PERTH (miningweekly.com) – Falling commodity prices have seen major Rio Tinto report a 43% drop in net earnings for the six months to June, compared with the previous corresponding period.

The miner on Wednesday announced a profit after tax of $5.1-billion, down from the $8.9-billion in the previous corresponding period, while underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) decreased from $15.5-billion to $11.7-billion.

Net cash generated by operations declined by 33% from $10.4-billion to $6.9-billion, with free cash flows declining 47% from $7.1-billion to $3.7-billion.

“Our robust financials, despite softer market conditions, are driven by the quality of our assets and our great people, delivering underlying Ebitda of $11.7-billion, free cash flow of $3.8-billion and underlying earnings of $5.7-billion, after taxes and government royalties of $4.1-billion. Our balance sheet strength enables us to continue to invest with discipline while also paying an interim ordinary dividend of $2.9-billion, a 50% payout, in line with our practice,” said Rio Tinto CEO Jakob Stausholm.

The miner told shareholders that the lower commodity prices were in line with the slowing global demand, with the Chinese recovery predominantly led by the services sector. This was partially offset by weaker local currencies during the first half of the year, and improvement in sales volumes and mix.

The company said on Wednesday that it remained focused on cost control, in particular maintaining discipline in fixed costs.

“We have a clear pathway to building an even stronger Rio Tinto and continue to gain momentum in our strategy to set the business up for long-term success. We are making good progress on pursuing our four objectives as we build further momentum in our Pilbara iron-ore business, mindful that we need to raise our game across many of our other operations,” said Stausholm.

“Our disciplined investment in lifting the health of our assets and focus on culture, mindset and relationships is delivering results, with our Pilbara iron-ore business consistently improving its performance with five consecutive quarters of year-on-year growth. We are taking real steps to shape our portfolio for the future, with first sustainable production from Oyu Tolgoi underground, just as we doubled our exposure through the acquisition of Turquoise Hill Resources. Last week we signed an agreement to form the Matalco aluminium joint venture to enter the exciting and fast-growing aluminium recycling industry in North America. And the Simandou iron-ore project in Guinea is advancing at pace, with final approvals expected later this year.”

During the full 2023, Rio is targeting a capital investment of $7-billion, excluding investment in Simandou, where the company’s share of investment is expected to be around $0.5-billion in the second half of the year.

In 2024 and 2025, Rio’s share of capital investment is expected to be up to $10-billion a year, including up to $3-billion in growth a year, depending on opportunities. Each year also includes sustaining capital of around $3.5-billion, of which around $1.5-billion a year is for Pilbara iron-ore and $2-billion to $3-billion of replacement capital.

The guidance includes around $1.5-billion over the next three years on decarbonisation projects. This remains subject to Traditional Owner and other stakeholder engagement, regulatory approvals and technology developments.

The miner told shareholders that it expected to have made financial commitments to industrial abatement projects representing more than 15% of group emissions by 2025.

However, unless the company used carbon offsets, it did not expect to achieve its targeted 15% reduction in Scope 1 and 2 emissions until after 2025.

“Physical delivery of renewables, diesel replacement and process heat abatement will lag our financial commitments,” Rio said.

“These delays are the result of a range of factors including engineering and construction timelines, the need to carefully integrate our ambitions with the needs of our local communities and stakeholder groups and a requirement for additional abatement to address underlying emissions growth as our production plans evolve.”