Rio Tinto (NYSE:RTP):

• Record underlying EBITDA* of $11,408 million, 73 per cent above first half 2007.

• Record underlying earnings* of $5,474 million, 55 per cent above first half 2007.

• Record net earnings* of $6,914 million, 113 per cent above first half 2007.

• Cash flow from operations up 54 per cent to a record of $8,860 million – a run rate of approximately $1.5 billion of cash flow per month.

• Half year production records achieved in iron ore, bauxite, alumina, aluminium, borates, titanium dioxide and thermal coal (on a like for like basis).

• Record capital expenditure of $3.7 billion, 91 per cent higher than first half 2007, on investments in value adding growth projects.

• New capital commitments of over $6 billion (100 per cent basis) announced during the year, including substantial expansions of iron ore operations in Australia, Brazil and Canada.

• Rio Tinto Alcan integration is making good progress, and remains on track to deliver $1.1 billion of after tax synergies from the end of 2009.

• Interim dividend increased 31 per cent to 68 US cents, with a continued commitment to increase the total 2008 and 2009 dividends by at least 20 per cent in each year.

• The divestment programme made good progress with $3 billion of sales announced to date. The Group remains on track to announce $10 billion of divestments in 2008.

Chairman’s comments

Rio Tinto’s chairman Paul Skinner said, “These are outstanding results. The 55 per cent increase in the Group’s half year underlying earnings to $5.5 billion clearly demonstrates the quality of Rio Tinto’s portfolio and the strength of our existing markets, operations and management. The Group continues to perform strongly, and the outlook remains positive.

“The benefits of the Alcan acquisition in 2007 continue to show through in line with the investment thesis supporting this strategic move to create the global aluminium leader. Rio Tinto Alcan’s large source of secure, hydro-based power supply is a major competitive advantage given emerging energy shortages around the world, including China.

“We continue to develop our strong pipeline of growth projects, which remains a significant competitive strength. During the year we have announced further expansions of our iron ore operations in the Pilbara region of Western Australia, expansions of our Brazilian and Canadian iron ore operations, and funding for the pre-feasibility studies for our Resolution copper project in Arizona in the US. Unlike many companies in the resources sector, we have the capacity to grow strongly from our existing base and create added value for shareholders over the decade ahead.

“Although we have seen some moderation in global growth rates from tightened availability of credit, the impact on our markets has been modest. The driver of demand for our products is urbanisation and industrialisation in heavily populated countries like China and India, and these economies continue to grow strongly. Prices for our products remain high by historic standards. While the equity markets are currently focused on downside risks, we believe there are potential offsets on the upside based on continued strength in commodity demand, low inventory levels and a supply side which continues to face multiple constraints.

“We increased our 2008 interim dividend by 31 per cent in line with our policy of paying an interim dividend that is half of the total dividend (expressed in US dollars) for the previous year. We are committed to increase the full year dividend by at least 20 per cent in 2008, and again in 2009.

“BHP Billiton’s pre-conditional offer to acquire all the shares in Rio Tinto has now been referred to a second phase review by the EU competition authorities. Our Boards rejected this offer on the basis that it undervalued the company and its prospects and we now await the outcome of the EU and other important regulatory reviews. In the meantime the Group’s performance in the first half, together with our growth potential, supports the Boards’ view that Rio Tinto presents a very strong standalone value proposition for shareholders.”

Chief executive’s comments

Tom Albanese, Rio Tinto’s chief executive said, “Rio Tinto’s earnings performance in the first half of 2008 easily eclipsed the same period in 2007, which was itself a record. There is no question that we are living in an era of unprecedented demand for minerals and metals, and we believe rapid demand growth and supply side challenges will be maintained.

“In this environment, the importance of having long life reserves and resources is critical, and Rio Tinto is particularly advantaged in this regard. When demand and prices are strong, growth options become increasingly valuable, and we have these in abundance.

“The Group set a half year production record in iron ore of 79 million tonnes on an attributable basis, as we deliver on our capital investment plans. Half year records were also established for bauxite, alumina, aluminium, borates, titanium dioxide and thermal coal (on a like for like basis).

“I am determined to continue driving operational excellence across the Group. Safety is at the top of my priorities and there was an improvement in the rate of lost time injuries again in the first half.

“We continue to make good progress with the integration of the Alcan assets that we acquired in 2007. We are on track to deliver annual synergies of $1.1 billion after tax from the end of 2009, considerably higher than our initial estimate of $600 million. As we have now become more familiar with the company, I am delighted by the quality of Alcan’s assets and its people.

“We have created an aluminium industry leader with an outstanding bauxite resource, a competitive refining position, sustainable hydro power, and industry leading smelting technology. We are currently studying a doubling of our bauxite production at Weipa in Australia, we are expanding our refinery capacity and examining a number of exciting smelter expansion opportunities in Canada and around the world. The Sohar smelter project in Oman was recently completed on time and on budget.

