Rio Tinto Says First-Half Profit Doubles on Iron Ore, Aluminum

Aug. 26 (Bloomberg) -- Rio Tinto Group, fighting a $142 billion hostile offer from BHP Billiton Ltd., said first-half profit more than doubled on increased aluminum production and record iron ore prices. Net income rose to $6.91 billion, from $3.25 billion a year earlier, London-based Rio said today in a statement distributed by the Regulatory News Service. Chief Executive Officer Tom Albanese says Rio is better able to expand its output of commodities independently. BHP, based in Melbourne, last week posted a 30 percent gain in fiscal second-half profit after producing record quantities of crude oil, iron ore and coal. Albanese, 51, plans to boost iron-ore output in Western Australia and mine the steelmaking raw material in Guinea to triple output to more than 600 million tons. BHP made its initial proposal in November, the same month Rio paid $38.1 billion for Canada's Alcan Inc. That made Rio the second-largest aluminum producer, boosting its second-quarter output of the lightweight metal almost fivefold. Rio is also the world's second-largest iron ore producer, and it said last month that second-quarter output of the steelmaking raw material rose 13 percent to a record 41.9 million metric tons. Both Rio and BHP agreed to contract-price rises for iron ore of as much as 97 percent from April 1. Prices have risen fivefold since 2001, driven by rising demand in China and other emerging economies. Iron ore accounted for 30 percent of Rio's sales last year, the biggest portion, followed by aluminum with 24 percent. Coal has surged to records this year. Aluminum for immediate delivery on the London Metal Exchange averaged 2.3 percent higher in the first half compared with a year earlier. Copper was 20 percent higher. Russia's United Co. Rusal is the largest aluminum producer and Brazil's Cia. Vale do Rio Doce is the biggest iron ore company.