Red ink: Wagons with iron ore enter Rio Tinto’s railway yard near Karratha in Western Australia. Expected tax revenues from companies have also been downgraded as subdued demand in China weighs on commodity prices including iron ore. — Reuters
SYDNEY: Rio Tinto is not supporting a push by some shareholders to consolidate the company’s dual-exchange share listing in Sydney, its CEO tells Reuters as the miner reports its smallest full year underlying earnings in five years.
Rio, in a separate statement, recommended its shareholders in London vote against a resolution requesting a review of its dual-listed structure at its annual general meeting in April.
Shareholder pressure ultimately forced top listed miner BHP to review its dual listing structure and consolidate it in Australia in 2022.
“We are a global company, we have global investors, and London kind of works for us. I just don’t believe that you’re going to change fundamentally your value by (swapping) exchange,” chief executive officer Jakob Stausholm said in an interview.
Activist investor Palliser Capital and over 100 other shareholders in December sought a shareholder resolution calling for Rio’s dual-listed model to be reviewed and urged the miner to keep only its listing in Australia. Their reasoning is that such a move would bolster the company’s share price.
Companies have left London in recent years for the United States or other markets, under pressure from investors seeking to boost the value of their shares.
Miner and commodity trader Glencore on Wednesday said that it is studying moving its primary listing to another exchange.
Rio, the world’s largest iron ore producer, reported underlying earnings of US$10.87bil for 2024, compared with US$11.76bil a year ago. Visible Alpha consensus was for US$11bil.
Sydney-based portfolio manager Andy Forster of Argo Investments said he did not have a strong view on the listing structure, but he liked Rio’s share, which was the lowest since 2019.
The payout “shows confidence in growth to grow earnings to be able to maintain payout and fund capital expenditure,” he said.
Iron ore prices moderated last year on weak demand from China’s struggling property sector and high portside inventories, which dented the miner’s earnings from the raw material used in steel making and offset growth in copper and aluminium segments.
Underlying operating earnings for Rio’s iron ore division fell 19% for the year, while its aluminium business logged a 61% increase in annual underlying operating earnings.
Meanwhile, ramp-up at the Oyu Tolgoi mine in Mongolia, strong performance at Escondida in Chile and higher refined copper production at Kennecott in Utah following the restart of the smelter led to a 75% rise in underlying operating earnings for the company’s copper business.
Rio, which derives most of its profits from iron ore but is increasingly focused on copper, declared a final ordinary dividend of US$2.25 per share, below last year’s US$2.58.
Rio expects total losses of 13 million tonnes of iron ore from tropical cyclones, which have hit Australia’s west coast and snarled iron ore shipments so far this year.
“Production guidance has remained the same, even on iron ore, but the company has run out of wiggle room for catching up on Pilbara iron ore volumes if there are any more interruptions at the port,” analysts at RBC said in a note.
A series of cyclones has disrupted shipments from the Pilbara iron-producing region of Western Australia.
The company expects Pilbara iron ore unit cash costs on a free-on-board basis to be between US$23 and US$24.5 per wet tonne for the current fiscal, slightly higher than the unit cost of US$23 per tonne logged in fiscal 2024. — Reuters
