Good morning to everyone here in Perth, and also to those of you who are joining us virtually. As Chair of Rio Tinto, I once again have the privilege of welcoming you to our 2025 Annual General Meeting, and it's great to be back in Western Australia. First, I would like to acknowledge the Whadjuk people of the Noongar Nation, on whose traditional lands I'm speaking from today, and I pay my respects to all traditional owners and Indigenous people that host our operations around the world. It also gives me great pleasure to introduce Robyn Collard to perform a welcome to country.
Robyn is a Noongar woman, a Noongar woman from the Whadjuk and Ballardong groups, and she's joined by her grandson, Tyrese Rioli , a Noongar, Tiwi, and Larrakia man, who will perform for us on the didgeridoo.
Kaya, wanju, wanju, nuna kenda nyining ni, jenang waan kening, Whadjuk, Noongar, Boodja. Wanju, wanju, maman, yogas, ngunis, jukan, burdias. Nija, nuna kenda nying, Whadjuk, Boodja. Hello and welcome to everyone who is here today to sit, listen, look, and learn from each other whilst you are here on Whadjuk, Boodja. Hello and welcome to the men, the women, the brothers and the sisters, and leaders at Rio Tinto. Today, you will be recognizing, honoring, and working together for this business. Nija, nuna kengwabenajau, jenang, Whadjuk, Boodja. Here on Whadjuk country, this AGM is about putting things in order.
The Noongar word to explain that is gwabenajau, gwabenajau, putting things in order. Mwot, jenabidi, jena, jena, jena, kura, kura, nuna kenda nying ni, kaa, jenang, nganing, kep, nija, bula barak, bula barak, waan kening, waan kening, murich. For many thousands of years, our ancestors have walked this land.
They've left their footprints in the sand and in the water. They've sat around the campfire, sharing food and water, and telling the many, many stories, just as you will be hearing the stories here today. Babinga, babinga, nija, nuna ken, nija. This is about connecting and learning from each other. Nija, wanju, Bunuba, Yawuru, Larrakia, Meanjin, Gadigal, Ngunnawal, Meanjin, Palawa, nija, Kaurna, nija, Whadjuk, Boodja. All of you who've come from across this land, from Darwin to Brisbane to Sydney to Canberra to Melbourne, Tasmania and Hobart, and of course Kaurna country in South Australia, Adelaide, and all of you from Noongar country, welcome, welcome, welcome. Ngala ken ken, nija, ngala kenbula, kura, kura, nija, kuling, Whadjuk, Boodja.
We are one, and we are many, from all the lands on earth we've come to be here today, sitting in Whadjuk Boodja, to share the stories, listen, look, and learn. Bianca. Thank you.
Thank you so much, Robyn, for your welcoming words, and Tyrese, for your wonderful didgeridoo playing, and to both of you for opening our AGM. Thank you. I hope we'll also be able to put some things in order in here as we go through the sessions today, but those were wonderful welcoming words. It was devastating last year to begin with the plane crash near Fort Smith in Canada. At last year's AGM, we named and remembered our four colleagues and the two air crew members who died in that tragic incident. It was with deep sadness that we experienced another fatality in 2024, as well as a missing seafarer.
In October, Morlaye Camara tragically lost his life in an incident at the Simfer port site in Morebaya, Guinea, and in December, Gel Aguaviva was reported missing from one of our bulk carrier ships near the Philippines.
Everyone has the right to go home safely every day. As we hold our colleagues and their loved ones in our thoughts, we want to assure you that we are learning from these events. They underscore why a relentless focus on safety is crucial, and I encourage us to take a moment to reflect on this. Thank you. Let me now introduce the members of our board who are with us today: Susan Lloyd-Hurwitz , Martina Merz , Jennifer Nason, Sam Laidlaw, Senior Independent Director and Chair of our People and Remuneration Committee, Simon Henry, Chair of our Audit and Risk Committee, Peter Cunningham, our Chief Financial Officer, Jakob Stausholm, our CEO, Dean Dalla Valle , Chair of our Sustainability Committee, Joc O'Rourke , Sharon Thorne, Ngaire Woods , Ben Wyatt, and Tim Paine , our Australian Company Secretary.
We also have with us Trevor Hart from KPMG, who has been our lead audit partner for the past five years. This will be Trevor's last AGM in that capacity due to his retirement from the role in accordance with the auditor rotation requirements, and I would like to personally acknowledge Trevor for his great work over the past five years and your great counsel. Thank you. In the last two years, I've spoken of our plan to renew the board's skill mix. This has led to a temporarily larger board, while our more experienced directors have supported the handover to newer members.
As we come to the end of this transitional period, there are a few changes to note. Kaisa Hietala and Sam Laidlaw will step down as directors at the conclusion of this meeting and are not seeking reelection today.
Sam will be succeeded by Ben Wyatt as Chair of the People and Remuneration Committee and by Sharon Thorne as Senior Independent Director. In October 2025, Simon Henry will also step down. Simon will be succeeded as Chair of our Audit and Risk Committee by Sharon Thorne. My thanks to Kaisa, Sam, and Simon for your incredibly valuable support and contributions, which are going to be greatly missed. That said, I'm happy about the breadth and experience that we currently have on the board. AGMs, as you know, play a key role in fostering dialogue and in building a shared understanding of the context in which we operate.
There are opportunities for us as your board to listen and learn from you, our shareholders, so that we can be better.
In order to make today's proceedings as efficient as possible, I will now declare that voting on all resolutions is open. As usual, resolutions will be decided by poll. As a board, we are very pleased to see Rio's progression over the past few years. Jakob and his executive team have been cultivating a mix of skills and knowledge, project growth, and social license. The newest members, Jérôme Pécresse in Aluminium, Katie Jackson in Copper, and Georgie Bissett in our People function, have all hit the ground running.
We are also pleased to welcome Paul Graves as CEO of Rio Tinto Lithium as we seek to build a world-class business off the back of the Arcadium Lithium acquisition, as Jakob will discuss later. We have an increasingly diverse portfolio of materials the world needs, including for the energy transition, and this is supporting our finances and profitable growth journey.
Our financial performance in 2024 was strong. Sales volumes and net operating cash flow were both up 3% year- on- year, while overall production grew 1%. The financial performance, combined with strict capital allocation and our healthy balance sheet, has enabled us to return $6.5 billion of dividends to you, our shareholders, a 60% payout at the top of our range and for the ninth year running. As Jakob and the team set out at our investor day in December, we have a clear path to a decade of stable, sustainable, profitable growth through our major projects, supported by continuous improvements to our existing operations.
Last year, I told you how excited I was about these projects, which we are executing in challenging environments on time and on budget. They have not disappointed.
We are on course for 4% production growth this year, largely underpinned by Oyu Tolgoi Underground. Oyu Tolgoi has a 97.5% Mongolian workforce. We recently launched the South Gobi Underground Mass Mining Institute to help ensure that outstanding engineering, technological, and safety expertise continues to be developed locally. In Argentina, the Rincón project went from greenfield to first lithium production in only 32 months. The board was very pleased to approve an investment late last year to expand the plant, where we will continue developing direct lithium extraction techniques, or DLE, that support water conservation and reduce waste.
Next, there is Simandou, a one-of-a-kind grade iron ore project being delivered by a team that is over 80% Guinean. Simandou is complex, but we firmly believe it will be transformational for Guinea and its people.
In the Pilbara, our development pipeline extends well into the next decade and beyond, with new mines and projects, including Western Range, West Angelas , Hope Downs 1 , Greater Nammuldi , and Brockman 4 expansion. In fact, over the next three years, we expect to invest more than $13.3 billion in new mines, plant, and equipment in the Pilbara. $13.3 billion. This builds on about $8.5 billion of investment in the region over the past three years. This is very much the heartland of Rio Tinto. We are also studying Rhodes Ridge, which may one day become the biggest iron ore mine built in Australia, potentially producing more than 100 million tons per annum.
In fact, we are executing more projects worldwide than we ever have before, and the skills we are gaining as we do so are helping us improve our organization overall.
We are making progress when it comes to operational performance, as Jakob will outline shortly. The Safe Production System is yielding results. We are getting consistently stable operating performance. For example, last year we delivered record bauxite production at Gove and Amrun. We have more work to do to drive improvements across all our assets, but I'm confident we're going to get there. Workplace culture is a key enabler of our performance. My years in business have taught me that culture is not a nice to have or a fad, it's foundational, which is why we are determined to continue to build a safe, respectful, and inclusive environment where people feel comfortable to share their ideas and make continuous improvements.
A respectful culture, social license, and strong environmental, social, and governance credentials go hand in hand with delivering shareholder value.
Actually, it tells you something about the culture that when I recently visited Richards Bay Minerals, or RBM, in South Africa with Sinead, I was asked a lot of questions from our frontline colleagues on our culture and our performance. This was in November, around the time we published the Everyday Respect Progress Review, and I was reassured that they felt free to speak up about any topic and wanted to see Rio succeed. If you do not know, RBM supplies the raw materials for titanium metal used in advanced manufacturing and titanium dioxide. I do not think we realize how many everyday items rely on this mineral, from paint to toothpaste.
The leadership at RBM is 100% South African, and many live in communities close to the mine and have progressed to management roles after first joining the company as graduates.
Richards Bay Minerals, as a board, we've been fortunate to visit a wide range of other sites over the last year, including our metallic recycling business and our primary Aluminium business in Canada. We also visited Kennecott in the US and Simandou in Guinea. Engaging with employees and communities where we operate deepens our understanding of our challenges and opportunities, as well as our societal role and responsibilities. We are, of course, by no means perfect, but while we focus on running our operations, a common thread that we are providing through this are jobs, training, and other opportunities, while also working on our environmental performance where we operate.
However, we need good partnerships to be able to do so. In March, I had the privilege of spending time with the leaders of the Puutu Kunti Kurrama and Pinikura people on their country in the Pilbara.
One of the topics we discussed was how a traditional owner group and a mining company can most efficiently work together. We have relationships with over 60 Indigenous and land-connected groups across the globe. Many of these are very positive relationships, while a small number remain challenged. In any case, we are committed to working together to achieve positive long-term outcomes. Our business is growing, but we need to do this in a sustainable way, and that requires us to build solid and trusting relationships and be consistent in our approach.
Much of what I have said today may sound familiar, and that's because we have a clear strategy, one that we are focused on delivering with consistency. This is not to say the context we find ourselves in is the same as the last time we were here together.
We are a complex business operating in a complex world full of complex challenges: geopolitics, tariffs, community relations, industrial relations, and lengthy permitting. While industries as ours must be nimble and constantly be building new capabilities and technologies to continue growing productivity, when the world looks ever more complex, a consistent approach can be powerful. We are a long-term company following a consistent strategy, and the long-term picture is positive in terms of the demand for what we do. The fundamental drivers of our demand are all in place: population growth, economic development, and a significantly increasing need for materials that support energy security.
