[Operator Instructions] Finally, before we start, can I draw your attention to our cautionary statement on Slide 2. Please read this carefully before you read the remainder of the materials. It's now my pleasure to hand over to Rio Tinto's CEO, Jakob Stausholm. Jakob?

Thank you, Menno. Good morning, and good evening to those of you listening in the Far East and Australia. It's a pleasure to present in person for the first time in London for 2.5 years. Our world has certainly changed in that time. The short-term outlook remains truly unpredictable, from logistics and supply chain issues and ongoing COVID impact to the war in Ukraine and increasing geopolitical tensions. Lately, heightened inflation in the Western world is putting pressure on real incomes and spending power. This is forcing governments and central banks to take actions, which add to the risk of potential recessions. This clearly impacts us. However, it is worth noting that China isn't experiencing such inflationary pressures. Therefore, it has more room to maintain a supportive policy stance and introduce additional easing measures to stimulate growth. The ultimate impact of these measures will be balanced by the effect of the ongoing COVID-19 restrictions. Overall, this could provide the mining industry and Rio Tinto an advantage over other industries considering China's role in global commodity demand and particularly iron ore. For Rio, China accounts for over half of our revenues. We remain convinced that the longer-term trends that we highlighted last October remain intact, underpinned by ongoing urbanization and additional demand created by the energy transition. This reinforces our belief that Rio Tinto is a mining company that is uniquely positioned for the future. While it is a time of continuing economic uncertainty, it is also one of opportunity. We have the portfolio to play a vital role in supplying materials for the energy transition, the ambition to decarbonize our business and the conviction that we are making the right investments in our culture and our partnership to unlock our full potential. I've always said it will take time to build a stronger Rio Tinto. It does. But we are making progress against each of our 4 objectives and are seeing the future Rio Tinto emerging. We strengthened our operational performance at a number of sites. We will now replicate this across the portfolio as we work to restore our DNA of being the best operator. We've done a great deal of work as we initiate our decarbonization journey. We continue to engage externally to rebuild relationships, particularly with Traditional Owners but also other stakeholders. This is all done with an absolute determination to achieve impeccable ESG credentials. We have made notable focus in creating value-adding growth options. From advancing or completing internal projects to acting with discipline in our choices on M&A, we are demonstrating our ability to excel in development. Finally, we are working on our social license. This will be judged by others, but it clearly requires us to work hard to restore trust, to rebuild relationships and to make Rio a place people are proud to work for and partner with. We remain totally focused on maintaining our momentum with a consistent disciplined approach. This applies to our performance, engagement, growth, decarbonization and, most importantly, our culture. Turning to our first half performance. Let's start with safety. We achieved another fatality-free half building on the prior 3 years. Safety requires discipline every day on every site and on every shift. Seeing our people return home safely each day remain our first priority. Beyond safety, we delivered good results in market conditions that were robust albeit below last year's record levels. I'm proud to see the positive momentum from the rollout of the Rio Tinto Safe Production System. We must build on this and replicate the successes across our assets. We are well positioned after a stronger second quarter particularly from our iron ore operations. Our performance also highlighted a number of areas where we need to improve. We achieved EBITDA of $15.6 billion with $4.8 billion of taxes and royalties. We invested $3.1 billion in growth and sustaining CapEx with free cash flow of $7.1 billion. The return on capital employed was 34%. Once again, our iron ore business is the primary contributor, but each of our product groups achieved double-digit returns. As a result, we will return $4.3 billion to our shareholders, our second highest interim dividend ever. This 50% payout is in line with our policy and reflects disciplined capital allocation and the strength of our balance sheet. Looking ahead, while the pricing environment is becoming more challenging, the demand outlook remains positive. Let me now hand over to Peter to take you through the financials in detail. Peter, please?

