Rio Tinto’s first-half profit falls nearly 65 percent on falling commodity prices

Rio Tinto’s profit slumps 65 percent

MELBOURNE, Australia — Mining giant Rio Tinto said sharp falls in metals and mineral prices were behind first-half profit dropping by nearly two thirds.

The world’s third-largest miner Thursday reported a net profit of $2.5 billion for the six months ended June 30, down 65 percent from a year earlier, and was cautious about whether recent gains in commodity prices would be sustained.

“However, the expectation that development in emerging markets will generate underlying strength in metals and minerals demand over the long term remains broadly unchanged,” Chairman Jan du Plessis said in a statement.

He said the company is financially stronger after using money raised from a recent share issue to reduce net debt by $14.8 billion.

“There is more work to do, but we are better positioned with renewed financial strength and a leaner cost base,” he said.

Last week, rival miner BHP Billiton Ltd. revealed a 61.8 percent fall in profit for the year through June, also due to commodity price falls.

Rio Tinto CEO Tom Albanese said the company was on track to meet commitments made in December to reduce operating expenditure despite the tough market conditions.

But in light of the improving economic climate, the group was reviewing its expenditure plans for 2010.

“Despite difficult markets, our businesses are running smoothly,” Albanese said.

Rio Tinto shares closed down slightly at 58.03 Australian dollars before the company’s announcement.