The pandemic has caused disruption across the global mining industry, but a 'strong' balance sheet has prompted Rio Tinto to keep its dividend plans
Rio Tinto plans to push ahead with its $3.7bn dividend payment to shareholders this month, despite the economic pressures of coronavirus weighing heavily on the mining industry.
Speaking to investors over a conference call this week, chairman of the Anglo-Australian miner Simon Thompson said the strength of its iron ore portfolio had been key to the decision to proceed with the payment, due on April 16 and representing $2.31 per share.
According to Reuters news agency, he said: “We took this decision because Rio Tinto has a strong balance sheet, our operations are running safely and our order book for iron ore is full.
“The pandemic presents an unprecedented challenge for Rio Tinto and for society as a whole.”
The mining firm also revealed that it paid $7.6bn in taxes and royalties globally in 2019 as part of its annual tax disclosure report.
Rio Tinto dividend maintained amid huge disruptions across the industry
The mining industry has faced several disruptions due to the spread of coronavirus, and precautionary measures such as social distancing to limit the impact of the health emergency.
Rio Tinto’s key Oyu Tolgoi copper and gold project in Mongolia has been affected, with the firm saying last month that development of the operation – already beset by delays and spiralling costs – would be “slowed” due to the coronavirus outbreak.
Project delays and closures have forced companies to reassess their finances and look for ways to cut costs as they seek to insulate themselves from the economic impact of Covid-19.
Freeport-McMoRan and Glencore are among the major global miners to have already revised their dividend plans this year.
Several miners, including Rio Tinto, have taken steps to support the regions in which they operate through the coronavirus crisis, leveraging the financial and supply chain tools at their disposal to offer funding, order personal protection equipment and invest in key medical equipment including ventilators.
Rio Tinto reveals tax payments after strong financial performance in 2019
As part of its tax disclosures, Rio Tinto confirmed it had paid $6.2bn in Australia – its core region of operation.
In Chile, it made $311m in tax contributions, and in Mongolia, home to the Oyu Tolgoi copper mine, it paid $305m.
The payments are reflective of a strong year for the company in 2019, in which it recorded its highest profits for eight years on the back of favourable iron ore prices —with earnings up 18% to $10.3bn.
Company chief financial officer Jakob Stausholm said: “Our business, including the taxes and royalties we pay, play a critical role in the overall economic health and development of the regions where we operate.
“The funds we provide to governments and communities support the basic infrastructure of society – bridges and roads, schools and hospitals – as well as other local development priorities, like job creation and skills training.
“Being transparent about where these payments go helps our stakeholders better understand how these funds may be used.”