Ladies and gentlemen, good morning, everyone here in London, and good evening, for those joining us from Australia, and a warm welcome to those participating via the webcast. With me here in London, we've got Tom Albanese, Chief Executive; and our CFO, Guy Elliott, is hosting our presentation from Sydney. Rio Tinto has produced another set of impressive results, reflecting favorable market conditions and strong demand for our products, in particular from Asia. Our operations have performed well in the face of unusually adverse weather conditions. And I must say, that I'm continued to be impressed with the way that our people respond to challenges such as these, leading to excellent operating results at all of our managed operations. We are clearly in a major investment phase, which is continuing to gather pace. And over the past 6 months, we've added 2 other portfolio through the highly successful acquisition of Riversdale. But as I said in February, we believe that the creation of shareholder value over the long term requires a balanced approach towards investing in high-quality growth and returning excess cash to shareholders. So far this year, we have completed $3 billion of the $5 billion buy-back program that we announced in February. And today, we've announced that we intend to maintain this buyback through the coming months. We have increased our buy-back program by $2 billion to $7 billion, which we will complete by the end of the first quarter of 2012, subject of course, as always, to market conditions. The global economic environment clearly continues to be volatile. Policy makers are grappling with substantial economic imbalances in both developed and developing countries. That rebalancing process will take time, and change is unlikely to occur smoothly. However, in an uncertain and volatile environment, our strategy is clear and unchanged, to invest in assets of the highest-quality, supported by a strong balance sheet. So together with our fundamental belief in the long-term demand growth for our products, this gives us real confidence in the long-term future of our business. That's all for me and I'm going to hand you over to Tom. Thanks, Tom.

Thank you, Jan, and good morning to you, and for those of you in Australia, good evening. Before I turn to our first half results, I'd like to start as always with safety. Once again, we recorded improvement in our loss time injury frequency and all Injury Frequency Rates during the first half of the year. However, this was overshadowed by 4 fatalities during the first half, mostly at construction projects. These were an unacceptable and we are taking action in all cases. At a time of rapid and substantial growth for our businesses, it is vital that we're able to grow our operations with everyone going home safely each and everyday through their career. And we'll ensure that further improvements in safety performance identified and implemented as soon as possible. Turning now to our first half results. In 2011, we achieved record earnings, record EBITDA, and record operating cash flow for the first half period. This was despite the exceptional adverse weather conditions that we experienced. We are recovering well through these, although there are still some residual effects at some of our operations, in particular in Queensland and the Northern Territory. We are making great progress in our industry-leading portfolio of growth leading projects. And during the first half of the year we increased the pace of spend at these projects to expand iron ore production from the Pilbara to 283 million tons per year by the end of 2013. We also announced the acceleration of our plans to expand this business further to 333 million tons, and our target has actually been brought forward by 6 months to the first half of 2015. This is in stark contrast to broader iron ore industry trends, which have seen many projects subject to significant delay. Just this Monday, we…

Thank you, Tom. Hello, everybody. Now let's take a look at how our record first half underlying earnings were achieved. It'll come as no surprise that the primary driver has been price, increasing earnings by $5 billion. We provided a breakdown of the price variance by commodity at the back of your handouts, in which you'll see that by far, the largest benefit came from the strong iron ore markets we continue to experience. Higher copper and aluminum prices were also significant, increasing earnings by approximately $600 million a piece. These strong prices were partially offset by the impact of currency movements, notably the stronger Australian dollar. These collectively reduced our underlying earnings by $810 million compared with the first half of 2010. Lower sales volumes reduced earnings by $444 million following the extraordinary weather disruptions in the first half. Iron ore operations were disrupted by several cyclones, widespread flooding, and a subsequent train derailment. Despite these challenges, we completed the expansion of our Pilbara system to a capacity of 225 million tons per year and are looking forward to a strong second half. Sales volumes were also affected by expected lower copper and gold grades at Kennecott Utah Copper, Escondida, and Grasberg. We'll experience lower grades for the rest of this year before seeing an improvement in the second half of 2012. Higher cash costs reduced earnings by $1.2 billion, which I'll return to in a moment. The effect of exploration and evaluation costs reflects a greater level of investment in the business and that's what I consider to be a good cost. And so our underlying earnings were $7.8 billion. All things being considered, this was a good result in a challenging operating environment. However, we did see some pressures on our operating costs, which I'd like to…

