Full Year Results - Part 1

Rio Tinto PLC
5 February 2001

Part 1

           Rio Tinto Earnings Grow 18 per cent to US$1,507 million            


* Earnings of $1,507 million, up 18 per cent on previous year 
* Operating cash flow up $0.4 billion to $3.4 billion 
* Acquisitions announced totalling $4 billion create growth and synergies 
* New projects and mine expansions under construction 
 
'The year 2000 was a particularly active one for us, offering some excellent
opportunities to expand our business,' said Rio Tinto chairman Sir Robert
Wilson. 'Acquisitions in Australia across four product groups, in line with
our strategy of seizing opportunities for synergy and increased shareholder
value, will add significant growth in future years.
 
'These include the minority shares in Comalco, now wholly owned by Rio Tinto;
North Limited with its iron ore and other assets; Ashton Mining Limited, our
joint venture partner in the Argyle diamond mine; the Lemington coal mine in
New South Wales and the agreement to purchase five Peabody Coal operations in
New South Wales and Queensland.
 
'Global economic growth of around 4.7 per cent was the highest in a decade
and resulted in continued growth in demand for commodities. Higher prices
coupled with further efficiency gains of $82 million improved our financial
performance, although this was offset by higher fuel costs of $61 million.
Second half earnings at $830 million were 23 per cent higher than earnings
for the first six months and brought the total for the year to a new record
high.'

                                                                          
            Full Year to 31 December           2000      1999     Change  

      Group turnover                          $9,972m    $9,310m       +7%
      Profit before tax                       $2,509m    $2,031m      +24%
      Net earnings                            $1,507m    $1,282m      +18%
      Earnings per share - cents                109.8       93.6      +17%
      Total dividends - US cents per share       57.5       55.0     +4.5%

All $ are US$, unless otherwise stated.
 

                            FULL YEAR 2000 REVIEW                             
 

The emergence of a number of opportunities to add value through acquisitions
resulted in considerable corporate activity in 2000. Good progress is being
made in assessing and integrating these assets although it was late in the
year before some came into the Group and the full impact on earnings,
especially of North, Ashton and the coal acquisitions, will only be seen in
2001 and subsequent years.
 
Main production growth was in the Aluminium and Iron Ore product groups.
Aluminium growth was mainly due to the increased stake in Comalco, while
growth in iron ore came from strong demand for steel in Asia, leading to
record production for Hamersley Iron. Gold production decreased due to lower
output from the Freeport joint venture, Cortez and Kelian and the closure of
Ridgeway but is expected to recover in 2001. Copper production increased
slightly, with higher production at Kennecott Utah Copper and Grasberg offset
by lower production at Escondida and Neves Corvo. 2001 will benefit from
increased grades at Kennecott Utah Copper as well as a full-year contribution
from Northparkes and Alumbrera. In Australia, coal production was up due to
an increased contribution from the Kestrel mine, while US coal production was
down slightly, as sales opportunities at low prices in the first half were
deliberately not pursued.
 
'Investment in our operations continued, with the underground development at
our Palabora copper mine in South Africa on track for full production in
2003; construction of the Diavik diamond mine in Canada's Northwest
Territories under way; construction of phase 4 of the Escondida copper mine
in Chile announced; expansion at Hamersley's Yandicoogina iron ore mine and
development of the West Angelas iron ore mine in Western Australia;
refurbishment of the Sept-Iles iron ore pellet plant in Canada and further
development at the Northparkes copper gold mine in New South Wales,
Australia,' said Rio Tinto chief executive Leigh Clifford. 'Safety remains a
priority. We have made a concerted effort to improve dramatically our safety
performance. The active involvement in safety of all line management, through
to and including me, has had collateral benefits in terms of employee
involvement.'

                                   OUTLOOK                                    

 
Sir Robert said: 'Economists might argue about whether the US as a whole is
in or is moving towards recession, but the metal consuming sectors of the US
economy are already in contraction and have been for several months.
Automobiles, capital equipment and construction are all under pressure and,
of course, the state of the US economy is the dominant influence in global
metals consumption.
 
'The good news is that metal markets appear to have already discounted the
downturn, unless the landing is very hard. Stocks of metals have been
unusually low relative to consumption and would normally have prompted higher
prices than we saw in the second half of 2000 and into 2001.
 
