First-half profits rose to $104.7 million compared to $79.5 million in the same period last year. The recently acquired Bengalla and Warkworth mines contributed six months of production compared to five months in the first half of last year.

A Rio Tinto subsidiary, Coal & Allied also improved its gearing to 41%, down from 61% at the end of December.

"We completed the sale of the Ravensworth/Namara business and our interests in the Moura operation for a total of $420 million and used the proceeds to reduce debt," Coal & Allied managing director Gary Goldberg said.

The company's Hunter Valley operations in New South Wales increased production to 6.4 million tonnes from 5.1Mt after implementing seven-day production. However, production from the Hunter will be cut by 1Mt in the final six months of the year.

"Coal & Allied remains optimistic about the long-term outlook for the market for thermal coal but recognises the need to respond to short term fluctuations," the company said.

Interim dividends also rose to 40c per ordinary share from 35c in the first half of 2001.