Underlying profits at the Montreal-based operations soared 124 per cent to US$1.25 billion, dramatically outpacing iron ore, copper, diamonds and energy, the company said Thursday.
Rio Tinto (NYSE:RIO) attributed the improvement to continuing cost reductions, productivity improvements, higher prices for valued-added products and weaker currency in Canada and Australia.
Aluminum was one of the few metals to see a price increase last year. On the London Metal Exchange, aluminum averaged US$1,867 per tonne in 2014, up one per cent.
Rio Tinto said value-added products, which represent 62 per cent of metal produced, allowed it to realize US$2,395 per tonne.
Overall, the company's underlying profits decreased nine per cent to US$9.3 billion, including a US$4.2-billion hit from lower metal prices, offsetting currency gains.
Sales declined 6.8 per cent to US$47.7 billion.
Iron ore remained by far the most important division, accounting for 87 per cent of Rio's profits. However, a halving of iron ore prices caused profits to fall 18 per cent despite record production volumes.
Iron Ore Company of Canada earnings decreased to US$144 million from US$305 million in 2013 on a 24 per cent drop in sales.
"Our continued financial and operating discipline enabled us to offset much of the impact of lower commodity prices in 2014," CEO Sam Walsh said.
The London-based company said Thursday it will increase the full-year dividend by 12 per cent and repurchase US$2 billion worth of shares.
Including one-time items, net earnings were US$6.5 billion, up from US$3.66 billion in 2013. This included a US$800-million net impairment charge related to the delayed smelter upgrade at Kitimat, B.C., and a US$1-billion impairment reversal for its Pacific Aluminum business.
The US$4.8-billion Kitimat project is expected to begin production around May or June, ramping up to full capacity of 420,000 tonnes in the first half of 2016.
Over the past year, Rio reduced its net debt by US$5.6 billion to US$12.5 billion. Capital expenditures will continue to fall in 2015, remaining at around US$7 billion through 2017.
The aluminium division has taken about US$30 billion worth of writedowns since the acquisition of Montreal-based Alcan for US$38.1 billion in 2007.