Rio Tinto halves dividend as falling iron ore price hits profit

Mining giant Rio Tinto has reported a 30 per cent fall in half-year profit and halved its interim dividend after the price of the steel-making ingredient iron ore, Australia’s most valuable export, dropped from last year’s record highs.

Rio Tinto, the nation’s second-largest mining company, told shareholders on Wednesday it had achieved an underlying profit of $US8.6 billion for the six months to June 30, while delivering a reduced half-year dividend of $US2.67 per share.

The dividend, which is down from $US5.61 last year, was lower than the $US3.05 a share that most analysts had been expecting.

Chief executive Jakob Stausholm said iron ore prices for the period were half of what they were in the first half of 2021.

“Market conditions were good, albeit below last year’s record levels,” Stausholm said.

Iron ore – the raw material processed in steel-making furnaces to churn out molten pig iron – is Australia’s largest export, bringing in $133 billion in the nation’s overall export earnings in the past financial year.

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However, Rio Tinto and rival iron ore giants BHP and the Andrew “Twiggy” Forrest-led Fortescue Metals Group are facing the threat of falling prices.

Benchmark iron ore prices, which averaged between $US110 and $US140 a tonne during the past financial year, have fallen to as low as $US100 a tonne this month as COVID-19 restrictions soften steel demand in China, the world’s largest iron ore consumer.