From a Q & A session at Rio Tinto's 2101 full year results - the...

From a Q & A session at Rio Tinto's 2101 full year results - the interesting bit is the exchange right at the end:

...QUESTIONER:

Great! I think I misunderstood what was written in the release. Anyway thanks, that clears it up.

As I've got the phone, just quickly one other question on ERA as I cover that one too for my sins! It is obviously going through a rough patch at the minute, but in terms of the broader uranium strategy where do we go with this, with R�ssing and with potentially ERA, maybe not going ahead with Ranger Deeps? Where does that kind of leave you in a uranium strategy sense - whereto from here if you can't deliver on Ranger Deeps?

TOM ALBANESE:

I want to say on ERA, first of all, the 12 week suspension is related to water management issues. We did get quite a bit of rain in the fourth quarter of 2010. As a precautionary measure going into the wet season in the first half of 2011 we felt we needed to keep enough freeboard in there so that if we continued to see extraordinary rains we didn't run into a water management problem. So again we are, very sensitive to stakeholder management issues and water management at ERA and I think has a prudent thing to do. But again I wouldn't necessarily say that is anything more than a temporal effect of quite an extraordinary weather season we have seen all through Northern Australia.

I look at the uranium business as something that has continued positive aspects as I look out over the next 5 or 10 years. I do see more and more interest, particularly in China but also in other markets, in recognising that the effects of eventual carbon price signals will lead to continued incentivisation of the nuclear power sector. But that being said, it does take some time to build these new nuclear power plants even in China, so you actually
have sort of anticipatory ramp up time.

Our long history of production both at ERA and at R�ssing stretching for more than 40 years puts us in a good position in the market, but I would accept your point that these are both very mature assets and in both cases they went through a patch between the late 1980s and 1990s and in the first half of the last decade where people really were ruling uranium out of investment plans and they had been starved of capital. We have spent the past 5 years really spending time upgrading the plants and really trying to play catch up from 20 years of under-investment in that uranium sector.

QUESTIONER:

Watch this space I guess!

TOM ALBANESE:

Well, again I've said, and I think Guy said the same thing, we like uranium and you in fact have to have the best business there - and watch this space!

QUESTIONER:

Thank you.

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... and from Rio's presentation of results, they show a slide (last slide here) that is titled: "Our portfolio has a long history of diversified returns". However, Rio's results show that about 60% of EBITDA comes from iron ore, about 17% from copper, with aluminium and energy both at about 10%, and diamonds and other minerals making up the rest. This isn't very diversified; Rio's dependence upon iron ore has been much commentated on in the financial press, especially the given the present and future huge investment and ramp-up in the Pilbara region, even more iron ore.

If Rio want to diversify, they've probably got to look at energy. They are already about to take over Riversdale (coal), but I am sure this is not the only project they are considering. EXT would be a good fit for Rio's energy portfolio, and it would also fit in with their stated policy of being an international diversified resource company.

As Tom Albanese said: watch this space!