As the world grows, so does its energy demand, including from electricity. From today to 2030, the International Energy Agency expects electricity to grow at six times the pace of overall energy demand, which itself is growing. There is enormous demand.
This mass electrification requires more Aluminium, more lithium, more copper, and more iron ore for steel. For example, we expect that by 2040, the world will need three times more copper than today for end use in renewable grid investment, energy storage, electric vehicles, and other parts of the global energy system. If this future world wants a stable supply of these materials, then it will have to build new mines and innovate and develop new technologies. We are doing all that we can to support this future, lithium being a case in point, while ensuring that we also continue creating value for our shareholders. In short, there will be challenges in the years ahead, but we believe we are well placed to navigate them and make the most of the opportunities ahead of us.
We are determined to consistently deliver sustainable production growth and shareholder value, even in a complex world. Thank you for listening to me, and with that, I will hand over to our CEO, Jakob Stausholm.
Thank you, Dom, and hello, everyone. I would also like to acknowledge and pay my respect to all traditional owners and First Nations people that host our operations around the world. Dom has made my job easy today because he has already set out how we are delivering our plan for a decade of sustainable, profitable growth and our ability to create further shareholder value. We are making good progress. Our financial performance is strong. The portfolio is evolving. Production is growing. We are honing our technical and leadership skills and becoming even more disciplined in cost management.
Meanwhile, the world is growing. Its energy use is rising, and therefore so is demand for the materials we produce. Yes, there are uncertainties, but while we are engaged in the short-term horizon, we tend to think 20, 30, even 40 years ahead.
The long-term outlook is positive, and I'm confident that we have the right strategy and objectives to deliver value today and into the future. With that in mind, I've spent much of 2025 visiting our operations across the world, learning more about our challenges and opportunities, and listening to our employees and external stakeholders about how we can find better ways to provide these materials. Allow me to give you an impression of where we are from my perspective based upon these visits. Of course, the best place to start is probably with our new lithium business.
Completing the acquisition of Arcadium Lithium in March was a significant moment in our history and a clear example of how we are evolving the portfolio in line with the commodities where demand growth is the strongest. The long-term picture for lithium is very attractive.
I was in South America when the transaction closed, getting to know our new colleagues and learning about our sites in Argentina. There was a strong shared commitment to ensure the success of Rio Tinto Lithium. The new business has the combined scale, technical, operational, and commercial expertise to be a truly world-leading business. It was also impressive to see the progress we are making to expand the Rincón Lithium plant, which demonstrates our deepening project building and technical expertise. As you have heard, 2025 is a pivotal year for our major projects. Simandou in Guinea is on track for first iron ore production at the mine gate by the end of the year, and production at the Mongolian Oyu Tolgoi Copper Mine is expected to grow by more than 50% this year.
It has been remarkable to witness Oyu Tolgoi's development as it ramps up to peak production of 500,000 tons of copper a year. In March, I visited the underground mine with the Mongolian president, who described it as one of the most exciting developments he has ever seen. Because Oyu Tolgoi is a modern, safe, and sustainable mining operation built by 20,000 Mongolians, it demonstrates best operator excellence in action. We are determined to achieve this excellence everywhere, to safely and sustainably realize the full potential of all our assets.
As you have heard from Dom, we made good progress on our best operator objective last year, and we are moving further and faster this year. We still need to stabilize existing assets, including Kennecott, Rio Tinto Iron and Titanium, and the Iron Ore Company of Canada, which all represent huge opportunities to unlock further value.
When I visited IOC earlier this year, I could tell that its history of excellence lives on. Like so many parts of Rio, the safe production system is simply helping us to tap into our DNA. The dedicated teams at IOC are identifying and addressing issues essential to continuously improve safety and productivity. Moreover, they're actually really welcoming the challenge. I've also seen excellent determination here in Western Australia and in the Pilbara, where the safe production system has helped stabilize our iron ore operations. Every time I visit, I'm just impressed by the passion and professionalism of the people who work in our mines here, often in extreme weather conditions.
There is no denying we have been challenged by intense cyclones this year, but still, we are proving resilient. I will never forget my engagements with traditional owners here in Western Australia.
It's not up to us to judge our progress on social license, but I will say that each time I'm on country, I see the positive evolution of those most important relationships. There's more to do, but we are committed to stay the course and continue rebuilding trust. We're deeply committed to the communities here because we know we cannot operate without their trust. Last year, we boosted spending with suppliers in Western Australia by AUD 1.5 billion to a record of AUD 10.3 billion as we continue to support local businesses to develop our pipeline of new Pilbara mining projects such as Western Range.
We work with roughly 2,400 suppliers here each year, a symbol of our ongoing commitment to support jobs and deliver shared success. Of course, societal factors heavily influence our ability to operate.
That's why we will continue to move the dial on impeccable ESG performance in ways that simply make good economic sense. For example, decarbonizing our business is deeply physical and complex, but we had a record year for our emissions reduction in 2024. What I'm most proud of is that we are starting to deliver projects that reduce our emissions and provide us with a secure supply of energy while retaining and even creating value. The same goes for our culture. I'll echo what Dom said, that culture is foundational to how we realize the full value of our assets.
That is because so much of our performance is about mindsets and behaviors. We will stay the course to create a culture where everyone feels safe, respected, and empowered to bring their best every day.
Everything I've seen so far tells me we are building on the considerable momentum we created heading into 2025. We have all the building blocks in place for an incredibly robust, diversified, and growing business. We will continue taking actions that ensure we remain resilient in the short, medium, and long term while creating value for you, our shareholders, through our commitments to consistent returns and a strong balance sheet. We will achieve that by maintaining a laser focus as we go deeper with the safe production system, deliver improved cost management, and learn from executing complex projects.
We will improve our culture, safety, and environmental performance as part of this accelerated drive towards best operator. That way, we know we can grow and build our portfolio of materials the world needs in a safe, sustainable, and competitive way. Thank you. Back to you, Dom.
Thank you, Jakob . We're now going to move to the formal business of the meeting. The notice of meeting containing the text of each resolution to be put to this meeting was published on our website and made available to shareholders on the 4th of March. I will take the notice as read. Resolutions 1 to 19 and 21 will be dealt with under the joint electorate procedure. Resolution 21 is the corresponding resolution of Resolution 24 on the Rio Tinto PLC notice of meeting. Rio Tinto PLC shareholders have cast their votes on these resolutions at the corresponding meeting we had in London on the 3rd of April. Resolution 20 will be voted on by Rio Tinto Limited shareholders only.
Your directors are unanimously of the opinion that Resolutions 1 to 20 proposed in this notice are in the best interests of shareholders and of Rio Tinto as a whole. Accordingly, we recommend that you vote in favor of Resolutions 1 to 20. I wanted to make a couple of points in relation to the shareholder requisition resolution number 21. Firstly, as you will be aware, the board does not support the resolution for the reasons we've set out in the notice of meeting. The board is very focused on strong governance, and this extends to the board's work on reviewing a unification of our DLC.
We've considered this topic regularly and objectively over many years and completed a further detailed review in 2024 with the benefit of five expert third-party advisors. We looked at the benefits and the costs.
All of this work showed that a unification of the DLC would be value-destructive for the group and its shareholders. Specifically, just to highlight three areas in a DLC unification. One, there would be one-off costs related in particular to long-arm capital gains tax in the mid-single-digit $ billion, significantly above what Palliser's analysis shows. Two, given how our portfolio is shaping, there would not be sufficient franking credits for our Australian shareholders in the future. Three, we would not see an increase in the overall share price of Rio Tinto.
Our financial advisors would expect the unified company's share price to move downwards towards the weighted average of the PLC and Limited share prices. Given the findings of the 2024 board review on this topic, the board unanimously believes that the resolution is duplicative and unnecessary.
There is no basis for expecting that an additional review would lead to a different conclusion. I also want to be clear that we were open-minded about all routes that maximize value for you, our shareholders, and that's the lens through which we assess this topic. We've also engaged widely with our shareholders whose interests we, of course, are resolutely focused on. Further, I would like to correct the assertion that has been made that Rio Tinto has underperformed our direct peer since the announced collapse of their DLC.
In fact, since that announcement, after adjusting for the demerger of their petroleum business, Rio Tinto has outperformed this peer by 7% from a market capitalization performance perspective, despite headwinds from our commodity mix over that same period. We've listened to our shareholders carefully, and we believe the direction to us is clear.
The group's priority should be on delivery against the widely supported strategy. Nevertheless, this resolution has been validly requisitioned, and I want to give the requisitioners the opportunity in a moment to briefly introduce it. Hopefully, James is back on. Yeah. I first of all want them to be able to explain, I want to explain the procedure for shareholders to ask questions on matters relevant to the business of the meeting. I will come back to James Smith from Palliser so he can address the group from the online system. Broadly, only shareholders or their representatives or proxy holders are entitled to ask questions.
For those in the room holding a white admission card, if you wish to ask a question, please raise your admission card and a microphone will be brought to you.
Before asking a question, if you could please state your name and if you represent an organization, the name of the organization, that would be very helpful. Kindly return the microphone when you've asked your question. For those attending virtually, you may submit written questions or ask them orally through the Lumi platform. To allow us to answer as many questions as possible, please try and keep your comments short and to the point. If we receive multiple questions on the same topic, we may, with your indulgence, aggregate them and provide a single answer to avoid repetition and to ensure the smooth running of the meeting.
I would like to go back to Palliser Capital and make sure they have the opportunity to briefly introduce their resolution. I think James Smith is on the line. He was with us in person in London. James, I hope you can hear me or hear us. If you can, please go ahead.
Yes, I can hear you, Dominic. Hopefully, the connection is clear on your side.
Excellent.
Okay. Good morning, everyone, and thanks to the chair for inviting me to speak. I'm pleased to have the chance to introduce Resolution 21 as the chair has envisaged, which we co-filed with other shareholders for Rio Tinto's AGMs. It had been my intention to be in person, but late-notice business commitments mean that I've been unable to travel this time. I apologize for that and thank everyone for listening to me via this audio link. My name is James Smith, and I'm the founder and CIO of Palliser Capital. Our firm manages a global multi-strategy fund that adopts a broad range of investment strategies across the capital structure of companies and around the world.
We prefer to collaborate with management teams to help improve the long-term value of the companies that we invest in for the benefit of all stakeholders.
We co-filed Resolution 21, which seeks a fair, independent, and transparent review of the unification of Rio Tinto's complex and legacy DLC structure into a single Australian domiciled company because we feel strongly that this will provide shareholders with the information that they need to assess an opportunity that has delivered a great deal of value to shareholders in 12 precedent situations. Two such examples, BHP and Brambles, were very similar in nature to Rio Tinto and will be familiar to many shareholders present and listening today given their U.K.-Australian structures.
