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Rio in massive share buyback after coal mines sale
[SYDNEY] Rio Tinto will return US$2.5 billion to shareholders in a buyback after selling most of its Australian coal assets to China-backed Yancoal, the mining giant said Friday.
The world's second-largest miner sold Coal & Allied to Yancoal, majority-controlled by China's Yanzhou Coal, earlier this month in a divestment drive analysts expect will lead to a complete exit from the sector.
The buyback followed two others in February and August, taking the total amount this year to US$4 billion, amid a recovery in commodity prices.
"Returning the US$2.5 billion proceeds from our Coal & Allied divestment shows our continued commitment to delivering superior value and returning cash to our shareholders," chief executive Jean-Sebastien Jacques said in a statement.
"This year we have announced cash returns to shareholders of US$8.2 billion, comprising US$4.2 billion of dividends and US$4 billion of share buy-backs."
Rio has benefited from a recovery in key metals prices after plunges brought on by a supply glut and a slowdown in growth in the world's top commodities consumer China.
"With iron ore prices at the level that they have been, Rio is generating a lot of cash, so they've got the money to... have a capital expenditure (investment) programme for the future and reward shareholders," CMC Markets' chief market analyst Ric Spooner told AFP.
"In the past, Rio... have been guilty of poor investments but now they do have a very disciplined focus on treading a good line between investing for the future on the one hand and returning (money) to shareholders on the other."
The Anglo-Australian miner last month reported a 93 per cent jump in net profit in the six months to June 30 to US$3.31 billion on the back of the rising prices.