Rio Tinto’s earnings hit by low iron ore price

Rio Tinto has posted a 43 per cent drop in its half yearly underlying earnings due to the falling price of iron ore.

The global miner revealed its underlying earnings for the first half totalled $US2.92bn, down from $US5.1 billion in the previous corresponding period.

Rio’s net earnings fell to $US806 million from $US4.4 billion last year.

The company has lifted its cost-cutting target to $US1 billion after delivering first half cost savings of $641 million, representing 85 per cent of its original full year target.

Meanwhile, capital expenditure is expected to fall to $US5.5 billion in 2015 and less than $US6 billion in 2016.

Rio produced 154 million tonnes of iron ore in the first half of 2015, 11 per cent higher than the same period last year due to the successful ramp up to 290 Mt/a at its Pilbara operations.

The miner said the key elements s of the 360 Mt/a infrastructure expansion in the Pilbara are complete with the focus now to ramp up the new equipment to full capacity and generate maximum value from the integrated system.

“This includes improvements from debottlenecking and productivity enhancements supported by a range of low cost brownfield developments,” Rio said.

Rio Tinto's chief executive, Sam Walsh, said he was proud of the company’s results.

"We've produced a very robust set of numbers despite what continues to be a pretty challenging environment for the mining industry," Walsh said.

"For some time it's been apparent that the economic environment has been adjusting to what is now called 'the new normal'.

"But let's be clear – we'll see continued economic growth from this larger base, including an increase in the long-term demand for all of our commodities."

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