Rio Tinto profit dives as weaker iron ore prices bite

Rio Tinto, the nation’s biggest iron ore miner, has reported a steep fall in full-year profit on the back of soaring inflation and softer prices for the key steel-making material during 2022.

The Anglo-Australian mining giant told shareholders on Wednesday afternoon that underlying profit had fallen 41 per cent across the 12 months to December 31 to $US12.42 billion.

The result follows a record full-year profit result in 2021 which, at $US21.09 billion, was the largest in its 149-year history.

Rio attributed the fall in last year’s profit to movement in commodity prices, impact of higher energy and raw material prices on its operations, and higher inflation bumping up its operating costs.

“Despite challenging market conditions, we remain resilient because of the quality of our assets, our great people and the strength of our balance sheet. That is why we delivered strong financial results with underlying EBITDA of $US26.3 billion, free cash flow of $US9.0 billion and underlying earnings of $13.3 billion, after taxes and government royalties of $US8.4 billion,” Rio’s chief executive Jakob Stausholm said.

The underlying profit result missed market expectations, but the miner beat expectations on its dividend payout. Most analysts had forecast Rio to record an underlying profit of $US13.39 billion, and dividends totalling $US4.80 for the full year.

Rio will pay out $US8.0 billion in full-year dividends, equivalent to $US4.92 a share, the second-largest dividend in the company’s history.

The price of iron ore, one of Australia’s most lucrative exports, fell from elevated levels last year as strict COVID-19 lockdowns a property market slowdown reduced steel demand in China, by far the world’s biggest consumer of iron ore.