Rio Tinto (ASX:RIO) may be the biggest iron ore miner in the world, but it’s copper that’s helped drive its earnings higher over the last six months.
Copper production is up 3%, but the copper price is up 39% year-on-year. Copper contributed 36% of Rio’s total EBITDA (earnings before interest, taxes, depreciation, and amortisation).
AFR Resource Reporter Peter Ker says Rio relied on iron ore for 80% of its earnings in 2021.
Rio CEO Simon Trott describes the recent result as a “step change”.
The increase in the iron ore price was less pronounced, with Rio’s realised pricing up 2% over the same period.
Supported by stronger performances from its lithium and aluminium divisions, Rio increased free cash flow by 75% to US$3.8 billion ($5.43 billion), Trott says. Net debt fell by US$300 million, while the gearing ratio was 16%.
The 50% payout ratio lifted the interim dividend to a fully franked US$2.11 per share, up 43% from a year earlier and ahead of analysts’ expectations of US$2.04.
Trott says, in part:
“Our strong performance is underpinned by accelerating productivity across the business. We have already banked US$870 million of productivity benefits and are on track to reach an annualised run-rate of US$1.8 billion by year-end, with significantly more to come as our multiyear program continues to scale.”
ASX investors are responding positively, with Rio shares opening 4% higher in early trade.
Write to Callum Newman at Mining.com.au
Images: Rio Tinto
