Rio Tinto Swings to Full-Year Loss on Aluminum, Coal Charges

Rio Tinto Group, the world’s second- largest mining company, swung to its first full-year loss in at least 21 years after taking a $14 billion one-time charge on the value of its aluminum and coal businesses.

The loss was $3 billion in the 12 months to Dec. 31, from $5.8 billion profit a year ago, London-based Rio said today in a statement. The result beat the average forecast loss of $4 billion of seven analyst estimates compiled by Bloomberg.

The writedowns saw Sam Walsh last month named as chief executive officer, replacing Tom Albanese who signed off on the $38 billion takeover of aluminum producer Alcan Inc. in 2007 that saw its debt rise as much as 19-fold. Declining prices, rising costs and slowing demand saw global mining companies wipe billions off project valuations in the past year.

“We don’t expect Walsh to outline a major change in company direction, ” JPMorgan Chase & Co. analysts Lyndon Fagan and Fraser Jamieson said in a report before the results. “However, capital discipline will be front of mind following $35 billion of impairments over the past six years.”

Rio rose 2.3 percent to A$72.07 at the close of trading in Sydney. The key S&P/ASX 200 Index gained 0.7 percent. Rio’s shares rose 9.5 percent last year, compared with a 7.8 percent gain for BHP, the biggest mining company.

Photographer: Patrick Hamilton/Bloomberg

The Rio Tinto Tower, which houses the offices of Rio Tinto Group, stands in Brisbane, Australia. Close

The Rio Tinto Tower, which houses the offices of Rio Tinto Group, stands in Brisbane, Australia.

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Photographer: Patrick Hamilton/Bloomberg

The Rio Tinto Tower, which houses the offices of Rio Tinto Group, stands in Brisbane, Australia.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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