will be up more tonight, page-43

full-year profit of us$9.9bn - reuters estimates Rio rides commodities boom
02/02/2006 10:27 AM
Sydney -

World number-two miner Rio Tinto said on Thursday its second-half profit more than doubled on strong demand and high prices for iron ore, aluminium, copper and other minerals in a commodities boom that shows no sign of slowing.

The miner rewarded shareholders with a $1.5bn special dividend and announced a $2.5bn share buyback by the end of 2007, subject to market conditions, as cashflow from its global operations jumped 85% to $8.3bn.

With demand soaring, especially from rapidly developing countries such as China and India, copper and zinc sell at prices at or near all-time highs and aluminium has not been so expensive since 1988.

"Global economic growth in 2005 showed continued resilience and demand from China remained strong," Chief Executive Leigh Clifford said in a statement.


......... Riding on the commodities boom, shares in Rio have risen about 68% since June 30 last year, compared with a 17% rise in the Australian S&P/ASX 200 Index.

Larger rival BHP Billiton should unveil fiscal first-half net profit before abnormal items of around $4.5bn on February 15, up from $2.8bn in the first half a year ago, setting the stage for a full-year profit of $9.9bn, according to Reuters Estimates.

BHP Billiton and Rio derive substantial earnings from their annual production of billions of pounds of copper - a metal used in everything from telephone cables to bathroom taps, and which is in short-supply in China.

The pair are joint venture partners in Chile's La Escondida deposit, one of the world's largest copper mines. BHP also mines the rich Olympic Dam lode in Australia, while Rio owns the deep Bingham Canyon mine in the United States.

Copper sells for around $2.19 a pound today, compared with $1.45 a pound a year ago.

Both companies posted strong output data in the October/December quarter, with Rio adding revenue from price hikes in the little-known market for molybdenum, a steel alloy, and BHP cashing in on high oil prices.

Rio Tinto's copper operations provided $2.02bn in net earnings in 2005 followed by iron ore which delivered net earnings of $1.72bn.