PERTH (miningweekly.com) – Major Rio Tinto has announced a 20% fall in net earnings and a 28% decline in free cash flows for the six months ended June, compared with the previous corresponding period.
Net earnings for the interim period reached $3.3-billion, down from the $4.1-billion in the previous corresponding period, while free cash flow declined from $3.8-billion to $2.8-billion in the same period.
Underlying earnings before interest, taxes, depreciation and amortization (Ebitda) declined by 6%, from $10.25-billion to $9.64-billion, with net cash generated from operating activities declining by 12% in the same period, from $6.38-billion to $5.62-billion, as commodity price movements impacted the bottom line.
Consolidated sales revenue for the interim period was down 7% on the same period in 2019, to $19.4-billion owing to lower prices and volumes for copper, and lower aluminum prices, the miner said on Wednesday.
“We’ve been agile and adapted our way of working to deliver another resilient performance while navigating the new and ongoing challenges of dealing with Covid-19,” said CEO Jean-Sebastian Jacques.
“Despite the challenging backdrop, we generated underlying Ebitda of $9.6-billion, with a margin of 47%, driven by our strong and stable operations, with all of our assets continuing to operate throughout the first half. As a result, we have declared an interim dividend of $2.5-billion, equivalent to 155c per share, and have reconfirmed our 2020 production guidance across all commodities.
“Our world-class portfolio of high-quality assets and our strong balance sheet consistently serve us well in all market conditions and particularly in turbulent times. This, together with our disciplined capital allocation, underpins our ability to sustain production, increase our investment in the business, pay taxes and royalties to governments and continue delivering superior returns to shareholders,” Jacques said.
Capital expenditure is expected to reach about $6-billion in the full 2020 and about $7-billion in both 2021 and 2022, with the three-year cumulative spend of $20-billion unchanged from the guidance issued in October of last year.
The capital projects include the $2.60-billion Koodaideri replacement iron-ore mine, in Western Australia, which is expected to produce 43-million tonnes a year of iron-ore, starting in early 2022, and the $0.8-billion Robe River joint venture sustaining production projects, also in the Pilbara, which are expected in 2021.
Work is also progressing at the Oyu Tolgoi copper mine, in Mongolia, where a mine redesign was announced in July, and first sustainable production is targeted for between October 2022 and June 2023.
In terms of production, Rio is targeting between 324-million and 334-million tonnes of iron-ore shipments for 2020, between 55-million and 58-million tonnes of bauxite, between 7.8-million and 82-million tonnes of alumina production and between 3.1-million and 3.3-million tonnes of aluminium production.
Refined copper production for the full year has been targeted at between 165 000 t and 205 000 t, with between 12-million and 14-million carats of diamond production also anticipated.