'Outside the US, the picture is not bad. Hopes of a substantial Japanese
recovery are proving to be short lived but Chinese consumption of metals
continues to grow strongly. Europe should achieve modest growth. Overall, new
metals and minerals capacity is limited and, in the US, power problems in the
Pacific Northwest are impacting aluminium production particularly hard.
Assuming the economic slowdown is short lived, metal prices should strengthen
as faster economic growth resumes.
 
'After further substantial additions to our resource base in the past 12
months, the long-term outlook is very encouraging for Rio Tinto.'


                       FULL YEAR 2000 FINANCIAL RESULTS                       

NET EARNINGS 
 
Net earnings increased by $225 million to $1,507 million, which was 18 per
cent above the $1,282 million for 1999. As last year, adjusted earnings are
the same as net earnings.
 
Earnings benefited by $254 million from higher selling prices, with copper
prices averaging 14 per cent above 1999 levels and aluminium prices up 13 per
cent. Market prices were also higher for the Group's diamonds, iron ore and
US domestic coal; though prices for seaborne coal were lower.
 
Movements in exchange rates increased earnings by $144 million. Margins were
strengthened by an 11 per cent reduction in the average Australian dollar
exchange rate in US dollar terms.
 
Overall, volume changes added $33 million to earnings. This includes the part
year impact of acquisitions made during the year. Sales tonnage increased by
nearly 13 per cent at Hamersley. Volumes were lower for separate local
reasons in several other operations.
 
In real terms, cash costs were reduced by $82 million, excluding the effects
of higher fuel prices of $61 million. Non-cash costs increased by $51
million, including a full year's amortisation of the new tailings facilities
at Kennecott Utah Copper and additional depreciation and amortisation charges
resulting from the increased stake in Comalco and the North acquisition.
 
Changes in post retirement costs increased earnings by $38 million after tax,
following revisions to actuarial assumptions.
 
Interest charges increased by $55 million after tax with increased debt
following the acquisitions during the year and higher interest rates.
 
The Group's tax rate at 32.6 per cent compares with 27.0 per cent for 1999.
Earnings in 1999 included a benefit of $89 million from adjustments to
deferred tax provisions as a result of reductions in future tax rates in
Australia and South Africa. These one-off adjustments recognised that the
Australian tax rate will reduce to 30 per cent for 2001 and future years. A
tax rate of 34 per cent applied to Australian earnings in 2000, so there will
be a further earnings benefit in 2001 which will continue in subsequent
years.
 
Overall, acquisitions during the year added $12 million to earnings after
recognising restructuring costs and the costs of financing these investments.
The seven months' contribution from the additional investment in Comalco had
a positive impact on earnings of $34 million. The earnings impact in just
over four months from North and one month from Ashton diluted earnings by $22
million as a result of restructuring costs and because synergies with the
various Group operations are yet to be visible in earnings.
 
Second half earnings were $153 million higher than the first half of 2000 due
largely to increases in volumes, particularly in the copper operations.
Hamersley's volumes also grew further and there was a seasonal increase in
titanium dioxide feedstock sales.
 

CASH FLOW

 
Cash flow from operating activities together with dividends from joint
ventures and associates totalled $3,440 million, an increase of $425 million
above 1999 as a result of increased operating profits. This was despite a $47
million net monetary increase in working capital due to increased sales
values in the second half of the year, reflected in accounts receivable.
 
Net repayments of funds previously advanced to joint ventures and associates
reduced to $40 million (1999: $399 million). This amount includes the residue
of the loan repayments from Freeport out of its share of the Grasberg
expansion. These repayments accounted for a large part of the $399 million
repaid in 1999, which also included the replacement of a loan to Richards Bay
Minerals with third party finance.
 
Acquisitions less disposals involved a net cash outlay of $3,191 million
(1999: $279 million). These included the cash consideration of $0.8 billion
paid for the remaining 28 per cent of Comalco not already owned by the Group,
the acquisitions of North for $2 billion and Ashton for $0.4 billion. Other
transactions included the purchase of the Lemington coal operation by Coal &
Allied and the sale of the Group's interest in Carbones del Cerrejon. In
addition to the cash consideration, a total of 6.1 million Rio Tinto Ltd and
Rio Tinto plc shares have been issued in connection with the Comalco and
Ashton acquisitions.
 
