RIO TINTO PLC

(a)The impact of adopting the narrow-scope amendments to IAS 12. Refer to page 166 for details.

(b)Refer to the Group statement of comprehensive income for further details. Adjustments to other reserves include currency translation attributable to owners of Rio Tinto, other than that arising on

Rio Tinto Limited’s share capital.

(c)Net of contributions received from employees for share awards.

(d)In 2022, the opening balance includes a US$17 million adjustment for the prospective adoption of Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, as reported

in the prior year financial statements.

Group Statement of Changes in Equity

Our financial performance

We use a number of measures, including segmental revenue, underlying EBITDA, and capital expenditure to provide us with a greater

understanding of our operations’ underlying business performance, including revenue generation, productivity and cost management, on a

comparable basis between reporting years.

1 Our financial performance by segment

Our management structure is based on product groups (PG) together with global support functions whose leaders make up the Executive

Committee. The Executive Committee members each report directly to our Chief Executive who is the chief operating decision maker (CODM) and

is responsible for allocating resources and assessing performance of the operating segments. The CODM’s primary measure of profit is underlying

EBITDA.

The Copper reportable segment has been adjusted to reflect a change in management responsibility for the Simandou iron ore project in Guinea

(Simandou) to the Chief Technical Officer for the build phase of this project. As a result, Simandou is now included in "Other Operations", which is

below reportable segments in our segmental analysis. Prior year comparatives have been adjusted accordingly.

Our reportable segments are as follows:

(a)Capital expenditure for reportable segments includes 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% of subsidiaries’ capital expenditure and Rio Tinto’s share of the capital expenditure of joint operations.

(b)Consolidated sales revenue includes subsidiary sales of US$20 million (2022: US$50 million;2021: US$44 million) to equity accounted units which are not included in segmental revenue.

Segmental revenue includes the Group’s proportionate share of product sales by equity accounted units (after adjusting for sales to subsidiaries) of US$3,036 million (2022: US$2,900 million;

2021: US$3,117 million) which are not included in consolidated sales revenue.

1 Our financial performance by segment continued

(a)Comparative information has been adjusted to reflect the movement of the Simandou iron ore project from the "Copper" reportable segment to "Other operations".

(b)Capital expenditure for reportable segments includes 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% of subsidiaries’ capital expenditure and Rio Tinto’s share of the capital expenditure of joint operations.

(c)Consolidated sales revenue includes subsidiary sales of US$20 million (2022: US$50 million;2021: US$44 million) to equity accounted units which are not included in segmental revenue.

Segmental revenue includes the Group’s proportionate share of product sales by equity accounted units (after adjusting for sales to subsidiaries) of US$3,036 million (2022: US$2,900 million;

2021: US$3,117 million) which are not included in consolidated sales revenue.

Segmental revenue

Segmental revenue includes consolidated sales revenue plus the equivalent sales revenue of equity accounted units in proportion to our equity

interest (after adjusting for sales to/from subsidiaries).

Segmental revenue measures revenue on a basis that is comparable to our underlying EBITDA metric.

Other segmental reporting

For further information relating to Revenue by destination and product and Non-operating assets by geography, refer to note 6 on page 183 and Our

operating assets section on page 187, respectively.

Underlying EBITDA represents profit before taxation, net finance items, depreciation and amortisation adjusted to exclude the EBITDA impact of

items which do not reflect the underlying performance of our reportable segments.

Other relevant judgements - Exclusions from underlying EBITDAItems excluded from profit after tax are those gains and losses that, individually or in aggregate with similar items, are of a nature and size to require exclusion in order to provide additional insight into the underlying business performance. The following items are excluded from profit after tax in arriving at underlying EBITDA in each year irrespective of materiality:–Depreciation and amortisation in subsidiaries and equity accounted units;–Taxation and finance items in equity accounted units;–Taxation and finance items relating to subsidiaries;–Unrealised gains/(losses) on embedded derivatives not qualifying for hedge accounting;–Net gains/(losses) on disposal of interests in subsidiaries; –Impairment charges net of reversals; –The underlying EBITDA of discontinued operations;–Adjustments to closure provisions where the adjustment is associated with an impairment charge and for legacy sites where the disturbance or environmental contamination relates to the pre-acquisition period.In addition, there is a final judgemental category which includes, where applicable, 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. In 2023, this includes all re-estimates of the closure provisions for fully impaired sites identified in the second half of the year due to the materiality of the adjustment in aggregate. In 2022 this category included the gain recognised by Kitimat relating to LNG Canada's project and the gain recognised upon sale of the Cortez royalty. In 2021 the category included the changes in closure estimates at Energy Resources of Australia and Gove Refinery.

(b)Depreciation and amortisation in subsidiaries for the year ended 31 December 2023 is net of capitalised depreciation of US$358 million (2022: US$139 million;2021: US$172 million).

(c)Refer to note 4 for details.

(d)During 2022, LNG Canada elected to terminate their option to purchase additional land and facilities for expansion of their operations at Kitimat, Canada. The resulting gain was excluded from

underlying EBITDA consistent with prior years as it was part of a series of transactions that together were material. On 3 December 2021 we gained control over a new wharf at Kitimat, Canada

that was built and paid for by LNG Canada. The gain on recognition was excluded from underlying EBITDA on the grounds of individual magnitude and consistency with the associated

impairment charge in 2021. Refer to note 4 for details.

(e)In 2023 the charge includes US$0.9 billion related to the closure provision update announced by Energy Resources of Australia on 12 December 2023 together with the update included in their

half year results for the period ended 30 June 2023, published in August. This update was considered material and therefore it was aggregated with other closure study updates (see note 14)

which were similar in nature and have been excluded from underlying EBITDA. The other closure study updates were at legacy sites managed by our central closure team as well as an update

at Yarwun alumina refinery which was expensed due to the impairment earlier in the year. In 2022, the charge related to re-estimates of underlying closure cash flows for legacy sites where the

environmental damage preceded ownership by Rio Tinto. In 2021, the closure provision increase excluded from underlying earnings was attributable to study updates at Energy Resources of

Australia, Diavik, Gove refinery, and a number of the Group's legacy sites where the environmental damage preceded ownership by Rio Tinto.

(f)On 2 August 2022, we completed the sale of a gross production royalty which was retained following the disposal of the Cortez Complex in 2008. The gain recognised on sale of the royalty was

excluded from underlying EBITDA on the grounds of individual magnitude.

2 Earnings per ordinary share

Basic earnings per share

Diluted earnings per share

For the purposes of calculating diluted earnings per share, the effect of dilutive securities of 10.1 million shares in 2023 (2022:9.8 million;2021:

10.5 million) is added to the weighted average number of shares described in footnote (b) below. This effect is calculated under the treasury stock

method, in accordance with IAS 33 “Earnings per Share”. Our only potential dilutive ordinary shares are share awards for which terms and

conditions are described in note 27.

(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 1,250.5 million (2022:1,248.9 million;2021:

1,247.4 million) plus the average number of Rio Tinto Limited shares outstanding of 370.9 million (2022:370.9 million;2021:371.0 million) over the relevant period. There wereno cross

holdings of shares between Rio Tinto Limited and Rio Tinto plc at 31 December 2023 (2022: nil;2021: nil).

3 Dividends

Our Directors have announced a final dividend of 258.0 cents per shareon 21 February 2024. This is expected to result in payments of

US$4.2 billion. The dividend will be paid on 18 April 2024 to Rio Tinto plc and Rio Tinto Limited shareholders on the register at the close of business

on 8 March 2024. Dividends per share announced for the year ended 31 December are as follows:

(a)Dividends are determined in US dollars, which is our functional currency, and declared in British pounds for Rio Tinto Plc and Australian dollars for Rio Tinto Limited. The applicable currency

exchange rate to convert the US dollar dividend into British pounds and Australian dollars is determined with reference to the WMR 4pm (UK) fixings on the day prior to the announcement of our

results for the year. Ordinary shareholders of Rio Tinto Limited and Rio Tinto Plc are paid equal cash dividends on a per share basis in line with the terms of the dual-listed structure.

Total dividends per share paid in the year

The franking credits available to the Group as at 31 December 2023, after allowing for Australian tax payable in respect of the current and prior

reporting period’s profit, are estimated to be US$8,734 million (2022: US$7,246 million;2021: US$6,611 million).

The proposed Rio Tinto Limited dividend will be fully franked based on a tax rate of 30%, and reduce the franking account balance by

US$410 million.

Reconciliation of dividend declared to dividend paid

(b)We economically hedge the dividend cash flows from the announcement date to the payment date in order to reduce our foreign exchange exposure on these cash flows. The realised impact of

these hedges is shown within ‘Other items’ in the Cash flows from consolidated operations and is not included in the above.

4 Impairment charges net of reversals

Impairment charges and reversals are assessed at the level of cash-generating units (CGUs) which, in accordance with IAS 36 “Impairment of

Assets”, are identified as the smallest identifiable asset or group of assets that generate cash inflows, which are largely independent of the cash

inflows from other assets. Separate cash-generating units are identified where an active market exists for intermediate products, even if the majority

of those products are further processed internally. In some cases, individual business units consist of several operations with independent cash-

generating streams which constitute separate CGUs.

Goodwill acquired through business combinations is allocated to the cash-generating unit or groups of cash-generating units that are expected to

benefit from the related business combination, and tested for impairment at the lowest level within the Group at which goodwill is monitored for

internal management purposes. All cash-generating units containing goodwill (note 11), indefinite-lived intangible assets and intangible assets that

are not ready for use (note 12) are tested annually for impairment as at 30 September, regardless of whether there has been an impairment trigger,

or more frequently if events or changes in circumstances indicate a potential impairment charge.

Other relevant judgements - determination of CGUsJudgement is applied to identify the Group’s CGUs, particularly when assets belong to integrated operations, and changes in CGUs could impact impairment charges and reversals. The most relevant judgement continues to relate to the grouping of Rio Tinto Iron and Titanium Quebec Operations and QIT Madagascar Minerals (QMM) as a single CGU on the basis that they are vertically integrated operations and there is no active market for QMM’s ilmenite.

Property, plant and equipment, including right-of-use assets and intangible assets with finite lives are reviewed for impairment annually or more

frequently if there is an indication that the carrying amount may not be recoverable. This review starts with an appraisal of the perimeter of cash-

generating units to consider changes in the business or strategic direction. Following this, an assessment of internal and external indicators is

performed. Internal sources of information considered include assessment of the financial performance of the CGU and changes in mine plans.

External sources of information include changes in forecast commodity prices, costs and other market factors.

Non-current assets (excluding goodwill) that have suffered impairment are reviewed using the same basis for valuation as explained below

whenever events or changes in circumstances indicate that the impairment loss may no longer exist, or may have decreased. If appropriate, an

impairment reversal will be recognised. The carrying amount of the cash-generating unit after reversal must be the lower of (a) the recoverable

amount, as calculated above, and (b) the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment

loss been recognised for the cash-generating unit in prior periods.

In 2023, we identified indicators of impairment at the Gladstone alumina refineries in the Aluminium segment and indicators of impairment reversal

at the Simandou project. Refer to page 179 for details.

Key judgement - indicators of impairment and impairment reversalsThe Oyu Tolgoi and Kitimat cash-generating units have both been impaired in previous years and are therefore monitored closely for indicators of further impairment or impairment reversal as such adjustments would likely be material to our results. At the time of their impairment, the carrying value and fair value for these CGUs were equal, making the CGUs sensitive to changes in economic assumptions, albeit headroom may have subsequently arisen due to the passage of time. Oyu TolgoiWe assessed the Oyu Tolgoi CGU for internal sources of information that could indicate impairment or impairment reversal by reference to the operational performance of the mine and development progress for the underground operation. For external sources of information that could indicate impairment or impairment reversal, we considered current and projected commodity prices. We concluded that there were no indicators of impairment or impairment reversal. KitimatThe Kitimat smelter was impaired in 2013 and 2014 during the construction phase as cost overruns were not expected to be recovered through economic performance. The plant was further impaired in 2021 (refer to page 180 for details) as operational performance was adversely impacted by a workforce strike in June 2021 that has reduced the capacity over a prolonged period.In 2023, the operational performance of the plant was considered as part of the assessment of internal sources of information for evidence of impairment or impairment reversal. As highlighted in the climate change section, the economic performance of assets in the aluminium segment has the potential to perform more strongly as the world transitions to a lower carbon future; however, our assessment of external sources of information did not indicate that this had yet been priced into asset valuations. We concluded that there were no indicators of impairment or impairment reversal.

Where indication of impairment or impairment reversal exists, an impairment review is undertaken. The 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 in its current

condition) and fair value less costs of disposal (FVLCD). When the recoverable amount of the cash-generating unit is measured by reference to

FVLCD, this amount is further classified in accordance with the fair value hierarchy for observable market data that is consistent with the unit of

account for the cash-generating unit being tested. The Group considers that the best evidence of FVLCD is the value obtained from an active

market or binding sale agreement and, in this case, the recoverable amount is classified in the fair value hierarchy as level 1. When FVLCD is based

on quoted prices for equity instruments but adjusted to reflect factors such as a lack of liquidity in the market, the recoverable amount is classified as

level 2 in the fair value hierarchy. No cash-generating units are currently assessed for impairment by reference to a recoverable amount based on

FVLCD classified as level 1 or level 2.

4 Impairment charges net of reversals continued

Where unobservable inputs are material to the measurement of the recoverable amount, FVLCD is based on the best information available to reflect

the amount the Group could receive for the cash-generating unit in an orderly transaction between market participants at the measurement date.

This is often estimated using discounted cash flow techniques and is classified as level 3 in the fair value hierarchy.

Where the recoverable amount is assessed using FVLCD based on discounted cash flow techniques, the resulting estimates are based on detailed

life-of-mine and long-term production plans. These may include anticipated expansions which are at the evaluation stage of study.

The cash flow forecasts for FVLCD purposes are based on management’s best estimates of expected future revenues and costs, including the

future cash costs of production, capital expenditure, and closure, restoration and environmental costs. For the purposes of determining FVLCD from

a market participant’s perspective, the cash flows incorporate management’s price and cost assumptions in the short and medium term. In the

longer term, operating margins are assumed to remain constant where appropriate, as it is considered unlikely that a market participant would

prepare detailed forecasts over a longer term. The cash flow forecasts may include net cash flows expected to be realised from the extraction,

processing and sale of material that does not currently qualify for inclusion in mineral reserves. Such non-reserve material is only included when

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 ore reserves. Typically, the additional evaluation required to achieve reserves status for such

material has not yet been done because this would involve incurring evaluation costs earlier than is required for the efficient planning and operation

of the mine.

As noted above, cost levels incorporated in the cash flow forecasts for FVLCD purposes are based on the current life-of-mine plan or long-term

production plan for the cash-generating unit. This differs from value in use which requires future cash flows to be estimated for the asset in its

current condition and therefore does not include future cash flows associated with improving or enhancing an asset’s performance. Anticipated

enhancements to assets may be included in FVLCD calculations and, therefore, generally result in a higher value.

Where the recoverable amount of a cash-generating unit is dependent on the life of its associated orebody, expected future cash flows reflect the

current life of mine and long-term production plans; these 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 orebody, including

waste-to-ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore impacting process recoveries and capacities of

processing equipment that can be used. The life-of-mine plan and long-term production plans are, therefore, the basis for forecasting production

output and production costs in each future year.

Forecast cash flows for ore reserve estimation for JORC purposes are generally based on Rio Tinto’s commodity price forecasts, which assume

short-term market prices will revert to the Group’s assessment of the long-term price, generally over a period of three to five years. For most

commodities, these forecast commodity prices are derived from a combination of analyses of the marginal costs of the producers and the incentive

price of these commodities. These assessments often differ from current price levels and are updated periodically. The Group does not believe that

published medium- and long-term forward prices necessarily provide a good indication of future levels because they tend to be strongly influenced

by spot prices. The price forecasts used for mineral reserve estimation are generally consistent with those used for impairment testing unless

management deems that in certain economic environments a market participant would not assume Rio Tinto’s view on prices, in which case in

preparing FVLCD impairment calculations management estimates the assumptions that a market participant would be expected to use.

Forecast future cash flows of a cash-generating unit take into account the sales prices under existing sales contracts.

The discount rates applied to the future cash flow forecasts represent an estimate of the rate the market participant 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 generally 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 final feasibility studies and mineral reserve estimation, internal hurdle rates,

which are generally higher than the Group’s weighted average cost of capital, are used. For developments funded with project finance, the debt

component of the weighted average cost of capital may be calculated by reference to the specific interest rate of the project finance and anticipated

leverage of the project.

For operations with a functional currency other than the US dollar, the impairment review is undertaken in the relevant functional currency. In

estimating FVLCD, internal forecasts of exchange rates take into account spot exchange rates, historical data and external forecasts, and are kept

constant in real terms after five years. 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 an increase in commodity prices, 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, particularly against the Australian dollar and Canadian

dollar, and vice versa. However, such compensating changes are not synchronised and do not fully offset each other. In estimating value in use, the

present value of future cash flows in foreign currencies is translated at the spot exchange rate on the testing date.

Generally, discounted cash flow models are used to determine the recoverable amount of CGUs. In this case, significant judgement is required to

determine the appropriate estimates and assumptions used and there is significant estimation uncertainty. In particular, for fair value less costs of

disposal valuations, judgement is required to determine the estimates a market participant would use. The discounted cash flow models are most

sensitive to the following estimates: the timing of project expansions; the cost to complete assets under construction; long-term commodity prices;

production timing and recovery rates; exchange rates; operating costs; reserve and resource estimates; closure costs; discount rates; allocation of

long-term contract revenues between CGUs; and, in some instances, the renewal of mining licences. Some of these variables are unique to an

individual CGU. Future changes in these variables may differ from management’s expectations and may materially alter the recoverable amounts of

the CGUs.

