Rio Tinto down after lower iron ore prices offset gains in copper, aluminium

Investing.com -- Rio Tinto (LON:RIO) shares slipped on Wednesday after the miner reported a $4.5 billion first-half profit, with lower iron ore prices and cyclone disruptions dragging on results despite stronger performance in copper and aluminium.

The British-Australian mining company posted underlying earnings of $4.8 billion and underlying EBITDA of $11.5 billion for the six months ended June 30. Net cash from operating activities totaled $6.9 billion. 

Rio Tinto declared an interim dividend of 148 cents per share, or $2.4 billion, in line with its 50% payout policy. The dividend will be paid on Sept. 19 to shareholders on record as of Aug. 15.

Iron ore shipments from Pilbara fell 5% after four cyclones hit Western Australia in the first quarter. 

Realised prices dropped 15% to $89.7 per dry metric tonne FOB, while unit costs rose to $24.3 per tonne. Segment EBITDA declined 24% from the same period a year earlier.

Copper output increased 16% to 438,000 tonnes, supported by the underground ramp-up at Oyu Tolgoi and higher grades at Escondida.

Underlying EBITDA rose 69% to $2.4 billion. Unit C1 costs fell to 97 cents per pound from $1.47, helped by higher gold by-product credits.

Aluminium recorded a 50% rise in underlying EBITDA to $1.7 billion, with an integrated margin of 33%. Bauxite production grew 9% to 30.6 million tonnes, and alumina rose 6% to 3.7 million tonnes. 

Realised aluminium prices, including product premiums, averaged $3,125 per tonne. The segment also absorbed $321 million in U.S. tariffs after a 10% Section 232 exemption was removed.

Minerals EBITDA dropped 58% to $300 million due to weaker titanium dioxide slag and iron ore pellet prices. 

Lithium production reached 29,000 tonnes of lithium carbonate equivalent following the $6.7 billion acquisition of Arcadium in March. Lithium prices fell 22% to $8,100 per tonne CIF in Asia.

Capital expenditure reached $4.7 billion, with $1.6 billion allocated to growth. Major investments included the Western Range iron ore project and lithium developments in Argentina and Canada. 

Net debt rose to $14.6 billion from $5.5 billion at year-end, reflecting the Arcadium deal and a $9 billion bond issue. The gearing ratio increased to 19%.

Market prices varied: iron ore averaged $101 per dry metric tonne CFR China, down 14% year-over-year; copper rose 16% to 455 cents per pound; and aluminium gained 2% to $2,593 per tonne.

The company reaffirmed full-year production guidance, with iron ore expected at the lower end due to weather and heritage constraints. Bauxite and copper are tracking toward the top of their respective ranges.

Scope 1 and 2 emissions totaled 15.6 million tonnes of CO2 equivalent, 21% below 2018 levels. Rio Tinto spent $253 million on decarbonisation, including $72 million in capital outlays.

The effective tax rate rose to 33% on underlying earnings, due to increased profits in higher-tax jurisdictions and deferred tax adjustments.