JOHANNESBURG (miningweekly.com) – Mining major Rio Tinto has delivered record full-year ordinary dividends of $5.2-billion, equating to 290c a share, and bringing total cash returns to shareholders for the year ended December 31, 2017, to $9.7-billion.
The company posted an operating cash flow of $13.9-billion, underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) of $18.6-billion and a ten-year record Ebitda margin of 44% for the 2017 financial year.
“The strength of our cash flow is a result of resilient prices during the year, coupled with a robust operational performance and a focus on mine-to-market productivity,” explained Rio Tinto CEO Jean-Sebastien Jacques, who also announced an additional $1-billion share buy-back.
During the year under review, Rio Tinto reported a 69% year-on-year increase in underlying earnings to $8.6-billion, driven by the $4.1-billion post tax impact of higher prices.
Rio Tinto reported net earnings of $8.8-billion during the year under review, primarily reflecting $2-billion of gains on business interest disposals.
This was partly offset by noncash exchange and derivative losses of $800-million, the $400-million impact of corporate tax rate changes in the US and France and net impairment charges of $500-million.
During the 12 months under review, the mining giant achieved consolidated sales revenues of $40-billion, $6.2-billion higher than 2016, primarily owing to higher average commodity prices.
Further, 400-million of additional free cash flow was generated in 2017 following the start of a mine-to-market productivity programme with an overall cumulative target of $5-billion from 2017 to 2021.
Rio Tinto further strengthened its balance sheet with a 60% cut in net debt to $3.8-billion and a net gearing ratio of 7%.
"Our strong balance sheet, world-class assets and disciplined allocation of capital puts us in the unique position of being able to invest in high-value growth through the cycle, and consistently deliver superior cash returns to shareholders,” Jacques said.
Meanwhile, the company continued “reshaping” its portfolio with $2.7-billion of divestments in 2017 and continued investing in growth projects, with the Silvergrass iron-ore mine, in Pilbara, now in production, and the Amrun bauxite project, in Queensland, as well as the Oyu Tolgoi underground copper mine development, in Mongolia, on track.
Silvergrass, with an approved project spend of $338-million, was commissioned in the fourth quarter of 2017.
The $5.3-billion Oyu Tolgoi project is expected to deliver its first tonnes in 2020, with average yearly production of 560 000 t between 2025 and 2030.
The $1.9-billion Amrun project remains on track, with production and shipping expected to start in the first half of 2019, increasing bauxite exports by about 10-million tonnes a year.
During 2017, Rio Tinto reported exploration and evaluation spend of $445-million to support the next wave of growth projects.