Aluminium - Alumina refineries, Australia

The Gladstone alumina refineries are responsible for more than half of our scope 1 carbon dioxide emissions in Australia and therefore have been a

key focus as we evaluate options to decarbonise our assets. In March 2023, the Australian Parliament legislated to introduce a requirement for large

heavy industrial carbon emitters to purchase carbon credits based on their scope 1 emissions with a reducing baseline for these emissions. The

challenging market conditions facing these assets, together with our improved understanding of the capital requirements for decarbonisation and the

now legislated cost escalation for carbon emissions, were identified as impairment triggers during the six months ended 30 June 2023.

Using a fair value less cost of disposal methodology and discounting real-terms post-tax cash flows at 6.6%, we have recognised a pre-tax

impairment charge of US$1,175 million (post-tax US$828 million). This represented a full impairment of the property, plant and equipment at the

Yarwun alumina refinery (US$948 million) and an impairment of US$227 million for the property, plant and equipment of Queensland Alumina

Limited (QAL). These impairments reflect market participant assumptions and the difficult trading conditions for these assets which were operating

below our planned output.

For QAL, the recoverable amount (net present value of US$325 million) was represented by future cash flows attributable to the double digestion

project. This major capital project improves the energy efficiency of the alumina production process and significantly reduces carbon emissions.

These cash flows were risk adjusted to reflect the pre-feasibility study stage of project evaluation. If investment in the double digestion project is not

approved, the post-tax impairment charge would be US$325 million greater and result in a full impairment of QAL.

Impact of climate change on our business - Gladstone alumina refineriesWe are committed to the decarbonisation of our assets to reduce Scope 1 and 2 emissions by 50% by 2030 and to net zero emissions by 2050 relative to our 2018 equity baseline. We anticipate that further carbon action may be necessary to align with the goals of the Paris agreement to limit temperature increases to 1.5oC. To illustrate the sensitivity of the refinery valuations to the cost of carbon credits, we have modelled a 10% increase in those unit costs across all years, before the impact of decarbonisation projects with all other inputs to the 30 June 2023 impairment valuation remaining constant. For QAL, this sensitivity indicated a reduction in the pre-tax value by US$99 million; however this is expected to be largely mitigated by decarbonisation projects, including double digestion. There was no impact at Yarwun as all property, plant and equipment was already fully impaired.

4 Impairment charges net of reversals continued

Other operations - Simandou, Guinea

The Simandou project in Guinea was fully impaired in 2015 as uncertainty over infrastructure ownership and funding had resulted in further spend

on exploration and evaluation being neither budgeted nor planned. In the second half of 2023, we concluded key agreements with the Republic of

Guinea and Winning Consortium Simandou (WCS) on the trans-Guinean infrastructure for the Simandou project and progressed agreements with

our joint venture partners that will enable the development of the Simandou iron-ore mine. We therefore concluded that although development

agreements remain subject to regulatory approvals, the key uncertainties that gave rise to the 2015 impairment have reversed and consequently an

impairment reversal trigger was identified at 1 October 2023.

Revisions to the Investment Framework and changes to the proposed infrastructure arrangements since 2015 mean that historical costs associated

with these items have been superseded and therefore the attributable asset cost and accumulated impairment associated with these items have

been permanently derecognised. Previously capitalised exploration and evaluation costs associated with the mine and retained items of property,

plant and equipment that continue to be relevant to the Simandou project development have been assessed for impairment reversal. The

recoverable amount of the cash-generating unit measured on a fair value less cost of disposal basis, is significantly greater than the historical cost

of the remaining impaired assets and therefore supports a full reversal of their previously recorded impairment charge. The pre-tax impairment

reversal of US$239 million is allocated as US$231 million to intangible assets (exploration and evaluation) and US$8 million to property, plant and

equipment. A deferred tax asset of US$152 million has been recorded to account for the difference between the asset values included in the Group

accounts and the carrying value of in-country depreciable assets. Under our Aspirational Leadership pricing scenario, increases in carbon pricing

are expected to drive demand for the higher-grade iron ore at Simandou which would indicate a higher recoverable value. As the previous

impairment has been fully reversed, this Paris aligned-sensitivity would not result in a different impairment reversal.

All spend on the Simandou project between the impairment in 2015 and 30 September 2023 was expensed as incurred. With effect from 1 October

2023, qualifying spend is capitalised.

Other operations - Roughrider, Canada

On 17 October 2022, we completed the sale of the Roughrider uranium undeveloped project located in the Athabasca Basin in Saskatchewan,

Canada for US$150 million (US$80 million in cash and US$70 million in shares of Uranium Energy Corp.). The project was fully impaired during the

year ended 31 December 2017 due to significant uncertainty over whether commercially viable quantities of mineral resources could be identified at

a future date. The sale therefore led to an impairment reversal during the year ended 31 December 2022. It also led to a loss on disposal being

recognised of US$105 million arising from the recycling of the currency translation reserve to the income statement.

Aluminium - Pacific Aluminium, Australia and New Zealand

The operating and economic performance of the Boyne Smelter in Queensland, Australia was below our expectations in 2022. The plant operated

with reduced capacity and the economic performance suffered due to the high cost of energy from the coal-fired Gladstone Power Station. These

conditions were identified as an impairment trigger. We calculated a recoverable amount for the cash-generating unit based on post-tax cash flows,

expressed in real terms and discounted using a post-tax rate of 6.6% over the period to 2029. This date was chosen as it coincided with both the

remaining term of the Boyne Smelter joint venture agreements and the Group’s Paris-aligned commitment to reduce carbon emissions by 50% by

2030 relative to the 2018 baseline. Despite the implementation of temporary energy price caps by the Australian Government in 2022, this resulted

in an impairment charge of US$202 million, representing a full impairment of the carrying value of the Boyne Smelter investment in equity accounted

unit.

Aluminium – Kitimat, Canada

On 3 December 2021, we announced completion of the newly-constructed wharf at Kitimat. Construction spend was incurred by LNG Canada and

therefore a gain of US$336 million representing the estimated fair value of the cost of construction was recorded and the carrying value of the

Kitimat CGU increased accordingly. Output from the smelter was reduced to 25% as a result of a workforce strike in mid-2021 and ramp-up to full

capacity was expected to extend through into 2022. As a previously impaired CGU, and therefore carrying limited headroom, these factors were

identified as conditions that could indicate that the uplifted carrying value may not be supportable and therefore the CGU was tested for impairment.

Using the fair value less cost of disposal methodology and discounting real-terms post-tax cash flows at 6.6%, we recognised a post-tax impairment

charge of US$197 million (pre-tax US$269 million) representing the difference between the recoverable amount (US$3,126 million) and the carrying

value (US$3,323 million).

5 Acquisitions and disposals

Acquisitions

In determining whether a particular set of activities is a business, an

acquired arrangement has to have an input and substantive process,

which together significantly contribute to the ability to create outputs.

Where an acquisition does not meet the definition of a business as

defined by IFRS 3 “Business Combinations” each asset is recognised

on the balance sheet at fair value. In the Group cash flow statement we

assess, based on the substance of the transaction, whether to allocate

the cash consideration for these transactions either to “Purchases of

property, plant and equipment, and intangible assets” or to “Acquisitions

of subsidiaries, joint ventures and associates” depending on the type of

assets purchased.

For undeveloped mining projects that have arisen through acquisition,

the allocation of the purchase price consideration may result in

undeveloped properties being recognised at an earlier stage of project

evaluation compared with projects arising from the Group’s exploration

and evaluation program. Subsequent expenditure on acquired

undeveloped projects is only capitalised if it meets the high degree of

confidence threshold discussed in note 12.

Where we increase our ownership interest in a subsidiary, the difference

between the purchase price and the carrying value of the share of net

assets acquired is recorded in equity. The cash cost of such purchases

is included within “financing activities” in the cash flow statement.

On 8 November 2023 we acquired Meridian Minera Limitada’s (MML)

57.7% share in Agua de la Falda (ADLF) for US$45 million.

Subsequently, we entered into an agreement with Corporación Nacional

del Cobre de Chile (Codelco), a state-owned enterprise, to explore and

potentially acquired assets in Chile’s prospective Atacama region - the

project will be known as Nuevo Cobre.

The majority ownership of 57.7% equity confers voting rights that will

allow Rio Tinto to control the relevant activities of Nuevo Cobre.

Therefore, we have accounted for Nuevo Cobre as an investment in a

partially owned subsidiary. There was no goodwill recognised on

acquisition as the transaction was not accounted for as a business

combination. The difference between the net assets acquired and the

purchase consideration has been recognised within Intangible assets as

Exploration and Evaluation assets. The transaction gives rise to the

recognition of a non-controlling interest of US$33 million, representing

Codelco’s 42.3% equity stake in Nuevo Cobre.

On 30 November 2023, Rio Tinto and Giampaolo Group completed a

transaction to form the Matalco joint venture. We acquired a 50% equity

interest in Matalco Canada Inc which ownsone Canadian aluminium

recycling facility and a 50% equity interest in Matalco USA LLC which

ownssix aluminium recycling facilities in the USA for combined

consideration of US$738 million, inclusive of accrued transaction costs

and working capital adjustments.

Rio Tinto has joint control over the Matalco businesses and therefore

our investment is accounted for under the equity method.

At 31 December 2023, the fair value of the underlying identifiable assets

acquired and liabilities assumed have been provisionally determined

and will be finalised within one year of the acquisition date in line with

the requirements of IFRS.

Following approval from Australia’s Foreign Investment Review Board

(FIRB), on 29 March 2022 we completed the acquisition of Rincon

Mining Pty Limited, the owner of a lithium project in Argentina. Total

cash consideration was US$825 million. In determining whether

Rincon’s set of activities is a business, we assessed whether it had

inputs and substantive processes which together significantly contribute

to the ability to create outputs. Based on this assessment, we

concluded that Rincon did not meet the definition of a business as

defined by IFRS 3 "Business Combinations" and thereforeno goodwill

was recorded. The transaction was therefore treated as an asset

purchase with US$822 million of capitalised exploration and evaluation

recorded for the principal economic resource. The balance of total

consideration was allocated to property, plant and equipment and other

assets/liabilities. For the Group cash flow statement we determined that,

since Rincon constitutes a group of companies, it was appropriate to

present the cash outflow as “Acquisitions of subsidiaries, joint ventures

and associates” rather than as separate asset purchases even though it

did not meet the definition of a business combination.

On 31 August 2022 we madea US$25 million investment in McEwen

Copper Inc. through our copper leaching technology venture, Nuton TM.

We accounted for our holding in McEwen Copper Inc. as an investment

in associate, given our representation on their Board.

On 16 December 2022 we acquired the remaining 49% share of

Turquoise Hill Resources for expected consideration of US$3.2 billion,

inclusive of transaction costs. This transaction was not classified as a

business combination as it related to the purchase of non-controlling

interests in an entity already consolidated as a subsidiary. Accordingly,

the transaction did not result in the remeasurement of assets or

liabilities and has been accounted for in the statement of equity as an

adjustment to non-controlling interests and retained earnings.

At 31 December 2022, consideration paid amounted to US$2,961 million,

including US$33 million of transaction costs. In 2023, a further$33 million

of transaction costs were paid (previously expected to be US$41 million).

Certain shareholders exercised their right to dissent to the transaction. In

accordance with the terms of the circular, those dissenting shareholders

received initial consideration of C$34.4 per share, with final consideration

depending on the outcome and timing of dissent proceedings, which at

the end of 2023 remained outstanding. We included within Other

provisions (note 36)US$211 million for additional consideration to be paid

to the dissenting shareholders representing the difference between their

initial consideration and C$43 per share paid to all other shareholders.

On 18 November 2021, we announced that we had completed the

acquisition of the 40% share in the Diavik Diamond Mine in the

Northwest Territories of Canada held by Dominion Diamond Mines,

becoming the sole owner as a result. The transaction did not meet the

definition of a business combination and therefore the incremental

assets and liabilities were treated as an asset purchase. Prior to

purchase, we recognised our existing 60% share of assets, revenues

and expenses, with liabilities recognised according to its contractual

obligations, and a corresponding 40% receivable or contingent asset

representing the co-owner’s share where applicable. Receivables

relating to the co-owner’s share were de-recognised and treated as part

of the net purchase consideration on completion.

Disposals

If a group of assets and liabilities (Disposal group) is sold the carrying

value of the disposal group is de-recognised with the difference

between the carrying amount and the consideration received

recognised in the income statement. Certain amounts previously

recognised in other comprehensive income in respect of the entity

disposed of may be recycled to the income statement. The cash

proceeds of disposals are included within “Investing activities” in the

cash flow statement.

5 Acquisitions and disposals continued

On 28 August 2023, we completed the sale of a 55% interest in the

undeveloped La Granja project in Peru for US$105 million to First

Quantum Minerals (FQM). The consideration received is recorded in the

cash flow statement for US$104 million (net of US$1 million of cash

balance), of which US$16 million relating to sale of land is included

within “net cash used in investing activities” and the remaining US$88

million is included within “net cash generated from operating activities”.

As a result of the sale, our retained interest in La Granja represents a

45% owned associate (equity accounted) over which Rio Tinto has

significant influence during the evaluation phase.

On initial recognition, the gain on fair valuation of interest retained in the

project of US$85 million was recognised to the extent of US$47 million

(relating to the 55% interest sold) within “profit relating to interests in

undeveloped projects” and the remaining gain of US$38 million was

eliminated against the fair value of the EAU. In total, we recognised a

pre-tax gain of US$154 million in the income statement, primarily

representing the consideration transferred by First Quantum, plus the

fair value of the retained interest in the project.

As summarised in note 4, we sold our shareholding in the Roughrider

uranium undeveloped project on 17 October 2022 for consideration of

US$150 million (US$80 million in cash and US$70 million in shares of

Uranium Energy Corp). This transaction was treated as a disposal of a

subsidiary as the carrying value was largely represented by assets

recorded as a purchase price allocation from the Hathor Exploration

business combination in 2012.

There were no material disposals in 2021.

6 Revenue by destination and product

We recognise sales revenue related to the transfer of promised goods

or services when control of the goods or services passes to the

customer. The amount of revenue recognised reflects the consideration

to which the Group is or expects to be entitled in exchange for those

goods or services.

Sales revenue is recognised on individual sales when control transfers

to the customer. In most instances, control passes and sales revenue is

recognised when the product is delivered to the vessel or vehicle on

which it will be transported once loaded, the destination port or the

customer’s premises. There may be circumstances when judgement is

required based on the five indicators of control below:

–The customer has the significant risks and rewards of ownership

and has the ability to direct the use of, and obtain substantially all of

the remaining benefits from, the good or service.

–The customer has a present obligation to pay in accordance with

the terms of the sales contract. For shipments under the Incoterms

cost, insurance and freight (CIF)/carriage paid to (CPT)/cost and

freight (CFR), this is generally when the ship is loaded, at which

time the obligation for payment is for both product and freight.

–The customer has accepted the asset. Sales revenue may be

subject to adjustment if the product specification does not conform

to the terms specified in the sales contract but this does not impact

the passing of control. Assay and specification adjustments have

historically been immaterial.

–The customer has legal title to the asset. The Group usually retains

legal title until payment is received for credit risk purposes only.

–The customer has physical possession of the asset. This indicator

may be less important as the customer may obtain control of an

asset prior to obtaining physical possession, which may be the case

for goods in transit.

Revenue is principally derived from sale of commodities. We sell the

majority of our products on CFR or CIF Incoterms. This means that the

Group is responsible (acts as principal) for providing shipping services

and, in some instances, insurance after the date at which control of

goods passes to the customer at the loading port. The Group, therefore,

has separate performance obligations for freight and insurance services

that are provided solely to facilitate the sale of the products it produces.

Other Incoterms commonly used by the Group are free on board (FOB),

where the Group has no responsibility for freight or insurance once

control of the goods has passed at the loading port, and delivered at

place (DAP), where control of the goods passes when the product is

delivered to the agreed destination. For these Incoterms, there is only

one performance obligation, being the provision of product at the point

where control passes.

Within each sales contract, each unit of product shipped is a separate

performance obligation. Revenue is generally recognised at the

contracted price as this reflects the standalone selling price. Sales

revenue excludes any applicable sales taxes. Sales of copper

concentrate are stated net of the treatment and refining charges, which

will be required to convert it to an end product.

The Group’s products are sold to customers under contracts that vary in

tenure and pricing mechanisms, including some volumes sold on the

spot market. Pricing for iron ore is on a range of terms, the majority

being either monthly or quarterly average pricing mechanisms, with a

smaller proportion of iron ore volumes being sold on the spot market.

Certain of the Group’s products may be provisionally priced at the date

revenue is recognised and a provisional invoice issued; however,

substantially all iron ore and aluminium sales are reflected at final prices

in the results for the period. Provisionally priced receivables are

subsequently measured at fair value through the income statement

under IFRS 9 “Financial Instruments” as described in note 24. The final

selling price for all provisionally priced products is based on the price for

the quotational period stipulated in the contract. Final prices for copper

concentrate are normally determined between 30 and 120 days after

delivery to the customer. The change in value of the provisionally priced

receivable is based on relevant forward market prices and is included in

sales revenue. Refer to “Other revenue” within the sales by product

disclosure below.

