Mining companies to report record earnings and dazzling dividends

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(Bloomberg) – The world’s largest mining companies are about to start revealing how much cash they are making from this year’s commodity boom. Keep an eye out for record earnings followed by dazzling dividend payments.

The top five diversified Western miners may have made a total of $ 85 billion in the first half of the year, according to analyst estimates, more than double the level of a year ago. Grupo Rio Tinto, the first to report its results on Wednesday, is expected to announce a half-year profit of $ 22 billion, on par with its total for all of 2020.

The mining sector has been one of the biggest beneficiaries of the world’s efforts to emerge from the pandemic. Trillions of dollars invested in recovery packages have triggered demand for commodities such as steel, iron ore and aluminum, driving prices up sharply and spreading inflationary pressures across the country. World economy.

And while previous rallies attracted the industry ambitious investment plans to build and expand mines, this time many producers seem content to return their windfall profits to investors. The two largest miners, Rio and its biggest rival, BHP Group, have already funneled record returns to shareholders.

The five largest mining companies, which also include Glencore Plc, Anglo American Plc and Vale SA, are expected to report record earnings for the half-year ended June, according to an average of analyst estimates compiled by Bloomberg. Rio could pay 60% of its underlying earnings, according to estimates by some analysts.

“This should be a stellar result set,” said Ben Davis, an analyst at Liberum Capital. “We expect record dividends from BHP and Rio, while Anglo and Glencore also have the potential to surprise.”

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Iron ore has been a big profit driver for the biggest producers. The world’s largest commodity after oil hit a record in the first half and has spent the past three months hovering around $ 200 a tonne, a level not seen in a decade. Steel and copper prices set new records this year, thermal coal has also exploded, and even diamonds have had a resurgence.

Some prices have recently declined amid concerns about rising COVID-19 cases and as China takes steps to curb rising costs. However, commodity prices in general remain historically high for now.

US copper miner Freeport-McMoRan Inc. gave a hint of what to expect when it published its results last week. The company paid off US $ 5 billion of debt in the last 12 months, reaching its target months ahead of schedule and setting the stage for increased returns for shareholders.

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