Anglo-Australian mining giant Rio Tinto on Thursday unveiled a 59-percent slump in annual net earnings to $5.8 billion and its chief refused his bonus due to write-offs from its aluminium business.
An impairment charge of $8.9 billion related to its troubled Alcan assets, undercutting record profit of $15.5 billion in 2011, prompted Rio chief Tom Albanese to forgo his bonus.
"As the acquisition of Alcan happened on my watch, I felt it only right not to be considered for an annual bonus this year," Albanese said.
The record profit, on unprecedented cashflows of $27.4 billion, were up 11 percent on 2010, and Rio chairman Jan du Plessis said he thought it "absolutely right" that Albanese and chief financial officer Guy Elliot go without a bonus.
"Whilst we have today reported excellent underlying earnings numbers, we also have to recognise that we have taken a significant impairment charge in relation to our aluminium business," said du Plessis.
He also expressed caution about the company's near-term prospects, anticipating that "uncertainty in the financial markets, particularly around the euro, together with elevated price volatility will continue into 2012".
Rio's 2007 acquisition of Canadian firm Alcan was expensive and hugely unpopular, with lagging profits from the metal prompting the mining giant to last year announce divestment plans for some of its aluminium assets.
Albanese said growth in demand for aluminium remained strong but it had been running surpluses for the past five years and "uncertain macroeconomic conditions", a rally in some currencies and high raw-material costs were squeezing margins.
"Chinese production is still tracking internal demand but has shifted more toward the northwest, where stranded coal is being used to generate electricity," he said.
Beyond aluminium, Albanese said Rio was performing strongly, with iron ore reaping impressive returns and many of the firm's products attracting higher prices.
"Our Australian businesses rapidly recovered from the severe flooding in the first half of the year. This enabled us to take advantage of the strong market conditions," he said.