Revenues from the sale of significant by-products, such as gold, are

included in sales revenue. Third-party commodity swap arrangements

principally for delivery and receipt of smelter-grade alumina are offset

within operating costs. The sale and purchase of third-party production

for own use or to mitigate shortfalls in our production are accounted for

on a gross basis with sales presented within revenue from contracts

with customers. Other operating income includes revenue incidental to

the main revenue-generating activities of the operations and is treated

as a credit to operating costs.

Typically, the Group has a right to payment before or at the point that

control of the goods passes, including a right, where applicable, to

payment for provisionally priced products and unperformed freight and

insurance services. Cash received before control passes is recognised as

a contract liability. The amount of consideration does not contain a

significant financing component as payment terms are less than one year.

We have a number of long-term contracts to supply products to

customers in future periods. Generally, revenue is recognised on an

invoice basis, as each unit sold is a separate performance obligation and

therefore the right to consideration from a customer corresponds directly

with our performance completed to date.

We do not disclose sales revenue from freight and insurance services

separately as we do not consider that this is necessary in order to

understand the impact of economic factors on the Group. Our Chief

Executive, the chief operating decision maker as defined under IFRS 8

“Operating Segments”, does not review information specifically relating

to these sources of revenue in order to evaluate the performance of

business segments and Group information on these sources of revenue

is not provided externally.

Consolidated sales revenue by destination(a)

(a)Consolidated sales revenue by geographical destination is based on the ultimate country of the product's destination, if known. Where the ultimate destination is not known, we have defaulted to

the shipping address of the customer. Rio Tinto is domiciled in both the UK and Australia.

Consolidated sales revenue by product

We have sold the following products to external customers during the year:

(a)Consolidated sales revenue includes both revenue from contracts with customers, accounted for under IFRS 15 “Revenue from Contracts with Customers”, and subsequent movements in

provisionally priced receivables, accounted for under IFRS 9, and included in “other revenue” above.

(b)“Other products and freight services” includes metallic co-products, molybdenum, silver and other commodities.

7 Net operating costs (excluding items disclosed separately)

(a)Includes purchases of third-party material to satisfy sales contracts.

(b)Amounts charged by equity accounted units relate to toll processing fees and also include purchases from equity accounted units of bauxite, aluminium and copper concentrate which are then

processed by the product group or sold to third parties.

(c)On 2 August 2022, we completed the sale for US$525 million of a gold royalty which was retained following the disposal of the Cortez mine in 2008.

(d)During the first half of 2022, LNG Canada elected to terminate their option to purchase additional land and facilities for expansion of their operations at Kitimat, Canada. On 3 December 2021 we

recognised a new wharf at Kitimat, Canada within Property, plant and equipment that was built and paid for by LNG Canada.

(e)In 2023, other external costs include US$269 million (2022: US$465 million,2021: US$502 million) of short-term lease costs and US$40 million (2022: US$50 million,2021 US$34 million) of

variable lease costs recognised in the income statement in accordance with IFRS 16 “Leases”. Refer to note 21.

(f)In 2023, US$1,007 million (2022: US$485 million;2021: US$445 million) of operating costs were capitalised, US$247 million (2022: US$190 million;2021: US$154 million) of costs were shown

separately within “Exploration and evaluation costs” in the Group income statement, and US$77 million (2022:$47 million;2021: US$47 million) of costs were shown within operating costs as

“Research and development”.

(g)Other operating income includes sundry revenue incidental to the main revenue-generating activities of the operations.

(h)Operating decarbonisation spend of US$234 million (2022: US$138 million) is allocated as US$182 million (2022: US$88 million) within ”Net operating costs (excluding items disclosed

separately)”, with the remainder included in our share of profit or loss of equity accounted units.

8 Exploration and evaluation expenditure

Exploration and evaluation expenditure includes 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;

–compiling various studies (order of magnitude, pre-feasibility and feasibility) and/or

–early works at mine sites prior to full notice to proceed.

Exploration expenditure relates to the initial search for deposits with economic potential. Expenditure on exploration activity undertaken by the

Group is not capitalised.

Evaluation expenditure relates to a detailed assessment of deposits or other projects (including smelter and refinery projects) that have been

identified as having economic potential. These costs are also expensed until the business case for the project is sufficiently advanced. For

greenfield projects, expensing typically continues to a later phase of study compared with brownfield expansions.

The charge for the year and the net amount of intangible assets capitalised during the year are as follows:

(a)In 2023, net cash proceeds of US$88 million were received in relation to the sale of a 55% interest in the undeveloped La Granja project in Peru, for which we recognised a gain on disposal of

US$154 million. This profit is recorded within underlying EBITDA as it represents recovery of past exploration and evaluation expenditures that were also included within underlying EBITDA.

Refer to note 5 for details of the transaction.

9 Finance income and finance costs

(a)The main sources of ineffectiveness of the fair value hedges include changes in the timing of the cash flows of the hedging instrument compared to the underlying hedged item, and changes in

the credit risk of parties to the hedging relationships.

(b)We capitalise interest based on the Group or relevant subsidiary’s cost of borrowing (refer to note 12 and note 13) or at the rate of project-specific debt (where applicable).

10 Taxation

The taxation charge contains both current and deferred tax.

Current tax is the tax expected to be payable on the taxable income for the year calculated using rates applicable during the year. It includes

adjustments for tax expected to be payable or recoverable in respect of previous periods. Where the amount of tax payable or recoverable is

uncertain, we establish provisions based on either: the Group’s judgement of the most likely amount of the liability or recovery; or, when there is a

wide range of possible outcomes, a probability weighted average approach.

Deferred tax is calculated in accordance with IAS 12 using rates that have been enacted or substantively enacted at the balance sheet date. Where

the recognition of an asset and liability from a single transaction gives rise to equal and off-setting temporary differences, we had previously applied

the Initial Recognition Exemption allowed by IAS 12, and consequently recognised neither a deferred tax asset nor a deferred tax liability in respect

of these timing differences. Under the narrow-scope amendments to IAS 12, deferred tax assets and liabilities are required to be recognised in

respect of such temporary differences and prior year results have been restated accordingly (refer to section “New standards issued and effective in

the current year” on page 166 for details). Primarily, this applies to lease arrangements and changes in closure estimates which are capitalised.

Other relevant judgements - uncertain tax positionsThe Group operates across a large number of jurisdictions and is subject to review and challenge by local tax authorities on a range of tax matters. Where the amount of tax payable or recoverable is uncertain, whether due to local tax authority challenge or due to uncertainty regarding the appropriate treatment, judgement is required to assess the probability that the adopted treatment will be accepted. In accordance with IFRIC 23 “Uncertainty over Income Tax Treatments”, if it is not probable that the treatment will be accepted, the Group accounts for uncertain tax provisions for all matters worldwide based on the Group’s judgement of the most likely amount of the liability or recovery, or, where there is a wide range of possible outcomes, using a probability weighted average approach. Uncertain tax provisions include any related interest and penalties. The Mongolian Tax Authority has issued a number of tax assessments covering the fiscal years 2013 to 2020, the most recent of which was received in December 2023, which are inconsistent with the Oyu Tolgoi Investment Agreement and Mongolian legislation. We have not booked any uncertain tax provisions for the matters under dispute, which have been referred to international arbitration. As required by Mongolian law we have paid US$356 million in respect of the assessments, pending resolution of the disputes through the arbitration. These amounts, adjusted for exchange rate movements, are included within our non-current receivables and other assets on the balance sheet. The interpretation of the Investment Agreement and Mongolian legislation has been, and is expected to continue to be, subject to dispute. Differences in interpretation of the Investment Agreement and Mongolian legislation could have a material impact on the recovery of the amounts paid and of certain deferred tax assets, further details of which are provided in Note 15.

Taxation charge

10 Taxation continued

Prima facie tax reconciliation

(b)The Group profit before tax includes profit after tax of equity accounted units. Consequently, the tax effect on the profit from equity accounted units is included as a separate reconciling item in

this prima facie tax reconciliation.

(c)As a UK headquartered and listed Group, the reconciliation of expected tax on accounting profit to tax charge uses the UK corporate tax rate to calculate the prima facie tax payable. Rio Tinto is

also listed in Australia, and the reconciliation includes the impact of the higher tax rate in Australia where a significant proportion of the Group's profits are currently earned. The impact of other

tax rates applicable outside the UK and Australia is also included. The weighted average statutory corporate tax rate on profit before tax is approximately 31% (2022:29% 2021:29%).

(d)The recognition of previously unrecognised deferred tax assets in 2023 and 2022 relates primarily to Oyu Tolgoi where reaching sustainable underground production has reduced the risk of tax

losses expiring if not recovered against taxable profits within eight years. In the comparative period to 31 December 2021 the recognition of previously unrecognised deferred tax assets also

included the recognition of prior year deferred tax assets in our Australian Aluminium business.

(e)The write-down of previously recognised deferred tax assets in the prior year relates to deferred tax assets of our US businesses. The enactment of the USInflation Reduction Act of 2022 in

August included a new Corporate Alternative Minimum Tax (CAMT) regime which applies a minimum tax rate of 15% on accounting profits. As a result of the new legislation, which does not give

relief for some Federal deferred tax assets, the deferred tax assets previously recognised have been written down. This amount has been restated from US$820 million as previously reported to

US$932 million to reflect the adoption of narrow-scope amendments to IAS 12 referred to in footnote (a).

(f)In 2021, the utilisation of previously unrecognised deferred tax assets arose due to higher than forecast profits in the year at Oyu Tolgoi.

(g)Unrecognised current year operating losses include tax losses around the Group, including increases in closure estimates in 2023, for which no tax benefit is currently recognised due to

uncertainty regarding whether suitable taxable profits will be earned in future to obtain value for the tax losses.

(h)During the year the Canadian aluminium business completed an internal sale of assets which resulted in the utilisation of previously unrecognised capital losses and an uplift in the tax

depreciable value of assets on which a deferred tax asset of US$364 million is recognised.

(i)In the year to 31 December 2022, adjustments in respect of prior periods includes amounts related to the settlement of all tax disputes with the Australian Tax Office for the years 2010 to 2021.

Future tax developments

We continue to monitor and evaluate the domestic implementation by relevant countries of the Organisation for Economic Co-operation and

Development’s (OECD) Pillar Two which seeks to apply a 15% global minimum tax. Pillar Two was substantively enacted by the United Kingdom on

20 June 2023, with application from 1 January 2024. As the Pillar Two legislation was not operative at the reporting date, the Group has no related

current tax exposure.

We have adopted the guidance contained in International Tax Reform – Pillar Two Model Rules – Amendments to IAS 12 released on 23 May 2023,

which provides a temporary mandatory exception from deferred tax accounting for Pillar Two. We estimate that the exposure to additional taxation in

2024 under Pillar Two is immaterial for the Group.

Our operating assets

We are a diversified mining operation with the majority of our assets being located in OECD countries.

Non-current assets other than excluded items(a)

The total of non-current assets other than excluded items is shown by location below.

(a)Allocation of non-current assets by country is based on the location of the business units holding the assets. It includes investments in equity accounted units totalling US$4,393 million (2022:

US$3,298 million) which represents the Group’s share of net assets excluding quasi-equity loans shown separately above.

(b)Comparative information has been restated to reflect the adoption of narrow-scope amendments to IAS 12. Refer to page 166 for details.

11 Goodwill

Goodwill is not amortised; it is tested annually at 30 September for impairment or more frequently if events or changes in circumstances indicate a

potential impairment. Refer to note 4 for further information.

At 31 December, goodwill has been allocated as follows:

Impairment tests for goodwill

Richards Bay Minerals

Richards Bay Minerals’ annual impairment review resulted inno impairment charge for 2023 (2022: no impairment charge). The recoverable amount

has been assessed by reference to the CGU’s FVLCD, in line with the policy set out in note 4 and classified aslevel 3 under the fair value hierarchy.

FVLCD was determined by estimating cash flows until the end of the life-of-mine plan including anticipated expansions. In arriving at FVLCD, a post-

tax discount rate of 8.6% (2022:8.6%) has been applied to the post-tax cash flows expressed in real terms.

The key assumptions to which the calculation of FVLCD for Richards Bay Minerals is most sensitive and the corresponding change in FVLCD are

set out below:

Future selling prices and operating costs have been estimated in line with the policy set out in note 4. The recoverable amount of the cash-

generating unit (CGU) exceeds the carrying value when each of these sensitivities is applied while keeping all other assumptions constant.

12 Intangible assets

Purchased intangible assets are initially recorded at cost. Finite-life intangible assets are amortised over their useful economic lives on a straight line

or units of production basis, as appropriate. Intangible assets that are deemed to have indefinite lives and intangible assets that are not yet ready for

use are not amortised; they are reviewed annually for impairment or more frequently if events or changes in circumstances indicate a potential

impairment.

The majority of our intangible assets relate to capitalised exploration and evaluation spend on undeveloped properties and contract-based water

rights. The water rights were acquired with Alcan in Canada.

The carrying values for undeveloped properties are reviewed at each reporting date in accordance with IFRS 6 “Exploration for and Evaluation of

Mineral Resources”. The indicators of impairment differ from the tests in accordance with IAS 36 in recognition of the subjectivity of estimating future

cash flows for mineral interests under evaluation. Potential indicators of impairment include: expiry of the right to explore, substantive expenditure is

no longer planned, commercially viable quantities of mineral resources have not been discovered and exploration activities will be discontinued, or

sufficient data exists to indicate a future development would be unlikely to recover the carrying amount in full. When such impairment indicators

have been identified, the recoverable amount and impairment charge are measured under IAS 36. Impairment reversals for undeveloped properties

are not subject to special conditions within IFRS 6 and are therefore subject to the same monitoring for indicators of impairment reversal as other

CGUs.

Exploration and evaluation

Evaluation expenditure relates to a detailed assessment of deposits or other projects (including smelter and refinery projects) that have been

identified as having economic potential. Capitalisation of evaluation expenditure commences when there is a high degree of confidence that the

Group will determine that a project is commercially viable; that is, the project will provide a satisfactory return relative to its perceived risks and,

therefore, it is considered probable that future economic benefits will flow to the Group. The Group’s view is that a high degree of confidence is

greater than “more likely than not” (that is, greater than 50% certainty) and less than “virtually certain” (that is, less than 90% certainty).

Assessing whether there is a high degree of confidence that the Group will ultimately determine that an evaluation project is commercially viable

requires judgement and consideration of all relevant factors such as: the nature and objective of the project; the project’s current stage, project

timeline, current estimates of the project’s net present value (including sensitivity analyses for the key assumptions), and the main risks of the

project. Development expenditure incurred prior to the decision to proceed is subject to the same criteria for capitalisation, being a high degree of

confidence that the Group will ultimately determine that a project is commercially viable.

In some cases, 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 when existing smelters or

refineries are closed. Mineral reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined.

Evaluation costs may continue to be capitalised in between declaration of mineral reserves and approval to mine as further work is undertaken in

order to refine the development case to maximise the project’s returns.

Carbon credits and Renewable Energy Certificates

Carbon credits and Renewable Energy Certificate (RECs) acquired for our own use are accounted for as intangible assets, initially recorded at cost.

They are amortised through the income statement when surrendered.

Contract-based intangible assets

The majority of the carrying value of our contract-based intangible assets relate to water rights in the Quebec region. These contribute to the

efficiency and cost effectiveness of our aluminium operations as they enable us to generate electricity from hydropower stations.

Other relevant judgements - assessment of indefinite-lived water rights in Quebec, CanadaWe continue to judge the water rights in Quebec to have an indefinite life because we expect the contractual rights to contribute to the efficiency and cost effectiveness of our operations for the foreseeable future. Accordingly, the rights are not subject to amortisation but are tested annually for impairment. We have no other indefinite-lived assets.The remaining carrying value of the water rights of US$1,776 million (included in contract-based assets) as at 31 December 2023 (2022: US$1,693 million) relates wholly to the Quebec smelters CGU. The Quebec smelters CGU was tested for impairment by reference to FVLCD using discounted cash flows. The recoverable amount of the Quebec smelters is classified as level 3 under the fair value hierarchy. In arriving at its FVLCD, post-tax cash flows expressed in real terms have been estimated over the expected useful economic lives of the underlying smelting assets and discounted using a real post-tax discount rate of 6.6% (2022: 6.6%).The recoverable amounts were determined to be significantly in excess of carrying value, and there are no reasonably possible changes in key assumptions that would cause the remaining water rights to be impaired.

Impact of climate change on our business - water rightsTo manage the uncertainties of climate change and our impact on the area, our team of hydrologists in Quebec analyse different weather scenarios on a daily basis. We monitor the water resource available to us along with the impact that our operation is having on the water quality and quantity, and on the environment when we return the water following use. Based on our analysis to date, we do not consider the renewal of our contractual water rights to be at risk from climate change for the foreseeable future.

12 Intangible assets continued

(a)Carbon abatement spend of US$61 million in 2023 (2022: US$33 million) relates to procurement of carbon units and RECs included within “Other intangible assets” on initial recognition and

charged to the income statement when surrendered.

(b)In the current year, additions to exploration and evaluation assets includes US$4 million of interest capitalised. Our average borrowing rate, excluding any project finance, used for capitalisation

of interest is 7.50% (2022:5.60%).

(c)The impairment reversal in the current year relates to the Simandou project, this also impacted cost and accumulated impairment due to derecognition of historical exploration and evaluation

costs. In 2022, the impairment reversal and disposal related to our sale of the Roughrider uranium project. Refer to note 4 for details.

(d)In the current year, the acquisition relates to our purchase of Meridian Minera Limitada’s 57.7% share in Agua de la Falda. In 2022, the acquisition related to our purchase of Rincon, a lithium

project in Argentina. Refer to note 5 for details.

