Posted on 27 Jul 2023
Global miner Rio Tinto's earnings for the first half fall to their lowest in three years, as lower iron ore prices dragged on its profit, Kallanish notes.
The group posted underlying earnings of $5.1 billion, tumbling from $8.7 billion a year ago, The group saw lower prices, in general, for its commodities, in line with slowing global demand, with the Chinese recovery predominantly led by the service sector.
Movements in commodity prices resulted in a $3.3 billion decline in the group's underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) overall compared with 2022 first half. This was primarily due to lower iron ore prices ($1.6 billion).
The group achieved an average iron ore price of $98.6/wet metric tonne (wmt) on an fob basis as compared to $110.9/wmt for the first half of 2022.
The group will pay an interim dividend of $1.77 per share, lower than $2.67 last year.
In 2023, Rio Tinto expects its share of capital investment to be $7 billion, excluding the Simandou iron ore project. It expects its share of investment in Simandou to be around $500 million in the second half of 2023.
In 2024 and 2025, its share of capital investment is expected to be up to $10 billion/year, including up to $3 billion in growth per year, depending on opportunities.
Each year also includes sustaining capital of around $3.5 billion, of which around $1.5 billion a year is for Pilbara iron ore and $2-$3 billion of replacement capital.
Meanwhile, the group does not expect to achieve its targeted 15% reduction in Scope 1&2 emissions until after 2025. It says physical delivery of renewables, diesel replacement and process heat abatement will lag its financial commitments.
These delays are the result of a range of factors including engineering and construction timelines, and evolving production plans, it says.
The firm, however, says it remains committed to reducing its Scope 1&2 emissions by 50% by 2030.
Source:Kallanish
