Coal & Allied annual results

Rio Tinto PLC
29 January 2007

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 2006 annual results
Solid result despite infrastructure constraints


SUMMARY



•           Net profit after tax was $206.8 million compared with $291.0 million profit after tax in 2005

•           2006 production of 28.8 million tonnes was similar to 2005 production

•           Coal & Allied's share of 2006 sales volumes was seven per cent lower than 2005

•           A fully franked dividend of $0.25 per share will be paid on ordinary shares



Coal & Allied's Managing Director, Douglas Ritchie said, 'Coal & Allied's
performance in 2006 reflected the continuing positive demand for coal, but was
offset by ongoing constraints in infrastructure capacity and the increased cost
of business inputs.'



'While global demand for thermal coal remained relatively high throughout the
year and resulted in strong prices, our total shipments were constrained by
available port and rail capacity and were nearly five per cent lower than 2005.'



The capacity balancing system remained in place at the Port of Newcastle
throughout 2006.  However in late 2006, Hunter Valley coal producers voted not
to continue with the system in 2007 and a take or pay system came into effect on
1 January 2007.



'In Coal & Allied's view, the capacity balancing system ultimately failed
because it did not address all aspects of the coal chain.  Hunter Valley
producers need a transparent demand management system that determines coal chain
entitlements based on production, guaranteed rail capacity and port allocation.
Any system must effectively manage coal logistics for at least a two or three
year time frame until investment in rail and port capacity matches demand,' Mr
Ritchie said.



In late 2006, Coal & Allied confirmed its long term commitment to the Mount
Pleasant Project with the commencement of a feasibility study into the project's
potential development.



 'As part of our focus on sustainable development, the proposed Mount Pleasant
operation will be designed to maximise energy efficiency, manage water use and
reduce impacts on our neighbours,' Mr Ritchie said.



Coal & Allied's net profit after tax was $206.8 million, down 29 per cent from
2005 largely due to decreased sales as a result of the constrained
infrastructure system.  As a result of the continued strength of the resources
sector, the cost of business inputs including raw materials and labour impacted
on profits.  Higher demurrage alone increased Coal & Allied's costs by $10
million over 2005.



SUMMARY OF PERFORMANCE



Coal & Allied's results for 2006 are shown below, along with comparative results
for 2005.


                                                                    Year to 31 December              Change

                                                                              2006        2005            %

Revenue ($ millions)                                                1,415.0        1,463.2             -3.3
Net profit after tax ($ millions)                                   206.8          291.0              -28.7
Operating cash flow ($ millions)                                    132.4          449.8              -70.6
Final dividend (cents per share)                                    25.0           120.0              -79.2
Coal production1 (million tonnes)                                   28.8           28.6                 0.7
Coal shipments1 (million tonnes)                                    27.6           29.0                -4.8
Lost time injury frequency rate2                                              1.05        1.75            -



1   Production and shipments are on a 100% basis. Shipments exclude purchased
coal.  Details of full production and shipments are shown in the Financial and
Operating Statistics appendix.

2 Per million person hours

Revenue
Revenue of $1,415.0 million was 3.3 per cent lower than in 2005 ($1,463.2
million).  Sales volumes were adversely affected by the shipping queues at the
Port of Newcastle in the last quarter.  This was partially offset by improved
prices and a greater proportion of sales made inclusive of freight.

Production
Managed production of saleable coal increased slightly (0.2 million tonnes) to
28.8 million tonnes, consistent with the port allocation through the Port of
Newcastle and domestic contracts.  Coal & Allied's share of saleable coal
production was 21.4 million tonnes.

Capital expenditure
Total capital expenditure for the year was $147.9 million compared with $65.1
million in 2005.  Expenditure was predominantly for sustaining purposes,
including replacement of heavy mobile equipment.

Cash flow
Net operating cash flow was $132.4 million compared with $449.8 million in 2005.
  The significant change in operating cash flow reflected the effect of lower
earnings, higher working capital flowing from port constraints and higher income
tax payments.

Debt
Net debt was higher at the end of 2006 at $278.1 million compared with $69.2
million in 2005.  Gearing (net debt to net debt + equity) was 25.4 per cent at
31 December 2006, compared with 7.8 per cent at 31 December 2005.

