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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 dug into record underlying earnings of $15.5 billion in 2011, and 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 earnings, on unprecedented cashflows of $27.4 billion, were up 11 percent on 2010, and Rio chairman Jan du Plessis said it was "absolutely right" that Albanese and chief financial officer Guy Elliott 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," du Plessis said.

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".

Rival BHP Billiton booked a 5.5 percent fall in first-half profits to US$9.9 billion Wednesday due to ongoing commodity price volatility.

Rio's $38 billion acquisition of Canadian firm Alcan in 2007 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 materials costs were squeezing margins.

Alcan's earnings slipped 28 percent in 2011 to $442 million.

"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 solid returns and many of the firm's products attracting higher prices, especially gold and copper.

"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.

Iron ore earnings jumped 26 percent in 2011 to $12.9 billion, with production volumes and prices both stronger.

Coal also saw improved prices but volumes were impacted by wild weather and weakness in global steel production.

Overall, price movements boosted underlying earnings by $6.7 billion compared with 2010, but the weakening US dollar and other currency movements detracted almost $1.0 billion.

Albanese saw "short-term uncertainties" but said all indications from key partner China were for a "soft landing", with growth in excess of 8.0 percent expected for 2012.

Rio was on track to expand its iron ore capacity by more than 50 percent by the first half of 2015 as it geared up to meet an "unprecedented increase in demand for metals and minerals over the next 10 to 20 years," he added.

The company had also extended its reach into growth areas Mongolia, Mozambique and South Africa by beefing up its stake in Ivanhoe and Richards Bay Minerals and acquiring Riversdale.

Rio declared a dividend of $1.45 per share -- a 34 percent premium on 2010 -- in recognition of what it described as "confidence in long-term outlook."

AFP