9 Aug 2012

Slide in Rio Tinto profit

6:05 am on 9 August 2012

Rio Tinto has recorded a 34% slide in underlying profit. First-half profit excluding one-off items was $US5.15 billion.

Statutory net profit was higher at $US5.89 billion, but still down 22% on last year.

The Anglo-Australian company says its net earnings include a $A989 million deferred tax asset following the introduction of the Minerals Resource Rent Tax in Australia.

Lower prices wiped almost $US2 billion off the group's half-year profit compared to the first half of 2011.

However, the company has not cut its $US16 billion expansion plans, expecting Chinese demand for iron ore and coal to improve later this year.

The ABC reports the cornerstone of that expansion is an increase in Pilbara iron ore output to 283 million tonnes per annum by the end of next year, and 353 million tonnes by the first half of 2015.

Chairman Jan du Plessis says that while lower prices hurt profits in the short-term, he is confident there will be demand for the company's increased output in the future.

Chief executive Tom Albanese says he expects around 500 Chinese infrastructure projects to commence over the next year, driving demand for commodities, but adds that the company's projects are still profitable in an environment of lower prices.

Despite the fall in profit, Rio announced a 34% increase in its interim dividend to 72.5 US cents. Rio is the world's third biggest miner.