Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. United Kingdom
  4. London Stock Exchange
  5. Rio Tinto plc
  6. News
  7. Summary
    RIO   GB0007188757

RIO TINTO PLC

(RIO)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Rio Tinto : Half Year Results 2021 - Release

07/29/2021 | 07:49am EDT

Interim Results 2021

In exceptional market conditions, Rio Tinto achieves record financial results and declares total interim dividend of 561 US cents per share, 75% of underlying earnings

28 July 2021

Rio Tinto Chief Executive Jakob Stausholm said "Government stimulus in response to ongoing COVID-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices. We focused on safely running our world-class assets and supplying products to our customers. This enabled us, despite operational challenges, to deliver record financial results with free cash flow of $10.2 billion and underlying earnings of $12.2 billion, after taxes and government royalties of $7.3 billion. We are further strengthening the portfolio with our commitment to fund the high-quality Jadar lithium project, which signals our large-scale entry into the fast-growing battery materials market. We will pay an interim dividend of 561 US cents per share, representing 75% of underlying earnings.

"We are making progress on our four priorities, identifying opportunities for operational improvement, advancing our ESG agenda, taking important investment decisions and stepping up our external engagement. We are making real and lasting changes to the way we engage, interact and operate and are committed to ensuring that we have strong and positive relationships wherever we do business. We have identified what we need to do to make Rio Tinto a better company for the long term, with the right teams in place to unleash our full potential."

Six months ended 30 June

2021

2020

Change

Net cash generated from operating activities (US$ millions)

13,661

5,628

143 %

Capital expenditure1 (US$ millions)

3,336

2,693

24 %

Free cash flow2 (US$ millions)

10,181

2,809

262 %

Consolidated sales revenue (US$ millions)

33,083

19,362

71 %

Underlying EBITDA2 (US$ millions)

21,037

9,640

118 %

Underlying earnings2 (US$ millions)

12,166

4,750

156 %

Net earnings (US$ millions)

12,313

3,316

271 %

Underlying earnings2 per share (US cents)

751.9

293.7

156 %

Ordinary dividend per share (US cents)

376.0

155.0

143 %

Special dividend per share (US cents)

185.0

0.0

n/a

Total dividend per share (US cents)

561.0

155.0

262 %

Underlying return on capital employed (ROCE)2

50 %

21 %

At 30 June 2021

At 31 December

2020

Net cash / (debt)2 (US$ millions)

3,140

(664)

Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) and are unaudited - see page 39 for further information. Footnotes are set out on page 3.

  • Our colleague Nico Swart was tragically killed in a shooting incident whilst driving to work at Richards Bay Minerals (RBM) in South Africa on 24 May. Our sympathies are with Nico's family and we are offering ongoing support to his family, friends and colleagues.
  • We continue to prioritise the safety of our people and communities and have now exceeded 30 months without a fatality on site. However, our all injury frequency rate (AIFR) of 0.39 has seen a slight increase versus 2020 first half (0.37).
  • Our new leadership team is now fully in place and focused on driving forward our four priorities. We are developing a large volume of work taking a company-wide,bottom-up and people-centric approach as we look to embed real and sustainable changes to the way we operate and engage.
  • In the first half, we sustained our efforts to earn back trust and strengthen our social licence. We continue rebuilding our relationships with Traditional Owners in the Pilbara and engaged extensively with government representatives, business leaders, current and former Rio Tinto employees and our shareholders. The insights from these meetings are helping us improve how we operate and effectively and respectfully engage in a collaborative manner wherever we operate.
  • $13.7 billion net cash generated from operating activities was 143% higher than 2020 first half, mainly due to higher pricing for iron ore, aluminium and copper.

Page 1

  • $10.2 billion free cash flow2 reflected the stronger operating cash flows partially offset by a 24% rise in capital expenditure1 to $3.3 billion, driven by an increase in replacement and development capital as we ramp up our projects.
  • Funding committedfor the Jadar lithium-borates project in Serbia, subject to receiving all relevant approvals, permits and licences and ongoing engagement with local communities, the Government of Serbia and civil society: $2.4 billion investment, targeting first saleable production in 2026 and ramp-up to full annual production of ~58,000 tonnes of battery-grade lithium carbonate in 2029.3
  • $21.0 billion underlying EBITDA2 was 118% higher than 2020 first half, with an underlying EBITDA margin2 of 61%.
  • $12.2 billion underlying earnings2 (underlying EPS of 751.9 US cents) were 156% higher than 2020 first half with an underlying effective tax rate of 29%. Taking exclusions into account, net earnings of $12.3 billion (basic EPS of 761.0 US cents) mainly reflected $0.3 billion of exchange rate gains net of $0.1 billion of net additional closure costs for non-operating and fully impaired assets. See table on page 12.
  • $3.1 billion of net cash2 at 30 June 2021, compared with net debt2 of $0.7 billion at the start of the year, which reflected the free cash flow of $10.2 billion partly offset by $6.4 billion of cash returns paid to shareholders.
  • Cash returns of $9.1 billion announced today, comprising interim ordinary dividend of $6.1 billion, equivalent to 376 US cents per share, and special dividend of $3.0 billion, equivalent to 185 US cents per share. Interim pay-out ratio represents 75% of first half underlying earnings.

