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Second highest ever dividend for Rio Tinto

Rio Tinto iron ore

Rio Tinto has declared its second highest ever interim dividend, of 267 US cents per share, after delivering an underlying EBITDA of $US15.6 billion.

For the six months ended June 30, net cash generated from operating activities was $10.47 billion, compared to $13.66b for the same period last year.

However the dividend was almost half that of last year’s 561c.

Rio Tinto chief executive Jakob Stausholm said the company remains focused on delivering on its long-term strategy, with a steady improvement in operating performance and some notable advances in the growth agenda.

“We continue to strengthen our partnership with the Mongolian government following commencement of underground mining at Oyu Tolgoi, delivered first iron ore from the Gudai-Darri mine in Australia and approved early works funding at the Rincon lithium project in Argentina,” he said.

“Market conditions were good, albeit below last year’s record levels. We delivered largely flat production and solid financial results, with free cash flow of $7.1b and underlying earnings of $8.6b, after taxes and government royalties of $4.8b.

“As a result, we are paying our second highest dividend of $4.3b, a 50 per cent payout, in line with our policy. The market environment has become more challenging at the end of the period.

“We are committed to making lasting, long-term change to our culture, including to our workplace culture, and to building better relationships with Indigenous peoples, communities and partners. The progress we are making will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society in the drive to net-zero carbon emissions.”

Following publication of a comprehensive external review of workplace culture in February, Stausholm said Rio Tinto was now implementing all recommendations from the report to ensure a safe, respectful and inclusive workplace.

“We are on track to achieve our gender diversity target to increase female representation (including in senior leadership) by two percentage points this year: this increased by one percentage point in the half to 22.6 per cent,” he said.

“We continue to focus on rebuilding our relationships with Indigenous Peoples across our global operations. On 14 February, we announced an agreement with the Yinhawangka Aboriginal Corporation on a new co-designed management plan to ensure the protection of significant social and cultural heritage values.

“This is part of our proposed development of the Western Range iron ore project in the Pilbara region of Western Australia. In May, we signed a Heads of Agreement with the Puutu Kunti Kurrama and Pinikura (PKKP) people which will guide the co-management of PKKP country where mining takes place.”

Stausholm  said delivery of first ore from Gudai-Darri, Rio Tinto’s first greenfield iron ore mine in the Pilbara in more than a decade, was a significant milestone, with the mine expected to reach its 43 million tonne per year capacity in 2023.

“We set ambitious climate targets in 2021 to reduce our Scope 1 and 2 emissions by 50 per cent by 2030,” he said.

“While, as expected, we are yet to achieve a reduction in our emissions, we are putting the building blocks in place, including a call for proposals to develop large-scale wind and solar power in Central and Southern Queensland to power our aluminium assets in the Gladstone region. These assets require 1140MW of reliable power to operate, which equates to at least 4GW of quality wind or solar power with firming.

“We reached agreement with the Australian Taxation Office on all tax matters in dispute. We also reached agreement with the Inland Revenue Authority of Singapore in relation to transfer pricing for the same historical years (2010 to 2021). In the second half of 2022, we will pay additional tax of A$613 million to the ATO, relating to this agreement, which has been fully provided.”

On the downside, Stausholm said as a majority shareholder of Energy Resources of Australia (ERA), the company was disappointed to learn of the material cost and schedule overruns on the Ranger rehabilitation project in Australia’s Northern Territory, announced earlier this year.

“We remain committed to ensuring the rehabilitation project is completed to a standard that will establish an environment similar to the adjacent Kakadu National Park,” he said.

“We also acknowledge the Traditional Owners, the Mirarr People’s opposition to developing the Jabiluka uranium deposit and restate our full support for ERA’s commitment that the deposit would never be developed without the Mirarr People’s consent.

“Since ERA announced the material cost and schedule overruns, we have sought to work constructively with ERA’s Independent Board Committee as they seek to find a funding solution.”

 

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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