Thanks very much, John and good morning, all. Really pleased to be able to make it here and for those who are on the phone lines, thank you very much for joining us. Let me welcome you to Rio Tinto’s 2015 results. The past year created some exceptional challenges for the industry. But against this backdrop, we’ve again delivered a very robust set of results. We continue to focus on running Rio Tinto efficiently and delivering shareholder value, not just for today, but for the long-term strength and success of the business. Our combination of Tier 1 assets, operating and commercial excellence and capital discipline has allowed us to protect margins, and deliver strong cash returns to our shareholders. This is an environment, where further decisive action is required. And only those companies with Tier 1 assets, strong balance sheets and strong controls can succeed in this market. We’ve continued to deliver sound results and to meet our commitments. And today, we are announcing continued pre-emptive action, to protect long-term shareholder value, and ensure that we can deliver sustainable returns to shareholders. Our financial results reflect the relentless efforts of all my colleagues over the past three years. I truly thank them for their support and importantly the speed with which they have embraced the cultural transformation the business has undergone during this period. As you would expect, let me start with safety. As I’ve said before, a culture of safety is central to Rio Tinto. A well run operation is a safe operation and forms a core part of our commitment to all our stakeholders, especially our employees. Over the course of this year, sorry last year, we improved our safety, as measured by all injury frequency rate. However, tragically, we had four fatalities during the year. My thoughts…

Thanks, Sam. These are a robust set of results in a pretty challenging environment. So, let’s have a look in bit more detail at what they tell us. First up, price volatility continued to be the dominant theme and it’s taken impact of declining prices on our earnings continued in the second half and led to a significant reduction of $7.7 billion for the year. There was some offset from currency, but the impact of energy costs and inflation was relatively modest. This brought us to the flexed 2014 earnings of $3.8 billion. There was a benefit from higher volumes, mainly from the Pilbara and increased bauxite exports from Weipa and Gove, but this was partly offset by lower volumes at Kennecott and in Titanium. The continued focus in the business on reducing our unit cash operating costs and exploration and evaluation costs, has made a meaningful impact of $953 million post tax. A higher allocation of interest charge to expense and increased depreciation following the completion of major capital projects accounted for the other movement. Which brings us to underlying earnings of just over $4.5 billion. Our net earnings were impacted by currency adjustments, impairments, increases in provisions and restructuring costs. Impairments impacted net earnings by $1.8 billion. At Simandou, we are finalizing an integrated bankable feasibility study for the mine, port and infrastructure, which we are due to complete in May of this year. However, given the uncertainties over the funding of the infrastructure coupled with the volatility of the current and near-term outlook for commodity prices, we have reviewed the carrying value of the asset, resulting in a post-tax impairment of $1.1 billion. Further impairments of $684 million relate mainly to the carrying value of Energy Resources of Australia, following a decision by the ERA board to…

Thanks, Chris. Now, let me turn to the outlook for 2016 and beyond. Our position today is founded on our portfolio of Tier-1, long-life, low-cost, expandable assets. And by managing these assets wisely and getting best value for our products, we’ve reduced our costs and we’ve maximized our cash flows. Our careful allocation of capital means that we’ve delivered cash returns for shareholders and built a strong balance sheet. Our intention, is to ensure, that this foundation remains robust, regardless of external factors. In the current environment, it’s clear why a strong balance sheet and cash generation are a necessity, rather than a luxury. Signs of recovery in industrial demand are yet to emerge, and a prolonged downturn brings increased risk. Housing sales in China stabilized during the second half of 2015, but we are yet to see a turnaround in China’s construction activity. The transition to a less commodity-intensive and slower growth path, often referred as the, New Normal, is further compounded by these soft industrial trends. The recent decline in oil prices has wide repercussions. Even though we benefit from it, a low oil price clearly has a negative impact on many governments and their economies. The volatility in global financial markets reflects concern over the strength of global manufacturing and global trade and we can see this impact on emerging equity markets. Central banks are also showing uncertainty. Although the Fed increased the US interest rates in December, expectations of further monetary tightening have reduced. This all points to caution in the near-term. Global GDP is expected to expand by around 3% in 2016, however it is weighted away from industrial activity and confidence is clearly fragile. The iron ore market dipped below $40 per tonne towards the end of last year, representing an 80% fall since…