Thank you, Jakob, and good morning, and good evening, everyone. Let's start by taking a look at the numbers. We've announced a solid set of results following robust demand for all our major commodities. And of course, this is set against the context of record prices and results last year. The 10% decline in revenues was driven by prices, primarily iron ore. This was offset in part by aluminum, where we saw strong pricing for the first 5 months of the year until markets changed in June. While the business remained resilient, cyclical cost inflation accelerated during the half. This led to some margin compression with $15.6 billion in underlying EBITDA and $10.5 billion of cash flow from operations. Free cash flow of $7.1 billion was after $3.1 billion of capital expenditure and a modest outflow in working capital, reflecting elevated prices for raw materials in aluminum inventory. Underlying earnings of $8.6 billion gave rise to a return on capital of 34% and led to us declaring an interim dividend of $4.3 billion, a 50% payout. Higher rates of inflation, increased closure liabilities, resulting in a $400 million pretax noncash charge to underlying earnings. We expect a similar impact in the second half under our existing policy if current rates of inflation persist. We were very glad to reach a settlement with the Australian Tax Office on all tax issues stretching back over the last 12 years. The settlement had a limited impact on our half year results, but we will pay just over AUD 600 million in the second half of the year. Importantly, the settlement gives us certainty on our transfer pricing arrangements between Australia and Singapore for the next 5 years. There were no material unusual items in the first half, so net earnings were very similar to underlying earnings. Let's now look at our key markets. Iron ore prices dropped 24% from the record highs we enjoyed in 2021 first half. In a context of continued softness in the Chinese property market and COVID restrictions, steel demand remained relatively robust. Prices were supported by weaker supply with flat production from the majors and disruption to some other sources of supply, in particular, from Russia and Ukraine. There was also disruption in the aluminum market, mainly from high energy prices which impacted supply from late 2021 and resulted in very low physical stocks. This pushed prices up 37% on average, although new capacity in China coupled with lower consumer sentiment elsewhere have reduced prices in the second quarter. The copper price has also been quite volatile. After a record first quarter, uncertainty in global -- in the global economy has weighed on prospects. A long position of just over 1 million tonnes in the copper market fully unwound in the second quarter. Let's now take a closer look at the key drivers of EBITDA. As ever, commodity prices were the biggest movement, lowering EBITDA by $3.4 billion in aggregate. Iron ore was $5.7 billion negative, partly offset by higher realized pricing for aluminum to the tune of $1.9 billion. As you would expect, we are not immune to inflation, reflected on the left of this chart, with PPI, rising energy costs largely attributed to diesel and higher market-linked prices for raw materials in aluminum all having an impact. In aggregate, these factors lowered EBITDA by $1.5 billion. If we look to the right of this chart, you can see the other impacts were relatively well contained, demonstrating the resilience of our operations. Sales volumes were reasonably flat overall, even though Kitimat was only operating at 25% of capacity. And we expect it to gradually recover over the second half. Higher iron ore sales from our portside operations in China were an important contributor with inventory reduced by just under 5 million tonnes this half. We did incur additional costs at Kitimat and Boyne as we recovered from disruption. And we also increased our resourcing in our iron ore business to support the ramp-up of Gudai-Darri and investment in the pit and health and system reliability. The impact of other cost increases overall was relatively muted, reflecting disciplined cost control across the business. Looking forward, a stronger U.S. dollar represents a decent tailwind to help offset further cost inflation in the second half. Now on to our productivity drive, which is gathering momentum. We continue to successfully roll out the Rio Tinto Safe Production System and have 15 deployments at 11 sites compared to 5 sites at the start of the year. Each deployment addresses a different bottleneck. For example, at IOC and Kennecott, we focused on the concentrator. And at West Angelas, on the drill fleet. We are seeing Rio sustainable improvements in operating performance as well as in safety and employee engagement. To give you an indication, in the half, there has been a 9% year-on-year improvement in average operating times across processing plants and drills at deployment sites versus the same period of 2021. Our focus is to scale it up to a multiyear program covering all assets across the group. And we are on track to meet our 2022 target of 30 deployments at 15 sites, and we'll build on that in 2023. Let's now look at each division, starting with iron ore. Shipments were 2% lower due to COVID-19 disruptions and much higher-than-average rainfall in late May. However, we saw a notable reduction -- a notable recovery in second quarter production supported by our focus on mine pit health and Gudai-Darri's commissioning in June. We did have higher levels of SP10 following delays in mine development sequence, which fed through to average price realization. Our unit cost for the half, at $21.20 per tonne before COVID-related costs of $0.60 per tonne were just above full year guidance driven by the lower volumes and higher input prices. The team continued to progress new ways of working with Traditional Owner groups. In May, the PKKP Aboriginal Corporation entered into a co-management heads of agreement with us. This is an important step towards rebuilding our relationship with the PKKP people and sets out how we will work in partnership on a co-management approach to mining activities in PKKP country. And following an agreement with the Yinhawangka people Aboriginal Corporation on a new co-design management plan earlier this year, we have received WA Environmental Protection Authority support for the development of Western range, a significant milestone for the project. Overall, financials were strong with operating cash flow of $8.5 billion and free cash flow of $7 billion. We are advancing the studies on the new replacement mines that we first mentioned at our investor seminar last year. Sustaining CapEx remains an important focus, unchanged at around $1.5 billion per year. Meanwhile, our energy transition program is gathering momentum with a proposed 100-megawatt solar farm near Karratha, forming part of our 1 gigawatt renewable energy plan to replace gas. Planning is ongoing, and we continue to engage with the WA government, Traditional Owners and other stakeholders. Moving on to aluminum, where we beat financial records with EBITDA of $2.9 billion. We benefited from higher market and product premiums in addition to the strong pricing environment for primary metal and alumina at least for the first 5 months of the year. This was partly offset by higher input costs for key materials such as caustic soda, coke, pitch and anodes, leading to an increase in cash costs. We generated $2.1 billion in operating cash flow, reflective of the higher EBITDA net of a $500 million working capital build. Free cash flow increased by 65% to $1.5 billion. Now we did have some operational challenges in the half. Kitimat ran at less than 1/4 of capacity following strike action last year. A controlled restart took place at the end of the second quarter with ramp-up progressing over the year subject to plant stability. We also had some disruption of Boyne, where we have now stabilized production. And the sales that were taken offline will be ramped up over the next 12 months. Given this cost inflation, we have provided additional sensitivities for aluminum raw materials. Now I'm not going to run through all the detail, but I would point out the time lags for the various price rises, in particular, for caustic, where we are now experiencing the full impact of our refineries. Energy prices are clearly an important component of our aluminum cost base. We do have some exposure to spot thermal coal prices. For the Boyne smelter, it is 50%. And for the Yarwun refinery, it is around 1/3. However, all our Canadian smelters are hydro-powered at very competitive rates, and this remains a key source of competitive advantage for us. On to copper. At $1.5 billion, underlying EBITDA was down 27% due to lower sales volumes with COVID-19 and other labor constraints impacting performance of the Kennecott smelter. Lower byproduct sales volumes, particularly gold at Oyu Tolgoi, as anticipated, also contributed. C1 unit costs were significantly higher at $1.48 per pound driven by lower by-product credits and cost inflation. The team at Oyu Tolgoi reached some really important milestones this half. Of course, there was the agreement in January, which meant underground mining could commence, leading to the first and second draw bells being fired at Hugo North in June. This excellent progress means that the undercut progression remains on track to achieve sustainable production from Panel 0 in the first half of 2023. We also completed a reforecast in the total project estimate to $7.06 billion. The $300 million increase against the 2020 definitive estimate is largely due to COVID-19, quite an achievement given the disruptions over the past 2 years. Turning to minerals. We benefited from strong market conditions for titanium dioxide, borates and diamonds partially offset by the weaker iron ore market. Underlying EBITDA of $1.3 billion was 10% lower primarily due to higher cash costs and energy price rises. Production performance was generally better than the first half of 2021, but there is certainly room for improvement. Importantly, we're moving ahead with our growth agenda, completing the acquisition of Rincon Lithium in March. And just yesterday, the Board approved $190 million for funding of a small start-up plant, an early works infrastructure to support a full-scale operation. On to capital allocation. Now we've been showing this slide for nearly a decade now, and it's important to stress that our disciplined approach is unchanged and that we intend to maintain it throughout the cycle. We still expect a disciplined increase in our capital expenditure over the coming years, but we have slightly reduced our 2022 guidance from $8 billion to around $7.5 billion due to a stronger U.S. dollar and rephasing of decarbonization and development projects. Our best estimate for 2023 and 2024 remains between $9 billion and $10 billion, which includes the ambition to invest up to $3 billion each year in growth. But this is highly dependent on the timing of commitments as we prove up the value of investment opportunities. If we cannot develop value-accretive options, we will follow our capital allocation framework. And it is to be noted that Simandou is included in our capital guidance and if we reach agreement to commit to the project with our JV partners, the Government of Guinea and WCS on the infrastructure pathway. Our best estimate of investment to decarbonize the business remains at $7.5 billion until 2030, including around $1.5 billion over the next 3 years which will be back-end dated. Sustaining capital remains at $3.5 billion a year, subject to inflationary pressures, while annual replacement capital is also unchanged at $2 billion to $3 billion. Let's now take a look at the balance sheet. We maintained our net cash position just at the end of June. This is impressive given that we paid $7.6 billion in dividends and acquired Rincon for $825 million. As I've said before, it is just a snapshot in time. We would expect to move into a modest net debt position for the second half of the year based on current prices as capital expenditure gathers momentum. We will maintain our financial strength. It is essential as it allows us to reinvest for growth, accelerate our own decarbonization and continue to pay attractive dividends. Finally, on to the dividend. We have declared a 50% payout for the interim, and this equates to $4.3 billion. This is in line with our policy and is our second largest interim payment in history. As ever, the balance of the dividend will be weighted towards the final at our full year results in February, when the Board will take full account of the outlook for major commodities and the long-term growth prospects of the business. It goes without saying that we remain firmly committed to capital discipline and our shareholder returns policy. With that, let me pass back to Jakob.

