (319,199
    )Net cash from operating activities
    
    
    8
    
    
    
    2,873,567
    
    
    
    4,896,936Cash flows from investing activities:Acquisition of property, plant and equipment
    
    
    14
    
    
    
    (507,218
    )
    
    
    (416,914
    )Post-production deferred stripping
    
    
    14
    
    
    
    (607,351
    )
    
    
    (570,464
    )Acquisition of intangible assets
    
    
    15
    
    
    
    
    
    
    
    (3,631
    )Net cash used in investing activities
    
    
    
    
    
    
    (1,114,569
    )
    
    
    (991,009
    )Cash flows from financing activities:Proceeds from issue of interest bearing liabilities
    
    
    
    
    
    
    893,800
    
    
    
    643,200Proceeds from borrowing from related companies
    
    
    11
    
    
    
    250,000
    
    
    
    Repayment of interest bearing liabilities
    
    
    
    
    
    
    (1,622,000
    )
    
    
    (85,000
    )Repayment of borrowing from related companies
    
    
    11
    
    
    
    (298,000
    )
    
    
    (48,000
    )Dividends paid
    
    
    11
    
    
    
    (800,000
    )
    
    
    (4,326,185
    )Other cash flows used in financing activities
    
    
    
    
    
    
    (5,150
    )
    
    
    (4,756
    )Net cash used in financing activities
    
    
    
    
    
    
    (1,581,350
    )
    
    
    (3,820,741
    )Net increment in cash and cash equivalents
    
    
    
    
    
    
    177,648
    
    
    
    85,186Cash and cash equivalents at 1 January
    
    
    
    
    
    
    112,127
    
    
    
    26,941Cash and cash equivalents at 31 December
    
    
    
    
    
    
    289,775
    
    
    
    112,127Non-cash transactionsCapitalization of retained earnings
    
    
    
    
    
    
    83,340
    
    
    
    Total non-cash transacions
    
    
    
    
    
    
    83,340
    
    
    
    
  A-92




---



##### 



MINERA ESCONDIDA LIMITADA
 
   
 (1)
    
    Reporting Entity
   Percentage ofEquity %BHP Escondida Inc.
    
    
    57.5Rio Tinto Escondida Limited
    
    
    30.0JECO Corporation
    
    
    10.0International Finance Corporation
    
    
    2.5Total
    
    
    100.0
 
 (2)
    
    Basis of Preparation
 (a)
    
    Statement of Compliance
 Normas de Información Financiera de Chile
   A-93




---



##### 



MINERA ESCONDIDA LIMITADA
   (2)
    
    Basis of Preparation, Continued
 (a)
    
    Statement of Compliance, ContinuedAs at the date of the present financial statements a number of new standards, amendments
to standards and interpretations are not yet effective for the year December 31, 2009,
and have not been applied in preparing these financial statements. None of these is
expected to have an effect on the financial statements of the Company, except for IFRS 9
Financial Instruments, which becomes mandatory for the Companys 2010 financial
statements and is expected to impact the classification and measurement of financial
assets. The extent of the impact has not been determined.(b)
    
    Managements ResponsibilityThe information contained in these financial statements is the responsibility of the
Companys Management, who expressly manifests an explicit and unreserved statements of
compliance with IFRS.(c)
    
    Basis of MeasurementThe financial statements have been prepared on the historical cost basis, except for
derivative financial instruments, which are measured at fair value.(d)
    
    Functional and Presentation CurrencyThese financial statements are presented in United States of America dollars, which is
the Companys functional currency. All financial information presented in dollars has
been rounded to the nearest thousand. The Company maintains accounting records in
United States of America dollars as authorized by the Companys Foreign Investment
Contract with the Chilean government. Transactions in other currencies are recorded at
actual rates of the transaction date. Year-end balances in foreign currencies are
translated into US Dollars at the applicable closing exchange rates.(e)
    
    Uses of Estimates and JudgmentsThe preparation of the financial statements in accordance with IFRSs requires
management to make a number of estimates and assumptions relating to the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates. Significant items subject to such estimation and assumptions include the
carrying amount of property, plant and equipment, mining property, exploration and
intangibles; valuation allowances for receivables, inventories and deferred income tax
assets; environmental liabilities; financial instruments and obligations related to
employee benefits. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
 A-94




---



##### 



MINERA ESCONDIDA LIMITADA
   (2)
    
    Basis of Preparation, Continued
 (e)
    
    Uses of Estimates and Judgments, ContinuedInformation about critical estimates and judgments in applying accounting policies that
have the most significant effect on the amounts recognized in the financial statement
includes:
 -
    
    Mine development expenses-
    
    Rehabilitation and restoration provision-
    
    Intangible assets-
    
    Revenue recognition
 (f)
    
    Change in Accounting PolicyThe Company has prepared these financial statements in compliance with International
Financial Reporting Standards (IFRS).These are the first financial statements issued under IFRS, where the Companys
transition date is January 1, 2008.
 
 (3)
    
    Significant Accounting Policies
 (a)
    
    InventoriesMinerals in process (including stockpile inventory), copper concentrate and copper
cathodes are valued at the lower of cost and net realizable value. Mining and milling
costs and non cash costs are included in the value of the inventories, as well as the
allocated costs of central maintenance and engineering and the on-site general and
administrative costs including all essential infrastructure support. Materials and
supplies are also valued at the lower of average cost and estimated net realizable
value.Stockpile costs are allocated using the average weighted cost method.Net realizable value is the estimated selling price in the ordinary course of business,
less the estimated costs of completion and selling expenses.The medium-grade ore stockpiled for future use is valued at the lower of average
production cost and net realizable value.
 A-95




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (b)
    
    Property, Plant and EquipmentRecognition and measurementItems of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment charges. Cost includes expenditure that is
directly attributable to the acquisition of the asset and capitalized interest incurred
during the construction and development period and during subsequent expansion periods.The cost of self-constructed assets includes the cost of materials and direct labor, any
other costs directly attributable to bringing the assets to a working condition for
their intended use, the costs of dismantling and removing the items and restoring the
site on which they are located and capitalized borrowing costs for qualifying assets.When parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment.Gains and losses on disposal of an item of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognized net within other income in profit or loss.Plant and equipment with a useful life of less than the life of the mine are depreciated
on a straight-line basis over the respective useful lives, ranging from 3 to 11 years.
The remaining items of plant and equipment are depreciated on a units-of-production
basis over the life of the proven and probable mineral reserves.Mine development is depreciated on a units-of-production basis over the life of the
proven and probable mineral reserves. Land is not subject to depreciation.Changes in estimates are accounted for over the estimated remaining economic life or the
remaining commercial reserves of the mine as applicable.Total depreciation and amortization for the years ended December 31, 2009 and 2008 is
included as a cost of the production of inventories.Expenditures for replacements and improvements are capitalized when the assets standard
of performance is significantly enhanced or the expenditure represents a replacement of
a component of an overall tangible fixed asset which has been separately depreciated.Other mineral assets comprise:
 
    
    Capitalized exploration, evaluation and development expenditure (including
development stripping) for properties in production
    
    Production stripping (as described below in overburden removal costs)
    
    Mineral rights
 A-96




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (c)
    
    Depreciation of Property, Plant and EquipmentThe carrying amounts of property, plant and equipment (including initial and any
subsequent capital expenditure) are depreciated to their estimated residual value over
the estimated useful lives of the specific assets concerned, or the estimated life of
the associated mine. Estimates of residual values and useful lives are reassessed
annually and any change in estimate is taken into account in the determination of
remaining depreciation charges. Depreciation commences on the date of commissioning for
those assets that are depreciated on the basis of production unit; while for those
assets that apply the straight line method of depreciation, it begins when they are
available for use.The major categories of property, plant and equipment are depreciated on a unit of
production and/or straight-line basis using estimated lives indicated below:
 Buildings
    
    25 to 34 years (Life of Mine)Land
    
    Not depreciatedPlant and equipment
    
    3 to 30 years straight-line depreciationMineral Rights
    
    Based on reserves of mineral on a unit of
production basisCapitalized exploration, evaluation and
development expenditure
    
    Based on applicable reserves of mineral
on a unit of
production basis
 (d)
    
