Rio Tinto trims interim dividend to five-year low as iron ore output and lithium weighs on bottom line

Rio Tinto’s dividend payout has fallen to its lowest level in five years but the mining giant’s departing boss is optimistic about the future and has some words of advice for his successor. Rio generated $US26.9 billion ($41.3b) of sales revenue during the first six months of 2025, a flat result compared to the same period a year prior. The average price Rio fetched for its most important commodity — iron ore — fell by 13 per cent year-on-year and production also went backwards after a series of cyclones in January and February savaged its key Pilbara port facilities. This was partially offset by Rio’s “improving operational performance” and a “rising contribution” from its aluminium and copper divisions. Approximately $US6.9b of net cash was generated across Rio’s global operations, down 2 per cent on the first-half 2024 result. Net debt ballooned by more than 160 per cent from $US5.5b to $US15b after Rio took on fresh loans to fund its $US6.7b purchase of Arcadium Lithium, which was completed in March. Net profit was 22 per cent lower at $US4.5b and this cascaded through to a 16 per cent cut in the interim dividend to $US1.48. It is the lowest dividend Rio has declared since 2018. But Rio’s outgoing chief executive Jakob Stausholm said the company’s “dividend capability” is set to improve, pointing to the Oyu Tolgoi copper mine in Mongolia and Simandou iron ore complex in West Africa as two massive projects that can underpin earnings growth. “We have taken the pain for a long time to invest in OT, and now it is really taking off, and that improves our dividend capability,” Mr Stausholm said. “The same is happening right now with Simandou. As we start ramping that up, our dividend capability goes up. “The whole name of the game is about dividend, but you cannot pay all the dividend today. You have to invest to make sure you get even better dividend in the future.” After narrowly fending off a vote calling for the board to review its dual-listing structure, the Anglo-Australian mining company said it had “sought to engage” with disgruntled shareholders. The motion led by Palliser Capital manged to win support from 19.35 per cent of shareholders in May, but needed 20 per cent to trigger the review. Meanwhile Rio’s next mega project Simandou is set to export first iron ore in November. By then, Mr Stausholm will have handed over the reins of Rio to Simon Trott. The Danish native, who picked Mr Trott to run Rio’s all-important WA iron ore division nearly five years ago, said his key piece of advice for his successor was “very simple”. “I have one (piece of) advice for him, don’t ever forget that Rio Tinto is a long-term company,” Mr Stausholm said. The half-year update is the final set of results the global mining chief delivers before he exits the business on August 25. Mr Stausholm told The West Australian he had “very few regrets” during his five-year stint at the helm of Rio, but shared that matters of people and safety would always weigh heavily. The deaths of four Rio team members in a plane crash near Fort Smith in Canada in 2024 would “always hurt in my heart,” he said.