Thank you, Guy. Turning to the long-term outlook. We continue to hold the view that the longer term drivers of industrialization and urbanization, driven by increasing prosperity in developing countries remains intact. This is well demonstrated by the fact that China's Central and Western provinces continue to experience far lower GDP per capita and metal's intensity rates than their eastern neighbors. I was recently in Chengdu, the capital of Sichuan province and witnessed the growth of the Western cities for myself. The activity we ground and the development plans demonstrate quite clearly the intent of the inner regions to grow rapidly. As urbanization rates rise, we're also seeing increasingly metals-intensive construction in China as buildings become higher and regulations for construction more stringent. Notwithstanding the short-term uncertainty and volatility in the markets, we continue to expect that over the next 15 to 20 years, consumption trends will lead to a doubling in demand for iron ore, for copper, for aluminum and certainly, for other commodities. On the supply side, volatility of the capital markets could reduce availability of finance for some projects. New ore bodies are harder to find, are getting deeper, and are more technically challenged. Many are located in higher risk regions and often subject to longer stakeholder engagement processes. This is just one reason why the group's strategic commitment to sustainable development is a crucial factor in maintaining and extending our ability to do business. The combination of strong demand growth and industry supply challenges gives us confidence that real long-term prices and margins for almost all the minerals and metals will continue at elevated levels albeit, of course, with heightened price volatility. We are growing into the strong environment of rising demand for our products through our strategic allocation of capital to our high-quality growth programs.…

And I think just for the total audience, I'll start with the questions in London and then I'll move over to Sydney. And then I'll move over to the phone and Guy, you'll of course, moderate the questions when we move over to Sydney. So first, we'll start here.

Rob Clifford, Deutsche Bank. Just 2 questions on CapEx. Firstly, just a bit concerned about the rate. Last year, you fell short on the CapEx target and said it would carry into this year. In the first half, you spent $5.1 but $700 million of that goes to the Guinea government and not into the ground. So it's more like sort of $4.4 billion. So you look a long way short of the $13 billion that have been discussed previously. And on top of that, the Australian dollar, obviously, is inflating probably after that $4.4 billion. So what -- how do we get confidence that you can actually ramp up to the rank that you've just been talking about?

I'll just maybe make a few comments, and then Guy if you can say, a little more -- more detail. We've had a long history of project development in what we all recognize -- I know you know you've been following us quite closely. There's a normal S-curve in project development. We're in the early months, and sometimes it takes even longer than the early months. You're -- you're really doing the surveys; you're doing the pre-commitments; you're doing the work that needs to be done before you actually have large construction activities on the ground. For example, Pilbara expansion continues to remain on track. And I was there about a month ago, they were putting in pilings for the various activities. While that's generating a burn rate of cash being spent, it's certainly a lot less than you'll see in the coming months. Because again, as you put foundations in, as you put pilings in, then after that you begin to put on the true fabrication or the true, more expensive, burn rates. So I look at the 5.1, and then I look at the fact that we've got commitments of at least $6 billion in the second half. I'm comfortable that we're going to be spending in excess of $11 billion, certainly the math would show that in the second half and probably closer to $12 billion. Now our previous numbers would have been $13 billion. Are our projects, the key products on track? Yes. Oyu Tolgoi on track. Pilbara on track. Yarwun 3 on track. Am I asking people to spend money just for the sake of meeting the target? No. Again, we want to be prudent with all the monies that we spend, and we will be properly reflective of the fact that you don't really want to change the pace of what should be a normal construction spend S-curve. So I don't know Guy, if there's anything else you can add to that.

Well, I think that you, by implication, raise the question of currency, understandably. The amount of higher capital that was expended because of the currencies in the first half was about $280 million. So it is true that the run rate, obviously, is lower than what we expect for the year, but I do think that if you look at the mining and the other commitments that we've got, it's very, very clear that we're going to see a much escalated level of capital expenditure in the second half. I think that the exact timing of payments in the period November through February, I don't know what that will be. But the important thing is that we do not foresee delays in our main projects, the ones that we've mainly been describing today. So I think that we're pretty confident with the numbers that we've got given out actually.

Rob, just one more point on sustaining capital, because a large portion of our total capital budget will be sustaining capital. During the financial crisis, we, like everyone else, cut way back on the sustaining capital. We focus on those things needed to protect the safety of the facilities and our employees, of course. But we actually held back quite a bit of activity and I think as we ramp projects back, I think on reflection, we probably have some element of wish list of projects that are on each plant by plant sustaining capital that actually may take longer to get done than it would have been scheduled for this year. That's not affecting the growth rates, of course. And of course, we will continue to do the work required to protect the integrity. But just in terms of just the ability of plants to do that work in that given time, I suspect that will be a part of the reason why we will come in less than that $13 billion we would've said earlier this year.

Just the second question, I guess following on from Guy's point about currency. Rio Tinto used to hedge currency so that when the Board committed to a U.S. dollar number, they could be more confident of gaining original returns rather than as you're seeing now, reduced returns. Why did Rio move away from that, and would you look at reinstating that?