    Intangible AssetsAmounts paid for the acquisition of identifiable intangible assets, are capitalized at
the fair value of consideration paid and are measured at cost less accumulated
amortization and impairment charges. Identifiable intangible assets with a finite life
are amortized on a straight-line basis over their expected useful life, which is
typically no greater than ten years.Subsequent expenditures are capitalized only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditure,
including expenditure on internally generated goodwill and brands, is recognized in
profit or loss as incurred.The Company has no identifiable intangible assets for which the expected useful life is
indefinite.Amortization is calculated over the cost of the asset, or other amount substituted for
cost, less its residual value.Amortization is recognized in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date that
they are available for use, since this most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset.Amortization methods, useful lives and residual values are reviewed at each financial
year-end and adjusted if appropriate.
 A-97




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (e)
    
    Leased AssetsAssets held under leases which result in the Company receiving substantially all the
risk and rewards of ownership of the asset (financial leases) are capitalized at the
lower of the fair value of the property, plant and equipment or the estimated present
value of the minimum lease payments. Subsequent expenditures to initial recognition
the asset is accounted for in accordance with the accounting policy applicable to that
asset.Operating lease assets are not capitalized and rental payments are included in the
income statement on a straight-line basis over the lease term.The Company maintains only operating leases at the date of this report.(f)
    
    Other AssetsOther assets consist of cash advances to operational and capital vendors; employee
advances for the school expenses reimbursement program and other prepayment related to
mineral permits; income tax and other prepaid.(g)
    
    Impairment of Assets
 (i)
    
    Financial assets (including receivables)A financial asset not carried at fair value through profit or loss is assessed at
each reporting date to determine whether there is objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a
loss event has occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows of that asset
that can be estimated reliably.Objective evidence that financial assets are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Company on terms
that the Company would not consider otherwise, indications that a debtor or issuer
will enter bankruptcy, the disappearance of an active market for a security. In
addition, for an investment in an equity security, a significant or prolonged
decline in its fair value below its cost is objective evidence of impairment.The Company considers evidence of impairment for receivables. No receivables have
been found to be specifically impaired.
 A-98




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (g)
    
    Impairment of Assets, Continued
  (ii)
    
    Non-financial assetsThe carrying amounts of the Companys non-financial assets, other than inventories
and deferred tax assets, are reviewed at each reporting date to determine whether
there is any indication of impairment. Formal impairment tests for all other
assets are performed when there is an indication of impairment. At each reporting
date, an assessment is made to determine whether there are any indications of
impairment. The Company conducts annually an internal review of asset values which
is used as a source of information to assess for any indications of impairment.
External factors, such as changes in expected future processes, commodity price,
costs and other market factors are also monitored to assess for indications of
impairment. If any indication of impairment exists an estimate of the assets
recoverable amount is calculated.The recoverable value is the greater of its value in use and its fair value less
costs to sell. The air value is determined as the amount that would be obtained
from the sale of the asset in an arms length transaction between knowledgeable
and willing parties. Fair value for mineral assets is generally determined as the
present value of the estimated future cash flows expected to arise from the
continued use of the asset, including any expansion prospects, and its eventual
disposal, using assumptions that an independent market participant may take into
account. These cash flows are discounted by an appropriate discount rate to
arrive at a net present value of the asset.Value in use is determined as the present value of the estimated future cash
flows expected to arise from the continued use of the company in its present form
and its eventual disposal. Value in use is determined by applying assumptions
specific to the Companys continued use and cannot take into account future
development. These assumptions are different to those used in calculating fair
value and consequently the value in use calculation is likely to give a different
result (usually lower) to a fair value calculation.
 A-99




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (g)
    
    Impairment of Assets, Continued
     Estimates/assumptions:
    
    Basis:Future production
    
    Proved and probable reserves, resource estimates and, in
certain cases, expansion projects.Commodity prices
    
    Forward market and contract prices, and longer-term price
protocol estimates.Exchange rates
    
    Current (forward) market exchange ratesDiscount rates
    
    Cost of capital risk adjusted for the risk specific to
the asset
 (h)
    
    Trade and Other PayablesThese liabilities are initially accounted for at their fair value and, subsequently, at
their amortized cost according to the effective interest method. The items shown in the
financial statements as current liabilities are settled in a period less than 12 months.
 A-100




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (i)
    
    Income Taxes and Deferred Income TaxesIncome tax expense comprises current and deferred income taxes and is recognized in
profit and loss except for items recognized directly in equity as other comprehensive
income. Current tax is the expected tax payable or receivable on the taxable income or
loss for the year using rates enacted or substantively enacted at the year end, and
includes any adjustment to tax payable in respect of previous years.Deferred income taxes are provided using the balance sheet method, providing for the
tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Where an asset has no deductible or depreciable amount for income tax
purposes, but has a deductible amount on sale or abandonment for capital gains tax
purposes, that amount is included in the determination of temporary differences. The
amount of deferred tax recognized is based on the expected manner and timing of
realization or settlement of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at period end.A deferred tax asset is recognized only to the extent that it is probable that future
taxable profits will be available against which the asset can be utilized. Deferred tax
assets are reviewed at each balance sheet date and adjusted to the extent that it is no
longer probable that the related tax benefit will be realized.Mining specific tax is treated as taxation arrangements when they have the
characteristics of a tax. This is considered to be the case when they are imposed under
government authority and the amount payable is calculated by reference to revenue
derived (net of any allowable deductions) after adjustment for items comprising
temporary differences. For Chile specific mining tax, current and deferred tax is
provided on the same basis as described above for other forms of taxation. Obligations
arising from royalty arrangements that do not satisfy these criteria are recognized as
current provisions and included in expenses.(j)
    
    ProvisionsA provision is recognized if, as a result of a past event, the Company has a present
legal or constructive obligation that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognized as finance cost.
 (i)
    
    Restoration and rehabilitationThe mining, extraction and processing activities of the Company normally give
rise to obligations for site closure or rehabilitation. Closure and
rehabilitation works can include facility decommissioning and dismantling;
removal or treatment of waste materials; site and land rehabilitation. The extent
of work required and the associated costs are dependent on the requirements of
relevant authorities and the Companys environmental policies.
 A-101




---



##### 



MINERA ESCONDIDA LIMITADA
   (3)
    
    Significant Accounting Policies, Continued
 (j)
    
    Provisions, Continued
     A-102




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (j)
    
    Provisions, Continued
 Closure and rehabilitation provisions are also adjusted for changes in estimates.
Those adjustments are accounted for as a change in the corresponding capitalized
cost. Changes to the capitalized cost result in an adjustment to future
depreciation and financial charges. Adjustments to the estimated amount and timing
of future closure and rehabilitation cash flows are a normal occurrence in light
of the significant judgments and estimates involved. Factors influencing those
changes include:
 
    
    Revisions to estimated reserves, resources and lives of operations,
    
    Developments in technology,
    
    Regulatory requirements and environmental management strategies,
    
    Changes in the estimated costs of anticipated activities, including the
effects of inflation and movements in foreign exchange rates, and
    
    Movements in interest rates affecting the discount rate applied.
 (ii)
    
    Employee benefitThe Company has an agreement with its employees providing for payment of severance
indemnities on termination of employment. Provision has been estimated based upon
ultimate severance remuneration to be incurred.
 (k)
    
    Foreign Currency TransactionsThe Companys reporting currency and the functional currency is the United States of
America dollars as this assessed to be the principal currency of the economic
environments in which they operate. Transactions denominated in foreign currencies
(currencies other than the functional currency of an operation) are translated to the
respective functional currency at exchange rates ruling at the dates of the underlying
transactions.(l)
    
    Financial Instruments
 (i)
    
    Non-derivative financial assetsThe Company initially recognizes loans and receivables and deposits on the date
that they are originated. Loans and receivables are financial assets with fixed
or determinable payments that are not quoted in an active market. Such assets are
recognized initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition loans and receivables are measured at
amortized cost using the effective interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables.
 A-103




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (l)
    
    Financial Instruments, Continued
 Cash and cash equivalents comprise cash balances and call deposits with original
maturities of three months or less. Bank overdrafts that are repayable on demand
and form an integral part of the Companys cash management are included as a
component of cash and cash equivalents for the purpose of the statement of cash
flows.All other financial assets (including assets designated at fair value through
profit or loss) are recognized initially on the trade date at which the Company
becomes a party to the contractual provisions of the instrument.The Company derecognizes a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction in which substantially all the
risks and rewards of ownership of the financial asset are transferred. Any
interest in transferred financial assets that is created or retained by the
Company is recognized as a separate asset or liability.Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal right
to offset the amounts and intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.(ii)
    