As the Chair has laid out, similarly to his comments at the group's U.K. AGM some weeks ago, management did not wish to do such a review. They have done their work, they say, and believe an independent process is not required, and nor would transparent disclosure of such an assessment be an appropriate thing for shareholders to receive.
Perhaps that would be acceptable to many if they were to provide details of their own review. The assumptions made, relevant rules, laws, and costs that they've considered, things that their advisors have assessed, and the precise scope of the work that they have conducted. If it included an assessment of their analysis as to the benefits of unification, not just the costs, which they say are excessive, perhaps this would be helpful. They have not done this. It's too confidential, they say. It's too sensitive, and it wouldn't be good for shareholders to see this information.
This is something that we struggle to credit as a position for them to have taken. It leaves us and perhaps others in the audience here scratching our heads. What analysis and views we have seen from management is, in our opinion, high-level and unsubstantiated.
That is surprising to us because we have seen the company engage a very large team of expensive advisors to help them with their efforts to argue against our simple and reasonable resolution request. Let us look at a number of relevant facts. Almost every DLC in the world has unified, each citing compelling rationales and reasons for their decisions to do so. That is 12 groups, in fact, and as mentioned, it includes BHP and Brambles as two of them. There are, to our knowledge, only a small number of DLCs remaining in the world, perhaps three or four, of which Rio Tinto is by far the largest.
Shareholder support in those 12 cases has averaged around 98%-99%. By way of illustration, for BHP Limited, it was 98%, and in the case of Brambles, it was 99.9%.
Those boards numbering 136 directors, esteemed business folks, were all in favor of it. Global proxy advisors, ISS and Glass Lewis, who are subscribed to by a gathering 90% or more of institutional investors, in all, by one case, were in favor. In that particular case, their concern turned on the compensation issue that was not related to unification itself. Despite this compelling backdrop of information, we've not been so bold or presumptuous as to put forward a resolution that requires unification. It's not a resolution to do it. It's simply a resolution to review it.
Again, management says that such a process of independent analysis and transparent disclosure is not a worthwhile endeavor. Better we all ignore that idea, they suggest. Now, in the PLC AGM, I cited three quotes regarding unification, which together we felt summarized management's key arguments against unification.
The first, quote, "The DLC is not an impediment, and management has the benefit of two acquisition currencies so long as the DLC remains in place." The second, quote, "Unification would be costly and with no material benefits." The third, quote, "Unification would result in a wastage of franking credits to Australian shareholders." I went on to provide more color on why these comments are unreasonable and lacking justification from our perspective. I shall summarize that again today. On the first, just to requote, "The DLC is not an impediment, and management has the benefit of two acquisition currencies so long as the DLC remains in place."
To this, we say, can we really believe this statement when Rio Tinto has never since the inception of the DLC used shares for acquisitions of target companies?
Sure, they may cite a couple of obscure cases where a script alternative was offered alongside a primary cash proposal in privatization of a subsidiary 25 years or so ago, intended to enable rollover relief to some folks who asked for it. The fact is that 100% of M&A has been done with cash. For the peers, it's 32% in cash and 68% in script. There may be at least some mixed views on mining company M&A more generally in the room, not least given a number of painful and value-destructive deals in recent years, both at Rio Tinto and across the industry. The reality is that the opportunity to use script is an important risk management tool.
By way of illustration, at one point, just a few days following the PLC AGM some weeks back, Rio's US ADR shares traded 13% lower following all the tariff concerns. A stark reminder, if any, was needed of the value of risk sharing with a target company's shareholders through the use of script, which the data shows, rather than being enabled by the DLC as long as it remains in place, is actually impeded in all DLC experiences. Otherwise, on capital allocation, we find other impediments rather than none. We haven't seen a buyback since 2018 as the FIRB's rules, which we have no quarrel with, by the way, restrict it. If you can't issue script via M&A, how do you resolve that issue given Chinalco's near 15% stake in Rio DLC?
On the second quote, "Unification would be costly and with no material benefits," we commissioned and made public a report by Grant Thornton Australia, the eighth largest firm of its type in the Australian market and similarly ranked globally and fifth ranked in the U.K. We engaged Grant Thornton Australia to work independently and based on public information. That report is available on a website that we created for folks to see all of our letters, presentations, and materials transparently and as frequently as possible. That website is unifyrio.com. The conclusions of the Grant Thornton work are clear.
Unification would be at least value neutral for Limited shareholders and positive for DLC. A meaningfully greater quantum of franking credits would be distributed to shareholders. We have done our best to be clear and transparent with the work.
All of those 116 pages of review from Grant Thornton Australia are available for all shareholders and other interested parties to look at on that website, and I'd encourage folks to read it. Our board will say it's not relevant, that management work is better, more accurate, I suppose they mean, but it's not for sharing and must remain secret. The conclusion on costs from the report are also clear. On this, we fundamentally disagree with that second quote, that unification would be costly and with no material benefits. I'm going to come back to that with a question a little bit later on. There is no massive one-off lump sum costs. Transaction costs would be around $400 million of U.K. stamp duty.
Ongoing taxes with ATO getting its full share of Australian corporate taxes rather than via the Singapore tax structure would increase by around AUD 140 million per annum. It is a little bit less than a 2% increase on our numbers. On no material benefits, we believe that just the ability to use script alone might have preserved $50 billion of book value over the last 30 years, and to unify would unlock many benefits as we have seen in key peers such as BHP, where there has been strong outperformance through unification afterwards. There are other elements among management's claims, obscure capital gains taxes in far-flung jurisdictions, or so our board tells us.
Our advisors and we have looked at all these relevant jurisdictions, and their rules and regulation is in as much depth and based on every public piece of information we can possibly find, and we just can't locate any of these costs with our advisors and having taken advice and specialist input in every one of those jurisdictions. On the third quote, that franking credits will be wasted, we think this makes no sense. As things stand, more than 80% of EBITDA is Australian, but only 23% of shares. Australian profit is used to pay U.K. dividends. Doing that burns franking credits because the process of journaling cash from Limited to PLC has to attach them, and the recipient PLC cannot use them.
This destruction would be avoided through unification, and a question on that a little bit later on too.
James, James, sorry, can I just, James, could I just—James, could I just—this is great. I want to make sure you have the time, but I also want to make sure there's going to be time for other questions, so if you could just take up the floor in a tiny bit.
Yeah, secondly, we need another two or three minutes.
Okay, thank you. Yeah.
Yeah. Yeah. Grant Thornton seems long-term pre-tax profit as more than 50% Australian. And your company's long-term payout ratio over the last 20 years has been in the 40s. That means clearly fully franked dividends. In fact, we can't construct, based on our analysis, that there'll be any franking credit deficit post-unification before, in the worst case, into the 2040s. Just to step back, what is the issue with a review?
I'm going to quote Glass Lewis and Bloomberg, and the board of management have heard this before. In Glass Lewis's words, "If there's even a small chance that such a huge value will be unlocked, an independent review is a worthwhile endeavor." Bloomberg said, "There's truly little risk other than a few bruised egos and some trivial costs to hire bankers and lawyers to allow an independent review." In Reagan's words, "Trust but verify," Bloomberg says. If we're right, that makes sense because there's $20 billion-$25 billion of potential value release.
Perhaps the cost of review would be 0.1% of that. It seems to us the rational decision, annoying as it may be, would be to just do the review. Now, for those who listened to the U.K. AGM or have looked at the transcripts, they'll know what comes next.
The reveal that those three quotes were in fact listed from BHP's commentary in response to Elliott's initial proposals, which myself and the Pallas team led as employees of Elliott at that time. They're very similar to all the pushbacks in this case, and we know how that situation was resolved. Governance improvement, tax costs that it was thought might crystallize didn't. A unification was announced several years later in August 2021. Rather than dwelling on that, I'm going to end today with three questions that hopefully the chair and the board can get to as the proceedings develop.
The first question is to the chair or board colleagues as he deems appropriate and refers to Rio's March 2025 board response slide pack at page 10.
There is a prediction there of an 11% share price drop to a weighted average share price for a unified Rio Tinto. Can you please explain to the attendees the basis for that position for that year that's been taken? That's my first question. A second question to our new Senior Independent or board colleagues as she deems appropriate. The Rio notice of meeting says the board expects tax costs of unification specific to how Rio has organized its business in the mid-single-digit billions. Are we right to understand that the board has reviewed a specific written advice that reaches a conclusion?
That's the second question. The final question is for Mr. Wyatt or his board colleagues as he deems appropriate given his specialism and comments in the area of franking credits last time.
It is a question that I see was asked in the PLC AGM and was not fully answered. Some follow-up was envisaged, which will have happened now. I think it would be of great interest to the meeting attendees today to hear those views. The question is, as mentioned in the March 2025 board response back, future growth is expected outside Australia that will increase PLC's ability to fund its own dividends rather than by drawing profits from Limited. In that case, and assuming as the board suggests, no unification, what would happen to the greatly increasing base of excess potential franking credits created at Limited?
It seems to me these franking credits will then accumulate at an accelerated rate and will be very unlikely to ever be used. I would like to hear your view and for the attendees whether you agree or disagree with that statement.
As I look forward to hearing some answers on those three questions, I want to take the opportunity to thank the chair again and to thank the board and to thank the audience for listening to my views and comments and appreciate all their efforts in arranging and coordinating the meeting today. Thank you, Dominic.
Thank you very much, James. That was very clear, and I think everyone could hear you well, so thank you. I do not want to spend the whole bulk of the meeting on this because I know we have a lot of questions on other topics and issues that people have. In the spirit of your questions, I might ask some of my board colleagues.
Sharon, I might start with you first on the cost and the tax liability side of it, and then go to you, Ben, on the franking credits, and then Jennifer, to you on the valuation, and then I think we'll close. Again, we've had many, many conversations with shareholders and interactions, and I think the votes are now in, if you will, on it, but I think it's still good if we could just briefly cover those three areas. Sharon, over to you.
Thanks, Dom, and thanks, James. The tax position, as you all know, is very complex. Rio is a huge global company with operations around the world, and most of our assets outside of Australia are owned by the PLC, which is different to BHP. Unification creates significant tax events.
The board asked EY, one of the largest professional services firms in the world, to review the tax exposures that we faced. They were given full access to Rio's internal information, which clearly was not something that Palliser has been able to have and Grant Thornton. EY concluded that the tax costs that we would face would be mid-single-digit billions of $ US dollars, which would reduce net asset value for shareholders. I did review the detailed paper, James, that was produced by EY. It was produced by a very senior tax partner based in the Brisbane office who has enormous experience working with oil and resources companies across the world.
His conclusion, as I said, was very clear about the exposures that we face.