I don't think it's about -- I'd just like to make one comment about history. Because I think in the past, actually, we've looked -- our actual practice is in some cases, we hedged the currency on capital projects and in some cases, we didn't. And generally, the bias would be in those cases where we had a, say a third party involved with the project that wouldn't necessarily have been as capable weathering the financial issues. We've always brought to mind whether it's operating cost or capital costs that once you begin hedging the currency, you actually begin to break that natural hedge and so we are mindful as we look at hedging on a going-forward basis. Guy?

Rob, the history is actually -- they very rarely have hedged the capital projects. Now there was an important exception, which was in 2003, '04, when we did the first stage of the Pilbara expansion. We did hedge that project, the capital element of it. And we took that decision because we thought it was an easy decision. The Aussie dollar at that time was in the range $0.50 to $0.55. It's a bit easier to take a decision when the Aussie dollars is at that level. It's much more difficult when it is at approaching parity. And so we have not hedged these matters. And as you can see, that's gone slightly against us in these 2 projects that we've discussed today. But I think that the world knows that we're not very big hedgers and that's the policy that we follow. Getting it right is very difficult .

From natural hedge, how do you get a natural hedge when you're not earning from your commodities while you're constructing?

I think what we've generally seen over the past few years is sort of a higher elevated view of long-term commodity trends. And so I think that, to some extent, Australian currency as a commodity currency, will be reflecting that.

Two questions, firstly on aluminum. Seems like you're mapping out a bit of a plan there to meet your target at 40% but it seems like the 2 big drivers to that are going to be divestments, if I'm sort of hearing you correctly, and also capital costs. I mean just in terms of divestments, is now everything open? I mean you've had a number of under performing assets in the portfolio like gold. So you're throwing everything open now and reviewing that? And secondly, just on capital spend. The carrying value of the Aluminum business is $40 billion. You're spending another $4 billion over the next few years. I'm just wondering, are you very confident about the return on invested capital that you're actually going to achieve out of that? Margins's one thing, and return on capital is the next thing. And just the second question just following on from Rob's question, I mean there's a very interesting chart that Guy put up in terms of your planned exchange rates and how you revise that out. But if I'm reading that correctly, you're still looking for the Aussie dollar to fall in 2013 to $0.90 and then 2014 to $0.85. So if the Aussie does stay here, we would see a large increase in terms of your capital spend in U.S. dollars?

Guy, I'll ask that you talk about the portfolio work we're doing with the Rio Tinto Alcan. I'll tackle the capital project in the Rio Tinto Alcan. I want to say a few words about the planned exchange rate and then -- but Guy can be quite precise and specific on that. So on the portfolio I think we're looking at all aspects of it, but Guy, if you wanted to say something in more detail.

Well, look, we've said in February and we've said again today, that we're looking at our portfolio. We're particularly looking at the aluminum portfolio because as you say, it's one of the drivers that will take us to this 40% margin target. But it's not only the Aluminum business that we're looking at. Tom's mentioned a couple of sites where we're carrying out a strategic review in Britain and in France, mainly in France. But we are giving considerations to whether there are other assets in the Rio Tinto Alcan portfolio that maybe will be better off in somebody else's hands. We've taken no decision along those lines. And I would say that, also, we regularly review the whole portfolio to say, is this asset really a Tier 1 asset? And if it doesn't have a pathway to attaining that status, well then we begin to wonder whether we should take another look at its future.

If I look at the key capital projects, which will make a difference in terms of EBITDA margins for Rio Tinto Alcan, I really want to focus on 3. The first would be -- actually I should say 4. The first is completing the Yarwun 2 project. I think that has been an attractive project. We kept it going through the worst of the financial crisis because we recognized the forward importance of adding that alumina into the market. And I'm very happy we kept it running through the financial crisis because again, having it ready to go into 2012 and moving into a net long position in alumina, I think will be quite important. In Canada, we have some of the most competitive power positions in the world, in the aluminum sector. But they're also matched with some of the oldest plants in the world. Kitimat, [indiscernible] these are very, very old facilities. They date back to the '40s and the '50s. And frankly, you're never going to get the efficiencies and effectiveness out of the facility with that technology, with that level of productivity in that age. And I think under virtually any economic assumption for aluminum or currency or anything else, those make quite a bit of sense on a going-forward basis. And then finally, I'd say that any opportunity that we can find to expand the bauxite production, so as we look at Weipa and we look at moving south of the [indiscernible], this would be a very important project in terms of delivering, again even more bauxite, which seems to be increasingly of value from a global perspective. So again, what we're looking at for a 40% EBITDA margin in terms of the capital projects would be those projects that are -- have been well flagged, well accepted, very attractive. And we're certainly not looking at rolling a series of sort of greenfield projects into make that. We're looking at those projects that you are very, very clearly aware of. And we've had quite explicit and detailed discussions in the past. I guess just one comment on the planned exchange rate, and Guy will go into it. And that is that I think that to some extent, the markets in their forward view of what exchange rates will be in 2014 are probably making some assumptions of reversions of commodity price, which are probably matched with reversions and currencies. And again that would be I think reflective of that natural hedge. So if currency stays high in those periods of time, it means that probably the commodities are probably also quite strong in that period of time, which wouldn't necessarily be a bad thing. But Guy, anything more detailed?