Where amortisation is calculated on a straight line basis, the following useful lives have been determined:

13 Property, plant and equipment

Property, plant and equipment is stated at cost, as defined in IAS 16 “Property, Plant and Equipment”, less accumulated depreciation and

accumulated impairment losses. The cost of property, plant and equipment includes, where applicable, the estimated close-down and restoration

costs associated with the asset.

Property, plant and equipment includes right-of-use assets arising from leasing arrangements, shown separately from owned and leasehold assets.

Once an undeveloped mining project has been determined as commercially viable and approval to mine has been given, further expenditure is

capitalised under “capital work in progress” together with any amount transferred from “Exploration and evaluation”. Once the project enters into an

operation phase, the amounts capitalised in capital work in progress are reclassified to their respective asset categories.

Costs incurred while commissioning new assets, in the period before they are capable of operating in the manner intended by management, are

capitalised unless associated with pre-production revenue. 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, at the rate payable on project-specific debt if applicable or at the Group or subsidiary’s cost of borrowing if not. This is performed until

the point when substantially all the activities that are necessary to make the asset ready for its intended use are complete. It may be appropriate to

use a subsidiary’s cost of borrowing when the debt was negotiated based on the financing requirements of that subsidiary.

Depreciation of non-current assets

Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine, smelter or refinery if that is shorter and there

is no reasonable alternative use for the asset by the Group. Depreciation commences when an asset is available for use and therefore there is no

depreciation for capital work in progress.

Straight line basis

Assets 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:

The useful lives and residual values for material assets and categories of assets are reviewed annually and changes are reflected prospectively.

Units of production basis

For mining properties and leases and certain mining equipment, consumption of the economic benefits of the asset is linked to production. Except

as noted below, these assets are depreciated on the units of production basis.

In applying the units of production method, depreciation is normally calculated based on production in the period as a percentage of total expected

production in current and future periods based on mineral reserves and, for some mines, other mineral resources. Other mineral resources may be

included in the calculations of total expected production in limited circumstances where there are very large areas of contiguous mineralisation, for

which the economic viability is not sensitive to likely variations in grade, as may be the case for certain iron ore, bauxite and industrial mineral

deposits, and where there is a high degree of confidence that the other mineral resources can be extracted economically. This would be the case

when the other mineral resources do not yet have the status of ore reserves merely because the necessary detailed evaluation work has not yet

been performed and the responsible technical personnel agree that inclusion of a proportion of measured and indicated resources in the calculation

of total expected production is appropriate based on historical reserve conversion rates.

The required level of confidence is unlikely to exist for minerals that are typically found in low-grade ore (as compared with the above), such as

copper or gold. In these cases, specific areas of mineralisation have to be evaluated in detail before their economic status can be predicted with

confidence.

Sometimes the calculation of depreciation for infrastructure assets, primarily rail and port, considers measured and indicated resources. This is

because the asset can benefit current and future mines. The measured and indicated resource may relate to mines which are currently in production

or to mines where there is a high degree of confidence that they will be brought into production in the future. The quantum of mineral resources is

determined taking into account future capital costs as required by the JORC code. The depreciation calculation, however, applies to current mines

only and does not take into account future development costs for mines which are not yet in production. Measured and indicated resources are

currently incorporated into depreciation calculations in the Group’s Australian iron ore business.

13 Property, plant and equipment continued

Key judgement - estimation of asset livesThe 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 are generally limited to the expected life of the orebody. The life of the orebody, in turn, is estimated on the basis of the life-of-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. Factors affecting the remaining service potential of smelters include, for example, smelter technology and electricity purchase contracts when power is not sourced from the Group, or in some cases from local governments permitting electricity generation from hydropower stations.

Impact of climate change on our business - estimation of asset livesWe expect there to be a higher demand for copper, aluminium, lithium and high-grade iron ore in order to meet demand for the minerals required to transition to a low carbon economic environment, consistent with the climate change commitments of the Paris Agreement. We expect this to exceed new supply to the market and therefore increase prices. Under the Aspirational Leadership scenario, the economic cut-off grade for our Mineral Reserves is expected to be lower; in effect we would mine a greater volume of material before the mines are depleted. We cannot quantify the difference this would make without undue cost as it would require revised mine plans, but for property, plant and equipment this increased volume of material would reduce the depreciation charge during any given period for assets that use the “Units of production” depreciation basis.

Deferred stripping

In open pit mining operations, overburden and other waste materials must be removed to access ore from which minerals can be extracted

economically. The process of removing overburden and other waste materials is referred to as stripping. During the development of a mine (or, in

some instances, pit; see below), before production commences, stripping costs related to a component of an orebody are capitalised as part of the

cost of construction of the mine (or pit). These are then 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, initial 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 (see below).

Key judgement - deferral of stripping costsWe apply judgement as to whether multiple pits at a mine are considered separate or integrated operations. This determines whether the stripping activities of a pit are classified as pre-production or production phase stripping and, therefore, the amortisation base for those costs. The analysis depends on each mine’s specific circumstances and requires judgement: another mining company could make a different judgement even when the fact pattern appears to be similar. The following factors would point towards the initial stripping costs for the individual pits being accounted for separately: –if mining of the second and subsequent pits is conducted consecutively following 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 removal and ore mining, rather than as an integrated unit; –if expenditures for additional infrastructure to support the second and subsequent pits are relatively large; and –if the pits extract ore from separate and distinct orebodies, rather than from a single orebody. If the designs of the second and subsequent pits are significantly influenced by opportunities to optimise output from several pits combined, including the co-treatment or blending of the output from the pits, then this would point to treatment as an integrated operation for the purposes of accounting for initial stripping costs. The relative importance of each of the above factors is considered in each case. In order for production phase stripping costs to qualify for capitalisation as a stripping activity asset, three criteria must be met: –it must be probable that there will be an economic benefit in a future accounting period because the stripping activity has improved access to the orebody; –it must be possible to identify the “component” of the orebody for which access has been improved; and –it must be possible to reliably measure the costs that relate to the stripping activity. A “component” is a specific section of the orebody that is made more accessible by the stripping activity. It will typically be a subset of the larger orebody that is distinguished by a separate useful economic life (for example, a pushback).

Recognition and measurement of deferred stripping

Property, plant and equipment - owned and leased assets

13 Property, plant and equipment continued

Property, plant and equipment – owned

(a)At 31 December 2023, the net book value of capitalised production phase stripping costs totalled US$2,505 million, with US$2,069 million within “Property, plant and equipment” and a further

US$436 million within “Investments in equity accounted units” (2022: total of US$2,497 million, with US$2,038 million in “Property, plant and equipment” and a further US$460 million within

“Investments in equity accounted units”). During the year, capitalisation of US$325 million was partly offset by depreciation of US$324 million, inclusive of amounts recorded within equity

accounted units (2022: US$411 million offset by depreciation of US$331 million). Depreciation of deferred stripping costs in respect of subsidiaries of US$216 million (2022: US$246 million;

2021: US$201 million) is included within “Depreciation for the year”.

(b)Adjustment on currency translation represents the impact of exchange differences arising on the translation of the assets of entities with functional currencies other than the US dollar, recognised

directly in the currency translation reserve. The adjustment in 2023 arose primarily from the strengthening of the Australian and Canadian dollars against the US dollar.

(c)Our average borrowing rate, excluding any project finance, used for capitalisation of interest is 7.50% (2022:5.60%).

(d)Additions to “Property, plant and equipment” includes US$94 million of spend on carbon abatement (2022: US$86 million).

(e)In 2023, the impairment charges related primarily to our alumina refineries in the Aluminium segment. Refer to note 4 for details.

(f)“Transfers and other movements” includes reclassification between categories.

(g)Excludes assets held under capitalised lease arrangements. Non-current assets pledged as security represent amounts pledged as collateral against US$3,994 million (2022: US$3,965 million)

of loans, which are included in note 20.

(h)In 2022, the acquisition relates to our purchase of Rincon, a lithium project in Argentina. Refer to note 5 for details.

Right-of-use assets – leased

(a)In 2023, the impairment charges related to our alumina refineries in the Aluminium segment. Refer to note 4 for details.

The leased assets of the Group include land and buildings (mainly office buildings) and plant and equipment, the majority of which are marine

vessels. Lease terms are negotiated on an individual basis and contain a wide range of terms and conditions. Right-of-use assets are depreciated

on a straight line basis over the life of the lease, taking into account any extensions that are likely to be exercised.

14 Close-down and restoration provisions

The Group has provisions for close-down and restoration costs, which

include the dismantling and demolition of infrastructure, the removal of

residual materials and the remediation of disturbed areas for mines and

certain refineries and smelters. The obligation may occur during

development or during the production phase of a facility. These

provisions are based on all regulatory requirements and any other

commitments made to stakeholders. The provision excludes the impact

of future disturbance that is planned to occur during the life of mine, so

that it represents only existing disturbance as at the balance sheet date.

Closure provisions are not made for those operations that have no

known restrictions on their lives as the closure dates cannot be reliably

estimated; instead a contingent liability is disclosed. Refer to note 37 for

details. This applies primarily to certain Canadian smelters that have

indefinite-lived water rights from local governments permitting electricity

generation from hydropower stations and are not tied to a specific

orebody.

Close-down and restoration costs are a normal consequence of mining

or production, and the majority of close-down and restoration

expenditure is incurred in the years following closure of the mine,

refinery or smelter. Although the ultimate cost to be incurred is

uncertain, the Group’s businesses estimate their costs using current

restoration standards, techniques and expected climate conditions. The

costs are estimated on the basis of a closure plan, and are reviewed at

each reporting period during the life of the operation to reflect known

developments. The estimates are also subject to formal review, with

appropriate external support, at regular intervals.

The timing of closure and the rehabilitation plans for the site can be

uncertain and dependent upon future capital allocation decisions, which

involve estimation of future economic circumstances and business

cases. In such circumstances, the closure provision is estimated using

probability weighting of the different remediation and closure scenarios.

The initial close-down and restoration provision is capitalised within

“Property, plant and equipment”. Subsequent movements in the close-

down and restoration provisions for ongoing operations are treated as

an adjustment to cost within “Property, plant and equipment”. This

includes those resulting from new disturbances related to expansions or

other activities qualifying for capitalisation; updated cost estimates;

changes to the estimated lives of operations; changes to the timing of

closure activities; and revisions to discount rates.

Changes in closure provisions relating to closed and fully impaired

operations are charged/credited to “Net operating costs” in the income

statement.

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 balance

sheet date and the cost is charged to the income statement.

The closure provision is represented by forecast future underlying cash

flows expressed in real terms at the balance sheet date. These are

discounted for the time value of money based on a long-term view of

low-risk market yields which includes a review of historic trends plus

risks and opportunities for which future cash flows have not been

adjusted, namely potential improvements in closure practices between

the reporting date and the point at which rehabilitation spend takes

place. The real-terms discount rate used is 2.0% (2022:1.5%) which is

applied to all locations since we expect to meet closure cash flows

principally from US dollar revenues and financing, with activities co-

ordinated by the Group's central closure team.

To roll forward those real-terms cash flows between periods, we identify

local rates of inflation based on Producer Price Inflation (PPI) indices

and, together with the real-terms discount rate, unwind the discount

through the line “Amortisation of discount on provisions”, shown within

“Finance items” in the income statement. This nominal rate for cost

escalation in the current financial year is estimated at the start of each

half-year and applied systematically for six months. At the end of each

half-year we update the underlying cash flows for the latest estimate of

experienced inflation, if it differs materially from our forecast, for the

current financial year and record this as “changes to existing

provisions”. For operating sites this adjustment usually results in a

corresponding adjustment to property, plant and equipment and for

closed and fully impaired sites the adjustment is charged or credited to

the income statement.

In some cases, our subsidiaries make a contribution to trust funds in

order to meet or reimburse future environmental and decommissioning

costs. Amounts due for reimbursement from trust funds are not offset

against the corresponding closure provision unless payments into the

fund have the effect of passing the closure obligation to the trust.

Environmental costs result from environmental damage that was not a

necessary consequence of operations, and may include remediation,

compensation and penalties. Provision is made for the estimated

present value of such costs at the balance sheet date. These costs are

charged to “Net operating costs”, except for the unwinding of the

discount which is shown within “Amortisation of discount on provisions”.

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 used.

(a)Includes US$1,272 million arising from study updates in the second half of 2023 (2022: US$180 million) which have been excluded from underlying EBITDA. Refer to note 1 for details.

(b)Close-down, restoration and environmental liabilities at 31 December 2023 have not been adjusted for closure-related receivables amounting to US$366 million (2022: US$351 million) due from

the ERA trust fund and other financial assets held for the purposes of meeting closure obligations. These are included within “Receivables and other assets” on the balance sheet.

Key judgement - Close-down, restoration and environmental obligationsWe use our judgement and experience to determine the potential scope of closure rehabilitation work required to meet the Group’s legal, statutory and constructive obligations, and any other commitments made to stakeholders, and the options and techniques available to meet those obligations in order to estimate the associated costs and the likely timing of those costs. Significant judgement is also required to then determine both the costs associated with that work and the other assumptions used to calculate the provision. External experts support the cost estimation process where appropriate but there remains significant estimation uncertainty. The key judgement in applying this accounting policy is determining when an estimate is sufficiently reliable to make or adjust a closure provision. Adjustments are made to provisions when the range of possible outcomes becomes sufficiently narrow to permit reliable estimation. Depending on the materiality of the change, adjustments may require review and endorsement by the Group’s Closure Steering Committee before the provision is updated.Cost provisions are updated throughout the life of the operation with conceptual study estimates reviewed every five years. Within ten years from the expected closure date, closure cost estimates must comply with the Group’s Capital Project Framework. This means, for example, that where an Order of Magnitude (OoM) study is required for closure, it must be of the same standard as an OoM study for a new mine, smelter or refinery.In 2023, a reforecast for the Ranger Uranium mine operated by Energy Resources of Australia has resulted in an increase to the closure provision of US$850 million. The increase is principally attributed to closure activities taking longer due to a reassessment of the time taken to achieve Pit 3 consolidation coupled with transition to a lower risk approach which adversely impacts achievement of final landform and the quantity of water to be processed. When operations ceased at the end of 2020, rehabilitation was expected to be complete by 2026; we now expect the final completion will be delayed until 2034, subject to permitting. The majority of the provision increase is attributable to rehabilitation activities post 2027 and is subject to further study which could result in material change to the provision. These activities remain subject to a number of studies and are also potentially sensitive to external events such as rainfall. A previous study was completed in early 2022 and the preliminary information from that study resulted in an increase to closure liabilities of US$510 million in 2021.In some cases, the closure study may indicate that monitoring and, potentially, remediation will be required indefinitely - for example, ground water treatment. In these cases, the underlying cash flows for the provision may be restricted to a period for which the costs can be reliably estimated, which on average is around 30 years. Where an alternative commercial arrangement to meet our obligations can be predicted with confidence, this period may be shorter.

14 Close-down and restoration provisions continued

Analysis of close-down and restoration/environmental clean-up provisions

(a)A key component of earthworks rehabilitation involves re-landscaping the area disturbed by mining activities utilising largely diesel powered heavy mobile equipment. In developing low-carbon

solutions for our mobile fleet, this may include electrification of the vehicles during the mine life. The forecast cash flows for the heavy mobile equipment in the closure cost estimate are based on

existing fuel sources. The cost incurred during closure could reduce if these activities are powered by renewable energy.

(b)Long-term water management relates to the post-closure treatment of water due to acid rock drainage and other environmental commitments and is an area of research and development focus

for our Closure team. The cost of this water processing can continue for many years after the bulk earthworks and demolition activities have completed and are therefore exposed to long-term

climate change. This could materially affect rates of precipitation and therefore change the volume of water requiring processing. It is not currently possible to forecast accurately the impact this

could have on the closure provision as some of our locations could experience drier conditions whereas others could experience greater rainfall. A further consideration relates to the alternative

commercial use for the processed water, which could support ultimate transfer of these costs to a third party.

(c)Indirect costs, owners' costs and contingency include adjustments to the underlying cash flows to align the closure provision with a central-case estimate. This excludes allowances for

quantitative estimation uncertainties, which are allocated to the underlying cost driver and presented within the respective cost categories above.

The geographic composition of the closure provision shows that our closure obligations are largely in countries with established levels of regulation

in respect of mine and site closure.

Projected cash flows (undiscounted) for close-down and restoration/environmental clean-up provisions

Remaining lives of operations and infrastructure range fromone to over 50 years with an average for all sites, weighted by present closure

obligation, of around 14 years. Although the ultimate cost to be incurred is uncertain, the Group’s businesses estimate their respective costs based

on current restoration standards, techniques and expected climate conditions.

