Rio Tinto annual earnings flat as iron ore weakens, copper cushions blow

By Melanie Burton and Roushni Nair

MELBOURNE, Feb 19 (Reuters) – Rio Tinto on Thursday reported flat annual earnings that missed expectations as its mainstay iron ore business suffered from lower prices, though this was offset by a strong performance from its copper division.

The world’s largest iron ore producer, which recently walked away from merger talks with Glencore, posted underlying earnings of $10.87 billion for the year to December 31, unchanged from a year earlier and below the Visible Alpha consensus of $11.03 billion.

The miner also declared a final dividend of 254 U.S. cents per share, implying a payout ratio of 60% of underlying earnings, up from 225 U.S. cents in 2024.

Rio’s London shares were down 3.4% by 0909 GMT, slightly underperforming peers.

COPPER IN FOCUS

The results highlight miners’ increasing focus on copper as demand grows, driven by the expansion of power-hungry AI data centres and the shift toward cleaner energy.

That strategic pivot has fuelled a wave of deal-making across the sector as companies try to secure long-life copper resources.

Rio’s talks with Glencore collapsed in February after the companies failed to agree on valuation and ownership terms, ending discussions that would have created the world’s largest listed mining company and significantly boosted copper exposure.

Copper overtook iron ore in rival BHP’s earnings for the first time, the world’s largest listed miner reported on Tuesday.

“A good result, perhaps as not as impressive as BHP, particularly with capital liberation,” said Andy Forster of Argo Investments in Sydney, referring to Rio’s plans to sell stakes in infrastructure and other assets.

Both major miners have pledged to tap existing assets to raise capital for reallocation and returning to shareholders, with BHP this week announcing a deal with Wheaton Precious Metals to provide silver from a mine in Peru for an upfront payment of $4.3 billion.

GAUGING INTEREST

Rio Tinto said it was gauging interest from the market for a sale of its titanium and borates division and looking at ways to monetise portions of its existing infrastructure across all divisions.

“Without M&A, we expect freed up cash to be used to strengthen Rio’s balance sheet and maintain returns within its 40-60% dividend payout range,” analysts at Jefferies said.

Rio’s iron ore earnings shrank to about 60% of the group total, down from 70% a year ago, as earnings from the copper division doubled on the year to account for around 30% of the total, with aluminium and lithium making up the remainder.

Iron ore earnings were hurt by higher annual unit costs for the company’s Pilbara iron ore output in Western Australia, which were around $0.50 per metric ton higher than in 2024 due to inflationary pressures and weather-related disruptions.

Pilbara unit costs are forecast to rise further, to between $23.50 and $25 per ton this year.

The copper division said average realised prices in 2025 rose 17% from a year earlier and output climbed by 11% from 2024, supported by a ramp-up at the Oyu Tolgoi mine in Mongolia.

(Reporting by Roushni Nair in Bengaluru and Melanie Burton in Melbourne; additional reporting by Clara Denina; Editing by Nivedita Bhattacharjee, Christian Schmollinger and Jan Harvey)