Well, I think that's the important point that Tom's just made, and it goes back to Rob's question about the natural hedge. The natural hedge is not a perfect thing. There's lags in it. The degree of movement of currencies is not necessarily the same in the opposite direction as the move in metal prices, but there definitely is some relationship. We have, unusually, given out today a projection of the Aussie dollar rate. We might easily revise it as we get closer to the years concerned. I don't know. That will be informed by whatever the current state of the markets are. But as Tom said, if we do revise it, it may very well be that, that revision takes place because we've reached a different view of the price that we are likely to retain for the metal concerned. So to the extent that we're paying a higher capital cost for the Pilbara expansion than the price that we had originally anticipated when we committed to it, we also could say, I think, that we are expecting to receive higher iron ore prices than we expected at the time we took that decision. And the same would be true of alumina. So in this case, we can say that there is a relationship.

Jason Fairclough, Bank of America Merrill Lynch. I guess just a question about sort of medium-term capital allocation and deployment. This year, it's looking more likely that you're going to go and expand into 3 new geographies, 3 new mineral basins with Simandou, with Riversdale, and with Oyu Tolgoi. And I'm just wondering given the embarrassment of riches that you have in terms of cash flow, what is the capacity of each of these new districts to soak up capital? I mean should we be thinking $10 billion to $20 billion a piece? Or should we be thinking $30 billion to $50 billion for each of these districts?

I think that I would like to say that these are 3, I think emerging global districts. And emerging global districts you don't try to develop out over a few years. Actually it's going to probably take -- you can't get the first infrastructure out, and we want to fix cost associated with that first round of infrastructure. But what I would hope to see is something where we move along at what would be a logical pace of development, get early production in quite quickly and then we provide that next generation of engineers with the tools, the infrastructure, the capabilities, the systems, but most importantly, the resources so they can look at optimizing. And I think that very much plays into our long-term strategy of having access to that resource and having access to mineralization and having access to mineral domains that have yet to be fully considered. And then progressively putting capital as the markets are there, as the technology is there and the capabilities are there to bring it forward. So if I look at capital allocation over the next few years, I've got to say first and foremost the #1 priority would be to expand the Pilbara to 283 to 333. It is, as I said, it's the lowest risk. It is the most enabled in terms of having the key parts of it, which is the port, the rail. It's all there. It's in place. It's well. It has been well flagged, that makes the most sense to put the highest priority to that. I think getting production -- first production going out of Oyu Tolgoi, and again, that's going on, as we said, on schedule. It is very important for the government of Mongolia and the economy of Mongolia to get that going.…

Okay, Glyn, go ahead.

Tom, just a couple of quick ones -- Glyn Lawcock of UBS. Firstly, just if you can cut that pie chart a different way, the cost one, if you can just cut it quickly into what's recurring and what's nonrecurring, if you can do that? I don't know if you've done that. And then just on Mozambique, I know you sort of talked a lot about it but I'm just wondering if you can comment on your thoughts in terms of the Zambeze project in terms of partnering and potential size given you've already talked about first production, you must have a view for size. I'm just wondering what you're thinking in terms of that as well.

I think -- and Guy, help me if you want to add anything to the pie chart because it's your pie chart. But what I would say is that, that there's one chunk which is related to one-off and production issues and I think those better be one-offs. So I'd put that in that category. And whether -- we always know the first half is a challenging environment anyway, particularly in Northern Australia. This was an exceptional period of weather-related impacts, and I would hope to say that that's a one-off. If I look at the segment, which is a very interesting one about site readiness, one thing that we have learned and we've spent quite a bit of time on is, if we focus the growth projects on just the capital owner teams and just the construction, and then we plan for just-in-time readiness for having the people ready to go and hire a general manager right at a time when it's ready to go, we end up with a longer commissioning period, a longer ramp up period. And given the state of the markets, we are consciously saying let's make sure we have these mines ready to go. We have the teams -- particularly in this tight market, we have teams, the capabilities, the systems ready to go for 283 million tons, then 333, not on a just-in-time basis, but in advance to that so that we can fully take advantage of that infrastructure when it's ready to go and ramp up the capital as quickly as possible. Now one could say well that's -- isn't that sound like part of the project and shouldn't that be capitalized? We run, I think, a conservative balance sheet and we do take the appropriate thing. It's very difficult to distinguish…

No, I think you covered it very well, Tom. Mozambique?

