Rio Tinto Group Price & Performance (RIO)

Now let's look at the evidence. Our production has grown for the third year in a row Copper equivalent production increased 1% in 2024 Rio our mid range guidance indicates another 4% growth this year, led by the ramp up [indiscernible] The 4% excludes Arcadium Lithium, So you can see we are already on our way organically. The acquisition only brightens the outlook As we set out, at our Investor Day in December, this puts us on course for a decade of 3% compound annual production growth. And this is not growth for the sake of growth. This is about investments that create more value from existing assets and diversifying our portfolio towards future areas of growth. We have really good momentum and the way we have built it is simple. A relentless focus on our four objectives: [indiscernible] best operator.

The safe production system is driving clear improvements that we will build on and accelerate It was very encouraging for me to speak to our iron ore colleagues in the Pilbara a couple of weeks ago and understand how the evolving culture and systems are empowering them to make continuous improvement We have more work to do on this objective to unlock value from all our assets this year And that's a major opportunity. Becoming best operator also means creating a safe environment and safe culture for our people. We are determined to learn from the deeply tragic events we experienced in 2024 to improve upon our processes [indiscernible] Second, impeccable ESG have an action plan to decarbonize and it's value accretive. Good for the climate, good for business. I'll come back to that later. Next, excellent development. The tremendous progress at Semendu Oir Tolgoi and Rincon showcases our project building expertise.

Peter will share the insights with you in a moment, And finally, social license, having spent time on country in Western Australia, recently I'm reminded of how fundamental this objective is to everything we do We must constantly earn the right to operate and grow and we cannot take our license for granted. Right now, I think we are in a good place. When I talk to our stakeholders, I sense we are building the trust and deep apartment Our four objectives are driving us forward in our ambition for a decade of growth and to deliver Our strong operational and financial performance support this conviction, We have increased production volumes and sales volumes and we remain very profitable. Even in a weaker iron ore price scenario. This resilience is underpinned by an increasingly diversified portfolio. Peter will go into more detail, but I want to bring to your attention that the net operating cash flow This increased 3% last year supported by a stronger performance from copper and aluminium. Looking at the second half of the year, you can see how much momentum we're gaining from these assets and that our distinct commodity mix is now paying off. Our strategic investments are adding value and our balance sheet is in good health.

Putting us ahead of the curve. This means no surprises We are paying ordinary dividends at the top end of the range for the year running, We have a resilient, highly valuable business today We have built a solid base for future value and once again we are paying back to our shareholders Rio. I will hand over to Peter. Thanks, Jakob. I have a reasonably simple task today to summarize our strong financial performance for three reasons. Firstly, majority of our assets are performing well. And we're starting to see productivity breakthroughs as SPS matures. As always, there are challenges, but the underlying trajectory is more operational consistency and continuous improvement. Secondly, we are seeing good discipline on costs, working capital and CapEx. Resulting in strong cash flows. The improvement in our cost performance in 2024 was particularly good to see after several 2%, to $23,300,000,000 despite an 11% lower iron ore price. With a rising contribution from our aluminum and copper divisions.

Operating cash flow was particularly resilient, rising 3% with a 67% EBITDA cash conversion rate, up from 63% in 2023 Rio. [indiscernible] rising to $9,500,000,000 we ended the year with net debt of $5,500,000,000 And as Jacob said, we have maintained our track record of 60% payout for the ordinary dividend equating to $6,500,000,000 These strong results have been achieved against a complex macroeconomic backdrop. And a mixed demand picture for our products dependent on end use. Firstly, the property sector globally has been soft. In China, it has been weak for a number of years, with steel demand down by as much as 30% Elsewhere in the world, construction has been dampened by higher interest rates. Second, traditional consumer and industrial sectors have tended to be more stable and generally supportive for metals. And this picture is pretty consistent across major markets. And third, demand from the energy transition.

