Rio Tinto annual profits treble to $14.3bn
Global mining giant Rio Tinto Thursday said its annual profits had nearly trebled to $14.3 billion on the back of soaring commodities prices and strong growth in emerging markets.
The Melbourne and London-based company enjoyed record underlying earnings in 2010 of $14.0 billion and record operational cash flow, while net debt was slashed from $18.9 billion to $4.3 billion.
"This year's record results reflect a combination of strong commodity markets, first class assets and excellent operational performance at our managed operations," said chairman Jan du Plessis.
Chief executive Tom Albanese said Rio had recovered from turmoil sparked by its pre-financial crisis purchase of Canada's Alcan, which prompted a takeover bid from rival BHP Billiton and the offer of a cash injection from Chinalco.
"Rio Tinto is reinvigorated, running strongly and benefiting from favourable markets," Albanese said.
Surging commodity prices were the main driver of Rio's stellar results, which were largely in line with expectations, boosting underlying earnings by $9.5 billion.
Copper, iron ore, tin and gold are all close to all-time records, while silver and palladium are at multi-decade highs and aluminum, nickel, platinum and coal have risen to their highest levels since the global financial crisis.
There was "robust" demand for power-generating coal from South Korea, India, Taiwan and China, while iron ore and coking coal benefited from improved conditions across all markets, Rio said.
Citing "GDP growth in emerging markets and supply constraints," Albanese said the general market and pricing outlook for commodities remained positive, though withdrawal of stimulus following the downturn continued to pose risks.
"(This has) the potential to generate both volatility and substantial swings in commodity prices," said Albanese.
"We are well placed to cope with the risks of both short term volatility and long term demand growth."
The mining giant was so confident of its prospects it announced a $5.0 billion share buyback to return "excess capital to shareholders" and said its main focus was growth.
Du Plessis said Rio's Australian iron ore ramp-up continued, with the company targeting 283 million tonnes per year by 2013 and 333 million by 2015 from 220 million currently.
There had been $12 billion in capital works approved across its tier one projects since the start of 2010.
"We are in a significant growth phase and have multiple opportunities to pursue," he said. "We will continue to make substantial investments in value-adding organic growth and targeted small to medium-sized acquisitions."
Rio had taken management of Mongolia's Oyu Tolgoi copper and gold project near the Chinese border, he said, which is expected to produce 450,000 tonnes of copper and 330,000 ounces of gold annually over 35 years.
The miner had also made a 3.9 billion dollar play for Australia's Riversdale, well established in the Mozambique coal fields, which du Plessis said "now has the unanimous support of Riversdale's Board" and had been extended until March 4.
It was Rio's first attempted acquisition since the collapse of a huge iron ore tie-up with rival BHP Billiton last October amid anti-competition complaints from regulators and top customers including China.
Rio's last big buy, the 2007 takeover of Canada's Alcan, was expensive and hugely unpopular.
It announced a final dividend of 63 US cents.
© 2011 AFP