Interim Results - Part 1

Rio Tinto PLC
2 August 2001


Part 1
            Rio Tinto first half earnings up 24% to US$841 million            

 
* Record half year in deteriorating economic conditions 
* Significant increase in volumes following last year's acquisitions 
* Good progress in the integration of recent acquisitions 
* Six major projects under way 
 

'Rio Tinto's first half earnings were at a record level, which is
satisfactory against the background of a weak economic environment', said Rio
Tinto chairman Sir Robert Wilson.
 
'The slowdown in the US has been accompanied by relatively soft markets in
Europe and Japan. In consequence we have seen moderate weakness across most
of our businesses, including non-ferrous metals and industrial minerals. The
exceptions amongst our products have been iron ore, where demand has hitherto
stayed quite firm, and coal, which has been buoyant. The geographic bright
spot has been China, where industrial production continued to grow strongly.
 
'A further decline in the Australian dollar against the US dollar has
substantially helped ease the burden of weak prices.
 
'Whilst we obviously cannot claim to be recession-proof, these results once
again demonstrate the quality of Rio Tinto's diversified portfolio', said Sir
Robert.
 

                                                                     
           Half year to 30 June             2001      2000    Change 
           Group turnover                $5,284m    $4,573m      +16%
           Profit before tax             $1,342m    $1,131m      +19%
           Net earnings                    $841m      $677m      +24%
           Earnings per share - cents       61.2       49.4      +24%
 
All $ are US$, unless otherwise stated.



                            FIRST HALF 2001 REVIEW                            

 
Mr Leigh Clifford, Rio Tinto's chief executive said: 'The Iron Ore product
group benefited from price increases of approximately four per cent, mostly
effective from 1 April 2001. At Hamersley Iron, shipments were slightly below
expectations to Europe and Japan, however this was offset partly by stronger
shipments into China.
 
'We also reached a satisfactory agreement with our Robe River joint venture
partners to share rail infrastructure with Hamersley Iron. We are convinced
that this will benefit all the joint venture parties and set the framework
for further opportunities for co-operation between them.
 
'The Australian and Indonesian coal operations benefited from increases in
seaborne coal prices in the order of 20 per cent. At Kennecott Energy, spot
prices for US domestic coal followed the general increase in gas and energy
prices in the US market, although the impact of price increases on earnings
was modest in the half.
 
'Production at Kennecott Utah Copper and at Freeport was higher reflecting
better ore grades. However, at Palabora, a three-week strike and heavy rains
significantly impacted pit production.
 
'We have made a good start in integrating the larger acquisitions made in the
last twelve months into our existing operations and realising the underlying
value which we recognised was there.

'We completed the acquisition of Peabody's Australian assets and agreed
several other small acquisitions in the first half, including an extra 8.3
per cent stake in the Queensland Alumina refinery and an increased stake in
the Warkworth coal mine, managed by Coal & Allied, in New South Wales. We
also disposed of our stake in Norzink and North's forestry business in
Tasmania.
 
'In developing Hail Creek, a world class coking coal resource, we will
capitalise on conditions in the international coal market. Progress is being
made on the construction of the Diavik diamond mine in Canada, the Phase IV
development of the Escondida copper mine in Chile and progression to
underground mining at the Palabora copper mine in South Africa.
 
'Rio Tinto continued to work with Nucor and others on feasibility studies to
develop a commercial HIsmelt(R) direct smelting technology plant in Western
Australia,' said Mr Clifford.
 
 
                                   OUTLOOK                                    
 
 
Commenting on the outlook, Sir Robert said: 'We see little to encourage
optimism about metals demand in the US during the rest of this year and,
probably, the first half of 2002. Neither Europe nor Japan look like the
engine for recovery and so 2001 could be the first year since the early 1990s
when we will see global consumption of key non-ferrous metals decline, albeit
by not very much.
 
'Low levels of investment by the industry in new capacity as we entered the
downturn, combined with low stocks and supply-side difficulties, especially
in aluminium, have all served to mitigate the adverse consequences.
Nonetheless the markets, and therefore presumably the prices, for most metals
and minerals seem likely to remain subdued over the next twelve months. High
energy prices will continue to put pressure on the industry's costs although
we shall also benefit from the strength of the coal market.
 