Key accounting estimate - close-down, restoration and environmental obligationsThe most significant assumptions and estimates used in calculating the provision are:–Closure timeframes. The weighted average remaining lives of operations is shown on the previous page. Some expenditure may be incurred before closure while the operation as a whole is in production.–The length of any post-closure monitoring period. This will depend on the specific site requirements and the availability of alternative commercial arrangements; some expenditure can continue into perpetuity. The Rio Tinto Kennecott closure and environmental remediation provision includes an allowance for ongoing monitoring and remediation costs, including ground water treatment, of approximately US$0.7 billion.–The probability weighting of possible closure scenarios. The most significant impact of probability weighting is at the Pilbara operations (Iron Ore) relating to infrastructure and incorporates the expectation that some infrastructure will be retained by the relevant State authorities post closure. The assignment of probabilities to this scenario reduces the closure provision by US$0.7 billion.–Appropriate sources on which to base the calculation of the discount rate. The discount rate by nature is subjective and therefore sensitivities are shown below for how the provision balance, which at 31 December 2023 was US$17.2 billion, would change if discounted at alternative discount rates. There is significant estimation uncertainty in the calculation of the provision and cost estimates can vary in response to many factors including:–Changes to the relevant legal or local/national government requirements and any other commitments made to stakeholders;–Review of remediation and relinquishment options;–Additional remediation requirements identified during the rehabilitation;–The emergence of new restoration techniques;–Precipitation rates and climate change;–Change in foreign exchange rates;–Change in the expected closure date; and–Change in the discount rate.Experience gained at other mine or production sites may also change expected methods or costs of closure, although elements of the restoration and rehabilitation can be unique to each site. Generally, there is relatively limited restoration and rehabilitation activity and historical precedent elsewhere in the Group, or in the industry as a whole, against which to benchmark cost estimates.The expected timing of expenditure can also change for other reasons, for example because of changes to expectations relating to Mineral reserves and mineral resources, production rates, renewal of operating licences or economic conditions. Changes in closure cost estimates at the Group’s ongoing operations could result in a material adjustment to assets and liabilities in the next 12 months and would also impact the depreciation and the unwinding of discount in future years.Changes to closure cost estimates for closed operations, and changes to environmental cost estimates at any operation, could cause a material adjustment to the income statement and closure liability. We do not consider that there is significant risk of a change in estimates for these liabilities causing a material adjustment to the income statement in the next 12 months. Any new environmental incidents may require a material provision but cannot be predicted. Project specific risks are embedded within the cash flows which are based on a central case estimate of closure activities assuming that the obligation is fulfilled by the Group. These cash flows are then discounted using a discount rate specific to the class of obligations.

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

14 Close-down and restoration provisions continued

Provisions of US$17,150 million (2022: US$15,759 million) for close-down and restoration costs and environmental clean-up obligations are based

on risk-adjusted cash flows expressed in real terms. The present volatility in interest rates has resulted in expectations of higher yields from long-

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

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

currency in which we plan to fund the closures and our expectation of long-term interest rate and exchange rate parity in the locations of our

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

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

15 Deferred taxation

The Group’s accounting policy in relation to deferred taxation is outlined within note 10.

The movement in deferred tax (liabilities)/assets in the year ended 31 December is as follows:

(b)The amounts credited/(charged) directly to the statement of comprehensive income include provisions for tax on cash flow hedges and on re-measurement gains/(losses) on pension schemes

and on post-retirement healthcare plans.

(c)“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.

(d)Recognised deferred tax assets of US$1,182 million (2022: US$868 million) are subject to expiry if not recovered within certain time limits as specified in local tax legislation and investment

agreements. Of those recognised assets US$nil (2022: US$nil) would expire withinone year if not used, US$140 million (2022: US$105 million) would expire withinone tofive years, and

US$1,042 million (2022: US$763 million) would expire in more than five years.

(e)Recognised and unrecognised deferred tax assets are shown in the table on page 202 and totalled US$10,040 million at 31 December 2023 (2022: US$8,089 million). Of this total, US$3,624

million has been recognised as deferred tax assets (2022: US$2,796 million), leaving US$6,416 million (2022: US$5,293 million) unrecognised, as recovery is not considered probable.

(f)Deferred tax liabilities are not recognised on the unremitted earnings of subsidiaries and joint ventures totalling US$2,249 million (2022: US$2,730 million) 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$110 million (2022: US$140 million) would be

payable.

Analysis of deferred tax

Deferred tax balances for which there is a right of offset within the same tax jurisdiction are presented net on the face of the balance sheet as

required by IAS 12. The closing deferred tax assets and liabilities, prior to this offsetting of balances, are shown below.

(b)Recognised deferred tax assets of US$1,182 million (2022: US$868 million) are subject to expiry if not recovered within certain time limits as specified in local tax legislation and investment

agreements. Of those recognised assets US$nil (2022: US$nil) would expire withinone year if not used, US$140 million (2022: US$105 million) would expire withinone tofive years, and

US$1,042 million (2022: US$763 million) would expire in more than five years.

(c)Other temporary differences include research and development, investment and other tax credits and allowances of US$583 million (2022: US$491 million).

(d)Deferred tax liabilities are not recognised on the unremitted earnings of subsidiaries and joint ventures totalling US$2,249 million (2022: US$2,730 million) 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$110 million (2022: US$140 million) would be

payable.

Other relevant judgements - Recoverability of deferred tax assetsIn considering the recoverability of deferred tax assets, judgement is required regarding the extent to which certain risk factors are likely to affect the recovery of these assets. These risk factors include the risk of expiry of losses prior to utilisation, the impact of other legislation or tax regimes, such as minimum taxes, and consideration of factors that lead to the generation of losses or other deferred tax assets. IAS 12 requires us to consider whether taxable profits will be available against which deferred tax assets may be utilised. The Mongolian Tax Authority has issued a number of tax assessments covering the fiscal years 2013 to 2020, the most recent of which was received in December 2023, which are inconsistent with the Oyu Tolgoi Investment Agreement and Mongolian legislation. The interpretation of the Investment Agreement and Mongolian legislation has been, and is expected to continue to be, subject to dispute through international arbitration. Differences in interpretation of the Investment Agreement and Mongolian legislation could have a material impact on the amount and recovery of recognised deferred tax items, including tax losses. The arbitration process on matters of this complexity can typically take over 12 months to conclude.

15 Deferred taxation continued

Analysis of deferred tax assets

The recognised amounts in the table below do not include deferred tax assets that have been netted off against deferred tax liabilities.

(b)Although our US group companies expect to generate sufficient taxable profits to utilise existing Federal deferred tax assets, the application of the new Corporate Alternative Minimum Tax rules

has resulted in a position where no material future tax benefit will be derived from the utilisation of Federal deferred tax assets and consequently these deferred tax assets are included as

'unrecognised' in this table.

(c)Deferred tax assets in Mongolia include US$310 million (2022: US$73 million) from tax losses that expire if not recovered against taxable profits within eight years. In addition, amounts have

been recognised as deferred tax assets relating to anticipated future deductions. Tax losses and other deferred tax assets have been calculated in accordance with the Oyu Tolgoi Investment

Agreement and Mongolian legislation. The interpretation of the Investment Agreement by the Mongolian Tax Authority has been, and is expected to continue to be, subject to dispute. Differences

in interpretation of the Investment Agreement and Mongolian legislation could have a material impact on the amount and period of recovery of deferred tax assets.

(d)US$2,455 million (2022: US$1,490 million) of the unrecognised assets relate to realised or unrealised capital losses, the recovery of which depends on the existence of capital gains in future

years. There are time limits, the shortest of which isone year, for the recovery of US$543 million of the unrecognised assets (2022: US$473 million).

(e)In addition to the unrecognised deferred tax assets in this table, the Group has accumulated UK foreign tax credits of US$1.3 billion (2022: US$1.3 billion). The credits are not refundable but

would be available, if needed, to shelter any UK tax in respect of profits arising in the Escondida business.

16 Inventories

Inventories are measured at the lower of cost and net realisable value, primarily on a weighted average cost basis. Third-party production purchased

for our own use that is ordinarily interchangeable in accordance with IAS 2 “Inventories” is valued on the same basis, jointly with our own production.

Average costs are calculated by reference to the cost levels experienced in the relevant month together with those in opening inventory.

The cost of raw materials and purchased components, and consumable stores, is the purchase price. The cost of work in progress and finished

goods and goods for resale is generally the cost of production, including directly attributable labour costs, materials and contractor expenses, the

depreciation of assets used in production and production overheads.

Work in progress includes ore stockpiles and other partly processed material. Stockpiles represent ore that has been extracted and is available for

further processing. If there is significant uncertainty as to if and when the stockpiled ore will be processed, the cost of such ore is expensed as

mined. If the ore will not be processed within 12 months after the balance sheet date, it is included within non-current assets and net realisable value

is calculated on a discounted cash flow basis. Quantities of stockpiled ore are assessed primarily through surveys and assays. Certain estimates,

including expected metal recoveries, are calculated using available industry, engineering and scientific data, and are periodically reassessed, taking

into account technical analysis and historical performance.

During 2023, the Group recognised a net inventory write-off of US$60 million (2022: US$55 million write-off). This included inventory write-offs of

US$94 million (2022: US$75 million)offset by a write-back of previously written down inventory due to an increase in realisable values amounting to

US$34 million (2022: US$20 million).

At 31 December 2023, US$925 million (2022: US$850 million) of inventories were pledged as security for liabilities.

17 Receivables and other assets

Financial assets (except provisionally priced receivables) which are held under a hold to collect business model and have cash flows that meet the

solely payments of principal and interest (‘SPPI’) criteria are recognised at amortised cost. Provisionally priced receivables are measured at fair

value through profit or loss with subsequent fair value gains or losses taken to the income statement.

As a part of our working capital management, we offer receivables factoring and letter of credit programs for our customers/receivables. For our

receivables under letter of credit programs, the business model of "hold to collect" has not changed and these continue to be recognised at

amortised cost as the sale of the letter of credit is made close to maturity of receivables and discounting costs are immaterial. The receivables under

our global factoring program do not meet the "hold to collect" model and therefore are recognised at fair value through profit or loss.

US$475 million of receivables (2022: US$457 million) subject to factoring program and US$372 million (2022: US$430 million) of receivables subject

to a letter of credit discounting program have been transferred to the participating banks and derecognised at the reporting date.

(a)At 31 December 2023, trade and other financial receivables are stated net of allowances for expected credit losses of US$82 million (2022: US$59 million). We apply the “simplified approach” to

trade receivables and receivables relating to net investment in finance leases and a “general approach” to all other financial assets.

(b)At 31 December 2023, other receivables include US$349 million (2022: US$329 million) related to Energy Resources of Australia Ltd’s (ERA) deposit held in a trust fund which is controlled by

the Government of Australia. ERA are entitled to reimbursement from the fund once specific phases of rehabilitation relating to the Ranger Project are completed. The fund is outside the scope

of IFRS 9.

(c)These prepayments will be charged to Group operating costs as tolling services are rendered and product processing occurs.

(d)There is no material element of receivables and other assets that is interest-bearing or financing in nature. The fair value of current trade and other receivables and the majority of amounts

classified as non-current trade and other receivables approximates to their carrying value.

Credit risk related to receivables

Our Commercial team manages customer credit risk by reference to our established policy, procedures and controls. The team establishes

credit limits for all of our customers. Where customers are rated by an independent credit rating agency, these ratings are used as a guide to

set credit limits. Where there are no independent credit ratings available, we assess the credit quality of the customer through a credit rating

model and assign appropriate credit limits. The Commercial team monitors outstanding customer receivables regularly and highlights any credit

concerns to senior management. Receivables to high-risk customers are often secured by letters of credit or other forms of credit

enhancement.

The expected credit loss on our trade receivable portfolio is insignificant.

18 Trade and other payables

Trade payables are measured at amortised cost, with the exception of provisionally priced contracts which are held at fair value as per IFRS 9.

The Group participates in supply chain finance arrangements whereby vendors may elect to receive early payment of their invoice from a third-party

bank by factoring their receivable from Rio Tinto. These arrangements do not modify the terms of the original liability with respect to either

counterparty terms, settlement date or amount due. Use of the early settlement facility is voluntary and at the vendors' discretion on an invoice-by-

invoice basis. Financial liabilities subject to supply chain finance therefore continue to be classified as trade payables with the cash outflows

showing in operating cash flows. At 31 December 2023, trade payables included US$821 million (2022: US$819 million) subject to early settlement

election by vendors.

(a)Deferred income includes contract liabilities of US$275 million (2022: US$345 million).

The fair value of trade payables and financial instruments within other financial payables approximates their carrying value.

Our capital and liquidity

Our overriding objective when managing capital and liquidity is to safeguard the business as a going concern. Capital is allocated in a consistent

and disciplined manner. Essential capital remains our priority for capital allocation. It includes sustaining capital to ensure the integrity of our assets,

high-returning replacement projects and decarbonisation investment. This is followed by ordinary dividends within our well-established returns

policy. We then test investment in compelling growth projects against debt management and additional cash returns to shareholders.

Our Board and senior management regularly review the capital structure and liquidity of the Group. They take into account our strategic priorities, the

economic and business conditions, and any identified investment opportunities, along with the expected returns to shareholders. We expect total cash

returns to shareholders over the longer term to be in a range of 40–60% of underlying earnings in aggregate through the commodity cycle.

We consider various financial metrics when managing our capital structure and liquidity risk, including total capital, net debt, gearing, the overall

level of borrowings and their maturity profile, liquidity levels, future cash flows, underlying EBITDA and interest cover ratios.

Our total capital as at 31 December is shown in the table below.

We have access to various forms of financing including our US Shelf Programme, European Debt Issuance Programme, Commercial Paper and

credit facilities.

In 2023, we exercised our option to extend the maturity of our US$7.5 billion multi-currency revolving credit facility byone year. The facility now

matures in November 2028. The facility remained undrawn throughout the year. At 31 December 2023, the Group’s subsidiaries had available in

aggregate US$558 million (2022: US$558 million) of committed borrowing facilities; these amounts are available for use by the respective holders of

each facility only and are not available for use across the Group.

Our credit ratings as at 31 December, as provided by Standard & Poor’s and Moody’s Investor Services, were:

Our unified credit status is maintained through cross guarantees, which mean the contractual obligations of Rio Tinto plc and Rio Tinto Limited are

automatically guaranteed by the other.

Financial liability analysis

In the table below, we summarise the maturity profile of our financial liabilities on our balance sheet based on contractual undiscounted payments as

at 31 December. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the

reporting period. This will, therefore, not necessarily agree with the amounts disclosed as the carrying value.

(a)The interest payable at the year end is removed from trade and other financial payables and shown within expected future interest payments and derivatives related to net debt. Interest

payments have been projected using interest rates applicable at the end of the applicable financial year. Where debt is subject to variable interest rates, future interest payments are subject to

change in line with market rates.

(b)The maturity grouping is based on the earliest payment date.

Our weighted average debt maturity including leases and derivatives related to debt was approximately 12 years (2022:11 years).

19 Net debt

Analysis of changes in net debt

(a)Borrowings excluding overdrafts of US$13,000 million (2022: US$11,070 million) differs from Borrowings on the balance sheet as it excludes bank overdrafts of US$1 million (2022: US$1 million)

which has been included in cash and cash equivalents for the net debt reconciliation.

(b)Other non-cash movements in lease liabilities include the net impact of additions, modifications and terminations during the year.

(c)Included within “Derivatives related to net debt” are interest rate and cross currency interest rate swaps that are in hedge relationships with the Group's debt.

(d)Other investments includes US$877 million (2022: US$1,998 million) of highly liquid financial assets held in a separately managed portfolio of fixed income instruments classified as held for

trading.

The table below summarises, by currency, our net debt, after taking into account relevant cross currency interest rate swaps and foreign

exchange contracts:

20 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost. Our policy is to

predominantly borrow in US dollars (USD) at floating interest rates, either directly or through the use of derivatives, as:

–the majority of our sales are in USD

–historically a lower cost of borrowing has been observed from maintaining a floating rate exposure

–historically there has been a correlation between interest rates and commodity prices.

For bonds with fixed interest rates, we generally enter into interest rate swaps to convert them to floating rates. The tenor of the interest rate swaps

is sometimes shorter than the tenor of the bond which means we remain exposed to long-term fixed-rate funding. As interest rate swaps mature,

new medium dated swaps are generally transacted to maintain this floating rate exposure; however, we may elect to maintaina proportion of fixed-

rate funding after considering market conditions, the cost and form of funding and other related factors.

We have designated the swaps to be in fair value hedge relationships with the corresponding period of future interest payments of the respective debt.

Where we borrow non-US denominated debt, we generally enter into cross currency interest rate swaps to convert the principal and fixed interest

coupon to a USD notional with a USD interest coupon.

Borrowings at 31 December

The characteristics and carrying value of the Group’s borrowings are summarised below.

(a)The fair value movements of our borrowings and interest rate swaps that are in fair value hedge relationships are summarised in note 9.

(b)The LIBOR reference rates derivatives were transitioned to Secured Overnight Financing Rate (SOFR) with effect from 1 July 2023 in accordance with International Swaps and Derivatives

Association (ISDA) Fallback Protocol. Weighted average interest rate after swaps for 2022 can be found in note 20 to the Financial Statements in our 2022 Annual Report.

(c)Rio Tinto has a US$10.0 billion (2022: US$10.0 billion) European Debt Issuance Program against which the cumulative amount utilised was US$1.1 billion equivalent at 31 December 2023

(2022: US$1.0 billion). The carrying value of these bonds after hedge accounting adjustments amounted to US$1.1 billion (2022: US$1.0 billion) in aggregate.

(d)We applied cash flow hedge accounting to this bond and the corresponding cross currency interest rate swap. The hedge is fully effective as the notional amount, maturity, payment and reset

dates match. Since 2019, we swapped the resulting fixed US dollar annual interest coupon payments to floating rates. Fair value hedge accounting has been applied to this relationship in

addition to the pre-existing cash flow hedge.

(e)On 7 March 2023, we issued US$650 million ten-year fixed rate and US$1.1 billion of 30-year fixed rate SEC-registered bonds.

(f)In November 2023, we entered into two new interest rate swaps with a notional of US$200 million, to convert our fixed coupon interest payments on this bond to 6 month SOFR +1.05%.

(g)In March 2023, our interest rate swap, which converted our fixed coupon interest payments on this bond to 3 month LIBOR +3.42%, matured.

(h)In February 2023, our interest rate swap which converted our fixed coupon interest payments on this bond to 3 month LIBOR +2.83% matured.