As a result of the Group's strong operating cash flow, the net cash outflow
before management of liquid resources and financing was contained to $2,291
million in the year, despite the large investment in acquisitions.
 

BALANCE SHEET

 
During the year, shareholders' funds increased by $248 million with earnings
of $1,507 million being partly offset by dividends of $790 million and
adjustments of $561 million on currency translation. The latter was due
largely to a 15 per cent decline in the Australian dollar. Net debt increased
to $5.1 billion as a result of the acquisitions made during the year.
Although the ratio of net debt to total capital increased from 23.7 per cent
at 31 December 1999 to 38.1 per cent at 31 December 2000, the balance sheet
remained in a strong condition.
 

DIVIDENDS

 
A 2000 final dividend equivalent to 38.5 US cents per share (1999: 38.5 US
cents) has been declared by Rio Tinto plc and Rio Tinto Limited. This,
together with the interim dividend equivalent to 19 US cents per share, makes
a total for the year of 57.5 US cents per share (1999: 55 US cents).
 
Dividends continue to be 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 Friday, 2 February 2001.
 
Rio Tinto plc shareholders will be paid a final dividend of 26.21 pence per
ordinary share (1999: 23.84 pence). Together with the interim dividend of
12.66 pence per share paid on 15 September 2000, dividends for 2000 total
38.87 pence per share (1999: 34.23 pence), an increase of 13.6 per cent.
 
Rio Tinto Limited shareholders will be paid a final dividend of 69.76
Australian cents per ordinary share (1999: 61.47 Australian cents). This will
be fully franked at the tax rate of 34 per cent. Together with the fully
franked interim dividend of 32.68 Australian cents paid on 15 September 2000,
dividends for 2000 total 102.44 Australian cents per share (1999: 87.11
Australian cents), an increase of 17.6 per cent, franked at the tax rate of
34 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 6 April 2001 to shareholders
registered at close of business on 9 March 2001, and to Rio Tinto plc bearer
shareholders against coupon 84 on or after 6 April 2001. The ex-dividend date
will be 7 March 2001. Dividends to Rio Tinto ADR holders will be paid on 9
April 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)                        
 
IRON ORE GROUP                      
                                    2000 earnings $344 million, up 33 per cent
                    Iron ore production at 61.4 million tonnes, up 20 per cent

 
Rio Tinto's Iron Ore group accounted for 11 per cent of Group turnover and
contributed 23 per cent of net earnings in 2000.
 
Hamersley achieved record iron ore production and shipments despite
disruptions caused by cyclones in the first quarter. Shipments totalled 67.1
million tonnes in 2000, 13 per cent more than in 1999. Strong demand resulted
from growth in Asia and the continued strength of the US economy. However
competition in the marketplace continued to intensify, with lower-priced
products entering the market and putting pressure on margins. Yandicoogina
was a strong contributor to Hamersley's performance, reflecting the growing
market for low alumina, high value-in-use fines ore.
 
With effect from January 2001, Robe River and The Iron Ore Company of Canada
will be reported within the Iron Ore group.
 
 
INDUSTRIAL MINERALS GROUP  
                                   2000 earnings $392 million, down 5 per cent
                            Borate production at 590,000 tonnes, up 5 per cent
    Titanium dioxide feedstock production at 1,368,000 tonnes, down 4 per cent
 
Rio Tinto's Industrial Minerals businesses accounted for 21 per cent of Group
turnover and contributed 26 per cent of net earnings in 2000.
 
Rio Tinto Borax's earnings of $119 million were four per cent lower than
1999. During 2000, continued strength in North America and recovery in Asian
markets were outweighed by competitive price pressures in Europe. Two
milestones were reached at the Boron mine. Remediation of the 1997/98 pit
wall slippage was completed without disruption to production, and the $130
million mine expansion project was finished on schedule and below budget.
Cost savings from this project and other cost reduction initiatives partially
offset higher stripping requirements and energy costs.
 