'Having just achieved record half-year earnings, it is difficult to feel
pessimistic about the future, especially since there are benefits still to
flow through over the next few years from the acquisitions made last year and
projects under construction. But the economic outlook is still deteriorating
and we have to expect a testing time ahead. We can, however, face that
prospect with confidence, even if not equanimity', said Sir Robert.
 

                                  DIVIDENDS                                   

 
Under Rio Tinto's long standing progressive dividend policy, the aim is to
increase the US dollar value of dividends over time, without cutting them in
economic downturns. The policy remains unchanged.
 
The directors have decided, however, that in future the rate of the total
annual dividend will be reviewed only at the year end, in the light of the
full year's results and the outlook for the following year. The interim
dividend for 2002 and subsequent years will be set at one half of the total
dividends for the previous year. The final dividend for each year, under the
progressive dividend policy, will be at least equal to the interim dividend.
 
An interim dividend for the current year of 20 US cents per share has been
declared, an increase of 1 US cent on the 2000 interim. No view on total
dividends for the year will be taken until the year end.
 

                      2001 FIRST HALF FINANCIAL RESULTS                       

 
NET EARNINGS 
 
Net earnings increased by $164 million to $841 million, which was 24 per cent
above the $677 million reported for the first half of 2000. As last year,
adjusted earnings are the same as net earnings.
 
Increased volumes contributed $97 million to earnings. This includes the
additional operating earnings resulting from the North acquisition last year,
the additional 27.6 per cent of Comalco, the additional 40 per cent of Argyle
and the Lemington mine; together with the acquisition of Peabody's Australian
mines in January 2001. Earnings contributed by the Freeport joint venture
improved significantly as a result of higher gold grades. Argyle's volumes
were markedly lower than in the first half of 2000, when sales were enhanced
by a draw down of diamond inventories.
 
Overall, acquisitions contributed $35 million to first half earnings, net of
their impacts on interest charges.
 
Movements in exchange rates increased earnings by $103 million. In large
part, this reflects the strengthening of margins in the Australian operations
resulting from a 15 per cent reduction in the exchange rate against the US
dollar.
 
Lower selling prices reduced earnings by $33 million, with a 30 per cent
decline in nickel prices, a significant reduction in alumina prices, and more
moderate percentage reductions in copper and gold. However, prices for
seaborne coal were significantly better than in the same period last year,
and iron ore prices increased by four per cent.
 
In real terms, cash costs were reduced by $29 million, with increased
efficiency levels, particularly at Utah Copper, Freeport and Hamersley. This
excludes $13 million of cost increases resulting from higher fuel and energy
prices.
 
The earnings result includes a $54 million gain on disposal of the Group's 50
per cent interest in the Norzink smelter. In the same period last year, there
was a similar gain from the sale of Carbones del Cerrejon. The sale of North
Forest Products had no impact on earnings.
 
Interest charges increased by $51 million after tax, with the effects of
increased debt following the acquisitions last year being moderated by lower
interest rates.
 
The Group's tax rate at 32.0 per cent compares with 31.5 per cent in the same
period last year. There were proportionately increased profits from
operations in higher tax jurisdictions and an increase in disallowable
amortisation charges resulting from acquisitions. Conversely, the tax charge
will continue to benefit from the lower tax rate in Australia, where earnings
are now taxed at 30 per cent compared with 34 per cent in 2000.


CASH FLOW 
 
Cash flow from operating activities together with dividends from joint
ventures and associates totalled $1,707 million, an increase of $147 million
over the corresponding period last year. This was attributable to increased
dividends from joint ventures. Operating cash flow was in line with the first
half of 2000 with increases in inventories in several operations offsetting
the benefit of increased operating profit.
 
Expenditure of $604 million on property, plant and equipment was $305 million
higher than the same period last year, and includes investment in the newly
acquired iron ore operations and in the Diavik diamond project.
 
