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Rio Tinto to give shareholders record dividend after bumper 2020 for iron ore

Henry Saker-Clark, PA City Reporter
·2-min read

Rio Tinto is to hand its shareholders a record dividend after becoming the latest mining firm to be lifted by a boom in demand for commodities.

Shares in the Anglo-Australian miner moved higher after it said it will pay a total dividend of 5.57 dollars (£4), including a special dividend of 93 cents (67p).

It takes the company’s total payout for the year, including its half-year dividend, to 9 billion dollars (£6.5 billion).

Rio Tinto was buoyed by the sharp improvement in commodity prices during the second half of the year as global economies recovered from the coronavirus pandemic.

Earlier this week, rivals BHP and Glencore also lifted their payouts to investors following strong performances in 2020.

On Wednesday, Rio Tinto said its most important commodity – iron ore used for steelmaking – saw its value surge by 85% to a nine-year high amid strong demand in China.

The company’s net cash rose by 6% to 15.9 billion dollars (£11.4 billion) as a result, while its net profit increased by more than 20%.

It also slashed its net debt from 3.7 billion dollars (£2.7 billion) to 664 million dollars (477 million).

Rio Tinto results
Jean-Sebastien Jacques quit as chief executive after Rio Tinto destroyed a sacred Aboriginal site in Western Australia (Dominic Lipinski/PA)

The strong trading performance nevertheless came amid a turbulent year for Rio Tinto, which saw Jean-Sebastien Jacques quit as its chief executive due to investor outcry following the destruction of a 46,000-year-old Aboriginal site in Western Australian.

In September, Mr Jacques left along with two other executives following the backlash after Rio Tinto destroyed two sacred Aboriginal shelters at Juukan Gorge in the Pilbara region to expand an iron ore mine.

The company said it does “not under-estimate the time and effort it will take for us to help restore trust and rebuild our reputation”.

Recently-appointed chief Jakob Stausholm said: “Working closely with the board, we must earn the right to become a trusted partner for traditional owners, host communities, governments and other stakeholders, but we all recognise that this will require sustained and consistent effort.”