Which is not only void growth for copper and aluminium, but also been a significant factor in holding up demand for finished steel due to investment in renewables Energy transition sectors accounted for around 20% of Chinese GDP growth in 2024. The effects have been less pronounced elsewhere we expect it to remain the major driver of demand growth globally. And this is where we are spending most focused in terms of our growth program. The significant inflationary pressures of the last few years have changed the shape of industry cost curves.

Resulting in higher prices for many products, given the correlation between prices and costs, [indiscernible] it's important to have a very balanced view of the demand picture. Our financial results are not the product of a global economy [indiscernible] on all cylinders. Turning now to EBITDA. In 2024, we really started to see the benefits of our diversified portfolio, and operational improvement. Higher prices for copper, [indiscernible] together with rising copper and bauxite volumes, helped to offset much of the impact of the iron ore price decline As we set out, our Capital Markets Day, Over the next few years, we expect to see our financial results increasingly driven by the whole portfolio of assets, not just the Pilbara.

Our improving operational stability and intense focus on cost discipline is starting to bear fruit. Just to give you a few examples, we have already lowered headcount in iron ore as part of our recent streamlining program. And have reduced group wide functional costs by 3% year on year. This is all about right sizing for the future Meanwhile, copy unit costs on a gross basis, that is, to say before bike product credits were down 4% on 2023 Rio we achieved greater cost efficiencies So overall, we really feel we've turned a corner. The post COVID inflationary environment was challenging. But costs are now under control and SBS is kicking in which gives us good momentum. Going into 2025. The EBITDA waterfall underlines the stability. Commodity prices as ever were the biggest driver. Netting out to $1,600,000,000 negative. The net effect of lower energy, and market based import costs more than offset the impact of general inflation of around 3% Rio. In copper equivalent terms, our production was up just over 1%. Mostly driven by our rising copper volumes in line with the ramp up at OT Higher grades at Escondida and the restart of the Kennicott smelter. This compensated for a modest decline in iron ore sales.

Exploration and evaluation was $300,000,000 lower.

Mainly a function of Cimendu costs being expensed for a good chunk of 2023 Rio we finalized agreements.

At around $1,000,000,000 a year Turning to cash unit costs. Our performance was more positive in the second half as expected, and broadly flat For the year, We had lower unit costs in aluminium, and copper, which were matched by adverse unit costs in our other businesses. Mainly driven by lower volumes. So all in all, this brings us to strong underlying EBITDA of $23,300,000,000 Onto the product groups, where we enjoyed a rising contribution Iron ore delivered more than $16,000,000,000 EBITDA 2024 Realized pricing was strong at 99% of the index. And we saw good levels of productivity improvement and met our shipments guidance. And this was all achieved despite the rate derailment earlier in the year and some adverse weather conditions in Q4, with unusually high rainfall. Unit costs came in at $23 a tonne, and we are guiding to around 3% higher this year at the midpoint. 2025 is going to be demanding, As Simon highlighted in December, with depletion peaking at 19,000,000 tonnes. However, we are targeting another 5,000,000 tonnes of productivity improvement from SPS and Western Range is on plan to commence production in the first half. Continue to advance our next four Pilgrim mine replacement projects.

These are progressing well, although timelines are, of course, subject to receiving environmental Heritage approvals. The product strategy work is ongoing. We are closely reviewing customer requirements, and available ore grades. Unfortunately, this year has started. With some very challenging weather conditions in the Pilbara. Tropical Cyclone Sean delivered more rain in one day than the wettest January on record and was followed by three more cyclones. First quarter production is impacted, importantly, our full year shipments guidance is unchanged. Our aluminium performance was impressive. In particular, for smelting bauxite. We were able to take full advantage of stronger markets leading to a 61% increase in product group EBITDA. Driven by higher prices and rising volumes across the three operations. Lastly Minerals, where TiO2 volume reflected weak Western market conditions for pigment, While IOC has still not achieved the operational stability we're striving for.

