Rio Tinto of­fers big re­ward to in­vestors

China Daily (Canada) - - VIEWS - By BLOOMBERG

Rio Tinto Group will pay a much higher div­i­dend than ex­pected and buy back $500 mil­lion of shares af­ter the world’s sec­ond­biggest min­ing com­pany re­ported its first gain in an­nual profit since 2013.

Higher iron ore prices boosted un­der­ly­ing profit by 12 per­cent to $5.1 bil­lion in 2016, Lon­don-based Rio said onWed­nes­day.

The div­i­dend fell 21 per­cent to 170 cents a share, re­flect­ing a new pol­icy align­ing the pay­out to earn­ings.

“What a dif­fer­ence a year makes,” Peter O’Con­nor, an an­a­lyst at Shaw & Part­ners Ltd in Syd­ney, said. “It’s been a long grind back from the global fi­nan­cial abyss that Rio slumped into.”

The global min­ing in­dus­try is re­bound­ing from a down­turn that forced some of the top pro­duc­ers to sell as­sets, cut costs and rein in spend­ing af­ter years of over-in­vest­ment bloated bal­ance sheets and left mar­kets over­sup­plied.

Iron ore, Rio’s main profit driver, surged 81 per­cent last year as Chi­nese stim­u­lus sup­ported lo­cal steel out­put, leading to higher de­mand for over­seas ore.

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