Acquisitions net of disposals involved a net cash outlay of $361 million
compared with $902 million in the same period last year. The principal
acquisition was the purchase of Peabody's Australian coal operations for $455
million. Disposals included North's forestry operations and the Group's
interest in the Norzink smelter.
 
As a result of further acquisitions and investment in current operations, the
net cash outflow before management of liquid resources and financing was $568
million.


BALANCE SHEET
 
During the six months, shareholders' funds increased by $151 million with
earnings of $841 million being offset by dividends of $275 million and a
reduction of $426 million on currency translation, largely reflecting a nine
per cent decline in the Australian dollar. Net debt increased by $700 million
to $5.7 billion as a result of capital expenditure and acquisitions during
the period. The ratio of net debt to total capital increased from 38.1 per
cent at 31 December 2000, to 40.5 per cent at 30 June 2001. The balance sheet
remains in a strong condition, with interest charges covered ten times.


2001 INTERIM DIVIDEND

Interim dividends equivalent to 20 US cents per share (2000: 19 US cents)
have been declared by Rio Tinto Limited and Rio Tinto plc.
 
Dividends are determined in US currency. Rio Tinto Limited dividends are
declared and paid in Australian dollars and Rio Tinto plc dividends are
declared and paid in pounds sterling, converted at exchange rates applicable
on Tuesday, 31 July 2001.
 
Rio Tinto plc shareholders will be paid an interim dividend of 14.03 pence
per ordinary share (2000: 12.66 pence).
 
Rio Tinto Limited shareholders will be paid an interim dividend of 39.42
Australian cents per ordinary share (2000: 32.68 Australian cents) which will
be fully franked at the tax rate of 30 per cent. The directors consider that
there are sufficient franking credits available for paying fully franked
dividends for at least the next year.
 
The respective dividends will be paid on 14 September 2001 to shareholders
registered at close of business on 17 August 2001. The ex-dividend date for
Rio Tinto Limited shares will be 13 August 2001, and 15 August for Rio Tinto
plc shares. Dividends to Rio Tinto ADR holders will be paid on 17 September
2001.
 
As usual, Rio Tinto will operate its Dividend Reinvestment Plan, details of
which can be obtained from the Company Secretaries' offices.


                        REVIEW OF RIO TINTO OPERATIONS                        

(Production shown is the product group share of output unless otherwise
stated. Comparatives are with the comparable period of 2000 unless otherwise
stated.)
 

IRON ORE GROUP 
 
                         2001 first half earnings $229 million, up 62 per cent
                    Iron ore production at 42.6 million tonnes, up 49 per cent

Rio Tinto's Iron Ore group accounted for 16 per cent of Group turnover and
contributed 27 per cent of net earnings in the first half of 2001.
 
Hamersley Iron, Australia, achieved record iron ore production of 33.1
million tonnes for the first half of 2001. Total shipments of 31.8 million
tonnes were slightly lower, reflecting reduced shipments to Japan and Europe
partly offset by higher sales to China. The approximate four per cent price
rise settled earlier in the year with the Japanese Steel Mills and the weaker
Australian dollar contributed to Hamersley's 47 per cent increased earnings
performance of $207 million.
 
Earnings from Robe River Iron Associates in Australia were $19 million for
the first half, also benefiting from the approximate four per cent price
rise. Total production of 13.8 million tonnes was lower due to unplanned
maintenance and difficulties associated with processing a higher proportion
of wet material. Production levels are expected to improve with a number of
operational initiatives adopted at the mine and port, including the
commissioning of an additional process plant.
 
Lower earnings for the Iron Ore Company of Canada (IOC) resulted from lower
shipments due to the downturn in the European and North American steel
industry. Price increases of approximately two per cent for pellets and 4.5
per cent for concentrates were achieved, based on market conditions in the
previous year.
 
 
INDUSTRIAL MINERALS GROUP 
 
                   2001 first half earnings $134 million, consistent with 2000
                            Borate production at 287,000 tonnes, up 3 per cent
       Titanium dioxide feedstock production at 727,000 tonnes, up 10 per cent

 
Rio Tinto's Industrial Minerals businesses accounted for 16 per cent of Group
turnover and contributed 16 per cent of net earnings in the first half of
2001.
 