Rio Tinto Iron & Titanium earnings were nine per cent lower at $173 million.
In 2000, titanium dioxide feedstock sales were down against a background of
market oversupply for higher grade feedstocks accentuated by customers
reducing inventory levels. The market oversupply particularly affected
Richards Bay Minerals, although its impact on the South African operation was
mitigated by a weaker rand versus the US dollar. Iron and steel co-products
remained intensely competitive with pricing impacted by a weaker Euro versus
the US dollar. Zircon markets, however, continued to strengthen throughout
the year.
 
Continued strong demand for Argyle diamonds resulted in an earnings
improvement of 28 per cent to $74 million. In the buoyant market that
prevailed in the first half of 2000, Argyle achieved strong price growth.
Through its customer support and relationship management, Argyle was able to
protect this price base in the second half of 2000 in the face of declining
market sentiment and consumer confidence.
 
Earnings at Luzenac were slightly lower than in 1999. Strong sales growth was
experienced in the European polymer and paper sectors but in lower priced,
lower margin products. This failed to offset weaknesses elsewhere,
particularly in the North American domestic pitch market. Earnings at Dampier
Salt recovered in the second half after the adverse weather conditions
earlier in the year.
 
With effect from January 2001, the Industrial Minerals group will consist of
Rio Tinto Borax, Rio Tinto Iron & Titanium and Luzenac. Argyle and other
diamond interests and Dampier Salt will be reported within the renamed
Diamonds & Gold group, formerly Gold & Other Minerals.
 
 
COPPER GROUP                      
                                     2000 earnings $290 million, up 8 per cent
                      Mined copper production at 865,100 tonnes, up 1 per cent
                    Refined copper production at 392,000 tonnes, up 1 per cent
                       Mined gold production at 1,466,000 ounces, same as 1999
 
Rio Tinto's Copper Group accounted for 21 per cent of Group turnover, of
which 72 per cent was from copper and the remainder mostly from gold
co-product. The Copper group contributed 19 per cent of net earnings in 2000.
The copper price in 2000 averaged 82 cents/lb, 14 per cent higher than the
1999 average. The average gold price was $279/oz in 2000, the same as in 1999.
 
In the US, Kennecott Utah Copper's mine production of copper was nearly six
per cent higher and that of gold some 44 per cent higher. A four per cent
increase in ore milled, combined with a four per cent increase in copper
grades and a 41 per cent increase in gold grades were the main reasons for
the improved performance compared with 1999.
 
Refined metal production increased, with the smelter complex working slightly
in excess of rated capacity. Refined copper output was one per cent higher
and gold was 19 per cent above 1999 levels.
 
At Grasberg in Indonesia, total production of copper in concentrates was
slightly higher due to improved mill recoveries, but gold production was 21
per cent lower than 1999. Rio Tinto's overall share of production increased
by 13.5 per cent for copper to 203,800 tonnes. Rio Tinto's share of gold
output was, however, 21.5 per cent lower at 739,000 ounces.
 
Normal operations resumed at the end of the year following restrictions on PT
Freeport Indonesia after the stockpile slippage at the Wanagon Basin. As a
result of Freeport-McMoRan Copper & Gold (FCX) share buy-backs during 2000,
Rio Tinto's holding in FCX increased from 14.6 per cent to 16.6 per cent.
 
Ore grade at Escondida in Chile continues to decline in line with long-term
projections and this resulted in a nine per cent reduction in mined copper
output in 2000. Refined copper produced by the oxide plant, which has
consistently exceeded design capacity at lower than planned cost, increased
by six per cent.
 
At Palabora in South Africa, copper grades in 2000 were 24 per cent higher
than 1999. Despite this, total production of copper in concentrate was only
five per cent higher with the increased grade being offset by lower recovery
rates, which were adversely impacted by the processing of lower grade
stockpiled material. Refined copper production was 12 per cent lower due to a
smelter shutdown in mid year to rebuild the reverberatory furnace and acid
plant.
 
At Neves Corvo, Portugal, copper production was some 24 per cent lower mainly
due to a failure in the shaft winder, which disrupted normal mine production
for nine weeks in the second half of the year. Rio Tinto commenced the
process of selling its 49 per cent interest in Neves Corvo. Negotiations are
continuing with short-listed bidders.
 
