PERTH (miningweekly.com) – Diversified mining giant Rio Tinto on Wednesday announced strong financial results for 2018, and rewarded its shareholders with large dividends, including a $4-billion special dividend.
The miner’s underlying earnings advanced 2% to $8.81-billion, as higher iron-ore and copper volumes, as well as stronger prices for aluminium and copper, lifted its revenue to $40.5-billion in the 12 months to December.
Iron-ore shipments in 2018 rose as the company de-bottlenecked its rail network following the implementation of its AutoHaul autonomous trains and the ramp-up of the Silvergrass mine. Copper shipments benefited from better operating performance at the Escondida mine, in Chile, where a labour disruption impacted 2017 results, as well as higher copper grades from Kennecott, in the US, and higher gold grades from the Oyu Togloi, in Mongolia.
Underlying earnings before interest, taxes, depreciation and amortisation for the full year were 2% lower than 2017, at $18.1-billion, with the higher revenues outweighed by a rise in energy and raw material costs.
On the back of its strong financial results, Rio Tinto returned a total of $13.5-billion to its shareholders in 2018, $6.3-billion of cash was returned from operations, comprising the $1-billion share buyback announced in August, and a record $5.3-billion full-year ordinary dividend, equating to 72% of underlying earnings.
The miner also declared $7.2-billion of supplementary cash returns from divestments, including a $4-billion special dividend, announced on Wednesday.
Free cash flow for the full year was down to $7-billion, from the $9.5-billion reported in 2017, on the back of lower operating cash flow and increasing investment in capital projects. Rio spent some $5.4-billion of capital in 2018, with $2.9-billion invested in high development projects, including automated trains at its Pilbara operations, the Amrun bauxite project, and the Oyu Tolgoi underground copper/gold mine.
“Our world-class portfolio and strong balance sheet will serve us well in all market conditions, and underpin our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long-term,” said Rio CEO Jean-Sebastian Jacques.
Rio in the year under review also approved capital expenditure (capex) for the Koodaideri and Robe River replacement iron-ore mines, in Western Australia. Koodaideri is expected to cost some $2.6-billion to develop, and will include a processing plant and 166-km rail line. The project will have a 43-million-tonne-a-year capacity, underpinning the production of Rio’s Pilbara Blend.
The miner told shareholders on Wednesday that capex for 2019 was expected to stay at about $6-billion, and at around $6.5-billion in 2020.
Rio has maintained its 2019 production guidance, with the miner projected to deliver between 338-million and 350-million tonnes of iron-ore, between 56-million and 59-million tonnes of bauxite, and between 8.1-million and 8.4-million tonnes of alumina.
Mined copper production in 2019 is expected to reach between 550 000 t and 600 000 t, while refined production is expected at between 220 000 t and 250 000 t, with between 15-million and 17-million carats of diamonds also expected.