Coal & Allied earnings outlook for 2006

17 January 2007

Rio Tinto's 75.7 per cent owned subsidiary, Coal & Allied Industries Limited, issued the following news release in Australia. All dollars are Australian currency.

Coal & Allied today announced that, as a result of significant shipping congestion at the Port of Newcastle and consequently increased operating costs, its expected earnings would be in the order of A$60 million for the second half of 2006.

This expected result compares with first half earnings in 2006 of A$146.5 million and 2005 second half earnings of A$163.7 million.

Managing Director of Coal & Allied, Mr Douglas Ritchie said, "Second half 2006 revenues were substantially impacted by congestion at the Port of Newcastle due to a shortage of capacity in the Hunter Valley coal chain."

"The significant shipping queues, particularly in November and December, have not only impacted sales volumes and demurrage but they have had flow-on effects through the production chain, leading to lower volumes and production inefficiencies.

"As noted in our 2006 half year results, the rising cost of business inputs being experienced by the industry is imposing increased costs on Coal & Allied.  This has further contributed to lower earnings in the second half of the year."

Coal & Allied will release its full year 2006 results on 29 January 2007.