Mozambique. I think right now, the emphasis is let's get the first production out of Benga as soon as it's reasonably practical and let's look at the options for expanding that and as soon as reasonably practical. And we're right in the midst of strategic production planning on Zambeze. Again, we are now at a point where we're outside that bitters period. But I think before, I don't want to preempt what the engineering that is currently going on the ground. As I've said, it is a tremendous resource, we've got to look at the right infrastructure solution. I suspect that infrastructure solution will have a component of public-private partnership. Again, that seems to be something that is supported by the Mozambique government, so they'll be engaged with other stakeholders as we come to that final infrastructure solution. But again, the resource there and the resource is worth the effort to take time and get it going while we focus initially on the ramp-up of Benga.

Yes, it's Paul Young from Deutsche Bank. Two questions. First one is on your transformation of the aluminum division. I'll ask it in a different way. Your EBITDA margin for the first half was around 20%. I know it was flat year-on-year. You have stated you want to increase EBITDA by $1 billion, I presume that's on a 0.5 basis. So that would take the EBITDA margin to 30%. So how do we get it to 40%? Or should I say, what component is expanding your better quality assets, and what percentage is actually higher prices? Second question I have is actually on sovereign risk and your acquisition strategy. Now you touched on resource naturalization. But when we look at what's happened out of the last year with having to make the $700 million payment to the Guinean government for what should be, I guess you could say, a fiscal stability payment. And then there's now also a discussion now that the government of Mozambique potentially taking part ownership in resources in Mozambique. So how has this changed your, one, your acquisition strategy towards Africa? Or has it simply, I guess 2, lifted the quiet hurdle rate on these projects?

Paul, First of all on aluminum transformation, I feel that actually the efforts on aluminum transformation, the key capital projects, which I've already referred to with Heath [ph], and the work on terms of really focusing the portfolio on the highest quality piece of the assets are all not quite equal but they're all materially important to that 40%. And I want to also say that a year ago, I actually put that 40% out there on an aspirational basis for the team, but also externally. And now, over the past 12 months I've been very encouraged by the fact that the team has -- under Justin's [ph] leadership is not only focused on recognizing its aspiration, but it's got to be something that they build into their planning and also their -- their base case performance expectation. So again, what we're doing is those things, which are prudent and those things that are in what I would call a long-term pricing environment to make that happen. Over the past 12 months, I think we've seen industry cost pressures bring the long end of the curve up to a higher level. So while we've enjoyed the higher LME price, we haven't seen the full benefit of that LME price flowing through margins, because some of those industry cost pressures, particularly coke, pitch and caustic were those that travel through the entire cost curve. And I think as we look forward, we're just going to -- I would expect to see that there will be components of the industry cost curve, particularly around energy, which will disproportionately affect some other parts of it. But again, we're not looking at what I would call, anything that's out of the range of what I'd say is the longer term LME price environment for…

Perhaps I could add that while it is true we face sovereign risk in all countries, the great, great majority of our assets actually sit in OECD countries, point number one. And that will remain the case for many, many years. The second point, in answer to your question about discount rates is of course we require a higher return from riskier looking environments. But we need to be thoughtful about how we might mitigate those risks and the time at which assets are most at risk. So we're thinking a lot about that, and in particular, thinking about how to mitigate risk. So shall we go toward the next question? Yes.

Lee Bowers from Macquarie. I had a couple of questions. The first one just relates to the progress of your labor procurement efforts up in the Pilbara. It's -- I noticed in the presentation you've highlighted that you're looking for the side count to basically double into the second half. Things are on time and on budget right now, but clearly, the critical path items start to emerge when we really start to scale up which is the point you've made. So just wondering if you can provide a bit more color on those efforts. And the second one relates to capital management and I guess the broader view of it. I'm wondering what sort of signals we're meant to take out over the last few buyback announcements in the sense that the first one was restructured over, basically, until the end of 2012 and you've bought back at more than twice the rate to the current point. And then this one basically takes us on the rate specified just past the next financial result. I guess it's just interesting from the perspective of you name it in the presentation the fact that you've invested $10 billion over the first half. I guess I see it a bit differently. In my mind, you've invested more like $12.3 billion when I include the stock that you've bought back certainly on the basis of what we know and I think what most people in this room and in the room in London know it at as well. So perhaps just a bit more insight into your thinking there would be appreciated.

Tom, do you want me to try and handle the second question, if you'd like to handle the first? Would that make sense?

