Rio Tinto Limited (RIO) is a diversified mining company holding a portfolio of world class interests in aluminium, copper, diamonds, gold, coal, iron ore and industrial minerals. RIO has operations spanning 6 continents and is the third largest mining company in the world.

Rio Tinto is focused on developing its resource operations globally via acquisitions and organic growth. This strategy has seen Rio make a number of acquisitions across five of its core product groups - aluminium, coal, iron ore, diamonds and industrial minerals. RIO remains a premier mining exposure with world-class assets, many of which are in the lowest cost quartile. RIO does not have the oil and gas or nickel exposure of BHP although it does have lower sovereign risk.RIO has reported a 60% increase in adjusted CY04 NPAT to US$2,217m or US161cps. EPS in A$ terms rose 42% to A$2.19ps. The full year dividend of US77cps was up 20% on the pcp. The Australian dividend equivalent of A$1.04ps was 16% higher than the pcp and 6% above our most recent forecast of A$0.98ps.Markets for most of the Group's products were stronger with earnings benefiting from new operations at Diavik (diamonds), Hail Creek (coking coal) and Eastern Range (iron ore), and the expansion of Escondida (copper). The expectation is for continued strong demand for key products in spite of a slowing in major OECD economies.The major expansion of the WA iron ore operations is well underway and largely underwritten by long term contracts. Expect progressive commissioning during 2005.The company took the opportunity to divest non-core businesses generating proceeds of in excess of US$1.5bn. RIO reports that major capital projects are progressing well. It has also announced its intention to return up to US$1.5bn of capital over two years through share buy-back programs.The balance sheet has been significantly strengthened. Gearing fell to a conservative 30% compared to 56% in the pcp.

30/12/04

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Materials