On the plus side, we achieved Rincon, first lithium, and from the Sarta plant, an approval for full scale operations. Moving to the safe production system. This is now being deployed at 31 or 80% of sites, and we're deepening maturity at the initial locations. Our Ameren mine in Queensland is a great [indiscernible] in 2024, It achieved record bauxite output and is now running above nameplate capacity and was a key driver of our overall 7% production uplift. Let's now take a look at OT Underground. Best Operator Excellence in Action. In 2024, we achieved all ramp up milestones. Including commissioning [indiscernible] As we steadily increase its capacity, output is set to rise by over 50%. And the ramp up will continue over the next three years. To 500,000 tons per year, On average, over the period 2028 Rio, to 02/1936, making OT the world's fourth largest copper mine the end of the decade. We believe that we can realize even more from our existing assets We're therefore addressing [indiscernible] complex challenges head on. Kennicott's orebody is significant. It remains a real opportunity to unlock value an attractive jurisdiction. Our job is to work through the geotechnical risks and maximize value from all open pit and underground options.

And it's vital we turn this asset around and set it up for the future. Over the last few years, we have learned a lot about the complexity of IOC. Now as I mentioned in December, We are systematically working through the bottlenecks in order to achieve operational stability. Elsewhere, we are deepening partnerships, bringing Sumitomo into the Winu project and working closely alongside our Chinese partners at Cimendu. I was in Guinea last month. And was struck by the tremendous progress over the last year. We remain confident that we will achieve first production at Simfa Meingate later this year and ramp up over thirty months to 60,000,000 tonnes [indiscernible] Lastly, on decarbonization. We have signed renewable power contracts for around half of Boeing's needs and secured a more flexible energy supply for ANZUS. As well as increasing our stake to 100%. We continue to take a very disciplined approach to capital allocation. Our CapEx guidance is unchanged. With growth of around $3,000,000,000 Each year, The major commitments in 2025 a completion of OT Underground, the ongoing delivery of Simendu and the start of construction at Rincon. Over the next few years, production from our projects will take off.

Particularly driven by OT [indiscernible] Our balance sheet strength is the key enabler here. It allows us to run our business consistently and maintain investment through the cycle. And creating optionality such as our acquisition of Arcadium. We remain committed to maintaining strong And finally, the dividend. In line with our usual practice, we have declared a 60% payout for the full year ordinary. Our commitment to consistent shareholder returns is unwavering. And we now have a nine year track record of paying at the top of the range. With that, Let me pass back to Jakob.

Thank you, Peter. We have made great progress executing our strategy and objectives in 2024.

As Peter showed, our momentum towards best operator is helping us get more from our existing assets. The underlying driver is our evolving more psychologically safe [indiscernible] creating a less hierarchical and more humane organization. We are also capturing operational learnings as we develop major projects, For example, Semendu is progressing at a breathtaking speed on schedule, and on budget, Of course, 2024 was the year of lithium as we sought to diversify our portfolio further. And our deepening project expertise is giving us the tools we need to also build a world class lithium business. Rincon went from greenfield to first lithium in only thirty two months and we are now scaling up the site with confidence.

Meanwhile, combining our Rincon learnings technology and balance sheet with Arcadium's expertise will allow us to realize the full potential Arcadium's assets The acquisition is advancing at pace and set to close within the first quarter. Enhancing our existing operations and evolving our portfolio in line with demand provides a strong base for us to succeed in the short, medium, and long term. Yes. We can expect more global volatility in the year ahead. But our strategy enables us to be resilient in an uncertain world and capture new opportunities as they arise. So let's look at the year ahead. There are important milestones to come, including Oyu Tolgoi's ramp up first production at the mine gate from Semendu and the rollout of technologies including AP60. And throughout our year, our priority is to intensify our focus on best operator to drive improvements everywhere the outlook gets even more exciting further down the line. 1,000,000 tonnes of copper a year this decade Growing our leading aluminum business expansion in high grade iron ore, and a leading lithium business. That's not all. We have a rich pipeline of projects exploration and technologies in development that will support our growth and provide materials needed for the energy transition.