When I came into this role three years ago, we had – I had three key objectives that could crystallize us to help deliver on the promised cost savings, to strengthen the balance sheet, and to improve how we allocate capital. We've made some strong progress on these, with $6.2 billion of cost savings, dramatically reduced debt levels, down $8.3 billion from the peak, and much lower levels of capital expenditure to $4.7 billion in 2015. But let me make it clear why we're choosing to change our dividend policy today, and the Board was able to make these decisions from a position of strength. Our balance sheet is in good shape, but the position of the global economy, and in particular the unprecedented volatility across the broad spectrum of commodity prices, makes it clear, in our view, that a progressive dividend is not appropriate in a cyclical industry such as ours. We continue to look to ensure that our balance sheet is robust and that returns are based more on profitability. Our 2015 underlying earnings were $4.5 billion. Now although this is simplistic, if we adjusted that number with the current consensus iron ore price alone, those earnings would have been around $2.7 billion. And that's before taking into account any other commodity prices or premia that we're seeing in the markets today. A $4 billion dividend would have represented a payout ratio of close to 150%. This is unsustainable. The volatility in the markets at the moment make it clear that we have to be conservative in our planning assumptions to ensure that we remain robust. We can't just wait for a price recovery. Hope is not a strategy. The impact of low earnings and cash flows on the financial health of the company can be rapid and…

Thanks, Chris. So let me summarize. In a challenging environment, we have today delivered a robust set of results, and we're delighted to declare a full-year dividend for 2015 of $2.15 per share. At the foundation of our business is a world-class asset portfolio and we continue to invest in growth, but only in a focused number of high-return projects. But just owning great assets is not enough. It requires a culture across the entire organization focused on cost management and extracting maximum value. The quality of our asset base is matched by the strength of our balance sheet, with net debt of $13.8 billion. And today, we've announced further preemptive action to ensure that the business remains resilient and capable of delivering sustainable shareholder returns. There is a clear intent behind everything we do to manage Rio Tinto well, not just for today, but for the long-term success and strength of your business. Now, if I could pass over to you for questions, and I'll just go and sit down and join Chris.

We have people on the line, so I'm intending to take three questions from the room and then take three from the telephone line, cyberspace. There is a question here first. Hang on, we are bringing a mike.

Thanks. It’s James Gurry here from Credit Suisse. Congratulations on a good cash result. The dividend reduction and everything seems quite defensive in preparing for -- or cautious for the future. How are you feeling about opportunities for potential acquisitions in the industry? You haven't touched on that in today's presentation, but perhaps the dividend commitment reduction might give you some opportunity to look at some of the distressed assets that might be out there. That's the first question. And just secondly, I think one of the other goals that was set when you guys took over, that Chris referred to, was strengthening the executive bench. I'm just wondering how you feel about the strength of the executive bench, and are you prepared for a smooth transition if and when you're ready to put that in place?

Okay, well, let me get Chris to tackle the first part of your question about potential M&A, and let me preempt that by saying, getting the balance right between growth and shareholder returns is important to us. And as we've mentioned during the presentation, focusing on the balance again between short and long-term, that's also very, very important. Right now, there is distressed assets that are out there and they're distressed for a good reason; high costs, low quality, no infrastructure, people trying to get rid of – I was going to say get rid of their trash, but I could never say that. But we are mindful that there could well be opportunities. And Chris, why don't you comment?

James, thanks for the question. The fundamental move really is to preserve the balance sheet and make sure the balance sheet remains robust, but you've got to recognize that it's part of a package of measures, the dividend change. The cost reductions, the capital expenditure reductions and the dividend policy are a matched set of measures. What it does it maintains a robust balance sheet and it gets away from this sort of concept of a fixed payment, no matter what. And so the Board will have more discretion about matching the dividend to earnings, to capacity, to cash flow and the balance sheet to their view of the future at any given time. But in terms of acquisitions, as Sam's mentioned, well, he didn't actually mention it; he didn't mention the bad asset sort of stuff that the trash comment.

I wouldn't have said that, no.

But the key issue really is around -- there are some very good assets in what you'd probably describe as distressed balance sheets, and they're not on the market as yet. But we've got a watching brief on a lot of things and we'll continue to do that. Whether we get to pull the trigger on anything, we'll always look at a hell of a lot more than we ever pull the trigger on. But we do have capacity in the event that we wanted to do that. It's more about, if we were to spend money on an asset acquisition, we'd want to have a path back to what our robust balance sheet would look like beyond the acquisition, and that's the metrics. But when I say that, we've got our eye on a lot of things, but nothing specific at the minute.