    Non-derivative financial liabilitiesThe Company initially recognizes debt securities issued and subordinated
liabilities on the date that they are originated. All other financial liabilities
(including liabilities designated at fair value through profit or loss) are
recognized initially on the trade date at which the Company becomes a party to the
contractual provisions of the instrument.The Company derecognizes a financial liability when its contractual obligations
are discharged or cancelled or expire.Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal right
to offset the amounts and intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.The Company has the following non-derivative financial liabilities: interest
bearings liabilities and borrowings and trade and other payables.
 A-104




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##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (l)
    
    Financial Instruments, Continued
 Such financial liabilities are recognized initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost.(iii)
    
    Derivative financial instrumentsThe Company accounts for derivatives and hedging activities in accordance with IAS
39, Financial Instruments: Recognition and Measurementsas amended. Derivate
instruments are recorded on the statement of financial position at their
respective fair value. Upon initial recognition attributable transaction costs
are recognized in profit or loss as incurred.Derivatives, including those embedded in other contractual arrangements but
separated for accounting purposes because they are not clearly and closely related
to the host contract, are initially recognized at fair value on the date the
contract is entered into and are subsequently remeasured at their fair value. The
resulting gain or loss on re-measurement is recognized in the statement of
comprehensive income. The measurement of fair value is based on quoted market
prices. Where no price information is available from a quoted market source,
alternative market mechanisms or recent comparable transactions, fair value is
estimated based on the Companys views on relevant prices.The Companys financial instrument policy is designed to achieve sales at the
average annual London Metal Exchange (LME) price shifted forward by one month and
three to four months, for cathodes and concentrates, respectively, for all tonnes
of copper shipped in a given calendar year. In the case where copper is sold with
a different quotation period than our targeted standard price or shipments are not
distributed evenly over the year, derivates financial instruments are entered into
to achieve the average sales price and timing described immediately above.
Changes in the fair value of these financial instruments are recognized
immediately in profit and loss.Other non-trading derivativesWhen a derivative financial instrument is not held for trading, and is not
designated in a qualifying hedge relationship, all changes in its fair value are
recognized immediately in profit or loss.
 A-105




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (m)
    
    Revenue Recognition
 Revenue from the sale of goods in the course of ordinary activities is measured at the
fair value of the consideration received or receivable. Revenue is recognized when
persuasive evidence, usually in the form of an executed sales agreement, or an
arrangement exists, indicating there has been a transfer of risk and rewards to the
customer, the quantity and quality of the goods has been determined with reasonable
accuracy, the price is fixed or determinable, and collectability is reasonably assured.
This is generally when title to copper concentrate and copper cathode passes to the
buyer when the ships depart from the loading port. The passing of title to the customer
is based on the terms of the sales contracts. These contracts provide for the Company to
issue a provisional invoice, with the final sales price to be determined and invoiced.
For the provisional sales the sales price is determined on a provisional basis at the
date of sale; adjustments to the sales price subsequently occurs based on movements in
quoted market or contractual prices up to the date of final pricing. The period between
provisional invoicing and final pricing is typically between 60 and 120 days. Revenue
on provisional priced sales is recognized based on the estimated fair value of the total
consideration receivable. The revenue adjustment mechanism embedded within provisionally
priced sales arrangements has the character of a commodity derivative. Accordingly, the
fair value of the final sales price adjustment is re-estimated continuously and changes
in fair value are recognized as an adjustment to revenue. In all cases, fair value is
estimated by reference to forward market prices.Under the copper concentrate sales contracts with smelters, final prices are set on a
specified future quotation period, typically three months after the month of arrival.
For copper cathode sales contracts, final prices are typically one month after the month
of arrival. Revenues are recorded under these contracts at the time title passes to the
buyer based on the forward price for the expected settlement period. The contracts, in
general, provide for a provisional payment based upon provisional assays and quoted
metal prices. Final settlement is based on the average applicable price for a specified
future period, and generally occurs from four to six months after shipment of copper
concentrates and two months for copper cathodes. Final sales are settled using smelter
weights, settlement assays (average of assays exchanged and/or umpire assay results) and
are priced as specified in the smelter contract. The form of the material being sold,
after deduction for smelting and refining is in an identical form to that sold on the
London Bullion Market. The form of the product is metal in flotation concentrate, which
is the final process for which the Company is responsible.For the concentrate mineral sales the refining treatment and shipping charges are netted
against operating revenues in accordance with industry practices. There is also an
embedded derivative regarding refining treatment price participation clauses in the
concentrate mineral sales contracts which does not qualify for hedge accounting.
 A-106




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##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (n)
    
    Overburden Removal CostsOverburden and other mine waste materials are often removed during the initial
development of a mine site in order to access the mineral deposit. This activity is
referred to as development stripping. The directly attributable costs (inclusive of an
allocation of relevant overhead expenditure) are initially capitalized as assets under
construction. Capitalization of development stripping costs ceases at the time that
saleable material begins to be extracted from the mine. On completion of development,
all assets included in assets under construction are transferred to other mineral
assets.Removal of waste material normally continues throughout the life of a mine. Production
stripping commences at the time that saleable materials begin to be extracted from the
mine. The costs of production stripping are charged to profit and loss as operating
costs when the ratio of waste material to ore extracted for an area of interest is
expected to be constant throughout its estimated life. When the ratio of waste to ore
is not expected to be constant, production stripping costs are accounted for as
follows:
 
    
    All costs are initially charged to profit and loss and classified as operating
costs
    
    When the current ratio of waste to ore is greater than the estimated
life-of-mine ratio, a portion of the stripping costs (inclusive of an allocation
of relevant overhead expenditure) is capitalized to other mineral assets
    
    In subsequent years when the ratio of waste to ore is less than the estimated
life-of-mine ratio, a portion of capitalized stripping costs is charged to the
income statement as operating costs
 The amount of production stripping costs capitalized or charged in a financial year is
determined so that the stripping expense for the financial year reflects the estimated
life-of-mine ratio. Changes to the estimated life of mine ratio are accounted for
prospectively from the date of the change.(o)
    
    Exploration and Evaluation ExpensesExploration and evaluation activity involves the search for mineral and water resources,
the determination of technical feasibility and the assessment of commercial viability of
an identified resource.Exploration and evaluation activity includes:
 
    
    Researching and analyzing historical exploration data
    
    Gathering exploration data through topographical, geochemical and geophysical
studies
    
    Exploratory drilling, trenching and sampling
    
    Determining and examining the volume and grade of the resource
    
    Surveying transportation and infrastructure requirements
    
    Conducting market and finance studies
 A-107




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##### 



MINERA ESCONDIDA LIMITADA
 
 (3)
    
    Significant Accounting Policies, Continued
 (o)
    
    Exploration and Evaluation Expenses, ContinuedAdministration costs that are not directly attributable to a specific exploration area
are charged to profit and loss. License costs paid in connection with a right to explore
in an existing exploration area are capitalized and amortized over the term of the
permit.Exploration and evaluation expenditure (including amortization of capitalized license
costs) is charged to profit and loss as incurred, except where the existence of a
commercially viable mineral deposit has been established.(p)
    
    Development ExpenditureWhen proved reserves are determined and development is sanctioned, capitalized
exploration and evaluation expenditure is reclassified as assets under construction,
and is disclosed as a component of property, plant and equipment. All subsequent
development expenditure is capitalized and classified as assets under construction.
Development expenditure is net of proceeds from the sale of ore extracted during the
development phase.On completion of development, all assets included in assets under construction are
reclassified as either plant and equipment or other mineral assets in case of
deferred stripping.(q)
    
    Finance Income and Finance CostFinance income comprises interest income on funds invested. Interest income is
recognized as it accrues in profit or loss using the effective interest method.Finance costs comprise interest expense on borrowings, unwinding of the discount on
provisions, impairment losses recognized on financial assets. Borrowing costs that are
not directly attributable to the acquisition, construction or production of a
qualifying asset are recognized in profit or loss using the effective interest method.(r)
    
    Rounding of AmountsAmounts in this financial report have, unless otherwise indicated, been rounded to the
nearest thousand dollars.(s)
    
    ComparativesWhere applicable, comparatives have been adjusted to disclose them on the same basis as
current period figures.
 A-108




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##### 



MINERA ESCONDIDA LIMITADA
 
 
 (4)
    
    Transition to IFRS
 (a)
    
    Explanation of transition to IFRSs
 (i)
    
