Mining giant Rio Tinto has a ‘bumper’ $7.6 billion first half net profit. The record profit is linked to the steadily rising prices of commodities which are being driven by demand from Asian nations.
The demand for key materials such as iron ore, coal and aluminum are what the global mining company feels will help them grow even more over the full year.
The company has plans to pay an interim dividend of 54 cents a share and also to increase its share buy back program. The interim dividend is 20% higher than previously though and the share buyback which was originally planned for $2 billion is now boosted to $7 billion. It is hoped that the company will be able to complete its share buy back by the end of March next year.
Chief executive Tom Albanese said they were quite pleased with the quality of the result, particularly given the severe weather conditions they saw affecting volumes and to some extent costs in the first half. He added that their longer-term picture remains absolutely intact. They expect in the next 15-20 years consumption trends will lead to doubling in demand for iron ore, copper, aluminum and certainly other commodities.
Chairman Jan du Plessis said that Rio Tinto has produced another set of record-breaking results. Market conditions have remained favorable over the past six months due to strong Asian demand, although the volatile economic environment that they highlighted eighteen months ago continues to exist, driven by significant macro economic imbalances.
Analysts said that despite the record profits posted the price gains in the value of commodities were offset by the increase in cash costs and the inflation. This was why the profits were not as high as some economic analysts had expected for the company. The adverse weather lowered the volumes and increased the mining operations costs.