Thanks, Chris. And let me emphasize that we also have a clear focus on exploration. Exploration in the past has provided us with a number of the high value assets that we've got. We continue to have our commitment to exploration and the opportunities that that would provide. Certainly in the area of copper, as Chris said, if there was an attractive project in that area, that could be of interest to us, at the right price or right value. In relation to the second part of your question, about strengthening the team and transition ultimately, we've got a very, very strong team. I have an excellent executive committee team and, quite frankly, you don't deliver the sort of results that we've mentioned today through just Chris and I, it's through the whole team. I've got Hugo and Debra and Jean-Sebastien here today, members of our ex co. During the coffee break, have a chat with them. They have a very good understanding and knowledge of the total business, despite their own particular specialties. This is important, and this will provide succession and transition for the business, as I get closer to retirement. At this stage, it's not a topic on the agenda. Personally, I'm loving what I'm doing. I believe I'm delivering value. And I've said to the Board, the timing is as it is, however short or however long it is, I'm here to deliver value to you, our shareholders. Do we have another question? Jason, why don’t we take it? Everyone will get a chance, so don’t feel that you’re going to be left out.

Hi, Jason Fairclough, Bank of America Merrill Lynch. Just a sort of more general question on the sustainability of the business, and you've talked, Chris I think I heard you three times, doing this from a position of strength. If we look at the dividend you're talking about for 2016, it still looks pretty close to 100% payout ratio for 2016. Now maybe that's a bridge here, but that still doesn't feel that sustainable to me. If I then look at what you're spending in terms of CapEx, it's much less than depreciation, particularly if I look at your sustaining CapEx. So I guess the question is, do you feel like the business is stable here? Do you think it's sustainable, as you've set it up today?

I'll let Chris answer but, clearly, the answer to that is yes. We are coming from a position of strength, a strong balance sheet, Tier 1 assets, a very focused organization, and we have taken the three proactive steps today to ensure that we retain that. Certainly 2016 underpinned dividend is a transition, but I believe that that is a fair way of proceeding forward with the revised policy. Chris?

Well, just a very brief comment on the transitional arrangements for 2016. Coming off the progressive, we've had pretty much absolute certainty under the progressive dividend about the minimum level of the dividend. And so the Board discussion focused around the fact that we were taking people from virtual certainty as to that minimum and onto a more variable basis. So the transitional arrangements apply to 2016, and we think that's a fair transitional arrangement into the new policy. The other thing to observe on the dividend is that the weighting, we mentioned in the speech, but the weighting will be toward the final dividend. So in the past, we've have that mechanistic half of the prior year's final dividend, or full-year dividend. We're moving away from that to a weighting toward the final dividend. If you think about that logically, it's pretty obvious that, once the final results are known, is the time when you can get absolute precision about exactly where the dividend is going to be pitched. So they're the transitional arrangements, and we'll see where the numbers come out. I'm sure all the analysts in the room will have a slightly different view about exactly what the numbers are, but I take your point. The second part of your question was about the sustaining capital, and we are in a sweet spot at the moment with regard to the absolute dollar level of the sustaining capital. We're in a very favorable, for us, price environment for that sort of activity, and we're coming off the back of having recently completed some major expenditure projects, some major growth projects. So we're depreciating – sorry, those growth projects are actually built in a period of fairly heavy price inflation in the construction costs of those projects. So we've got probably a slightly favorable cost structure for the activity; we've got slightly less activity because of the newness of some of the assets; and we've got a higher depreciation, based off the back of recent capital expenditure. So over time, that activity level will increase, and the price will go wherever the price of it goes. But it'll probably be more activity in the future and probably at a different price level. The guidance we've given today assumes that we stay at or around the $2 billion for the next few years. I think that's quite comfortable -- well, I say comfortable, it's tight but it's manageable. But longer term, I think you do revert back more to something like depreciation and sustaining capital probably getting closer together.

Thanks, Chris. Just to wrap up on that, in terms of sustainability, that's really the basis of everything that we're talking about today; to ensure that we maintain the strength of our balance sheet and the robustness of the business. There's no question as you look forward, as we come out of this down cycle, we will be in a very, very strong position to capitalize on the long-term growth for the commodities that we supply. As the world continues to develop, urbanize, industrialize, there is basically nothing that people use on an everyday basis that can be produced without using our materials, even down to the iPhone that's in your pocket. All of these require us. Do we have another question in the room?

