Rio Tinto warns of uncertainty ahead

Rio Tinto said that the trading outlook for the rest of the year was "uncertain", with earnings being driven by the prices of iron ore, aluminium and copper.

Commenting on current trading in its 236-page rights-issue prospectus, which was posted to shareholders on Tuesday, Rio said that there was uncertainty in the pricing of spot iron ore, copper and aluminium.

"The recent significant reduction in commodity prices and global demand for the group's products has had, and is expected to continue to have, a material adverse impact on the group's business, financial condition and results of operations," Rio said.

Although it has locked-in iron-ore pricing contracts with some Asian customers, the group is still in pricing talks with Chinese steel mills which are seeking more aggressive cuts in pricing.

Rio Tinto is launching the world's fifth-largest rights issue, raising $15.2bn (£9.3bn), after the group walked away from a $19.5bn cash injection from Chinalco, the state-controlled Chinese group.

Rio is saddled with about $38bn of debt associated with the purchase of Canadian aluminium group Alcan before the commodities market imploded last year. It has also announced an iron ore joint venture with rival BHP Billiton in the Pilbara region of Western Australia.

The 21-for-40 rights offer is being priced at £14.00 for UK shareholders, a 52pc discount to the shares closing price on Monday, the day before the document was posted.