“In June the Group announced a weighted average price increase of 86 per cent for our Australian iron ore, a great result reflecting very strong demand and a valuation premium for our Pilbara product. Rio Tinto has a well defined growth path to increase annual production capacity in Australia from 220 million tonnes* in late 2008 to 320 million tonnes* in 2013, with a conceptual pathway to 420 million tonnes*, taking advantage of our excellent resource position and expandable port and rail infrastructure.

“Globally, the Group has plans to increase iron ore production to over 600 million tonnes* per annum, including growth in Canada, Brazil and Guinea. While there has been a challenge to Rio Tinto’s tenure of the Simandou project in Guinea, we believe our legal title is clear and we and our partner the International Finance Corporation (a division of the World Bank) are working with the Guinean authorities to clarify the situation. We believe there is no better company than Rio Tinto to deliver this project for the benefit of all parties.

“In copper, we have announced additional resources of 628 million tonnes at Kennecott Utah Copper and substantial resources of over 1 billion tonnes at Resolution in the USA and 2.8 billion tonnes at La Granja in Peru (refer to press releases dated 16 May 2008 and 29 May 2008). In Mongolia, we are making progress with negotiations with the new government to develop the significant Oyu Tolgoi copper / gold deposit. These substantial assets will form part of the next generation of copper mines, which will be required to meet rapid copper demand growth.

“We continue to address cost escalation in the industry through overhead reduction and innovative technological solutions. During the first half, we unveiled plans for the “mine of the future”, with remote operations centres and driverless trucks and trains. As part of that plan we announced a $371 million (Rio Tinto share $350 million) investment to automate our 1300 km iron ore railway in the Pilbara, which we believe will lead to driverless trains within five years.

“Our targeted divestment programme continued during the first half, and we are on track to announce $10 billion of divestments this year. We have achieved strong prices for the assets that we have sold so far. Proceeds from these divestments, together with our strong organic cash flows from operations which are now running at the rate of $1.5 billion per month, are steadily strengthening our balance sheet.

“Rio Tinto is in great shape, and is getting stronger. My personal commitment is to drive the business to deliver all the shareholder value of which it is capable, based on its outstanding assets, growth options and people.”

*100 per cent basis. Rio Tinto's attributable share of 320 Mtpa and 420 Mtpa of iron ore production at its Pilbara operations is approximately 80 to 85%. Rio Tinto's attributable share of its global iron ore production beyond 600 Mtpa is approximately 85%.

Net earnings and underlying earnings

In order to provide additional insight into the performance of its business, Rio Tinto presents underlying earnings. The differences between underlying earnings and net earnings are set out in the following table.

Commentary on the Group financial results

2008 first half underlying earnings of $5,474 million and 2008 first half net earnings of $6,914 million were $1,945 million above and $3,661 million above the comparable measures for 2007. The principal factors explaining the movements are set out in the table below.

Prices

The effect of price movements on all major commodities was to increase earnings by $2,790 million. Prices for many of the Group’s major products reached record levels in the first half: average copper prices were 20 per cent higher, and Rio Tinto negotiated record benchmark pricing levels for its iron ore production, with effect from 1 April 2008. Agreement was reached with major iron ore customers for a 96.5 per cent increase for lump ore and 79.88 per cent increase for fines for the 2008 contract year, representing an 85.7 per cent weighted average increase. The seaborne thermal and coking coal markets were also buoyant, reflecting strong demand and tight supply. Molybdenum prices averaged $34 per pound during the first half of 2008, an increase of 21 per cent compared with 2007 first half.

Exchange rates

There was significant movement in the US dollar in the first six months of 2008 relative to the currencies in which Rio Tinto incurs the majority of its costs. Compared with the first half of 2007, the Australian dollar was 14 per cent stronger, the Canadian dollar was 13 per cent stronger and the Euro was 15 per cent stronger. The effect of all currency movements was to decrease underlying earnings relative to the first half of 2007 by $253 million.

Volumes

Higher sales volumes, particularly from iron ore growth projects and the inclusion of a full six months of Alcan, benefited earnings by $616 million relative to 2007 first half. These gains were partly offset by lower copper, gold and molybdenum volumes across the copper product group, caused primarily by lower grades at Kennecott Utah Copper.

Costs

The Group continued to invest further in the future development of the business with an increased charge to underlying earnings of $219 million from exploration and evaluation costs. Increased energy costs reduced underlying earnings by $132 million. Higher freight, contractor, maintenance and input costs were experienced throughout the Group, notably in the energy & minerals and copper & diamonds product groups, as industry supply constraints persisted.

