Rio Tinto halves dividend but expects global economy to stabilise in 2023

Rio Tinto greater than halved its annual dividend to replicate decrease commodity costs however mentioned it was “quietly assured” the outlook for the worldwide economic system had improved after China relaxed its Covid-19 restrictions.

The world’s second-largest miner on Wednesday mentioned it will pay a complete dividend of $4.92 for 2022 — 53 per cent decrease than in 2021 when it paid a big particular dividend on the again of document earnings pushed by hovering commodity costs. Income for 2022 fell 13 per cent to $55.5bn, whereas revenue earlier than tax dropped 40 per cent to $18.6bn.

Rio Tinto adopted BHP and Fortescue Metals in lowering its shareholder payout after a bumper 2021, however the firm mentioned that it had nonetheless paid out $8bn in 2022.

Jakob Stausholm, chief government, mentioned it was the second-largest dividend payout within the firm’s 150-year historical past and got here because the mining firm was reshaping its enterprise to enhance returns after years of underperformance in opposition to its rivals. “What I’m seeing offers me confidence that we’re heading in the right direction,” he mentioned.

The corporate is reliant on China for iron ore exports. Stausholm mentioned he was “very optimistic” concerning the nation’s prospects now that it had relaxed Covid-19 restrictions. Their lifting has pushed a restoration within the iron ore worth since November. He added that there have been optimistic indicators of a restoration within the Chinese language actual property sector, a key finish marketplace for Australian iron ore, which is used to make metal.

“We’re quietly assured [Chinese] demand might be a stabilising issue for the worldwide economic system in 2023,” he mentioned.

The outlook reaffirms feedback made by BHP that China would offset potential weak point in European and US economies in 2023, which might hit demand. Stausholm mentioned there was much less concern about financial downturns within the US and Europe, the place the vitality disaster had eased, than on the finish of 2022.

Rio Tinto, which produces iron ore, aluminium, copper and lithium, forecasts the vitality transition will drive commodity demand at a price of round 3.7 per cent per 12 months to 2035.

Stausholm mentioned he was not trying to make use of the corporate’s steadiness sheet to conduct “transformative M&A”, regardless of a latest spate of consolidation within the mining sector, as the most important firms have positioned themselves in the direction of higher-growth minerals.

Rio Tinto paid $3.3bn to purchase out Canada’s Turquoise Hill final 12 months to realize higher management of the Mongolian copper mine Oyu Tolgoi and has been linked with potential enlargement in lithium. Stausholm mentioned he didn’t need the corporate to turn into distracted by large-scale takeovers.

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