Battling BHP and Rio to post record profits

By James Regan

SYDNEY (Reuters) - Mining giants BHP Billiton (BLT.L) (BHP.AX) and Rio Tinto (RIO.L) (RIO.AX) should post record half-year profits as they reap the benefits of an industrial commodities boom, and are likely to use the results to bolster their arguments in a $123 billion (66 billion pound) takeover stand-off.

Both are also likely to outline big expansions in key profit sectors such as copper and iron ore, where analysts predict higher prices next year on the back of strong demand for imported raw materials from China's industrial sector.

Consenus figures based on forecasts by 20 analysts and provided by BHP point to a 12 percent rise in annual net profit to $15.4 billion, suggesting second-half profit will have risen 30 percent to $9.4 billion from $7.2 billion previously.

Analysts polled by Reuters Estimates forecast Rio's January-June underlying profit will have risen 40 percent to $5.2 billion. BHP's financial year ends June 30, while Rio follows the calendar year.

The more-diversified BHP will see a $5 billion-plus boost to earnings before interest and tax (EBIT) from strong oil prices denied to Rio, which is not in the oil business, as well as up to $1.5 billion in EBIT from its manganese business.

BHP has also said it will see $465 million in EBIT via forward copper sales, known as provisional pricing, in the half versus a $240 million loss in the previous half.

Rio, meanwhile, should get a lift from one-off sales of 15 million tonnes of iron ore into the lucrative spot market, which was paying double the contract price during the half-year thanks to demand from Chinese steel mills.

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