Coal & Allied HY2004 results

Rio Tinto PLC
26 July 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.


Coal & Allied impacted by stronger Australian dollar - 2004 half year results


SUMMARY

•         Net profit after tax was $7.2 million, similar to the same period last year.

•         Net debt has reduced in Australian dollar terms by 2 per cent in the first half of 2004 to $443.8 million.

•         No interim dividend will be paid on ordinary shares.


Commenting on the result, Coal & Allied's Managing Director Dr Grant Thorne
said, 'The underlying operational result reflects the continuing impact of the
strong Australian dollar and the fact that for most of the reporting period Coal
& Allied's selling price was locked in at 2003 settlement levels.  After a
difficult first half, Coal & Allied is only now beginning to enjoy the benefit
of prevailing higher prices.  The company is operating much more profitably,
with realised US dollar prices expected to be approximately 25 per cent higher
for the second half.'


Coal & Allied's net profit after tax of $7.2 million was positively affected by
the recognition of inpit inventory for the first time and by depreciating mining
properties over their estimated life.  These two accounting adjustments had a
positive effect of $14.0 million on net profit.


'Half year production was similar to the same period in 2003, with production
interruptions in the first quarter due to wet weather offset by operational
improvements in the second quarter This improvement was through higher equipment
availability and utilisation at all mines, along with Mount Thorley/Warkworth
coaling operations moving to a seven-day roster,' Dr Thorne said.


'Following the successful introduction of the port allocation system, the number
of ships queuing off the port of Newcastle has reduced from a peak of more than
50 in the first quarter to just 12 at 30 June, resulting in reductions in
demurrage.


'The transition to Rio Tinto Coal Australia management has been successfully
implemented with efficiencies and cost benefits starting to be realised. With
these organisational and production improvements in place, we are optimistic
about the second half of 2004 when we expect to see positive benefits for Coal &
Allied flowing through from price increases and lower demurrage costs.


'However, earnings will continue to be hit by higher fuel prices and the
increased New South Wales coal royalty which takes effect from 1 July 2004.'



SUMMARY OF FINANCIAL PERFORMANCE


Coal & Allied's results for the first half of 2004 are shown below, along with
comparative results for 2003.


                                                                     Half-year ended 30 June       Change
                                                                         2004           2003            %

Sales revenue ($ millions)                                              435.8          463.0          (6)
Net profit after tax ($ millions)                                         7.2            7.2            -
Operating cash flow ($ millions)                                         56.9         (15.8)          460
Dividends (cents per share)                                               Nil            Nil            -

Coal production1 (million tonnes)                                        13.6           13.8          (1)
Coal shipments1 (million tonnes)                                         13.9           13.8          (1)


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


Restructure

Coal & Allied combined its corporate and service functions with those of Rio
Tinto Coal Australia on 1 February 2004. Rio Tinto Coal Australia (100 per cent
Rio Tinto) is managing Rio Tinto Coal Australia's (formerly Pacific Coal's)
existing assets, as well as Coal & Allied's assets in the Hunter Valley under a
management services agreement. Both businesses are now managed from a single
corporate office in Brisbane.


Sales revenue

Sales revenue of $435.8 million was down six per cent compared with the first
half of 2003, reflecting the stronger Australian dollar against the US dollar
and a greater proportion of lower value domestic sales partly offset by improved
prices for export coal.


Production

Managed production of saleable coal was down by 200,000 tonnes to 13.6 million
tonnes. Coal & Allied's share of this was 10.3 million tonnes of saleable coal.



Production interruptions in the first quarter due to wet weather were offset in
the second quarter as a result of higher equipment availability and utilisation
at the mines, along with Mount Thorley/Warkworth coaling operations moving to a
seven-day roster.  During the period, coal chain congestion and the port
allocation system imposed constraints on the quantity of coal exported.  This
was offset by an increase in production for domestic sales.


Dividends

As a result of the difficult financial conditions in the first half of 2004,
Directors have decided no interim dividend for ordinary shares will be paid.  A
preference dividend of 1.75 cents per share, fully franked, will be paid on 18
August 2004. This is consistent with the first half of 2003.


Cash flow

Net operating cash flow was $56.9 million compared with ($15.8 million) in 2003.
The improvement was primarily attributable to the timing of tax payments in
2003, which related to 2002 earnings, and a tax refund in 2004, which related to
2003 payments.  The underlying cash generated by the business was similar in
both periods.


Debt

Net debt was lower at $443.8 million. Gearing (net debt to net debt + equity)
was 35.4 per cent at 30 June 2004, compared with 36.2 per cent at 31 December
2003.


Capital expenditure

Total capital expenditure for the half year was $10.9 million compared with
$17.9 million for the same period last year.  Expenditure was predominantly for
equipment replacement and the upgrade of the Hunter Valley coal preparation
plant.


Integration of Mt Thorley and Warkworth

The joint venture participants of the Mt Thorley and Warkworth Joint Ventures
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.


Market conditions

The upward trend in spot thermal coal prices, which developed in late 2003,
continued throughout the first half of 2004 driven by continuing strong demand
and uncertainty around Chinese supply.  By the end of June the globalCOAL
Newcastle spot index had reached its highest ever level of US$63.63 per tonne
compared with US$36 per tonne at the end of December 2003.  Although there has
been a retreat from this peak, most major export coal supply chains are already
operating at or near capacity. This would indicate there is unlikely to be a
surge of new production in the short term which could weaken market sentiment.
Contract prices also rose strongly during the half-year.  However the company
will significantly benefit from the increase in contract prices in the second
half.


The introduction of the port allocation system at Newcastle in April has been a
major contributor to the reduction in the number of vessels waiting to berth. At
the end of March there were over 50 vessels waiting and by 30 June this had
fallen to around 12, which reduces demurrage to negligible levels.


For further information, please contact:

LONDON                                               AUSTRALIA

Media Relations                                      Media Relations

Lisa Cullimore                                       Ian Head

Office:  [phone]                        Office:  [phone]

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Investor Relations                                   Investor Relations

Peter Cunningham                                     Dave Skinner

Office:  [phone]                        Office:  [phone]

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Richard Brimelow                                     Susie Creswell

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Website: www.riotinto.com



COAL & ALLIED FINANCIAL AND OPERATING STATISTICS


                                                        First half 2004      First half 2003
Production and shipments                                    '000 tonnes          '000 tonnes

Total shipments 1                                                13,911               13,807


Total saleable production 2

Hunter Valley Operations                                          6,093                6,104

Mount Thorley Operations                                          1,622                1,558

Bengalla                                                          2,600                3,074

Warkworth                                                         3,295                3,065

Total                                                            13,610               13,801



Coal & Allied equity share of production

Hunter Valley Operations (100%)                                   6,093                6,104

Mount Thorley Operations (80%)                                    1,298                1,246

Bengalla (40%)                                                    1,040                1,230

Warkworth (55.57%)                                                1,831                1,703

Total                                                            10,262               10,283



Shipments by product 1

Export thermal                                                    9,479               10,022

Domestic thermal                                                  2,048                1,254

Coking                                                            2,384                2,531

Total                                                            13,911               13,807


Financial                                                     $ million            $ million

Total assets                                                      1,830                1,803

Capital expenditure and investments                                  11                   18
Depreciation and amortisation                                        59                   58
Employees (number)                                                1,377                1,534
Net debt to net debt + equity (%)                                  35.4                 38.4
Earnings per share (cents)                                         8.3c                 8.3c

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

2 Production is on a 100% basis


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