Interest/tax/other

The effective tax rate on underlying earnings, excluding equity accounted units, was 30 per cent compared with 32 per cent in the first half of 2007.

The group interest charge was $487 million higher than in 2007 first half, mainly reflecting increased net debt following the acquisition of Alcan.

Items excluded from underlying earnings

The previously announced divestment programme has resulted in the sale of the Cortez Gold mine (Rio Tinto share 40 per cent) on 5 March 2008 and the Greens Creek silver / zinc / lead mine (Rio Tinto share 70.3 per cent) on 16 April 2008. In addition the Tarong Coal mine was divested on 31 January 2008. The profits on disposal from these divestments have been excluded from underlying earnings.

Cash flow

Cash flow from operations, including dividends from equity accounted units, was a record $8,860 million, 54 per cent higher than the first half of 2007.

The Group invested at record levels, in particular in expansion projects. Net capital expenditure on property, plant and equipment and intangible assets was $3,652 million in the first half of 2008, an increase of $1,736 million over the same period of 2007. This included the expansion of the Cape Lambert port and the Hope Downs mine in Western Australia, the expansion of the Yarwun alumina refinery and the construction of the Clermont thermal coal mine in Queensland, the A418 dike at the Diavik diamond mine and the Madagascar ilmenite mine.

Dividends paid in the first half of 2008 of $1,083 million were $246 million higher than dividends paid in the first half of 2007, following the 31 per cent increase in the 2007 final dividend. The share buy back programme was discontinued after the announcement of the Alcan acquisition on 12 July 2007: returns to shareholders from the on-market buy back of Rio Tinto plc shares in the first half of 2007 totalled $1,417 million (net of $11 million proceeds from the exercise of options).

Balance sheet

Rio Tinto commissioned expert valuation consultants to advise on the fair values of Alcan’s assets. As required under International Financial Reporting Standards (IFRS), the tangible and intangible assets of the acquired business have been uplifted to fair value. The residue of the purchase price not allocated to specific assets and liabilities has been attributed to goodwill. The provisional values incorporated in the 2007 financial statements will be subject to revision within 12 months of the date of acquisition as permitted by the relevant accounting standard, IFRS 3.

Net debt decreased by $3.0 billion over the six month period to $42.1 billion, predominantly from cash received from asset disposals. Debt to total capital duly declined to 56 per cent at 30 June 2008 and interest cover was 11 times.

Profit for the year

IFRS require that the profit for the period reported in the income statement should also include earnings attributable to outside shareholders in subsidiaries. For the first half of 2008, the profit for the year was $7,291 million (2007 first half $3,401 million) of which $377 million (2007 first half $148 million) was attributable to outside shareholders, leaving $6,914 million (2007 first half $3,253 million) of net earnings attributable to Rio Tinto shareholders. Net earnings and underlying earnings, which are the focus of the commentary in this report, deal with amounts attributable to equity shareholders of Rio Tinto.

Dividends

The Group has a progressive dividend policy and a multi decade track record of continual dividend growth over time. Dividends are determined in US dollars. The interim dividend is set at one half of the total dividends declared for the previous year excluding any special dividends. Therefore, interim dividends equivalent to US 68 cents per share (2007 interim: US 52 cents per share) have been declared by Rio Tinto plc and Rio Tinto Limited.

The 2008 interim dividend represents a 31 per cent increase on the previous year’s interim, in US dollar terms. Further increases of at least 20 per cent in each full year have already been announced for 2008 and 2009.

Rio Tinto plc shareholders will be paid an interim dividend of 36.25 pence per ordinary share (2007: 25.59 pence per share). Rio Tinto Limited shareholders will be paid an interim dividend of 77.35 Australian cents per ordinary share (2007: 60.69 Australian cents per share), which will be fully franked. The Boards expect Rio Tinto Limited to be able to pay fully franked dividends for the reasonably foreseeable future.

Rio Tinto dividends are declared in US dollars and paid in pounds sterling and Australian dollars, converted at exchange rates applicable on 21 August 2008.

The respective dividends will be paid on Thursday 2 October 2008 to holders of ordinary shares, with ADR holders to be paid on Friday 3 October 2008. This will apply to Rio Tinto plc and ADR shareholders on the register at the close of business on Friday 5 September 2008 and to Rio Tinto Limited shareholders on the register at the close of business on Tuesday 9 September 2008. The ex-dividend date for Rio Tinto plc, Rio Tinto Limited and Rio Tinto ADR holders will be Wednesday 3 September 2008.

As usual, Rio Tinto will operate its Dividend Reinvestment Plan, details of which can be obtained from the Company Secretaries’ offices and from the Rio Tinto website (www.riotinto.com). The last date for receipt of the election notice for the Dividend Reinvestment Plan is Thursday 11 September 2008.