Rio Tinto posts record earnings

FIRST-half earnings for the world's second largest diversified mining group were up 24% to $841 million, with energy accounting for 21% of the group’s turnover.

Staff Reporter

“Rio Tinto’s first-half earnings were at a record level, which is satisfactory against the background of a weak economic environment,” said Rio Tinto chairman Sir Robert Wilson. A further decline in the Australian dollar against the US dollar has substantially helped ease the burden of weak prices, he said.

The energy group, which comprises coal and uranium oxide, delivered a 43% improvement and first-half earnings of US$167 million.

US subsidiary Kennecott Energy lifted production in the second half of 2000 due to improved demand. Kennecott Energy varies its production, and commits to contracts, in response to changes in market conditions and the company is now fully committed for 2001, and 86% committed for 2002.

Approximately 50% of 2002 production volume is committed at prices prevailing before 2001, 13% is dedicated to long term contracts and 6% is priced quarterly at prevailing market prices.

The 48% increase in production from the Australian coal operations (16.9 million tonnes) was largely due to the Lemington and Peabody acquisitions. In New South Wales, Coal & Allied’s increased earnings of $38 million benefited from improved sales volumes, the weaker Australian dollar and an increase in seaborne traded coal prices.

The Lemington mine integration was completed and work progressed to realise value from the acquisition of the Peabody mines. Earnings at Pacific Coal in Queensland of $60 million benefited from the significant increase in seaborne traded coal prices. At the Kestrel mine, longwall performance issues affected production and constrained shipments. Kestrel produced 1.5Mt of coking and thermal coal with sales of 1.6Mt.

Blair Athol overcame mining difficulties associated with working through old underground workings and produced 5.9Mt compared with 5.0Mt. Tarong's production of 2.8Mt was higher, reflecting increased demand from the adjacent power station.

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