Rio Tinto declares record dividend after iron ore surge drives 2020 earnings

Rio Tinto has announced the largest annual dividend in its 148-history after new chief executive Jakob Stausholm described 2020 as a ‘year of extremes’ for the world’s biggest iron ore producer.

The mining giant returned a total of US$9 billion to shareholders in the 2020 financial year after benefitting from an 85% surge in the iron ore price, driven by strong demand from China’s rebounding steel industry.

However, the firm’s destruction of a sacred Aboriginal site in May to make way for a mine expansion in Western Australia (WA) effectively trashed its long-standing reputation as one of the best operators in the mining sector.

After replacing former chief J-S Jacques in the aftermath of the Juukan Gorge debacle, Stausholm has made restoring trust with indigenous groups and other stakeholders a priority for 2021 and beyond.

“Earlier this week I visited Juukan Gorge…and I personally expressed my deep regret for the damage caused,” Stausholm said. “It was a humbling experience and had a profound impact on me.”

Stausholm was speaking after Rio posted its 2020 financial report, which contained the best annual results in almost a decade. Underlying earnings increased by 20% to $12.4 billion, while net debt fell to $664 million from $3.65 billion.

Rival mining major BHP also announced a record shareholder dividend after record iron ore production in WA drove underlying net profit over the first half of the Australian financial year.