Rio Tinto surprises with record payout as iron ore exports boom
Mining giant Rio Tinto has delivered shareholders its biggest-ever dividend after a stunning rally in prices for iron ore last year drove its full-year profits sharply higher.
The Anglo-Australian miner surprised investors on Wednesday when it reported a better-than-expected 20 per cent increase in underlying profit for the year to December 31 and said it would pay total dividends of $US5.57 for the period, the most in its history.
Most analysts had expected Rio to announce total dividends of $US4.80. The miner’s underlying profit of $US12.4 billion ($16 billion) also beat expectations of $US11.74 billion.
It comes as the price of steelmaking ingredient iron ore, Australia’s most lucrative export, has doubled in the past year, boosting the fortunes of top miners including BHP, Rio Tinto and Fortescue. Massive economic stimulus programs post-COVID-19 have been fuelling robust steel demand in China at the same time as disruptions are affecting rival iron ore suppliers in Brazil.
The financial results were the first to be unveiled by new chief executive Jakob Stausholm after replacing former CEO Jean-Sebastien Jacques, who resigned amid outrage over the miner’s decision to blast through Aboriginal rock shelters in Western Australia’s Pilbara region.
“It has been an extraordinary year,” Mr Stausholm said. But he added: “Our successful response to the COVID-19 pandemic and strong safety performance were overshadowed by the tragic events at the Juukan Gorge, which should never have happened.”
Although legally sanctioned, the blast went against the wishes of the traditional owners, the Puutu Kunti Kurrama and Pinikura (PKKP) people, who were left devastated and said they were not aware of Rio’s plans to destroy the site until it was too late for the explosive charges to be removed. Rio has apologised and conceded multiple failures in its engagement with the PKKP in the lead-up to the blast in May last year.
Mr Stausholm has indicated that rebuilding trust with traditional owners is one of his top priorities, and has recently travelled to the Pilbara to meet with the PKKP and “express my deep regret about the damage we caused”.
“I witnessed first-hand the pain it has inflicted,” he said. “It was a confronting experience and has had a profound impact on me.”
Business reporter for The Age and Sydney Morning Herald.
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