Rio Tinto plc DISCLOSUREOther Disclosures

Market Risk

25 Financial instruments and risk management Recognition and measurement We classify our financial assets into those held at amortised cost and those to be measured at fair value either through the profit and loss (FVTPL) or through other comprehensive income (FVOCI) based on the business model for managing the financial assets and the contractual terms of the cash flows. Classification of financial asset Amortised cost Fair value through profit and loss Fair value through other comprehensive income Recognition and initial measurement At initial recognition, trade receivables that do not have a significant financing component are recognised at their transaction price. Other financial assets are initially recognised at fair value plus related transaction costs. The asset is initially recognised at fair value with transaction costs immediately expensed to the income statement. The asset is initially recognised at fair value. Subsequent measurement Amortised cost using the effective interest method. Fair value movements are recognised in the income statement. Fair value gains or losses on revaluation of such equity investments, including any foreign exchange component, are recognised in other comprehensive income. Dividends are recognised in the income statement when the right to receive payment is established. Derecognition Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised in the income statement. Not applicable. When the equity investment is derecognised, there is no recycling of fair value gains or losses previously recognised in other comprehensive income to the income statement. Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost. Financial risk management objectives Our financial risk management objectives are: • to have in place a robust capital structure to manage the organisation through the cycle • to allow our financial exposures, mainly commodity price, foreign exchange and interest rates to, in general, float with the market. Our Treasury and Commercial teams manage the following key economic risks generated from our operations: • capital and liquidity risk • credit risk • interest rate risk • commodity price risk •