Rio Tinto Borax's earnings of $52 million were similar. North American sales
weakened with the downturn in the US economy. Softening of demand in Europe
was exacerbated by product substitution and the decline of the euro. Borax
continued to benefit from cost and productivity improvements.
 
Earnings from Rio Tinto Iron & Titanium were marginally down at $64 million.
Overall, titanium dioxide feedstock markets experienced soft customer demand,
as trading conditions deteriorated steadily throughout the first half for the
group's customer base. These trends were exacerbated by oversupply in some
high-grade feedstock sectors. Iron and steel co-products encountered very
difficult market conditions, in particular for product lines supplying the
automotive sector. These factors were partially offset by stronger zircon
markets and a weaker rand against the US dollar. Production facilities
generally ran well; increased production at QIT was due to the need to
rebuild inventories following a major furnace repair, whereas production at
RBM was reduced in line with market demand.
 
The Luzenac Group's earnings were similar. Volumes in Europe were unchanged.
Sales in North America were lower, with the polymers and coatings segments
particularly affected by the state of the economy.
Earnings at Dampier Salt were above last year's level when production was
severely affected by a cyclone. Salt production was strong with both sites
benefiting from continued good growing conditions, but sales volumes were
down due to delays in shipments.
 
 
COPPER GROUP 
 
                         2001 first half earnings $163 million, up 55 per cent
                     Mined copper production at 475,000 tonnes, up 16 per cent
                  Refined copper production at 185,000 tonnes, down 1 per cent
                     Mined gold production at 1,238,000 ounces, up 73 per cent

Rio Tinto's Copper group accounted for 23 per cent of Group turnover, of
which 14 per cent was from copper and the remainder mostly from gold
co-product. The Copper group contributed 19 per cent of net earnings in the
first half of 2001. The copper price averaged 78 cents/lb, three per cent
lower. The average gold price was $266/oz compared with $285/oz.
 
In the US, Kennecott Utah Copper's production of metals in concentrate,
except molybdenum, was higher, primarily due to an increase in ore grade.
Refined copper and gold production was marginally lower mainly due to a major
maintenance shutdown in the first quarter. Earnings of $31 million for the
first half reflected increased copper, gold and molybdenum sales volumes and
efficiency improvements although they were offset by lower prices.
 
During June, Kennecott's North concentrator was suspended in response to
difficult market conditions and the need to improve performance. The
suspension is part of an on-going effort to reduce costs and improve
efficiencies. The suspension will result in an 18 per cent reduction in
annual ore production. However, copper production will remain at similar
levels until 2002 due to anticipated higher copper grades for the balance of
this year and next year.
 
At the Grasberg copper and gold mine in Indonesia, total payable metal
increased due to higher ore grade and improved milling rates and recoveries.
Total gold production was up substantially due to the significant increase in
grade. Rio Tinto's overall share of production increased by 21 per cent for
copper to 102,000 tonnes and 121 per cent for gold to 678,000 ounces.
 
Ore grade at Escondida in Chile declined in line with long-term projections,
although the rate of decline was partly offset due to mining of higher grade
material adjacent to the top of the sulphide orebody. Mined copper output was
eight per cent lower, while oxide plant production was slightly higher.
 
Heavy rains and a 23 day strike at the Palabora copper mine in South Africa,
which ended on 14 June, affected pit production and concentrator activities.
Total copper in concentrate production was 49 per cent lower compared with
the first half of 2000. Total refined copper production was 38 per cent
higher as a result of higher availability following the smelter maintenance
shutdown during the first half of last year.
 
In Australia, production at the Northparkes copper-gold mine benefited from
higher copper and gold grades but operating costs were adversely affected by
major maintenance shutdowns. At Peak Gold, production was reduced due to
lower grade.
 
Copper and gold production at Alumbrera, Argentina, benefited from higher
copper and gold grades. Higher sales volumes led to improved earnings for the
period. At Neves Corvo, Portugal, copper production was eight per cent lower
mainly due to lower feed grades and recoveries.
 