Yes. Thank you, Peter. There is a wise saying, I have shared before. Culture eats strategy for breakfast. This is really true. Since I became Chief Executive, I've spent significant time on this journey. This is also true for the leaders and the teams I'm spending time with as I visit different Rio operations. We needed a reset, putting respect for people, communities and land at the heart of our contribution. And we needed to listen. This started with strengthening relationships with the Traditional Owners and indigenous people of the lands on which we operate. With our communities, customers, suppliers and host governments, we're also implementing the recommendations of the Everyday Respect report and are identifying what more we can do. We've also set new values and are now embedding them. I believe we are making real progress. Ultimately though, it will be judged by others. This is about making Rio Tinto more safe, inclusive and respectful and putting people at the heart of our organization. Earlier this year, I met representatives from all the Traditional Owners of the land on which our iron ore operations are located. It is by hearing and responding to their concerns that we will build stronger long-term relationships. It is particularly pleasing to reach co-management heads of agreements with PKKP and Yinhawangka people. On ERA, we continue to work with the Board to ensure that ERA has the means to complete rehabilitation of the Ranger Mine to a standard that will establish an environment similar to the adjacent Kakadu National Park. Through the Rio Tinto Safe Production System, we are harnessing the skills and talent of our 49,000 people, taking their insights and ideas and empower them to achieve consistent operational excellence. This will unlock real and sustainable improvements. As Peter said, this has already delivered 9% improvement in processing plants and drill rigs where we have implemented the system. Clearly, though, we're not yet firing on all cylinders, but we are making genuine and consistent progress. Last year, we set an ambitious new strategy and climate targets. The first step to meeting these is developing the mindset, unleashing our capabilities and challenging all our employees to think differently as we decarbonize our business. Execution and investment will follow. As we have said in the past, reducing our emissions will take time, and they have remained flat so far this year. We cannot achieve our ambitions alone. Partnerships with government, suppliers, communities and other stakeholders are critical here. Under our Chief Scientist and through the commercial group, we are progressing projects and partnerships that will enable us to deliver tangible results in the long term. A strong and evolving portfolio of projects is delivering focus on the technology front. For example, our first load of rock transported by electric haul truck in a trial at Kennecott, we are advancing renewable energy projects with planned -- with detailed planning on initial wind and solar installations for our 1 gigawatt micro-grid in the Pilbara. Proposals are also being reviewed to support the repowering of our Queensland aluminum assets. We're studying high potential areas for nature-based climate solutions through the conservation, restoration and regeneration of land on or near our assets. And we continue to build a stronger innovation ecosystem through strategic investments in technology startup, for example, electric hydrogen who are pursuing low-cost green hydrogen and partnerships with like our MOU with Salzgitter on carbon-free steel making. On the commercial front, I'm particularly excited by the recently announced MOU with Ford, which covers lithium, aluminum and carbon. This partnership is a perfect example of how the energy transition presents an extraordinary opportunity for Rio. All the commodities we produce are needed today. Looking to the future, the demand will grow, driven by the energy transition and ongoing urbanization. In 2021, in my first set of results as Chief Executive, I committed to taking the important decisions on projects and invest in materials essential to the energy transition. I'm proud that we have progressed our growth agenda during the first half. We expect the Oyu Tolgoi underground to reach sustainable production in the first half of 2023. I recently spent a week in Mongolia for the Naadam celebration. It was wonderful to learn more about the incredible culture and history of Mongolia and to meet so many stakeholders. The work Bold and the team are doing is making a big difference. It was humbling to see for myself how much the relationship has improved. We are also advancing the Rincon lithium project in Argentina with 190 million funding approval. This is to develop a planned capacity for smaller start-up and early works to support a full-scale operations. In parallel, we are engaging with the communities, the province of Salta and the government of Argentina. Two of our North American assets are producing critical minerals for the first time, extracting from existing waste streams. At SOREL in Canada, we have innovated to become the first North American producer of scandium oxide. It is critical for lightweighting aluminum for the aerospace industry. At Kennecott in Utah, we have become 1 of only 2 U.S. producers of tellurium used in solar panels. We are ramping up Gudai-Darri in Western Australia to support output of Pilbara Blend, a product that remains essential to the transition. In May, the Board visited and saw for itself the great work of the team to achieve first production. We're now focused on the next phase of replacement mines for the Pilbara, including approvals for the Western Range project. At Simandou, our negotiation teams are right now in Guinea working with our joint venture partners in [indiscernible] WCS and the government of Guinea towards incorporating the infrastructure joint venture. This will be an important first step, and there's more to do to bring this significant project to life. We remain committed to delivering Simandou in accordance with international ESG standards, ensuring that the project results in sustainable benefits to Guinea and its people, along with our shareholders and customers. In conclusion, I'm proud we are making a steady progress against our 4 objectives. Remember, this is a multiyear journey, but we have the right foundations and pathways to make Rio Tinto stronger. Most importantly, we have great people. They are the key to our future success, and we will continue investing in them and in our culture. We have an outstanding portfolio of long-life assets and the expertise to play a leading role in delivering vital commodities for a low-carbon future. Our balance sheet remains strong, providing both protection and optionality. We will continue to challenge ourselves to innovate and think differently. Looking ahead, mining is crucial to the world, and we are uniquely positioned to invest and grow in the commodities needed for the energy transition, to accelerate the decarbonization of our portfolio and to continue to pay attractive dividends. Thank you. We're now happy to take questions, Peter and I. Should we start here in the room?

