Business

Rio Tinto issues $3.4b to shareholders as Chinese demand bolsters iron ore prices

Rio Tinto issues $3.4b to shareholders as Chinese demand bolsters iron ore prices

Rio Tinto has issued a multibillion-dollar dividend to shareholders as Chinese demand bolsters iron ore production levels.

The major miner booked a net profit of $US3.3 billion ($A3.6 billion) for the six months ending June 30, a $US800,000 ($A1.1 million), or 20 per cent, decline compared with the same period in 2019.

Its earnings before tax and interest fell 6 per cent to $US9.6 billion ($A13.4 billion), mostly fuelled by lower prices for aluminium and copper.

Rio Tinto chief executive Jean-Sebastien Jacques said the results were “resilient” given the significant economic impacts of COVID-19.

“Our world-class portfolio of high-quality assets and our strong balance sheet consistently serve us well in all market conditions and particularly in turbulent times,” he said.

“This, together with our disciplined capital allocation, underpins our ability to sustain production, increase our investment in the business, pay taxes and royalties to governments and continue delivering superior returns to shareholders.”

Rio Tinto said its iron ore shipments had risen 3 per cent over the six-month period, largely driven by strong demand from the Chinese economy.

According to the company’s update, Chinese sales made up 54.9 per cent of the group’s total revenue.

Rio Tinto’s dividend to shareholder is an increase of 3 per cent compared with the same interim dividend in 2019, with the US$2.5 billion equating to US155 ($A216) cents per share.

The company in its results said it continued to engage with traditional owners after its Juukan Gorge scandal in the Pilbara, where historical Indigenous caves were blown up by the mining giant.

“We are engaging extensively with traditional owners, including the Puutu Kunti Kurrama and Pinikura people, and Indigenous leaders in the Pilbara and across Australia,” the company said.

A board-led review into its heritage management processes is under way, and the company will be making a submission to a joint standing committee on Northern Australia.

The company’s net debt has increased to $US4.8 billion ($A6.7 billion) from $US3.7 billion ($A5.2 billion) compared with the same period last year.

Free cash flow was also 28 per cent lower over the period, while the group’s capital expenditure rose 13 per cent to $US2.7 billion ($A3.7 billion).