With effect from January 2001, Northparkes in Australia and Alumbrera in
Argentina will be reported within the Copper group. Also, Peak Gold has been
transferred to the Copper group and the management has been merged with
Northparkes. Anglesey Aluminium in the UK and Zinkgruvan in Sweden will also
form part of the Copper group.
 
 
ALUMINIUM GROUP                 
                                   2000 earnings $338 million, up 115 per cent
                     Bauxite production at 11.0 million tonnes, up 29 per cent
                      Alumina production at 1.5 million tonnes, up 29 per cent
                        Aluminium production at 619,000 tonnes, up 27 per cent
 
Comalco, Rio Tinto's Australian integrated aluminium group, accounted for 16
per cent of Group turnover and contributed 22 per cent of net earnings in
2000. Rio Tinto acquired the publicly held 27.6 per cent of Comalco in
mid-year.
 
The average aluminium price at 70 cents per pound was 13 per cent higher than
1999. Alumina prices increased significantly during the first half of the
year, reflecting a tight market following an explosion at a competitor's
refinery in 1999. The average Australian dollar exchange rate weakened by
around 11 per cent against the US dollar and Comalco's earnings also
benefited from weakness in the New Zealand dollar, with both currencies
falling to historical lows in the second half of the year.
 
Comalco's underlying earnings continued to benefit from the performance
enhancement process, with increased production at all sites and a further
significant reduction in operating costs.
 
Total production at Weipa increased from 11.4 million tonnes to 11.8 million
tonnes. Comalco's alumina entitlements from Queensland Alumina and
Eurallumina increased by four per cent. Both refineries produced at record
levels following the implementation of process improvements. Comalco's
aluminium production increased by two per cent to 695,000 tonnes with all
three smelters achieving record production levels for the year.


ENERGY GROUP                
                                    2000 earnings $260 million, up 18 per cent
                        Coal production at 132 million tonnes, down 5 per cent
                       Uranium oxide production at 2,195 tonnes, up 1 per cent
 
Rio Tinto's Energy group accounted for 18 per cent of Group turnover and
contributed 17 per cent of net earnings in 2000.
 
In the US, demand for coal from the Southern Powder River Basin of Wyoming
grew by 1.7 per cent in 2000, with spot market prices strengthening through
the second half of 2000 based on a more balanced supply and demand.
 
Kennecott Energy's share of production of 101 million tonnes in 2000
represented a decrease of seven per cent compared with 1999. Lower sales were
due mainly to a decision to reduce production in the first half of the year
following lower spot prices experienced in late 1999 and early 2000.
 
Production from the Australian coal operations was similar to that in 1999.
In New South Wales, Coal & Allied's profitability improved due to better
operational performance and the settlement of a dispute concerning a long
term coal contract. Collective workplace agreements for Hunter Valley
Operations and Mount Thorley Operations were signed in 2000, the terms of
which allow for significant reforms. In late 2000, Coal & Allied purchased
the Lemington coal mine and announced the purchase of the Australian coal
assets of the Peabody group which was completed at the end of January 2001.
 
Earnings at Pacific Coal in Queensland of $93 million were up 16 per cent on
1999. Kestrel Coal, in its first full year of operation under Pacific Coal's
management, produced a combined 3.3 million tonnes of coking and thermal coal
and achieved sales of 3.7 million tonnes. Blair Athol Coal, while
encountering difficulties with mining through old underground workings,
produced 11.0 million tonnes compared with 11.1 million tonnes in 1999.
Tarong Coal's production of 5.0 million tonnes was lower than the previous
year (5.1 million tonnes) due to lower demand from the adjacent power
station.
 
Earnings from Kaltim Prima Coal in Indonesia for 2000 were $18 million. The
impact of lower shipments, as a consequence of 44 days of lost production due
to industrial disputes, and lower prices, accounted for the reduction in
profit compared with 1999. 
 
In January 2000, Rio Tinto sold its one-third interest in Carbones del
Cerrejon in Colombia at a profit of $55 million.
 
In Namibia, Rossing's uranium oxide production was one per cent higher than
in 1999. The spot uranium oxide price fell to the lowest real price on
record. In response to market conditions, Rossing initiated a cost reduction
programme aiming to reduce costs by 20 per cent. Whilst savings were achieved
in 2000, the programme continues. The previously announced reduction in
Namibian mining tax is now expected in 2001.
 