A couple of things before we kick off. Roberto, operator, can you please explain to people online the procedure. Here in the room, please introduce yourself, your name and the institution you work for, for the benefit of others who may not know. And please limit yourself to 1 question and 1 follow-up. We'll do 2 here, 2 online, and we'll keep switching. Given that there are more people online, we may take 3 or 4 online before we come back here. Liam, you want to kick it off?

Liam Fitzpatrick from Deutsche Bank. I'll follow the rules, Menno. So 1 question to start with on Simandou. It seems like we're getting successive delays. Can you give a bit more color on what's causing it? Any insights on the sticking points? And are you still committed to participating?

Look, this is a massive project. And you have to align quite a few stakeholders, several joint venture partners from China, ourselves and the government of Guinea. Not an easy negotiation. But it's actually gone pretty fast. And it's my assessment that we're doing very, very well on it. I much rather have tension when you negotiate and then really agree on things. So when you get into execution, you don't suddenly realize, no, I don't like this. And I think that's exactly what is happening now. The government of Guinea have hired really good advisers and have gone through it very, very thoroughly. And of course, there were some issues. And Bold and the whole team is right now in Conakry, and I'm very optimistic. I mean ultimately, you only have an agreement when you have ink on the paper, but it's actually progressing very well.

I've got a quick follow-up slightly linked on the iron ore market. You're now in a position to bid volumes with [indiscernible]. You've also given quite a cautious outlook. So would you be comfortable keeping volumes around current levels for the foreseeable future until there's a visible recovery in the market?

Well, right now, we're simply sticking to our guidance. And if you calculate backwards, you will see that, that will require more production in the second half than in the first half. And we feel comfortable about that as we are ramping up Gudai-Darri. But obviously, we will always look at the market conditions, but there is demand for our iron ore.

Richard?

Richard Hatch, Berenberg. Two questions. First one on ERA, you've talked a little bit about it this morning. Just on the numbers that I can put together, it looks like the rehabs, AUD 1.6 billion to AUD 2.2 billion, it was nearly AUD 1 billion, 86% of the company. It's got about $800 million, $900 million of funding. How should we think about the cash that goes into ERA and over what kind of time period? Because clearly, nobody is going to come in and buy it, so you've got to fund it, so how do we think about that?

Absolutely. Look, we are totally committed to make sure that the rehab will happen and work hand-in-hand with the Traditional Owners, the Mirarr people. But ultimately, you're asking a question that you actually have to ask to the Board of ERA because it's a public-voted company. Obviously, we are a big shareholder, and we are just working with the Board to try to figure out how can we most efficiently funnel in money to do the rehab. But we also have to be respectful for the remaining shareholders who also has to contribute, of course. And that's the dialogue we are going again, but there should be no doubt about the stance of Rio. We stand behind. This will be we have to the higher standards.

And just to follow up just on the dividend, which you've paid above your 40% to 60% range over the last few years given the fact that you've made so much cash. I mean with CapEx increasing and perhaps the outlook being a little bit more uncertain, is it just prudent to assume that over sort of 2023, '24, all things known, that you really revert back to the range, which is 40% to 60%, which I see is basically your last point on the last slide? So is that a sensible way to look at it, 40%, 60%, and don't expect to pay above that?

What do you think, Peter?

Well, Richard, I think the key is that we're paying out on a very consistent basis at the interim. I mean, 50%. I mean if you look at the first half of last year at this stage, I think the iron ore price was double where it is today. I mean we are in a different context, and we're just paying out and putting the decision really at the end of the year when we'll have the full information at the end of the year as to the performance. And we'll take -- the Board will take a view of the outlook. So I think we're just being very consistent with what we've done in the past and following through with that, so just expect us to be consistent.

Roberto, can we, please, have the first question from the line, please?

[Operator Instructions] The next question from Paul Young.