Hot metal production at Anglesey Aluminium's smelter in the UK was similar as
cell utilisation and amperages were maintained close to last year's rates. At
Zinkgruvan in Sweden, production was affected by lower grades of both zinc
and lead.
 

ALUMINIUM GROUP 
 
                         2001 first half earnings $172 million, up 10 per cent
                      Bauxite production at 6.0 million tonnes, up 25 per cent
                          Alumina production at 807,000 tonnes, up 22 per cent
                        Aluminium production at 341,000 tonnes, up 27 per cent
 
Comalco, Rio Tinto's wholly-owned Australian integrated aluminium group,
accounted for 14 per cent of Group turnover and contributed 20 per cent of
net earnings in the first half of 2001. Rio Tinto achieved full ownership of
Comalco following acquisition of the minorities in mid 2000.
 
The average aluminium price at 70 cents per pound was one cent lower. Alumina
prices were also weaker. Comalco's performance enhancement process continued
to generate savings across all sites.
 
Total Weipa bauxite production of 5.7 million tonnes was slightly lower due
to high rainfall and a shiploader shutdown at the port for scheduled
maintenance. Bauxite shipments of 5.5 million tonnes were in line with the
same period last year.
 
Production at the Queensland Alumina refinery in Australia was lower than
anticipated due to operating problems and unscheduled maintenance. At the
Eurallumina refinery in Italy, production was also adversely affected by a
temporary plant shutdown. The high price of caustic soda had an adverse
effect on costs at Comalco's refineries.
 
Total aluminium production from Comalco's three smelters was similar to last
year, although production was adversely impacted by an increase in the rate
of cell reconstructions. Continuing softness in Japan put pressure on metal
shipments but overall volumes of 338,600 tonnes were maintained by placing
additional metal in the US and Europe.
 
 
ENERGY GROUP 
                
                         2001 first half earnings $167 million, up 43 per cent
                          Coal production at 74 million tonnes, up 19 per cent
                     Uranium oxide production at 2,355 tonnes, up 122 per cent

Rio Tinto's Energy group accounted for 21 per cent of Group turnover and
contributed 20 per cent of net earnings in the first half of 2001.
 
In the US, Kennecott Energy lifted production in the second half of 2000 due
to improved demand. Strong demand continued in the first half of 2001, and
Kennecott Energy's share of production of 53 million tonnes was 11 per cent
higher despite rail outages and disruptions due to flooding. In the first
half, spot prices for US domestic coal followed the general increase in gas
and energy prices in the US market. However, since June 2001 prices have
declined somewhat.
 
Kennecott Energy varies its production, and commits to contracts, in response
to changes in market conditions. Kennecott Energy has responded to the
improved market conditions and is now fully committed for 2001, and 86 per
cent committed for 2002. Approximately 50 per cent of 2002 production volume
is committed at prices prevailing before 2001, 13 per cent is dedicated to
long term contracts and six per cent is priced quarterly at prevailing market
prices.
 
Production from the Group's Australian coal operations was 48 per cent higher
at 16.9 million tonnes, largely due to the Lemington and Peabody
acquisitions. In New South Wales, Coal & Allied's increased earnings of $38
million benefited from improved sales volumes, the weaker Australian dollar
and an increase in seaborne traded coal prices. The Lemington mine
integration was completed and work progressed to realise value from the
acquisition of the Peabody mines.
 
Earnings at Pacific Coal in Queensland of $60 million benefited from the
significant increase in seaborne traded coal prices. At Kestrel, longwall
performance issues affected production and constrained shipments. Kestrel
produced 1.5 million tonnes of coking and thermal coal with sales of 1.6
million tonnes. Blair Athol overcame mining difficulties associated with
working through old underground workings and produced 5.9 million tonnes
compared with 5.0 million tonnes. Tarong's production of 2.8 million tonnes
was higher, reflecting increased demand from the adjacent power station.
 
High rainfall constrained coal production at Kaltim Prima in Indonesia.
Blockades over land compensation claims and industrial action against a
contractor further affected production. By the end of the second quarter,
however, the mine was operating at record levels.
 
Uranium oxide production at Rossing in Namibia was affected by operating
problems in the processing plant. The cost reduction programme initiated last
year in response to tough market conditions continued. Trading activity in
the spot uranium oxide market was thin.
 
