Coal & Allied

Rio Tinto PLC
26 June 2003

Coal & Allied earnings outlook and operating changes



Coal & Allied, Rio Tinto's 75.7 per cent owned subsidiary, today announced that
it expected first-half earnings to only break even as a result of sharply
deteriorating market conditions for Australian export coal in the first half of
2003.


This compares with first-half earnings in 2002 of A$104.7 million and 2002
second-half earnings of A$55.0 million


Managing Director of Coal & Allied, Mr. Gary Goldberg said,  'As we foreshadowed
at the company's Annual General Meeting in April, we are being affected
adversely by the sharp movement in US dollar exchange rates, lower coal prices,
increased demurrage costs and the increasing proportion of lower priced spot
sales for our thermal coal.'


'In recent months we have been hit hard as the Australian dollar has continued
to strengthen, lowering export coal prices in Australian dollar terms by around
25 per cent compared with 2002. In addition demurrage costs have increased to
around one US dollar per tonne.'


'For every one cent increase in the value of the Australian dollar against the
US dollar our net profit after tax is reduced by around A$9 million. Similarly,
for every one US dollar fall in the export coal price our net profit after tax
is reduced by around A$29 million,' Mr Goldberg said.


Coal & Allied also announced a number of operational changes aimed at lowering
costs and improving productivity in response to the deteriorating market.  These
changes involve reducing coal inventories and productive capacity compared with
2002 by moving from seven-day to five-day rosters at some sites, working less
overtime and reducing use of contract labour across all operations.


Mr. Goldberg said, 'In making these changes our objective is to lower costs
while protecting jobs for our employees and maintaining base level production
rates.'


'These changes will reduce our annual production capacity by around four million
tonnes while our overall 2003 production will be slightly less than in 2002.
These operating changes together with the Easter shutdown earlier this year,
will reduce our clean coal stockpiles by around 500,000 tonnes and in-pit
inventories by about 1.5 million tonnes at year-end.'


'The changes at Hunter Valley Operations, Mount Thorley Operations and Warkworth
will be introduced over the next few weeks in consultation with our employees
and contractors.'


'We believe these changes will position our operations to weather the market
downturn and enable the company to respond flexibly to the demands of our
customers,' Mr. Goldberg concluded.





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Website: www.riotinto.com




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