Publishing this information, we believe, would be highly prejudicial to our shareholders and to your interests, and we do not think it is right to do it. I can assure you that I have been through it in detail, and I am very comfortable with the conclusions that EY reached.
Thank you, Sharon. Ben, over to you on the franking credits topic.
Thanks, Dom, and thanks, James. For the benefit of those in the room, it is often, it is for me anyway, to think about Rio Limited, the Australian company, if you like, as holding all the Australian assets. There are some small exceptions, one about holding the Australian assets, Rio PLC, the London listing holding, the global assets. That is the fundamental difference, just coming back to one of the comments by James, between us, between Rio and BHP for a start, where the assets are held.
Now, for those in the room here, we're all Limited shareholders. We all, assuming we're all Australian tax residents, get the benefits of the franking credits that come attached through the Rio Limited shareholding. Now, ultimately, there are two points, and James, I'm coming to your specific question. There are two points. Obviously, if you collapse into Limited, you bring a lot of non-Australian tax residents into the shareholding. The franking credits effectively still flow, but of course can't be utilized by non-Australian tax residents. You see a faster dilution of franking credits across a much broader shareholder base that is outside of Australia who don't have the, who don't pay tax in Australia.
Now, the second point, I think the point you're raising, James, is if we assume that we are moving from, say, 70% EBITDA coming out of through Limited through to, say, 50/50, and you look at our capital markets day in December last year, you are seeing an increase in EBITDA coming through the PLC, then as a result, that transfer, if you like, of dividends from Limited to PLC reduces, and therefore franking credits will build up in Limited. James, I guess it depends on your assumptions, particularly around the iron ore price. And if you're assuming a long-term quite high iron ore price, there will be a build-up of franking credits.
Ultimately, I'm not sure I agree with your proposition that they will never be utilized, but I certainly prefer them be utilized through the Limited line to Australian tax residents who, of course, can take the tax advantage of those franking credits as opposed to diluting through to shareholders who don't have that advantage. Hence why the board has come to a position around for the Limited shareholders in particular, and this is fundamentally different for BHP because the nature of the revenue and the assets within both companies means that Limited effectively are ring-fenced to take advantage of those franking credits. Hopefully, I've answered your question, James.
Thank you, Ben. Jennifer, I should have just mentioned a bit of the background. You probably know, but Sharon used to be the chair of Deloitte, so she knows something about accounting and tax issues. Ben, as you know, is a former treasurer, has a lot of experience in this area. And Jennifer Nason was the head of investment banking at JP Morgan. So Jennifer, if you want to talk maybe a little bit about share price.
Sure. And just quickly to sort of round out the response here, I am an independent director, and I just retired after 40 years at JP Morgan where I chaired the investment bank. So I've spent a long career in the capital markets, actually focused, among many other things, on the costs and benefits of various jurisdictions and listing and the impact that has on trading performance and value creation. So I personally have raised this issue as a director on this board since I've been on the board, and it's something that we have discussed many, many times and recently done the detailed work.
It is something that we will continue to evaluate. I am more than satisfied with the analysis, the independent analysis we've done as an independent director around these issues. Today, the costs just outweigh the benefits. That is not to say those circumstances might not change in the future, and we will continue to evaluate it. In terms of where we would expect the stock to trade, were we to unify, the advice we've had is that we would more likely than not trade to sort of the average of the two. In fact, we would need substantial incremental Australian demand to have any chance of trading to the Limited level demand that would equate to sort of the average of the entire issuance in the Australian market over the last 10 years.
We have had detailed advice on that, and I just want to assure everybody that as an independent director and my fellow independent directors, we have done an independent analysis. Thank you.
Thank you, Jennifer. Thank you again, James, for your comments earlier. I would like to shift on. As I said before, I just want to reiterate from a board point of view, we are agnostic about where we are listed. We want to get the best value for our shareholders and where it is. Someone teased me here about, I mentioned we would be comfortable going to Greenland if we could get a good price. Obviously, there is not really a market there, but I am just saying we are open and we will continue to review this on a regular basis. If I can, maybe I will stop it at that.
We can have conversations after the sessions as well, but I'd love to be able to get to the broader questions in the room. With that, I would actually like to go to the audience first. As I mentioned, if you could just put your hand up or your card, then someone will come by and get a microphone to you. I'll try and go back and forth a bit between the audience, and then we have some people online, and then we have some written questions. I'll just try and go back and forth in that way. If we could ask the audience any questions. We'll start right here in the front.
Good morning. Ross Ferguson, representing the Australian Shareholders Association, with proxy votes from 516 shareholders representing about 568,000 shares.
Firstly, we'd like to thank you, Chairman, for your team meeting with the ASA monitoring team and providing further insight into some of our concerns. We would also like to congratulate Rio Tinto on a strong year and acknowledge your progress towards decarbonizing your operations. In particular, ASA will vote for Resolution 19, the 2025 Climate Action Plan, and we will vote against Resolution 21, the shareholder requisitioned resolution. My comment relates to director re-elections. We note that many directors currently have relatively low levels of share ownership.
Specifically, four directors with four or more years of service hold shares valued at less than 40% of their total 2024 board and committee fees. ASA maintains the view that the value of shares held by a director should exceed the total annual fees earned, with this threshold being met within three years of their appointment.
While we acknowledge the practical challenges directors may face in timing their share purchases, one potential solution could be the implementation of a policy whereby a set % of director fees are withheld and invested in company shares during defined trading periods. Our question then is, would Rio Tinto consider adopting a minimum shareholding policy requiring directors to accumulate shares equivalent to at least one year total fees within three years of their appointment? Further to the remuneration report, our concern lies with the long-term incentive, which allows for a maximum payout equivalent to five times the base salary.
This significantly exceeds the ASX-listed company norm whereby LTI payouts are typically capped at two times base salary.
We believe that enabling a potential total annual payout of up to eight times base pay, reaching GBP 10.28 million in 2024 and potentially GBP 11.28 million in 2025 is inappropriate given prevailing market practices. Hence, ASA will vote against the remuneration report. Our second question is relating to the 2025 Climate Action Plan. While limiting carbon credit use to 10% of the 2018 baseline is commendable, reliance on credits and nature-based solutions raises concerns. Rio Tinto has indicated that it will not meet its 15% reduction target by 2025 without offsets, and credits are integral to 2030 goals.
Has Rio explored alternative strategies to reduce absolute emissions and avoid dependencies on credits? Is there a long-term plan in place to phase out reliance on offsets in favor of direct reductions? Thank you.
Thank you very much, Ross.
Thank you to you and your group for all of the engagement and the ideas that you've brought forward to us. What I'm going to do is I'll take a shot at your first question on the director's fees, and then I may turn it to Sam on the remuneration side of it. On the 2025 Climate Action Plan, I might make some comments. Jakob may jump in as well on the carbon credits, if you will. First, on the shares, we are very much committed to wanting to ensure that our non-executive directors have a stake in the company. In last November, we actually changed the basis on which NEDs share ownership targets are set. We did that to align with the approach we have for the executive committee members, the management.
We're expressing shareholding targets as a fixed number of shares that ensures the targets remain constant, even in the event of fluctuating share prices. To your point, the required shareholdings are set based on a target of one times the base fees. These are reviewed every two years. That target is in line with what's been adopted by other major listed companies in the ASX and the London Stock Exchange, and we think it's a reasonable target. We are also of the view, as you mentioned, there's sometimes restrictions because of an acquisition that's occurring or other issues.
In the last, actually in the last six weeks, we've seen acquisitions of shares by the four directors that you've mentioned because people are keen. I think they're irritated with me because we don't allow them to at times to be able to do it.
We are very committed to ensure that we do have shareholdings or skin in the game, if you will. I think we should take your idea of being able to be paid in shares. There are different markets that have different views. I come from the Canadian system where we were actually paid half in shares as opposed to in the fees, but there are different rules and regulations. We will look at that because we are keen that we have the skin in the game from all of us where we are. Sam, could I turn it over to you on the remuneration?
Certainly, Ross. A very good question and an important question. Obviously, what we are aiming to do is to ensure that our remuneration structures are both attractive and retain the best talent, but also are competitive in the marketplace, but are not excessive.
Actually, the change to which you refer, which is moving to five times base pay on the long-term scheme, was actually something that we did last year rather than this year. The reason we did it was that we did extensive benchmarking actually at the end of 2023, and the market has continued to move since then. At that time, it was very clear that our primary benchmark against which we measure, which is the London FTSE and the U.K. market, in contrast to Australia, had moved to five times long-term pay. This was quite normal. There is a big difference to our structure compared to our principal competitor in that we have much more performance-related pay and a much longer duration of payout.
If you look actually at 2024 in terms of the outcome, because our pay is very performance-related, 85% of our pay structure actually is paid out in terms of performance pay rather than fixed pay. Our fixed pay and short-term pay is much lower than our competitors. What we have chosen to do is reward performance. Of that performance in the long term that you describe, 80% of that is actually attached to share price performance. Only in the circumstance that actually our share price performs extremely well, both against the mining peer group and against the broader MSCI index, do we get to the sort of levels of compensation that you're describing. We never have during my tenure of eight years on the board.
I think if we did, that would be a phenomenal result that all shareholders would participate in. The other thing we did last year, which was why the resolution last year got 97% support from shareholders, was that in addition to increasing the quantum, we attached that further one turn of long-term compensation to decarbonization measures. I think that's been very broadly welcome. We only will achieve the five times if we actually manage to achieve some extremely stretching decarbonization targets that are linked to our ambition of reducing our Scope 1, Scope 2 emissions by 50% by 2030. Only if the share price performs really well and only if we manage to achieve all the decarbonization do we get anywhere close to the maximum figures that you described.
If you actually look at the outcome for 2024, actually CEO pay was down 57% because our share price did not perform as well as we would all have wished. I think that illustrates the leverage there is to performance in our structure relative to many others in the Australian market.
Thank you, Sam. Just on the carbon credit point and the climate action plan that you referenced to, I think we feel very good about the progress that we've made. If this was two years ago, I think we would have been worried. It was also worrying about where the technology was and where things were moving. As we said in that report, we're very close to hitting the 2025 target of 14% actual carbon emission reductions. What I might do is ask Jakob to comment on.
We feel very confident also about the 2030, just given what we've been doing at Boyne and Queensland and so forth, where we've been decarbonizing in a very significant way through the 2.2 gigawatts of renewable energy and improving the cost position of those assets. This is why we say this is in the shareholders' interest. We feel very confident on what we're doing directly to remove carbon. I don't know, Jakob , if you want to talk about the.
No, thank you. Thank you, Dom. Yes, we actually feel quite proud because when we announced the minus 50%, which is almost four years ago, three and a half years ago, we were quite nervous because obviously when you set yourself a stretch target, you cannot know all the details. We also had to inform you, shareholders, that it would cost a lot of money.
