Rio Tinto has slashed its interim dividend by nearly 60 per cent, to US45c (A59c) a share, under its new dividend policy as the company’s underlying profit slumped 47 per cent in the first half of the year.
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Rio Tinto’s underlying earnings fell 47% to $US1.563 billion for the June half year as the big miner continues to be hit by a global fall in commodity prices.
The miner reported a net profit of US$1.71 billion versus a profit of US$806 million in the same period of 2015-when it posted noncash exchange-rate and derivative losses of US$1.3 billion-and underlying earnings of US$1.56 billion down from US$2.92 billion.
The low-phosphorus Marra Mamba ore from the Silvergrass mining operations is treated at the Greater Nammuldi processing plant and blended into Rio Tinto’s Pilbara blend product.
“The global economy seems stuck in a subdued low-productivity growth pattern which would indicate that continued caution is required for the second half of 2016”.
Iron ore rebounded in the course of the first half, and averaged nearly $50 per ton, Rio Tinto said, up from a January low of below $40. Also, the startup of new mines and Rio Tinto’s own increased shipments of the steelmaking commodity are contributing to a cloudy price outlook. 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. Rio Tinto and a raft of other global miners have been under pressure to slash costs as commodity prices tumbled late a year ago into early 2016.
Aluminium production was 10% higher in the first half of the year at 1.8 million tonnes, mined copper production came in 1.0% higher at 282,300 tonnes, and bauxite production was 9.0% higher in the first half at 23.2 million tonnes.
Rio Tinto said net debt fell 6% to US$12.9 billion compared to the end of December.
Rio shares have jumped 23 percent in London this year, rebounding from a seven-year low reached in January.
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Mining giant Rio Tinto is set to invest up to $338 million to complete the development of its iron ore operations in Western Australia. “But in this day and age, boring is good”.
