A more buoyant commodities market helped Rio Tinto mine higher earnings from its copper and iron ore production, convincing it to issue its largest interim dividend.
The healthy interim dividend will see a total of $2bn rewarded to shareholders.
Over the first half thus far, the firm has returned over $3bn in cash to shareholders, which represents 75% of its first half underlying earnings.
Rio Tinto also announced an additional $1bn share buyback programme by the end of 2017, following on from its $500m buyback mentioned in its final results.
The move marks a turning point for the Anglo Australian miner, which abandoned its “progressive” policy of maintaining or increasing its dividend year by year in February 2016, a move it was criticised for.
Still, the prospect of a record high interim dividend did not translate into a higher share price for the mining firm, which was down 2.3% at £34.21p per share.
Chief executive J-S Jacques, who stepped into the role last summer at a precarious juncture for the company, was keen to highlight the success of Rio Tinto’s restructuring efforts and its renewed commitment to maximising cashflow.
The “strong results” included improved operating cash flow of $6.3bn, a 95% improvement from the $3.2bn generated in 2016, as well as 68% higher pre tax earnings of $9.0bn.
Jacques’ cost reduction programme saved the firm approximately $2bn in the first half, meeting its target six months early. Net debt at 30 June 2017 was $7.6bn, down from $9.6bn late December.
“We are now shifting gear to focus on the untapped value from our productivity programme and continue to strengthen our portfolio to build higher returns for the future,” the chief executive said.
“We announced the sale of our thermal coal business in Australia for $2.7 billion and are making good progress on our compelling growth projects – Oyu Tolgoi, Amrun and Silvergrass.”
