Mining giant Rio Tinto’s first-half profit more than triples amid strong demand for iron ore

Rio Tinto’s first-half profit more than triples

SYDNEY — Mining giant Rio Tinto said first-half profit more than tripled amid strong iron ore demand from China and higher commodity prices as the world economy climbed out of recession.

Net profit for the six months through June was $5.85 billion, up from $1.62 billion in the same period a year earlier, the Anglo-Australian company said in a statement Thursday. The company’s underlying earnings — which exclude one-time gains and losses from events such as asset sales — were $5.77 billion, up 125 percent.

“This was an outstanding half reflecting higher prices,” Rio chairman Jan du Plessis said in a statement. “Our business is robust with a strong balance sheet which is able to withstand volatility or further shocks from the global economy.”

In the first half of 2009, Rio was still struggling with massive debt from its 2007 purchase of Canadian aluminum giant Alcan Inc. for $38 billion, and was battling the effects of the global financial crisis.

Rio, the world’s third largest mining company, said its net debt had been reduced to $12 billion, compared with $39 billion a year earlier. The company declared an interim dividend of 45 cents per share.

Demand for iron ore — a key component in steel production — has skyrocketed, particularly from China, which is the world’s biggest steel producer. That has led to massive growth in the mining industry, with Rio raising iron ore production this year after demand from China prompted a 39 percent jump in first quarter output.

Rio’s iron ore net earnings were $4.11 billion, up from $1.93 billion in the same period last year.

Du Plessis said developing Rio’s relationship with China was a key priority, and said he was pleased that Aluminum Corp. of China, or Chinalco, had agreed last week to buy a $1.4 billion stake in a Rio iron mine in West Africa.

CEO Tom Albanese said he expects demand for commodities to remain strong over the long term despite a volatile global economy. “Our longer term view remains that industrialisation and urbanisation in China, followed by India, will drive robust commodity demand growth.”

Rio’s underlying earnings excluded one-off items such as the company’s sale of its Corumba iron ore mine in Brazil to mining giant Vale SA for $750 million.

Rio shares rose 0.2 percent, or 17 Australian cents (16 cents), to close at AU$73.01 on the Australian stock exchange ahead of the company’s earnings announcement.