First-half 2011 results disappointed some, due to weaker-than-expected output of iron ore and aluminum. With fears of tightening global credit markets running high, a joint bid with Mitsubishi Corp (Japan: 8058) for Coal & Allied Industries for approximately AUD$10.6 billion (USD11.3 billion) also apparently spooked some investors.

Rio Tinto, however, also generated some USD18 billion in cash flow during the first half, nearly twice the year-ago tally. The company also posted a 35 percent jump in profit. An ongoing USD7 billion stock repurchase program is a clear demonstration of the company’s financial power. So is Rio’s portfolio of expansion projects, including a now-accelerated plan to boost annual iron ore output to 333 million tonnes in Australia and Africa by 2015. Some USD6 billion in capital expenditures are planned for the rest of 2011 alone. The company is also ramping up output of alumina, copper and coking coal, among other resources.

The 2007 purchase of Alcan left Rio with a fair amount of debt. That has now been whittled down, with only USD500 million left to finance between now and the end of 2012. And with the company’s 30-year debt yielding barely 5 percent, it should have no problems rolling it over at a rock-bottom rate. There’s even a twice-annual yield of nearly 2 percent, with payments made in March and September. A new addition to the Metals and Mining Portfolio, Rio Tinto rates a buy up to USD65.

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