Rio Tinto Diamond Earnings Rise 10%

Diversified miner Rio Tinto enjoyed record first half earnings, noting strong operational performance and markets. First half net earnings were $2,165 million, jumping nearly 34.5 percent. Its three diamond operations generated net earnings of $99 million.

The miner reports this morning (Wednesday) first half underlying earnings of $2.087 billion, double those of the first half of 2004 of $993 million.

The results were a reflection of strong markets buoying prices across the board by $1.004 billion. Higher production volumes added another $460 million to the results.

Rio’s three diamond mines, Argyle, Diavik and Murowa, added $9 million to net earnings of $90 million during the first half of 2004. 100 percent owned Argyle in Australia saw gross turnover rise from $195 million to $246 million, netting $40 million compared with $36 million.

Argyle’s production nearly tripled from 18.057 million carats to 6.282 million carats. By comparison, full year production in 2004 was 20.62 million carats.

Rio's 60 percent share in Diavik balanced out that gain, adding another $50 million to the bottom line, a $4 million drop. “The effect of the weaker US dollar offset the benefit from higher prices,” the company said. Its share of the Canadian mine production increased 12 percent to 2.558 million carats from 2.286 million during the first half of 2004.

The difference in the diamond net earnings came from the 78 percent share in Murowa that contributed $9 million. The mine commenced production in the second half of 2004.

Diamond exploration continued in Canada, Botswana, Mauritania, India and Brazil.

However, rough diamond sales make up only 10 percent of the miner’s results. Copper sales generated net earnings of $440 million and iron ore sales added another $424 million. 

Rio Tinto’s chairman Paul Skinner said, “Very good operational performance across all our businesses enabled us to capitalize on the strong markets we experienced for our products. As a result, cash flows and earnings were at record levels. Cash flow from operations, including dividends from associates and joint ventures, was $3,421 million.”