Iron ore rally helps Rio Tinto tee up bumper investor payout
MINING giant Rio Tinto is on course to unveil a bumper payout this week thanks to stronger commodity prices.
The FTSE 100 company could increase returns to shareholders by up to $2.5bn (£1.91bn) when it reports first-half results on Wednesday.
The Anglo-australian behemoth has already returned $288m to investors via a $500m share buyback programme it launched in March.
“We see Rio substantially increasing its capital returns by $2.5bn this half followed by $5bn in 2018,” said analysts at Credit Suisse. Demand in China for iron ore and aluminium, two key metals produced by the miner, has helped boost the windfall. Analysts at RBC also raised the prospect of a special dividend
‘We see Rio Tinto substantially increasing its $500m capital returns by $5bn in 2018’
later in the year once it banks the cash from the multi-billion dollar sale of its Australian coal mines.
Last month, Rio sealed the $2.7bn sale of its Hunter Valley coal mines in Australia to China’s Yancoal, which beat Glencore to the prize after a bidding war. The deal is expected to complete in September. Last week, Glencore struck an agreement to take a stake in mines from Yancoal.
Even before the mining industry was battered by a two-year downturn in commodity prices, Rio was considered to have the strongest balance sheet of the major miners.
Jean-sebastien Jacques, the firm’s boss, has commissioned three new projects to expand its production of copper, iron ore and bauxite, used in aluminium.
Yet despite this outlay, Rio is keeping a lid on costs, with capital expenditure next year expected to be considerably below what it spent in 2014.
Colossus of learning Plans to use Bletchley Park to protect national security for the first time since the end of the Second World War, by turning it into a cyber-security school, have been delayed. The College of National Security – which will be free to around 450 students – was due to open next October but is still waiting to apply for Government funding.