That brings me on to decarbonization. It is worth highlighting that we made significant progress in '24, This was a record year for our emission reduction. We have moved from strategy to action cutting emissions by 14% between 2018s and 2024. Parking the trend a time when they are on the rise globally, and we have done it without compromising our shareholder returns. 2024 was also a record year of project approvals to meet our future targets, These recent commitments have significantly advanced our progress towards our 02/1930 target to cut emissions by 50%, which we are pursuing a relentless focus On value, In summary, our strong operational and financial results tells us Rio intend to has momentum on its trajectory for a decade of growth. [indiscernible] have also shown leadership in project development and we are embedding those learnings throughout the organization Crucially, we are delivering consistent shareholder value as we diversify and decarbonize our portfolio and strengthen our business further.

No matter what comes our way, cyclones and all, I have confidence a very decent year ahead. Because I have an excellent team and we have an excellent resource base. Thank you.

Good morning.

Afternoon, and good evening, everyone. Thank you for joining the call today. My name is Rachel Arellano. For those who have not yet met me, I'm really excited to be here. My first full year results as Head of Investor Relations at Rio Tinto.

Jacob and Peter have taken you through their introductory remarks on our strong operational and financial results for the year 2024. We will now follow with a question and answer session for forty five minutes. Please limit yourself to one question and one follow-up. That we can cover as many people as possible. With that, I will now hand over to the operator. Thank you. Thank you.

We will now go to your first question. [indiscernible] Comes from the line of Rahul Anand from Morgan Stanley. Please go ahead.

Hi, Peter Yackel and team. Thanks for the call.

First question is for Peter. Perhaps. Peter, the dividend policy and the dividend today obviously, great consistency and predictability having paid 60% of EPS over the past nine years. If I look through the detail, however, obviously, the dividend represents a payout greater than 100% of the free cash generation. Or my number is about 120%. And if we look into the future, you've obviously got higher CapEx. Which implies your dividend at the 60% level is probably going exceed the free cash flow in future periods as well? So I guess my question is, are you comfortable adding debt to maintain that EPS payout level in future periods?

That's the first one. Thanks.

Well, I think the key point is that we are investing in some pretty attractive growth through the OT underground, and through Simendu, which is going to add incremental cash flows into the system. So the answer is yes. I mean, right now, we had a small deficit of free cash flow to investment. But those incremental cash flows really give us the confidence going forward to keep to pay the dividend at the level it is.

Got it. That's very clear. And look, quick second one for Jakob perhaps Congratulations, obviously on the strong performance from the aluminum business. For the period. Just under a scenario, Yakob, where you do have tariffs on Canadian goods come in. I mean, how would the aluminum business be able to cope with that? Just wanted to understand, under a scenario where you perhaps shipping your product to Europe. I mean is there capacity in the trade routes available? What What incremental cost should we think about? Obviously, there's a lot of volatility, but it would help us sort of square the circle on that. Thanks.

Yes. Thank you, Roel. I am in Washington, D. C. And I'm trying to understand Bear in mind that we produce a lot in The U. S. Different products and then a number of products are being imported for us into The U. S. So first of all, the economic impact on tariffs to Rio Tinto might be both pluses and minuses, and we don't know whether the net will be positive or negative. But it really depends on how the tariff hit. If all countries are getting a tariff, the impact for us is zero.