In Australia, Energy Resources of Australia achieved production in line with
the same period last year. However, sales were down in response to customer
deferrals of some deliveries and weak market demand.
 
 
DIAMONDS & GOLD GROUP 
 
                        2001 first half earnings $80 million, down 25 per cent
                       Mined gold production at 602,000 ounces, up 17 per cent
 
Rio Tinto's Diamonds & Gold group accounted for eight per cent of turnover
and contributed ten per cent of net earnings. The average gold price was
$266/oz compared with $285/oz.
 
Earnings from Argyle Diamonds, in Australia, of $30 million were
significantly lower despite the additional approximately 40 per cent interest
following the Ashton Mining acquisition in 2000. The absence of sales from
inventories, which were depleted in the first half of last year, was the main
reason for the reduction in earnings.
 
Prices of diamonds compared favourably although they came under considerable
pressure towards the end of the period. Market demand was down, especially in
the US, where retailers continued to reduce stocks. Production volumes were
adversely affected by difficulties in accessing ore in the central and
southern areas of the pit resulting in increased recovery of lower grade ore
from the northern bowl area. The grade is expected to improve in the second
half as mining in areas of higher grade begins.
 
In the US, Kennecott Minerals' performance was affected by lower gold, silver
and zinc prices. Cortez experienced lower sales volumes and higher costs due
to reduced mill throughput. At Greens Creek, silver production benefited from
higher grade and improved throughput and recovery.
 
In Brazil, lower prices reduced earnings at the Fortaleza nickel mine and
smelter. At Morro do Ouro, earnings were affected by lower gold production as
a result of major maintenance to four primary mills.
 
Production at the Kelian gold mine in Indonesia was higher mainly due to the
higher grade.
 
At Lihir Gold, Papua New Guinea, production was up due to the continued high
gold grade and the impact of autoclave maintenance on production in the first
half of 2000.
 
The sale of the Norzink zinc smelter in Norway was completed early in the
second quarter following receipt of all necessary approvals. Rio Tinto
recorded an after tax gain of $54 million for its 50 per cent share.
 
 
OTHER 
 
The North Forest Products business was sold during the period for $171
million.
 
 
ACQUISITIONS 
 
Early in 2001, Coal & Allied completed the acquisition of Peabody's
Australian coal assets in the Hunter Valley region of Australia for $455
million plus $100 million of assumed debt. Coal & Allied further increased
its interest in the Warkworth Mining Joint Venture from 43.75 per cent to
55.57 per cent for $27 million.
 
Rio Tinto acquired, on-market, an additional 1.83 per cent interest in Coal &
Allied Industries for $15 million, increasing its interest from 70.88 per
cent to 72.71 per cent. In addition, Rio Tinto acquired a 20.3 per cent
interest in the Labrador Iron Ore Royalty Income Fund for $56 million.
 
Comalco reached agreement to acquire an additional 8.3 per cent interest in
Queensland Alumina for $189 million. Following completion of the transaction
in the third quarter of 2001, Comalco's interest in Queensland Alumina will
increase from 30.3 per cent to 38.6 per cent, representing an additional
300,000 tonnes of alumina per annum.
 
In July 2001, Dampier Salt agreed to acquire the salt operations of Cargill
Australia, located at Port Hedland, Western Australia, for $95 million, plus
contingent performance-based payments payable over a number of years, not to
exceed $15 million in aggregate. The purchase will consolidate Dampier's
position as the world's leading salt exporter, increasing its annual capacity
from five million tonnes to eight million tonnes.
 
In July, Rio Tinto also reached agreement to purchase the Three Springs talc
mine and processing plant in Western Australia from Western Mining
Corporation for $28 million. The acquisition will allow Luzenac to broaden
its product portfolio and provide locally sourced high quality talc to the
Asia Pacific region.
 
Following the issue of a compulsory acquisition notice on 13 May 2001 and the
receipt of objections, as required by the Australian Corporations law, Rio
Tinto applied to the Supreme Court of Victoria for approval of the
acquisition of the 1,983,752 Western Australian Diamond Trust units (3.05 per
cent) that it does not already own. A hearing has been scheduled for 17
August 2001.
 