Jakob, Peter, first question is around the spend profile, pretty challenging backdrop at the moment, hard to complete projects. You only spent $3.1 billion in the first half. That implies based on the new guidance of $9 billion run rate of spend in the second half. Is -- Peter, is that actually achievable?

So what I'd say is I think that most of that sort of -- the second half is always stronger than the first half in spend. So that profile has been pretty consistent year-on-year as the first point that I'd make about the $3.1 billion we spend. I think the second thing is, I think, the sustaining capital we're spending at pretty consistent levels now year-on-year. We've, I think, built up that $3.5 billion is where we're at. Most of the kind of the lower level of spend was in just rephasing of some of the development spend that we had and also the profile of decarbonization spend, which was a bit slower this year and, as I said, will sort of be more back-ended. So I honestly don't think don't read into the $3.1 billion, I think, of reprofiling. We're still in that $9 billion to $10 billion range going forward. I think you've got a bit of benefit there, tailwind from exchange, but you've also got other pressures in the system. So that's our view. We'll give better guidance at the end of the year when we got full information. As I did say, Simandou is in that guidance. And exactly the timing of when things move forward is going to be important to that spend profile as well.

I mean, Paul, if I should just add 1 thing, I just spent a week in Mongolia. Look, first half, we actually had a lot of COVID restrictions in a number of places. And suddenly, when I was there, the COVID restriction was away, and suddenly, you can just get an awful lot more done. So have that in mind when you look at the numbers as well.

Okay. Yes. The follow-up question is on the performance of the Pilbara. This seems like you are starting to turn the corner. You could be completing all those project times, and Gudai-Darri is ramping up. That will give you some breathing space in 2023 before the next set of half a dozen or so replacement mines are required. But the question is actually on Gudai-Darri. I noticed that this is -- it's been a long time in the making of this mine, but you don't talk about Phase 2 anymore. That seems to be probably the highest returning project that you'd have in the Pilbara. Can you talk around the timing of Gudai-Darri Phase 2. I know you're going to say that we need to ramp up Phase 1 first, but I think that, that will happen fairly quickly into the second half -- first half of next year. But what about Phase 2, can you talk about it?

Yes. Yes, Peter, by all means, I would like to see Phase 2 as well.

Absolutely. So Paul, you're exactly right. I mean the focus is on Phase 1 in ramp-up. I mean the ramp-up profile we're sort of looking at is pretty similar to other mines we've had in the Pilbara in the past. So we need to move to that, get the Pilbara -- get Gudai-Darri up to the 43 million tonnes in the first phase. And in parallel, study is starting on next phase, Phase 2. So no change there, if you like, to the profile that we're working on.

[Operator Instructions] The next question is from the line of Alain Gabriel from Morgan Stanley.

My first question is on the M&A strategy and broadly speaking, on the lithium strategy. Can you expand on the comments you made on M&A? And do you have an increasing appetite for larger deals? Or are you still happy with your $1 billion or $2 billion smaller acquisitions in lithium? That's the first part of the question.

Yes. No, thank you. It's a very good question. We have a very strong balance sheet, so we have the optionality to do many things. But I tend to focus actually less on that side and more about the organization and the strengths of the organization. I'm very keen on keeping our engineers very busy. But I'm also very keen on not overstretching them. And I think it's great that we have taken on Rincon, and I'm very, very keen on trying to figure out what it would take to find a path forward for the ERA project as well. But there's just the limits on how many new projects we should undertake. So it's a little bit that mindset I have, and therefore, I'm not too excited about doing too many things on the M&A front, but we're looking at it. We have the optionality. And as you have seen for a couple of months, asset prices are going down. And then, of course, it becomes more attractive. But key for us starts with some very basic things. Do we have the capacity to execute the things? What are we adding? Why are we the best owner of the asset? And then the second part of it is, of course, trying to not hit it at the top of the cycle.

And following up on the M&A as well. The acquisition process of Turquoise Hill appears to have exceeded the usual 3 to 4 months for the independent valuators to express a view. Are there any deadlines or milestones that you are working with at the moment? And by when should we expect a breakthrough there?

Yes. So TRQ, we put a lot of effort into thinking through and offering the shareholders a fully priced proposal. The Board looked at it seriously and say this is a very serious offer and kicked off the Canadian process. It's a very rigorous process. And to be quite frank, I haven't spent 5 minutes looking at the valuation since then because I want to be respectful to that process. The independent committee of the TRQ Board will come back to us, and I'll listen very carefully to it. I reckon that the market has changed. That copper assets are now trading perhaps 40% lower than before, and therefore, our alternative set -- our set of alternatives are different. Strategically, I still think it's the right thing to simplify TRQ, but quite frankly, let them finalize the process. I understand we're getting close to that, and then we'll have a fresh look at what is in the interest of you shareholders.

Let's come back to the room. Danielle?

It's Danielle Chigumira from Crédit Suisse. Just a question on the decarbonization spend. So the $1.5 billion next 3 years seems to be a bit more back-end weighted now. Can you talk a bit about your ability to spend that? And also, any commentary around whether the cost as in dollar per tonne of carbon reduced has changed since you outlined the initial strategy last year?

Thanks, Danielle. I mean I think the key is that we've set out -- when we set out the sort of targets, the 15% absolute reduction by 2025 and then 50% by 2030, since then we've done an awful lot to build the foundations of how we will get there. So building up the right capability within the organization, really building up sort of some of the studies that are needed because these projects are kind of really, really at the heart of a lot of our businesses where we need to change things. So it's not something from day 1 you need to do. You need to actually go through the right studies and the right engineering to come up with these solutions. So I think that's sort of sense I have now is that we've got really -- we are building those foundations, and we will start as we get into the sort of later this year into '23 and '24 really building up those projects and sort of fully implementing them. So that's why more back ended of the $1.5 billion. I think in terms of price, I think we're just working through that, so I wouldn't change where we're at in terms of the sort of spend profile. We're working through all of that. And -- but at the moment, I think we're pretty fine with that guidance.

