By Mathew Murphy
TO PINCH Prime Minister Julia Gillard's slogan, global miner Rio Tinto is ''moving forward'', further reducing its previously debt-heavy balance sheet and flagging its intention to keep growing, all while bringing in a record half-year result that beat analysts' expectations.
One of the most vocal critics of Labor's profit-based tax, Rio more than doubled underlying earnings in the first half of calendar 2010 to hit $US5.8 billion ($A6.3 billion), up 125 per cent on the 2009 first half.
That was led by a rebound in commodity prices, particularly strong iron ore sales, and lower operating costs.
The group's tax impost grew significantly as well, with Rio paying almost $US2.48 billion - twice as much tax in the first half of 2010 as in the previous corresponding period on a reconciled basis.
While increasing its net earnings by 260 per cent to $US5.8 billion compared with the first half of 2009, it simultaneously cut net debt from $US18.9 billion to $US12 billion.
The strong result will mean a first-half dividend of 45¢ a share, in line with analysts' expectations.
Rio chief executive Tom Albanese said growth was ''the first priority for our cash flows'' and that the company would invest $US13 billion over the next 18 months.
Mr Albanese said the revised mining tax that Rio helped negotiate with BHP Billiton and Xstrata last month was ''not perfect but is something that we can work with''. The proposed Policy Transition Group would allow ''further opportunity to work constructively with the government to ensure that the tax system continues to encourage investment in Australia'', he said.
''When Julia Gillard came into office, she said she recognised the issues and she not only wanted to engage but to negotiate,'' Mr Albanese said. ''The fact that we have announced $US1 billion of investments in the Pilbara since then reinforces that we do want to invest in Australia and with the [mineral resource rent tax] we can invest in Australia.''
Following on from more than $US10.3 billion in divestments of non-core assets since the start of 2008, when the company had an undesirable amount of debt, Rio also announced the sale of a 61 per cent stake in Alcan Engineered Products to Apollo Global Management and Fonds Strategique d'Investissement for an undisclosed sum.
So much has the market's view of Rio's financial position changed in the past two years, its chief financial officer, Guy Elliott, was forced to respond to suggestions that the company was now overcapitalised.
''We have made a dramatic reduction in debt over the last 18 months. I don't think it would be right to say that we are overcapitalised given the high levels of capital expenditure announced,'' he said. ''Markets are certainly strong, but they are also volatile, and we believe that volatility will present opportunities to us both in further growth and small and medium-sized mergers and acquisitions.''
Rio said it continued to work with regulators to advance its $US116 billion iron ore joint venture with BHP in Western Australia's Pilbara, but it provided no timelines on when it expected a response.
Net earnings from the iron ore division, which moved away from the traditional benchmark pricing system, more than doubled from $US1.9 billion in the first half of 2009 to $US4.1 billion a year later. The effect of price movements across all commodities in the first half of 2010 lifted underlying earnings by $US3.77 billion compared with the previous corresponding period.
Even Rio's troubled aluminium division returned to profit during the first half of 2010.
The interim results were released after the market closed. Rio shares edged up 17¢ to $73.01.