Rio Tinto income flat as weaker iron ore costs take shine off copper

Rio Tinto has reported flat full-year profits as weaker iron ore prices were offset by a boost in production and higher copper prices.

As the world’s largest iron-ore producer, Rio Tinto has taken a hit from weak demand in China and rising global supply, which is pushing prices lower.

Rio Tinto said shipments of Pilbara iron ore slipped 1 per cent, while average realised prices fell about 8 per cent.

It came as the miner posted underlying earnings of $10.87billion for the year ended 31 December, unchanged from a year earlier, below expectations. Adjusted Ebitda rose 9 per cent to $25.4billion.

Record iron ore production in the Pilbara region helped to offset the overall drop in price.

Rio Tinto said earnings at its aluminium and lithium business jumped 29 per cent and enjoyed a ‘standout year’ for copper earnings.

Lower iron ore prices pushed earnings lower at Rio Tinto despite a copper boom

The growth of AI and shift to renewable energy, both of which rely on copper for parts, have seen miners increasingly focus on production of the red metal.

Glencore, which recently walked away from merger talks with Rio Tinto, this week said higher copper prices had helped to offset a slump in coal prices.

While BHP and Antofagasta both reported stronger-than-expected results as copper demand soared.

It has triggered a wave of dealmaking as companies race to bolster their copper resources. Merger talks between Glencore and Rio Tinto collapsed earlier this month as they failed to agree on valuation and who would lead the $200billion company.

Rio Tinto said average realised prices for copper rose 17 per cent last year, with output up 11 per cent, supported by a ramp up at the Oyu Tolgoi mine in Mongolia.

The miner declared a final dividend of 254 cents per share, up from 225 cents in 2024, but investors weren’t hugely impressed.

Shares were down 3.8 per cent to 7,106p at the open. 

Adam Vetesse, market analyst for eToro said: ‘Investment wise, shares have had an incredible run, and we are seeing some profit taking this morning following this update. 

‘That said, Rio Tinto is still a high-quality dividend play with copper-led growth potential, trading on a reasonable multiple, although a China stumble could cap gains. Patient holders will like the yield; traders may wait for a dip.’