Tuesday, UK-based mining giant Rio Tinto Group (RTP,RIO.L) reported first-half profit that more-than doubled from last year, on strong demand and higher prices for minerals and metals. Further, the company, combining Rio Tinto Plc and Rio Tinto Ltd., announced a 31% rise in interim dividend, and said it remains on track to announce US$10 billion divestments in 2008.
First-half net earnings attributable to equity shareholders grew 113% to US$6.91 billion from US$3.25 billion last year. Earnings per share surged to 536.1 US cents from 250.4 US cents a year ago.
The 2008-first half results included profits on disposal of interests in businesses of US$1.48 billion, partly offset by charges of US$120 million, including non-recurring consequences of Alcan acquisition. Prior-year results included impairment charges less reversals of US$314 million.
Excluding items, underlying earnings grew 55% to US$5.47 billion or 426.5 US cents per share from US$3.53 billion or 272.6 US cents per share last year.
Rio Tinto's pre-tax profit was US$9.69 billion, higher than US$4.66 billion in the previous year.
The price movements of all major commodities increased earnings by US$2.79 billion, and higher sales volumes, mainly from iron ore growth projects and the inclusion of Alcan, benefited earnings by US$616 million.
Gross sales revenue totaled US$30.01 billion, up from US$13.93 billion a year ago. Consolidated sales revenue grew to US$27.19 billion from prior year's US$12.06 billion.
Rio Tinto's chairman Paul Skinner said, "These are outstanding results. The driver of demand for our products is urbanisation and industrialisation in heavily populated countries like China and India, and these economies continue to grow strongly. Prices for our products remain high by historic standards."
Among divisions, Iron Ore sales revenue surged 114% to US$8.09 billion from US$3.78 billion last year. Production- Rio Tinto share was 79.2 million tones, up 14% from the prior year. Rio Tinto negotiated higher benchmark pricing levels for its iron ore production in 2008. The company reached agreement with major customers for a 96.5% increase for lump ore and 79.88% for fines from the Pilbara operations for the 2008 contract year, representing an 85.7% weighted average increase. Demand remains very strong, the company said.
Aluminium sales revenue, from Rio Tinto Alcan, soared to US$12.56 billion from US$1.77 billion a year ago. On a pro forma basis, sales revenue increased slightly to US$12.56 billion from last year's US$12.29 billion. Production of Bauxite increased 15%, Alumina rose 10% while Aluminium production edged up 1% in the period.
Energy & Minerals sales revenue climbed 30% year-over-year to US$4.65 billion. Production-Rio Tinto share of coal in US rose 1%, and other Australian coal production increased 8% from last year. The production of Uranium increased 8%, Titanium dioxide grew 6%, and Borates jumped 18% from the previous year.
Meanwhile, sales revenue from Copper & Diamonds dropped 1% year-over-year to US$4.71 billion, on lower production, despite higher prices. Refined copper production declined 20%, while mined copper production rose 4%. The results were also impacted by production fall of 33% in Mined molybdenum, 57% in mined gold, and 31% in diamonds. Volume declines in copper, gold and molybdenum were caused primarily by lower grades at Kennecott Utah Copper. Meanwhile, the average copper price grew 20%, gold price climbed 38%, and molybdenum price went up 21%.
Regarding its production, Rio Tinto said it plans to increase iron ore production to over 600 million tonnes per annum globally, including growth in Canada, Brazil and Guinea. The company expects to increase annual production capacity in Australia from 220 million tonnes in late 2008 to 320 million tonnes in 2013, with a conceptual pathway to 420 million tones.
Further, Rio Tinto said it increased 2008 interim dividend by 31% to 68 US cents from last year's 52 US cents per share. Rio Tinto Plc shareholders will be paid an interim dividend of 36.25 pence per share, compared to 25.59 pence per share last year, while shareholders of Rio Tinto Ltd. will receive an interim dividend of 77.35 Australian cents per share, higher than 60.69 Australian cents per share last year, which will be fully franked.
The dividend will be paid on October 2 to holders of ordinary shares, with ADR holders to be paid on October 3. The payments are applicable to Rio Tinto plc and ADR shareholders on record of September 5 and to Rio Tinto Ltd. shareholders on record of September 9.
The company added that it is committed to increase the full-year dividend by at least 20% in 2008, and again in 2009.
In addition, Rio Tinto said the Rio Tinto Alcan integration is making good progress, and remains on track to deliver US$1.1 billion of after tax synergies from the end of 2009. The company's initial estimate was for US$600 million. It was in October 2007 that Rio Tinto acquired a controlling 79.42% interest in the issued share capital of Alcan Inc, and the remaining 20.58% was acquired by November, with a total purchase price of USUS$38.7 billion.
The company also said it remains on track to announce US$10 billion of divestments in 2008.
In a different development on Sunday, Australian government approved a bid by China's state-owned Aluminum Corp. of China Ltd., or Chinalco, (ACH), to raise its stake in Rio Tinto to 11%. The approval was granted by Wayne Swan, Treasurer of the Commonwealth of Australia, on Monday.
Swan said that he approved the proposal by Chinalco to acquire up to 14.99% of the shares in Rio Tinto Plc, the London Stock Exchange-listed arm of Rio Tinto. A 14.99% stake equates to an interest of around 11% in the Rio Tinto Group.
Rio Tinto is currently fending off a hostile US$142 billion takeover bid by the world's largest miner BHP Billiton Ltd. (BHP,BBL,BLT.L).
Skinner said, "BHP Billiton's pre-conditional offer to acquire all the shares in Rio Tinto has now been referred to a second phase review by the EU competition authorities. The Group's performance in the first half, together with our growth potential, supports the Boards' view that Rio Tinto presents a very strong standalone value proposition for shareholders."
RTP closed Monday's regular trading session at US$379.65, down US$1.61 or 0.42%, on a volume of 259 thousand shares.
RIO.L is currently trading at 4,998 pence on the LSE, down 181 pence or 3.49%, on a volume of 1.3 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.