The problem is if it's only one country and the country we are selling into. But then of course, we could redirect our aluminum to other markets and other other producers will supply The U. S. Market. So new balances will arise It's far too early to conclude anything on where tariffs will end. And that's why my focus is to try to understand what is it The U. S. Wants to achieve At the end of the day, tariffs is only an instrument. And allow me just to follow-up on what Peter said. I think it's so fundamentally your first dividend question. I actually did the math here because you have seen that we nine years in a row have paid 60% of dividend. The maximum of our policy. We've actually paid €72,000,000,000 of ordinary dividend over the last nine years In that period, we have reduced the debt to half the size and we have stepped up CapEx and we have gone from contracting our production volume to growing it. And now we have a clear decade of 3% production growth ahead of us.

And therefore you just look at that statistics, you feel really comfortable about meeting your dividend requirements for the future.

Absolutely. No, that is definitely commendable, Jacob. Thank you very much. That's my questions.

Thank you.

Your next question comes from the line of Jason Fairclough from Of America.

Please go ahead.

Good morning, good evening. Good afternoon, I guess all of the above to everybody on the call. Thanks for the opportunity. A couple from me, Jakob. First one, I guess, again on tariffs. As an executive, given the volatility on the news flow around tariffs, Are you more or less minded to make more investments in The U. S. And Canada at the moment? Right now, as I say, I'm sitting in The U. S. We are very keen to invest in The U. S. As you know, we have potential copper mine resolution that could produce 25% of the copper needs for The U. S. We also are one of only two who has a copper smelter And It's been difficult to make money on copper smelting in The U. S. And maybe there will be better conditions for that in the future. So I wouldn't mind seeing further investment into The U. S. But I'm also very keen on investing in Canada Rio we are investing a lot in Canada. Right now, as you know, and I'm very pleased to to inform you that the project is on schedule and and the AP60, the first news smelter in Western in the Western world for sixteen years.

And I'm very comfortable about that one. But of course, there's a little bit of uncertainty right now But I think the way to look at it right now is instead of just looking at the downside, when you have fairly seismic change opportunities arise and it's really the opportunities I'm looking for right now. So there's nothing about cutting down on investments in Canada right now. Thank you. This is a follow-up if I could. And this one maybe for Peter. And Peter, you're kind of alluding to the fact I think that you're partway through a lot of these growth projects. And I was just looking at your balance sheet. I think it's $100,000,000,000 of assets. It's just under $70,000,000,000 of property, plant and equipment. Off the top of your head, have you got a feel for how much of that PP and E is actually unproductive today? That it would become productive in the next few years?

Jason, not off the top of my head, but fundamentally, on Simondu, we spent $2,400,000,000 of our share of the CapEx, so about 40% of the way through by the end of last year. Clearly, that's not producing anything at this moment in time. And on OT, we've spent I think we're 95% there of the CapEx. But we're only just starting to go through the ramp up process. I mean, we talked in the presentation that that we expect more than 50% uplift in copper output this year. 25 versus 24. So they are the two big components if you like, that certainly are on the balance sheet. And not yet translating into anything like the full cash flows. Thanks a lot, Peter.

Thank you. We'll now take the next question And the question comes from the line of Paul Young from Goldman Sachs. Please go ahead. Yes, afternoon, Jakob and Peter. Hope you're both well. Jakob, few questions on the Pillar, please. First one is on just guidance and the fact that you have lost 13,000,000 tons of of production from the weather which is effectively your guidance range or the spread. Said you can make up around half of that. And I think you generally budget for seven to 10 loss days from weather it's here anyway, but you're holding your guidance. So I would have thought though that commentary would have been guiding to lower to the mid range. So just curious about are you really just waiting for the complete review of the infrastructure impact? Yes. Thank you, Paul.

I do think we know quite well where we are. What we, of course, don't know is whether we get more cyclones in the months ahead. And what I will say to you, we're only in February. And I've just spent three weeks in in Australia and I spent time up in the mines Fortunately, there was no cyclones when I was there. They are doing an amazing job at the moment. The SPS is really working the culture is changing. The maintenance is in a much better shape. Our rail lines are are working very well. So I actually feel very comfortable And of course, we have talked to Simon Chaudh and his team, and they feel comfortable with the guidance as it is right now. It's clear that it will have an impact on first quarter production and sales volume. And it's a bit unlucky circumstances. You know the whole story from a lot of water in December. And so into the three or four events we have have just recently had.