(i)In October 2023, we entered into a new interest rate swap to convert our fixed coupon interest payments on this bond to 6 month SOFR +0.76%.

(j)These borrowings relate to the Oyu Tolgoi LLC project finance facility and the due dates stated represent the final repayment date. The interest rates stated are pre-completion and will increase

by 1.2% post-completion, which is expected to happen in 2029 subject to meeting certain conditions. Refer below on the refinancing of the facility made during the year.

(k)The Group’s borrowings of US$13.0 billion (2022: US$11.1 billion) include US$4.0 billion (2022: US$4.0 billion) of subsidiary entity borrowings that are subject to various financial and general

covenants with which the respective borrowers were in compliance as at 31 December 2023.

We refinanced the Oyu Tolgoi project finance on 16 February 2023 with a syndicate of international financial institutions, export credit agencies and

commercial lenders. The lenders have agreed to a deferral of the principal repayments bythree years to June 2026 and to an extension of the final

maturity date byfive years from 2030 to 2035. As part of refinancing, the debt transitioned to the SOFR benchmark to which we applied the Phase 2

IBOR reform relief under IFRS 9. The refinancing did not result in a derecognition of the drawn down amount; however we recognised an accounting

loss on modification of US$123 million related to changes other than the benchmark transition and capitalised transaction costs incurred of US$50

million.

Update on interest rate benchmark reform

We adopted, in prior periods, Interest Rate Benchmark Reform Amendments to IFRS 9 “Financial Instruments”, IFRS 7 “Financial Instruments:

Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases”. The amendments address the financial reporting impact from reform of the

LIBOR and other benchmark interest rates (collectively “IBOR reform”). We have taken relevant practical reliefs from certain requirements relating to

changes in the basis for determining contractual cash flows of financial assets, financial liabilities and hedge accounting, described below. On 1 July

2023 we completed the transition of our US LIBOR derivatives to SOFR on cessation of US LIBOR at 30 June 2023. There has been no impact on

our hedging arrangements because of the LIBOR reform reliefs we have taken as permitted under IFRS 9.

21 Leases

IFRS 16 applies to the recognition, measurement, presentation and disclosure of leases. Certain leases are exempt from the standard, including

leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources. We apply the scope exemptions in paragraphs 3(e)

and 4 of IFRS 16 and do not apply IFRS 16 to leases of any assets which would otherwise fall within the scope of IAS “38 Intangible Assets”.

A significant proportion of our lease arrangements relate to dry bulk vessels and office properties. Other leases include land and non-mining rights,

warehouses, ports, equipment and vehicles.

We recognise all lease liabilities and corresponding right-of-use assets on the balance sheet, with the exception of short-term (12 months or fewer)

and low-value leases, where payments are expensed as incurred. Lease liabilities are recorded at the present value of fixed payments; variable

lease payments that depend on an index or rate; amounts payable under residual value guarantees; and extension options expected to be

exercised. Where a lease contains an extension option that we can exercise without negotiation, lease payments for the extension period are

included in the liability if we are reasonably certain that we will exercise the option. Variable lease payments not dependent on an index or rate are

excluded from the calculation of lease liabilities at initial recognition. Payments are discounted at the incremental borrowing rate of the lessee,

unless the interest rate implicit in the lease can be readily determined. For lease agreements relating to vessels, ports and properties, non-lease

components are excluded from the projection of future lease payments and recorded separately within operating costs as services are being

provided. The lease liability is measured at amortised cost using the effective interest method. The right-of-use asset arising from a lease

arrangement at initial recognition reflects the lease liability, initial direct costs, lease payments made before the commencement date of the lease,

and capitalised provision for dismantling and restoration of the underlying asset, less any lease incentives.

We recognise depreciation on right-of-use assets and interest on lease liabilities in the income statement over the lease term. Repayments of lease

liabilities are separated into a principal portion (presented within financing activities) and an interest portion (which the Group presents in operating

activities) in the cash flow statement. Payments made before the commencement date are included within financing activities unless they in

substance represent investing cash flows, for example where pre-commencement cash flows are significant relative to aggregate cash flows of the

leasing arrangement.

Other relevant judgements - lease assessmentWe have to apply judgement for certain contractual arrangements, such as renewable energy power purchase agreements (PPAs), in evaluating whether we have the right to obtain substantially all of the economic benefits from the use of the renewable energy assets, including the right to obtain physical energy these assets generate. Based on our evaluation, we determine whether an arrangement is a lease, an executory contract or a derivative. An immaterial amount was recognised as a lease at year end for a fixed component of the QMM renewable PPA. Amrun PPA is a lease, which has not yet commenced and is included in capital commitments (note 37).

Lessee arrangements

We have made the following payments during the year associated with leases:

21 Leases continued

Lease liabilities

The maturity profile of lease liabilities recognised at 31 December is:

At 31 December 2023, commitments for leases not yet commenced were US$308 million (2022: US$481 million); commitments relating to short-

term leases which had already commenced at 31 December 2023 were US$164 million (2022: US$132 million). These commitments are not

included in the lease maturity profile table above.

22 Cash and cash equivalents

For the purpose of the balance sheet, cash and cash equivalents covers cash on hand, deposits held with banks, and short-term, highly liquid

investments (mainly money market funds and reverse repurchase agreements) that are readily convertible into known amounts of cash and which

are subject to insignificant risk of changes in value. Bank overdrafts are shown as current liabilities on the balance sheet. For the purposes of the

cash flow statement, cash and cash equivalents are shown net of overdrafts.

Restricted cash and cash equivalent analysis

Cash and cash equivalents of US$422 million (2022: US$391 million) are held in countries where there are restrictions on remittances. Of this

balance, US$156 million (2022: US$268 million) could be used to repay subsidiaries’ third-party borrowings.

There are also restrictions on a further US$553 million (2022: US$576 million) of cash and cash equivalents, the majority of which is held by partially

owned subsidiaries and is not available for use in the wider Group due to legal and contractual restrictions currently in place. Of this balance

US$129 million (2022: US$336 million) could be used to repay these subsidiaries’ third-party borrowings.

Credit risk related to cash and cash equivalents

Our Treasury team manages credit risk from our investing activities in accordance with a credit risk framework which sets the risk appetite. We make

investments of surplus funds only with approved investment grade (BBB+ and above) counterparties who have been assigned specific credit limits.

The limits are set to minimise the concentration of credit risk and therefore mitigate the potential for financial loss through counterparty failure.

At 31 December 2023, we held US$2,775 million (2022: US$850 million) of reverse repurchase agreements, measured at amortised cost and

reported within cash and cash equivalents as they are highly liquid products maturing within three months. We accepted collateral of investment

grade quality in respect of these reverse repurchase agreements, with a fair value of US$2,924 million as at 31 December 2023 (2022:

US$892 million). Collateral is not recognised on our balance sheet and if the counterparty were to default we would be able to sell it.

23 Other financial assets and liabilities

Derivatives are measured at fair value through profit or loss unless they are designated as hedging instruments. For details about our hedging

strategy and risks, refer to note 24. The Group has made an irrevocable choice to measure investments in equity shares at fair value through other

comprehensive income (FVOCI) except for those held for trading purposes.

Other financial assets

(a)Current “Other investments, including loans” includes US$877 million (2022: US$1,998 million) of highly liquid financial assets held in a separately managed portfolio of fixed income instruments

classified as held for trading and included within our net debt definition.

Credit risk related to other financial assets

Our Treasury team manages credit risk in relation to applicable other financial assets in accordance with our counterparty credit framework (which is

reviewed bi-annually) to minimise our counterparty risk and mitigate financial loss through counterparty failure. Derivatives and investments with any

given counterparty are required to be within the credit limit (based on a quantitative credit risk model) for that counterparty as approved by the

Group’s Financial Risk Management Committee. Our investments are dictated by the Group’s investment policy which sets out a number of criteria

for eligible investments, including credit quality, duration, maturity and concentration limits.

Other financial liabilities

Offsetting and enforceable master netting agreements

When we have a legally enforceable right to offset our financial assets and liabilities and an intention to settle on a net basis, or realise the asset and

settle the liability simultaneously, we report the net amount in the consolidated balance sheet. Agreements with derivative counterparties are based

on the International Swaps and Derivatives Association master netting agreements that do not meet the criteria for offsetting, but allow for the

related amounts to be set-off in certain circumstances. During the year, there were no material amounts offset in the balance sheet.

24 Financial instruments and risk management

We classify our financial assets into those held at amortised cost and those to be measured at fair value either through the profit and loss (FVTPL)

or through other comprehensive income (FVOCI) based on the business model for managing the financial assets and the contractual terms of the

cash flows.

Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of

transaction costs incurred, and are subsequently measured at amortised cost.

Financial risk management objectives

Our financial risk management objectives are:

–to have in place a robust capital structure to manage the organisation through the commodity cycle

–to allow our financial exposures, mainly commodity price, foreign exchange and interest rates to, in general, float with the market.

Our Treasury and Commercial teams manage the following key economic risks generated from our operations:

–capital and liquidity risk

–credit risk

–interest rate risk

–commodity price risk

–foreign exchange risk.

These teams operate under a strong control environment, within approved limits.

(i) Capital and liquidity risk

Our capital and liquidity risk arises from the possibility that we may not be able to settle or meet our obligations as they fall due. Refer to our capital

and liquidity section on page 204.

(ii) Credit risk

Credit risk is the risk that our customers, or institutions that we hold investments with, are unable to meet their contractual obligations. We are

exposed to credit risk in our operating activities (primarily from customer trade receivables); and from our investing activities that include government

securities (primarily US Government), corporate and asset-backed securities, reverse re-purchase agreements, money market funds, and balances

with banks and financial institutions. Refer to note 17, note 22 and note 23 for an understanding of the size of, and the credit risk related to, each

balance.

(iii) Interest rate risk

Our interest rate management policy is generally to borrow and invest at floating interest rates. However, we may elect to maintain a proportion of

fixed-rate funding after considering market conditions, the cost and form of funding and other related factors. After the impact of hedging,68%

(2022:77%) of our borrowings (including leases) were at floating rates. To understand how we manage interest rate risk, refer to note 20.

Sensitivity to interest rate changes

Based on our floating rate financial instruments outstanding at 31 December 2023, the effect on our net earnings of a 100 basis point increase in US

dollar Secured Overnight Financing Rate (SOFR) interest rates, with all other variables held constant, would be an expense of US$5 million (2022:

US$26 million). This reflects the net debt position in 2023 and 2022.

We are also exposed to interest rate volatility within shareholders’ equity. This is because we have designated some cross currency interest rate

swaps to be in a cash flow hedge relationship with our 2029 British pound sterling (GBP) loan. As we receive fixed GBP interest and pay fixed

United States dollar (USD) interest any change in the GBP interest rate or the USD interest rate will have an impact on the fair value of the

derivative within shareholders’ equity. With all factors remaining constant, a 100 basis point increase in interest rates in each of the currencies in

isolation would impact equity, before tax, by a charge of US$33 million (2022: US$35 million) for GBP and a credit of US$42 million (2022: US$48

million) for USD. A 100 basis point decrease would have broadly the same impact in the opposite direction.

(iv) Commodity price risk

Our broad commodity base means our exposure to commodity prices is diversified. Our normal policy is to sell our products at prevailing market

prices. For certain physical commodity transactions for which the price was fixed at the contract date, we enter into derivatives to achieve the

prevailing market prices at the point of revenue recognition. We do not generally consider that using derivatives to fix commodity prices would

provide a long-term benefit to our shareholders.

Exceptions to this rule are subject to limits, and to defined market risk tolerances and internal controls.

Substantially all iron ore and aluminium sales are reflected at final prices at each reporting period. Final prices for copper concentrate, however, are

normally determined between 30 and 180 days after delivery to our customer.

At 31 December 2023, we had 92 million pounds of copper sales (31 December 2022:83 million pounds), that were provisionally priced at US 387

cents per pound (2022: US 380 cents per pound). The final price of these sales will be determined during the first half of 2024. A 10% change in the

price of copper realised on the provisionally priced sales, with all other factors held constant, would increase or reduce net earnings by US$22

million (2022: US$19 million).

Power costs represent a significant portion of costs in our aluminium business and, therefore, we are exposed to fluctuations in power prices.

To mitigate our exposure to changes in the relationship between aluminium prices and power prices, we have a number of electricity purchase

contracts that are directly linked to the daily official LME cash ask price for high-grade aluminium (LME price) and to the US Midwest Transaction

Premium (Midwest premium).

In accordance with IFRS 9, we apply hedge accounting to two embedded derivatives within our power contracts. The embedded derivatives

(notional aluminium forward sales) have been designated as the hedging instrument. The forecast aluminium sales, priced using the LME price and

the Midwest premium, represent the hedged item.

The hedging ratio is 1:1, as the quantity of sales designated as being hedged matches the notional amount of the hedging instrument. The hedging

instrument’s notional amount, expressed in equivalent metric tonnes of aluminium, is derived from our expected electricity consumption under the

power contracts as well as other relevant contract parameters.

When we designate such embedded derivatives as the hedging instrument in a cash flow hedge, we recognise the effective portion of the change in

the fair value of the hedging instrument in other comprehensive income, and it is accumulated in the cash flow hedge reserve. The amount that is

recognised in other comprehensive income is limited to the lesser of the cumulative change in the fair value of the hedging instrument and the

cumulative change in the fair value of the hedged item, in absolute terms. On realisation of the hedges, realised amounts are reclassified from

reserves to consolidated sales revenue in the income statement.

We recognise any ineffectiveness relating to the hedging relationship immediately in the income statement.

Sources of ineffectiveness include differences in the timing of the cash flows between the hedged item and the hedging instrument, non-zero initial

fair value of the hedging instrument, the existence of a cap on the Midwest premium in the hedging instrument and counterparty credit risk.

We held the following notional aluminium forward sales contracts embedded in the power contracts as at 31 December:

The impact on our financial statements of these hedging instruments and hedging items are:

(a)Aluminium embedded derivatives (forward contracts and options) are contained within certain aluminium smelter electricity purchase contracts. The carrying amount of US$174 million (2022:

US$189 million) is shown within “Other financial assets and liabilities”.

(b)The difference between this amount and the total cash flow hedge reserve of the Group (shown in note 35) relates to our cash flow hedge on the sterling bond (refer to interest rate risk section).

(c)Hedge ineffectiveness is included in “net operating costs” (within “raw materials, consumables, repairs and maintenance” - refer to note 7) in the income statement.

(d)On realisation of the hedge, realised amounts are reclassified from reserves to consolidated sales revenue in the income statement.

There was no cost of hedging recognised in 2023 or 2022 relating to this hedging relationship.

Our commodity derivatives are impacted by changes in market prices. The table below summarises the impact that changes in aluminium market

prices have on aluminium forward and option contracts embedded in power supply agreements outstanding at 31 December 2023. Any change in

price will result in an offsetting change in our future earnings.

We exclude our “own use contracts” from this sensitivity analysis as they are outside the scope of IFRS 9. Our business units continue to hold these

types of contracts to satisfy their expected purchase, sale or usage requirements.

Impact of climate change on our business - Upper Calliope Solar Farm power purchase agreement in QueenslandOn 22 December 2023, as part of the program to develop renewable energy solutions for our Queensland aluminium assets, we entered into a long-term renewable 1.1GW power purchase agreement to buy renewable electricity and associated green products to be generated in the future from Upper Calliope Solar Farm. The contract is accounted for as a financial derivative with a zero fair value at inception and an immaterial fair value at year-end. It will require complex derivative measurement over the contract’s term categorised under level 3 with significant unobservable inputs related to future energy prices.

(v) Foreign exchange risk

The broad geographic spread of our sales and operations means that our earnings, cash flows and shareholders’ equity are influenced by a wide

variety of currencies. The majority of our sales are denominated in USD.

Our operating costs are influenced by the currencies of those countries where our mines and processing plants are located, and by those currencies

in which we buy imported equipment and services. The USD, the Australian dollar (AUD) and the Canadian dollar (CAD) are the most important

currencies influencing our costs. In any particular year, currency fluctuations may have a significant impact on our financial results. A strengthening

of the USD against the currencies in which our costs are partly denominated has a positive effect on our net earnings. However, a strengthening of

the USD reduces the value of non-USD denominated net assets, and therefore total equity.

In most cases our debt and other financial assets and liabilities, including intragroup balances, are held in the functional currency of the relevant

subsidiary. There are instances where these balances are held in currencies other than the functional currency of the relevant subsidiary. This

means we recognise exchange gains and losses in our income statement (except where they can be taken to equity) as these balances are

translated into the functional currency of the relevant subsidiary. Our income statement also includes exchange gains and losses arising on USD net

debt and intragroup balances. On consolidation, these balances are retranslated to our USD presentational currency and there is a corresponding

and offsetting exchange difference recognised directly in the currency translation reserve. There is no impact on total equity.

Under normal market conditions, we do not consider that active currency hedging of transactions would provide long-term benefits to shareholders.

We review our exposure on a regular basis and will undertake hedging if deemed appropriate. We may deem currency protection measures

appropriate in specific commercial circumstances. Capital expenditures and other significant financial items such as acquisitions, disposals, tax and

dividend cash flows may be economically hedged.

The table below shows the estimated retranslation effect on financial assets and financial liabilities at 31 December, including intragroup balances,

of a 10% strengthening in the closing exchange rate of the USD against significant currencies. We deem 10% to be the annual exchange rate

movement that is reasonably probable (on an annual basis over the long run) for any of our significant currencies and therefore an appropriate

representation for the sensitivity analysis.

