China demand raises hopes for Rio Tinto

The mining group Rio Tinto yesterday pointed to a brighter year ahead, fuelled by strong demand from China for commodities including iron ore and copper.

The chairman, Paul Skinner, said: "As we enter 2004, we see stronger markets and improved prices for key products.... While the level of the US dollar remains a key uncertainty, our increased investment programme reflects this confidence."

The upbeat tone came after Rio Tinto announced an adjusted profit of $1.38bn for the year to 31 December - some $148m below the previous year's figure.

Mr Skinner said 2003 had been a challenging year for a host of reasons. "While demand for our products in China grew rapidly and many commodity prices rose progressively over the year, these positive factors were offset by the continuing decline in the US dollar," he said.

The weakening of the dollar cut Rio Tinto's earnings by $412m in the year, although the company was also hurt by problems at two plants.

City analysts were disappointed with the 2003 figures but took heart that 2004 was shaping up to be a better year. Analysts at Williams de Broe said: "We expect volumes and pricing to outweigh exchange rate movements in 2004. Key expansion plans for iron ore, copper, coal, diamonds and alumina will be the key to driving earnings growth."