Rio Tinto is committed to sustainable development and sees it providing long term business benefits. The Sustainable Development Leadership Panel assists in developing business plans that include sustainable development initiatives. Rio Tinto Procurement's Sustainable Supply program aims to build long term commercial synergies with supplier communities by aligning supplier performance with Rio Tinto's policies and collaborating to improve quality. Key factors in sustainable supply include the influence of distance from operations, time for community development, and identifying opportunities. Initial focus areas include developing local communities and training through strategic sourcing and logistics projects.

1. -0-
Rio Tinto Procurement
Sustainable Supply
Lowell Millburn
Global Manager - Sustainable Procurement
9 September 2006
Local Communities / SD Workshop
Scottsdale, Arizona

2. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Sustainable Development Leadership Panel (SDLP)
Mission
Rio Tinto has made a commitment to sustainable development, in the
belief that acting responsibly will result in long term business benefits:
• Risk mitigation
• Reduced operational cost
• Social and economic opportunity
• Environmental, energy and natural resource conservation
• Enhanced reputation / brand recognition
SDLP exists to assist Rio Tinto ExCo and BUs in the development of
business plans that action sustainable development initiatives.
SDLP’s commitment involves ongoing engagement with key
stakeholders such as shareholders, employees, suppliers, customers,
governments and communities.

3. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Sustainable Supply: RTP’s Commitment to SD
Sustainable Supply is RTP’s contribution to Sustainable Development
What it Is:
• Building long term, commercial synergies among BU communities
• Aligning Supplier performance against Rio Tinto / RTP SD Policy
• Collaborating with suppliers to improve product/service quality
• Supporting local communities to strengthen relevant skill/supply base
• Applying globally recognized standards to meet local community needs
What it Is Not:
• Long term, irrevocable commitment to specific suppliers
• Rigid application of global standards that poorly address local need

4. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Rio Tinto inbound supply chain comprises a set of industry standard processes. Collectively
the processes can be easily described as “Source – Buy – Deliver” …
Sourcing Records
Maintain
Vendor
Relationships
Purchase
Materials and
Services
Manage
Transport
Process
Consignment
Stock
Authorise
Purchase
Orders
Transmit
Purchasing
Documents
Receive
Materials and
Services
Expedite
Purchase
Orders
Manage
Storage of
Materials
Consume
Materials
Transfer
Materials
Dispose of
Materials and
Waste
Stock take
Materials
Process
Invoices and
Credit Notes
Review Invoice and
Credit Note
Processing
Pay
Accounts
Design
and Maintain
Operational Metrics
Review and Report
Savings and Benefits
Against Plans
Modify Plans based
on Learnings
Develop
Strategies
and Policies
Procurement
Planning
Determine
Requirements
Determine
Source
of Supply
Procurement
Use
Materials
Account for
Materials
and Services
Benefits
Realisation
Create
and Maintain
Sourcing Records
Maintain
Vendor
Relationships
Purchase
Materials and
Services
Manage
Transport
Process
Consignment
Stock
Authorise
Purchase
Orders
Transmit
Purchasing
Documents
Receive
Materials and
Services
Expedite
Purchase
Orders
Manage
Storage of
Materials
Consume
Materials
Transfer
Materials
Dispose of
Materials and
Waste
Materials
Process
Invoices and
Credit Notes
Review Invoice and
Credit Note
Processing
Pay
Accounts
Design
and Maintain
Operational Metrics
Review and Report
Savings and Benefits
Against Plans
Modify Plans based
on Learnings
Develop
Strategies
and Policies
Determine
Develop Materials
And Services
Catalogue Strategy
Analyse BU
Operational and
Maintain
Catalogue
Develop
Procurement
Strategy
Develop
Organisation
Strategy
Develop
Supplier
Strategy
Inventory
Management
Strategy
Develop
Warehousing
Strategy
Develop
Transport
Strategy
Develop
Payment
Strategy
Develop
Supply Systems
Strategy
Analyse Historical
Procurement
Transactions
Gather and
Analyse Market
Intelligence
Develop
Long Term
Procurement Plan
Develop
Annual
Procurement Plan
Develop Savings
and Benefits
Forecasts
Maintain
Service
Catalogue
Maintain
Material and
Service Classifications
Forecast
Future
Requirements
Requisition Non
and Services
Authorise
Purchase
Requisitions
Maintain
Vendor Master
Source
Requirements
Negotiate
and Award
Contracts
Implement
and Maintain
Contracts
Create
and Maintain
Contracts
Create
and Maintain
And Services
Catalogue Strategy
Analyse BU
Operational and
Maintain
Catalogue
Develop
Procurement
Strategy
Develop
Organisation
Develop
Supplier
Strategy
Inventory
Management
Strategy
Develop
Warehousing
Strategy
Develop
Transport
Strategy
Develop
Payment
Strategy
Develop
Supply Systems
Strategy
Procurement
Transactions
Gather and
Analyse Market
Intelligence
Develop
Long Term
Procurement Plan
Develop
Annual
Procurement Plan
Develop Savings
and Benefits
Forecasts
Maintain
Service
Catalogue
Manage
Inventory
Forecast
Future
Requirements
Requisition Non
and Services
Authorise
Purchase
Requisitions
Maintain
Vendor Master
Catalogue
Maintain Vendor
Management
System
Source
Requirements
Negotiate
and Award
Contracts
Implement
and Maintain
Contracts
Create
and Maintain
Contracts
Create
and Maintain
Sourcing Records
Maintain
Vendor
Relationships
Purchase
Materials and
Services
Manage
Transport
Process
Consignment
Stock
Authorise
Purchase
Orders
Transmit
Purchasing
Documents
Receive
Materials and
Services
Expedite
Purchase
Orders
Manage
Storage of
Materials
Consume
Materials
Transfer
Materials
Dispose of
Materials and
Waste
Materials
Process
Invoices and
Credit Notes
Review Invoice and
Credit Note
Processing
Pay
Accounts
Design
and Maintain
Operational Metrics
Review and Report
Savings and Benefits
Against Plans
Modify Plans based
on Learnings
Develop
Strategies
and Policies
Determine
Requirements
Create
and Maintain
Sourcing Records
Maintain
Vendor
Relationships
Purchase
Materials and
Services
Manage
Transport
Process
Consignment
Stock
Authorise
Purchase
Orders
Transmit
Purchasing
Documents
Receive
Materials and
Services
Expedite
Purchase
Orders
Manage
Storage of
Materials
Consume
Materials
Transfer
Materials
Dispose of
Materials and
Waste
Materials
Process
Invoices and
Credit Notes
Review Invoice and
Credit Note
Processing
Pay
Accounts
Design
and Maintain
Operational Metrics
Review and Report
Savings and Benefits
Against Plans
Modify Plans based
on Learnings
Develop
Strategies
and Policies
Determine
Purchase-to-Pay Map
Source
Buy
Deliver
Find, qualify and contract the
suppliers that best match the
customer needs for goods & services
Automate and integrate with customer
processes the buying of the goods &
services at negotiated T&C’s
Manage the delivery of the
goods/services at the time and place
required by our customers
Simple Model Of An Integrated
Inbound Supply Chain
All BU’s Have To Manage An Inbound Supply Chain
Rio Tinto Procurement Has Proposed And Had Accepted A Unified Service Model That Spans The Rio Tinto Group
RTP Mission – Inbound Supply Chain Services
Group Leverage Points; Scale, Process, People & Systems

5. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Mandate:
Business Units outsource all procurement / supply work
(Source, Buy, Deliver) to RTP
A statement of how the in-bound supply
chain is managed in Rio Tinto.
Encapsulates how RTP works with our
customers and our suppliers.
Business Unit
Authorise service and value delivery
plan
Direct decision making:
- Determine specification
- Determine demand
- Authorise award decisions
Rio Tinto Procurement
Application of Group authorised
standard processes
Deliver procurement excellence:
- People
- Processes
- Systems
Health & Safety and Sustainable
Development applied in the
in-bound supply chain
Governance
- BU direction through plan
development and review
- RT Legal & Internal Audit oversight
- Funding benchmarks
Organisation
- Hub and Spoke structure
- Practice Leader roles to
drive improvement
Service Level Agreement
- Commercial authorities defined
- Mandate in practice
RTP’s Operational Support of Rio Tinto Business Units

6. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
“Sustainable Supply” concepts are proving to be key success factors for Rio Tinto....
SD principles provide context to the way we buy, while achieving BU stakeholder obligations.
Key Success Factors Underlying “Sustainable Supply”
Factor A: Influence Of Distance
What are the current geographic, logisitical
constraints to supply? How to mitigate risk?
Factor B: Influence Of Time
What opportunities exist to develop or promote
resources within local communities?
Factor C: Influence Of Opportunity
Which supply categories best leverage / support a
given community? How does RTP optimize its
relationship to local communities?
Note To Slide; The above focuses mainly on the critical communities aspect, supply chain reputation risk mitigation is also covered under the general SD topic
Optimized, World-Class Supply Chain
Capital/Infrastructure
Requirement
Operational
Supply Chain Need
Mutual influence increases
with the proximity of a
community to a mine.
• What does the community
supply base look like
today?
• How can we address
economic, cultural, or
environmental concerns
over logical time
horizons?
• How best to engage
existing and potential
suppliers within region?
Key Success Factors:

7. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
RTP must analyze what the concentration of suppliers is versus distance from BU
operations…what the dynamic is between a local community as “neighbor” rather than
simply a set of potential suppliers/resources.
Example Only; Resolution Copper
Factor A: Influence Of Distance
Community Supply Capability v/s Distance
By reviewing the proximity of supply
to operation, RTP is able to gauge
how best to approach and develop
a community to its inherent
strengths and skillset, as well as
assess how to develop additional
supply opportunity.
upon
Key Questions:
What economic What operational spend is
committed within 50 miles of site? 200
miles?
What / environmental pressures exist in a
local community that complicate critical
supply chain opportunity within region?

8. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
A Few Key Questions
• What does the community supply
base look like today?
• What can we look to develop over
logical time horizons?
• How do we engage with potential
new suppliers?
• How far back the chain do we go to
promote capability growth (e.g high
school)?
We must take a time dependent view to developing the community supply base. The long term, quality ore
bodies at most of our operations permit us the flexibility of extended time horizons to plan against.
Given time we should be able to
develop a community supply base
that services our mutual needs.
Illustrative Only
+1yr +5yr +10yr “x” yr
Development Time
Increasing
Community
Supply
Capability
Service
component,
low complexity
Sophisticated services.
high developed IP
component, moderate
investments
Increasing
complexity, e.g
local distributor
and services
Local investments
in infrastructure for
goods and services
Factor B: Influence Of Time
Development Of A Community Supply Base

9. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
A Few Key Questions
• What does the spend map for the
BU look like?
• Does the spend map change over
development time?
• After the exclusions what are the
targeted opportunities?
• What community systems and
structures can we use to leverage
the targeted opportunities?
We can take a targeted approach to community supply opportunities by mapping the opportunities against
known spend maps of our operations.
We can apply logic to help
target the type of community
supply that we can effectively
mutually develop.
Illustrative Only
Rio Tinto Supply
Markets “SECT”
150 Total
Theoretical
Markets
Exclude; Global or pan
regional suppliers
requiring no local
service/infrastructure
Exclude; Specialist
remote service providers
requiring no local
presence
Exclude; those Group
supply markets not
required by the
specific BU
150
Target opportunity;
remaining SECT categories
including distributors to
established supply markets.
Factor C: Influence Of Opportunity
Community Spend Mapping

10. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Potential Sustainable Supply Areas/Activities
Black Economic Empowerment (BEE)
Project Procurement Standards (Capital)
- Expectations of suppliers on SD
Indigenous Community Development
- The Americas, Australia, Africa
- Diavik, Argyle & Weipa Regional Plans
Emerging Markets
- Developing suppliers in consideration
of The Way We Work
HME Suppliers
- Products improvements, tyre re-tread, engine
emissions & noise
RTA Strategic Procurement
- Technical & supplier development
Environmentally Sensitive Inputs
- E.g. caustic, fuels, explosives etc
- Storage and disposals
Transparent Sourcing Process
- Evaluation criteria, local, HSE, systems
Local Community Development
- Resolution Copper local community program
Measurement
- Value improvement reporting to include non-
dollar factors/targets
The way we buy
Economic Social Environment Governance
Black Economic Empowerment (BEE)
Project Procurement Standards (Capital)
- Expectations of suppliers on SD
Indigenous Community Development
- The Americas, Australia, Africa
- Diavik, Argyle & Weipa Regional Plans
Emerging Markets
- Developing suppliers in consideration
of The Way We Work
HME Suppliers
- Products improvements, tyre re-tread, engine
emissions & noise
RTA Strategic Procurement
- Technical & supplier development
Environmentally Sensitive Inputs
- E.g. caustic, fuels, explosives etc
- Storage and disposals
Transparent Sourcing Process
- Evaluation criteria, local, HSE, systems
Local Community Development
- Resolution Copper local community program
Measurement
- Value improvement reporting to include non-
dollar factors/targets
The way we buy
Economic Social Environment Governance

11. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Sustainable Supply Project Framework & Lifecycle
Mission
Policy
Outreach
Plan
Project
Engage
Measure
Rio Tinto SDLP Benchmark Focus / Guidelines
The way we work / The way we buy
RTP Sustainable Development Plan (SDP)
BU / Community-Based Needs / Opportunity / Idea Generation
BU Procurement Programming VDP / SD Playbook
↓
↓
↓
↓
↓
↓
SD-Oriented Contracting / Improvement Initiatives
RTP/Supplier/Community Performance Metrics/Reporting
Sustainable Supply initiatives follow RTP’s Process Framework:

12. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
SD Performance Metrics – Global/Local Action
RTP Sustainable Supply initiatives will have key metrics to monitor
progress

13. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Project: Long Term Cement Supply / Transport Strategy
BU: Diavik Diamond Mines – Capital Projects
BU Objective: Value Improvement
SD Objectve: Local/Tribal Skills Training / Business Development
Strategy: Develop a long term material / transport strategy leveraging ice road to permit
DDMI to reduce the landed cost of cement required for kimberlite
pipe backfill from $450/ton to less than $350/ton.
SD initiative: Identify, solicit, develop local and tribal businesses base to
participate in the development of limestone/cement operations
in NWT. Potentially assist in funding/training local resources
to transport, store, and inspect FIBC bulkbags for reuse.
SD Example Case – Strategic Sourcing / Logistics

14. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Local Community Initiatives Can Vary by BU / Region
Potential Sustainable Supply Initiatives:
• Resolution Copper – Promote a progressively skilled/competitive local
supply base (trade education/business dev. support)
• Diavik Diamonds – Create long term strategies for Yellowknife/Tribal
business development (regional cement/transport/
packaging strategies)
• Potasio Rio Colorado – Rebuild material/services supply base in
Mendoza/Neuquen provinces, drawing upon
environmentally sound, sustainable business cases.
• Pilbara Iron / WA – Aboriginal / Local Community Supplier Enablement
• Guinea – Progress high profile, philanthropic social programs
(e.g., used asset disposal/donation: computers )
• Core Technologies – Fostering sustainable technical improvement
(e.g., HME Noise/Safety/Quality Standards)

15. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Sustainable Supply – Implementation Schedule 2006/2007
2006 2007
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4
SDLP/RTP Strategy Alignment
Town Hall: Sustainable Supply
SD Playbook Development
SD Foundation Training
Hub Funct. Stream Training
SDT/BU Stakeholder Training
SD Pilot BU – Project Dev.
Full Phase I Implementation
Activity/Milestone

16. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Immediate Focus (Q3/Q4 2006)
Sustainable Supply Objectives:
• SD Playbook Development (VDP driven process/templates/metrics)
• SD Training – Rio Tinto Foundation Modules (RTP Portal)
• BU/Local Community Introduction to SD (Progressive Sites Q4)
• RTP Pilot Initiatives (RCML; PRC; DDMI; QMM)

17. Org Review Conceptual design Nov 2005v2.pptRio Tinto Procurement
Lowell Fields Millburn, M.A., M.L.I.S.
Global Manager - Sustainable Supply
Rio Tinto Procurement
5295 South 300 West, Suite 300
Murray, Utah 84107
Phone: 1(801) 743-4619
Cell: 1(801) 599-3228
Fax: 1(801) 743-4666
Email: lowell.millburn@riotinto.com