    Applying IFRS 1These financial statements prepared under the IFRS accounting basis as at and for
the year ended December 31, 2009 (including comparative financial information for
the year ended December 31, 2008) include disclosures applicable for entities
reporting their first application of IFRS. Such disclosures prescribed by
International Financial Reporting Standard 1  First-Time Adoption of
International Financial Reporting Standards (IFRS 1 First Time Adoption)
include; transition accounting policies and adjustments from the Companys
previously applied accounting basis, an opening statement of financial position as
at the earliest comparative period presented on the basis of IFRS, reconciliation
of equity and reported profit or loss as of the date of transition, adjustments to
presentations of cash flow statements and other matters.As stated in note 2(a), these are the Companys first financial statement prepared
in accordance with IFRSs.The accounting polices set out in note have been applied in preparing the
financial statement for the year ended 31 December 2009, the comparative
information presented in the financial statement for the year ended 31 December
2008 and in the preparation of an opening IFRS statement of financial position at
1 January 2008 (the Companys date transition).In preparing its opening IFRS statement of financial position, the Company has
adjusted amounts report previously in financial statement prepared in accordance
with Chilean GAAP (previous GAAP). An explanation of how the transition from
previous GAAP to IFRSs has affected the Companys financial position, financial
performance and cash flows is set out in the following tables and the notes that
accompany the tables.
 (b)
    
    Reconciliation between IFRS and generally accepted accounting principles in Chile
(Chilean GAAP)
 (i)
    
    Members equity as at December 31, 2008 and January 1, 2008The equity reconciliation of Company Chilean GAAP to IFRS is the following:
 1-Jan-08
    
    31-Dec-08ThUS$
    
    ThUS$Members equity on the basis of Chilean GAAP
    
    
    3,906,402
    
    
    
    3,153,364Fixed asset (a)
    
    
    16,606
    
    
    
    16,606Deferred taxes (b)
    
    
    (975
    )
    
    
    (975
    )Transition effects
    
    
    15,631
    
    
    
    15,631Members equity according to IFRS
    
    
    3,922,033
    
    
    
    3,168,995
 A-109




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (4)
    
    Transition to IFRS, Continued
 (ii)
    
    Members equity as at December 31, 2008 and January 1, 2008, ContinuedExplanation of differences
 (a)
    
    The conversion adjustment as at the date of transition is
the result of the process of re-evaluation of the depreciation methods
adopted by the Company in order to achieve a better model to reflect
consumption of the future economic benefits of its fixed assets. Amounts are
presented net of tax effect.(b)
    
    These adjustments are the result of the re-calculation of
deferred taxes according to IAS 12 Income Taxes.
 (iii)
    
    Statement of comprehensive income as of December 31, 2008
 31-Dec-08ThUS$Statement of comprehensive income on the basis of Chilean GAAP
    
    
    3,570,290Other adjustment
    
    
    2,857Statement of comprehensive income according to IFRS
    
    
    3,573,147
 
 (5)
    
    Financial Risk Management
 The financial risk arising from the Companys operations are credit risk, liquidity risk,
market risk and operational risk. These risks arise in the normal course of business, and the
Company manages its exposure to them in accordance with the BHP Billiton Groups portfolio
risk management strategy. The objective of the strategy is to support the delivery of the
Group and Companys financial targets, while protecting its future financial security and
flexibility by taking advantage of the Companys operations and activities.A cash flow at risk (CFaR) framework is used to measure the aggregate and diversified impact
of financial risk upon the Companys financial targets. The CFaR is defined as the worst
expected loss relative to projected business plan cash flow over a one year horizon under
normal market conditions. The CFaR includes board-approved limits.The Financial risk management as at December 31, 2009 and 2008 consists in the following:
 A-110




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5)
    
    Financial Risk Management, Continued
 (a)
    
    Exposure to credit riskCredit risk is the risk of financial loss to the Company if a customer or counterparty
to a financial instrument fails to meet its contractual obligations, and arises
principally from the Companys receivables from customers. To manage credit risk the
Company maintains group-wide procedures covering the application for credit approvals,
granting and renewal of counterparty limits and monitoring of exposures against these
limits. As pat of these processes the financial viability of all counterparties is
regularly monitored and assessed.The Companys credit risk exposures are categorized under the following:
 (i)
    
    CounterpartiesThe Company conducts transactions with the following major types of
counterparties:
 
    
    Receivables counterparties  the majority of sales to the Companys
customers are made on open terms.
    
    Derivate counterparties  counterparties to derivative contracts consist
of a diverse number of financial institutions and industrial counterparties
in the relevant markets.
    
    Cash investment counterparties  the Company holds short-term cash
investment with approved financial institutions.
 The Company has no significant concentration of credit risk with any single
counterparty or group of counterparties.The Companys exposure to credit risk is influenced mainly by the individual
characteristics of each customer.The Company has established a credit policy under which each new customer is
analyzed individually for creditworthiness before the Companys standard payment
and delivery terms and conditions are offered. The Companys review includes
external ratings, when available, and in some cases bank references. Purchase
limits are established for each customer, which represent the maximum open
amount, these limits are reviewed quarterly. Customers that fail to meet the
Companys benchmark creditworthiness may transact with the Company only on a
prepayment basis.Goods are sold subject to retention of title clauses, so that in the event of
non-payment the Company may have a secured claim. The Company does not require
collateral in respect of trade and other receivables.The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
 A-111




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5)
    
    Financial Risk Management, Continued
 Book value
    
    Book value2009
    
    2008ThUS$
    
    ThUS$Receivables trade
    
    
    1,280,904
    
    
    
    282,307Receivables employee loans
    
    
    47,117
    
    
    
    22,350Total current trade and other receivables
    
    
    1,328,021
    
    
    
    304,657Receivables trade non-current
    
    
    
    
    
    
    Receivables employee loans non-current
    
    
    25,671
    
    
    
    11,909Total current trade and other receivables -
non current
    
    
    25,671
    
    
    
    11,909Total credit exposure
    
    
    1,353,692
    
    
    
    316,566
 The balances of the trade receivables as at December 31, 2009 and 2008
include the provisional invoices issued for copper concentrate and copper cathode
shipments. Such invoices are based on the weight measured by the Company and on
the tests subject to review and final agreement by the clients. According to the
terms and conditions of the sale contracts, the final price received will also be
dependent on the copper prices quoted on global metal exchanges, including the
LME, during the future quotational periods applicable to each delivery. As at
December 31, 2009 and 2008, provisional invoicing agreement sales have been valued
according to the future prices. Refining, treatment, and shipment charges are
offset against operating income, in accordance with industry standards. The
Company has not recorded a provision for uncollectable accounts.The aging of current and non-current trade and other receivables at the reporting
date was:
 Gross
    
    Impaired
    
    Gross
    
    Impaired2009
    
    2009
    
    2008
    
    2008ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$Not past due
    
    
    1,325,170
    
    
    
    
    
    
    
    291,685
    
    
    
    Past due 0-30 days
    
    
    1,965
    
    
    
    
    
    
    
    4,707
    
    
    
    Past due 31-120 days
    
    
    886
    
    
    
    
    
    
    
    8,265
    
    
    
    More than one year
    
    
    25,671
    
    
    
    
    
    
    
    11,909
    
    
    
    Totals
    
    
    1,353,692
    
    
    
    
    
    
    
    316,566
    
    
    
    
 The Company believes that the unimpaired amounts that are past due by more than
30 days are collectible, based on historic payment behavior and analyses of the
underlying customer credit ratings.
 A-112




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 Based on historic default rates, the Company believes that no impairment
allowance is necessary in respect of trade receivables.During 2009 and 2008 no renegotiation of the terms of receivables has occurred.(ii)
    
    InvestmentsThe Company does not invest in securities.(iii)
    
    GuaranteesThe Company has not issued financial guarantees.
 (b)
    
    Exposure to liquidity riskLiquidity risk is the risk that the Company will encounter difficulty in meeting the
obligations associated with its financial liabilities that are settled by delivering
cash or another financial asset. The Companys approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Companys reputation.The Companys strong credit profile and diversified funding sources ensure that
sufficient liquid funds are maintained to meet its daily cash requirements. The
Companys policy on counterparty credit exposure ensures that only counterparties of a
high credit standing are used for the investment of any excess cash.In addition, the Company maintains the BHP Billiton Groups support and procedures as
illustrated bellow:
 
    
    The Company resists granting longer payment terms to customers and not granting
open credit terms to existing secure customers unless they are backed by strong
financial strength. The President of marketings approval will be sought before
extended payment term is granted.
    