Strong cash flow from operations

Six months ended

Six months ended

30 June 2021

30 June 2020

US$m

US$m

Net cash generated from operating activities

13,661

5,628

Capital expenditure1

(3,336)

(2,693)

Sales of property, plant and equipment

26

28

Lease principal payments

(170)

(154)

Free cash flow2

10,181

2,809

Cash inflows from prior years' disposals

10

10

Dividends paid to equity shareholders

(6,435)

(3,607)

Share buy-back

-

(208)

Other

48

(179)

Decrease / (increase) in net debt2

3,804

(1,175)

Footnotes are set out on page 3.

  • $13.7 billion of net cash generated from operating activities was 143% higher than 2020 first half, primarily driven by higher prices for our major commodities, which also resulted in higher dividends from equity accounted units. It is net of a tax payment of $0.4 billion in Mongolia (disputed by Oyu Tolgoi, including through international arbitration) and a $0.3 billion settlement related to the transfer of pension obligations in France.
  • $3.3 billion of capital expenditure1 was 24% higher, comprised of $1.4 billion of sustaining capital and $1.9 billion of development capital, of which $0.5 billion was growth and $1.4 billion was replacement.
  • Free cash flow2 of $10.2 billion, up 262%.
  • $6.4 billion of dividends reflected the 2020 final ordinary and special dividends paid in April 2021.
  • As a result of the above, net debt2 improved by $3.8 billion in 2021 first half to net cash of $3.1 billion.

Entry into battery minerals at scale: funding committed for Jadar lithium-borates project in Serbia

  • $2.4 billion funding committedto one of the world's largest greenfield lithium projects, subject to receiving all relevant approvals, permits and licences and ongoing engagement with local communities, the Government of Serbia and civil society.
  • To be built to the highest environmental standards, including utilising dry stacking of tailings, with no need for a tailings dam. Approximately 70% of raw water to come from recycled sources or treated mine water.
  • Expected to operate in the first quartile of the cost curve for both products, with a 40-year mine life.
  • First saleable production in 2026 at a time of strong market fundamentals with lithium demand forecast to grow 25-35% per year over the next decade.

Page 2

  • Following ramp-up to to full production in 2029, the mine is expected produce ~58,000 tonnes of battery- grade lithium carbonate, 160,000 tonnes of boric acid (B2O3 units) and 255,000 tonnes of sodium sulphate annually.3
  • Positions Rio Tinto as the largest source of lithium supply in Europe. Jadar could supply enough lithium to power over one million electric vehicles per year.4

