Rio Tinto (ASX:RIO) unveiled a monster profit yesterday. Half-year underlying earnings grew by 55% compared to the same period last year. The figure over at BHP for full-year growth was around 22%.

Is this a cannonball through the port bow of the SS BHP Tinto? Is the bid sinking?

Well, in the last week three things have happened. Rio has clearly been the better performer this year. The ACCC has shaken its finger at BHP for trying to corner the iron market. And Wayne Swan opened the front gate, allowing Chinalco to take an 11% overall blocking stake in Rio Tinto.

None of those things scream ‘merger’. And judging by the ratio of Rio to BHP shares, the market doesn’t think it’ll happen. Anything above 3.4 means investors see one new mega-miner on the horizon. Anything below means investors see two old mega-miners on the horizon.

We’re deep in the red zone. Deeper now that Gumshoe ACCC is on the case.

That raises one more question. What happens if the bid falls through? Does Rio’s share price collapse?

That was BHP’s latest suggestion in a string of marketing angles to keep the bid alive. I made you, Tinto. You need me. Dump me and your share price goes down too.

We’ll get to that issue further down. First let’s look at Rio’s report card.

There’s really only one thing to take notice of. Rio did better from the boom in iron ore contract prices than BHP. Iron made up over half of Rio’s underlying earnings for the first time.

If you buy a Rio share for $120, you’re paying $60 for an iron company and $60 for a diversified miner.

The iron domination is probably going to keep dominating. Rio’s planning to divest US$7 billion in assets this year. You can bet it’ll be holding on to its darling iron assets. And buying more, probably. Rio’s capital expenditure is at a record. The main target? Iron. Again.

And again, a lot of sectors had record production. Rio’s producing more iron ore, bauxite, alumina, aluminium, borates, titanium dioxide and thermal coal than ever. But the biggest driver of this year’s result was commodity price gains. Mostly in iron and coal.

This is not a financial recommendation. But if you need more iron in your diet, buy some Rio Tinto.

Now. What are the implications of all this?

One. Rio has enjoyed the iron boom more than BHP. If it keeps booming, that won’t change much. If it goes bust, Rio stands to lose a lot more.

Personally, we don’t see it going bust yet. That could be decades away. But Rio is leveraged now. It’ll gain more from Asia’s iron addiction. It’ll have worse withdrawal when it’s all over.

Two. Rio’s share price isn’t likely to collapse if the bid does. We’re not saying that it won’t happen. Anything is possible. The argument here is that BHP’s bid has inflated Rio’s shares past where they would otherwise be.

But consider the ‘before’ and ‘after’.

Before the bid, a dollar of Rio earnings cost $45. Today, it costs $23. One iron boom makes a big difference to earnings. But by that measure, Rio hasn’t inflated. It’s deflated.

The share price hasn’t kept pace with earnings. Slacker. Then again, most share prices haven’t.

On the whole, it was a less-than-inspiring week for merger enthusiasts. We still like BHP’s chances if it adds a little bit of cash to the deal.

Meanwhile, people are getting what they deserve, not what they expect. And it seems that the march of skeletons out of closets across Australia is still in full swing.

St George (ASX:SGB) was probably the least exposed to the initial shock-wave of the credit bust. But that doesn’t mean it indulged in it any less. Bank Number Five is now ruing a $458 million loan to Centro (ASX:CNP).