Yes. Thank you, thank you. It is certainly a challenge to fill all the skilled positions, all of the operating positions, all of the construction positions in the Pilbara at the moment. And actually given that a number of the flagged projects in West Australia haven't actually been fully kicked off, in some cases, they are still in pre-approval stage, not just in mining but also in terms of some of the offshore gas projects, I suspect that the labor environment will begin to get tighter in 2012 and 2013. So we do recognize that in early moving -- or early mover will get the advantage in terms of bringing those skills in, bringing the people in. I visit sites on a regular basis and you can't help but notice that, that construction camps, that fly in and fly out camps, that the town sites, are all in much better shape than they were in the past. We've got to not only compete in terms of the wages and benefits, but also in terms of the quality of the accommodations, the quality of the food, the living experience we can give for people that are actually working in those areas. We have to do -- we have to put a lot more effort in terms and some of this gets built into our cost structure, the cost of hiring and make sure we recruit the right people. To some extent the decision we made to accelerate the 333 was to essentially match construction contracts to get this. So rather than get in a situation where we were demanning construction camps in 2013 and then waiting 6 to 9 months and then remanning them in 2014, we recognized providing stability of a construction camp actually provides us with a better position in that overall environment. I can't say it's easy but with the team in Perth, the team in the Pilbara, they are an exceptional team and I have confidence that Sam and that team will be able to do what's required to ensure that we have the people in place.

On the capital management signals that you asked about, I guess we do see it slightly differently from you in that we wouldn't say that we've invested $12.3 billion in quite the same sense that you imply. What we are saying is that there is a balance, and the balance needs to be struck between as a first priority we think it's our job to invest in high-quality mining and metals opportunities whether they be organic or M&A. When we have exhausted those opportunities, then within the constraints, as I said, of the dividend and the single A target, then we need to return cash to shareholders by whatever the most efficient means may be. And that's what we've done. And we did it more quickly than we originally said. In other words, we have bought back $3 billion at a pace that might have, compared to our original announcement, have taken longer. We've done that because the surplus cash was greater than we anticipated at the moment that we made the announcement. Now we have chosen to maintain something like the same run rate. And if we were to do with that, it would be completed at approximately at end of March. Now this is all subject to market conditions. We do see it slightly differently from pure investment in the Pilbara. It's a different proposition, we believe. But we do think it's an appropriate balance. And that's what we struck in selecting this time period and this amount of money.

I'm going to now bring it over to the phones if I may, and see if there's anyone that's standing by for questions from the phone lines.

Our first question will come from Clarke Wilkins of Citi.

Just a question in regards to the Queensland call, you said your operation was not quite back to full production yet. When do you sort of expect the operations to be back at full production for the second half of the year?

Clarke I think, again, I think this is going to be a progressive return over the course of the second half. In some cases, we have areas where there still would be water in the pits where there would be exposed coal ready to go. In other cases, we had a situation where we had to defer stripping during some of the wet weather. We've got to get caught up on those stripping before we get into those new coal areas. So I would say it's a progressive ramp up over the second half.

Our next question today is from Linden Fagan [ph] of RBS.

My question is on the dividend policy. You mentioned that would be reviewed significantly next year. I was wondering if yield comes into that equation and whether the progressive nature might be looked at in favor for something at a sustainable high level?

Guy, over to you.

The words that I used were very carefully chosen, and the answer is we will look at the dividend in February and I'm not making any commitments about at all. We look, of course, at yield but you have to realize that's a function of the share price, which we don't know what that will be when we come to February. But probably the most important question that we consider when we set the dividend is considering that it is a progressive policy that the level of the dividend, if there is to be an increase, has got to be able to withstand any shock in the future. We wish to be completely dependable in the future where the payment of that dividend is concerned. So we don't -- we need to look beyond today is very strong conditions and what I think will probably be strong conditions also in February, and say to ourselves, well what are the most difficult conditions that we can imagine? And then set the dividend according to that. And so I think that this is a very strong business. We've got very low cost assets, very large assets that generate cash even in the worst possible condition. So we can certainly afford to have this progressive dividend policy, but it's those considerations that go through our minds as we've said, the dividend. And so I don't think we're going to look at the notion of the progressive dividend and adopt some completely new type of dividend approach. We have said for years that this is the intent of our dividend policy and we most recently committed to it, for example, in the rights issue that we had. So at the moment, there is no intent to look completely root and branch at a different form of dividend policy.

Our next question today comes from David George [ph] of Bell Potter Securities [ph].

Just back on aluminum, the total asset value of the business $40 bil, out of the total asset value of $73 bil so we're all aware of the lay [indiscernible] articulated on that large chunk of your asset base. If I moved your 40% EBITDA margin target, and let's say you're doing that in this period already and annualize that, it's a rough estimate -- it translates through to about a 12% EBITDA of asset return. So it that enough, that 40% target? Could it mean that you actually have to look at further write downs or impairments in that asset value of your Aluminum business? Or is it that 12% really piles against some of your other businesses, particularly on the North?

Guy, do you want to take that?

