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Rio Tinto posts record full-year profit

Rio Tinto has reported its best ever annual profit and a record full-year dividend of $US16.8 billion ($A23.3 billion), boosted by higher iron ore prices and strong demand from top consumer China.

The world’s biggest iron ore producer posted underlying earnings of $US21.38 billion for the year ended December 31, up 72 per cent from a year earlier.

Analysts had expected underlying earnings of $US21.63 billion, according to Visible Alpha.

The jump in earnings came despite tight labour market conditions due to pandemic-related restrictions and its impact on the ramping up of the company’s Pilbara operations in Western Australia.

“The recovery of the global economy, driven by industrial production, resulted in significant price strength for our major commodities, which we were able to capture, achieving record financial results…,” Rio Tinto Chief Executive Jakob Stausholm said in a statement on Wednesday.

Rio Tinto declared a final special dividend of 62 cents per share and a final dividend of $US4.17 per share, higher than the $US3.09 per share final dividend a year earlier, bringing the total dividend for 2021 to a record $US10.40 per share.

The company’s shares closed 1.2 per cent higher on the Australia Stock Exchange ahead of the results.

Labour shortages induced by COVID-19 restrictions have hit Australian miners, with Rio previously forecasting weaker-than-expected iron ore shipments for 2022.

The miner on Wednesday warned of Pilbara iron ore unit cash costs for 2022 rising.

Like rivals BHP and Fortescue Metals Group, Rio has benefited from the West Australian government’s isolationist COVID-19 policies which have allowed the mining sector to operate largely uninterrupted for much of the past two years.

But the state’s border closures have exacerbated labour shortages with companies struggling to access skilled workers.

The mining giant warned the reopening of Western Australia’s borders will be no magic bullet for labour shortages after riding a surge in commodity prices to a record profit.

Chief executive Jakob Stausholm on Wednesday said he hoped the reopening of WA’s borders from March 3 would gradually relieve the pressures.

“There’s not going to be a magic bullet,” he told reporters.

“Slowly but surely I hope we will work towards more normal conditions. It’s very difficult to predict how it’s going to unfold … but I see (that) we are reaching a stage in the pandemic where things hopefully are moving forward.

“Many things have worked out very well in the Pilbara but it’s very clear that we have certain specific specialised skills shortages that we are hopefully able to address on opening the border.”

A report released by the company earlier this month outlined a culture of bullying, harassment and racism, including 21 complaints of actual or attempted rape or sexual assault over the past five years.

Nearly half of all employees who responded to an external review of the miner’s workplace culture commissioned by Rio Tinto said they had been bullied, while racism was found to be common across a number of areas.

Rio has promised to implement all 26 recommendations from the report by former Australian sex discrimination commissioner Elizabeth Broderick.

Mr Stausholm said he hoped the “confronting” report would foster a culture of greater openness.

“I really feel we have gone from silence to a very open dialogue. So I’m more optimistic than ever that we can address this,” he said.

with Reuters

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