Our projects

  • Increased our spend on exploration and evaluation to $324 million in 2021 first half, as we progressed our greenfield programmes across 8 commodities in 19 countries and advanced our evaluation projects, notably Resolution Copper in Arizona and Winu copper-gold in Western Australia.
  • At the Winu project in Western Australia, we continue to actively engage with the Traditional Owners and we plan to commence discussions on the initial scope and mine design, also in consultation with the Western Australian Environmental Protection Authority, with sanction now targeted for next year and first production in 2025, partly due to COVID-19 constraints. Drilling, fieldwork and study activities continue to progress.
  • At Resolution, we are continuing to assist the US Forest Service with its review of the Final Environmental Impact Statement and draft Record of Decision. Mine studies continue to progress in parallel.
  • At the Simandou iron ore project in Guinea, we are reviewing results from the technical optimisation of the infrastructure studies, and product test sample analysis is now underway. A new office was established in Conakry in the first half as we expand our in-country team.
  • Mining has commenced at the $2.6 billion Gudai-Darri replacement iron ore mine in Western Australia, with more than nine million cubic metres of pre-stripping completed in June. Despite labour shortages, first ore in the crusher is expected in 2021, although commissioning is later than originally planned. The project is expected to ramp up in early 2022, consistent with previous guidance, and reach full capacity in 2023. The first phase of this new hub, which will be our most technologically advanced mine, connecting up with our autonomous rail network, will have a 43 Mt annual capacity, underpinning production of the Pilbara Blend™.
  • The $0.9 billion (our share, previously $0.8 billion) investment in the Robe River Joint Venture replacement mine projects are progressing. First ore at West Angelas (C, D) was achieved in June with load commissioning expected later in the year following delays related to heritage management. First ore at Robe Valley (Mesa B, C, H) is still expected in 2021, consistent with previous guidance.
  • First ore at the $0.8 billion Western Turner Syncline phase 2 mine, which will also replace existing production, is still expected in 2021, consistent with previous guidance.
  • At the Oyu Tolgoi copper/gold underground project, project progress has been significantly affected by heightened COVID-19 constraints in Mongolia. To comply with COVID-19 restrictions, site manning levels were less than 25% of planned requirements. Despite these restrictions, as the Material Handling System 1 had been ahead of the definitive estimate schedule, it is now 90% complete with technical criteria achieved to support undercut commencement, subject to the ongoing impacts of COVID-19 and satisfactory resolution of the non-technical undercut criteria.
  • The $0.9 billion first phase of the south wall pushback at the Kennecott copper mine in the US remains on track, with gradual access to higher grades expected over 2021. The $1.5 billion second phase is expected to extend copper operations to 2032. On 22 July, we announcedthe approval of a $108 million investment for underground characterisation studies.
  • The Zulti South project at RBM in South Africa, to sustain current capacity and extend mine life, remains on full suspension.
  1. Capital expenditure is presented gross, before taking into account any cash received from disposals of property, plant and equipment (PP&E).
  2. This financial performance indicator is a non-GAAP alternative performance measure ("APM"). It is used internally by management to assess the liquidity and performance of the business and is therefore considered relevant to readers of this document. It is presented here to give more clarity around the underlying business performance of the Group's operations. APMs are reconciled to directly comparable IFRS financial measures on pages 74 to 79.
  3. These production targets were previously reported in a release to the Australian Securities Exchange (ASX) dated 10 December 2020, "Rio Tinto declares maiden Ore Reserve at Jadar" (for battery-grade lithium carbonate it was 55,000 tonnes). All material assumptions underpinning the production targets continue to apply and have not materially changed.
  4. Assuming 60kWh battery size.

Page 3

$ 9.1 billion interim cash returns declared to shareholders in first half

Six months ended 30 June

2021

2021

2020

2020

US$bn

USc per share

US$bn

USc per share

Ordinary dividend

Interim

6.1

376.0

2.5

155.0

Pay-out ratio on ordinary interim dividend

50 %

53 %

Additional return

Special dividend

3.0

185.0

n/a

n/a

Total cash returns declared in first half

9.1

561.0

2.5

155.0

Pay-out ratio on total interim dividend

75 %

53 %

Total cash returns paid to shareholders in first half

Six months ended 30 June

2021

2020

US$bn

US$bn

Previous year's final ordinary dividend paid in April of each year

4.9

3.6

2020 special dividend announced in February 2021, paid in April 2021

1.5

n/a

Share buy-back programme, completed in February 2020

n/a

0.2

Total cash returns paid to shareholders in first half

6.4

3.8

Page 4

Guidance

  • Capital expenditure1 is expected to be around $7.5 billion in each of 2021, 2022 and 2023, unchanged from previous guidance. Each year includes $3.0 to $3.5 billion of sustaining capital, of which Pilbara iron ore sustaining capital is $1.2 to $1.6 billion. We continue to proactively manage COVID-19 and prioritise work across critical projects, as challenges associated with interstate and international border access continue, impacting the availability and movement of people, most notably in Australia, Canada and Mongolia.
  • Effective tax rate on underlying earnings of approximately 30% in 2021.

2021 production guidance (Rio Tinto share, unless otherwise stated)

Pilbara iron ore (shipments, 100% basis)

325 to 340 Mt1

Bauxite

56 to 59 Mt2

Alumina

7.8 to 8.2 Mt

Aluminium

3.1 to 3.3 Mt

Mined copper

500 to 550 kt2

Refined copper

210 to 250 kt

Diamonds3

3.0 to 3.8 M carats

Titanium dioxide slag

n/a4

Iron Ore Company of Canada pellets and concentrate

10.5 to 12.0 Mt

Boric oxide equivalent

~0.5 Mt

2021 unit cost guidance

Pilbara iron ore unit cash costs per wet metric tonne, free on board (FOB) basis

$18.0-18.5/t5

Copper C1 unit costs (average for Kennecott, Oyu Tolgoi and Escondida)

