In a year where its aluminium subsidiary was able to extract a $30m payout from New Zealand taxpayers, world mining giant Rio Tinto has delivered a larger than expected profit and dividend - despite the prices of most of its products falling.

Rio's underlying profit in 2013 was up 10 per cent on the previous year to US$10.2 billion, above analysts' expectations of $9.7 billion.

Net profit, which included impairments, was $3.7 billion.

The world's second largest iron ore producer also met a promise issued by chief executive Sam Walsh a year ago to boost shareholder returns and slash debt.

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Shareholders will receive a US$1.92 dividend per share, up from $1.67 12 months earlier, while net debt was at $18.1 billion at the end of 2013, down $4.0 billion from six months earlier.

In August last year, the New Zealand Government made a made a one-off payment of $NZ30 million to Rio Tinto - which threatened to close the Tiwai Point aluminium smelter if it didn't get a lower power price from Meridian Energy.

New Zealand Treasury documents revealed it advised ministers that any request for "Government assistance" from the smelters' owners "should be rejected, because it would result in a significant transfer of value from New Zealanders to Pacific Aluminium and Rio Tinto shareholders".

"There is no economic rationale for a long term government subsidy for the Tiwai point smelter," Treasury advised.

Finance minister Bill English justified the short term subsidy as worthwhile.

"In the end we made the judgement that relative to supporting the jobs in Southland, certainty for the electricity market, and the upcoming Meridian float we made the judgement that a one off payment was worthwhile," he said.

Tiwai Point smelter uses 12 per cent of New Zealand's electricity production, and accounts for 40 per cent of Meridian's annual revenue.

Massive cost cutting has driven Rio Tinto's profit growth, with falls in the prices of most of its commodities - with the exception of iron ore - hurting earnings by US$1.3 billion, despite record production.

Rio cut operating cash costs by $2.3 billion, exceeding the 2013 target of $2 billion.

There was also a $1 billion reduction in exploration and evaluation spend, plus a 26 per cent drop in capital expenditure to $12.9 billion.

"Today we've delivered real results to demonstrate the very real and significant progress we've made," Walsh told reporters from London.

"The cost reduction results ... well they're stunning."

He said Rio would pay down more debt and stabilise its business in 2014.

Walsh rejected predictions of large falls in the iron ore price, citing predictions the global economy would grow strongly in 2014, in China and developed countries.

Fat Prophets analyst David Lennox said Rio's performance indicated the miner could generate profits by means other strong commodity prices.

"It's a valid way to generate profits even if it's not palatable," he said.

Rio reduced its workforce by 4,000 people during the year and another 3,300 workers left through the divestment of businesses.

The 2013 profit was an improvement from a US$3.03 billion loss in 2012, which was caused by more than US$14 billion in one-off writedowns.

This year's result again included non-cash writedowns, though, in aluminium and copper.

-AAP/ NZ Herald