Myles Allsop at UBS. Just a few quick questions. First of all, with the new dividend policy, I mean you've got your washing machine chart, and that says ordinary dividend is a second priority after maintenance CapEx, but you are now not prepared to put any kind of floor to the 2017 dividend. Can you imagine any scenario where Rio Tinto won't pay an ordinary dividend, so as we look beyond this year into 2017? Secondly, just on your longer-term iron ore demand outlook, has that changed or are you still as bullish as you were last year at the Iron Ore Seminar? And then thirdly, could you just give us a sense what free cash flow the Pilbara is generating at spot commodity prices? With freight at $3, with $13 C1 cash costs, I suspect there's a substantial amount of free cash flow that's been thrown off that business. Thank you.

Perhaps, if I let Chris pick up the first and third question and if I pick up on long-term demand for iron ore. But, Chris, perhaps on the 2017 dividend and washing machines and so on?

Well, the question was around can we envisage any situation where we wouldn't pay an ordinary dividend. I think it's highly unlikely, but --

A board decision.

Yes, it's always going to be a board decision and I guess we've given guidance no further than the 2016 transitional arrangements, but should I think it's highly unlikely. With regard to the Pilbara free cash flow, I think the easiest steer we can give you there is, you know the volume. We've given you the volumes, we've given you what the spot cash costs would be today. And without going any deeper than that, I think you can probably figure that out for yourself. The CapEx requirement for Silvergrass is going to be much lower as we are seeing it today. So it's coming through on a pretty solid basis.

In terms of long-term demand for iron ore, we still have confidence in this. As I mentioned, as the world continues to develop, urbanize, industrialize, whether it's China, the ASEAN nations, India, Middle East, South America, Africa, all of these regions will require iron ore and steel as they urbanize. I think there are some aspects that people are overlooking in relation to the impact of infrastructure spending basically across the world, but certainly in the ASEAN regions. The One Belt, One Road, the new Silk Road, the Asia Infrastructure Investment Bank and so on, is very much focused on opening up trade and opening up ports and infrastructure and, of course, all of this will require steel. So we're going through a transition period. Nobody quite understands what the new normal means when President Xi Jinping mentioned it, but I think he mentioned that – it means that things are not going to be quite as they were in the past and that we need to adjust to it, we need to be responsive to it. And that's exactly what we're doing, both in terms of our profile for iron ore future production, but also in terms of what we're doing in terms of repositioning the business today, in terms of further improvements to our cost, further reductions to our capital, and a revised dividend policy. With that, let me take a question from the telephone lines if, operator, you could help me?

No problem, sir. So we will take our first question from Clarke Wilkins, Citi. Please go ahead. Your line is open.

Good evening, Sam. Just in regards to the iron ore side, just with Silvergrass, that $500 million I think was mentioned as what the sort of updated CapEx came in under, that's in the sort of the growth projects rather than the stay-in business CapEx? And also, just in terms of stay-in business CapEx for the Pilbara, on a dollar per ton basis where does that set out for the cost reductions? And finally, just in regards to sort of with Silvergrass, where does that get you towards filling up your infrastructure capacity of 360? And how does the current thinking about when Koodaideri is required to keep that running at 360 in the future?

Well, that was a good half a dozen questions. Let me perhaps pick up on those. Silvergrass, I think, as you know, we have actually already started Silvergrass in a trucking operation through to the Brockman 4 plant. It was nicknamed by the iron ore folk NIT2, Nammuldi incremental tonnes 2, and it's actually a trucking of Silvergrass product, around 10 million tonnes, into Brockman. Silvergrass is all about maintaining the Pilbara blend and retaining the specification quality, whatever you want to call it, grade of the Pilbara blend product. Pilbara blend is critical to us in terms of optimizing our products. As you are aware, we blend 13 of our products to produce Pilbara blend to optimize iron content, phosphorous silica, alumina and so on. And that enables us not only to provide a base for the foundation of burdens for the steel blast furnaces, but also it underpins the price establishment in the spot price being such a major element in the iron ore seaborne trade. So it's an important element, because let me emphasize that bringing on Silvergrass is aimed at maintaining spec, not bringing on extra tonnes. And although we have announced that we now have 360 million tonnes of infrastructure capacity, rail and port in the Pilbara, at this stage, we're not taking full usage of that. And this is really phasing the implementation to more match the market for iron ore. In relation to cost per tonne, Silvergrass will be highly competitive against our existing operations and, in fact, the project has a very, very good return. In relation to Koodaideri, Koodaideri is a future prospect for us. The iron ore team are looking at exactly when we should implement Koodaideri with the view to continuing to push that out for as long as we can. Do we have another question on the line?

We will take our next question from Lyndon Fagan from JPMorgan. Please go ahead your line is open.