With effect from January 2001, Rio Tinto's interest in Energy Resources of
Australia, which resulted from the North acquisition, will be reported within
the Energy group.
 
 
GOLD & OTHER MINERALS GROUP 
                                   2000 earnings $121 million, down 2 per cent
                   Mined gold production at 1,205,000 ounces, down 20 per cent
 
Rio Tinto's Gold & Other Minerals group accounted for nine per cent of
turnover and contributed eight per cent of net earnings in 2000.
 
The average gold price, at US$279/oz, was the same as 1999. The average
silver price was four per cent lower and those of aluminium, nickel and zinc
were higher by 13, 44 and four per cent respectively.
 
Higher ore grade, additional milling capacity installed in 1999 and improved
recoveries increased gold production to record levels at Morro do Ouro in
Brazil. In the US, Kennecott Minerals' output was 29 per cent lower due to
the closure of the Ridgeway mine in late 1999 and lower gold production at
Cortez due to the transition from Stage 2 to Stage 3 of the Cortez Pipeline
pit.  
 
Production was lower at Kelian in Indonesia in the first half of 2000, as
mining activities were suspended from late April until mid June as a result
of a dispute over land compensation claims, but production recovered in the
second half.
 
Rio Tinto's interest in Lihir Gold decreased to 16.3 per cent in early 2000
as a result of the merger of Lihir Gold and Niugini Mining. Lower head grade
in 2000 reduced gold production by three per cent compared with 1999.
 
In Australia, the $20 million development of Peak Gold's New Occidental
orebody will extend the life of the mine by up to five years.
 
Record production at Anglesey Aluminium in the UK occurred as a consequence
of increasing amperages and high cell utilisation.
 
The Greens Creek zinc/lead/silver mine and mill in Alaska continued to
implement productivity improvements and consistently exceeded design
throughput. However, ore grades varied with the mining sequence resulting in
similar tonnages of zinc and silver being produced.
 
The transition to underground mining at the Fortaleza nickel mine in Brazil
was completed in November. While production of nickel fell by seven per cent
compared with 1999, earnings benefited from the strong nickel price during
the year.
 
On 31 January 2001, agreement was reached for the sale of Rio Tinto's
interest in the Norzink zinc smelter in Norway.
 
With effect from January 2001, the Gold & Other Minerals group has been
renamed the Diamonds & Gold group and consists of the following entities:
Argyle, Ashton, Dampier Salt, Diavik, Lihir, Kelian, Kennecott Minerals, Rio
Tinto Zimbabwe and Rio Tinto Brasil.
 
 
NORTH 
                                                     2000 earnings $19 million
                                    Iron ore production at 10.2 million tonnes
                                      Mined copper production at 30,500 tonnes
                                      Uranium oxide production at 1,207 tonnes
 
Control of North passed to Rio Tinto on 11 August 2000. Earnings for the
period from then, including $8 million of one-off costs relating to
restructuring, were $19 million before financing costs resulting from the
acquisition.
 
The iron ore assets of North comprise a 53 per cent stake in Robe River Iron
Associates, in which Mitsui (33 per cent), Nippon Steel (10.5 per cent) and
Sumitomo Metal (3.5 per cent) also have interests, and Iron Ore Company of
Canada (IOC), in which Mitsubishi (25 per cent) and the Labrador Iron Ore
Royalty Income Fund (18.9 per cent) are also shareholders.
 
For the year 2000, Robe achieved record total shipments of 33.2 million
tonnes and production of 31.7 million tonnes, up 12 per cent and four per
cent respectively on the previous records in 1999. At IOC, total pellet
production was a record 12 million tonnes in 2000.
 
Since acquisition, Rio Tinto has been reviewing rationalisation and
optimisation opportunities between existing operations of Hamersley and Robe
and in the development of West Angelas.
 
The North business units have been transferred into the respective Rio Tinto
product groups with effect from January 2001 for management purposes.
 
 
ACQUISITIONS 
 
During the year, Rio Tinto acquired the 27.6 per cent minority stake in
Comalco at a cost of $0.8 billion, North at a cost of $2 billion, Ashton at a
cost of $0.4 billion and the Lemington coal mine in the Hunter Valley for
$134 million.
 
