Rio Tinto produces coal at mines in Australia and the US for the domestic markets, and in Australia for the international markets. Most is thermal coal, used to generate steam to drive the turbines in electrical power plants. Rio Tinto also produces a smaller amount of coking coal in Australia which is exported for use in blast furnaces producing iron.

A large part of the world's electrical power (around 40 per cent) is generated using coal, including more than half of that in the US. Countries with hydroelectric capacity, such as Brazil and Canada, or natural gas like Russia, and countries of the Middle East, often prefer to use these as the basis for their electrical power generation. Others, such as France, have favoured nuclear power generation. However, for many countries, and particularly those in Asia, coal remains the most practical and cost effective form of power generation currently available.

Strong economic growth in Asia over the last 20 years has been accompanied by rapid growth in the demand for electrical power and for imported coal. Over the past decade, growth in the demand for coal in this market has averaged around six per cent a year.

Coal faces no problems of physical availability. Known reserves worldwide are huge and, in energy terms, the earth holds more coal than oil and gas combined. The major constraint facing coal is its environmental reputation. Pollution problems with coal occur when it is burned and emissions are uncontrolled; in the developed world this has been overcome by preventing domestic burning of coal in cities and the use of pollution control equipment on power stations.

The major issue today is that in power stations coal emits significant amounts of the greenhouse gas carbon dioxide. Coal also releases sulphur dioxide, believed to cause acid rain. The latter problem can be addressed by "scrubbing" power station gases or by using low sulphur coals such as those produced by Rio Tinto's US mines in the Powder River Basin of Wyoming and Montana.

The issue of carbon dioxide from coal is more difficult to overcome. Many countries using coal for power generation at present simply do not have any very obvious alternative to coal. Renewable energy sources like solar power and wind power are developing but look unlikely to supply more than a small fraction of electrical energy for a long time to come.

The answer in the longer run is likely to lie in technology and the coal industry and power generators are currently funding research to find ways of converting coal into liquids and gases which can be used to generate power without significant releases of carbon dioxide and that allow capture of the carbon dioxide emitted by power plants, and permanent storage in rocks deep underground.