Tyler Broda: Tyler Broda from RBC. Just my question is on inflation. I would like to understand your views on sort of how much of this inflation do you see being sort of transitory and then how much is structural? I know it’s a question, but in terms of your views from right here. And then I guess within that context, we’ve seen sustaining CapEx rise every year. And then on the growth CapEx side, we’re probably going to see higher cost than maybe what we were thought 2 years ago. How — within that context, how does that $10 billion number look mid-decade at this point?
Peter Cunningham: That’s very, very good. In terms of inflation, I think you — in that waterfall, we show some of those market-driven factors. And we would expect those to be sort of exactly the same sort of cycle as our prices. So there’s always a close correlation between our prices and our input prices going forward for those. I mean, clearly, there is that inflation there that we sort of — general inflation that flows through. But I have to say, I think what we see is pretty much that felt, as I said, right across the cost curve. So what you’re seeing is pretty much just the cost curve rise. And so that being reflected then into price. So we — our job is to sort of try and minimize anything over and above that as much as we can to maintain our competitive position.
And that is our full intent and how we’re trying to run the business at this moment in time. So that’s how we see it. In terms of the capital side, and as I said, I think we’re absorbing that inflation within our sustaining capital guidance. So we don’t see that changing. And I think we’ve now had pretty consistent levels of sustaining capital going to the business and going forward. And I think that talks to one of the Jakob’s key priorities is. Every year, our assets come out at the end and better health than they go in. And that sustained — having that level of sustaining capital is absolutely critical. So I think at the moment, we are comfortable with the capital guidance and just fully absorbing any inflation within that.
Menno Sanderse: Alain?
Alain Gabriel: Alain Gabriel, Morgan Stanley. One question is on the — throughout your presentation, you have given a little reference to inorganic growth. You seem to be much more inwards looking at this stage. How do you think about M&A at this point in the cycle? And do you see opportunities with an acquisition at the asset level, not through the public markets?
Jakob Stausholm: Yes. Look, first of all, I probably much more believe in smaller M&A than big M&A. And I hope you can see with the things we are doing, they’re all individual are very different but they all make industrial sense because that’s where you actually get value out of M&A, in my view. We are trying to build — shape the portfolio so it’s relevant for our customers, for the future. There could be more things. But now you’re saying looking inwards, looking outwards. That’s simply because of the fact that Rio has had for decades a cupboard full of absolutely amazing opportunities. May I mention Resolution, Simandou, Rhodes Ridge, et cetera. You just don’t find those on the market. And we already have in the copper. So this shouldn’t be a surprise that we are looking inwards to try to develop those right now.
But that doesn’t mean that we are not looking outside as well. And I think we showed that with Rincon. We also showed that we were decisive and took TRQ private because it was just the wrong structure. So we’re looking. But at the end of the day, we don’t want to grow lithium for the sake of growing lithium. We want to be convinced that we can actually create value if we’re doing it, buying an asset.
Operator: Your next phone question comes from the line of Paul McTaggart from Citigroup.
Paul McTaggart: So back on the Pilbara, not to bore you. But in the short run, new steelmaking technologies are not going to be around. There’s going to be some years before we develop sort of green steel, et cetera. Is there an increasing pressure to sort of reduce carbon intensity for steelmaking? And that means high-grade feedstocks, potentially DRI, even more scrapped BOS. Obviously, you’re doing Simandou, which is high grade. But what longer term, what do you think is — what will be the changes in the Pilbara with higher ore grades. And do you see an industry maybe perhaps the medium term, we start to do some downstream growth? How do you think this is going to play out?
Menno Sanderse: Paul, you were slightly hard to hear so let me quickly repeat it for Jakob and Peter. So very — we’re moving towards a low steel — low carbon steelmaking industry. That means initially because there are no new technologies. Higher grading the ore streams into that, how do you — we’re doing Simandou, which is higher ore grade. How are you seeing the Pilbara developing in the near term? That’s your question?
Paul McTaggart: Yes.
Jakob Stausholm: So let’s just — first of all, we, as Rio Tinto, are uniquely placed because we will soon be extracting iron ore on 3 continents. And you forgot to mention IOC, which is very, very high quality. And we will have Simandou, which is very high quality. And we have Pilbara, which is high quality, but you’re right, not as high grade as the 2 others. Having said that, look at the expansions we’re doing, Western Range is attractive. Rhodes Ridge is absolutely super quality iron ore. So we are upgrading there. And then on top of that, there is a lot of R&D happening. I think we used the word cracking the code. And we are really trying to find ways and means to progress this. But having said that, the world is not going to change away from blast furnace from 1 year to another. So this is — I think I’ve said in my speech earlier, it’s a multi-decade development. But I hope you see that we are already preparing us for that.
Operator: We will now take the next question. And the next question comes from the line of Kaan Peker World Bank of Canada.
Kaan Peker: Just 1 question on, I suppose, the Pilbara. In the Investor Day and also today, there was a discussion around being a best operator as the goal. However, if we look across the Pilbara, Rio has higher relative unit cost and sustaining CapEx despite being larger scale. So I suppose my question is, when will the best operator goal result in lower unit costs and lower CapEx? And when should we start seeing that come through?
