Rio Tinto Limited AGM

Rio Tinto PLC
04 May 2006


Rio Tinto reports on excellent year


Buoyant conditions in the mining sector in 2005, together with Rio Tinto's
strategic positioning and strong operating performance, resulted in a second
successive year of record profits, the chairman of Rio Tinto Paul Skinner told
the annual meeting of shareholders in Melbourne today.


'We enjoyed strong prices for most of our products and an increase in production
volumes. In 2005, underlying earnings of just under US$5 billion were 118 per
cent above 2004. Cash flow was 85 per cent higher at US$8 billion and our
regular dividend four per cent higher.


'Together with a 20 per cent increase in the regular dividend in 2004, this
represents an increase of almost 25 per cent over the last two years. In
addition, we declared a significant special dividend.


'Investment in the growth of the business continued, with capital expenditure a
record US$2.5 billion. This is expected to increase to at least US$3 billion in
each of 2006 and 2007.


'The current strength of the Group's cash flow means that, in addition to
comfortably funding current and planned investments, capital can be returned to
shareholders without reducing our flexibility to pursue other development
opportunities which may arise.  We remain in a very strong financial position.'


Rio Tinto chief executive Leigh Clifford said 2005 was an excellent year. 'The
mining industry is experiencing strong prices across most of our products.


'We were able to capitalise on the upswing with a strong operating performance
that maximised production. There was a significant improvement in our safety
record for the sixth year in a row.


'We approved major projects and concluded a number of well executed
transactions. At the same time, we concentrated on operational and project
delivery, and achieved record output in many areas.


'All product groups except Industrial Minerals, which is in a reorganisation and
renewal phase, increased their underlying earnings.'


The Chairman also announced that the board had decided today not to put
Resolution 3 to the meeting as a number of shareholders had indicated some
concerns about the subject matter of that resolution. Resolution 3 dealt with
proposed changes to the Rio Tinto Limited constitution and adoption of new Rio
Tinto plc articles of association.


As a consequence of this, the equivalent resolution at the earlier Rio Tinto plc
meeting will be taken not to have been passed.


The transcript of both addresses follows:


Opening remarks by the chairman, Paul Skinner


Good morning ladies and gentlemen. I am very pleased to welcome you to this
year's Annual General Meeting.


All of our directors are here this morning, except Lord Kerr, who sends his
apologies. He is sorry not to be here, having enjoyed the last two meetings.


I should like to begin by welcoming two new colleagues to the board, both of
whom are standing for election today for the first time.


Sir Rod Eddington, formerly chief executive of British Airways, was appointed to
the board in September 2005. Tom Albanese, chief executive of Copper and
Exploration, was appointed a director in March and strengthens the executive
representation on the board.



Both will add to the overall skill and experience of the Rio Tinto board, which
is a vital underpinning of our high standard of corporate governance.
Maintaining a well qualified and effective board is an important priority -
particularly for me as chairman.



All of your directors retiring by rotation are eligible to stand for re-election
and I'm pleased to say that Sir David Clementi, Leigh Clifford, Andrew Gould and
David Mayhew all offer themselves for re-election at today's meeting.



Before we proceed with the formal part of the agenda, Leigh and I will say a few
words about Rio Tinto's business, our current projects and operations.



In 2005, the buoyant conditions in our sector, together with Rio Tinto's
strategic positioning and strong operating performance, resulted in a second
successive year of record profits.



We enjoyed strong prices for most of our products and an increase in production
volumes. In 2005, underlying earnings of just under US$5 billion were 118 per
cent above 2004. Cash flow was 85 per cent higher at US$8 billion and our
regular dividend four per cent higher.



Together with a 20 per cent increase in the regular dividend in 2004, this
represents an increase of almost 25 per cent over the last two years. In
addition, we declared a significant special dividend.



Investment in the growth of the business continued, with capital expenditure a
record US$2.5 billion. This is expected to increase to at least US$3 billion in
each of 2006 and 2007.



The current strength of the Group's cash flow means that, in addition to
comfortably funding current and planned investments, capital can be returned to
shareholders without reducing our flexibility to pursue other development
opportunities which may arise.  We remain in a very strong financial position.





Capital management



Given these strong cash flows, we were able to announce a major capital
management programme totalling US$4 billion.



