By Dhirendra Tripathi
Investing.com – ADRs of Rio Tinto (NYSE:RIO) traded 0.4% higher in premarket Wednesday as high iron ore prices and strong demand from its top consumer China led the miner to its highest ever annual profit.
Economies rebounded last year while commodity prices surged to record highs, creating robust cash flows at companies like RIO, BHP (NYSE:BHP) and Glencore (OTC:GLNCY). Iron ore accounts for around 75% of RIO’s earnings and it hit record prices last year. Copper also did, while aluminum prices are currently at a 13-year high. Price realizations across the three items surged last year.
Net earnings more than doubled from a year earlier to $21 billion, RIO said.
There may be worries ahead for RIO. According to reports, China is pushing hard to cool ore prices and is exploring making producers and traders negotiate sales to the world’s biggest market through a state-backed platform. The company said the outlook for iron ore prices is “less certain.”
RIO’s plans to diversify into new-age minerals and tap new areas of growth suffered a setback last month when opposition from the local community forced the Serbian government to block its plans to build Europe’s biggest lithium mine. The company said it is reviewing the legal basis of Serbia’s decision.
Consolidated sales revenue jumped more than 42% to $63.5 billion.
Rio Tinto declared a final special dividend of 62 cents per share, paying out $16.8 billion in overall dividends in the year.