Coal & Allied Annual Results

Rio Tinto PLC
29 January 2004



Rio Tinto's 75.7 per cent owned subsidiary, Coal & Allied Industries Limited,
issued the following news release in Australia. All dollars are Australian 
currency.



2003 Annual results - Coal & Allied hit by higher exchange rate and lower coal
prices


SUMMARY

•         Net profit after tax was $0.1 million compared with $159.7 million 
          profit after tax in 2002.

•         Restructuring costs after tax of $10.5 million to cover expenses 
          associated with the rationalisation of management, corporate and 
          administrative functions.

•         A tax benefit of $29.6 million has resulted from Tax Consolidations.

•         Net debt in Australian dollar terms has reduced by 11.1% in 2003 to 
          $455.3 million.

•         No final dividend on ordinary shares will be paid.





On 16 December 2003, Coal & Allied foreshadowed a loss of approximately $30
million.  Included in the final result is the likely impact of joining the tax
consolidation regime resulting in a tax benefit of $29.6 million, which offsets
this anticipated loss.



Commenting on the result, Coal & Allied's Managing Director, Mr Gary Goldberg
said, 'This result clearly reflects the very difficult market conditions
experienced in 2003 by Coal & Allied.



'Throughout the year, revenues were adversely affected by the extremely strong
Australian dollar, lower realised coal prices and increased demurrage costs.
The Australian dollar appreciated by 32 per cent in the 12 months to December
2003, severely affecting revenues. In addition, demurrage costs averaged around
US$1 per tonne over 2003 as a result of continued congestion and capacity
constraints in the Hunter Valley rail system. The company also incurred
increased costs for workers compensation insurance with premiums rising to an
average of 17.9 per cent of gross wages in 2003 compared with an average in 2002
of 13.8 per cent of gross wages.



'Safety improvement was in line with the improved performance of 2002, but
failure to meet the target for 2003 will be a catalyst for even more focus in
2004.



 'Despite the difficult year, we made good progress implementing operational and
cost reductions and in December the company announced the creation of a new
management services agreement with Rio Tinto Coal Australia which along with
operational management changes will deliver pre tax savings of approximately $20
million annually to Coal & Allied.



 'Coal & Allied is competing in a tough market place and we expect 2004 to be
another challenging year. However I am confident the changes we have made
position the company to remain a strong, international competitor in the global
coal market,' Mr Goldberg concluded.



SUMMARY OF FINANCIAL PERFORMANCE



Coal & Allied's results for 2003 are shown below, along with comparative results
for 2002.


                                                                      Year to 31 December              Change
                                                                              2003         2002           %

Sales revenue ($ millions)                                                   876.7      1,181.4         (26)
Net profit after tax ($ millions)                                              0.1        159.7        (100)
Operating cash flow ($ millions)                                              16.7        269.3         (94)
Dividends (cents per ordinary share)                                           Nil           80
Coal production1 (million tonnes)                                             27.2        29.22          (7)
Coal shipments1 (million tonnes)                                              27.9        28.72          (3)


1 Production and shipments are on a 100 per cent basis. Shipments exclude
purchased coal.

2 Excludes operations sold in 2002.  Details of full production and shipments
disclosed in Financial and Operating Statistics appendix.



Restructure

Coal & Allied has agreed with Rio Tinto to combine Coal & Allied's corporate and
service functions with those of Rio Tinto Coal Australia (previously Pacific
Coal). Rio Tinto Coal Australia (100 per cent Rio Tinto) will manage Pacific
Coal's existing assets, as well as Coal & Allied's assets in the Hunter Valley
under a management services agreement.  Both businesses will be managed from a
single corporate office in Brisbane.



This will result in a reduction in management, corporate and administrative
positions in Coal & Allied. These changes to head office administration and
support structures, along with operational management changes, will further
reduce costs, delivering annual pre-tax savings in excess of $20 million to Coal
& Allied. A restructuring provision of $15 million before tax has been provided
for in 2003 to cover costs associated with these changes.

Sales revenue

Sales revenue of $876.7 million was down 26 per cent compared with 2002,
reflecting the stronger Australian dollar against the US dollar a lower market
price for export thermal coal, and the exclusion of operations sold in 2002.

Production

Managed production of saleable coal, excluding sold operations, was down by 2.0
million tonnes to 27.2 million tonnes, reflecting the decision in June to align
production to market conditions.  Coal & Allied's share of saleable coal
produced was approximately 20.3 million tonnes.

Dividends

In light of the tough conditions experienced in 2003, Directors have determined
no dividends on ordinary shares will be paid in 2003.  The preference dividend
of 1.75 cents per share, fully franked, will be paid, making the total
preference dividend for the year 3.5 cents, fully franked. This compares with
fully franked dividends of 80 cents per ordinary share and 3.5 cents per
preference share in 2002.

Cash flow

Net operating cash was $16.7 million compared with $269.3 million in 2002.  The
significant change in operating cash flow is the effect of lower earnings
resulting from the impact of lower coal prices in Australian dollar terms, the
fall-off of operating cash from the mines sold in 2002 and taxation payments
made in the first half relating to 2002 earnings.

