Sunday, February 5, 2006

Rio Tinto Group, the world’s third-largest miner, say they will return a record annual profit of over AU$5.32 billion to shareholders, following surging commodity prices – doubling the group’s profit. Earnings from operations jumped 118 percent last year.

The London-based company unveiled a net profit of 58 per cent on the previous year. The result was boosted by increases in commodity prices driven by demand from China. Chinese interests account for around 15 percent of Rio Tinto’s sales.

Rio Tinto’s CEO, Leigh Clifford said demand for iron ore remains strong. Prices for the steelmaking raw material and metalshave climbed to records amid rising demand from China.

“China clearly continues to have a major impact on what they are doing,” said Tim Barker at BT Financial Group. “With commodity prices as strong as they are at the moment, and not showing any signs of a change of direction, one would think there is still room for some improvement in earnings in 2006,” he said.

The company produced 65 million tons of iron ore in the second half, 15 percent more than a year ago. Rio and other miners last year secured a record 71.5 percent price increase.

Rio Tinto say they are studying further mine expansion and will invest around $9 billion to meet the global demand led by China. Projects include expanding WA iron ore mines, its coal mine in NSW and copper interests in the USA.

Other investments would see the expansion of a titanium dioxide project in Madagascar and Canada, in the Cortez Hills gold venture in the USA, and in the Argyle Diamonds underground mine development in North West Australia.