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What to look for in Rio Tinto's numbers

Doubts linger on Rio Tinto's ability to fund its dividend through organic cash flows ahead of publication of its full-year figures
February 3, 2016

A week ahead of the release of its full-year figures, mining giant Rio Tinto (RIO) has been placed on negative credit watch by Standard & Poor's due to lower price forecasts for iron ore, aluminium and copper. Indeed, the agency also lowered BHP Billiton's (BLT) credit rating to A from A+ to reflect lower commodity price assumptions.

IC TIP: Buy at 1601p

There's little Rio can do to alleviate the fall in underlying prices, although growth in its iron ore division is gradually slowing down, with the group vowing to export 350m tonnes in 2016. That's a 16 per cent increase from just two years ago, underlining the rapid rate of expansion. The good news for Rio is that stockpiles are now close to being exhausted, after the group exported more tonnes of iron ore than it mined in 2015. Attention will also turn to the recent performance of the Kennecott and Escondida copper mines following recent operational difficulties.