Rio Tinto Sticks to Spending Plans Despite Profit Drop

Global miner Rio Tinto posted a 34 percent drop in first-half profit, at the better end of expectations, weighed down by weaker iron ore prices, but said it was sticking to its $16 billion spending plans for the year.

Rio, the world's second-largest iron ore producer, said underlying earnings fell to $5.2 billion, at the top end of forecasts and above the consensus of analyst expectations at $4.9 billion.

Rio Tinto joins major rivals Anglo-American and Xstrata in reporting earnings dented by falling prices and stubbornly high costs. Vale, the world's largest producer of iron ore, reported its worse second quarter since 2007 last month, blaming slowing demand for the steelmaking ingredient.

"We have been signalling for some time that markets would remain volatile and we have seen challenging conditions in the first half," Rio Tinto Chief Executive Tom Albanese said.

"Although sentiment remains negative in Europe and the U.S. recovery is still fragile, our order books are full and we expect Chinese GDP growth to be around eight per cent in 2012. We expect to see signs of improvements in Chinese economic activity by the end of the year."

Source: CNBC.com