Rio Tinto PLC on Wednesday hiked its dividend to record levels for 2021, following a sharp rise in profit and revenue, driven by significant price rises for major commodities, more than offsetting a decline in output.

Shares in Rio Tinto were down 0.5% at 5,664.00 pence on Wednesday in London.

For the year, the Anglo-Australian miner reported a pretax profit of $30.83 billion, doubled from $15.39 billion the year before, while underlying earnings before interest, tax, deprecation and amortisation rose 58% to $37.72 billion from $23.90 billion.

Consensus expectations had underlying Ebitda coming in at $38.29 billion.

This was on sales revenue which grew 42% year-on-year to $63.50 billion from $44.61 billion, a figure which fell short of consensus expectations, which stood at $65.12 billion.

Rio Tinto’s record financial performance came as the miner generated free cash flow of $17.7 billion, up 88% from $9.41 billion in 2020.

Operationally, Rio Tinto saw 2021 production for Pilbara iron ore fall 4.0% year-on-year to 319.7 million tonnes.

Bauxite production dropped 3.2% to 54.3 million tonnes after severe wet weather in the first quarter hurt system stability throughout the year.

Mined copper was down 6.5% to 493,500 tonnes due to lower recoveries and throughput at Escondida in northern Chile, which itself was exacerbated by Covid-19.

However, Rio Tinto’s profit rise was supported by a considerable rise in commodity prices, with the average realised price for iron ore up 45% to $143.8 per dry metric tonne from $98.9 the prior year.

In addition, the average price for aluminium rallied to multi-year highs, up 49% year-on-year to $2,899.0 per tonne from $1,946.0, due to power supply disruptions in China and a recovery in global demand.

Also, the average copper price grew 50% year-on-year to 424 US cents per pound from 283 cents.

Rio Tinto declared a final ordinary dividend of 417.0 US cents, and a special payout of 62.0 cents. This brought the group’s total payout to 1,040 cents per share, up 86% from 557 cents the year before.

Looking ahead, Rio Tinto has kept its production guidance unchanged from its update in January, with Pilbara iron ore shipments to come in between 320 and 335 million tonnes.

Bauxite, which has a high aluminium content, production is seen between 54 and 57 million tonnes; while aluminium production is expected to range between 3.1 to 3.2 million tonnes.

Financially, Rio anticipates capital expenditure to be $8.0 billion in 2022, rising to $9.0 billion then $10.0 billion in 2023 and 2024. Capital expenditure for 2021 rose 19% year-on-year to $7.4 billion.

Turning to its decarbonisation push, Rio Tinto pledged to spend $10 billion to halve its carbon emission by 2030, including $2 billion for wind and solar energy to decrease gas usage at its Pilbara sites by 80%.

‘The recovery of the global economy, driven by industrial production, resulted in significant price strength for our major commodities, which we were able to capture, achieving record financial results,’ said Chief Executive Jakob Stausholm.

‘With the launch of our new strategy, we have set a new direction for Rio Tinto to thrive in a decarbonising world. We have a portfolio that is well positioned, and are targeting disciplined investment in commodities that will see strong demand in the coming decades. Our agenda is an ambitious, multi-year journey which we are determined to deliver and we have already taken the first steps, with underground operations under way following the Oyu Tolgoi agreement and a binding agreement to acquire the Rincon lithium project in Argentina,’ Stausholm added.

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