Rio Tinto (RIO.AU) (RIO.LN) shareholders could be forgiven for asking what ever happened to stronger for longer commodity prices after the Anglo-Australian miner unveiled a 47% drop in first half underlying earnings to $1.56 billion – the lowest in 12 years. So much for the commodities super-cycle!

It was the first set of results from greenhorn CEO Jean-Sébastien Jacques, who is charged with ensuring the miner can continue to build on the 33% rally in its stock price from its February low by sweating its tier one assets and driving down costs to remain competitive in the harsh new world of much lower commodity prices.That said, J-S Jacques has timed his arrival to the top job to perfection given iron ore prices have rallied 14% over the past month that he’s been in the chair.

The iron ore division – based in the Pilbara, Western Australia – was again the focus. The division’s underlying earnings fell 17% year-on-year to $1.7 billion mainly due to 14% fall on the price of 62% grade iron ore over the same time. However, the miner continues to make excellent progress in driving down costs, with the cost of producing a tonne of iron ore falling to $14.30 a tonne from $16.20 a tonne at the same time last year. The competition is intense to be the lowest cost producer in the Pilbara, with rival Fortescue Metals Group (FMG.AU) last week stating its aim to produce iron ore in the 2017 financial year at a cost of between $12 and $13 a tonne.

As Australia’s second largest tax payer, behind rival miner BHP Billiton (BHP.AU) (BLT.LN), federal treasurer Scoot Morrison will be heartened by Rio Tinto’s forecast that every 10% rise in the iron ore price will lift its underlying earnings by $761 million.

Rio Tinto’s Australian-listed shares have rallied 15% since late June, helped by the rally in iron ore prices on hopes that Chinese government stimulus will help stabilize growth in the world’s second largest economy.