Debt

Net debt was lower in Australian dollar terms in 2003 at $455.3 million. Gearing
(net debt to net debt + equity) was 36.2 per cent at 31 December 2003, compared
with 38.9 per cent at 31 December 2002.

Capital expenditure

Total capital expenditure for the year was $55.2 million compared with $119.4
million for the same period last year.  Expenditure was predominantly for
equipment replacement, the purchase of land and some expenditure to develop new
mining areas.  Capital expenditure for 2002 included the purchase of a shovel
and the Cheshunt pit development.

Market conditions

Global spot thermal coal prices firmed considerably late in 2003. This was as a
result of a combination of factors which are described below. The rapid
appreciation of the Australian dollar against the US dollar demanded ever-higher
spot prices to maintain returns in local currency.



In Europe, a very hot summer and low rainfall ensured coal fired power station
output was maintained at a higher level than anticipated. In Asia, the main
impact was due to the longer than expected shutdown of Japan's nuclear power
stations over most of the summer period. This was offset to some degree by a
mild summer. The instability in export coal supply from China due to mine
closures for safety reasons and diversion of export coal to its booming domestic
market, gave buyers cause for concern.



Abnormal vessel queues at the Port of Newcastle through 2003 resulted in
demurrage costs increasing to around $US 1 per tonne.  Despite record shipments
from Newcastle, fluctuations in the arrival of vessels and capacity constraints
and congestion in the Hunter Valley rail system contributed to these high
demurrage costs.



The market price formation for 2004 will be heavily influenced by the behaviour
of China as a coal exporter. Continuing high crude steel production globally
suggests that demand for semi-soft and thermal coal will continue to be firm.

Taxation

Coal & Allied has included in its results the likely impact of joining the tax
consolidation regime from 1 January 2003, resulting in a tax benefit of $29.6
million from the uplift in the tax depreciable base of fixed assets.

Integration of Mt Thorley and Warkworth

The joint venture participants of the Mt Thorley and Warkworth Joint Ventures
have agreed to an operational integration of the two mines.  A road bridge
linking the two operations was completed in January 2004 allowing more effective
use of infrastructure.



New Enterprise Agreements.

Further stability will be provided over the next three years with a new
enterprise agreement for Hunter Valley Operations and a new common enterprise
agreement for the integrated Warkworth - Mount Thorley Operations being
certified in December 2003.





For further information, please contact:

LONDON                                           AUSTRALIA

Media Relations                                  Media Relations
Lisa Cullimore                                   Ian Head
Office:  [phone]                    Office:  [phone]
Mobile: [phone]                     Mobile: [phone]


Investor Relations                               Investor Relations
Peter Cunningham                                 Dave Skinner
Office:  [phone]                    Office:  [phone]
Mobile: [phone]                     Mobile: [phone]
Richard Brimelow                                 Daphne Morros
Office:  [phone]                    Office:  [phone]
Mobile: [phone]                     Mobile: [phone]


Website: www.riotinto.com






Coal & Allied Financial and Operating Statistics


                                                                                           2003           2002
              Production and shipments                                              '000 tonnes    '000 tonnes

              Total shipments 1                                                          27,887         31,549

              Total saleable production 2
              Hunter Valley Operations                                                   12,008         12,625
              Mount Thorley Operations                                                    3,152          4,292
              Bengalla                                                                    6,203          5,385
              Warkworth                                                                   5,869          6,882
              Sub total                                                                  27,232         29,184
              Narama                                                                          -            370
              Ravensworth East                                                                -            387
              Moura                                                                           -          2,399
              Total                                                                      27,232         32,340



              Coal & Allied equity share of production

              Hunter Valley Operations (100%)                                            12,008         12,625
              Mount Thorley Operations (80%)                                              2,522          3,434
              Bengalla (40%)                                                              2,481          2,154
              Warkworth (55.57%)                                                          3,261          3,824
              Narama (50%)                                                                    -            185
              Ravensworth East (100%)                                                         -            387
              Moura (55%)                                                                     -          1,320
              Total                                                                      20,272         23,939



Shipments by market 1

              Japan                                                                      14,876           16,523
              Asia (excluding Japan)                                                      7,388            8,512
              Europe                                                                      2,349            2,165
              Other                                                                         512              297
              Domestic                                                                     2762            4,052
              Total                                                                      27,887           31,549


              Shipments by product 1

              Export thermal                                                             20,316         20,484
              Domestic thermal                                                            2,762          4,052
              Coking                                                                      4,809          6,533
              Hard coking                                                                     -            480
              Total                                                                      27,887         31,549


              Financial                                                                    2003           2002
                                                                                      $ million      $ million

              Total assets                                                                1,805          1,873

              Capital expenditure and investments                                            55            119
              Depreciation and amortisation 3                                               121            128
              Employees 4                                                                 1,516          1,563
              Net debt to net debt + equity (%)                                            36.2           38.9
              Earnings per share (cents)                                                   0.1c         184.4c



1 Shipments are on a 100 per cent basis and exclude purchased coal.

2 Production is on a 100 per cent basis

3 Depreciation and amortisation include amortisation of mining rights relating
to Lemington and Peabody mines.

4 In 2002 Ravensworth, Narama & Moura employees were excluded.


                      This information is provided by RNS
            The company news service from the London Stock Exchange