But I if we felt we should change the guidance, we would have changed the guidance. But given where we are today, the guidance is the guidance. And that is, of course, mode of confidence in what they're doing. But But I really feel it's the best guidance we can give to the to the market Okay. That's thanks, Jakob. And then maybe just on the long run, and actually Rajvind, great to see Migsui come in as a JV partner. Seeing you have a longstanding relationship [indiscernible] I'm just curious on your views, it seems like a pretty big number they paid. But so I'm just curious about your views on that and do you think they're assuming a larger operation? And then secondly, the fact that they own a stake in Cape Leander just with the infrastructure charges, does this change any way potentially the effective equity tons or free cash flow that you might get out of Rose Ridge? [indiscernible] absolutely no changes to that. We have a very good relationship with the two families, but particularly the one family for strategic reasons did not want to be participating. So it's super good news we are getting towards the end ownership of the joint venture so that we can really progressing at that.

And then you asked me about valuation and unfortunately, Paul, I cannot do your job, but I think it's very, very transparent. That we are dealing with an asset that is worth an enormous lot of money. And don't forget, we are very happy with our 50% ownership because our economics is considerable more than the 50% because we will get the full synergies from using the rail and the port. So I think you actually have got all of you analysts have got some really important points to help you valuing our iron ore business. Over to you.

Paul, guys. Good work today. Thanks. I've got Thank you. Your next question comes from the line of Linda Fagan from JPMorgan. Please go ahead. Hello, Linden, are you on mute? Yes, I was. Sorry about that. Hi, everyone.

Jacob, thanks for the call. Just wanted to touch on the Pilbara replacement mines. Again, it feels like results keep rolling by and we're now closer to getting approvals Obviously, depletion really kicking in. Can you comment maybe about the $3.45 to 3.6 shipment range and when you expect to achieve that now? It really does feel like we're creeping up to some of that timeline slipping. And then I've got a follow-up as well. Thanks.

Yes. Let me start and hand over to Peter. But just a couple of things. I mean, first of all, you have good news today about Rhodes Ridge. We have just talked about that. I know what you're saying, you're talking about the interim between that and and now. I will say to you as well, which is also good news is that Western Range is on schedule on budget. So that will be ramping up shortly. And we are making focus on those things. But you're right, The beauty about iron ore system is that we don't have constraints in the port and the rail. And we are becoming more and more productive than the mine. So the constraining fact is really about getting access to land. We are making progress at the moment. But that's the critical part. There's absolutely no change to what Simon Trot told you at the Capital Markets Day. But Peter, why don't you just elaborate on that? Jakob, that was going to be my punch line, exactly that. We are pretty much progressing as we thought So there's no change to the timelines we talked for the four big replacement mines that are going to come through.

They're certainly moving to the system. We can't be sure on timelines around approvals. But at the moment, we've feel that they're moving along the timelines that we expected. Okay. Well, I guess yes, the press is on for 2028, I guess. But look, the next question I had was a market question. I mean, we've observed Chinese iron ore imports ramping up over the last few years, just as steel production has been [indiscernible] And I guess through the Chimendo project alone, most the market is bearish on iron ore. And here we are seeing Chinese imports grow in falling steel environment I'm wondering what your observations are around why Chinese iron ore imports continue to rise I know we're seeing domestic depletion, etcetera, Any commentary there? And I guess as a related topic, your market impact assessment on bringing Timminsu on and how disruptive that might be? Lyndon, effectively still seeing Chinese production of steel.

Around 1,000,000,000 tons. And that's clearly driving the iron ore demand. We did see sort of some increase in port stocks in 2024, about 30,000,000 tons.