60-75 US cents/lb

    1. At the low end of the range and remains subject to COVID-19 disruptions, risks around tie-in of new mines and management of cultural heritage.
    2. At the low end of the range.
    3. Diamonds 2021 guidance and actuals are for Diavik only for comparability, following Argyle closure in 2020. Unadjusted Diamonds production for 2020 was 14.7 million carats, including both Diavik and Argyle operations.
    4. Full year titanium dioxide slag production guidance has been removed as a result of risks around the timing of resumption of operations due to an escalation in the security situation at our Richards Bay Minerals operation in South Africa.
    5. Assumes a 0.77 Australian dollar exchange rate.
  • Production and unit cost guidance is consistent with our Second Quarter Operations Review released on
    1. July 2021.
  • We will continue to monitor government-imposed restrictions related to COVID-19, and any other potential COVID-19 related disruptions. Restrictions on movement and availability of people can impact our ability to execute planned maintenance and deliver projects.
  • Iron ore shipments and bauxite production guidance remain subject to weather and market conditions. We expect iron ore shipments to be at the low end of the guidance range which remains subject to tie-in and ramp-up of brownfield replacement mines, and ongoing cultural heritage management. Progress has been made on tying in approximately 90 million tonnes of replacement mine capacity at existing hubs in Robe Valley, West Angelas and Western Turner Syncline Phase 2. Replacement projects remain on track for completion in 2021, and Gudai-Darri is set to ramp up during 2022. The tight labour market in Western Australia has limited our access to experienced contractors and specific skill sets.
  • The full impact on our Pilbara iron ore operations, mine developments and heritage approach from the reform of the Aboriginal Heritage Act 1972 (WA) remains unknown. We continue to engage with Traditional Owners regarding current and proposed plans for mining activities and work through development scenarios, adjusting mine plans where required. Given the quality of our resource, we retain a range of development options in the Pilbara, subject to heritage and environmental approvals.
  • Full year titanium dioxide slag production guidance has been removed as a result of risks around the timing of resumption of operations at RBM in South Africa, due to a deterioration in the security situation. On 21 July, we announcedthat we would shut one of the four furnaces due to depletion of available feedstock. We continue to work with national and provincial governments as well as community structures to find a lasting solution to the current situation. However, if the situation does not improve, then we could be forced to progressively shut down the other furnaces by the end of August.

Page 5

Disclaimer

Rio Tinto plc published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2021 11:47:20 UTC.


ę Publicnow 2021
All news about RIO TINTO PLC
11:32aRIO TINTO : Agreement in principle reached by Rio Tinto and Unifor Local 2301
PU
09/24Australia shares post third weekly loss as Evergrande debt crisis weighs
RE
09/23ALCOA POWERS UP IN BRAZIL AS CHINA A : Andy Home
RE
09/22RIO TINTO : Jefferies Trims Rio Tinto PT, Maintains Buy Rating
MT
09/22RIO TINTO : Jefferies reiterates its Buy rating
MD
09/21Top global companies call for zero emmissions shipping by 2050
RE
09/21FTSE 100 Roars Back on Tuesday, Driven by M&A Prospects
DJ
09/21Miners' FTSE 100 Top Spot Isn't Expected to Last
DJ
09/20Australia shares fall on weak financials, tech; China Evergrande spooks markets
RE
09/20PEGASUS RESOURCES : in Negotiations to Acquire Uranium Assets -- Shares Down Nearly 19%
MT
More news
Analyst Recommendations on RIO TINTO PLC
More recommendations
Financials (USD)
Sales 2021 65 708 M - -
Net income 2021 23 525 M - -
Net cash 2021 3 472 M - -
P/E ratio 2021 4,58x
Yield 2021 17,2%
Capitalization 26 668 M 26 668 M -
EV / Sales 2021 0,35x
EV / Sales 2022 0,45x
Nbr of Employees 47 500
Free-Float 65,3%
Chart RIO TINTO PLC
Duration : Period :
Rio Tinto plc Technical Analysis Chart | RIO | GB0007188757 | MarketScreener
Technical analysis trends RIO TINTO PLC
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 23
Last Close Price 66,03 $
Average target price 82,54 $
Spread / Average Target 25,0%
EPS Revisions
Managers and Directors
Jakob Stausholm Chief Executive Officer & Executive Director
Peter Lloyd Cunningham Chief Financial Officer & Executive Director
Simon Robert Thompson Chairman
Arnaud Soirat Chief Operating Officer
Megan Clark Independent Non-Executive Director
Sector and Competitors
1st jan.Capi. (M$)
RIO TINTO PLC-11.69%109 048
BHP GROUP-11.10%134 566
ANGLO AMERICAN PLC7.16%43 747
GRUPO MÉXICO, S.A.B. DE C.V.-2.37%31 770
SAUDI ARABIAN MINING COMPANY (MA'ADEN)92.59%25 588
TECK RESOURCES LIMITED35.67%13 174