 
NEW PROJECT DEVELOPMENT 
 
Towards the end of the first half, Hamersley Iron and the Robe River joint
venture partners reached agreement to share rail infrastructure in the
Pilbara region of Western Australia. The agreement resulted in an immediate
capital cost saving of $110 million to the West Angelas project and made
provision for port sharing, subject to agreement on user terms. The
establishment of the Pilbara Rail Company, a 50:50 joint venture between Rio
Tinto Iron Ore and Robe River, will occur after the necessary Government
approvals have been obtained and will end the legal action launched by the
Japanese joint venture participants last year.
 
Work progressed on the construction of mine site and port facilities for the
West Angelas project in Australia. At the end of the first half, engineering
work at the mine and port was 95 per cent complete with construction 40 per
cent complete. Following resolution of the West Angelas rail issue, orders
have been placed for rolling stock, contracts for rail works have been
awarded and ground preparation work for the new twin cell car dumper has
begun. Robe is expecting to make its first shipment of iron ore early in the
second half of 2002.
 
Work continued on IOC's $240 million Sept-Iles pellet plant expansion that is
due to be commissioned in mid 2002. Delivery of major equipment began and
good progress was made on the structural elements of the expansion. Initial
annual production will be 1.3 million tonnes of pellets, rising to 4.5
million tonnes in 2004, lifting IOC's total pellet production to 17 million
tonnes per year.
 
Work with Nucor and others continued on detailed cost and other studies for a
commercial sized HIsmelt(R) plant in Western Australia.
 
At Diavik, in the Northwest Territories, Canada, all critical materials for
the 2001 construction programme were hauled over the winter ice road.
Generally, construction is progressing well and within budget. The project
remains on schedule to begin diamond production in the first half of 2003.
 
Development of the Palabora underground mine continued with construction just
over 70 per cent complete. At Escondida, construction of the Phase IV
expansion continued.
 
Following approval for the $210 million Hail Creek coking coal development in
Queensland, mobilisation of the project team began. The mine, which will
produce 5.5 million tonnes of high quality hard coking coal per year, is
expected to start up in 2003.
 
A detailed review of the Comalco Alumina Project is in progress. The focus is
directed at further refining the capital cost estimate and evaluating risks.
When this work is completed, Rio Tinto will determine whether or not to
proceed.
 
Rio Tinto continued work on e-business initiatives including the electronic
procurement marketplace, Quadrem, and GlobalCoal, which commenced operations
in May. Rio Tinto Shipping became a shareholder in LevelSeas, a company that
provides voyage management services and a chartering system for bulk ocean
transportation.
 
 
EXPLORATION 
 
Total pre-tax exploration expenditure charged to the profit and loss account
for the first half of 2001 was $54 million compared with $58 million.
Prioritisation of the world wide exploration programme continued. The
programme focused strongly on copper, diamonds and iron ore with a growing
commitment to industrial minerals.
 
Encouraging results were returned from early stage copper and gold projects
in Turkey and Iran. Drilling and metallurgical test work continued at the
Simandou iron ore deposit in Guinea, the Kazan trona discovery in Turkey and
the Wonarah phosphate project in the Northern Territory of Australia.
 
Exploration in the vicinity of existing mines continued to deliver good
results with programmes underway at Freeport, Bingham Canyon, Merlin, Peak
and Rawhide. An important brownfields opportunity was also secured through an
option agreement to earn a 55 per cent interest in BHP Billiton's deep
high-grade porphyry copper prospect at the Superior mine in Arizona.
 
Divestment of prospects that did not meet Rio Tinto's development criteria
continued with the sale of the Yakabindie nickel deposit in Western
Australia, the Lake Cowal gold deposit in New South Wales and the Wafi
gold-copper deposit in Papua New Guinea.
 
 
 

 
For further information, please contact: 
                                                   
                LONDON                  AUSTRALIA                
                Media Relations         Media Relations          
                John Hughes             Ian Head                 
                + 44 (0) 20 7753 2331   [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] 
     
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