Great. And just a follow-up is on the co-management agreement with the PKKP, what does that mean on an operational basis? Does it mean changing mine plans? Does it mean things take longer to implement? How should we think about that?

Yes, this is very close to my heart, and we use it now everywhere, but it's actually a work that was very well invented by PKKP. It's more than a year ago, I started that discussion. I think it's a mindset of thinking about that we are guests on their country and really that we just do things together. And there's something about signing agreements, but it's actually much more about what is happening in the field. And in fact, what we also learned is we can do much better, focus on things when we go hand in hand, so to say, you have representatives from Traditional Owners with yourself when you're out in the field, et cetera. We have actually operated very well like that. We just never called it like that at our bauxite operations at Weipa in Queensland. But we clearly had to improve our practices in Western Australia. And under that banner, we're changing everything. I can tell you, take a project like Gudai-Darri, we have changed the mine plan significantly by really listening carefully to the Traditional Owners. And I also sense now, I had the opportunity to meet all the Traditional Owners, that there is a different sentiment. I think people start seeing that we are listening and we are adjusting. We are -- our people have never been as busy before because we are changing the mine plans a lot. But when we get them right, it's sustainable because everybody wants to see it happening, then it's actually for mutual benefit. So it's not just theory on paper, it's practice, it's how our engineers are working day in and day out.

Jatinder Goel from BNB Paribas Exane. A question on capital allocation. Relating to your comments, Jakob, you mentioned asset prices have come down. Does that make buy versus build more favorable towards buying because with asset prices, wherever you can transact versus CapEx inflation and the execution challenges that the entire industry is facing? But tying to that, most of your future projects are also strategic than rather optional. Can you do both a sizable M&A plus continue with your organic growth as well?

Yes. I mean all else equal, you're right. And -- but I think I look at it also slightly different. We have so much already in the cover, and that's what we're actually trying to focus. You've seen us really pushing Oyu Tolgoi going forward. And right now, as I said, the team is down in Conakry. And I want to see Simandou progressing. And then it comes down so we only have the capacity to do so many things. So if we can progress, all else equal, the cheapest thing is to focus what you already have in the cover, but we are looking at the markets. And yes, it's been better priced now, but who knows. It's not for us to call when the trough is. You only know that afterwards.

Just another follow-up on capital allocation. Was net cash balance sheet not strong enough to top up dividend with a special even if you wanted to stick to 50% payout? And then tied to that, you've been constrained from buybacks because of Chinalco shareholding, but that wasn't really a challenge where share price was. But now do you feel you need to find a solution? And is there any discussion with Australian regulators or Chinalco to solve with maybe Chinalco can participate proportionately and you can still kick off with buybacks?

I think in terms of the balance sheet, yes, we had net cash but relatively small net cash. And I always think of it kind of them making a commitment of $4.3 billion, which, as we said, is our second largest interim dividend. So that has to be sort of factored in. So that's really, really in terms of balance sheet. But as we said, we're just being very consistent on the dividend. 50% is our sort of normal level. It's where we placed the ordinary dividend at the half of the year, putting the big decision to the end of the year when we've got full information. So that's on the first. But in terms of buybacks, yes, that we've still got the same situation in terms of constraints on buybacks. And at the moment, no sort of change to that.

Roberto, can we get another question from the line, please?

Yes. [Operator Instructions] The next question is from Hayden Bairstow.

Just I guess a follow-up to some of the questions previously. Just around your comments on Simandou and the potential timing of that, just looking at the aspirational CapEx for the next '23, '24, sort of $1.5 billion a year. If you're committed to Simandou, would that sort of remove any further options in terms of your capital allocation if you've got the commitments you've already got in the rest of the business? Or is there still going to be scope for other potential new projects to come in?

Thanks very much. When we talk about the $3 billion, we've talked about around as to what we would be willing to sort of commit on around growth. And there's been a number of options we've been sort of working on in parallel. So Simandou is clearly a big component of that. And I said, there's absolutely room within the spend profile to accommodate what we see as potential spend on Simandou to the extent we do sort of land on all the agreements. Would there be room, it depends, as we said, with there's a number of options that we're working on. And so yes, we have flagged some flexibility to accommodate, but it really just depends on timing and exactly when we land these sort of studies on other options.

A follow-up to that would be just on capital allocation between the Pilbara and Simandou and assuming it is approved and goes ahead, I mean do you really start then assessing Pilbara life extension options as opposed to expansions versus more investment in Guinea, pushing Simandou harder?

Look, so far, I think we have 2 major iron ore assets, IOC and the Pilbara. And it has been sound to look at projects stand-alone in each of the assets. At some stage, I hope we'll have 3 assets with Simandou as well. And we'll, of course, look at it in an integrated way. But my standpoint is just the global seaborne iron ore market is 1.9 trillion tonnes. And it's -- from that point of view, I think you have to be careful of saying you get a little bit here, you have to be careful there. Right now, there has been for a number of years a very good balance between supply and demand. And we need to be sure that our wonderful assets in Western Australia are up to snuff, that we are doing the rebuild over time so that we don't get behind the curve while we are also developing Simandou. It's also very important to remember that is 2 different qualities. The quality of Simandou is the highest quality you can have. It's the only basically comparable to what has been produced in the Northern part of Brazil. So you're playing to different markets. You get opportunity, optionality in terms of how you can blend things, et cetera. So I actually see that the asset will strengthen the competitiveness of our Pilbara assets.

[Operator Instructions] The next question is from Robert Stein.

Just a quick question on relationships with China with the new SOE being set up called the China Mineral Resources Group. I'm just wondering how that's going to impact how you think about marketing for your Pilbara business as well as negotiation with the joint venture partners on Simandou. Arguably now they come under 1 banner, and so we'll have a much more united approach. And so I'm just wondering how you're preparing your business for that change in market power.

