• Rio Tinto Limited
• Website: www.riotinto.com

Industry:

Metals & Mining

Fiscal Year-End:

 

Rio Tinto (RIO) is a major international resources company. The company has dual listings, as Rio Tinto Plc in London and Rio Tinto Ltd in Australia. RIO has major operations in Australia, North America, South Africa, Chile and many other countries, producing a range of commodities, including gold, copper, coal, iron ore, alumina, aluminium, mineral sands and diamonds. RIO's major earnings drivers are iron ore and aluminium, representing 27% and 42%, respectively, of RIO's FY08 earnings.

Rio Tinto Zinc and CRA have a long history of close association, with CRA being a subsidiary of RIO until 1986. In December 1995, the companies unified through a dual listed companies structure in June 1997. The UK listed entity was renamed Rio Tinto plc and the Australian listed entity Rio Tinto Limited. In 2000-2002, RIO spent US$4B acquiring North Limited, Ashton Diamonds and 100% of Comalco. Since then, RIO has disposed of non-core assets worth a net US$2.5B.

A handful of resource companies dominate the world with large and high-quality assets. Rio Tinto, BHP Billiton, Alcoa and Anglo American represent the top echelon of the industry. The outlook for the resources industry is linked to world economic growth, and, as such, is a cyclical industry. Demand for commodities continues to rise, and supply is on the whole adequate. However, a mismatch between supply and demand can cause significant price moves for short periods, impacting mining companies.

Rio Tinto's management sets the company apart from other resource companies, with an impressive track record of profit growth. This is partly due to the high-quality assets, with most of the core operations being very low cost, reliable and likely to contribute for a long time yet. However, Rio Tinto's management has applied new technology, innovative industrial relations practices and astute acquisition strategies, which have served to enhance the operations and, therefore, shareholder value.

Rio Tinto has a wide range of customers, such as Asian iron ore and coal contracts with steel manufacturers and power stations particularly noteworthy. Buyers of metals source their supply from a diverse range of mining companies, and Rio Tinto has a more significant position in copper than that in other metals such as nickel, aluminium, lead and zinc. Key competitors are BHP Billiton, CVRD, Anglo American and Alcoa.