    Alerts have been set up to track latest updates of our key customers with open
credit.
    
    Deliveries to customers will be suspended when we have unusual overdue.
    
    Marketing will stay in frequent contact with customers to head off late payments
and obtain better understanding of their recent development with heightened focus
on operating cash flows.
 A-113




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 The following are the contractual maturities of financial liabilities, including
estimated interest payments and excluding the impact of netting agreements at December
31, 2009:
 Current
    
    Contractual
    
    6 months or
    
    6-12
    
    
    
    
    
    
    
    
    
    Over 5amount
    
    cash flow
    
    less
    
    months
    
    1-2 years
    
    2-5 years
    
    yearsThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    THUS$
    
    THUS$Non-derivative financial
liabilitiesTrade and other payables,
current and non-current:
    
    
    388,615
    
    
    
    (442,615
    )
    
    
    (388,615
    )
    
    
    
    
    
    
    (9,000
    )
    
    
    (27,000
    )
    
    
    (18,000
    )Interest bearing liabilities,
current and non- current:
    
    
    765,000
    
    
    
    (780,603
    )
    
    
    (138,538
    )
    
    
    (54,117
    )
    
    
    (366,571
    )
    
    
    (151,921
    )
    
    
    (69,456
    )Due to related companies,
current and non-current:
    
    
    283,022
    
    
    
    (315,992
    )
    
    
    (71,335
    )
    
    
    (29,687
    )
    
    
    (57,183
    )
    
    
    (135,838
    )
    
    
    (21,949
    )Derivative financial liabilitiesOther financial liabilities,
current and non-current
    
    
    99,393
    
    
    
    (99,393
    )
    
    
    (86,273
    )
    
    
    (10,663
    )
    
    
    (2,457
    )
    
    
    
    
    
    
    
 It is not expected that the cash flows included in the maturity analysis will occur
significantly earlier, or significantly later than the settlement date.(c)
    
    Exposure to market riskMarket risk is the risk that changes in market interest rates, commodity prices and
foreign exchange rates will affect the Companys income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.In executing its strategy, financial instruments are potentially employed in three
distinct but related activities. The following table summarises these activities and the
key risk management process.
 A-114




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 Activity
    
    Key management processes1. Risk mitigationHedging of revenues with financial
instruments could be executed to mitigate
risk at the portfolio level when CFaR
exceeds the Board-approved limits.
Similarly, and on an exception basis,
hedging for the purposes of mitigating
risk related to specific and significant
expenditure on investments or capital
projects will be executed if necessary to
support the Companys strategic
objectives.
    
    -   Assessment of portfolio CFaR
against Boar-approved limits.
-    Execution of transactions
within approved mandates.2. Economic hedging of commodity sales,
operating costs and debt instrumentsWhere Company commodity production is
sold to customers on pricing terms that
deviate from the relevant index target,
and where a relevant derivatives market
exists, financial instruments are
executed as an economic hedge to align
the revenue price exposure with the index
target.
Where debt is issued with a currency or
interest rate profile that deviates from
the relevant index target, fair value
hedges are executed to align the debt
exposure with the index target.
Similarly, where specific and significant
operating costs are contracted in a
currency that deviates from the relevant
index target, financial instruments are
executed as an economic hedge to align
the currency exposure with the index
target.
    
    -    Assessment of portfolio CFaR
against Board-approved limits.
-    Measuring and reporting the
exposure in customer commodity
contracts and issued debt
instruments.
-    Executing hedging
derivatives to align the total
group exposure to the index
target.3. Strategic financial transactionsOpportunistic transactions may be
executed with financial instruments to
capture value from perceived market
over/under valuations.
    
    -    Exposures managed within
value at risk and stop loss
limits.
-    Execution of transactions
within approved mandates.
 Primary responsibility for identification and control of financial risks, including
authorizing and monitoring the use of financial instruments for the above activities and
stipulating policy thereon, rests with the Financial Risk Management Committee under
authority delegated by the Company Management Committee.
 (i)
    
    Interest rate riskThe Company is exposed to interest rate risk on its outstanding borrowings from
the possibility that changes in interest rates will affect future cash flows or
the fair value of variable interest rate. The interest rate is effective from the
beginning of the financial year and fixed/floating mix and balances are constant
over the year.
 A-115




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 Based on the net debt position as at December 31, 2009, it is estimated that one
percentage point increase in the LIBOR interest rate will decrease the Companys
profit after taxation and equity by US$12.2 million (2008: decrease of US$16.4
million). This assumes that the change in interest rates is effective from the
beginning of the financial year and the fixed/floating mix and the balances are
constant over the year.A sensitivity analysis is illustrated bellow:
 2009
    
    2008ThUS$
    
    ThUS$1% rate variation effectExternal debt  international banks
    
    
    9,678
    
    
    
    11,150External debt  domestic banks
    
    
    
    
    
    
    2,143Subordinated debt
    
    
    2,561
    
    
    
    3,069Total variation
    
    
    12,239
    
    
    
    16,362
 (ii)
    
    Commodity price riskContracts for the sale of commodities are executed whenever possible on a pricing
basis to achieve a relevant index target. Where pricing terms deviate from the
index, derivative commodity contracts are used when available to return realized
prices to the index.Financial instruments with commodity price risk included in the following table
are those entered into for the following activity:
 -
    
    Economic hedging of prices on commodity contracts as
described above:
 2009
    
    2008Fair value of
    
    Fair value of
    
    Fair value of
    
    Fair value ofasset
    
    liability
    
    asset
    
    liabilityForward commodity
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$Copper
    
    
    130,798
    
    
    
    (97,165
    )
    
    
    311,636
    
    
    
    (831,092
    )Totals
    
    
    130,798
    
    
    
    (97,165
    )
    
    
    311,636
    
    
    
    (831,092
    )Includes:Current
    
    
    126,281
    
    
    
    (94,708
    )
    
    
    223,665
    
    
    
    (738,559
    )Non-current
    
    
    4,517
    
    
    
    (2,457
    )
    
    
    87,971
    
    
    
    (92,533
    )
 A-116




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##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 The Companys exposure at December 31, 2009 and 2008 to the impact of movements in
commodity markets upon the financial instruments is set out in the following
table:
 2009
    
    2008Impact on equity and
    
    
    
    
    
    Impact on equity andprofit of 10% movement
    
    
    
    
    
    profit of 10% movementUnits of
    
    Net exposure
    
    in market price
    
    Net exposure
    
    in market priceexposure
    
    receive/(deliver)
    
    (post-tax)
    
    receive/(deliver)
    
    (post-tax)ThUS$
    
    
    
    
    
    ThUS$Copper
    
     ́000 tons
    
    
    380
    
    
    
    215,910
    
    
    
    232
    
    
    
    56,218
 (iii)
    
    Foreign currency riskThe US dollar is the functional currency of the Company and as a result currency
exposures arise from transactions and balances in currencies other than US dollar.
The Companys potential currency exposures comprise transactional exposure in
respect of non-functional currency monetary itemsMonetary items, including financial assets and liabilities, denominated in
currencies other than the functional currency of an operation are periodically
restated to US dollar equivalents, and the associated gain or loss is taken to
profit or loss.The following table shows the foreign currency risk on the financial assets and
liabilities of the Companys operations denominated in currencies other than the
functional currency of the operations at December 31, 2009:
 Net financial
    
    Net financialassets/(liabilities)
    
    assets/(liabilities)2009
    
    2008Functional currency - US dollar
    
    ThUS$
    
    ThUS$Cash and cash equivalents
    
    
    3,970
    
    
    
    657Trade and other receivables
    
    
    6,974
    
    
    
    53,349Current tax asset/(liability)
    
    
    (97,845
    )
    
    
    82,035Trade and other payables
    
    
    (68,572
    )
    
    
    (62,370
    )Provisions
    
    
    (56,160
    )
    
    
    (108,897
    )Net exposure
    
    
    (211,633
    )
    
    
    (35,226
    )
 The Companys foreign currency risk is managed as part of the risk management
strategy within the overall CFaR limit.
 A-117




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 The principal non-functional currencies to which the Company is exposed are the
Chilean Pesos. Based on the Companys net financial assets and liabilities as at
31 December 2009 and 2008, a weakening of the US dollar against these currencies
as illustrated in the table below, with all other variables held constant, would
have affected post-tax profit and equity as follow:
 2009
    