Yes. No, thank you. Look, I think we need to step back and figure out what is fact and what is rumors. I mean we all know that there was an inaugural meeting of this entity the day before yesterday with senior representation in China. But how they will act in the market is rumors, and I don't want to speculate on that. I have no particular concern. We have worked for the last 50 years successfully with China for the benefit of Rio Tinto. And I believe we have also been helpful in China developing in steel industry, so I'm very confident that, that will continue.

And just a follow-up. There's a change in how the sort of market structure in that format give you an added impetus to invest in your business in Australia and Simandou and the like to grow volumes, where you arguably will have them taken off or you if you don't, is that a way -- is that a change in how the strategy works here?

Well, certainly, we have not changed a single decision within Rio Tinto based upon the market rumors about this. So no, I cannot see that linkage.

[Operator Instructions] the next question is from Lyndon Fagan from JPMorgan.

Just in regards to the decarbonization CapEx of $7.5 billion out to 2030, I guess it's now been some time since that was first announced. I'm wondering if you're able to share the potential returns on that number. I guess BHP has talked about the $4 billion spend with a negative $0.5 billion NPV. They're an equivalent number we can think about for Rio's spend. And I guess the next question I had was related to Slide 40. I was just interested to see the idea of using civil size trucks in iron ore. And I'm wondering if you can maybe talk a bit more about this slide and when this project might be rolled out and, I guess, when we might be able to see 0 emission mining trucks within the Rio business.

That's a wonderful question that I happily pass on to Peter because I also like to know exactly the profitability. But I will say one thing. What has changed since last year is that the price of gas has gone up, the price of oil has gone up, and therefore, all else equal, the economics of renewable becomes better. But Peter?

I think I'd just really go back to what I said at the seminar at a reasonably modest carbon price, we see this as value accretive. But I think you have to stand back and just talk really about that sort of the derisking of the business and the cash flows through effectively taking down the carbon intensity of our business. That's what this is all about is actually really making our business with a 50% absolute reduction, much more resilient in the face of change and decarbonization than before and actually making the business ready for the opportunity as well because I think a lot of the conversation tends to go around the cost of decarbonization. But when we look at our portfolio, we actually see more opportunity because, fundamentally, the world of decarbonization, we're going to need more of pretty much all the products we produce. And so we've got to see this in the round. We're both, I think, making our business much more resilient through the work we're doing and setting ourselves targets we are about Scope 1 and 2 but also positioning the business to take advantage of changing markets and the opportunity that's inherent within what is a very, very big change for the world. So thanks for the question. In terms of the trucks, I mean it's -- my apologies. It's going to take a bit of time. I mean we are now doing the work to really sort of understand what -- how do you get to sort of trucks. And it will take time. We are in an R&D stage working with OEMs around this, so it will take time.

[Operator Instructions] The next question from Myles Allsop from UBS.

Great. Just first of all, maybe on the balance sheet, so Peter, you mentioned that we will see net cash moved to net debt in the second half of the year. Could you give us a sense where you think net debt should ideally sit? Is it in that $5 billion, $10 billion, $15 billion range? You talked around a strong balance sheet, but what does that mean in terms of absolute levels of net debt? That's the first question.

Myles, I think I'm not going to put numbers on it because it changes through the cycle. I mean actually sort of committing to targets on net debt, I think when prices are moving as much as they are, as we said, iron ore price this time last year, it was over $200 a tonne. It's -- we're over -- it's half of that now. To actually set targets and manage that is too hard. What we're saying is that, fundamentally, we believe that a really strong balance sheet is the way that you have real flexibility and strategic options. And you can really act and drive the business consistently throughout the cycle. So would it be in net cash or probably that's not going to be normal, but we'll run the net debt at a very sort of strong balance sheet. That's the way we think is the right way to run a balance sheet in this industry.

Okay. Maybe just on the CapEx as well because I think it's a little bit concerning when we look at the cycle, look at where commodity prices are, obviously, look at the uncertainty around China. And then we still hear that you're looking to increase CapEx by sort of potentially over $2 billion year-on-year in 2029. And obviously, that will have quite meaningful kind of implications for the amount of cash that can be returned to shareholders. But how much flexibility do you see within your CapEx overall? Normally, in a down cycle, we see sustaining CapEx come down. We see kind of growth projects kind of sort of moderate and sell on. But how should we think about your CapEx in this cycle? Is it going to be more kind of resilient as you invest through the cycle, and that impacts cash returns? Or will there be more flex than it looks like in your charts?

So allow me to open up here on the CFO question, but look, this is actually really fundamental. If we start adjusting our CapEx program because we think there is a recession in the next 6 months, we have lost it. We are in for the long haul here. In fact, if you really think about it, the best thing is to invest when you have a recession because that's where you can buy services cheap. We are absolutely convinced that we have the right investment profile going forward. And whether there's going to be a tailwind or headwind, it should not affect the things. Obviously, sometimes things become a little bit more expensive when you get inflation, and we need to manage that very carefully, but we fundamentally want to carry out the activities that we have planned to do.

Myles, I mean, it all ties to having the strong balance sheet because that enables us to be that consistent investor. And at the end of the day, we want to have that level of sustaining capital in our business that keeps the assets -- the integrity and the productive capacity of the assets through the cycle. We need to be investing in our development assets in replacement assets in that range that we talk, again, to keep our cash flow sort of strong throughout the cycle in the long term. And then because we do see positive markets for the future, we want to take advantage where we have those value-accretive growth options to actually bring them forward, and we just want to be consistent through the cycle.

Take 1 in the room and we'll go back to the line [indiscernible]. Anybody? Yes, please.

Alex Pearce at BMO. So it's encouraging to see some improvement in IOC in the quarter. Can you remind us what the remaining bottlenecks are at that project and so we can get a sense of when potentially you could be up to the full capacity there? And is it a case that you need to put this HBI investment in place to actually get to that full capacity?

