Rio Tinto first half earnings jump 125 percent

5th August 2010, Comments 0 comments

Anglo-Australian mining giant Rio Tinto Thursday posted a 125 percent jump in its first-half earnings to 5.8 billion US dollars, citing recovery in its key markets.

Chief chief executive Tom Albanese said the results were a first-half record.

"We've reaped the benefits of the cost reduction efforts implemented in 2009 and we have been pushing our production hard to benefit from a strong pricing environment, leading to record first-half cash flows," he said in a statement.

Rio said its relationship with China was a critical one, but warned that despite predictions of Chinese and global economic growth this year and next, the world economy "will be volatile".

"Developing our relationship with China is a key priority for Rio Tinto," said chairman Jan du Plessis.

He said the "outstanding" first-half performance was due to higher commodity prices, which added 3.77 billion to underlying earnings compared with the same period last year.

Du Plessis also attributed the results to cost reduction efforts, which slashed Rio Tinto's net debt to 12 billion dollars from 39 billion in June 2009.

Rio said it had renewed its focus on growth, with three billion dollars approved since January for projects including the expansion of Western Australia iron ore operations and a joint venture with Chinalco at the Simandou iron project in Guinea.

"Growth is the first priority for our cash flows," said Albanese, noting expansions or development underway in Canada, the United States and Mongolia.

Chinese growth is tipped to be nine percent, with "positive implications for metals and minerals markets", but Albanese warned that "economic conditions on a global scale will be volatile" for the next 18 months.

"Our longer-term view remains that industrialisation and urbanisation, followed by India, will drive robust commodity demand growth," Albanese said.

© 2010 AFP

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