TERRY MCCRANN

operations; and this will remain true even after it spends another $7 billion on the Oyu Tolgoi mine in Mongolia.

In the latest half, iron ore generated $US5.7 billion, or 57 per cent, of the gross profit of the product groups.

If you notionally take out the coal assets (all) being sold, it would have been 64 per cent.

Iron ore is also easily the most profitable. The Pilbara operation generated a staggering 67¢ gross profit from every dollar of sales. Aluminium was only 35¢ in the dollar, copper (and diamonds as a group) 45¢.

So the (easily) most profitable part of the business, at least for now, becomes an even bigger part of the business.

We haven’t seen the BHP full-year numbers yet, but in the first half iron ore contributed only 38 per cent of gross profit, thanks to the oil that Rio doesn’t have and BHP’s bigger copper division.

Like Rio, BHP’s iron ore was also the most profitable of the product groups, albeit not quite as fabulously so. It generated “only” 60¢ gross profit in the sales dollar.

And further, if you took