Chemistry Board

Rio Tinto Profit Falls

Rio Tinto have said that commodity markets are likely to remain volatile in the near term after reporting a 22% drop in first-half earnings, but the company stuck by its US$16 billion spending program for this year even as rival miners cut or postponed investments.

Rio Tinto, the world's second-largest iron-ore producer by output after Brazil's  Vale SA also said it expects Chinese growth to pick up by the end of the year as billions of dollars pledged by Beijing on new infrastructure give the economy a shot in the arm.

China accounts for around 60% of imports of iron ore, much of it shipped from the remote Pilbara region of Western Australia state, where Rio Tinto and BHP Billiton are spending vast sums to expand mines.

However, the Chinese economy grew 7.6% in the second quarter compared with a year earlier, the slowest rate since the financial crisis. This has prompted some analysts to predict that China's demand for steel, which uses iron ore, will fall this year for the first time in 31 years.

Rio Tinto's net profit fell to US$5.89 billion in the first six months of the year from a record US$7.59 billion a year earlier, while revenue dropped to US$25.34 billion from US$29.06 billion. It said it would pay an interim dividend of 72.5 cents a share, up 34% from a year earlier.

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