Jakob Stausholm. Picture: SUPPLIED
Jakob Stausholm. Picture: SUPPLIED

Sydney — Rio Tinto Group, the world’s top iron ore producer, posted its biggest annual profit in nine years and will pay out a record $9bn in dividends, as global miners cash in on a nascent boom in metals prices.

The London-based company said underlying earnings were $12.4bn in 2020, up 20% on the prior year. Its full-year payout included a special dividend as Rio followed its peers in rewarding investors. Glencore said Tuesday it would resume payouts after suspending them last year, while BHP Group paid a record dividend.

From iron ore and copper, to platinum and tin, metals prices are ramping higher as the world economy emerges from its coronavirus-induced slump of 2020, fueled by huge government and central bank support as well as tightening supply.

“The fundamentals are pretty strong,” said Jakob Stausholm, presiding over his first results since becoming CEO in January. “The Chinese economy is growing strongly and what we are learning coming out of 2020 is that — more than anything — we are having very commodity-intensive growth.”

Iron ore prices gained about 70% over the period, boosted by Chinese stimulus measures to accelerate the post-pandemic economic recovery which saw the country’s steel mills ramp up their activity. Rio said significant momentum in these prices boosted underlying earnings for ore from its operations in Western Australia.

“Our strong operational performance in the Pilbara in 2020 enabled us to take advantage of the rising price environment for our high-quality products,” Rio said. “This price strength was driven by buoyant demand from China and constraints in global seaborne supply.”

Rio said it has almost completed implementing recommendations from a board review of its cultural heritage management into the blasts in Western Australia that damaged ancient Aboriginal sites in 2020, though Stausholm declined to comment on any potential financial restitution during a media call.

Tougher heritage protection laws are expected in the wake of the Juukan Gorge blasts which could lead to longer lead times for Rio to bring new resources on stream. “The rock shelter at Juukan should never have been touched,” Stausholm said, adding that he had visited the site this week and met with local elders.

Rio said it was in “active discussions” with the government of Mongolia to address outstanding issues regarding the troubled Oyu Tolgoi copper project. Mongolia has asked Rio whether it’s prepared to mutually terminate the $6.75bn project in the Gobi Desert, the Financial Times reported earlier this month.

Bloomberg

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