Coal & Allied Interims

Rio Tinto PLC
18 July 2001

                 Coal & Allied first half profit and outlook                  
 

FINANCIAL SUMMARY
 
* Net profit after tax and abnormal items for the first half of 2001 was
$79.5 million, up from $73.6 million for the same period last year. There
were no abnormal items for the first half compared with an abnormal gain of
$33 million in the first half of 2000 relating to the settlement of a long
term coal contract. 
 
* Excluding the effect of abnormal items, profit after tax of $79.5 million
increased by 96 per cent compared with $40.6 million for the same period last
year. 
 
* Sales revenue increased 123 per cent to $642.7 million. This increase was
attributable mainly to the acquisition of the Peabody and Lemington mines
which continued to perform well under Coal & Allied's management. 
 
* An interim dividend of 35 cents per ordinary share and a dividend of 1.75
cents per preference share, both fully franked at 30 per cent, were declared. 
 
Commenting on the results, Coal & Allied Chairman, Mr Barry Cusack said,
'Volume gains provided by the Peabody and Lemington acquisitions contributed
to this good result, despite the additional costs relating to those gains and
the increased interest costs arising from the acquisitions.'
 
'The benefits of these acquisitions are being enhanced by the integration of
the six newly acquired mines to achieve cost efficiencies, which will be a
continuing major focus through the second half,' Mr Cusack said.
 
'Despite the uncertain economic environment in key markets in Asia, coal
demand is likely to increase as a result of continuing high energy demand.
Coal & Allied will benefit from the full impact of price increases for export
coal in the second half because of its strong contract position with its
customers.'
 


SUMMARY OF FINANCIAL PERFORMANCE

Coal & Allied's results for the first half of 2001 are shown below, along
with comparative results for the first half of 2000.

                                                                              
                                              First half to 30 June           
                                                  2001         2000     Change
                                             $ million    $ million          %
  Sales revenue                                   642.7        288.4       123
  Profit after tax and before                      79.5         40.6        96
  abnormal items                                                              
  Net profit after tax and                         79.5         73.6         8
  abnormal items                                                              
  Operating cash flow                             159.9         55.0       191
  Dividends (cents per                               35          200         -
  share)1                                                                     
  Coal production2 (mt)                            16.9          6.4       163
  Coal shipments2 (mt)                             17.2          6.5       164

1 Interim dividend for 2000 was a special dividend. 
2 Production and shipments are on a 100% basis. Shipments exclude coal
purchase trading. 
 

Sales Revenue

Sales revenue of $642.7 million was up 123 per cent in the first half of 2001
due to increased shipments of 17.2 million tonnes and stronger prices for
part of the period. The benefit of a weaker Australian dollar against the US
dollar was partly offset by the impact of forward exchange contracts that
were put in place last year to hedge a portion of sales revenue.
 
Last year, Coal & Allied entered into a limited number of forward exchange
contracts to sell US dollars. There are A$25 million of hedge contracts at an
average exchange rate of 53 US cents due to mature this year, which completes
this program. In addition, as part of the Peabody acquisition, Coal & Allied
inherited additional hedges comprising approximately A$40 million per year at
an average rate of 54 US cents maturing over the next four years. Coal &
Allied has not entered into any new hedges since that time.
 
Production 

Production increased by 163 per cent to 16.9 million tonnes compared with the
first half of last year, reflecting the acquisitions made in the past twelve
months. Including these acquisitions, Coal & Allied now manages over 37
million tonnes of saleable coal, of which it is entitled to about 28 million
tonnes.

Dividend

Directors declared an interim dividend of 35 cents per ordinary share and a
dividend of 1.75 cents per preference share, both fully franked at 30 per
cent. This compares with a special interim dividend of 200 cents per ordinary
share franked to 55 cents at 34 per cent, and a preference dividend of 1.75
cents per preference share fully franked at 34 per cent for the first half of
2000.
 
The interim dividend will be paid on 23 August 2001 to shareholders
registered at close of business on 16 August 2001.
 
Following payment of this interim dividend, there are $41.0 million of
available franking credits at a tax rate of 30 per cent.
 
 
FUNDING

Cash flow

Coal & Allied generated an operating cash flow of $159.9 million reflecting
sales from the newly acquired mines, higher realised coal prices and the
lower Australian dollar.
 