    2008ThUS$
    
    ThUS$Post-tax
    
    
    
    
    
    Post-taxCurrency movement
    
    profit
    
    Equity
    
    profit
    
    EquityA +/- $10 (Chilean peso) variation:
    
    
    1,710
    
    
    
    1,710
    
    
    
    545
    
    
    
    545
 The foreign exchange rate used as of December 31, 2009 was CL$507.10 to US$1
(CL$636.45 to US$1 for 2008).
 Fair value sensitivity analysis for fixed rate instruments
 The Company does not account for any fixed rate financial assets and
liabilities at fair value through profit or loss, and the Company does not
designate derivatives as hedging instruments under a fair value hedge accounting
model. Therefore a change in interest rates at the reporting date would not affect
profit or loss.
 The asset and liabilities fair value approximates the carrying value.
 (d) Operational risk
 Operational risk is the risk of direct or indirect loss arising from a wide variety of
causes associated with the Companys processes, personnel, technology and
infrastructure, and from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and generally accepted
standards of corporate behavior. Operational risks arise from all of the Groups
operations.
 The Companys objective is to manage operational risk so as to balance the avoidance of
financial losses and damage to the Companys reputation.
 (i)
    
    Capital managementThe Companys capital management policy is exclusively restricted by the covenants
established in the loan agreements with foreign banks. The net worth of the
Company may not be less than US$900 million, measured upon completing the
corresponding 12-month fiscal period.
 A-118




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (5) Financial Risk Management, Continued
 The return on capital is measured regularly and its interpretation is according to
the market scenario, production restrictions and LME copper prices, among other
variables.
 The dividend policy is analyzed by Management according to the profitability of
the periods and cash flows requirements. These requirements are strongly impacted
by the Companys capital projects, normal debt to creditors and taxes.
Additionally, precautions must be adopted before any eventual commodity price
drops and their possible impact on a negative cash flow outcome that might force
payments to clients.
 The financial debt/equity ratio, calculated by the Company at the end of the
balance period is illustrated bellow:
 2009
    
    
    2008ThUS$
    
    
    ThUS$Total liabilities
    
    
    2,399,835
    
    
    
    3,935,260Less: cash and cash equivalent
    
    
    (289,775
    )
    
    
    (112,127
    )Net debt
    
    
    2,110,060
    
    
    
    3,823,133Total net members equity
    
    
    5,568,590
    
    
    
    3,168,995Less: amounts accumulated in members equity in
relation to cash flow coverage
    
    
    
    
    
    
    Net members equity, restated
    
    
    5,568,590
    
    
    
    3,168,995Financial debt/equity ratio
    
    
    0.38
    
    
    
    1.21
 
 (6) Determination of Fair Value
 (i)
    
    DerivativesThe fair value of forward sales commodity forward contracts is based on their listed
market price. Fair values reflect the credit risk of the instrument and include
adjustments to take account of the credit risk of the Company and counterparty when
appropriate.(ii)
    
    Restoration and rehabilitation provisionsFair value, which is determined for disclosure purposes, is calculated based on the
present value of future principal and interest costs, discounted at a rate of interest
at the reporting date.
 A-119




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 (7) Cash and Cash Equivalents
 The mix of cash and cash equivalent is as follows:
 Jan 1,2009
    
    
    2008
    
    
    2008ThUS$
    
    
    ThUS$
    
    
    ThUS$Cash
    
    
    5
    
    
    
    7
    
    
    
    8Bank balances
    
    
    1,245
    
    
    
    766
    
    
    
    840Short-term deposits less than 3 months
    
    
    288,525
    
    
    
    111,354
    
    
    
    26,093Total cash and cash equivalents
    
    
    289,775
    
    
    
    112,127
    
    
    
    26,941
 Cash equivalents of ThUS$288,525, ThUS$111,354 and ThUS$26,093 at December 31, 2009, 2008 and
January 1, 2008, respectively, consist of short term investments with an initial term of less
than one month in financial instruments issued by Commercial Banks and Central Bank of Chile
Securities. For the purpose of the statement of cash flows, the Company considers all highly
liquid debt instruments with original maturities of three months or less to be cash
equivalents.
 
 (8) Reconciliation of Cash Flows from Operating Activities
 The reconciliation of cash flows from operating activities for the years ended December 31,
2009 and 2008 is as follows:
 2009
    
    
    2008Note
    
    ThUS$
    
    
    ThUS$Profit for the period
    
    
    
    
    3,199,595
    
    
    
    3,573,147Adjustments for:Depreciation
    
    14
    
    
    336,374
    
    
    
    320,807Amortization of intangibles
    
    15
    
    
    272
    
    
    
    91Write-off and disposals of assets
    
    14
    
    
    85,512
    
    
    
    42,867Finance expense
    
    
    
    
    4,320
    
    
    
    7,365Finance revenue
    
    
    
    
    (637
    )
    
    
    (3,601
    )Income tax expenses
    
    13
    
    
    825,156
    
    
    
    919,370Deferred Stripping
    
    14
    
    
    486,488
    
    
    
    415,651Cash flow from operating
activities before changes in
working capital and
provisions
    
    
    
    
    4,937,080
    
    
    
    5,275,697
 A-120




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (8) Reconciliation of Cash Flows from Operating Activities, Continued
 2009
    
    
    2008ThUS$
    
    
    ThUS$Changes in trade and other receivables
    
    
    (1,023,364
    )
    
    
    702,798Changes in inventories
    
    
    (332,847
    )
    
    
    (308,651
    )Changes in due from related companies
    
    
    (38,920
    )
    
    
    (4,594
    )Changes in other financial assets
    
    
    97,384
    
    
    
    (138,478
    )Changes in trade and other payables
    
    
    (370,408
    )
    
    
    472,487Changes in provisions
    
    
    47,458
    
    
    
    (1,602
    )Changes in other financial liabilities
    
    
    (640,192
    )
    
    
    637,918Changes in due to related companies
    
    
    (24,015
    )
    
    
    13,281Changes in other assets and liabilities
    
    
    484,219
    
    
    
    (515,841
    )Income tax paid
    
    
    (262,828
    )
    
    
    (1,236,079
    )Net cash from operating activities
    
    
    2,873,567
    
    
    
    4,896,936
 
 (9) Financial Instruments
 December 31, 2009
 Other non-Derivatives
    
    
    financial assets
    
    
    TotalsAssets
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Other financial assets, current and non-current
    
    17
    
    
    130,798
    
    
    
    
    
    
    
    130,798Trade and other receivables, current and
non-current
    
    10
    
    
    
    
    
    
    1,353,692
    
    
    
    1,353,692Due from related companies, current and
non-current
    
    11
    
    
    
    
    
    
    73,403
    
    
    
    73,403Cash and cash equivalents
    
    7
    
    
    
    
    
    
    289,775
    
    
    
    289,775Totals
    
    
    
    
    130,798
    
    
    
    1,716,870
    
    
    
    1,847,668
 Other non-Derivatives
    
    
    financial liabilities
    
    
    TotalsLiabilities
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Interest bearing liabilities
    
    20
    
    
    
    
    
    
    765,000
    
    
    
    765,000Due to related companies, current and non-current
    
    11
    
    
    
    
    
    
    283,022
    
    
    
    283,022Trade and other payables, current and non-current
    
    19
    
    
    
    
    
    
    388,615
    
    
    
    388,615Other financial liabilities current and non-current
    
    21
    
    
    99,393
    
    
    
    
    
    
    
    99,393Totals
    
    
    
    
    99,393
    
    
    
    1,436,637
    
    
    
    1,536,030
 A-121




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (9) Financial Instruments, Continued
 December 31, 2008
 Other non-Derivatives
    
    
    financial assets
    
    
    TotalsAssets
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Other financial assets, current and non-current
    
    17
    
    
    311,636
    
    
    
    
    
    
    
    311,636Trade and other receivables, current and
non-current
    
    10
    
    
    
    
    
    
    316,566
    
    
    
    316,566Due from related companies, current and
non-current
    
    11
    
    
    
    
    
    
    34,483
    
    
    
    34,483Cash and cash equivalents
    
    7
    
    
    
    
    
    
    112,127
    
    
    
    112,127Totals
    
    
    
    
    311,636
    
    
    
    463,176
    
    
    
    774,812
 Other non-Derivatives
    
    
    financial liabilities
    
    
    TotalsLiabilities
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Interest bearing liabilities
    