We calculate sensitivities in relation to the functional currencies of our individual entities. We translate the impact of these on net earnings into USD

at the exchange rates on which the sensitivities are based. The impact to net earnings associated with a 10% weakening of a particular currency,

shown above, is broadly offset within equity through movements in the currency translation reserve and therefore generally has no impact on our net

assets. The offsetting currency translation movement is not shown in the table above. The impact is expressed in terms of the effect on net earnings

and equity, assuming that each exchange rate moves in isolation. The sensitivities are based on financial assets and financial liabilities held at

31 December 2023, where balances are not denominated in the functional currency of the subsidiary or joint operation, and exclude financial assets

and liabilities held by equity accounted units. These balances will not remain constant throughout 2024 and therefore this illustrative information

should be used with caution.

Valuation hierarchy of financial instruments carried at fair value on a recurring basis

The table below shows the classifications of our financial instruments by valuation method in accordance with IFRS 13 “Fair Value Measurement” at

31 December.

All instruments shown as being held at fair value have been classified as fair value through the profit and loss unless specifically footnoted.

(a)Valuation is based on unadjusted quoted prices in active markets for identical financial instruments.

(b) Valuation is based on inputs that are observable for the financial instruments, which include quoted prices for similar instruments or identical instruments in markets which are not considered to

be active, or inputs, either directly or indirectly based on observable market data.

(c)Valuation is based on inputs that cannot be observed using market data (unobservable inputs). The change in valuation of our level 3 instruments for the year to 31 December is as follows:

(d)Our "cash and cash equivalents" of US$9,673 million (2022: US$6,775 million), includes US$2,722 million (2022: US$2,725 million) relating to money market funds which are treated as fair

value through profit or loss (FVPL) under IFRS 9 with the fair value movements going into finance income.

(e)Investments in equity shares and funds include US$157 million (2022: US$153 million) of equity shares, not held for trading, where we have irrevocably elected to present fair value gains and

losses on revaluation in other comprehensive income (FVOCI). The election is made at an individual investment level.

(f)Other investments, including loans, covers cash deposits in rehabilitation funds, government bonds, managed investment funds and royalty receivables.

(g)Trade receivables include provisionally priced invoices. The related revenue is initially based on forward market selling prices for the quotation periods stipulated in the contracts with changes

between the provisional price and the final price recorded separately within “Other revenue”. The selling price can be measured reliably for the Group's products, as it operates in active and

freely traded commodity markets. At 31 December 2023, US$1,362 million (2022: US$1,234 million) of provisionally priced receivables were recognised.

(h)Level 3 derivatives mainly consist of derivatives embedded in electricity purchase contracts linked to the LME, midwest premium and billet premium with terms expiring between 2025 and 2036

(2022:2025 and 2036).

(i)Net debt derivatives include interest rate swaps and cross-currency swaps. As part of the ISDA Fallbacks Protocol, on 1 July 2023 we completed the transition of our US LIBOR derivatives to

SOFR on cessation of US LIBOR at 30 June 2023. There has been no impact on our hedging arrangements after taking into account the IFRS 9 LIBOR reform reliefs.

(j)Trade and other financial payables comprise trade payables, other financial payables, accruals and amounts due to equity accounted units within note 18.

There were no material transfers between level 1 and level 2, or between level 2 and level 3 in the current or prior year.

Valuation techniques and inputs

The techniques used to value our more significant fair value assets/(liabilities) categorised under level 2 and level 3 are summarised below:

Sensitivity analysis in respect of level 3 financial instruments

For assets/(liabilities) classified under level 3, the effect of changing the significant unobservable inputs on carrying value has been calculated using

a movement that we deem to be reasonably probable.

To value the long-term aluminium embedded power derivatives, we use unobservable inputs when the term of the derivative extends beyond

observable market prices. Changing the level 3 inputs to reasonably possible alternative assumptions does not change the fair value significantly,

taking into account the expected remaining term of contracts for either reported period. The fair value of these derivatives is a net liability of US$186

million at 31 December 2023 (2022: US$208 million).

Impact of climate change on our business - coal royalty receivablesAt 31 December 2023, royalty receivables include amounts arising from our divested coal businesses with a carrying value of US$214 million (2022: US$209 million). These are classified as “Other investments, including loans” within note 23. The fair values are determined using level 3 unobservable inputs. These royalty receivables include US$90 million from forecast production beyond 2030. These have not been adjusted for potential changes in production rates that could occur due to climate change targets impacting the operator. The main unobservable input is the long-term coal price used over the life of these royalty receivables. A 15% increase in the coal spot price would result in a US$64 million increase (2022: US$68 million) in the carrying value. A 15% decrease in the coal spot price would result in a US$39 million decrease (2022: US$18 million) in the carrying value. We have used a 15% assumption to calculate our exposure as it represents the annual coal price movement that we deem to be reasonably probable (on an annual basis over the long run).

Fair values disclosure of financial instruments

The following table shows the carrying amounts and fair values of our borrowings including those which are not carried at an amount which

approximates their fair value at 31 December. The fair values of some of our financial instruments approximate their carrying values because of their

short maturity, or because they carry floating rates of interest.

Borrowings relating to listed bonds are categorised as level 1 in the fair value hierarchy while those relating to project finance drawn down by Oyu

Tolgoi use a number of level 3 valuation inputs. Our remaining borrowings have a fair value measured by discounting estimated cash flows with an

applicable market quoted yield, and are categorised as level 2 in the fair value hierarchy.

Our people

Summarised below are the key financial metrics relating to our people.

25 Average number of employees

(a) “Other countries” primarily includes employees in the Middle East (excluding Oman which is included in Africa), and other countries in Asia which are not shown separately in the table above.

Employee numbers, which represent the average for the year, include 100% of employees of subsidiary companies. Employee numbers for joint

operations and equity accounted units are proportional to the Group’s interest under contractual agreements. Average employee numbers include a

part-year effect for companies acquired or disposed of during the year.

Part-time employees are included on a full-time-equivalent basis. Temporary employees are included in employee numbers.

People employed by contractors are not included.

26 Employment costs and provisions

(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 28.

(b)The provision for other employee entitlements includes a provision for long service leave of US$296 million (2022: US$271 million), based on the relevant entitlements in certain Group

operations, and includes US$17 million (2022: US$32 million) of provision for redundancy and severance payments.

27 Share-based payments

The Rio Tinto plc and Rio Tinto Limited share-based incentive plans are

as follows.

UK Share Plan

The fair values of Matching and Free Share awards are the market

value of the shares on the date of purchase. The awards are settled in

equity.

Equity Incentive Plan

Since 2018, all long-term incentive awards have been granted under the

2018 Equity Incentive Plan which allows for awards in the form of

Performance Share Awards (PSA), Management Share Awards (MSA)

and Bonus Deferral Awards (BDA) to be granted. In general, these

awards will be settled in equity, including the dividends accumulated

from date of award to vesting and therefore the awards are accounted

for in accordance with the requirements applying to equity-settled

share-based payment transactions.

Performance Share Awards

Participants are generally assigned shares in settlement of their PSA on

vesting. Therefore the awards are accounted for in accordance with the

requirements applying to equity-settled share-based payment

transactions, including the dividends accumulated from date of award to

vesting.

The awards are subject to Total Shareholder Return (TSR) performance

conditions. The fair value of the awards is calculated using a Monte

Carlo simulation model taking into account the TSR performance

conditions. Forfeitures prior to vesting are assumed at 5% per annum of

outstanding awards (2022:5% per annum).

Management Share Awards

The vesting of these awards is dependent on service conditions being

met; no performance conditions apply.

The fair value of each award on the day of grant is based on the share

price on the day of grant. Forfeitures prior to vesting are assumed at 7%

per annum of outstanding awards (2022:7% per annum).

Bonus Deferral Awards

Bonus Deferral Awards provide for the mandatory deferral of 50% of the

bonuses for Executive Directors and Executive Committee members.

The vesting of these awards is dependent only on service conditions

being met. The fair value of each award on the day of grant is based on

the share price on the day of grant. Forfeitures prior to vesting are

assumed at 3% per annum of outstanding awards (2022:3% per

annum).

Global Employee Share Plans

The Global Employee Share Plans were introduced in 2012 and re-

approved by shareholders in 2021. Under these plans, the companies

provide a Matching share award for each Investment share purchased

by a participant. The vesting of Matching awards is dependent on

service conditions being met and the continued holding of Investment

shares by the participant until vesting. These awards are settled in

equity including the dividends accumulated from date of award to

vesting. The fair value of each Matching share on the day of grant is

equal to the share price on the date of purchase less a deduction of

15% (5% per annum) for estimated cancellations (caused by employees

withdrawing their Investment shares prior to vesting) in addition to a

deduction for forfeitures prior to vesting which are assumed at 5% per

annum of outstanding awards (2022:5% per annum).

The PSA, MSA, BDA and awards under the Global Employee Share

Plans and UK Share Plan together represent 100% (2022:100%) of the

total IFRS 2 “Share-based Payment” charge for Rio Tinto plc and Rio

Tinto Limited plans in 2023.

These plans are accounted for in accordance with the fair value

recognition provisions of IFRS 2.

The fair value of the Group’s share plans is recognised as an expense

over the expected vesting period with an offset to retained earnings for

Rio Tinto plc plans and to other reserves for Rio Tinto Limited plans.

The Group uses fair values provided by independent actuaries

calculated using a Monte Carlo simulation model.

The terms of each plan are considered at the balance sheet date to

determine whether the plan should be accounted for as equity-settled or

cash-settled. The Group does not operate any material plans as cash-

settled although certain awards can be settled in cash at the discretion

of the directors or where settling awards in equity is challenging or

prohibited by local laws and regulations. The value of these awards is

immaterial.

The Group’s equity-settled share plans are settled either by the

issuance of shares by the relevant parent company; the purchase of

shares on market; or the use of shares held in treasury. If the cost of

shares acquired to satisfy the plans differs from the expense charged,

the difference is taken to retained earnings or other reserves, as

appropriate.

The charge that has been recognised in the income statement for Rio

Tinto’s share-based incentive plans, and the related liability (for cash-

settled awards), is set out in the table below.

Performance Share Awards (granted under either the Performance Share Plans or the Equity Incentive Plans)

In addition to the equity-settled awards shown above, there were 24,365 Rio Tinto plc and 19,881 Rio Tinto Limited cash-settled awards outstanding

at 31 December 2023 (2022:26,394 Rio Tinto plc and 23,917 Rio Tinto Limited cash-settled awards outstanding). The total liability for these awards

at 31 December 2023 was US$1 million (2022: US$2 million).

Management Share Awards, Bonus Deferral Awards (granted under the Equity Incentive Plans), Global Employee Share

Plans and UK Share Plan (combined)

(a)Awards of Rio Tinto American Depositary Receipts (ADRs) under the Global Employee Share Plan are included within the totals for Rio Tinto plc awards for the purpose of these tables.

(b)These numbers are presented and calculated in accordance with IFRS 2 and represent awards for which an IFRS 2 charge continues to be accrued for.

27 Share-based payments continued

(a)Awards of Rio Tinto American Depositary Receipts (ADRs) under the Global Employee Share Plan are included within the totals for Rio Tinto plc awards for the purpose of these tables.

In addition to the equity-settled awards shown above, there were 90,331 Rio Tinto plc and 7,913 Rio Tinto Limited cash-settled awards outstanding

at 31 December 2023 (2022:90,748 Rio Tinto plc and 9,685 Rio Tinto Limited cash-settled awards outstanding). The total liability for these awards

at 31 December 2023 was US$5 million (2022: US$5 million).

28 Post-retirement benefits

Description of plans

The Group operates a number of pension and post-retirement healthcare plans which provide lump sums, pensions, medical benefits and life

insurance to retirees. Some of these plans are defined contribution and some are defined benefit, with assets held in separate trusts, foundations

and similar entities.

Defined benefit pension and post-retirement healthcare plans expose the Group to a number of risks.

For these reasons, the Group has a policy of moving away from defined benefit pension provisions and towards defined contribution arrangements.

The defined benefit pension plans for non-unionised employees are closed to new entrants in all countries. For unionised employees, some plans

remain open.

The Group does not usually participate in multi-employer plans in which the risks are shared with other companies using those plans. The Group’s

participation in such plans is immaterial and therefore no detailed disclosures are provided in this note.

Pension plans

The majority of the Group’s defined benefit pension obligations are in Canada, the UK, the US and Switzerland. In Australia the main arrangements

are principally defined contribution in nature, but there are sections providing defined benefits linked to final pay. The features of the Group’s defined

benefit pension obligations are summarised as follows.

The Group also operates a number of unfunded defined benefit plans, which are included in the reported defined benefit obligations.

Post-retirement healthcare plans

Certain subsidiaries of the Group, mainly in the US and Canada, provide healthcare and life insurance benefits to retired employees and in some

cases to their beneficiaries and covered dependants. Eligibility for coverage is dependent upon certain age and service criteria. These arrangements

are unfunded, and are included in the reported defined benefit obligations.

For post-employment defined benefit schemes, in accordance with IAS 19 “Employee Benefits”, local actuaries calculate the fair value of the plan

assets and the present value of the plan obligations using a variety of valuation techniques dependent on the type of asset or liability. The difference

is recognised as an asset or liability in the balance sheet.

Where appropriate, the recognition of assets may be restricted to the present value of any amounts the Group expects to recover by way of refunds

from the plan or reductions in future contributions. In determining the extent to which a refund will be available the Group considers whether any

third party, such as a trustee or pension committee, has the power to enhance benefits or to wind up a pension plan without the Group’s consent.

The current service cost, any past service cost and the effect of any curtailment or settlements and the interest cost less interest income on assets

held in the plans are recognised in the income statement. Actuarial gains/(losses) and returns from assets are recognised in other comprehensive

income.

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate.

All amounts charged to the income statement in respect of these plans are included within “Net operating costs” or in “Share of profit after tax of

equity accounted units”, as appropriate.

Plan assets

The assets of the pension plans are invested predominantly in a diversified range of bonds, equities, property and qualifying insurance policies.

Consequently, the funding level of the pension plans is affected by movements in interest rates and also in the level of equity markets. The Group

monitors its exposure to changes in interest rates and equity markets and also measures its balance sheet pension risk using a value at risk

approach. These measures are considered when deciding whether significant changes in investment strategy are required.

Investment strategy reviews are conducted on a periodic basis to determine the optimal investment mix. This is performed while bearing in mind the

risk tolerance of the Group and local sponsor companies, and the views of the Pension Committees and trustee boards who are legally responsible

for the plans’ investments. The assets of the pension plans may also be invested in qualifying insurance policies which provide a stream of

payments to match the benefits being paid out by the plans. This would therefore remove the investment, inflation and longevity risks.

In Canada, the UK and Switzerland, the Group works with the governing bodies to ensure that the investment policy adopted is consistent with the

Group’s tolerance for risk. In the US the Group has direct control over the investment policy, subject to local investment regulations.

The proportions of the total fair value of assets in the pension plans for each asset class at 31 December were as follows.

(a)The holdings of quoted equities are invested in either pooled funds or segregated accounts held in the name of the relevant pension funds. These equity portfolios are well diversified in terms of

the geographic distribution and market sectors.

(b)Investments in private equity, private debt and property are less liquid than the other investment classes listed above and therefore the Group’s investment in those asset classes is restricted to

a level that does not endanger the liquidity of the pension plans.

(c)The holdings of government bonds are generally invested in the debt of the country in which a pension plan is situated. Corporate and other quoted bonds are usually of investment grade.

Private debt is mainly held in the North American and UK pension funds and is invested in North American and European companies.

(d)The property funds held by pension plans are invested in a diversified range of properties.

(e)Qualifying insurance policies are held with insurance companies that are regulated by the relevant local authorities. In October 2023, the trustee of the Rio Tinto 2009 Pension Fund purchased a

buy-in contract for US$1.7 billion, largely through an in specie transfer of assets. The value of those policies is calculated by the local actuaries using assumptions consistent with those adopted

for valuing the insured obligations.

(f)The holdings of cash and other are predominantly cash and short-term money market instruments.

(g)The Group makes limited use of futures, repurchase agreements and other instruments to manage the interest rate risk in some of its plans. Fund managers may also use derivatives to hedge

currency movements within their portfolios and, in the case of bond managers, to take positions that could be taken using direct holdings of bonds but more efficiently. Exposure to these

instruments is closely monitored and maintained at a level that does not endanger the liquidity of any pension plan.

The assets of the plans are 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$2 million (2022: US$2 million).

Maturity of defined benefit obligations

An approximate analysis of the maturity of the obligations is given in the table below.

Most of the Group’s defined benefit pension plans are closed to new entrants, therefore the carrying value of the Group’s post-employment

obligations is less sensitive to assumptions about future salary increases than to other assumptions such as future inflation.

Geographical distribution of defined benefit obligations

An approximate analysis of the geographic distribution of the obligations is given in the table below:

Total expense recognised in the income statement

These expense amounts are included as an employee cost within net operating costs.

The settlement loss in 2021 resulted from pension obligations in France being transferred to an external insurance company.

Total amount recognised in other comprehensive income before tax

(a)In October 2023, the trustee of the Rio Tinto 2009 Pension Fund (RT09), a UK based scheme, purchased a bulk annuity contract - buy-in contract - which covers all scheme members. The bulk

annuity contract is a Fund asset which provides an income to the RT09 which matches the pension paid out by the Fund. No formal decision to progress to buy-out and winding up of the RT09

can be made until such time as the Company and trustee agree on a number of key areas, including use of any residual surplus. As such, the trustee retains the legal responsibility to make

benefit payments and the loss arising on this transaction was charged to Other Comprehensive Income.

