HomeBase MetalsRecord profit drop for Rio Tinto

Record profit drop for Rio Tinto

Conveyor at Rio’s Los
Colorados ore
Melbourne, Australia — MININGREVIEW.COM — 20 August 2009 – Rio Tinto Limited “’ the world’s second-largest miner “’ posted a record drop in 2009 first-half profit, in line with market forecasts, but said that it was confident about the future after a tough 18 months.

Making this announcement here, the company “’ which has eased its debt woes with recent asset sales and a US$15.2 billion (R123 billion) share sale “’ forecast that cost cuts would pay off in the second half, and in a sign of its confidence said it expected to pay a final dividend this year.

“There is more work to do, but we are better positioned with renewed financial strength and a leaner cost base,” chairman Jan du Plessis said in a statement.

Reuters reports that the key challenge for Rio Tinto is to resolve a stalemate with Chinese steel mills on price talks for iron ore, its biggest earner, amid tension with the Chinese government over the arrest of four staff in Shanghai on suspicion of bribery.“We remain cautious about the recent rally in prices,” du Plessis added.

Rio Tinto is still pushing for more asset sales to bolster its balance sheet, damaged by the costly takeover of Alcan two years ago at the peak of the commodities boom.

With the US$2 billion (R16 billion) sale of most of its remaining Alcan packaging businesses to Australia’s Amcor Limited this week, Rio has passed the half-way mark of its target to sell US$15 billion (R120 billion) worth of assets in two years. It said it had cut net debt by nearly 40%.

Underlying January-June earnings fell to US$2.565 billion (R20 billion) from US$5.526 billion (R44 billion) a year ago, matching analysts’ forecasts for around US$2.6 billion (R21 billion).

Rio’s first-half iron ore earnings fell by one-third, while the company’s coal earnings rose 48%. Its aluminium division posted a loss of US$689 million (R5.5 billion).