This comprises a US$1.5 billion special dividend of US$1.10 per share and a
share buyback programme totalling US$2.5 billion by the end of 2007.  It
replaces the approximately US$500 million remaining from the 2005 buyback
programme.



Rio Tinto dividends have increased each year since the dual listed companies
merger in 1995. The aim of our progressive dividend policy is to increase the
dollar value of ordinary dividends continuously over time, without cutting them
in economic downturns.



The final dividend declared for 2005 under this progressive policy brings total
dividends for the year to 80 US cents per share.



This means that the 2006 interim dividend payable in September can be expected
to be
40 US cents per share.


Strategy



Rio Tinto has maintained a consistent strategy over many years - to invest in
large, long life, low cost orebodies and to develop and deliver them in a way
which reflects best operational practice.  We believe this will, over time,
produce value growth for shareholders in varying market conditions, which may
not always be as supportive as those we enjoy today.



Our experience also suggests that a disciplined focus on large orebodies will
result in additional development options emerging as geological understanding
and technology advances.



We continue to maintain a rigorous approach to investment appraisal with value
creation for you, our shareholders, as the leading criterion. At a time when
prices for most commodities are at record levels we believe it is vital to focus
on investing in projects which are economically robust.



As I noted earlier, our capital expenditure continues to grow and we have an
exciting set of development opportunities.  While much of this programme is
focused on our heartland areas of Australia and North America, we recognise that
a significant part of our future growth will lie in new areas for us.



The recent decision to proceed with a titanium sands development in Madagascar
and the exploration joint venture agreed with Norilsk Nickel in Russia exemplify
this.



Alongside our investment programme we are doing all we can to leverage the
benefits of our global reach and scale through programmes designed to promote
global best practice in our operations and reducing costs by improving the
effectiveness of our primary business processes.


Sustainable development



Rio Tinto also seeks to differentiate itself by a strong focus on the important
social and environmental aspects of our global business.



We need to be able to deal with complex stakeholder relationships and position
ourselves as a preferred mining partner. This means we have to show that our
environmental performance, business transparency, community relations and
employee conditions match our traditional technical skills.



With social and community experts working alongside our mining professionals, we
contribute to the economic and social development of our host communities while
minimising the effect of our activities on the environment.



It is very encouraging to see these values in action. I recently visited our
mining project in Madagascar which is in the early stages of construction. At an
inauguration ceremony the President of Madagascar spoke very positively about
the economic potential of the project and expressed his appreciation of the role
Rio Tinto is playing in developing it.



I also saw the care being taken by our scientists and anthropologists to address
complex environmental and social challenges that are integral to a major
resource development in one of the world's poorest countries.



Personally I have no doubt that a proactive approach to sustainable development
will be of long term benefit to the Group and add value to the business in all
phases of our activity.


Details of our 2005 sustainable development performance and financial results,
as well as more details of our projects, are set out in our year end
publications, the Annual report and financial statements, the Annual review and
the Sustainable development review.



Copies of these documents are available outside for anyone who would like them.


China's major impact


These remarks would not be complete without noting the major impact of China's
economic growth on our markets. Our view is that China will continue to enjoy
strong long term economic growth - probably with some occasional short term
variations.



The 11th five year plan, which was recently adopted, places considerable
emphasis on balanced and sustainable growth and a gradual transition from
investment to consumption as the key driver of the economy. We believe this will
be supportive of metals and minerals markets over the longer term.



We continue to enjoy strong relationships with our Chinese customers which have
been built up over many years. It is also encouraging to see a more positive
economic environment in Japan, which remains a major market for Rio Tinto
products.


Outlook



Looking at the wider global economy, several potential threats to economic
growth remain, including higher energy prices, structural imbalances in trade
flows, concerns over the future of the multi-lateral trading system, and the
potential for currency fluctuations.



However, we believe economic growth will continue the positive trend of 2005,
even if rates of growth slow somewhat.  This, in turn, should result in a
continuation of strong markets for our products and prices above the long term
trend.



We recognise that the current strong markets will not continue indefinitely. At
some point the supply position will become more balanced and we will see a
downturn in the cycle.