Thanks very much. Just with the dividend cut, there's obviously a lot more available free cash flow, yet the Pilbara isn't running at 360 which is what your infrastructure capacity is. Given the cost reductions in the Pilbara and the attractive margins there, why not accelerate a bit of that production to utilize that latent infrastructure? That's the first question. Then the next one is just on coal. You've obviously sold Bengalla, now Mount Pleasant. Should we expect further exits of coal assets or are you committed to retaining a presence in coal? Thanks.

Chris, do you want to pick up this?

Yes, okay. Yes, Lyndon, thanks for the question. The issue regarding the infrastructure, I think before we were to commit to capital expenditure, we've obviously got a big opportunity there with productivity gains, and that's our primary focus. We've got the Silvergrass projects, the one coming through and, as Sam explained, that's got as much to do with product quality as it has to do with maintaining the volumes. It doesn't really add much volume. But I think we've got an opportunity there to take advantage of that surplus infrastructure capacity to see what productivity we can get out of existing operations. With regard to coal, as you rightly point out, we did have the two disposals that have been in the market recently, the Bengalla and then the Mount Pleasant project circa $800 million of value recycled out of the balance sheet. Other than that, we've now got pretty much the best thermal coal assets in Australia. If you want to call them a good house in a bad street, that's probably not a bad description of the state of the market at the movement. So we're going to run those for optimizing cash flow and earnings. And it's important for our team that they get focused on making sure that they optimize those operations. If someone wants to come along and pay us more than they're worth, or more than we think or a price that we think is a good price, then we'd entertain that. But, at this stage, we're running them for value and for cash and profitability.

Thanks, Chris. Do we have one more question on the line at this stage?

Our next question comes from Brendan Fitzpatrick from Morgan Stanley. Please go ahead.

The first question relates to a comment that Chris made with regards to all the assets need to contribute to the group and I think the phrasing was a credible improvement plan. Could I confirm that that means something more than just a cash flow breakeven that there's a positive contribution and if so, what timeframe do assets have to deliver this credible plan?

Well, the plans are in place. The timeframe, we think probably six months is a reasonable timeframe for someone to demonstrate progress against the plan. It's something that -- there will be idiosyncrasies against any of these assets that will have to be considered. So it's not cut and dried, but what we've got is a focus on making sure that each and every asset in our portfolio can generate cash. That's the first priority. We'd like them all to generate absolute profit and the like as well, but that might be a second step in some cases. So we've got work underway, we've got a very deliberate process going on about it and we'll update the market when there's something to update about.

Was there a second question there?

I've got a second one as a follow-up. The capital expenditure for the now started calendar year ‘16 has about a quarter of it unallocated. Is there scope that elements which can be not spent and, therefore, we have a lower CapEx? Or is it just projects which are still pending approval?

More the latter than the former. The projects are well and truly identified and sort of expected, but not yet finally formally approved by the board.

So, for example, Silvergrass at this stage is not approved, probably expecting that midyear, similar timing for OT underground. Do we have a question in the room? Rob?

Hi, Rob Clifford, Deutsche Bank. Nice change to the policy, by the way but my questions are on that. Over the years, the defense of the progressive dividend policy has been because that's what shareholders are telling us they want. So does this change mean that you're getting now a different message from the shareholder base, or the board has taken this decision separate from the shareholders? And secondly, probably more for Chris. this change in capital allocation, what - so we've got the front end of what it means to the shareholders in terms of dividends? In terms of your team, Chris, and the strategic going forward, how are you changing the systems internally to match, or how has the thinking changed internally in terms of the investment process, the buybacks versus acquisitions, etc?

Firstly, if I could answer on the dividend policy and, Chris, if you could pick up on the capital. I think that it would be true to say that there is no definitive view from shareholders as to exactly what the policy should be, except that, A, a strong balance sheet is important for the business and, secondly, that we’ve recognized that the market realities. Of course, there's also been a lot of criticism of progressive dividend in a cyclical industry. I think the action that we've taken, and not only on dividend policy, but on operating costs and capital, it is actually a proactive step, recognizing the market environment that we sit in. And, quite frankly, it's not just a situation that Rio Tinto sees itself in, the entire commodity industry does, oil and gas does, various aspects of agriculture and banking, need I tell you, and a whole range of areas. And as you said in your opening comments, we need to be responsive to that. We come from a position of strength. It's critical that we maintain that strength. It's critical that we get the balance right so that we maintain a strong balance sheet, while actually taking proactive action internally in terms of what we are doing to contribute to that. I don't think anybody in this room actually predicted that commodities, oil and gas, and so on, would be where it is today. More importantly is that we take proactive action that in a way, you can say that we're taking a leadership action. But we're taking proactive action to ensure the strength of the business going forward. And having a strong balance sheet is fundamental to what we do. Chris, capital allocation.

