Strong demand boosts Rio profits

Rio Tinto has been fighting a takeover bid from BHP Billiton

Half-year profits at mining giant Rio Tinto have surged thanks to strong demand and high commodity prices.

Reporting its results for the six months to 30 June, its net earnings totalled $6.9bn (£3.74bn), up 113% from the same period a year ago.

Rio, which is fighting a hostile takeover from fellow Anglo-Australian miner BHP Billiton, said it remained a strong stand-alone company.

Rio rejected BHP Billiton's $147bn offer in February this year.

'Positive' outlook

While net half-year earnings rose 113%, Rio said its underlying earnings increased by 55% to $5.5bn.

Rio Tinto presents a very strong stand-alone value proposition for shareholders Paul Skinner, Rio Tinto chairman See Rio Tinto's share price

"The group continues to perform strongly, and the outlook remains positive," said Rio chairman Paul Skinner.

Commodities analyst Adam Dixon of Ausbil Dexia said Rio's latest results were "certainly well ahead of expectations".

"Rio's exposure to the bulk commodities sector has been extremely beneficial for the company and I think that the results will be very positively received by the market," he said.

Competition probe

Rio said it remained confident about its prospects, and that the continuing difficulties in the global credit markets were not affecting demand for commodities.

It further reiterated its opinion that BHP's offer price for the company was too low.

"The group's performance in the first half, together with our growth potential, supports the boards' view that Rio Tinto presents a very strong stand-alone value proposition for shareholders," said Mr Skinner.

BHP's hostile approach for Rio is continuing to be investigated by both Australia's competition watchdog and the European Commission.

Both are due to report before the end of the year, but the Australian Competition and Consumer Commission has already said it has concerns that combining the two mining giants could lead to higher iron ore prices.