    20
    
    
    
    
    
    
    1,493,200
    
    
    
    1,493,200Due to related companies, current and non-current
    
    11
    
    
    
    
    
    
    355,037
    
    
    
    355,037Trade and other payables, current and non-current
    
    19
    
    
    
    
    
    
    764,601
    
    
    
    764,601Other financial liabilities, current and non-current
    
    21
    
    
    829,661
    
    
    
    
    
    
    
    829,661Totals
    
    
    
    
    829,661
    
    
    
    2,612,838
    
    
    
    3,442,499
 January 1, 2008
 Other non-Derivatives
    
    
    financial assets
    
    
    TotalsAssets
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Other financial assets, current and non-current
    
    17
    
    
    92,162
    
    
    
    
    
    
    
    92,162Trade and other receivables, current and
non-current
    
    10
    
    
    
    
    
    
    1,024,018
    
    
    
    1,024,018Due from related companies, current and
non-current
    
    11
    
    
    
    
    
    
    29,889
    
    
    
    29,889Cash and cash equivalents
    
    7
    
    
    
    
    
    
    26,941
    
    
    
    26,941Totals
    
    
    
    
    92,162
    
    
    
    1,080,848
    
    
    
    1,173,010
 Other non-Derivatives
    
    
    financial liabilities
    
    
    TotalsLiabilities
    
    Note
    
    ThUS$
    
    
    ThUS$
    
    
    ThUS$Interest bearing liabilities
    
    20
    
    
    
    
    
    
    935,000
    
    
    
    935,000Due to related companies, current and non-current
    
    11
    
    
    
    
    
    
    389,756
    
    
    
    389,756Trade and other payables, current and non-current
    
    19
    
    
    
    
    
    
    297,264
    
    
    
    297,264Other financial liabilities, current and non-current
    
    21
    
    
    106,084
    
    
    
    
    
    
    
    106,084Totals
    
    
    
    
    106,084
    
    
    
    1,622,020
    
    
    
    1,728,104
 A-122




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 (10)
    
    Trade and Other Receivables
 The composition of the balance of trade and other receivables as at December 31, 2009, 2008
and January 1, 2008 is the following:
 2009
    
    2008
    
    Jan 1, 2008ThUS$
    
    ThUS$
    
    ThUS$CurrentTrade receivables:Domestic clients
    
    
    142,931
    
    
    
    5,250
    
    
    
    126,872Foreign clients
    
    
    1,129,516
    
    
    
    252,957
    
    
    
    840,999Total trade receivables, current
    
    
    1,272,447
    
    
    
    258,207
    
    
    
    967,871Receivable from employees
    
    
    46,459
    
    
    
    19,609
    
    
    
    29,045Other sundry receivables (*)
    
    
    9,115
    
    
    
    26,841
    
    
    
    10,539Total other receivable, current
    
    
    55,574
    
    
    
    46,450
    
    
    
    39,584Total trade and other receivables, current
    
    
    1,328,021
    
    
    
    304,657
    
    
    
    1,007,455Non-currentReceivable from employees housing program and other
    
    
    25,671
    
    
    
    11,909
    
    
    
    16,563Total receivables, non-current
    
    
    25,671
    
    
    
    11,909
    
    
    
    16,563
 
 (*)
    
    Other accounts receivable from the sale of scrap, unused warehouse articles and
other sales. A-123




---



##### 



MINERA ESCONDIDA LIMITADA
 
 
 (11)
    
    Balances and Transactions with Related Companies
 (a)
    
    The accounts receivable from related companies as at December 31, 2009, 2008 and
January 1, 2008 consist in the following:
 Nature of the
    
    2009
    
    2008
    
    Jan 1, 2008Company
    
    relationship
    
    ThUS$
    
    ThUS$
    
    ThUS$BHP Billiton Marketing A.G.
    
    Common owners
    
    
    49,071
    
    
    
    29,534
    
    
    
    29,810Minera Spence S.A.
    
    Common owners
    
    
    22,926
    
    
    
    3,427
    
    
    
    Compañía Minera Cerro Colorado Ltda.
    
    Common owners
    
    
    404
    
    
    
    1,040
    
    
    
    52Others
    
    Miscellaneous
    
    
    1,002
    
    
    
    482
    
    
    
    27Total  current
    
    
    
    
    73,403
    
    
    
    34,483
    
    
    
    29,889
 (b)
    
    The accounts payable to related companies as at December 31, 2009, 2008 and January
1, 2008 consist in the following:
 Nature of the
    
    2009
    
    2008
    
    Jan 1, 2008Company
    
    relationship
    
    ThUS$
    
    ThUS$
    
    ThUS$BHP Billiton Marketing AG.
    
    Common owners
    
    
    15,040
    
    
    
    25,279
    
    
    
    32,557BHP Chile Inc.
    
    Common owners
    
    
    2,410
    
    
    
    26,737
    
    
    
    5,175Minera Spence S.A.
    
    Common owners
    
    
    671
    
    
    
    8,600
    
    
    
    7,084Compañía Minera Cerro Colorado Ltda.
    
    Common owners
    
    
    145
    
    
    
    2,808
    
    
    
    BHP Finance International Inc.
    
    Common owners
    
    
    22,378
    
    
    
    187
    
    
    
    BHP International Finance Corporation
    
    Common owners
    
    
    48,276
    
    
    
    48,462
    
    
    
    28,621Rio Tinto Finance PLC
    
    Common owners
    
    
    
    
    
    
    
    
    
    
    14,748Others
    
    Miscellaneous
    
    
    102
    
    
    
    964
    
    
    
    11,571Total  current
    
    
    
    
    89,022
    
    
    
    113,037
    
    
    
    99,756BHP International Finance Corporation
    
    Common owners
    
    
    91,150
    
    
    
    118,750
    
    
    
    166,750Río Tinto Finance PLC
    
    Common owners
    
    
    72,600
    
    
    
    87,000
    
    
    
    87,000Japan Escondida Finance
    
    Common owners
    
    
    24,200
    
    
    
    29,000
    
    
    
    29,000International Finance Corp.
    
    Common owners
    
    
    6,050
    
    
    
    7,250
    
    
    
    7,250Total  non-current
    
    
    
    
    194,000
    
    
    
    242,000
    
    
    
    290,000
 A-124




---



##### 



MINERA ESCONDIDA LIMITADA
 
 (11)
    
    Balances and Transactions with Related Companies, Continued
 (c)
    
    The significant transactions with the related companies are summarized as follows:
 2009
    
    2008
    
    Jan 1, 2008Effect on profit
    
    
    
    
    
    Effect on profit
    
    
    
    
    
    Effect on profitNature of the
    
    
    
    Amount
    
    (debit)/credit
    
    Amount
    
    (debit)/credit
    
    Amount
    
    (debit)/creditCompany
    
    relationship
    
    Transaction
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$
    
    ThUS$BHP Billiton Marketing AG
    
    Common owners
    
    Sales agency commissions
    
    
    15,565
    
    
    
    (15,565
    )
    
    
    19,446
    
    
    
    (19,446
    )
    
    
    21,224
    
    
    
    (21,224
    )BHP Billiton Marketing AG
    
    Common owners
    
    Freights
    
    
    114,276
    
    
    
    (114,276
    )
    
    
    211,716
    
    
    
    (211,716
    )
    
    
    240,811
    
    
    
    (240,811
    )BHP Billiton Marketing AG
    
    Common owners
    
    Sales
    
    
    264,611
    
    
    
    264,611
    
    
    
    250,781
    
    
    
    250,781
    
    
    
    629,942
    
    
    
    629,942BHP Mineral International
    
    Common owners
    
    Reimbursement of
expatriates salaries
and others
    
    
    23,205
    
    
    
    (23,205
    )
    
    
    4,547
    
    
    
    (4,547
    )
    
    
    10,782
    
    
    
    (10,782
    )BHP Chile Inc.
    
    Common owners
    
    Financial services
    
    
    2,674
    
    
    
    (2,674
    )
    
    
    2,798
    
    
    
    (2,798
    )
    
    
    5,187
    
    
    
    (5,187
    )BHP Chile Inc.
    
    Common owners
    
    Reimbursement of
capital project
    
    
    46,218
    
    
    
    (46,218
    )
    
    
    53,924
    
    
    
    (53,924
    )
    
    
    19,631
    
    
    
    (19,631
    )BHP Chile Inc.
    