Yes, well, in terms of internal process and systems and the like, I think it probably has its genesis really in the overall focus on cash. So any project now will have to go through a fairly rigid project planning, but also ways of optimizing the cash outflows on the project in terms of what's the best way and timing to spend that money. Regarding the dividend, and we've talked before about some of the changes we've put in place over the last couple of years, with things like the evaluation committee, prior to investment committee, prior to board, et cetera, so I think that rigor is just being reinforced. And I think that we've got people on various committees that are adding to things like ore body knowledge and so on, which are things you should be - I think you're entitled to assume that we do that and do that well. And we've now got it in place that we should be able to do it well. With regard to the capital allocation framework, I think that actually works better under the revised policy because, as we're planning any sort of period, we can look at – the sustaining capital can be fairly direct and fairly accurate as a format. There will always be an estimate about what the ordinary dividend would look like. And then the real part of the thing becomes far more vibrant in terms of other forms of return over and above any ordinary dividend. So it might be a special dividend, it might be a buyback, but it'll be situation specific as to what the total form of the overall returns to shareholders would be in any given period. So that's the intent of the thinking. There would be an estimate plugged in for the dividend, there would be an estimate plugged in for growth CapEx, there would be a view about where we are with the balance sheet, there would be a view about do we have capacity for further returns. And that will become a bit more iterative than it was in the past even.

I think just coming back to the dividend point, it is important to recognize that the board represents shareholders and is elected by shareholders. And they have a very strong focus on maximizing shareholder returns, given the economic circumstances and that's what physically drives them. If you look over the past five years, Rio Tinto has generated $25 billion of shareholder returns. If you look at the 2015 result, the board has maintained the commitments, the expectations that you had of a full-year dividend. Recognizing the transition to the new policy, the board recognizes that there was a need for a stepping stone, and that's the underpinning of the 2016 dividend with providing at least $1.10 of dividends per share. So I think that we're recognizing the realities of the market. We're responding proactively to that. We're watching what our competitors are doing, but we're playing our own game. We're playing what actually suits us and will deliver maximum returns to shareholders over the short and longer term. Do we have another question in the room?

Hi, Fraser Jamieson from JPMorgan. A quick question again about the dividend and a bit of a follow-up on Chris' answer just there. In terms of how certainly income-focused investors think about investing in Rio going forward, the split in terms of the total shareholder returns is going to be important to them. Presumably, there is a thought, even though you're moving away from a progressive policy, that you probably don't want the ordinary dividend being massively volatile in the first few periods at least. So there must, I would have thought, have been some thinking and discussion in the Board and management around how that split looks from 2017 onwards in terms of where that ordinary dividend kind of splits out. Now, I know you're not going to give us forecasts around what the earnings are, et cetera, et cetera, but some idea and some context around the discussions on the split between the ordinary dividend and the top ups to shareholder returns would be great.

Thanks, Fraser. You're certainly right, there was a massive amount of discussion, as you would expect. But, Chris, why don't you try to summarize it?

I think the first conversation is really about total returns. And I think the one point under the new policy is, whilst there will be variability; there is capacity for greater participation in the up cycle of the process. And a view and a commitment really of a balanced approach, I'm not saying 50/50, but a balanced approach to allocation of growth capital and allocation of returns to shareholders. And I think the precise form is always going to be a situation-specific conversation whenever the decisions are being made. So you rightly point out that I'm not going to give you a forecast for 2017 and beyond and so on. But you've got all your own numbers; you can play with that a bit from here. But the key will be the primary ordinary dividend and then there will be the capacity for further returns. And the form of those can vary between a bigger ordinary, a special, or there may be buybacks involved. But a total return to shareholders will be the first decision, and then the second decision will be about the form of them.

Thanks, Chris. Another question in the room?

Paul Gait, Bernstein. Two questions, if I could? The first is, you mentioned every asset earning its own way but then, with regard to, say, Kennecott, at spot, it doesn't have any benefit of the US dollar exchange rate, being a US asset. At spot prices, I make it cash flow break-even, if not negative and you're investing $600 million in the life of mine extension. So on that basis, did you ever consider deferring or cancelling that, given that the incremental spend is still all in front of you for that pushback? And second of all, based on that, do you have any estimate for what the future operating costs of Kennecott post that life of mine extension will be to put it in a position where it will justify its inclusion in the portfolio?