Debt

Net debt increased to $1.2 billion as a result of the Lemington and Peabody
acquisitions. Debt repayments of $67.2 million were made during the period.
Net debt to total capital was 65.8 per cent at 30 June 2001. Coal & Allied
previously had negligible debt.
 
Capital Expenditure and Investments

Total capital expenditure and investments for the first half of 2001 were
$72.6 million compared with $10.5 million for the same period last year. The
increase largely reflected the purchase of an additional 11.82 per cent
interest in the Warkworth Mining Joint Venture ($52 million), about $9
million spent on upgrading the truck fleets at Moura and Hunter Valley
Operations and about $4 million to complete the development of Hunter Valley
Operation's Carrington pit.
 

PRICES AND INTERNATIONAL INDUSTRY CONDITIONS

Market Conditions and Outlook

Pricing negotiations with most major customers were completed during the
period, generally reflecting the 20 per cent increase in the headline price
for internationally traded thermal coal. Most of these price increases are
applicable from 1 April and will be more fully reflected in the second half
of the year. Recently the spot market for export coal has been trending
slowly downwards on very small volumes. The rapid expansion of coal exports
from China has been significant in capping the recent rise in spot prices.
 
Despite the economic slowdown in Japan, demand for thermal coal in that
country is expected to increase significantly as the peak summer season
approaches. Renewed tender activity in Japan is expected to emerge in the
second half of 2001. Coking coal demand in Japan is expected to remain firm
notwithstanding some uncertainty in the crude steel production rate.

The underlying outlook for coal remains firm however the continued economic
slowdown in Japan remains a concern. Energy demand growth continues in Korea
and Taiwan.
 
In Europe, the continuing winding down of subsidised domestic coal production
will offer increased export opportunities.
 

REVIEW OF OPERATIONS

In this Review of Operations, production figures for the ex-Peabody mines
(Bengalla, Moura, Narama, Ravensworth East and Warkworth), cover the period
from the effective date of acquisition (29 January 2001) to 30 June 2001. The
figures in brackets below represent Coal & Allied's equity interest. 
 
Mount Thorley Operations (80 Per Cent)

The Mount Thorley open cut mine produced two million tonnes of soft coking
and thermal coal during the first half of 2001, in line with the first half
of last year. Production was adversely affected by heavy rainfall.

Hunter Valley Operations (100 Per Cent)

The integration of the Lemington mine into Hunter Valley Operations was
completed following substantial restructuring, including rationalisation of
the workforce. Production was 5.1 million tonnes, compared with 4.4 million
tonnes for the same period last year. The entire Hunter Valley Operations
complex was adversely affected by unusually high rainfall that also delayed
development of new mining areas to progressively replace the North pit.

Warkworth (55.57 Per Cent)

Production of 2.9 million tonnes at Warkworth was increased to take advantage
of a domestic contract.

Bengalla (40 Per Cent)

Production increased to 2.4 million tonnes as output was ramped up closer to
design capacity. The dragline moved to a seven-day operation and three new
trucks were introduced.

Ravensworth (100 Per Cent) And Narama (50 Per Cent)

Ravensworth East, which began production in December 2000, produced 668,000
tonnes however output was constrained by heavy rainfall in the first quarter.
At Narama, production increased to 1.2 million tonnes in order to take
advantage of a spot tender.

Moura (55 Per Cent)

The Moura mine, in Queensland, achieved excellent operating performance,
producing 2.6 million tonnes of coking and thermal coal. Additional mobile
equipment and improved dragline performance contributed to the production
increase.

Mount Pleasant Development (100 Per Cent)

Development plans for the Mount Pleasant deposit are progressing following
receipt of development consent last year, based on a seven million tonne per
annum open cut mining operation with a life of twenty years. While capable of
stand-alone development, the deposit's proximity to the adjacent Bengalla
mine offers potential for world-scale efficiencies through infrastructure
sharing. The final decision is subject to further development consents and
joint venture approvals.

Port Waratah Coal Services (36.5 Per Cent)

As a result of the recent acquisitions, Coal & Allied's interest in Port
Waratah Coal Services (PWCS) increased from 33.7 per cent to 36.5 per cent.
PWCS contributed profit of $7.3 million compared with $8.2 million for the
same period last year. Work is underway to expand the Newcastle port's coal
loading capacity from 70 to 90 million tonnes per year.