The acquisition of the Australian coal assets of Peabody by Coal & Allied for
$455 million plus $100 million of assumed debt was completed in early 2001.
 
In December 2000, Rio Tinto announced that it intends to make a cash offer
for the Labrador Iron Ore Royalty Income Fund at a total cost of C$405
million. This acquisition will provide Rio Tinto with the opportunity to
consolidate its interest in the Iron Ore Company of Canada.
 
 
SHARE ISSUES AND BUY BACKS 
 
During the year to 31 December 2000, 3.16 million Rio Tinto plc shares and
2.14 million Rio Tinto Limited shares were issued in connection with the
Comalco acquisition. In addition 0.4 million Rio Tinto plc shares and 0.4
million Rio Tinto Limited shares have been issued in connection with the
Ashton acquisition.
 
In total, 1.2 million Rio Tinto plc shares were purchased and cancelled by
Rio Tinto plc at an average price of 1035p per share and 0.75 million Rio
Tinto Limited shares were purchased and cancelled by Rio Tinto Limited at an
average price of A$25.13 per share. In addition, Rio Tinto Limited purchased
off-market and cancelled 91 million Rio Tinto Limited shares held by Tinto
Holdings Australia Pty. Limited (a wholly owned indirect subsidiary of Rio
Tinto plc).


NEW PROJECT DEVELOPMENT 
 
Through the North acquisition, the Iron Ore group acquired interests in the
West Angelas project at Robe River and the refurbishment of the Sept-Iles
iron ore pellet plant at IOC in Canada. The Rio Tinto board subsequently
endorsed both these projects.
 
The West Angelas development is based on producing lump and fines products at
20 million tonnes per annum at the mine site for railing to Cape Lambert for
subsequent shipping. The port will be upgraded to a nominal annual capacity
of 50 million tonnes per annum to meet this requirement.
 
Rio Tinto has explored opportunities for potential infrastructure
rationalisation and optimisation which would result in the amendment of the
Robe Development Plan to provide for construction of a rail connection to
Hamersley's existing railway with significant savings to the project. Rio
Tinto's partners have chosen to pursue legal action over the question of
whether to construct a separate rail line or use the existing Hamersley rail
system. The partners have commenced proceedings in the Victorian Supreme
Court, asserting that the separate rail line must be built. Rio Tinto
believes these issues can be resolved through discussion and will continue to
act in the best interests of the project.
 
The refurbishment of the Sept-Iles pellet plant will lift the annual pellet
capacity at IOC from 12.5 million tonnes to 17 million tonnes, making it the
second largest pellet producer in the world. At year end, engineering was 65
per cent completed. Construction commenced in August and to date has
comprised mainly demolition, site preparation and initial civil works.
Commissioning of the plant is scheduled for July 2002.     
 
In June, the Western Australian Government approved the expansion of
Yandicoogina to 20 million tonnes per annum, enabling Hamersley to
participate fully in one of the fastest growing market sectors for iron ore.
No major changes to the existing facilities were needed but plant
modifications allow operating hours and throughput rates to be increased. The
five million tonne per annum expansion has been completed.
 
Detailed technical and commercial studies of the HIsmelt(R) direct smelting
technology plant, capable of producing around 600,000 tonnes of hot metal per
annum, were completed in October 2000. Conditions specific to the site under
study resulted in a higher capital cost than originally expected. This,
together with weakening steel markets, led to consideration of alternative
development proposals. Work continues on assessing a suitable site although
Western Australia seems to be the most competitive option.
 
In Industrial Minerals, Richards Bay Minerals' $170 million fifth mining
dredge was commissioned on schedule and to budget by early 2000. Construction
of the C$1.3 billion 20-year-life Diavik Diamonds project in Canada was
approved in December. Diavik and its contractors are currently arranging
transport of approximately 4,000 truckloads of fuel, equipment and
construction materials to the project site on the seasonal winter road.
 
Within the Copper group, work on Palabora's $410 million underground mine
continued, with the project on track to meet all key dates. Underground
production at capacity rates is scheduled for 2003 to coincide with closure
of the open pit.
 
In December 2000, the joint venture partners in Escondida announced approval
for the $1,036 million Phase 4 expansion. A stable water supply for the
project has been secured and development will commence immediately with
detailed engineering of the expansion now 97 per cent complete.
 