The experience has been that we have built a lot of expertise. We are getting the results now. Do not forget, one thing is we have reduced by 14%. In that meantime, the world has gone up by 15%. We are delinking ourselves from the trend of the world significantly. Today, we are in a situation where we have line of sight. I mean, time will tell, is it minus 45 or is it minus 52, but towards the minus 50% in 2030, I am barely aware of any big industrial company that has such a stretching target. The best of it for you shareholders is it actually generates value. We are able to do some repowering with renewable energy nowadays that are cheaper than coal-fired power. I am, on that hand, very optimistic.
I have to say, ultimately, long-term, beyond 2030, we depend on where the world is going. The world is not progressing as much as what was agreed on various COPs. That will longer term be a challenge for us. So far, it goes in the right direction. Thank you.
Thank you. I hope that gets at your questions, Ross. I'm going to go online for a second because we have some people related to QMM where it's very either late in the night or very early in the morning, however you want to define it. I'll go to Paddle number two in the room after that. Yvonne, I think, can you hear us? I'm not sure if Valéry is on the line from Madagascar. We don't see her on the system. Yvonne, if you would like to start, that would be great.
Yeah. Thank you, Mr. Barton. Valéry tells me by contact that he is online at the moment waiting to come in. Shall I go ahead with my question, or do you want to find Valéry first? Can you hear me?
Yeah, we can hear you. Do we have Valéry? We do not. We do not seem to. Could you go first while we try and figure out how to get that connection?
Yes. Thank you. If you can hear me okay, I will start. My name is Yvonne Orengo. As an individual shareholder in Rio Tinto, I am deeply concerned about what Rio Tinto is telling its investors about the QMM mine in Madagascar, which I know gets very little exposure in Australia. Rio Tinto says it cannot operate without the trust of its host communities.
As you know, you do not have this trust in Madagascar due to years of social and environmental failings and conflicts. Civil society in Madagascar and beyond are trying to address this problem by calling for an independent assessment of the QMM mine, but the company has been and is still resisting these calls. It does so by claiming that its recent water and radiation studies are carried out by independent agencies and/or are reviewed by similar. Therefore, it argues there is no need for any further third-party scrutiny of QMM.
Aside from the fact that issues around QMM are multiple and include conflict over loss of land and natural resources, labor issues, inadequate compensation, lost livelihoods, human rights violations, among many others, they are not all answered by water and radiation studies.
There are also issues with the studies themselves, which the company has been resolutely ignoring. For example, independent experts commissioned by the Andrew Lees Trust, a British charity, have analyzed them, raised serious questions about their conclusions, and demonstrated that the claims that Rio Tinto is making off the back of these studies, such as no health concerns around QMM, are simply not supported by the evidence. Adding to this, the company is making promises and assurances at its AGMs over a number of years that appear to be aimed at assuaging investor concerns, but are frankly quite hard to reconcile with reality.
For example, as a PLC AGM in London, we were told the company has, and I quote, "requested a peer review of the JBS&G study through the UN Natural Radiation Committee," by which it means it is referring to a study Rio Tinto commissioned into the radiological impact of the mine. The committee being the UN Scientific Committee on the Effects of Nuclear Radiation, otherwise known as UNSCEAR. What transpires is that Rio Tinto has simply submitted the study to the UNSCEAR annual review, a process that gathers all available radiation data from all around the globe. This is not a peer review process for a private company's report.
Any suggestion by Rio Tinto that its submission to UNSCEAR could be considered a peer review or indeed an endorsement of JBS&G's findings on QMM would not only be very incorrect, but extremely misleading.
This is not a standalone transparency issue. At the 2022 AGM, we were promised a study and report about hundreds of fish deaths that followed two tailings dam failures at QMM that year, which the company now refuses to share. Rio Tinto gave us also to understand there would be an independent external evaluation of those tailings dam failures at QMM, and there was anything that remotely resembled one. Before that, in 2019, investors were assured that QMM's breach of an environmental buffer zone, which placed QMM's toxic mine tailings into a local estuary system, had, I quote, "no significant impact." It then transpired there never was any study by Rio Tinto, by QMM, or by the regulator that could begin to support any such conclusion or claim.
These water contamination issues are now the focus of a human rights legal action against the company, all of which leads me to my two questions regarding transparency deficits and the company's presentations around QMM. My first question is, on what grounds do you believe it is reasonable to dismiss the independent scientific peer review analyses of the company's recent water and radiation studies of QMM without any full process or full discussion? The second question is, and forgive me, is it a deliberate act of obfuscation or simply incompetence that leads Rio Tinto to say things at its AGMs which could encourage investors into hoping and believing one thing, only to discover the reality of something quite different further down the line?
How do you intend to address this problem in order to avoid formal complaints against the company about its integrity vis-à-vis transparency and its obligations, both to investors and the Malagasy people who host your mine? Thank you.
Thank you, Yvonne. Valéry is now joined. With everyone's indulgence, I'd like her to be able or him to be able to answer or to ask us a question, and then we'll try and respond. Valéry, can you hear us? I know you're calling from Madagascar.
I can hear you.
Please go ahead.
Can you hear me?
We can hear you very well.
Okay. I would like to continue on the community social program of QMM Madagascar. We know that Rio Tinto QMM has started investing in community social programs since the period it started mining in Madagascar.
It's around numbers have been said that it's around $20 million plus of investment in the social program. In the meantime, we have documented all those impacts that Yvonne mentioned previously. It tells us that QMM has not done an independent evaluation of the use of this investment of $20 million plus in Madagascar. From what we have found in our report, we suspect that the performance of this investment in community social program does not relate to what we can find on the ground. In addition to that, starting in 2023, we have a renewal of the contract with the government of Madagascar. It is included that $4 million per year will be allocated for the community social program. QMM also, Rio Tinto also plans to expand the extraction into other regions of Anôsy.
This poses some issues, some concerns for us that, for example, the first question that I would like to ask for Rio Tinto is that, would it not be appropriate to firstly evaluate, do an independent audit of the impact of the first phase of this social program prior to moving to the investment of the $4 million per year? The second question is, has Rio Tinto explored to readjust its QMM community social program approach for the company to respect higher standards on the ground? Because we have found these transparency issues and some governance issues here from the ground. Thank you.
Thank you very much, Valéry. Thank you again for doing it in the middle of the night for yourself. We appreciate it. I am going to start, and then I might ask Sinead to jump in and correct me or provide any more detail if you would like.
I think there's a number of points in response. I think, first of all, I would just say that we deeply value the community relationships and the importance of those in what we do in QMM. I visited the site myself and talked with local government, with the national government, and the community groups to try and understand where we are and what we can be doing differently. I think on the waterfront, we have a different view, Yvonne, than you. We have been using externally accredited laboratories such as Bureau Veritas here in Australia for analyzing the water quality.
We make that data available in the annual water report. We published the latest last month. Those results, by the way, are consistent with those that we noted last year in terms of water quality upstream and downstream.
WSP, an independent environment expert, has been on site three times in the last year to progress the receiving environment study, which aims to expand our understanding of the aquatic health in the surrounding environment on that. I think on the community investment comments you made, Valéry, those are very good comments to make. We'll look into that. We have made a commitment, as you mentioned, to providing $100 million over 25 years. That is focused on providing medical care to about 20,000 community members, agricultural supplies to 12,000 farmers, and education supplies.
There is no question, I'm sure, that we can be doing some things differently, but I would say that our relationship with the local governments and the communities that we involve when we feel quite good about. I would also mention that our employee engagement at that site is literally one of the highest we have in the world in terms of where people are. Sinead, you may want to correct or add anything to what I've said.
Thank you, Dom. Thanks, everyone. Yvonne and Valéry, thank you for dialing in. I know what it's like to have late-night calls to the other side of the world, so I appreciate that. I think maybe a comment, Dom, to build on what you said. I think at QMM, we've been operating at QMM now for over 25 years. As Yvonne has said and Valéry, we've just updated our fiscal agreement for another 25 years with Madagascar.
One of the challenges that I think, Yvonne, I have to call out and recognize your dedication to is that we publish our water data and all of our raw information, and we know that we've had concerns in the past related to the quality of water and the quality of sampling in the area. We have listened to that feedback very carefully. We've changed how we do our water analysis. We now use independent laboratories. It takes a lot longer to do that, and that frustrates me, but we have very good independent data, and we publish that regularly on our website.
We've also taken the feedback around the concerns on radiation impacts in the community, and hence we commissioned the study in, I think it was 2018, from another independent company, JBS&G, around radiation impacts in the community.
We did a study over many years to publish the sample results of ingestion pathways for people in the area through dust, fish, plants, water, soil, to understand if there's any anomalous information. That is available on the website. We have indeed submitted that to the UN. It's not because we're seeking validation. It's simply a scientific study. It's not about QMM. I think it's about the actual broader question around radiological impact on natural environments globally.
Across, I think, all of that time, the feedback we've also received from NGOs locally like Transparency International, Publish What You Pay, has been that they're concerned about our ability to work through the resolution of long-term concerns on land compensation, and they're concerned about the engagement that we have around investment in the community. We agree and accept those findings.
Over the last few years, we've spent time to do a lot more around community engagement. Less reliance on working through third parties and also doing direct engagement. We engage with government. We engage with NGOs. We also engage directly with people in the communities. We now do a lot of outreach to the communities. We also do a lot of engagement on where to spend the money from the fiscal agreement outcomes. We've done over 36 meetings in the communities. Everyone's got a different view of what we need to spend that money on.
Again, coming to a resolution on that's been very important. I think at QMM, we're very clear that we have work to do around improving our community engagement.
We've listened very carefully to what we've heard from people over the years, and we are continuing to accept that feedback and improve year- on- year. I am certainly not suggesting we're perfect. I think we're really focused on how do we engage with people on the ground and hear the voices locally and directly to understand what the concerns are. Thank you.
Thank you, Sinead. I should have introduced Sinead. She's the CEO of our minerals business and so spends quite a lot of time in Africa in that work. Could I move to paddle two?
Good morning to the board. My name is Deanna McGowan. I am a Robe River woman. Standing beside me, of course, is more of the Robe River Kuruma leaders. We're here to, like everybody else, pose a question.
I would just initially ask the board for some leeway in terms of I need to provide a summary before I get to the question. I hope that's fine. For the last 50 years, our country has been mined by Robe River Joint Venture Robe Valley Operations , operated by Rio Tinto. Our past relationships with the Robe River Joint Venture and mining is traumatic. We have an aspiration to reach a solid working relationship with Rio, but we face an uncertain future. As part of my question today, again, like I just said, is a short summary of what it means when we talk about traumatic pasts and uncertain futures.
It is nearly five years on since the Juukan Gorge destruction, and we are no closer to modernizing our agreement with Rio Tinto. We're still waiting for Rio Tinto to commit to remedying past failings.