But fundamentally, it was that steel production rate that drove the demand for iron ore. Now we would sort of say that prognosis we gave to the market over the last sort of two years is keeping going. I mean, there is a chunk of supply of iron ore coming in from the majors. But there's still 600,000,000 to 700,000,000 tonnes there.

Is coming into the market from Chinese domestic from a whole variety of land born and seaborne. Suppliers around the world. And you've seen a lot of inflation in the cost curve over the last few years, giving more support into the Arm Moore market.

And we've just seen that every time there's been a sort of prices come down, it's bounced back up because of that that cost support in the around the the supply curve. So I think we just sort of have no change to our view on that. It's just I think remains a very robust market. And the fact that you've had that sort of big, big swathe of sort of supply there which is clearly striving to meet Chinese demand. Is where Simadu fits in.

I mean, this is high grade, low cost iron ore, which which we think there's an absolute place for in the market balance because of that overall supply curve. So no change really, Linden, to to our view on what's happening there. And I think I should probably add a little bit because sometimes you read things in the newspapers from various sources. Yes. Simendu is going amazingly well. It's really progressing at I call it, breathtaking speeds. Because it does. But it's only, first of all, at the end of this year and it's going to take thirty months to ramp up. And it's only 6% of the world's seaborne iron ore that will come out in from Siemensu we think there is space in the market for that. Thanks.

Thank you. Your next question comes from the line of Efraim Ravi from Citigroup. Please go ahead.

Thank you.

The first question, of the €2,500,000,000 for Rincon that you plan to spend over the next four years, how much would you expect to spend this year? Or is the acceleration of the project also subject to formation of those super sites Palladium in Argentina as part of your plan after closing the Arcadium transaction?

Yes. I'll ask Peter to answer. The exact number of this year of Rincon. It's a fairly smaller part of it. But But we let's just start with the good news. Acadium that transaction has gone extremely smoothly. And we were not we thought it might take up to a year to close the deal, but we announced it in October. And now we might actually be able to close it here If not by March 1, then in the course of March. And I'm planning to go to Argentina myself here in March and go and seeing the sites. It goes without saying, there are certain things you can't do. Before you have closed the deal.

And from there on, we will very quickly develop a plan for exactly where investments will happen and how fast we can ramp them up given the fact that we haven't closed the deal, it will be not very smart of us to share a plan. We have a plan, but we're going to learn much more. So far, everything looks very good. And integration, I'm very comfortable on that as well. I think there's a good match of cultures between the two companies. And I have hired Paul Graves to lead our Leisham business And I think in general, we are on a path to retaining people. And from there, learn from each other and get more technical excellence and really drive the growth forward. But Peter, how much are we going to spend on income? So I mean this year clearly is the first year of construction. And so you always have a slower buildup.

Rio that profile. So we would expect it to be in around $500,000,000 this year.

And a follow-up on the iron ore business. So the if I assume that 13,000,000 tons is loss for the year, would it be also fair to assume that there would be a a lower proportion of SP10 in 2025 compared to 2024 SP10 volumes last year was about 60,000,000 tons. So is it is there enough flex in the system to reduce proportionate the amount of SP-ten and Bluemolpilbrola blend?

I think the key point there is that the reason why losing the ports is important? Because we usually have excess capacity in the ports and we can make it up during the year. From the mines when we lose port capacity. But we can't this year because effectively with the whole system is sort of stopped out in part. So that's what's meaning that we can't move the ton. So it really doesn't change our view that we will continue to have elevated SP10 this year.

Thank you.

Thank you. Your next question comes from the line of Rob Stein from Macquarie. Please go ahead.

Hi, Jacob and Peter. Thank you for the opportunity Couple of well, two questions. Just on your CapEx guidance, So the $11,000,000,000 this year excluding the one on closure, the one on exploration and development, Just looking forward, when Arcadium does come in and you reseak with the portfolio, are we expecting upside risk [indiscernible] Sort of 11 number