http://www.bloomberg.com/apps/news?pid=20601087&sid=aGkGFJtQ6l4M - "Rioâs iron ore unit, its biggest earner, had a 33 percent decline in underlying earnings to $1.9 billion in the first half. The aluminum unit swung to a $689 million loss from a profit of $1 billion a year ago. Earnings from its copper and diamond unit plunged 72 percent to $472 million in the period. Aluminum was the biggest contributor to Rioâs sales in 2008, accounting for 42 percent, followed by iron ore at 30 percent. The average price of aluminum for immediate delivery on the London Metal Exchange slumped 53 percent in the first half to $1,213 a ton, from a year earlier, while copper fell 50 percent to $4,067 a ton. â¢Rio Tinto Profit Tumbles 65% After Copper, Iron Ore, Aluminum Prices Drop Rio Tinto Says Profit Tumbles 65% After Metals Slump (Update2) Share | Email | Print | A A A By Brett Foley and Rebecca Keenan Aug. 20 (Bloomberg) -- Rio Tinto Group, the worldâs third- largest mining company, said first-half profit tumbled 65 percent after copper, iron ore and aluminum prices declined. Net income fell to $2.5 billion from $6.95 billion a year earlier, London-based Rio said today in a statement. Underlying earnings that exclude some one-time items were $2.6 billion, missing the $2.73 billion median estimate of seven analysts surveyed by Bloomberg News. Rio, which isnât paying a dividend for the first half, said it may pay a final dividend for 2009. Chief Executive Officer Tom Albanese has grappled with debt that ballooned after Rioâs $38.1 billion purchase of Canadian aluminum producer Alcan Inc. in 2007. Rio cut spending and jobs, raised a combined $21 billion from a share sale in June and an agreement to create an iron-ore joint venture with its biggest rival BHP Billiton Ltd., helping to pay debt after commodity prices plunged. Rio âstill has a large debt pile and is now facing pressure from its largest customer China,â Matthew Hasson, mining sales director in London at Arbuthnot Securities Ltd., wrote in a note. âWe still prefer BHP.â Rio increased 32.5 pence, or 1.4 percent, to 2,344 pence at 8:14 a.m. on the London Stock Exchange. The shares have gained 90 percent this year. Assets Sales A final dividend will be paid subject to âsatisfactory trading results, progress on divestments and prevailing market conditions,â Rio Chairman Jan du Plessis said in the statement. The total cash dividend for 2010 will be at least equal to the $1.75 billion paid in 2008, he said. The company raised $3.7 billion this year selling assets, cut 16,000 jobs in the first half compared with a target of 14,000, and is on schedule to meet commitments to reduce full- year spending, Albanese said. Rio, the worldâs second-largest iron ore producer, is embroiled in a spying row in China just as talks on annual iron ore contracts with Chinese steelmakers remain deadlocked. China, the largest iron ore buyer, last week formally arrested four Rio executives including Stern Hu, an Australian and head of the companyâs iron ore business in China. The four, who were detained in Shanghai on July 5, face charges of bribery and stealing commercial secrets from Chinaâs steel industry. Rio said it will support the employees in defending against the allegations. Chinese Arrests The arrests came a month after Rio rejected a proposed $19.5 billion investment from state-owned Aluminum Corp. of China, also known as Chinalco, in favor of the BHP venture and a rights offer. The deal would have allowed Chinalco to double its stake in Rio and own a share in some mines. The iron ore talks have stalled as the China Iron & Steel Association demands a cut from last yearâs record price thatâs steeper than the 33 percent agreed on by Japanese and Korean customers. China will ask Rio, BHP and Brazilâs Vale SA for a 35 percent reduction to match the deal agreed to with Australian miner Fortescue Metals Group Ltd., the CISA said Aug. 17. Rioâs iron ore unit, its biggest earner, had a 33 percent decline in underlying earnings to $1.9 billion in the first half. The aluminum unit swung to a $689 million loss from a profit of $1 billion a year ago. Earnings from its copper and diamond unit plunged 72 percent to $472 million in the period. Aluminum was the biggest contributor to Rioâs sales in 2008, accounting for 42 percent, followed by iron ore at 30 percent. The average price of aluminum for immediate delivery on the London Metal Exchange slumped 53 percent in the first half to $1,213 a ton, from a year earlier, while copper fell 50 percent to $4,067 a ton. Underlying earnings exclude items such as asset divestments and impairments. The company said in June it wonât pay an interim dividend. To contact the reporters on this story: Brett Foley in London at bfoley8@bloomberg.net; Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net. Last Updated: August 20, 2009 03:42 EDT
These commodities are no longer plunging; in fact, they have been soaring for the past 8 months. Copper has more than doubled since its mid-December lows. (I am not, however, going to speculate as to whether this is good, bad, or neither for the economy.) Not sure why you're quoting old prices at the top there. (On the other hand, I know why Rio Tinto used these numbers -- they're trying to explain their profit decrease.) Check out these sites for current prices: www.kitcometals.com www.futuresource.com
These companies profits dropped because they were producing too much for what they were selling. If one year metal prices are high, a company will double production so they can sell more. Price go down a bit because of less demand and the company has produced all this stuff but not enough buyers so their production costs are higher than normal but not as many sales as they hoped.