(Reuters) - Rio Tinto <RIO.AX> <RIO.L> said on Friday it has completed a planned bond buyback, reducing gross debt by $2.5 billion, with the early redemption costs likely to reduce first-half underlying profit by about $180 million.
The global miner said that since the start of 2016 it has reduced the face value of outstanding bonds to about $9.5 billion from around $21 billion.
Analysts, on average, expect Rio to post half-year profit of $4.78 billion, according to Thomson Reuters Eikon data.
Rio cut net debt by about $4.2 billion in 2016 and said in February it would like to see further debt reduction as it looks to withstand any volatility in commodity markets.
Early redemption costs from the latest buyback would likely reduce its cash flow from operating activities by about $260 million in the first half ending on June 30, the company said.
Reductions in underlying earnings and cash flow would be offset by savings in future periods, it said.
Earlier this week, Rio selected Yancoal <YAL.AX> to buy its Coal & Allied division in Australia for $2.45 billion, surprising commodities trading giant Glencore, <GLEN.L> which had put in a higher bid.
(Reporting by Anusha Ravindranath in Bengaluru; Editing by Richard Pullin)
