(Bloomberg) -- Rio Tinto (LON:RIO) Group, the world’s No. 2 mining company, pledged to return more than $7 billion to investors after a spree of asset sales and first half-profit hit a four-year high.
The producer declared an interim dividend of $1.27 a share, from $1.10 in the same period a year earlier, and also approved plans to hand investors about $4 billion of proceeds from asset sales. Rio’s total package of $7.2 billion of cash returns, compares with a payout of $3 billion in the first half of 2017, according to filings.
Underlying profit rose 12 percent to $4.4 billion in the six months through June on better base metals prices and higher iron ore volumes, London-based Rio said in a statement on Wednesday. That compared with $3.9 billion a year earlier and a $4.45 billion average estimate among three analysts’ forecasts compiled by Bloomberg.
The miner’s balance sheet is being bolstered by asset sales announced this year of about $8.5 billion, including Australian coal mines and an interest in Indonesia’s Grasberg, the second-largest copper mine.
Rio will continue to invest in growth and look to “further strengthen our portfolio and maintain a strong balance sheet in order to deliver superior returns to shareholders in the short, medium and long term,” Chief Executive Officer Jean-Sebastien Jacques said.
The biggest miners are using bumper cash flows to reward investors and fund development of new projects as continued strong demand in China supports higher profits. Anglo American (LON:AAL) Plc last week approved a $5 billion copper mine in Peru as first-half profit rose, while Vale SA said it will buy back $1 billion of its own shares after earnings jumped.
China’s efforts to support its economy are helping to sustain commodities, allowing producers to shrug off concerns over global trade tensions. For top iron ore exporters including Rio, there’s an additional boost from Beijing’s clamp down on pollution, a factor that’s boosting prices for higher-quality raw materials.