Amounts recognised in the balance sheet

The following amounts were measured in accordance with IAS 19 at 31 December.

The surplus amounts shown above are included in the balance sheet as “Receivables and other assets”. See note 17.

Deficits are shown in the balance sheet within “Provisions (including post-retirement benefits)”. See note 26.

Funding policy and contributions to plans

The Group reviews the funding position of its pension plans on a regular basis and considers whether to provide funding above the minimum level

required in each country. In Canada and the US the minimum level is prescribed by legislation. In the UK and Switzerland the minimum level is

negotiated with the local trustee in accordance with the funding guidance issued by the local regulators. In deciding whether to provide funding

above the minimum level, we consider other possible uses of cash elsewhere, the local sponsoring entity’s tax situation and any strategic advantage

we might obtain. The Group does not generally pre-fund post-retirement healthcare arrangements.

The level of surplus in the Rio Tinto Pension Fund in the UK is such that it may be used to pay for the employer contributions to the defined

contribution section of that Fund, in accordance with the funding arrangements agreed with the Trustee of that Fund. Consequently, the cash paid to

defined contribution plans is lower than the defined contribution service cost by US$6 million. Contributions to defined benefit pension plans are kept

under regular review and actual contributions will be determined in line with the Group’s wider financing strategy, taking into account relevant

minimum funding requirements.

In 2021, additional cash of US$294 million was paid in order to settle pension obligations in France. This amount was paid to an external insurer,

along with the transfer of existing pension assets in order to transfer the obligations to that insurer.

As contributions to many plans are reviewed on at least an annual basis, the contributions for 2024 and subsequent years cannot be determined

precisely in advance. Most of the Group’s largest pension funds are fully funded on their local funding basis and at present do not require long-term

funding commitments. Contributions to defined benefit pension plans for 2024 are estimated to be around US$70 million but may be higher or lower

than this depending on the evolution of financial markets and voluntary funding decisions taken by the Group. Contributions for subsequent years

are expected to be at similar levels. Healthcare plans are generally unfunded and contributions for future years will be equal to benefit payments net

of participant contributions. The Group’s contributions for healthcare plans in 2024 are expected to be similar to the amounts paid in 2023.

Movements in the net defined benefit liability

A summary of the movement in the net defined benefit liability is shown in the first table below. The subsequent tables provide a more detailed

analysis of the movements in the present value of the obligations and the fair value of assets.

The impact of lower interest rates on bonds and qualifying insurance policies explains most of the return on plan assets, net of interest on assets in

The resulting effect of applying an asset ceiling is a loss of US$60 million and a loss of US$5 million for the change in currency exchange rate during

the year. In determining the extent to which the asset ceiling has an effect, the Group considers the funding legislation in each country and the rules

specific to each pension plan. The calculation takes into account any minimum funding requirements that may be applicable to the plan, whether any

reduction in future Group contributions is available, and whether a refund of surplus may be available. In considering whether any refund of surplus

is available, the Group considers the powers of trustee boards and similar bodies to augment benefits or wind up a plan. Where such powers are

unilateral, the Group does not consider a refund to be available at the end of the life of a plan. Where the plan rules and legislation both permit the

employer to take a refund of surplus, the asset ceiling may have no effect, although it may be the case that a refund will only be available many

years in the future.

Main assumptions (rates per annum)

The main financial assumptions used for the healthcare plans, which are predominantly in the US and Canada, were: discount rate:5.0% (2022:

5.4%); medical trend rate:8.3% reducing to 4.7% by the year 2032 broadly on a straight line basis (2022: 7.1%, reducing to 4.8% by the year 2031);

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 27 years (2022:27

years) and that a man aged 60 in 2041 would have a weighted average expected future lifetime of 28 years (2022:28 years). The mortality tables

are generally based upon the latest standard tables published in each country, adjusted appropriately to reflect the actual mortality experience of the

plan participants where credible data is available. Adjustments have been made to some of our plans within the demographic assumptions for the

impact of the Covid-19 pandemic.

The values reported for the defined benefit obligations are sensitive to the actuarial assumptions used for projecting future benefit payments and

discounting those payments. In order to estimate the sensitivity of the obligations to changes in assumptions, we calculate what the obligations

would be if we were to make changes to each of the key assumptions in isolation. The difference between this figure and the figure calculated using

our stated assumptions is an indication of the sensitivity to reasonably possible changes in each assumption. The results of this sensitivity analysis

are summarised in the table below. Note that this approach is valid for small changes in the assumptions but will be less accurate for larger changes

in the assumptions. The sensitivity to inflation includes the impact on pension increases, which are generally linked to inflation where they are

granted.

29 Directors’ and key management remuneration

Aggregate remuneration, calculated in accordance with the UK Companies Act 2006, of the Directors of the parent companies was as follows.

The Group defines key management personnel as the Directors and certain members of the Executive Committee. The Executive Committee

includes the Executive Directors, product group Chief Executive Officers and Group executives.

The aggregate remuneration including pension contributions incurred by Rio Tinto plc in respect of its directors was US$15,184,000 (2022:

US$10,692,000;2021: US$7,522,000). The aggregate pension contribution to defined contribution plans was US$20,000 (2022: US$10,000;2021:

US$9,000). The aggregate remuneration, including pension contributions and other retirement benefits, incurred by Rio Tinto Limited in respect of its

directors was US$1,043,000 (2022: US$735,000;2021: US$642,000). The aggregate pension contribution to defined contribution plans was US$nil

(2022: US$nil;2021: US$nil).

During 2023, no director (2022: nil; 2021: nil) accrued retirement benefits under defined benefit arrangements, andtwo directors (2022: two;2021:

two) accrued retirement benefits under defined contribution arrangements.

Emoluments included in the table above have been translated from local currency at the average exchange rate for the year with the exception of

bonus payments, which have been translated at the year-end rate.

Aggregate compensation, representing the expense recognised, under IFRS as defined in the “Basis of preparation” section, of the Group’s key

management, including directors, was as follows.

The figures shown above include employment costs which cover social security and accident premiums in Canada, the UK and payroll taxes in

Australia paid by the employer as a direct additional cost of hire. In total, they amount to US$1,321,000 (2022: US$1,173,000;2021: US$1,511,000).

Our Group structure

The Group’s principal subsidiaries (note 30), joint operations (note 31), joint ventures and associates (note 32) are in most cases held by

intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited. This section of the notes only includes those companies that

have a more significant impact on the profit or operating assets of the Group.

30 Principal subsidiaries

The Group’s principal subsidiaries at 31 December 2023 are summarised in the table below.

(a)Robe River Mining Co Pty Ltd (which is 60% owned by the Group) holds a 30% economic interest in Robe River Iron Associates (Robe River). North Mining Ltd (which is wholly owned by the

Group) holds a 35% economic interest in Robe River. Through these companies the Group recognises a 65% share of the assets, liabilities, revenues and expenses of Robe River, with a 12%

non-controlling interest. The Group therefore has a 53% economic interest in Robe River.

(b)Rincon Mining Pty Limited incorporated in Australia but operates in Argentina.

(c)Rio Tinto do Brasil Ltda holds the Group’s 10% interest in Consórcio de Alumínio do Maranhão, a joint operation in which the Group participates but is not a joint operator. The Group recognises

its share of assets, liabilities, revenues and expenses relating to this arrangement.

(d)Iron Ore Company of Canada is incorporated in the US, but operates in Canada.

(e)Rio Tinto Simfer UK Limited (which is wholly owned by the Group) holds a 53% interest in Simfer Jersey Limited (Simfer Jersey), a company incorporated in Jersey. Simfer Jersey, in turn, has an

85% interest in Simfer S.A., the company that operates the Simandou mining project in Guinea. As at 31 December 2023, Simfer Jersey also owns 100% of Simfer InfraCo Guinée S.A., a

company incorporated in Guinea, which will deliver Simfer’s scope of the co-developed rail and port infrastructure. The Group therefore has a 45.05% indirect interest in Simfer S.A. and a 53%

indirect interest in Simfer InfraCo Guinée S.A. These entities are consolidated as subsidiaries and together referred to as the Simandou iron ore project.

(f)The Group’s shareholding in QIT Madagascar Minerals SA (QMM) carries an 80% economic interest and 80% of the total voting rights; a further 5% economic interest is held through non-voting

investment certificates to give an economic interest of 85%. During the year, a Memorandum of Understanding (MoU) was signed with the Malagasy Government in relation to their fiscal regime

for QMM which expired at the end of May 2023. The MoU gives effect to the application of a new fiscal regime for the next 25 years, with terms effective as of 1 July 2023. Terms of the MoU

includes the granting of a 15% free-carry equity stake to the Malagasy Government that can no longer be diluted, while maintaining their current 20% of the voting rights. As a result, the

Malagasy Government's non-controlling interest has been recognised for the first time, and QMM's net earnings has been presented net of amounts attributable to non-controlling interests from

1 July 2023. The initial recognition of non-controlling interests, and any subsequent recognition arising from future contributions, gives rise to a charge within equity as the transaction is between

Rio Tinto and the Malagasy Government acting in their capacity as shareholders and there are no changes to the net assets of QMM. As at 31 December 2023, the value of QMM’s non-

controlling interest is US$16 million.

(g)Additional classes of shares issued by Richards Bay Titanium (Proprietary) Limited and Richards Bay Mining (Proprietary) Limited representing non-controlling interests are not shown. The

Group’s total legal and beneficial interest in Richards Bay Titanium (Proprietary) Limited and Richards Bay Mining (Proprietary) Limited is 74%.

Summary financial information for subsidiaries that have non-controlling interests that are material to the Group

This summarised financial information is shown on a 100% basis. It represents the amounts shown in the subsidiaries’ financial statements prepared

in accordance with IFRS in line with the Group’s accounting policies, including fair value adjustments, and before intercompany eliminations.

(b)On 16 December 2022, we purchased the remaining 49% share of Turquoise Hill Resources Ltd. The Group now holds a 66% direct interest in Oyu Tolgoi LLC. Up until 15 December 2022 the

Group had a 51% interest in Turquoise Hill Resources Ltd, which held a 66% interest in OT and, therefore, had a 34% indirect interest in OT. Refer to note 5 for details.

(c)Under the terms of the project finance facility held by Oyu Tolgoi LLC, there are certain restrictions on the ability of Oyu Tolgoi LLC to make shareholder distributions.

30 Principal subsidiaries continued

(b)“Other companies and eliminations” includes North Mining Limited (a wholly-owned subsidiary of the Group which accounts for its interest in Robe River) and goodwill of US$342 million (2022:

US$337 million) that arose on the Group’s acquisition of its interest in Robe River.

31 Principal joint operations

The Group’s principal joint operations at 31 December 2023 are summarised in the table below.

(a)The Group owns a 54% interest in the Western Range Joint Venture (WRJV), an unincorporated arrangement in the Pilbara. The Group recognises its equity share of assets, revenue and

expenses relating to this arrangement. Liabilities are recognised at 54% with the exception of the close-down and restoration provision, which is recognised at 100% according to WRJV’s

contractual obligations, with a corresponding 46% receivable from China Baowu Group, for the co-owner’s share.

(b)Although the Group has a 79.4% interest in New Zealand Aluminium Smelters Limited and an 80% interest in Queensland Alumina Limited, decisions about activities that significantly affect the

returns that are generated require agreement of both parties to the joint arrangement, giving rise to joint control.

(c)Queensland Alumina Limited, New Zealand Aluminium Smelters Limited and Pechiney Reynolds Quebec Inc. are joint arrangements that are primarily designed for the provision of output to the

parties sharing joint control. This indicates that the parties have rights to substantially all the economic benefits of the assets. The liabilities of the arrangements are in substance satisfied by

cash flows received from the parties. This dependence indicates that the parties in effect have obligations for the liabilities. It is these facts and circumstances that give rise to the classification of

these entities as joint operations.

(d)Pechiney Reynolds Quebec Inc., an entity incorporated in the United States, has a 50.1% interest in the Aluminerie de Bécancour, Inc. aluminium smelter, which is located in Canada. As Rio

Tinto owns 50.2% of Pechiney Reynolds Quebec Inc our effective ownership of the Bécancour smelter is 25.2%.

Other relevant judgements - accounting for the Pilbara Iron ArrangementsA number of arrangements are in place amongst the Australian Iron Ore operations, managed by Rio Tinto, which allow their respective assets to be operated as a single integrated network across the Pilbara region. In assessing the Pilbara Iron Arrangements, it has been concluded that they collectively constitute a joint operation on the basis that decisions about relevant activities require unanimous consent. The resulting efficiencies are shared between Rio Tinto and Robe River Iron Associates (Robe River), and the parties fund all of the cash flow requirements of Pilbara Iron (Company) Services Pty Ltd and Pilbara Iron Pty Ltd.Each of the partners in the joint operation is able to request the other to construct assets on their tenure to increase the capacity of the rail and port infrastructure network. The requesting partner’s (Asset User’s) share of the capacity of the network will increase by the capacity of the newly constructed asset, but generally that capacity may be provided from any of the network assets. The Asset User will pay an annual charge, Committed Use Charge (CUC) over a contractually specified period irrespective of network usage. The constructing partner (Asset Owner) has an ongoing obligation to make available capacity from those assets and to maintain the assets in good working order as required under relevant State Agreements and associated tenure. The arrangements are managed through two wholly-owned subsidiaries: Pilbara Iron (Company) Services Pty Ltd and Pilbara Iron Pty Ltd.We have also considered whether the CUC arrangements give rise to a lease between the Asset Owner and the Asset User. We have concluded that they do not, as there is no specified asset; rather the Asset User has a first priority right to the capacity in the CUC asset. This treatment was grandfathered on adoption of IFRS 16 on 1 January 2019, following an assessment under the preceding standards IAS 17 “Leases” and IFRIC 4 “Determining whether an arrangement contains a lease”, with no change to the conclusion under IFRS 16 for subsequent expenditure subject to the existing CUC arrangements. Management considers that these arrangements are unique and has used judgement to apply the principles of IFRS to the accounting for the arrangements as described above. The obligation of the Asset Owner to make capacity available is fulfilled over time and not at a point in time. The CUC arrangement is therefore an executory contract as defined under IAS 37, whereby neither party has performed any of its obligations, or both parties have partially performed their obligations to an equal extent, and so the CUC payments are expensed as incurred. An alternative interpretation of the fact pattern could have resulted in a gross presentation in the Group’s balance sheet with an asset and a corresponding liability to reflect the present value of the CUC payments. The Asset User is a wholly-owned subsidiary of Rio Tinto, whereas the Asset Owner is a joint operation. This impact would be some US$1,009 million (calculated on the basis of grossing up the tax written down value of the CUC assets). Other methods of calculating the gross-up might give rise to different numbers.

32 Principal joint ventures and associates

Principal joint ventures

The Group’s principal joint ventures at 31 December 2023 are summarised in the table below.

(a)The year-end of Minera Escondida Ltda is 30 June. The amounts included in the consolidated financial statements of Rio Tinto are however, based on financial statements of Minera Escondida

Ltda that are coterminous with those of the Group. The company has no share class.

(b)Although the Group holds a 20% interest in Sohar Aluminium Co. L.L.C, decisions about relevant activities that significantly affect the returns that are generated require agreement of all parties

to the arrangement. It is therefore determined that Rio Tinto has joint control.

Other relevant judgements - accounting for Minera Escondida LtdaJudgement has been applied on the determination that Escondida is a joint venture. We have based this on the nature of significant commercial decisions, including those in relation to capital expenditure, which require approval of both Rio Tinto and its partner BHP (holders of a 57.5% interest). In contrast, our partner has assessed Rio Tinto’s rights as protective and concluded that it controls Escondida through its rights to direct relevant activities. Adoption of the equivalent judgement by the Group would result in reclassification of Escondida from a joint venture to an associate, with no other financial reporting consequence since accounting under the equity method would remain in place.

32 Principal joint ventures and associates continued

Summary information for joint ventures that are material to the Group

This summarised financial information is shown on a 100% basis. It represents the amounts shown in the joint ventures’ financial statements

prepared in accordance with IFRS under Group accounting policies, including fair value adjustments and amounts due to and from Rio Tinto.

Reconciliation of the above amounts to the investment recognised in the Group balance sheet

(a)In addition to its “Investment in equity accounted units”, the Group recognises deferred tax liabilities of US$354 million (2022: US$328 million) relating to tax on unremitted earnings of equity

accounted units.

(b)Income tax in 2023 includes a charge of US$252 million for the revaluation of deferred tax balances following the substantive enactment of the Chilean Royalty Bill which, effective from

1 January 2024, will implement a 1 percent royalty on revenues, a margin based tax with rates ranging between 8% and 26%, and a 46% cap to the overall Chilean tax burden of mining

companies.

Principal associates

The Group’s principal associates at 31 December 2023 are summarised in the table below.

(a)The parties that collectively control Boyne Smelters Limited do so through decisions that are determined on an aggregate voting interest that can be achieved by several combinations of the

parties. Although each combination requires Rio Tinto’s approval, this is not joint control as defined under IFRS 11 “Joint Arrangements”. Rio Tinto is therefore determined to have significant

influence over this company.

(b)On 1 December 2023, we acquired a 10% equity interest (12.5% voting right) in Mineração Rio do Norte S.A. (MRN) from Companhia Brasileira de Aluminio (CBA) for a nominal amount which

resulted in an increase of our interest in MRN from 12% to 22% (25% voting right). In prior years, it was determined that we had significant influence through representation on MRN’s board of

directors and consequently the ability to participate in financial and operating policy decisions. Therefore, the increase in equity does not change the basis of consolidation and MRN remains

treated as an associate.