Paul, thanks for that. JS is in the room and you might collar him at the tea break and give you more granularity. In terms of the first issue, Kennecott is a cash positive asset for us. It's also earning further cash from processing other concentrates through the smelter and so on. The issue regarding the CapEx profile at Kennecott is twofold. There's some work going on to continue the de-weighting of the east wall, and there's further projects for the south pushback. The south pushback is something that is under review for whether we can do a different phasing of it and those sorts of issues, but that's the ordinary course of business there. Going forward, I think it is one where we've got a period here where we've got a long-term view about the ultimate life of Kennecott being extended significantly by the south pushback. So that's one where you'd have to have a balanced view about the immediate versus the longer-term benefit of it and what would be the transitional arrangements if you were to do something different. But I'd recommend you burn JS' ear after the process.

Okay. Let's move back to the phone lines. We have another question.

Our next question comes from Luc Pez from BNP Paribas; please go ahead, your line is open.

One question; maybe when you discussed M&A and you're focused on Tier 1 copper assets, do you mean by this that you're more attracted by existing producing assets? Or would you also consider Tier 1 projects? Or, let's say, does the experience of Oyu Tolgoi has somehow cooled your appetite for such large projects?

I think our focus with acquisition will be primarily looking at operating assets that are generating cash flow. Of course, we have our own development projects in the pipeline, as you mentioned correctly Oyu Tolgoi underground, but also, the Resolution project and the La Granja project are two further copper development projects that we have in our portfolio. Do we have another question on the line?

Our next question comes from Hayden Bairstow from Macquarie. Please go ahead.

Just had a follow-up question on iron ore. Just interested in your comments around defending the Pilbara blend, and not overly concerned on volumes. Just touching on the non-Pilbara blend stuff, particularly Yandi, you've got a mine life now to 2021; is there a plan to spend more capital there in the three-year window, given it's going to be another two- or three-year build to push it beyond 2021?

Yes, you're right, Hayden, in relation to our iron ore products in the Pilbara. We certainly have Pilbara blend, we have Yandi, and we have the Robe Valley product. With Yandi, there are, certainly, further options for us beyond the life of the existing projects and that's, certainly, things that we'll be looking at down the track. They're not immediately in the pipeline but, of course, with our valuation work, we're continuing with our infill drilling and exploration work around existing operations. The world is a very different place when you're producing about 1 million tonnes a day coming out of the Pilbara. We need to ensure that we are, in fact, front loading the system with this drilling program. Do we have another question on the line?

Our next question comes from Paul Young from Deutsche Bank. Please go ahead, your line is open.

Chris, a few questions for you, and now that I know J-S is in the room, this is pretty relevant. Just on your CapEx guidance, your $2 billion drop in 2017, that's huge, that's a big number. Part of this is FX, part is lower contractor rates, I understand that, and you've given a lower number for Silvergrass. But have you assumed any savings on the OT underground, due to the lower CapEx environment? That's question number one. The second question's actually on Escondida. For me, this is actually a massive standout in the second half; reported EBITDA just $89 million during the December half, and costs were well above what we’ve been guided on a recent site visit. So just wondering if you have any sense to why that was. Thank you.

Well, if I address the first one. The CapEx guidance anticipates Oyu Tolgoi as we have it today, as we think we know the level of cost today. That feasibility study is still ongoing, and so it is being reviewed very, very thoroughly as to whether or not we can get a different outcome on the CapEx requirement. With regard to Escondida, you were on the site visit. We weren't permitted to go on that site visit; not quite sure what the dialog was. But I think the rapid drop in the price on copper, over the last period, has obviously had an effect. And J-S, would you have any particular granularity about --?

The main impact of Escondida in H2 was credit related, and that's the driver why the EBITDA dropped. We expect that, as and when the desal plant comes online in early 2017, we'll come back to normal production level and normal cash flows.

Thanks very much. Thanks, Chris. Let's move back into the room with Q&A.

Menno, Morgan Stanley. Just two brief questions. The first one is on the price deck and the assumptions behind it, and the comment made earlier. The Board would, clearly, not be human if they did not push back harder on the numbers that the Executive Board brought to them about long-term demand and price decks, and all that kind of stuff. Can you talk us through what discussions have taken place, and if changes have been made to this long-term outlook, especially with Chinese consumption of steel now shrinking, as you said, 4% to 5%, and no change in sight? And if no changes have been made, why not? Why react in the way you did with the dividend, the CapEx, and the cost, which makes total sense, but not on the assumptions underlying all of it?

