The writedown is largely related to Rio’s ill-timed $38.1 billion takeover of Alcan in 2007.

Rio chief executive Tom Albanese and chief financial officer Guy Elliott will forgo their annual bonuses due to the charge.

Cash flow from operations rose 16% to $27.4 billion and earnings before interest, tax, depreciation and amortisation increased 10% to a record $28.5 billion.

Albanese said the financial results were driven by another record year for the iron ore business but not all divisions performed strongly.

“At our November investor seminar we noted that uncertain macroeconomic conditions, together with stronger currencies in some regions and high raw material costs, would result in impairments of our aluminium business,” he said.

“Under these conditions, the full value of our planned improvements in cash margins from existing aluminium operations and from the successful implementation of growth projects is not reflected in the market valuation used for impairment purposes.

“As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year.”

However, Albanese said demand for aluminium remained strong and after divesting non-core assets the company would continue to focus on securing its position as the lowest-cost producer in the industry.

“We have refocused on our core assets, in particular our world-class bauxite resources, industry-leading technologies and our modern portfolio of large scale, long life, hydro-based smelters,” he said.

Albanese said cost pressures, as well as the higher Australian and Canadian dollars, were affecting margins.

“We are determined to tackle these cost issues and are accelerating a number of cost and productivity initiatives to control those costs we can influence,” he said.

“We will also continue to mitigate some of these cost increases, through our industry-leading investment in technology, which will lead to increasing automation and improved productivity across many of our operations in years to come.

Albanese was still bullish on long-term growth, despite short-term uncertainties.

“All that we are seeing in China at present underlines our expectation of a soft landing in our key Chinese market, with growth in excess of 8 per cent in 2012,” he said.

“Longer term, the drivers of industrialisation and urbanisation in emerging economies remain in place and will lead to an unprecedented increase in demand for metals and minerals over the next 10 to 20 years.

“It is increasingly apparent that the mining industry as a whole will struggle to bring new supply to the market quickly enough to meet this heightened demand. The recent turmoil in the financial markets will only further delay new supply.”

The company is clearly focused on growth, with capital expenditure jumping to $12.3 billion last year, from $4.6 billion in 2010.

Total capital expenditure for 2012 on approved projects and sustaining capital is expected to be $16

Billion, but the company expects this to increase as it improves further projects, mainly in the Pilbara.

The company increased its dividend by 34% to $1.45.

This story first appeared on ILN's sister publication MiningNews.net.