Our approach will be to continue to invest in value creating production growth
to provide long term supply assurance to our customers, and to maintain our
market position.



Our existing portfolio has the potential to generate continuing growth in future
and we remain alert to potential opportunities from mergers, acquisitions and
alliances.



I believe that Rio Tinto is in very good shape and competitively well positioned
to remain one of the world's leading mining companies.



In conclusion, I would like to recognise Rio Tinto's employees and the
contribution they make. Their continuing efforts, and commitment to our core
values, will ensure that we maintain a strong and competitive company.



The board is very appreciative of the important part our employees played in
2005 in all the countries in which we operate. Mining is a demanding occupation
that calls for great dedication.



Let me now ask Leigh to comment on our performance in 2005 and, in more detail,
on the future direction of the Group.


Leigh, over to you.



Remarks by the chief executive, Leigh Clifford


Thanks Paul, and good morning ladies and gentlemen.


Product group results



As the chairman pointed out, 2005 was an excellent year. The mining industry is
experiencing strong prices across most of our products.



We were able to capitalise on the upswing with a strong operating performance
that maximised production.



There was a significant improvement in our safety record for the sixth year in a
row.



We approved major projects and concluded a number of well executed transactions.
At the same time, we concentrated on operational and project delivery, and
achieved record output in many areas.



All product groups except Industrial Minerals, which is in a reorganisation and
renewal phase, increased their underlying earnings.



The Copper group was our best performer with underlying earnings of more than
US$2 billion. This was due to higher copper and gold prices and a significant
increase in molybdenum production to take advantage of a price increase of more
than 100 per cent.



Iron ore underlying earnings were more than 200 per cent higher at US$1.7
billion in a year that also saw fast track development of simultaneous expansion
projects across the Group's mines, rail and ports in Western Australia.



This year a succession of cyclones in Western Australia has disrupted production
at our iron ore operations, leading to some lost tonnage in the first quarter
and some effect early in the second quarter as well.



In 2005, results from the Energy group benefited from a significant increase in
the price received for both thermal and coking coal, leading to a 70 per cent
increase in underlying earnings to US$733 million.



Industrial Minerals' contribution was US$197 million, 23 per cent lower than in
2004, due to significant one-off costs and restructuring provisions in relation
to the formation of Rio Tinto Minerals.



In the Aluminium group, a ten per cent increase in prices lifted earnings by
US$106 million to US$392 million and volumes increased with the first full
year's production from the Comalco Alumina Refinery.



Finally, in Diamonds, a strong market for gemstones and a solid operating
performance from our three mines increased underlying earnings by nearly 50 per
cent to US$281 million.


Strategy implementation



The mining industry is riding high at the moment, but we realise that these
favourable conditions are no basis for complacency.



Although we see durability of economic growth in China and elsewhere, the
reality is that we are in a cyclical business - even if successive cycles have
different characteristics.



We may be seeing stronger demand for some time, and some constraints in the form
of input shortages, yet eventually there will be a supply side response.



Rio Tinto's long term strategy for portfolio development, investment, and
operational excellence is designed to create shareholder value whatever the
prevailing business conditions.



The key elements of our strategy remain intact, but we are seeing some changes
in emphasis and application.



In the current competitive environment where we are stretched to meet strong
demand, some cost increases are inevitable. Other costs are, in fact, desirable
and make good business sense, such as increased exploration and project
evaluation spending. This is a 'bad' cost, 'good' cost story, and 'good' costs
will result in future value.



We give particular attention to managing 'bad' costs with global procurement,
shipping and recruitment strategies, and tight operational control.



Adjusted for inflation, in 2005 our costs increased by five per cent per unit of
production, a performance that compares favourably with our peer group
companies.



Improving performance together



Rio Tinto has a long track record of creating value through business
improvement. This remains a priority notwithstanding the buoyant market
conditions.



We are currently in an exciting new phase of improvement. This is a dedicated
Group wide programme we call Improving performance together. We are building on
the success of our decentralised business model with strong local management
accountability.



By making the most of our global scale and reach, we now want to ensure we
maximise the skills, experience and energy of our employees across the Group.



This means adjusting our organisational structure to ensure greater
collaboration between businesses and replicating best practice across the Group.
The use of improved information technology and common infrastructure is key to
this approach.



