Rio Tinto has voiced its opposition to a proposal from some shareholders to consolidate its dual-exchange share listing in Sydney. This announcement comes as the mining giant reported its smallest full-year underlying earnings in five years.
Key Highlights:
Opposition to Listing Change:
CEO Jakob Stausholm stated that the company does not support the push for a review of its dual-listed structure, which allows it to operate on both the London and Sydney exchanges. He emphasized, “We are a global company, we have global investors, and London kind of works for us.”
Rio Tinto has recommended that its London shareholders vote against the resolution at the upcoming annual general meeting in April.
Shareholder Pressure:
Activist investor Palliser Capital and over 100 other shareholders called for a review of the dual-listed model in December, arguing that consolidating to a single listing in Australia would enhance the company’s share price. This follows a trend where companies have shifted from London to other markets to increase share value.
Profit Decline:
Rio Tinto reported underlying earnings of $10.87 billion for 2024, down from $11.76 billion the previous year, falling short of the $11 billion consensus estimate from Visible Alpha.
The company declared a final ordinary dividend of $2.25 per share, lower than last year’s $2.58, reflecting challenges in the iron ore market.
Market Conditions:
Iron ore prices weakened due to sluggish demand from China’s property sector and high portside inventories, impacting earnings from this key segment. Underlying operating earnings for the iron ore division fell by 19%.
In contrast, the aluminium business saw a 61% increase in earnings, while the copper division experienced a 75% rise in underlying operating earnings, bolstered by strong performances at various mines.
Production Challenges:
Rio anticipates losses of 13 million tonnes of iron ore due to tropical cyclones affecting shipments from Australia’s west coast. Analysts have noted that the company may struggle to meet production guidance if further disruptions occur.
Cost Projections:
The company expects Pilbara iron ore unit cash costs to range between $23 and $24.5 per wet metric tonne for the current fiscal year, slightly higher than the previous year’s cost of $23.