Dividends
A fully franked final dividend of $0.25 per ordinary share will be paid. An
interim dividend of $1.10 was paid during 2006.  A dividend of 1.75 cents per
preference share, fully franked, will be paid, making the total preference
dividend for the year 3.5 cents per share, fully franked.

Infrastructure
The capacity balancing system continued to manage the vessel queues, however in
the last quarter shipping queues increased and there were very significant load
delays.  Despite infrastructure expansions, there is a risk that the system
capacity may remain constrained during 2007.  Hunter Valley coal producers will
be required to work constructively to maximise efficiencies in the system.  The
Port Waratah Coal Services (PWCS) expansion should increase port capacity to 105
million tonnes a year during 2007, however the additional port capacity is
expected to be available ahead of the corresponding rail capacity.  A take or
pay system came into effect on 1 January 2007 at PWCS.

Market conditions
During 2006, the thermal and semi-soft markets stabilised marginally from 2005
levels, however global demand for thermal coal from most regions of the world
remained relatively strong.  The thermal coal market recovered in the fourth
quarter from a third quarter decline and the demand fundamentals remain sound.
There was continued strength in the semi-soft market during 2006.  China's net
export position continued to fall dramatically in 2006, largely offsetting
Indonesia's coal export growth.

Safety performance
Safety performance improved significantly across all operations, resulting in a
40 per cent reduction in the frequency of injury (1.05 LTIFR compared with 1.75
in 2005). For the second year in a row, Mount Thorley/Warkworth won the NSW
Minerals Council Occupational Health and Safety Innovation Award.  The award
recognised the development of the 'Eye Spy' safety tool which is a camera device
that can be fitted to haul trucks when changing truck trays.

Coal & Allied's operations were also well represented in the 2006 Hunter Valley
Opencut Mines Rescue competition with Hunter Valley Operations taking first
place, Bengalla second and Mount Thorley/Warkworth third.

Sustainable development / Climate Change
Coal & Allied is a long-term contributor to a range of projects that support the
research, development and deployment of clean coal technologies, including a
voluntary contribution of funds to the COAL21 levy.  As part of its
business-wide climate change action plan, Coal & Allied is also working to
improve energy use at its operations, in its new projects and the supply chain.
Coal & Allied is designing its projects to recognise risks from a changing
climate and opportunities in a changing policy environment.

Coal & Allied recognises that there is a high level of public interest on the
issue of climate change and coal mining.  While all independent research has
found coal is essential for energy supply in the short to medium term, the
company recognises that coal will need to be used differently in the future.



Coal & Allied's focus on sustainable development continued in 2006 through both
internal and external engagement programs.





For further information, please contact:

LONDON                                               AUSTRALIA

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Website: www.riotinto.com

High resolution photographs available at: www.newscast.co.uk






Coal & Allied Financial and Operating Statistics
                                                                                       2006         2005
Production and shipments                                                        '000 tonnes  '000 tonnes


Total shipments 1                                                                    27,634       29,042


Total saleable production 2

Hunter Valley Operations                                                             12,025       12,374

Mount Thorley Operations                                                              3,895        3,962

Bengalla                                                                              5,544        5,965

Warkworth                                                                             7,341        6,293

Total                                                                                28,806       28,594



Coal & Allied equity share of production

Hunter Valley Operations (100%)                                                      12,023       12,375

Mount Thorley Operations (80%)                                                        3,116        3,170

Bengalla (40%)                                                                        2,218        2,386

Warkworth (55.57%)                                                                    4,082        3,497

Total                                                                                21,439       21,428



Shipments by market 1

Japan                                                                                11,615       16,353

Asia (excluding Japan)                                                                7,664        6,347

Europe                                                                                1,591        2,026

Other                                                                                 2,507          241

Domestic                                                                              4,257        4,075

Total                                                                                27,634       29,042




Shipments by product 1

Export thermal                                                                       20,224       21,493

Domestic thermal                                                                      4,257        4,075

Coking                                                                                3,153        3,474

Total                                                                                27,634       29,042




Financial                                                                              2006         2005

                                                                                  $ million    $ million

Total assets                                                                          1,861        1,728

Capital expenditure and investments                                                     148           65
Depreciation and amortisation                                                            96          105
Employees                                                                             1,355        1,301
Net debt to net debt + equity (%)                                                      25.4          7.8
Earnings per share (cents)                                                            238.8        335.7

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