Rio Tinto 1st Half Profit Higher, Payout Flat — Update

By Rhiannon Hoyle

Mining giant Rio Tinto said its first-half profit rose by 14% and underlying earnings were up a smidgen, as increased copper production and prices helped to offset a softer result from its dominant iron-ore business.

The world's second-biggest miner by market value on Wednesday said it made a net profit of $5.81 billion in the six months through June, up from $5.12 billion a year earlier when its bottom line was weighed by write-downs against some Australian alumina refineries.

Underlying earnings totaled $5.75 billion, compared with $5.72 billion in the first half of 2023 and a consensus estimate of $5.79 billion according to 13 forecasts compiled by Visible Alpha.

Directors of Rio Tinto declared an interim dividend of $1.77 a share, which the miner said was equal to 50% of underlying earnings, in line with its policy and typical midyear payouts in recent years. A year ago, the company also paid out $1.77 a share or 50% of underlying earnings.

"Rio Tinto is both consistently very profitable and growing," said Jakob Stausholm, the miner's chief executive.

Stausholm said the company expects to increase overall production by roughly 2% this year, and is targeting an around 3% compound annual growth rate from 2024 to 2028 from existing operations and projects.

Rio Tinto been seeking to raise its production of commodities needed for the energy transition. Metals such as copper play an essential role in building electric vehicles, renewable energy and grid infrastructure. Projects include the expansion of copper-mining operations in the U.S. and in Mongolia, where it says its Oyu Tolgoi business is set to become the world's fourth-largest copper mine by 2030.

"We are at an inflection point in our growth, with a step change from our aluminum business and consistent production at our Pilbara iron ore operations," said Stausholm. "We have considerable growth in cash flow from the ramp-up of the underground copper mine at Oyu Tolgoi, and more value to come as our Simandou investment and Rincon lithium project proceed at pace."

Rio Tinto benefited from copper prices inceasing to a record high during the first half of 2024. The run-up in metal prices, which have since eased from their peak, was fueled by speculators betting on a boom in clean energy and data centers.

During the half, Rio Tinto earned nearly 6% more from each pound of copper it sold compared to a year earlier.

At the same time, the miner benefited from increased production as it ramped up the Oyu Tolgoi underground mine beneath the remote Gobi desert in Mongolia. Output from its Kennecott mine near Salt Lake City, Utah, also rebounded following disruptions from a broken conveyor belt in early 2023. Rio Tinto produced 13% more mined copper year over year.

The strength of Rio Tinto's copper arm helped to counter a dip in iron-ore production and prices.

The Anglo-Australian miner makes most of its money from vast iron-ore mining operations it runs in remote northwest Australia. As steel's main ingredient, iron ore is one of the world's most-traded commodities, and Rio Tinto is a top producer alongside Brazil's Vale.

Shipments from its Australian operations were 2% lower in the first half versus a year earlier, and the average price that Rio Tinto was paid for that iron ore was 1.3% lower year over year.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

July 30, 2024 19:14 ET (23:14 GMT)

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