Yes. Look, IOC is close to my heart as a business. I think it's a wonderful asset, but we have probably run it pretty tight for many years, and it needs a little bit of care. Second quarter has been really, really encouraging. In fact, we had a couple of really, really good months in April and May. But then we had a longer shutdown in June and therefore on average is kind of a little bit of an improvement. I'm very, very encouraged, both with the new CEO and the management team there and how they're going about it. So it will come back to full capacity, but I don't want to predict the time of it because when you're dealing with the aged mining assets, there is no linear development. There might be a few setbacks underway. But they're doing the right things right now. I think it's pretty good, yes.

Back online, please, Roberto, another question.

[Operator Instructions] The next question from Amos Fletcher from Barclays.

Jakob and Peter, I just wanted to ask a question about your growth options at [ Jadar ] and Winu. You seem to be considering your strategy of saying relatively little about what's actually happening on the ground there. I was just wondering, can you give us some more detailed comments on project progress, what are the Board's internal deadlines and expectations for the next key stage gates, et cetera?

No, thanks very much. I mean I think the focus is very much and should be on Traditional Owner engagement and on the approvals process. And those processes are underway, and will take the time they take to get right. So that's why we're not putting time frames against it because I think that would actually -- those processes are just ones that we need to go at the right pace and move forward. So that's where Winu stands. Thanks for the question.

[Operator Instructions] We are now taking our next question from the line of Tyler Broda.

I just wanted to touch on the MOU with Ford. Clearly, auto companies are moving closer to the miners with the shifts in batteries and just some of the evolutions there. I just wonder if you could walk through a bit on this MOU, sort of what it means right now, where you could see it going. And then I guess on a wider basis, sort of how do you see things evolve from Rio's positioning on providing offtake. Do you get premiums for these products? How do you see this evolving over time?

Yes. No, thank you. It is very important. It's per definition still just an MOU, so a lot of things need to be sorted going forward. But what you see and I have over the last 3 months met most of the automaker CEOs, and there's a very, very changed mindset because what you see now is that EVs is happening now, and it's an irreversible process. Because in the beginning, people are afraid of investing in the new platforms of EV. But now all the automakers have done it, and they really have to scale that up. And suddenly, they're all realizing that some of the bottlenecks are actually in the materials. That's the 1 dimension. And the other thing is they're making commitments about that their products will have less CO2 in them. And then for both reasons, we become very, very relevant. We become relevant in terms of that we will be able to produce lithium, I hope, one day in Europe. We are producing in the U.S. We will be producing in Argentina. But we're also very relevant that we are producing some of the lowest CO2 aluminum in the world. So it's kind of a -- it's a different kind of partnership with end customers that we can start forming compared to a history of very much commodity trade from our side. So it's -- the world is changing in the commercial landscape, and I find it very exciting.

One more question, Roberto. Next one, please?

[Operator Instructions] The question from the line of Glyn Lawcock.

I was wondering if you could just drill down a little bit on Traditional Owner engagement. Just wondering if you could give me some concrete evidence of progress. I note in the presentation you mentioned Western Range and some movement there. I mean have we got to a point where that Western Range is approved or is it still just progress? I guess it goes to Amos' question too on Winu where Peter said engagement will take time. But you've been saying that for a while now. I just wondered if you could give me some concrete evidence anywhere where you actually are making progress. And in answering that as well, I think in 6 months ago, you made the comment, approach, an appropriate remedy for destruction of [indiscernible] has substantially progressed. Are we getting close to a remedy and is that going to be a dollar figure? And if you can you give me any sense of what that might be.

So of course, we as a company, we like to be very logical and set a time line, et cetera. It doesn't work like that. You cannot impose a time line of recovery with another party. What I would focus on is you're asking for data point is just to see how the relationship has changed from visit to visit is, of course, not me who are making the difference. But when I meet people and they appear differently is because our people have done a super job. So for example, I have been several times to Gudai-Darri, and we were struggling to have the right engagement there. And when we went there as a whole Board 2 months ago. We had the most beautiful session with the Traditional Owners. And that's what I've seen as well. PKKP is difficult -- not difficult, they have amazing people, but they have just gone through so much pain, and you just have to recognize that. But it is real. I was not at the signing ceremony. Our Chairman was there, and it was a very emotional event. On Western Range, yes, we are working hand in hand. We are very aligned with the Yinhawangka people on how the mine plan should look like for the Western Range. So from every new trip I take to Western Australia, I get new data points that things are absolutely hitting in the right direction. Then you can ask, should we've gone faster or slower. I actually think it's happening as fast as it can happen. You cannot expect that such things are just changing from one day to another.

Great. One final question. Roberto, last one, please, before we wrap up.

Our last question is from the line of Lachlan Shaw from UBS.

Jakob and Peter, just a follow-up to Glyn's question there. So turning that around on Traditional Owner engagement, how much time do you think we're talking that these projects, how much time is involved, how much longer are these projects taking to get through these additional processes now?

Look, yes, I don't know whether it takes that much longer. I think we always have to fight bottlenecks within ourselves. I think it's more work to do mine plans. That's for sure. And you will have bottlenecks within your own company. You will have bottlenecks in terms of capacity of participation from the Traditional Owners. You also have bottlenecks in state governments to get approvals, et cetera. But how much longer, we have always had that in a way. And I think the trick is to not see them going longer. Time will tell. But what I see is that we are progressing. For example, the Western Range, I'm actually very impressed. We have, quite frankly, been a bit slow on Western Range for many years. And now lately, we have really progressed it fast. And I think that is actually telling is not about slowing down things to work with the Traditional Owners, is actually there, you can find solutions and move forward.

Okay. Thank you very much, everybody, for listening, and thank you for coming here in London. And see you next time. Bye-bye.