Mesa J, your largest mine on our country, has been operating for 30 years. You have paid us for three years. Twenty years ago, when we were about to sign our agreement with Rio Tinto, our old people were told when asked, "Why isn't Mesa J included in this agreement?" "Don't worry about it. We're going to close that mine." Here we are now. Down the track, I think, what's the timeline? Oh, sorry. This is very nerve-wracking for me, and it's like I've got a lot of weight on my shoulders and my people, my old people that went before us. It is now 17 years of payments that Rio has cheated us out for Mesa J.
Rio Tinto is destroying our sacred Bungaroo Valley. You extract seven gigaliters of water a year to supply your coastal operations.
Your own expert advice says to you you need to reduce consumption to at most 3 gigaliters now. However, Rio Tinto refuses to make operational sacrifices to do this. Country cannot keep waiting for a desalination plant. Our country is dying. Our culture and our heritage at lies in ruins. 1980 mining practices destroyed our storylines and our places. Our people live with this daily. Mesa faces lie in piles of rubble, continuing to pollute our and bringing pain to our people. You reached a remedy agreement to rehabilitate Juukan Gorge .
When will you do this to commit to do the same for Middle Robe? Robe River people respect and honor our past. We do not forget. We cannot forget. Rio Tinto's past is our present. Until you remedy your past, it stains our future together. My question is, when will Rio Tinto face and respond to these truths so we can move forward in partnership?
Thank you very much, Deanna, and for your statements and also your question. I will try and respond to some of the points you made. I am going to ask Simon Trott, who leads our Iron Ore business, to follow up as well on it. The first point I just want to make is we are very committed. We want to be able to get to an agreement and a resolution in working with you. We have had a number of conversations and we will be having after this meeting as well. There is a very, very strong commitment to work through these issues with you.
I want to focus particularly on the water issue because we acknowledge and recognize that the mining activity and what's been happening in the region is having a severe impact on water. We are very committed to trying to be able to help rectify and improve that. As you know, we've invested about $395 million in a four-gigaliter desalinization plant, which will be operational in 2026. That will lead to the extraction of water from the Bungaroo bore field to about three gigaliters annually. That will reduce it to half the current levels. We think there's a pathway to zero extraction from Bungaroo, but the Western Australian government will be a key part of that.
As announced in February, the government's water corporation is committed to developing further climate-independent water sources through construction of an additional large-scale desalinization plant by 2030. We are very committed to work on that, as well as the other issues that you mentioned to Mesa J as well. Simon, is there anything you'd like to add?
Thanks, Dominic. And welcome to all the people from Robe River Kuruma and thanks for coming along to the AGM and for your question. Firstly, to acknowledge many of the issues that you've raised, as Dom's outlined, in terms of the impact on country, mining does stretch back over many, many years. Water, we are taking actions. We have a pathway to zero. I've been out on country. I've been out on country with Dominic, with some of the representatives that are here today. Sorry, with Jakob, with some of the representatives that are here today. The desal plant construction is progressing well. We'll turn that on next year.
That will get our draw on the aquifer down below 3. We do acknowledge that the climate has dried. The original license out there for 10 gigaliters was put in place when there were more frequent cyclonic events, and we have not seen that over the last few years. We are taking actions that will get our consumption down below 3 gigaliters. We will look to further solutions to be able to reduce that impact on the aquifer further. There are a number of areas where we need to work together, and you have outlined some of those here today, some of the past mining practices, the mining benefits payments, and some of the return to country and some of the impacts that we are having on country.
We really look forward to working with you to be able to progress those discussions and find a way through both to rectify those as well as continuing to work on water and some of the draw that we've had on the Bungaroo aquifer. Thank you.
Thank you, Simon. I'm now, with your indulgence, we've had a number of written questions, so I just want to make sure we go through those. I'm going to start with a question that came from Mr. Antonio Ferrone and Mr. Patrick Hart. Their questions on the acquisition of Arcadium Lithium. I'm just going to read the question. Rather than pay billions for the overseas lithium acquisition, would it not have made more economic sense to acquire Pilbara Minerals Limited or Mineral Resources Limited?
What has been the impact on the Rio share price subsequent to the acquisition of Arcadium Lithium? I will say a couple of things. You may want to jump in too, Jakob, on it. First, when we looked at the lithium opportunity, we literally started by looking at the periodic table to look at what elements are going to play an important role in the energy transition and have the scale to matter for shareholders. Lithium clearly was on that. We looked again at supply and demand. We looked at the cost curve structure of lithium, and we also looked at what we thought demand would look like and recycling. There was a very rigorous, detailed approach, so we went through it.
Then the management team literally looked at asset by asset on the lithium side of things to be able to then determine that Arcadium was actually the best fit for us and where it is. It actually has quite a lot of contiguity between our assets in Quebec and also in Argentina. Jakob, do you want to add anything?
Yeah, thank you. I suppose right now, although it's a big company, it's a small part of our market cap. Any impact from Arcadium on our share price will have been fairly Limited. You can never establish that exact number. I'd like to just elaborate further on what Dom says, what's the logic.
Strategically, we concluded quite quickly that we were very keen, according to our purpose statement of finding better ways to provide the materials the world needs, is to provide the materials of lithium, i.e., we were interested in producing battery-grade lithium and not just spodumene and therefore being dependent upon the next part of the chain, namely the processing towards lithium. That is kind of the real difference between Arcadium and now you mentioned Pilbara Minerals. We looked at all companies and we just realized that we both strategically achieved to produce the final materials, so battery makers to EV makers with Arcadium.
Secondly, the overriding things for a global company like Rio Tinto is the geology and a deep belief about cost curve. Where is it most efficient to extract various materials?
There are amazing mining opportunities here in Western Australia, but when it comes to lithium, the opportunity in the lithium triangle of Argentina, Chile, and Bolivia is second to none. We believe that we have acquired, in a way, the same mentality as the Pilbara, these long-lived assets at the low end of the cost curve that will create a very robust business for decades to come. We did not know when we started, but the more we analyzed and clearly today, we are absolutely still convinced that we have acquired exactly the right company. Thank you.
I am going to do one more of the written because we have 12 of them. Then I am going to go to four in the audience. This is a question from Mr. Julio Álvarez . What is the effect of U.S. tariffs on the company's share price?
It's a tough exam question to give us. What I'd say on that is that, and I commend the management team, there was a lot of analysis that had been going on actually before President Trump was elected in November as a scenario, what might happen. I mean, looking at not only the direct tariff impact in terms of if the U.S. puts tariffs on countries in which we're operating or on the materials that we're providing and where we're operating, but also looking at the second order and third order effects of that, if you will, because when someone puts in tariffs, someone will probably put counter tariffs. How would that affect our business and also our supply? And where do we get materials from?
Because you could have a double whammy of your tariffs are going up on products that you produce, and then there's a countervailing tariff on the inputs that we get for that. Then there's looking at the broader growth impact. A lot of analysis was done at the asset-by-asset level to be able to look at it. What we're finding is that clearly tariffs, when you put a 25% tariff on Aluminium, we get concerned on that. The fact that that's across the board is better than when it's specifically on a particular country. There are also elements. We have a very, as you know, substantive copper business in the United States.
We have one of only two smelters on the copper side, and that can provide opportunity. We have been looking at things on a very granular basis. Obviously, it's very dynamic. It can often change day by day. I would say that the organization is very ready in dealing with those contingencies, and there's basically been puts and takes on it. Jakob, if you would.
No, look, you said it already, Dom, I think the only other dimension I would like to add, and I was trying to say it in my speech earlier today, we are a long-term company. Tariffs have changed quite a lot from day to day. We see it a little bit as short-term noise, and we are trying to figure out what it is nations are trying to achieve long-term. What we understand in the U.S. is a desire to build more extraction and more manufacturing in the U.S. Maybe that is where we should focus our effort. At the end of the day, tariffs are between nations.
The thing I want to just convey a message to you, shareholders, is we can manage that. Some tariffs might be in our benefit and some might be adverse to us, but in aggregate, it is of Limited impact.
Thank you, Jakob. Four.
Good morning, Mr. Chairman and directors. My question simply is, has geothermal come under your watch so far? The geothermal energy is a clean energy, renewable energy, aligning with the global push for reducing carbon emissions and transitioning to a low-carbon economy. Geothermal power plants can operate continuously, unlike solar and wind, making them a reliable source of base power, according to Geoscience Australia. Sorry, I'll be happy to. Geothermal energy is, yeah, I told you that part, I meant the other place. In Western Australia, the largest geothermal power plant is being built over the next 12 months in Western Australia.
Here, it'll be in north of Perth. The main thing is that it is offering an alternative to wind and, of course, solar. What I'm asking is, another little section here. Sorry for taking time. Is there a risk when the EVs decline, which is currently happening right now, that hydrogen use will be required because EVs are proven to cause more pollution than reducing pollution? There are different metals, of course, planned with FCEV. These will require most likely using something like, I forgot the name of that. I think it's platinum. One of the metals would be required. The question is, has Rio Tinto looked at this? Have they studied into it and worked at what will happen as progressively lithium will not be required in the future as much as it is at the moment?
Thank you very much. Jakob's keen to answer that.
Thank you. That's actually excellent questions. Yes, we would not be doing our job if we were not looking into those things. Myself, when I visited our Aluminium smelter at Iceland last year, went and looked at a number of geothermal projects. They're really leaders up there. By the way, part of the power that goes into our Aluminium smelter in Iceland is geothermal. I think in general, I would say we are always trying to look for non-CO2 emitting energy and particularly energy that is firmed. We are a major user of hydropower in our Aluminium smelters all around the world.
Whether it's hydropower or geothermal, both are in a way equally good. It's really good to combine it with things like solar and wind as well.
I would say one last thing as well is that what really helps on getting the sustainable energy system to work is that the prices of battery storage have gone down so much that it's actually getting easier and easier to firm renewable electricity grids. We are actually probably the Western world's largest user of electricity. I am very pleased to say that we have a number of scientists who are really looking at this. I think the latest solution on Boyne smelter is a good example of a leading-edge solution. If we get the last bits and pieces in place, it will probably be the first Aluminium smelter in the world that runs on solar, wind, and a battery. Now, to your other question on hydrogen, we are also looking at hydrogen with great interest, not so much on mobile equipment.
One thing is we know how to get to our minus 50% by 2030. From 2030 to 2050, we should get net zero. That means we will have to change a number of manufacturing processes. It is very likely that hydrogen will be part of the solution in those manufacturing processes. It is still in early days. It is at the research and development level. Yes, your questions are highly relevant and are being worked by great people in BU every day. Thank you.
Thank you. I am going to take one more, the written, and then I will go to two. From Mr. Cletus Mathias and Mrs. Silvana Di Martino . They are asking about the dividend for the coming year and whether the company would increase dividend payout rates.
