Rio Tinto has reported a 28 per cent drop in first-half earnings because the miner faces falling commodity prices and rising costs.
However, the world’s greatest iron ore producer mentioned it might pay a $4.3bn interim dividend — its second largest on report — because it ended the half yr with a web money place of $300mn.
A rebound in uncooked materials prices from coronavirus pandemic-induced lows boosted profits and shareholder returns at large miners final yr, however tighter financial coverage and a deepening downturn in China’s property market have weighed on commodity prices.
Rio and its rivals have additionally been grappling with labour shortages and rising costs for gas, explosives and chemical compounds. As a outcome, revenue margins throughout the trade are falling.
On prime of that, China has introduced plans to centralise shopping for of steelmaking ingredient iron ore, a transfer that might change the dynamics and profitability of the trade.
Rio has additionally exited coal and missed out on record-breaking prices for the fossil gas. Its shares are down greater than 2 per cent this yr.
In the six months to June, Rio mentioned underlying earnings, a measure tracked by analysts, had been $8.6bn, down from $12.2bn a yr earlier, on income of virtually $30bn. That was barely higher than consensus expectations of $8.5bn.
Rio declared an interim dividend of 267 cents per share — representing 50 per cent of underlying earnings and beneath what most analysts had anticipated.
Rio chief govt Jakob Stausholm mentioned the market atmosphere had turn out to be tougher because the finish of June.