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Rio Tinto profits rise to US$ 14.3 billion

World Coal,

Rio Tinto profits rose to US$ 14.3 billion in 2010 on the back of rising commodity prices and strong growth in developing markets. Of that, the energy group, which includes coal and uranium, increased its underlying earnings to US$ 1.187 billion, a 2% increase on the previous year. Adverse exchange rate movements from a stronger Australian dollar against the US dollar adversely impacted earning, but this was offset by higher realized prices and the divestment of two undeveloped coal projects in Australia.

Average coal prices were lower than in 2009 due to the absence of higher carry over prices from 2008 that were reflected in the first quarter of 2009.

Last year saw continuing strength in the seaborne market for Australian coal as demand for thermal coal continued from South Korea, India, Taiwan and China. Global steel demand improved in all markets in the H1 and led to strong demand for semi-soft coking coal. The market for premium quality hard coking coal remained steady in 2010.

Hard coking coal production from the Queensland coal operations increased by 20%, benefiting from the recent investment in two additional shovels and two new truck fleets and strong operational performance from Kestrel underground mine. The current severe wet season, which has already caused major flooding, and is predicted to continue to produce higher than average rainfalls, had a slight impact on 2010 production levels and will continue to impact production rates in the first quarter of 2011.

Semi-soft coal production was 7% higher than 2009, primarily due to coal seam presentation in the mining sequence relative to comparable periods. Production from the Australian thermal coal operations declined by nine per cent compared with 2009, mainly due to Blair Athol winding down while Clermont ramps up production and wet weather in the Hunter Valley.

In a separate statement, Rio said it had extended the offer period for its takeover bid of Sydney-based Riversdale Mining by 14 days. Rio's bid has the support of the Riversdale board, and Rio confirmed that no other offer had emerged.

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