Rio Tinto Group’s best profit in three years and a record dividend is yet another sign that miners are reaping the benefits of a surge in commodity prices.
Yet the sheer size of Rio’s cash flow is starting to raise another question: how else will the world’s second-biggest mining company invest all its money?
In December, Rio approved spending $368 million to continue the future development of the Resolution copper project in Arizona, a joint venture with BHP Billiton Ltd., according to the statement today.
Shareholders may be willing to support Rio if it moves to add a different commodity to its portfolio -- mainly based around copper, iron ore and aluminum, according to a report from UBS Group AG.
Quimica & Minera de Chile SA, one of the world’s top lithium producers, people familiar with the matter said last month.
“It’s a very consistent message and strategy which shareholders will like,” said Richard Knights at Liberum Capital Ltd. “Given the multi generational nature of their asset base, mainly iron ore and aluminum, they can keep this up a long time.”
Investec’s Hillcoat said it’s unlikely that Rio will embark on any “multibillion-dollar expansions” to chase M&A growth or pay a premium for other commodities, such as copper, given the industry’s history of overspending.
- Rio Tinto pays out record dividend, profit hits three-year highReuters
- Rio Tinto full-year profit jumps 69 percent; announces $1 billion buybackReuters
- Rio Tinto Profit Climbs On Prices, Ups Dividend; Plans Addl. $1 Bln Buy BackNasdaq
- Lead Rio Tinto Not Into TemptationBloomberg
- Rio Tinto boosts cash returns as profit hits three-year highNasdaq
- Rio Tinto Should Keep Part of Its Record HaulWall Street Journal
- Rio Tinto records 2017 profit of $US8.8 billion, up 90 per cent from 2016ABC Online
- Rio Tinto Rewards Investors as Profit Rallies to Three-Year HighBloomberg
- Rio Tinto ups buyback, pays record annual dividendMarketWatch