Well, I think it is difficult to compare it to iron ore right now, I do understand that. We have given an EBITDA target in margin terms. We haven't given a return target. And I haven't checked your calculation, but I may very well be in that sort of order that you've come up with. I can assure you that we look at all assets every year where there's been a triggering event to determine whether they're being carried at the correct value. And if they're not, we take an impairment or reverse an earlier impairment. In the case of assets which have a lot of goodwill, which is the case with Rio Tinto Alcan, we look at that annually in all cases. So we'll do that this year as we have done in all previous years. But of course, taking a hit if that's what we chose to do to the book value of Rio Tinto Alcan would make no difference at all to the EBITDA, which is basically a cash measure. And if that margin that we're trying to increase by the various methods that Tom outlined in detail, and I think that's the most important thing. We've got to focus on getting the performance of the business back up through operational improvement, through investment and through divestment. And that's what we're focused on doing.

David, I might just say that we set that 40% target on the basis that over long periods of time, we've noticed that product groups have to be generating, on average, a 40% EBITDA margin in order to competitively attract capital compared to other opportunities. If you look at this period, I think we're roughly at 45% EBITDA margin, and that's been certainly benefitting from iron ore which is probably plus 70%. But I think both the aluminum and the energy groups are in the 20s. So again, what we see overtime is there is a cyclical nature, different businesses -- over longer periods of time, different businesses are doing better than others and that's not necessarily the same one every single decade. So that drove the 40% target, but as Guy said, that was predominantly to generate cash returns. I think we have a just a few more minutes but I'd like to maybe get something in the audience here in London, please.

It's Andrew King [ph] from HSBC. Two questions. One on acquisitions. You previously used some very carefully chosen words to say that you would look at things in the low single-digit billions. You've just spent 4, which I guess is close to the limit of that definition. I wasn't sure yet whether you were saying per deal or in total, but can you give us some idea of your appetite for adding more growth options from where you are at the moment given the fact that you are now at $11 billion to $13 billion in CapEx? And just secondly a very specific question, because you spoke about sustaining CapEx and why that, that's moved. Can you give us an idea of what a proper normalized sustaining CapEx is for this business?

I'll maybe make the comment on acquisitions and then Guy, if you want to supplement that on acquisitions. But maybe if you can give us something on sustaining capital and I'll supplement that. First of all on acquisitions, what we had said over the past year or so was small to intermediate size. And I think that Riversdale is frankly fit for purpose. It was a good opportunity, it represents what we see as a first tier asset. There are not that many out there. As I look around at the sort of the suite of investment opportunities and things that are being considered, most of them are assets that are have been around for the past 10 or 20 years. They're sort of on the third stage of being shopped in some particular cases. While there maybe some opportunities, they wouldn't necessarily meet at the same successful screen as Riversdale would have. So I think if I, first and foremost, have to say what do we have in-house? And if I look at our in-house assets I'd say, we have best -- as far as I'm concerned, the best in-development copper project underway at Oyu Tolgoi. We have some of the best now, coking coal projects underway in Mozambique. We have an incredible suite of iron ore opportunities, of course, led by the Pilbara, but also as I talked about IOC and the north shore of Canada and also in Guinea. These are very, very strong options within the company. And I'd actually want to focus on those strong opportunities as -- because they are things we know and we know what we can do to bring value. Of course, we keep our eyes on the spectrum out there but it's not that there is a rich spectrum of opportunities outside. Guy?

Well, on M&A, I mean I think the key point to make, which you've kind of made already, is we're entirely focused on value and focused on quality. In addition to which, we're very focused on execution and quite a lot of desirable assets are difficult to get out of the hands in which they sit. It is very difficult to execute those transactions as we can see from our own efforts and from the efforts of others. It doesn't mean we're not going to try. On the question of sustaining capital, we've slightly changed our definition of this in recent times. And the reason we've done that is that the Pilbara machine is essentially causing us to open and close mines at a very great rate in the coming years. And so we're reclassifying the opening and closing of mines as sustaining capital, which means that our sustaining capital is at a level of approximately $4 billion, plus or minus, in coming years. And so what we'll do in the seminars that we'll be later holding later is to give a bit more detail about that. But I think you'd have to understand that many people would regard as opening a mine as normal organic capital. But because of the nature of the infrastructure being so important in the Pilbara, we tend to regard it as sustaining. But 4 would be the sort of level that you should think about.

A specific example of that would be Western Syncline, which was a new mine that we put in place last year. And that was designed to basically ramp up as, tom [ph] price naturally began to ramp down. So a good example, a specific sample of that type of capital.

Sorry, Terry Austin [ph] from TSI and Associates [ph]. Some of the updates that you've given on Oyu Tolgoi, for instance, as your production schedules, there are some milestones though not only for the start up but also ramp up in the future given the size of the projects. What did timing of these key milestones of the power transportation, smelter contracts, they're all smelter for the matter that they're talking about it, and also the project financing, which is not being completed yet?

