Alcan hits Rio bottom line
10th Feb 2012
LONDON, Feb 10 – An US$8.9B hit from the overhang of the Alcan purchase nearly five years ago has cut global mining giant Rio Tinto’s net earnings by 59% to $5.8B for the year to December 2011.
The impairment charge, relating to the write down last year on the value of the company’s aluminium assets, stopped Rio Tinto achieving yet another record in a year when it posted its highest ever underlying earnings of $15.5B and cash flows from operations of $27.4B.
Higher world prices across each of the company’s commodity sectors helped offset reductions in output and increased costs in its world-wide businesses.
The main driver behind the company’s success continues to be the Iron Ore group, which contributed $12.9B to underlying earnings, a rise of 26% from the previous year due to record production volumes and higher prices.
The Energy group, covering coal and uranium operations, had a 10% fall to $1.1B. The Queensland floods of early 2011 reduced production volumes while lifting costs, and production of uranium from the company’s two mines was substantially lower.
Copper group earnings fell 24% to $1.9B, reflecting lower volumes from lower grades at Kennecott Utah Copper, Escondida and Grasberg, higher cash costs and an increase in evaluation expenditure.
Higher prices for the Diamonds & Minerals group were largely offset by lower volumes and increased costs, but the main factor in a 23% year-on-year fall in earnings to $252M was a $79M tax benefit in 2010. Rio Tinto Alcan's earnings were 28% lower at $442M.
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