RIO TINTO NET PROFIT NOSEDIVES

       Rio Tinto Group, the world's third-largest mining company, said first-half profit tumbled 65 per cent after copper, iron ore and aluminium prices declined.
       Net income fell to US$2.5 billion(Bt85.4 billion) from $6.95 billion a year earlier, London-based Rio said yesterday in a statement. Underlying earnings that exclude some one-time items were $2.6 billion, missing the $2.73-billion median estimate of seven analysts surveyed by Bloomberg.
       Rio, which isn't paying a dividend for the first half, said it may pay a final dividend for 2009.
       Chief executive officer Tom Albanese has grappled with debt that ballooned after Rio's $38.1 billion purchase of Canadian aluminium producer Alcan in 2007. Rio cut spending and jobs, raised a combined $21 billion from a share sale in June and an agreement to create an ironore joint venture with its biggest rival BHP Billion, helping to repay debt after commodity prices plunged.
       "Rio still has a large debt pile and is now facing pressure from its largest customer China," Matthew Hasson, mining sales director in London at Arbuthnot Securities, wrote in a note. "We still prefer BHP."
       Rio increased 32.5 pence, or 1.4 per ent, to 2,344 pence in early trade on the London Stock Exchange. The shares have gained 90 per cent this year.
       "A final dividend will be paid subject to satifactory trading results, progress on divestments and prevailing market conditions," Rio chairman Jan du Plessis said in the statement. The total cash dividend for 2010 will be at least equal to the $1.75 billion paid in 2008, he said.
       The company raised $3.7 billion this year selling assets, cut 16,0000 jobs in the first half compared with a target of 14,000, and is on schedule to meet commitments to reduce full-year spending, Albanese said.
       Rio, the world's second-largest iron-ore producer, is embroiled in a spying row in China just as talks on iron-ore contracts with Chinese steelmakers remain deadlocked.
       China, the largest iron-ore buyer, last week formally arrested four Rio executives including Stern Hu, an Australian and head of he company's iron ore business in China. The four, who were detained in Shanghai on July 5, face charges of bribery and stealing commercial secrets from China's steel industry. Rio said it will support the employees in defending against the allegations.
       The arrests came a month after Rio rejected a proposed $19.5-billion investment from state-owned Aluminium Corp of China, also known as Chinalco, in favour of the BHP venture and a rights offer. Teh deal would have allowed Chinalco to double its stake in Rio and own a share in some mines.
       The iron-ore talks stalled after the China Iron and Steel Association demanded a cut from last year's rcord price that is steeper than the 33 per cent agreed on by Japanese and Korean cutomers. China will ask Rio, BHP and Brazil's Vale for a 35-per-cent reduction to match the deal agreed to wtih Australia's Fortescue Metals Group, the CISA said on August 17.
       Rio's iron-ore unit, its biggest earner, had a 33-per-cent decline in underlying earnings to $1.9 billion in the first half.
       The aluminium unit swung to a $689-million loss from a profit of $1 billion a year ago. Earnings from its copper and diamind unti plunged 72 per cent to $472 million in the same period.
       Aluminium was the biggest contributor to Rio's sales in 2008, accounting for 42 per cent, followed by iron ore at 30 per cent.
       The average price of aluminium for immediate delivery on the London Metal Exchange slumped 53 per cent in the first half to $1,213 a tonne, from a year earlier, while copper fell 50 per cent to $4,067 a tonne.
       Uneerlying earnings exllude items such as asset divestments and impairments.
       The company said in June it will not pay an interim dividend.
       AT A GLANCE
       Chief executive officer Tom Albanese has grappled with debt that ballooned after Rio's $38.1 billion purchase of Canadian aluminium producer Alcan in 2007.
       "Rio still has a large debt pile and is now facing pressure from its largest customer China," Matthew Hasson, mining sales director in London at Arbuthnot Securities, wrote in a note. "We still prefer BHP."
       Rio increased 32.5 pence, or 1.4 per ent, to 2,344 pence in early trade on the London Stock Exchange. The shares have gained 90 per cent this year.