rio banks $2.2 billion Rio banks $2.2 billionRebecca...

rio banks $2.2 billion Rio banks $2.2 billion


Rebecca Keenan
Thursday, February 03, 2005


MAJOR mining house Rio Tinto has posted record US$2.2 billion earnings, buoyed by strong commodity prices but offset by a weakened US dollar and operational issues at its copper and gold Grasberg mine in Indonesia.

The result was a 61% improvement on 2003s achievement.

A pit slippage at the Grasberg operation in 2003 cost Rio US$230 million via decreased production in 2004. The company claimed $30 million on insurance and production levels had returned to normal by the last quarter of the year.

The company also lost money on exchange rates with the strong Australian dollar against the US dollar reducing earnings by US$326 million.

Rio said higher volumes, mostly from new projects including the Diavik diamond project, Escondida copper project, Hail Creek coking coal project and the West Angelas iron ore project, had increased earnings by $270 million.

However tropical cyclone Monty had trimmed down volume growth at the Western Australian iron ore operations.

Total cash flow for the year was up 28% on 2003 at US$4.49 billion.

It was good news for Rio shareholders with dividends increased 20% to US77c per share. Rio also outlined its intention to return up to US$1.5 billion of capital over two years through share buy-back programs.

While no mention was made of a much speculated counter bid for WMC Resources Rio chairman Paul Skinner said that after the share buy-back program there was still "flexibility to take advantage of opportunities as and when they arise".