In announcing giant revenues and super-massive dividends, Australian mining colossus Rio Tinto delighted markets, shareholders… and maybe even roboticists too!
Earlier this week, Rio declared consolidated group revenues of US$40.5 billion and underlying earnings of US$8.8 billion for the 2018 calendar year, two percent up on the previous year.
Although net cash from operating profits was down by 15 percent to US$11.8 billion, driven primarily by the timing of tax payments, the company managed to strengthen its balance sheet by paying down US$4.1 of debt.
The company felt confident enough to declare a super-massive dividend of US$13.5 billion – said to be the largest in the company’s history.
Australian iron ore from the Pilbara region was the major earner pulling in US$18.4 billion on the back of about 338 million tonnes, of which 282 million tonnes of iron ore production belongs to Rio.
Production volumes
Rio’s production volume was two percent higher than in the previous year owing to expanded mine production and productivity improvements.
Among the productivity improvements was the deployment of the world’s biggest robots.
In July last year, the company completed a 28,000 haul of 28,000 tonnes of iron ore from inland Australia to the Cape Lambert export port, more than 932 miles (1,500km) distant).
That deployment was part of a $940 million “AutoHaul” programme to automate iron ore rail transport to Rio’s export port facilities. Each automated train will run an average return journey of 800km over 40 hours. Approximately six months later, by the end of December, AutoHaul trains had run autonomously for one million kilometres.
Productivity improvements have, over time, led to a dramatic decrease in Rio’s Pilbara cash unit cost per tonne. It stood at US$20.4 per tonne in H1 2014 and, by H2 2018, has fallen to US$13.2 per tonne, which is a decrease of just under 35 percent.
Looking forward, Rio expects iron ore shipments from the Pilbara to be in the range of 338 million tonnes to 350 million tonnes, subject to weather and market conditions. Drivers of iron ore demand include demand from Chinese steel mills for the higher quality iron ores that Rio produces.
Rio adds that, last year, Chinese steel inventories declined, indicating “healthy end-use demand”. It added that steel demand outside of China was “robust”.
Turning to seaborne supply, the company said that the 2018 seaborne iron ore supply was “essentially flat” with expansion by the major produces mostly offset by high-cost, low-quality supply exiting the market. Operational disruptions and industrial disputes also played a factor.