Rio Tinto group, the third-largest mining company globally, said its first-half profit was down 22 per cent after prices for iron ore, copper and aluminum slipped and costs at its operations gained.
Net income slumped to $5.9 billion compared with $7.6 billion a year earlier, London-based Rio said in a statement today. Net income received a $1 billion boost due to a so-called deferred tax benefit after Australia introduced its Mineral Resource Rent Tax on 1 July.
According to analysts, Rio was heavily dependent on iron ore, which could prove to be its Achilles heel. Rio, like rivals BHP Billiton and Xstrata Plc, was faced with the double whammy of rising costs and lower prices as slowing global growth hurt demand for raw material. Xstrata posted a 33 per cent drop in first-half profit yesterday.
Iron ore is expected to contribute to about 86 per cent of the miner's underlying earnings this year, analysts say.
Rio Tinto, the biggest ore-exporter after Rio de Janeiro- based Vale SA, was up 2.9 per cent to 3,220 pence by the close of trading in London - its highest since 3 May.
The company hiked its interim dividend 34 per cent to 72.5 cents a share, even as underlying profit fell 34 per cent to $5.2 billion.