    Common owners
    
    Marketing services
    
    
    1,800
    
    
    
    (1,800
    )
    
    
    1,800
    
    
    
    (1,800
    )
    
    
    1,800
    
    
    
    (1,800
    )BHP Chile Inc.
    
    Common owners
    
    Sales commissions
    
    
    958
    
    
    
    (958
    )
    
    
    2,766
    
    
    
    (2,766
    )
    
    
    588
    
    
    
    (588
    )BHP Finance International Inc.
    
    Common owners
    
    Debt interest
    
    
    4,697
    
    
    
    (4,697
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BHP International Finance 
Corporation
    
    Common owners
    
    Debt interest
    
    
    9,201
    
    
    
    (9,201
    )
    
    
    15,647
    
    
    
    (15,647
    )
    
    
    20,561
    
    
    
    ](20,561
    )Río Tinto Finance PLC
    
    Minority ownership
    
    Debt interest
    
    
    7,523
    
    
    
    (7,523
    )
    
    
    7,815
    
    
    
    (7,815
    )
    
    
    10,727
    
    
    
    (10,727
    )Japan Escondida Finance
    
    Minority ownership
    
    Debt interest
    
    
    2,418
    
    
    
    (2,418
    )
    
    
    2,605
    
    
    
    (2,605
    )
    
    
    3,576
    
    
    
    (3,576
    )International finance Corporation
    
    Minority ownership
    
    Debt interest
    
    
    604
    
    
    
    (604
    )
    
    
    651
    
    
    
    (651
    )
    
    
    894
    
    
    
    (894
    )BHP Finance International Inc.
    
    Common property
    
    Loan obtained
    
    
    143,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Río Tinto Finance PLC
    
    Minority ownership
    
    Loan obtained
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Japan Escondida Finance
    
    Minority ownership
    
    Loan obtained
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    International finance Corporation
    
    Minority ownership
    
    Loan obtained
    
    
    6,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BHP Finance International Inc.
    
    Common property
    
    Debt paid
    
    
    143,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BHP International Finance Corp.
    
    Common property
    
    Debt paid
    
    
    27,600
    
    
    
    
    
    
    
    27,600
    
    
    
    
    
    
    
    27,600
    
    
    
    Río Tinto Finance PLC
    
    Minority ownership
    
    Debt paid
    
    
    89,400
    
    
    
    
    
    
    
    14,400
    
    
    
    
    
    
    
    14,400
    
    
    
    Japan Escondida Finance
    
    Minority ownership
    
    Debt paid
    
    
    29,800
    
    
    
    
    
    
    
    4,800
    
    
    
    
    
    
    
    4,800
    
    
    
    International finance Corporation
    
    Minority ownership
    
    Debt paid
    
    
    7,450
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    1,200
    
    
    
    BHP International Finance Corp.
    
    Common owners
    
    Dividends paid
    
    
    460,000
    
    
    
    
    
    
    
    2,487,556
    
    
    
    
    
    
    
    3,087,750
    
    
    
    Río Tinto Finance PLC
    
    Minority ownership
    
    Dividends paid
    
    
    240,000
    
    
    
    
    
    
    
    1,297,856
    
    
    
    
    
    
    
    1,611,000
    
    
    
    Japan Escondida Finance
    
    Minority ownership
    
    Dividends paid
    
    
    80,000
    
    
    
    
    
    
    
    432,619
    
    
    
    
    
    
    
    537,000
    
    
    
    International finance Corporation
    
    Minority ownership
    
    Dividends paid
    
    
    20,000
    
    
    
    
    
    
    
    108,154
    
    
    
    
    
    
    
    134,250
    
    
    
    Minera Cerro Colorado Ltda.
    
    Common owners
    
    Sales
    
    
    21,042
    
    
    
    21,042
    
    
    
    16,680
    
    
    
    16,680
    
    
    
    48,401
    
    
    
    48,401Minera Spence S.A.
    
    Common owners
    
    Sales
    
    
    102,278
    
    
    
    102,278
    
    
    
    8,398
    
    
    
    8,398
    
    
    
    39,167
    
    
    
    39,167BMI- Base Metals
    
    Common owners
    
    Sales
    
    
    3,829
    
    
    
    3,829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 The subordinated debt to members at December 31, 2009, 2008 and January 1, 2008, consist in
the following:
 2009
    
    2008
    
    Jan 1, 2008ThUS$
    
    ThUS$
    
    ThUS$LenderBHP International Finance Corporation
    
    
    139,150
    
    
    
    166,750
    
    
    
    194,350Rio Tinto Finance PLC
    
    
    72,600
    
    
    
    87,000
    
    
    
    101,400JECO Corporation
    
    
    24,200
    
    
    
    29,000
    
    
    
    33,800International Finance Corporation
    
    
    6,050
    
    
    
    7,250
    
    
    
    8,450Subtotal
    
    
    242,000
    
    
    
    290,000
    
    
    
    338,000Less:Current portion
    
    
    (48,000
    )
    
    
    (48,000
    )
    
    
    (48,000
    )Total non-current portion
    
    
    194,000
    
    
    
    242,000
    
    
    
    290,000
 A-125




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##### 



MINERA ESCONDIDA LIMITADA
 
 (11)
    
    Balances and Transactions with Related Companies, ContinuedDraw downs of subordinated debt to members have been made as follows:
 
    
    US$295 million during December 1998, payable in 30 semi-annual payments commencing on June 15, 1999. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
    
    US$200 million during May and June 2000, payable in 30 semi-annual payments commencing on December 15, 2000. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
    
    US $150 million on May 11, 2001, with a grace period of 5 years for principal payable in 20 semi-annual payments commencing on June 15, 2006. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
    
    US$250 million loan was obtained in 2009, which was fully repaid on September 2009.
 Under the terms of the subordinated loan agreement, the borrower can elect to capitalize
interest due on each payment date to existing debt. Interest payable is shown as a current
liability until such time as the election is made or until such interest is paid. No interest
was capitalized for the years ended December 31, 2009 and 2008.The subordinated debt to members is unsecured.Scheduled principal payments on subordinated debt to members at December 31, 2009 are as
follows:
 Subordinateddebt tomembersPrincipal payments following the year ending December 31, 2009
    
    ThUS$2010
    
    
    48,0002011
    
    
    48,0002012
    
    
    48,0002013
    
    
    48,0002014
    
    
    28,3332015 and after
    
    
    21,667Totals
    
    
    242,000
 A-126




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##### 



MINERA ESCONDIDA LIMITADA
 
 
 (12)
    
    Inventories
 The inventories as at December 31, 2009, 2008 and January 1, 2008 consist of the following:
 2009
    
    2008
    
    Jan 1, 2008ThUS$
    
    ThUS$
    
    ThUS$CurrentConsumables and material
    
    
    363,415
    
    
    
    299,150
    
    
    
    173,888Work in progress
    
    
    670,368
    
    
    
    375,913
    
    
    
    223,913Finished products
    
    
    46,262
    
    
    
    72,577
    
    
    
    42,585Provision stock obsolescence
    
    
    (5,257
    )
    
    
    (5,699
    )
    
    
    (7,096
    )Total inventories
    
    
    1,074,788
    
    
    
    741,941
    
    
    
    433,290
 
 (13)
    
    Income Taxes and Deferred Income Taxes
 (a)
    
    Income tax expensesThe expense (benefit) for income taxes for the years ended December 31, 2009 and 2008
consist of the following:
 2009
    
    2008ThUS$
    
    ThUS$Current income tax expense
    
    
    515,470
    
    
    
    895,911Deferred tax expense
    
    
    309,686
    
    
    
    23,459Total income tax expense
    
    
    825,156
    
    
    
    919,370
 Reconciliation of effective tax rate:
 2009
    
    
    
    
    
    2008%
    
    ThUS$
    
    %
    
    ThUS$Profit before taxation
    
    
    
    
    
    
    4,024,751
    
    
    
    
    
    
    
    4,492,517Tax on profit at statutory rate of 20.32
    
    
    20.32
    
    
    
    817,829
    
    
    
    20.32
    
    
    
    912,879Factors affecting income tax expense for the periodAmount under/(over) provided in prior years
    
    
    0.18
    
    
    
    7,327
    
    
    
    0.14
    
    
    
    6,491Total taxation expense
    
    
    20.50
    
    
    
    825,156
    
    
    
    20.46
    
    
    
    919,370
 A-127