The expansion will be completed within two years and will increase ore
processing facilities by 85 per cent, resulting in an average increase in
copper production of 400,000 tonnes annually and boosting average total
production to 1.2 million tonnes a year over the first five years of full
operation.
 
Consideration is being given to reactivating the Hail Creek coking coal
project in Queensland, which was put on hold at the start of 1999 pending
improvement in market conditions. A decision to proceed may be made in 2001.
 
Comalco continues to evaluate a new greenfield alumina refinery at Gladstone
in Queensland based on Weipa bauxite. 
 
At the Murowa diamond prospect in southern Zimbabwe a mining reserve of 16.5
million tonnes at a grade of 0.9 carats per tonne was announced.
 
 
EXPLORATION 
 
Total pre-tax exploration expenditure charged to the profit and loss account
for 2000 was $136 million, the same as in 1999.
 
Global prioritisation of the exploration programme continued, together with
the assimilation of both North's and Ashton's exploration activities.
 
In Irian Jaya/Papua, delineation drilling continued on recently recognised
porphyry gold-copper mineralisation within the Ertsberg intrusion on the
existing Contract of Work. There is potential for 100 to 200 million tonnes
of resource within the intrusion mineable by both open pit and underground
block caving methods. Drilling also continued on extensions to the Kucing
Liar skarn system on the periphery of the Grasberg intrusion. Several long
intervals of high grade copper-gold mineralisation were obtained, indicating
good potential for additional mineable resources.
 
Early encouragement was also obtained from reconnaissance drilling programmes
on copper prospects in Turkey and Argentina.
 
A laterite nickel deposit was identified in Indonesia. Preliminary
indications suggest potential for approximately 380 million tonnes, grading
around 1.3 per cent nickel and 0.1 per cent cobalt, containing approximately
195 million tonnes of higher grade mineralisation, grading around 1.5 per
cent nickel and 0.1 per cent cobalt.
 
Deep delineation drilling continued at the Argyle diamond mine in Western
Australia. Early stage work continued on kimberlite discoveries in Australia,
Canada and Zimbabwe.
 
Exploration drilling continued at the Simandou lump haematite prospect in
Guinea. Resource modelling indicates potential for approximately 1,200
million tonnes of primary mineralisation with a 65 per cent iron content.
 
Delineation drilling at the Wonarah phosphate deposit in the Northern
Territory, Australia, intersected high grade phosphate mineralisation. There
is potential for an open pittable resource of over 100 million tonnes at more
than 22 per cent phosphorus oxide, P2O5.
 
 
E-BUSINESS 
 
Rio Tinto has been active in the creation of the Quadrem procurement
marketplace, which was successfully trialed in October 2000. This
e-marketplace grew over the second half of 2000 as further companies joined,
having seen the potential of creating an industry-wide marketplace for the
purchase of goods and services.
 
During the second half of the year efforts were focused on developing the
procurement organisation, business processes and computer systems so that,
when Quadrem becomes fully operative, Rio Tinto will be in a good position to
benefit quickly from the efficiencies that the new technology offers. The
impact on Rio Tinto's purchase of goods and services will be positive,
allowing more efficient ordering, reduced inventories and access to a wider
market of suppliers, leading to lower costs.
 
On the marketing side, an internal study was completed during the second half
of the year. The study concluded that the benefits offered by the new
technologies would best be achieved by allowing individual product groups to
harness the new technology to their respective markets. Proposals from the
product groups are emerging. The Australian Energy businesses will be
participating, amongst others, in GlobalCoal, the first spoke market
developed by Hubco - of which Rio Tinto is a founding member. It is
anticipated that there will be further developments in 2001 in this area.
 
 
For further information, please contact:
 
LONDON 
 
Media Relations                   Investor Relations 
Lisa Cullimore                    Peter Jarvis
+ 44 (0) 20 7753 2305             + 44 (0) 20 7753 2401
 
                                  Jonathan Murrin
                                  + 44 (0) 20 7753 2326
AUSTRALIA 
 
Media Relations                   Investor Relations 
Ian Head                          Dave Skinner
[phone]               [phone]
                              
                                  Daphne Morros
                                  [phone]
 
Website: www.riotinto.com
 
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