A blend of falling commodity prices and rising costs squeezed profits at iron ore producer Rio Tinto, where earnings fell by almost $4 billion in the first half.
The Anglo-Amerian mining giant relies on global economic growth to create demand for the metals it produces. It has previously warned of the impact of Russia’s invasion of Ukraine and the subsequent global tightening of monetary policy to control the wave of inlflation following the war.
Underlying earnings of $8.6 billion for the the six months to the end of June were lower than the $12.2 billion last time. City analysts were expecting $8.5 billion. Rio announced plans to pay out $4.3 billion in interim dividends, in what it called its “second highest” such payout ever. Nonetheless, it was a cut from last year’s record, which followed a strong revenue rebound as commodity prices soared as the global economy recovered after pandemic restrictions were lifted.
The mining industry has also been struggling with labour shortages. Rio said its production in the period was “largely flat”. In the run up to today’s results, Rio warned of “supply bottlenecks” in the eurozone, with “energy security” key for the region.
Its chief executive, Jakob Stausholm, said the “market environment has become more challenging” toward the end of the first half of the year.
Shares in the FTSE 100 company fell almost 3% to 4682p in London on Wednesday.