Rio Tinto profit falls but dividend increases amid ‘exceptional performance’

Rio Tinto share price gains 1% on strong earnings July 2020

Rio Tinto said its net debt totaled $4.83 billion at the end of June, down from $12.90 billion four years ago, as the Anglo-Australian company preferred higher shareholder returns over the heavy investments of previous commodity cycles.

Shares of Rio Tinto PLC (LON: RIO) gained 1.5% today after the mining giant reported better-than-expected first-half profit.

Underlying earnings from iron ore, which typically accounts for about 80 per cent of Rio's earnings, gained 1 per cent to $US4.56 billion ($A6.35 billion) in the half-year, and shipments rose three per cent.

Iron ore pellets and concentrates production in the six months to June 30 were up 6% on a year prior at 5.3 million tonnes versus 5.0 million tonnes.

Rio Tinto nevertheless bumped up its interim dividend by 3% to 155c per share.

"Rio's resilience and the very strong balance sheet supports the small increase in the dividend", said Richard Marwood, senior fund manager at Royal London Asset Management, which holds shares in the miner. The company signalled uneven global recovery last week.

Rio Tinto share price gained around 1.5% on the latest results.

RIO Tinto CEO, Jean-Sebastien Jacques, reiterated his group's interest in seeing how it could participate in the development of Simandou, an iron ore deposit which has been the subject of legal action for years, preventing its development.

"We are having a lot of private conversations for all our smelters in Aus".

"We will look at all options because it is an infrastructure project and scale is important", Jacques said.

Free cash flow tumbled 28% as the miner spent more on development projects and tax payments, but analysts at Jefferies remained upbeat about its prospects.

"We have continued to pay the same level of taxes, same level of employment, the same dividend", Chief Financial Officer Jakob Stausholm told Reuters.

Jacques said he will front an Australian Senate enquiry next week over Rio's destruction of two sacred caves of historic significance in Western Australia.

A separate Simandou venture about 70 kilometers (44 miles) to the north, could be up and running within five years, producing about 60 million tons a year in an initial stage, according to Societe Miniere de Boke, part of a consortium with Singapore's Winning Shipping Ltd. and Guinea's government.



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