Raise bid and we'll talk, soaring Rio tells BHP

Underlying earnings were up 2% at US$7.44 billion (£3.8billion) while revenue leapt 32.2% to $29.70 billion.

Currency movements had knocked $403million off its bottom line but with record production across the company's product line, chief finance officer Guy Elliott was extremely bullish and saw no let-up in demand.

"The results show strong volume growth across the board of our products and we think this growth will continue," he said. "We are so confident of this that we are committed to our huge programme of investment."

Elliott predicted Rio would plough some $9 billion into its businesses this year following last year's record capital expenditure of $5 billion, a 25% increase on the previous year.

"We set out our stall very clearly last year as one of value and we've backed up that with a 31% increase in the dividend and are committed to raise that by 20% over the next two years," Elliott said.

He repeated comments by chief executive Tom Albanese last week that suggested Rio may be prepared to consider an offer from BHP at the right price.

"We are all about value," he said. "That governs our position and that remains unchanged. We stand against the BHP bid unless a proposal is made that fully values the company."

Rio has consistently relied on future growth prospects to deride the BHP offer as too low.

Elliott kept the line today with bullish predictions for the industry in general and his key markets in particular. "I think it's too early to say prices have peaked," he said. "There may be some extra upside this year.

"All our products and markets are performing very well and we are confident we will be able to continue to deliver growth.

"We are very confident about China where we see no sign of flagging in demand for any of our products. We believe that will continue even if there is a recession in the US.

"That may shave 1% off growth in China, but from our perspective our products are all going into construction of infrastructure that have little reference to exports."

Elliott acknowledged that costs were rising but added: "Our costs are in line with the industry and under good control, as can be seen by our terrific margins."

The reporting period saw the completion of Rio's Alcan acquisition that established the company as the world's largest aluminium producer. However, Alcan contributed to the results for just nine weeks.

"It is a little early to say how Alcan is doing but we are very pleased with it so far and the integration has gone very smoothly," he said. "We have lifted our targeted synergies from the deal to $940 million from the end of next year."

Rio Tinto has kicked off its planned $15 billion divestment of assets, with the sale of its interest in the Greens Creek base metals mine in Alaska to joint venture partner Hecla Mining Company for $750 million.

The company plans to divest a number of non-core assets to write down debt associated with its acquisition of Alcan.