INTEGRATION AND RESTRUCTURING

Work is progressing to realise value from the acquisitions undertaken in the
past twelve months. Beyond the immediate operating benefits realised,
opportunities for further value creation are being explored. Coal & Allied is
discussing these opportunities with its joint venture partners and will be
seeking additional approvals if necessary.
 
The Lemington mine has been successfully integrated into Hunter Valley
Operations following substantial restructuring which has resulted in the
closure of the mine offices and redeployment of surplus equipment. At
Lemington, production levels for the latter part of the first half were
maintained with 100 fewer employees.
 
As part of the integration exercise, administrative and technical functions
of the newly acquired Hunter Valley mines were rationalised. Shared services
are being introduced at all operating sites, except at Bengalla, where
discussions with joint venture partners are continuing. Shared service
functions will cover technical, health, safety and environment, finance,
logistics, human resources and community relations functions - all aimed at
improving efficiencies and generating savings.
 
Coal & Allied increased its interest in the Warkworth mine from 43.75 per
cent to 55.57 per cent, effective 29 January 2001, following completion of
Ticor's divestment of its 20 per cent
 
interest. Also during the half year, the sale of Eroc Pty Ltd (formerly
Peabody Mining Services Pty Ltd) was completed.
 
As part of the fair value exercise conducted on the acquisition of Peabody
and Lemington mines, an amount of $19 million was charged against profit
representing amortisation of mining rights. For future periods, it is
expected that over a full year, approximately $45 million will be charged
against profit.
 

OTHER

Airc Decision

On 10 July 2001, the Australian Industrial Relations Commission ordered the
reinstatement of 11 employees, representative of the 108 Hunter Valley No. 1
employees made redundant in October 1998, on the basis of an individual
performance review system. Coal & Allied is reviewing the decision closely
before deciding on its future course of action.
 
 
For further information, please contact:
 
                                                             
              LONDON                     AUSTRALIA                
              Media Relations            Media Relations          
              Lisa Cullimore             Ian Head                 
              + 44 (0) 20 7753 2305      [phone]      
              Investor Relations         Investor Relations       
              Peter Cunningham           Dave Skinner             
              + 44 (0) 20 7753 2401      [phone]      
              Jonathan Murrin            Daphne Morros            
              + 44 (0) 20 7753 2326      [phone] 
     
Website: www.riotinto.com
 
 
               Coal & Allied Financial and Operating Statistics               

                                                                              
                                                      Half year      Half year
                                                           2001           2000
  Production and shipments                          '000 tonnes    '000 tonnes
  Total shipments 1                                      17,202          6,509
  Total saleable production 2                                                 
  Hunter Valley Operations                                5,136          4,449
  Mount Thorley Operations                                2,022          1,955
  Warkworth                                               2,909              -
  Bengalla                                                2,367              -
  Narama                                                  1,168              -
  Ravensworth East                                          668              -
  Moura                                                   2,586              -
  Total                                                  16,856          6,404
  Coal & Allied equity share of production                                    
  Hunter Valley Operations (100%)                         5,136          4,449
  Mount Thorley Operations (80%)                          1,618          1,564
  Warkworth (55.57%)                                      1,617              -
  Bengalla (40%)                                            947              -
  Narama (50%)                                              584              -
  Ravensworth East (100%)                                   668              -
  Moura (55%)                                             1,422              -
  Total                                                  11,992          6,013
                                                    

                                                      Half year      Half year
                                                           2001           2000
  Financials                                          $ million      $ million
  Total assets                                            2,461          1,004
  Capital expenditure and investments 3                      73             10
  Depreciation and amortisation 4                            76             30
  Employees                                               1,903            769
  Net debt to total capital (per cent)                     65.8            0.0
  Earnings per share (cents)                               91.8           85.0
  Effective tax rate (per cent)                            34.9           29.4
  
Notes:                                                                      
  First half 2000 comparative information reflects Coal & Allied's actual     
  results and does not include the effect of the Lemington and Peabody        
  acquisitions.  
                                                             
  1 Shipments are on a 100% basis and exclude coal purchase trading.          
  2 Production is on a 100% basis.                                            
  3 Capital expenditure and investments includes the acquisition of an        
  additional 11.82% interest in Warkworth.                                    
  4 Includes amortisation of mining rights relating to Lemington and Peabody  
  mines.