Thursday, January 18, 2007

Rio Tinto Record 121 Million Tonnes in WA.

Rio Tinto Limited (ASX:RIO) has also announced that during calendar 2006 it produced an all-time high of 121 million tonnes of iron ore in Western Australia. It increased its exploration expenditure from by $33 million in 2006 (an increase of more than 10%). Meanwhile a subsidiary coal mining business Coal & Allied has forecast a reduction in interim profit for the second six months of 2006 and is due to a serious backlog of some 55 ships waiting to load coal at the Newcastle terminal in New South Wales.

I haven't read up on why 55 ships are backlogged but that can't be a good thing as ships are very expensive to send around the world. I am sure management will be addressing this and while it is a subsidiary company that is making a reduction in profit, it is a large reduction. The reduction sits at around $100 million. Considering this is almost two thirds of last years profit it needs to be addressed quickly.

Overall, I don't think this will affect the Rio Tinto price dramatically as they are well diversified.

Good Luck Investing.

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