PERTH (miningweekly.com) – Mining major Rio Tinto has seen a 28% drop in profits after tax for the interim period of 2022, and a 26% fall in underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) when compared with the same period in the 2021 financial year.

The miner on Wednesday reported a profit after tax of $8.9-billion, compared with the $12.3-billion reported in the same period of 2021, while underlying Ebitda decreased from $21.03-billion to $15.59-billion in the same period.

Net cash generated from operating activities fell by 23% from 2021 figures, from $13.66-billion to $10.47-billion.

The miner told shareholders that the lower earnings reflected the movement in commodity prices, the impact of higher energy prices on its operations and higher rates of inflation on its operating costs and closure liabilities.

The miner in June made a $1.1-billion final payment to the Australian Taxation Office in respect of 2021 profits, and also experienced a rise in working capital, primarily owing to elevated prices for raw materials in aluminium inventory, partly offset by a drawdown in iron-ore portside inventories.

“Market conditions were good, albeit below last year's record levels. We delivered largely flat production and solid financial results, with underlying Ebitda of $15.6-billion, free cash flow of $7.1-billion and underlying earnings of $8.6-billion, after taxes and government royalties of $4.8-billion,” said CEO Jakob Stausholm.

“As a result, we are paying our second highest ever interim dividend of $4.3-billion, a 50% payout, in line with our policy. The market environment has become more challenging at the end of the period.”

Rio on Wednesday told shareholders that capital investment in 2022 reached $7.5-billion, and the miner is expecting its share of investment in 2023 and 2024 to reach between $9-billion and $10-billion, which includes the ambition to invest up to $3-billion in growth per 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, subject to ongoing inflationary pressure.

In addition, Rio’s guidance includes around $1.5-billion over the next three years on decarbonisation projects, mainly relating to repowering the Pilbara, which will accelerate from 2025, bringing its best estimate to around $7.5-billion, in aggregate from 2022 to 2030.

“We are committed to making lasting, long-term change to our culture, including to our workplace culture, and to building better relationships with Indigenous peoples, communities and partners. The progress we are making will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society in the drive to net-zero carbon emissions,” Stausholm said.

"We remain focused on delivering on our long-term strategy, with a steady improvement in operating performance and some notable advances in our growth agenda. We continue to strengthen our partnership with the Mongolian government following commencement of underground mining at Oyu Tolgoi, delivered first iron-ore from the Gudai-Darri mine and approved early works funding at the Rincon lithium project.”