LONDON: Rio Tinto Group boosted dividend payments despite a 4% fall in half-year earnings, as strong iron ore prices helped to offset the impact of the coronavirus pandemic on copper and aluminum.
The No 2 miner’s underlying earnings in the six months to June 30 fell to US$4.75bil, beating estimates. London-based Rio will pay out US$2.5bil in ordinary dividends, higher than the same period a year earlier, even as some rivals and other industries cut payouts by the most since the global financial crisis.
Iron ore accounted for more than 90% of earnings, underscoring the extent to which Rio is reliant on the steel-making ingredient and also on the pace of economic recovery in China, the top consumer.
Demand in the Asian nation has remained strong, Rio said in a statement.
The producer is working with partners to “reduce capital intensity, lower operating costs and shorten the timetable for development” of the high-grade Simandou iron ore project in Guinea, Rio said. Fieldwork involving geotechnical investigation and surveying will start in Guinea this half.
Rio will make a submission soon to an Australian Parliamentary inquiry on the destruction of Aboriginal heritage sites in the Pilbara mining region, the company said.
Rio may need to consider termination of an energy contract with Landsvirkjun for the ISAL aluminum operation in Iceland and “commence planning for an orderly closure of the smelter, ” if the parties cannot improve electricity purchase conditions, the company said.
The Tiwai Point smelter on New Zealand’s South Island will be shuttered by next August 2021, the firm said earlier this month.
The aluminum industry “continues to face challenging conditions in global markets and policy uncertainty, exacerbated by the impact of Covid-19, ” and Rio is working to ensure the sustainability of smelters in Australia and Iceland, the company said.
Rio’s board has approved funding for a feasibility study for Jadar lithium project in Serbia, the company said. — Bloomberg
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