One of the main reasons for this paradox was that global prices for gold in the first half of 1998 fell by 14 per cent to $297 per ounce from $347 per ounce in the same period of 1997. Secondly, gold production in Indonesia was lower. The net outcome was that two of the mines posted negative returns, one almost halved it and in one case it was just maintained. However, iron ore, coal, aluminium and industrial minerals divisions performed much better enabling the group to show an overall satisfactory performance, despite economic slowdown being witnessed by several countries.

The Lihir gold mine in Papua New Guinea, which ranks among the largest such projectsin the world and which was commissioned not long ago, attained production of 2,62,000 ounces of gold in the first half of 1998. The mine in which Rio Tinto has 17 per cent stake, is estimated to contain 13 million ounces of recoverable gold. Its output is expected to rise in the coming months.

Gold production at Kelian in Indonesia in which the Austrian group has 90 per cent interest was nearly 15 per cent lower, reflecting lower ore grades, since higher grades were inaccessible due to heavy rainfall.

However, gold production from Moro Do Ouro in Brazil in which Rio Tinto has 51 per cent stake, improved by 20 per cent in the first half of the current year. Metallurgical properties of the ore, however, resulted in less mill-through put than earlier planned.

This situation is being reviewed.

While the overall gold production of the group improved marginally in the first half of 1998, financial performance of individual mines in which Rio Tinto has interest, varied widely. Kelian in Indonesia, whichwas responsible for net earnings of $8 million in the first half of 1997, posted a loss of $3 million in the first half of 1998. Likewise, the mine in Brazil presented a negative return of $8 million compared with net earnings of $2 million in the first half of 1997. The net earnings from the Peak Gold which is 100-per cent owned by Rio Tinto fell from $4 million to $2 million. Rio Tinto Zimbabwe was able to maintain its net earnings for the first half of 1998 at US S 1 million.

Of the other product groups, four however, reported increase in earnings. Though this was partly due to currency changes, there were also major sustainable improvements. Industrial minerals increased their earnings by 12 per cent. Iron ore group earnings rose by 35 per cent. Energy group earnings from the continuing operations were 16 per cent higher with the efficiency gains countering lower international coal prices. In the aluminium sector Comalco's earnings were up by 54 per cent. The average aluminium price was lower by 11 percent but was offset by some expansion and cost reduction.On the whole Rio Tinto's gross turnover for the first half of 1998 was on about five per cent lower at $4461 million while net earnings were down by seven per cent at $551 million. Interim dividend in terms of the US currency was maintained at 16.5 US cents, against the earning per share of 39.4 US cents.