We are still in the early stages of this journey but we are confident it will
deliver lasting value through a combination of greater capital efficiency,
higher volumes, improved revenues and enhanced productivity.



This goes to the core of Rio Tinto's business approach, which is about sustained
first class operational delivery and replicating our best practice and
performance throughout the Group.


The effect of China



As the chairman indicated, we expect demand from China to continue to support
metal prices above the long term trend for some time yet.



Depending on the commodity, China now accounts for between 20 and 30 per cent of
total global demand. Furthermore, 15 per cent of Rio Tinto's total sales revenue
in 2005, over US$3 billion, was derived from China.



It is worth noting the increasing gap between demand and supply of key mineral
resources in China. While this may be offset to some degree by discovery of new
mines in China, geological prospectivity is a key factor and identifying new
indigenous resources is a challenge.



To illustrate, China consumes 33 per cent of all steel, but produces only 17 per
cent of the world's iron ore. Likewise, China consumes 22 per cent of copper,
but its mine production is only five per cent of world output. For aluminium,
they consume 22 per cent of aluminium metal but produce only 12 per cent of the
world's alumina.



Major project developments



The Group has announced plans to spend in excess of three billion dollars on
brownfield and greenfield projects in each of 2006 and 2007.



In iron ore alone, we have embarked on our largest development project in Rio
Tinto's existence with nearly US$3 billion committed to mine, rail and port
expansion in Western Australia to meet strong demand principally from China.



Also, following our agreement with Hancock Prospecting in the middle of 2005,
and after receiving the necessary approvals from the Western Australian
Government, we are now underway with the 22 million tonne Hope Downs project.



Our HIsmelt project, commissioned last year, is showing encouraging performance,
and we are progressively increasing capacity.



Towards the end of 2005, we announced the extension of two of the Group's
largest and most mature mines.



Firstly, in Australia, the Argyle Diamonds underground block caving project is
going ahead at a cost of US$760 million to prolong its 20 year life by at least
another 11 years.



And in Namibia, US$82 million will be spent at Rossing Uranium to add another
ten years to an already 30 year mine life.



These projects underline the optionality conferred by long life orebodies.



In addition to these expansions, we approved development of the Cortez Hills
underground gold project in Nevada with our joint venture partner Barrick Gold,
and construction of a US$775 million mineral sands project in Madagascar.



We can potentially add to this a new generation of advanced prospects in the
pipeline.



•  We have started evaluation of the La Granja copper project in Peru;

•  The Simandou iron ore project in Guinea is currently in the
   pre-feasibility stage;

•  The PRC potash project in Argentina recently entered the feasibility
   study stage, and

•  Work continues on the Resolution copper project in Arizona.


Exploration



We have an encouraging array of exploration projects and once again have
increased our exploration spending. In 2005, we spent US$110 million on
exploring new areas, US$83 million on evaluation and US$57 million on
exploration associated with operating mines. This year we expect spending to
increase further.



In January we signed a ground breaking exploration joint venture with Norilsk
Nickel of Russia. The focus of the joint venture will be a very large region of
far eastern Russia.
Whilst not excluding other minerals, the focus of our efforts in the joint
venture will be on base metals and gold.


Summing up



Our business is in great financial shape, generating record cash flows, and also
investing at record levels.



Through strong operational performance and focus on project delivery, we
produced record volumes in many of our product groups



At the same time we are managing the cost pressures that the global industry is
currently facing.



We believe that Rio Tinto, with its combination of technical capability and
depth, its focus on operational performance and business improvement, its
commitment to responsible mining practices, and its strong balance sheet, is
well positioned for the future.



For further information, please contact:

LONDON                                               AUSTRALIA

Media Relations                                      Media Relations

Nick Cobban                                          Ian Head

Office:  [phone]                        Office:  [phone]

Mobile: [phone]                         Mobile: [phone]

Investor Relations                                   Investor Relations

Nigel Jones                                          Dave Skinner

Office: [phone]                         Office:  [phone]

Mobile: [phone]                         Mobile: [phone]



David Ovington                                       Susie Creswell

Office:  [phone]                        Office:  [phone]

Mobile: [phone]                         Mobile: [phone]



Website: www.riotinto.com



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