Okay. Let me pick that up. Certainly, as I said, there were significant discussions with the Board on the outlook and on our dividend policy. And the Board, quite rightly, expected that management would put forward a combination of target areas to improve the outlook for the business. There's no question that, as an organization, we were surprised with the drop; the extent of the drop surprised us in the fourth quarter of last year. And I think that raised interest, concern from the Board, in regarding to the volatility that we're seeing in the marketplace, and ensuring that we maintain the strength of the dividend -- sorry, of the balance sheet, but also providing shareholder returns and growth. It is volatile; our economics people, I think for the last three months of last year, revised their outlook, short-term outlook, each month and it was only hitting in one direction. As you know, in the short-term period, two years, we use a combination of spot and analyst views on pricing as the basis of our short-term view and it's been very, very volatile. In relation to our long-term look at the market and pricing, we do that progressively during the year. The team can't review everything monthly; they clearly have to develop a schedule and work through that. But quite frankly, the Board's focus was more on ensuring that we move solidly through the downturn cycle, rather than necessarily focusing on the long-term view. I think it was also driven by the fact that a number of people have criticized a progressive dividend policy in a cyclical industry. And that criticism I think was worthy, that it works to an extent in the up cycle; it could work to limit shareholder returns. But in the down cycle it becomes very, very difficult, and that's really why the Board has made the call that it has. Do we have another question in the room?

Is there room for one follow-up?

Yes, sure.

Very briefly on the -- it's a slightly difficult one to answer maybe, but how did the Board come to $2 billion to $3 billion of growth CapEx as the right number? Was that based on this is the cash flow available, or these are really unbelievable projects, or these are projects we can't really get out of because we may lose our license to operate? What's been the balance?

Well, obviously, the capital that's put forward was put forward by management as the projects that we see necessary to continue growth. If you look at the three projects they do have very good return. If you look at Amrun, South of the Embley, half of the project is actually replacement tonnes; as we move to the end of the life of East Weipa we do need to have replacement tonnes. The optimum, the best option, for that is South of the Embley, Amrun, and to operate that you need to put in new infrastructure; you need to put in a new port, and other infrastructure facilities. Once you do that, with the expectation of growth in the bauxite market, the export tonnes become very, very attractive. Amrun, as I've said many times to you, is one of our very best projects, but it's also required to actually maintain the replacement tonnes for East Weipa. Silvergrass, particularly with the low capital that the iron ore team have developed, and we're challenging them to further improve that, again it's a very attractive project, but it's required for us to be able to maintain the specification of the Pilbara blend. There is huge value associated with maintaining the spec, maintaining the relativity of Pilbara blend. It also means that we also optimize our capital facilities in relation to a number of stockpiles that we require at our ports, in relation to the ability to be able to swap product from the Dampier East Intercourse Island port structure and the Cape Lambert port structure. So it means we have a very robust, very consistent supply there. Oyu Tolgoi again is a highly perspective project; we have already commenced work on the underground. I think, J-S, we've already invested around $1 billion, or half…

Ben McEwen, CIBC. Over the course of the year, we saw a contraction in the equity book value of the Company of about $10 billion; part of that was obviously driven by the dividend, but also by impairments and currency movements. I was wondering what the scope for replication of that impairment and currency move trend is into 2016, and then the associated implication of that on the gearing ratio. Thanks.

That's a good point. I think the one you missed out on in your causes was the buyback as well. But this is something that we've got to watch; it's the currency one in particular, given that it's not a -- we get the benefit into the operating cost side of things, and the manifestation of that coming through. And the fact that that can vary from balance to balance is a bit of a problem for us in that regard. We'll be looking at ways that we can minimize that volatility, but we have it as an outcome in that process. But it's not something that we get overly concerned about, because the underlying US dollar debt and the underlying US dollar interest cost is unchanged. There's no real economic impact to it. It is something that we can monitor and watch, but as you saw in the start of the day, it's probably cost us as least 1 percentage point, maybe a bit over 1 percentage point, in that regard. It is something that we're monitoring, but not a hell of a lot we can do about it, and then the question would be what would be a response if it took us too far. I think this has been a pretty heavy period with the Aussie dollar, but not only the Aussie but the Canadian dollar was probably the bigger impact of the two.

Thanks, Chris. If I could thank everybody for being here today, and thanks for those that are on the line. We've announced today strong results in a very challenging environment, and I hope that our presentation provided you with a focus that we're not sitting back resting on our laurels, we're an organization that's very focused in taking proactive action, an organization focused on the future, ensuring that we can continue to provide long-term sustainable returns to our shareholders. Thank you very much.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.