Thanks to the record prices for most natural resources, the mining companies are swimming in money.
Now they are starting to spend it.
Rio Tinto is rewarding its shareholders with a half-yearly dividend, which is higher than all distributions over twelve months for 145 years.
At the same time, they are looking for future fields: BHP is examining the opening of the huge potash deposits in Canada, and both competitors are working on lithium deposits for battery production.
Christoph Hein
Business correspondent for South Asia / Pacific based in Singapore.
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Rio Tinto plans to distribute a total of $ 9.1 billion to its shareholders over the past six months. With a profit of $ 12.16 billion, the Australian-British company can look back on the best half of the year in its history. This gives the new CEO Jakob Stausholm an entry that he couldn't have wished for better. With iron ore prices hovering around $ 200 per ton, the ore giant posted a net profit of a good $ 100 per ton.
That's why shareholders get the highest dividend the company has ever paid at $ 5.61.
The value is well above the analysts' expectations.
The previous record dividend, paid out in 2019, was $ 2.12.
Behind the enormous demand is China with its steel cookers on the upswing.
The decrease in the half year increased by 3 percent in a tight market.
Different strategies from Rio Tinto and BHP
The two competing giants are currently planning to put a total of $ 2.8 billion into lifting lithium. However, they have different strategies. Rio Tinto plans to invest $ 2.4 billion in the Jadar project. It is said to be home to one of the largest lithium deposits in the world. "If it works, Jadar will be the largest European source of lithium supply for at least 15 years," says the company. The German auto industry with its battery manufacturers should also benefit from this. "Jadar will also produce borates, which are used in the development of renewable energy equipment such as solar panels and wind turbines."
A mine and processing of the raw materials are planned. But there is still a long way to go: Serbia's President Aleksandr Vucic had proposed to initiate a referendum on opening the mine. Not everyone in the region is enthusiastic about the idea of mining lithium. The group is trying to convince the Serbs that the mine will contribute around 4 percent to economic output. The Australians plan to have five years to start mining. At full load, the mine is expected to deliver around 58,000 tons of battery lithium and 160,000 tons of boric acid.
BHP, on the other hand, focused on supplying nickel years ago. The best move was the revival of Nickel West in the suburb of Perth, Western Australia, for which BHP has just signed a major supply contract with the American manufacturer Tesla. Now the Australians are challenging their competitor in the ore business, the Fortescue Metals Group of billionaire Andrew Forrest around the Canadian Noront Resources. BHP offers a seventy percent markup on the last stock price in the mine. The Melbourne group could pay it from the postage: It amounts to 325 million Canadian dollars (218.87 million euros). This is to push Forrest, who holds its 37 percent stake in Noront through its investment company Tattarang and its subsidiary Wyloo Metals, to be pushed out."Our intention is to expand our current investment in Noront Resources, Canada, through an offer for all of the remaining shares," said Tattarang on Wednesday. The Western Australian investors had bought into Canada at the end of 2020 and made their takeover attempt in May.
Another investment in Canada is likely to be more important for BHP than the possible bidding war: The market says the Australians had made up their minds to open the Jansen potash mine in Saskatchewan for around 7.5 billion Australian dollars (4.7 billion euros). An agreement had been reached with the Westshore port for the shipping of the fertilizer. BHP reckons that lifting the first 4 million tons will cost around $ 115 per ton each. The market price is currently $ 350 per ton.