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17 Feb 2021 | 07:00

Rio Tinto delivers record dividend as iron ore demand boosts profits

(Sharecast News) - Rio Tinto delivered a record dividend to shareholders as soaring iron ore prices last and demand from China drove full-year profits sharply higher.

The Anglo-Australian mining giant on Wednesday reported a better-than-expected 20% increase in underlying profit to $12.4bn and declared a total dividend of $5.57 a share against expectations of $4.80.

Iron ore prices have almost doubled in the past year, providing a boost for miners. Rival BHP on Tuesday also announced a record dividend as massive Covid-19 economic stimulus plans fuel booming steel demand in China at the same time as disruptions are hit rival suppliers in Brazil.

Net debt fell to $664m from $3.65bn. The global miner declared a record final dividend of $3.09 per share, higher than the $2.31 per share in 2019, and also announced a special dividend payout of 93 cents a share.

"Our strong operational performance in the Pilbara in 2020 enabled us to take advantage of the rising price environment for our high-quality products," Rio Tinto said.

"This price strength was driven by buoyant demand from China and constraints in global seaborne supply. We increased our iron ore shipments by 1% and production by 2% compared with 2019, whilst implementing strict measures to manage Covid-19."

The results are the first under the new leadership of chief executive Jakob Stausholm after the Juukan Gorge scandal where the company blew up culturally significant Aboriginal rock shelters in Western Australia's Pilbara, leading to the resignation of former CEO Jean-Sebastien Jacques.

"It has been an extraordinary year - our successful response to the COVID-19 pandemic and strong safety performance were overshadowed by the tragic events at the Juukan Gorge, which should never have happened," said Stausholm.
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