I think that, as has been mentioned in our talks before, the board expects total dividends over the long term to be in the range of 40%-60% of underlying earnings in aggregate through the cycle. As I mentioned in my talk in 2024, the company paid a full year dividend of $6.5 billion or 60% payout. That is again the ninth year in a row. We look at that very closely and want to adhere to that. Acknowledging the cyclical nature of the industry, it is also the board's intention to supplement the dividend with additional returns in periods of very strong earnings and cash generation. We have no plans to change the policy. I hope that is clear. Can I go to two?
Hi. Thanks for taking my question. My name's Mia Pepper.
I'm here with a proxy representing the Mineral Policy Institute, and I'm the campaigns director at the Conservation Council of WA. I just want to pay respects and acknowledge the questions raised around water abstraction in the Pilbara. We absolutely agree that there's big issues around water abstraction in the Pilbara. My question today is on behalf of the Mirarr people at Kakadu. I think it's actually 20 years in a row that in some form of representation in both London and Australia, this issue has been raised. I want to thank Rio Tinto for listening and for the commitments made about the rehabilitation at Ranger Uranium Mine in Kakadu and the commitments not to mine uranium at Jabiluka. My two questions relate, though, to these issues.
Earlier this year, there was a study by Lonergan Edwards & Associates that concluded any acquirer of Energy Resources of Australia, the company that operates Ranger Uranium Mine and Rio Tinto owns 98% of, would have to take responsibility for the rehabilitation of Ranger and fully commit to funding the rehabilitation. We are seeking today confirmation that Rio Tinto agrees with that assessment and commits to that funding and rehabilitation work. The second question is around Jabiluka. ERA, the company again who operates Ranger, has been leading a deeply divisive legal action seeking to mine Jabiluka.
That is explicitly against Mirarr's wishes. They have made it very clear that Jabiluka should never be mined. We would like to ask why Rio Tinto is tolerating the behavior of ERA. Does Rio Tinto remain committed to respecting the Mirarr wishes not to mine Jabiluka? Thank you.
Thank you, Mia. Thank you, first of all, for the comments on water and the challenges there, which we fully agree with you. On Jabiluka, just a couple of comments. I just say in the first one, the answer is yes, we fully agree with that. If someone were ever to acquire that, they would have to pay for all the rehabilitation and that. I think, I hope, and I'm going to repeat what I've said now, I think in every one of these AGMs I've been in, our commitment to not, we do not want to do any mining in Jabiluka, and we're committed to that.
There are some legal matters, as you alluded to, that relate to the Northern Territory government decision not to renew the Jabiluka mineral lease. That's being managed by the ERA Independent Board Committee. We're not a party to those proceedings.
We are moving ahead on the compulsory acquisition of all the remaining shares in ERA that we do not already own. We have lodged the necessary documents and provided them to ERA shareholders. The ERA shareholders have until May 19th, so less than three weeks from today, to submit an objection. When that process is complete, we will control the company. We are completely aligned with the Mirarr on the permanent protection of the Jabiluka. We are also very focused on the rehabilitation of the Ranger mine to make sure that is up to the right standards.
We want that to be in an environment similar to that of the adjacent Kakadu. I had the privilege of visiting with Kellie Parker last year to meet with Yvonne Margarula , and I expressed our complete commitment to that to her. I hope that answers your question. I think I was then going to go back to five in the audience.
Thanks. Good morning, Dominic and Jakob and board members. My name's Keren Adams. I'm a legal director at the Human Rights Law Centre, and I've come over from Melbourne to attend the meeting today. As you know, we represent Indigenous communities living with the ongoing and very substantial environmental legacy of Rio Tinto's former Panguna mine in Bougainville in Papua New Guinea. For those unfamiliar with Panguna, this was formerly one of Rio Tinto's largest copper and gold mines. During the time of its operation, around a billion tons of mine waste tailings were released directly into the river valley south of the mine.
The environmental destruction that was caused by that caused such significant damage that, combined with an unequal distribution in the mine's profits, ended up causing a significant uprising by local people that forced the mine's abandonment over three decades ago. In 2020, we assisted local communities to bring a human rights complaint against the company in relation to those impacts, as a result of which the company agreed to fund an environmental human rights impact assessment of the mine, which was published last year. That impact assessment made very significant findings of ongoing environmental, human rights, and social damage being caused by the mine to some 25,000 local Indigenous people who live around and downstream of the mine.
One of our clients, Theonila Roka Matbob , who's an Indigenous landowner from the Basikang Clan , a community leader, and the member of parliament for where the mine's located, was hoping to join online today to ask the board some questions, but has been unable to get through due to the connection issues with Bougainville. She has asked me to put the following two questions to the board. Firstly, the Panguna mine legacy impact assessment funded by Rio Tinto and published last year has confirmed what our people have been saying for three decades, that we are living with an ongoing human rights and environmental disaster.
It has found serious risks to our people's lives, as well as major impacts on our cultural sites, our lands and waterways, and our livelihoods being caused by the mine's collapsing levees and infrastructure, the ongoing pollution of our rivers and mine-related flooding being caused by the mine tailings waste in the river valley, and the chemicals left behind that have never been cleaned up. We welcome the steps the company has taken to date, including funding the impact assessment and the recent announcements about a potential remedy framework. We would like clarity. Is Rio Tinto now committed to cleaning up Panguna, addressing all of these impacts, and working with us on long-term solutions? That's the first question.
The second question is, I and other community leaders have worked collaboratively with Rio Tinto for the past three years to ensure that the independent impact assessment could be carried out safely and with the participation and consent of local people. Yet since the impact assessment was published late last year, Rio Tinto has set up a roundtable that we are not part of to discuss next steps and potential solutions. We are the ones living with the mine's impacts, and we know the solutions our people need. We must be part of the discussion about next steps.
I would like to invite Rio Tinto's CEO to meet with me and other community leaders as soon as possible to discuss how we can work together on solutions. Will you meet with us? That's the second question. Thank you.
I might answer the first part, and then Jakob will answer the second part. I think, and Karen, it was great to be able to meet with you yesterday along with Kellie Parker, our Australian CEO, just to learn more about what's happening and not happening in the situation there. I just say to the first question, we are committed to working alongside with the communities to help improve the situation that's there and figure out the overall game plan on where things are. You talked in the session yesterday a lot about how we ensure that the community involvement is there, which we've taken note of to do that. It's not some separate group, but they're actually very much involved in it.
I think secondly, what was raised was making sure that actually the results are there in terms of the short-term changes as it relates to structures that are not safe actually on the location and where that is. We are very committed to continuing in the process that you've kindly helped lay out for this in helping make that situation better. Jakob, do you want to?
Yeah, thank you, Keren. Good to see you, and thanks for making the trip here to Perth. I just want to say, we as a company, and certainly I, are very keen to find solutions on something that's very complex that stems a long time back. It involves many stakeholders. Local communities are a very important part of it. It involves PNG, and it involves the autonomous government of Bougainville.
I'm spending quite a lot of time talking to my people around how can we navigate that and how can we progress this so that we find the right solutions. There are different requests from different stakeholders, so it's complicated. To your question of my involvement and for engagement, I'm absolutely very open to that. I met the president of the autonomous government of Bougainville last year. I'm meeting any key stakeholders because we're just very keen to solve it and appreciate your role in this as well. You have been committed to it for quite some years now.
We do now have much more information with the study that has been done. I really hope we can progress this over the foreseeable future. Thank you.
Okay, I'm going to take some questions, and then I'll go to Paddle 3.
I'm going to try and combine some. They're really mainly around ESG, and they're both ends of the spectrum with quite some colorful language, I must say, on each of them. One from Mr. David Price, how much of Rio Tinto's decision-making is influenced by those ESG advocates? A question from Craig Holden and Jenny Holden, how much money would be saved if the company did not have to follow climate change regulations? A question from Mr. Ian Simpson, deleting some of the colorful language, but there should be no questions about the climate change action plan.
Climate has not changed in a way anything we can do about it. It's normal. If you live to be 200, you'd still be talking about it. Just work cleanly, and everything will be fine. We have a question from Mr. Lawrence Prineas .
The company has committed to a target of reaching net zero emissions by 2050. Why hasn't the board made this a firm requirement rather than an aspirational requirement and embedded it in company policy and governance structures to ensure accountability and alignment with long-term shareholder interests? We have both ends of the spectrum. Our view on this, as Jakob laid out, is that we believe it's in the shareholders' interest to actually decarbonize. Jakob mentioned what we're doing in Boyne, which is the single largest renewable project in Australia, 2.2 gigawatts.
We're moving from coal to solar and wind, and that's actually going to improve the cost position of those assets on the cost curve. It's a win-win, and that's how we're looking at this. We believe that this is actually, again, in the long-term interest.
We, by the way, will say that at Rio Tinto, we do believe that climate change is occurring, and we're very worried about that, and it's something that we believe we need to deal with. We're seeing it impacting our assets around the world. That's our view, but we are doing this very much with the mindset of what's in the shareholders' interest. We believe we'll also be able to make the targets that we've set as well as we go through it. Go to Paddle 3.
Thank you. Thanks, Mr. Chairman. Scott Gibson, I'm here as a representative of Palliser, and I'm also holding a proxy for SLAM Consulting. I just have two follow-ups to the responses provided to James's earlier questions, and I'll address them to Jennifer and Ben given the earlier responses.
The first one is on unification, did the board's analysis include flow forward from ASX's index upweighting? Which unification precedents were reviewed where the pro forma price of the unified entity traded to the weighted average as suggested by the board? For you, Ben, to get to the board's conclusion that unification would cause a greater wastage of franking credits, what was the assumption on the pro forma ownership of Rio Tinto shares held by Australian domiciled shareholders for the unified entity? Thank you.
Jennifer, do you?
Yeah, on the first question about just what would be the likely trading performance post-unification, I don't have all of our work in front of me right now, but we did, and our advisors did a detailed analysis around likely outcomes on trading performance, and precedents were considered.
I don't have that in front of me right now, but that was obviously a key part of the analysis because that's how you determine value creation versus not value creation. That was a key part of the work that we did.
Just to add to that too, we actually had investors could talk actually to the bankers that were providing that perspective. We're happy to follow up again on that. I think we've had seven meetings with Palliser, but we're happy to show you the detail of the flows back and forth and where that is and the precedents on it. Ben?
Yeah, look, and similarly, although I must admit I'd like to get that same information from Grant Thornton, so perhaps you could pass that back through. I'd like to see their assumptions around some of these things as well.
What it did highlight was the fact that ultimately you will be unable to pay fully frank benefits over the longer term. Now, yes, there are assumptions around pricing, there are assumptions around dividend payout ratios, etc., and you can get to a range of different outcomes. What is clear is if you have a large increase in non-tax resident shareholders of the Limited line, you will get a dilution, if you like, of the franking credits, which means that you see a sharper or more rapid decrease in the franking credit balance that the company would hold.