I think, again, many of those questions also regarding finance are probably best directed to Ivanhoe and not to us. But let me just talk about from a project-specific basis. The first priority is to develop the open pit and the surface infrastructure for that open pit. That's the mill and the various surface facilities. And that is again, as I've said, nearly 1/3 of the way there. And it continues to run on schedule. We will, over this period of time, need to have a power -- an electricity solution for quickly for the mill, which mills are normally very heavy power consumers. And they're -- I think they'll be -- ultimately, they'll be a combination of probably Mongolian power production driven off of Mongolian coal. But in the interim I think it's going to be requiring Chinese power that's being exported into Mongolia. The power line is being built on the Mongolian side of it. It has not yet been done on the Chinese side of it. So those will be things that will need to be solved. And the teams are working very hard on those particular areas in this period of time. I think in terms of the pace of underground, it's continuing to develop as we would expect. And again, we're going to be motivated to bring underground production in but properly because that's where the highest grades that are going to be coming into the production picture. Additional facilities, smelting on-site, et cetera, I would not see those as critical path milestones and there may never actually be a need for a smelter on site. And maybe part of the project -- maybe something that's separate from the project. These will be the types of options that we'll be able to consider in the future. So again the first stage, the key milestones would be the open pit, the surface facilities, getting the power for those surface facilities. And then once that's up and running, which is what we've said 2013, commercial production, then being -- readying for the next phase, which is going to be oriented around, getting the underground, the higher grades for the underground, into that mill complex.

Nick Hatchet [ph] RBS. Returning to the shareholder returns theme, there are 2 mechanisms you've used in the past, namely the off-market buyback in Australia and special dividends. Can you outline your current philosophy on those?

Guy, please.

Well, Nick, you're right to say we've used both of them. In relation to the off-market buyback, that worked at the time we did it because the delta between the limited and the plc share prices was such that it made good financial sense for an Australian investor to do the buyback. It would, at the present delta between the 2 prices, probably not make sense for such an Australian shareholder to buy back the shares just because that gap has widened so much. We do keep a very close eye on that because it certainly is an option. And we recognize that there would be those who would want to do it if the circumstances were right. The idea of a special dividend is occasionally discussed. To date, we felt that the buyback of plc shares is the most efficient means of returning cash to shareholders. But you can be sure that we do keep these other ideas in mind, and from time to time look at them again. But the important thing is that we're returning capital to shareholders on a pretty major scale.

I'll just ask Guy if you can just take one question in Sydney. Then I've got an appointment with the TV studios to get my face powdered. So over to you.

Tim Jerrod [ph] from Investec [ph]. Just a quick question on the TiO2 feedstock business, can you give us a little bit of an idea on how quickly you might be able to grow that or put it as a priority? And I noticed you talked about Madagascar being up 30% on last year's. Can you just tell us what that actually means in terms of tons? And within 2 or 3 years' time, Madagascar will be at full capacity. Can you again just remind us what is full capacity for Madagascar?

Guy, I'll talk about the broader growth objectives for TiO2 maybe if you could then be ready to talk about more specific numbers that Tim's asked. I would say on TiO2, we have a very strong market position, but also I'd say technology position and resource position. So I would see ourselves leveraging those technology abilities and the resource opportunities. We are in discussions with the government of Québec where, of course, our serill [ph] assets are located. And again, that's been an important part of the Québec industrial economy. That I think there are going to be opportunities to look for working with the government of Québec on their Plan North [ph] and leveraging some of their government objectives with our business objectives. So I think that there are going to be opportunities to expand both feedstock and smelting capacity up in Québec. I think we'll also have large resource positions in Mozambique that we'll be able to bring in and consider opportunities for in addition to those in Madagascar. I think with respect to South Africa, we'd rather look at the overall power position and the availability of power, because again, the smelting of TiO2 for TiO2 slag is a very power-intensive activity.

On Madagascar, Tim, I'm afraid don't have got all the data at my fingertips here. But I believe we were about 10% below target in terms of our production in the year-to-date. The programs to improve the mining at QMM are well underway. And I understand that we -- we're looking at different mining methods, including dry mining, which is currently going on there. And we should be able to look at the development of the Phase 2 at some point following 2015.

Tim, I'm just going off memory, but I think what we've said is the rate of capacity for QMM we'd like to get to is 750,000 tons per year of TiO2 concentrate. Thank you very much. Again, I appreciate all your questions and your interest. A very strong set of numbers. It was a challenging weather environment. The operations and the organization pulled through quite nicely. I'm very excited about the state of our current businesses, the long-term position of our markets, and certainly, I think we have some premier growth opportunities to leverage up in the coming years. And not only in the coming years, but also the coming decades. And certainly, we are continuing to ramp up our capital spending accordingly, but also mindful of the balance that we've talked about we've accelerated and increased the size of our capital buyback program. Thank you very much.