Rio Tinto reported a strong underlying 2016 net profit of US$5.1 billion (versus US$4.6 billion in 2015). Significant cost reductions totaling $1.6 billion were a feature. RIO has cut $7.8 billion in costs since 2012 and aims to deliver US$5bn of free cash flow in productivity improvements over the next five years. Strong cash flows including asset sales ($1.3billion in 2016) have strengthened the balance sheet, highlighted by a halving of the net debt over the last three years to US$9.6 billion. RIO’s final dividend of 125 US cents (170 US cents full year) well exceeded market expectations and, along with a US$500 million share buy-back, highlights the potential for growing capital returns in future years. Rio Tinto is now a rejuvenated strong resource major underpinned by a world-class suite of assets and very strong balance sheet.