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Rio Tinto posts bumper year

Diversified giant Rio Tinto has reported record results for the 2021 financial year, with a 116% surge in aftertax profit.

“Our people have continued to safely run our world-class assets and are working hard to improve our operational performance, despite challenging operating conditions from prolonged Covid-19 disruptions,” CEO Jakob Stausholm said on Wednesday.

“The recovery of the global economy, driven by industrial production, resulted in significant price strength for our major commodities, which we were able to capture, achieving record financial results with free cash flow of $17.7-billion and underlying earnings of $21.4-billion, after taxes and government royalties of $13-billion. This enables us to pay our highest total dividend ever of 1 040c a share, including a 247 c a share special dividend, representing a 79% payout.”

Consolidated sales revenue for the 2021 financial year was up 42%, with Rio reporting revenues of $63.4-billion, while profit after tax reached $21-billion.

Rio reported $25.3-billion in net cash generated from operating activities, 60% higher than 2020, primarily driven by higher prices for the company’s major commodities, which also led to an increase in dividends received from equity accounted units and paid to joint venture partners.

“With the launch of our new strategy, we have set a new direction for Rio Tinto to thrive in a decarbonising world. We have a portfolio that is well positioned, and are targeting disciplined investment in commodities that will see strong demand in the coming decades,” said Stausholm.

The miner spent $7.4-billion in capital expenditure during 2021, which was comprised of $0.6-billion of growth capital, $3.3-billion of replacement capital and $3.5-billion of sustaining capital. In 2021, Rio funded its capital expenditure from operating activities and expect to continue funding its capital programme from internal sources, except for the Oyu Tolgoi underground development, which is currently project- financed.

“Our agenda is an ambitious, multi-year journey which we are determined to deliver and we have already taken the first steps, with underground operations under way following the Oyu Tolgoi agreement and a binding agreement to acquire the Rincon lithium project in Argentina,” said Stausholm.

“We continue to evolve and deepen the way we engage and interact with all stakeholders as we work hard to generate and strengthen relationships wherever we operate. Our actions will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society, particularly in relation to the drive to net-zero carbon emissions.”

Rio expected capital expenditure in 2022 to be around $8-billion, which considers potential increases of around 15% for the Pilbara replacement projects.

The miner said on Wednesday that mining and operational readiness activities are progressing at the $2.6-billion Gudai-Darri mine and the railway is operational. The first train was loaded from the mobile crushing and screening facilities in December and first production from the main plant is now expected in the second quarter of 2022, subject to the continuing impacts of Covid-19.

Once fully commissioned, this first phase will have an annual capacity of 43-million tonnes, replacing depleting orebodies and providing some incremental capacity.

Furthermore, Rio’s $0.8-billion investment in the Western Turner Syncline phase 2 mine, part of Greater Tom Price operations, will facilitate mining of new deposits and includes construction of a new crusher and a 13- km conveyor. The project achieved first ore in October, following commissioning of the autonomous mining truck fleet.

Rio is also investing $1.7-billion with its joint venture partners, Mitsui and Nippon Steel Corporation at the Robe Valley and West Angelas operations.

First ore at West Angelas C and D was achieved in June, and the mines are now commissioned.

At Robe Valley, the autonomous mining truck fleet has been commissioned. Since achieving first ore in August, ongoing Mesa A wet plant construction and commissioning challenges have impacted production ramp-up. Rio noted that new wet plant components are on order and production will operate at a reduced capacity until repairs are completed.

Meanwhile, in each of 2023 and 2024, Rio expects group capital expenditure to be between $9-billion and $10-billion, which includes the ambition to invest 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 earmarked for the Pilbara iron-ore operations, subject to ongoing inflationary pressure.

The guidance also includes around $1.5-billion over the next three years on decarbonisation projects, mainly relating to repowering the Pilbara, which Rio said would accelerate from 2025, bringing the miner’s best estimate to around $7.5-billion, in aggregate from 2022 to 2030. – (Mining Weekly)

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