I'd like to then shift. The only other comment I'd make, it's worth looking at a Goldman Sachs report that was put out there. We had nothing to do with that side of it, which actually looked at all three of these different categories.
I'd recommend looking at it because it reinforced, in fact, they thought on the tax liability side, we were underestimating it and then had very good analysis again on the franking credits and the pricing. I'd recommend taking a look at that. I'm going to move back to the questions that were submitted. This question is from Rask Investments and Jalcla Proprietary Limited . Was Rio Tinto's support for the yes vote in the Australian Indigenous Voice referendum a waste of resources? Was it an attempt to influence politics against the majority vote of the nation and therefore outside your remit as a company? Why did you use our company's resources to support the yes vote?
Has the company changed its policy to ensure the board cannot take a view on community issues acting on the interests of the company unless it first seeks a 75% approval of shareholders? Thank you for those questions. I'll just make a couple of comments on this. First, Rio Tinto's support for recognition of Indigenous Australians is not new. Rio Tinto was the first miner to endorse the Australian Native Title Act, which, as you know, was over 30 years ago. Today, we are also one of the largest employers of Indigenous Australians, and we have significant operations on Indigenous lands.
Aboriginal and Torres Strait Islander peoples are vitally important stakeholders in our business, and it makes sense for us to support the principle of their having a greater say in matters that affect them.
The referendum decision does not change our commitment to elevating Indigenous voices, including those of our employees. That includes advocating for the rights and heritage of Indigenous peoples on whose land we live and work. It is a long-held company position, and our donation reflects that. Any questions from the floor? People want to have lunch or dinner later on. I think we've got some, if you could bear with me, just with some more questions. Within what timeframe will the board buy back Rio Tinto shares with surplus cash in the company?
This is from Mr. Loreto Del Borrello . I'd say a couple of things on this front is that we believe with the financial strength that we have now, we can both invest for growth and, as I mentioned, continue to pay attractive dividends through the cycle. I mentioned the 40-60% payout.
As you know, we are currently restricted in buying back PLC shares as a result of the Chinalco shareholding. There's a limit on that side, and we're working with them to do it. I just would point out, by the way, that a unification would not be able to, that would not solve that issue on it. That is where we are on that. Any more? From Mr. Emmanuel Jardim, does Rio make any political donations? Just to provide a short answer on that, Rio Tinto prohibits the use of its funds to support political candidates or parties. We set out Rio Tinto's policy on political donations on our website in our annual report. No donations were made by the group to parties or political candidates during 2024. That was the case the year before and the year before that.
We obviously respect every country's political process and do not get involved in political matters, nor do we make any type of payments to political parties or political candidates. I'll just take two more, and then we'll close here. What steps, if any, is Rio Tinto taking to address the need for resilience of Western countries for more diversity in sourcing high-grade rare earth materials required for the electronics industry? This is from Ms. Eva Huysmans. Thank you for the question on that. As Jakob mentioned, our purpose is trying to find the materials in better ways to help in the energy transition and what we need in terms of humanity.
We're operating in 35 countries. We've got a pretty focused portfolio in iron ore, copper, Aluminium, but also some other minerals and materials which we think fit within that purpose.
We are actually providing some of the critical minerals through the work that we do, and more than we had anticipated. I'll give you an example, which is on scandium. In 2022, we began producing high-purity scandium oxide, which is a rare earth mineral. That is in our Quebec, Canada assets. In 2023, we bought a scandium deposit in Australia, which is known as the Burra Project . For those that are not aware of it, scandium is very important for strengthening Aluminium and also allows the ability to have more flexibility and resistance to heat and corrosion.
It is very important in the defense industry, and we're looking forward to that business developing. In a number of our smelters, our copper smelter in Kennecott, that also through the process of the waste, we also can produce some of the rare earths and minerals.
We're looking at that and seeing opportunities. Actually, in just the board meetings we've had this week, we're looking at what are the ways we can actually have a, what is the way we should more actively be involved on that side of things. It's very much front and center. Okay. Where is this question? Yeah, Stephen Mayne online. Okay. Stephen Mayne . Yeah, let me read the question. We had a win in Australia's federal court in February last year after Rusal and its oligarch controlling shareholders sued us for locking them out of the economic benefits of their 20% stake in the Gladstone Bauxite refinery in Queensland as part of the global sanctions regime against Russia following the illegal invasion of Ukraine.
Are we ring-fencing the revenues if there is a settlement and peace agreement down the track? Was this skirmish the biggest impact from the global Russian sanctions regime, or have other assets and commercial dealings been impacted more significantly in other jurisdictions? Are we in a position to buy Rusal's 20% stake in the current environment, or are we unable to pay them money for anything? Please summarize where this whole situation is. I might pass it to Isabelle, who is our General Counsel, to give a more comprehensive answer.
Thank you. This is a case following, remember, the sanctions regime that was elaborated by the Australian government in 2022 following the invasion of Ukraine by Russia.
This matter around the effect of these restrictions, these sanctions, was taken to court by QAL and Rio Tinto and followed its way through the process of the various steps of the courts in Australia and was actually decided in favor of QAL and Rio Tinto that there were some restrictions that applied to the processing of bauxite in the Aluminium supply chain. That went all the way through the courts to the federal court, and as is mentioned in the question, has been determined by the courts fully in favor, including in relation to costs. It has exhausted all the avenues for the court system, and this is where it stands today.
Obviously, we can't speculate on the questions of sanctions and war, so we will keep monitoring this element.
Jakob, do you want to talk just in terms of are we affected anywhere else in our?
Yeah, so we are basically not affected by the restrictions from the Russia-Ukraine war other than of material size, other than this Rusal's 20% stake. You're asking some really good questions, and of course, we are considering our options, but we just don't comment on commercial matters. So far, the actions we have taken have been confirmed by the court of being the right course of action. Whatever we commercially might agree between Rusal is, yeah, things we don't comment upon.
I'm going to go to the last question, and this is from Dr. Grant Thorne, who I believe has had a long and distinguished career at Rio Tinto. Welcome back to the group. Rio Tinto properly focuses the attention of its leadership on the health and well-being of all who work on its operating sites.
This focus was a critical element in achieving transition from collective to associative behavior very successfully more than 20 years ago. How does Rio Tinto continue to satisfy itself that its systems promote open and honest reporting of accidents and incidents in its contractor workforce? How does Rio Tinto ensure that too much emphasis on the numbers does not drive contractors to under-report? I think I'm going to refer this to Dean Dalla Valle , who's the Chair of our Sustainability Committee.
Thank you, Dom, and thank you, Dr. Thorne, for your question. I believe you know our organization well and you know the values that we live every day. That anyone who comes to site, no matter who they represent, their safety and their well-being is our number one priority.
This has the attention at the highest level of the organization, from all you see here today, to the Sustainability Committee. The way in which we create transparency is to encourage reporting of every incident and every event. When we do report that, we are agnostic as to which organization the people come from. In fact, I think you said we focus on numbers, and I think it'd be a far more serious event should we detect under-reporting as opposed to over-reporting. A number of mechanisms are in place to ensure that we do have full transparency. All the numbers we report, all our measurements include contractors and our employees.
We do break numbers down where we need to to understand the sub-performance of different groups, but they're just purely used for guidance.
All our leaders are trained to lead their entire workforce regardless of who they work for. Our safety maturity model, which is our tool to assess how each of our sites are performing, includes contractors. That looks at leadership, looks at engagement, the learning of that group, the risk management process, work planning, and how the risk is owed. They are subjected to the same scrutiny and understanding. Our assurance work we do, internal and external, also includes all events regardless of which organization they belong to. I'm pretty confident that they are treated completely equally, that the numbers come through.
The final stop of all this is we have obviously hotlines and whistleblower events, and certainly there's an opportunity there for any organization which feels that things are under-reported, they can actually bypass management, go directly to it.
In fact, if you go to page 87 of the annual report, you'll see under health and safety, there are some reports there. When I checked, very, very few are in relation to transparency. I think there is a closeout loop of it. I think you should be rest assured that we are agnostic where the events occur. We only care about the events and that full transparency is strongly, strongly encouraged.
Thank you very much, Dean. It's great. For those who feel like I've assembled, okay, we'll take one more after this, but that'll be the last question. There are a number of questions where I tried to bundle them together. If people think I didn't do a good job, please send us and we'll send you a response to it. I just want to make sure people do feel that their questions will be answered as we go through it. We'll finish with number four.
Mr. Chairman, it's Paul Smyth again. Just simply, what will happen in the event that hydrogen comes to the fore rather than put in the back store? What happens then? What will Rio Tinto do if like the Toyota cars are produced now, giving 1,300 kilometers on one tank full of hydrogen? Won't that tend to make people want to do something about it? That's my question.
Yeah, thank you. There's no guarantees for how technologies are developing, of course. Hydrogen has been on its way for a long, long time period, and there are some encouraging results, as you're saying. Just look at what is happening right now with EVs and batteries.
Just over the last months, we have had announcements from several battery producers that they can recharge a battery that can drive 500 kilometers in five minutes. It's astonishing what we see of development of batteries, and therefore all car manufacturers seem to be focusing towards the EVs rather than the hydrogen solutions. Even the Japanese, who for a long time have been much more committed towards the hydrogen cars. Look, we're not car manufacturers, so we basically observe that industry, but we feel very confident about the growth for lithium to come.
As I said earlier, hydrogen would probably be highly relevant in a number of manufacturing processes. It's just difficult to see it in mobile equipment as the world stands right now. Thank you.
Thanks, Jakob. Okay, with that, I think I'm going to close the sessions.
I hope you feel that we've had a good discussion. As I mentioned, if there was any question that you don't feel we answered properly or I bundled them incorrectly, please let us know and we will make sure we go through that. The time's come for us to take a poll on the resolutions. Many of you have already voted by proxy, and if you have, you don't need to vote again. People in the room who are eligible to vote should now complete the voting card on the back of your admission card by filling in your name and voting intentions and then signing the voting card.
Please then either hand your completed card to the registrar staff or post it in one of the ballot boxes at the exits as you leave the room.
If you have any difficulty, one of our attendants will be happy to assist you. If you're attending online, you should complete your votes now through the Lumi platform . The polls will close approximately five minutes after the end of the meeting. Christopher Dedrick from Computershare Investor Services has been appointed as the returning officer for the poll. The results of the polls will be announced as soon as possible after this meeting and will be posted on the Rio Tinto website. This brings us to the end of the meeting, and on behalf of the board, I'd like to thank you all for your participation and continued support.
I hope you're going to join me and my fellow directors and members of the executive team for some refreshments in the foyer. I now declare the meeting closed. Thank you.