Energy group

Energy

A dragline and bucket in operation at Rio Tinto Energy's Antelope coal mine in Wyoming, US.

The Rio Tinto Energy group's portfolio comprises thermal coal and coking coal operations, and uranium.

Its coal interests are in Australia and the US. They supply internationally traded and domestic US and Australian markets.

The Energy group also includes Rössing Uranium (Rio Tinto: 69 per cent) in Namibia and Energy Resources of Australia (Rio Tinto: 68 per cent), which supply uranium oxide for electricity generation.

At 31 December 2006, the Energy group accounted for 13 per cent of Group operating assets and, in 2006, contributed 17 per cent of its sales revenue. Underlying earnings were US$711 million, US$22 million lower than in 2005.

The results benefited from a sustained increase in the price of thermal coal but were adversely affected by a softening in the market for premium coking coal and by supply chain problems in the Hunter Valley in New South Wales which constrained Coal and Allied's production.

Throughout the year the emphasis was on producing high margin products and optimising the coal supply chain. However, increases in the cost of basic materials, fuel, explosives and labour were not fully offset by production growth, resulting in a rise in the cost per unit of production across all operations.

The Energy group is a leading advocate of, and investor in, the sustainable development aspects of the future uses of coal and uranium. It has contributed resources and investment funds to the FutureGen clean coal research project in the US, COAL21 in Australia and to the International Energy Agency's Clean Coal Centre.