- Glencore saw its net income plunge by three-quarters to $4.3bn last year
- Rio Tinto revealed post-tax profits tumbled by 19 per cent to $10bn in 2023
- Both firms were among the FTSE 100’s biggest fallers on Wednesday morning
Two of Britain’s largest largest mining groups reported lower earnings for 2023, following a slump in commodity prices.
Glencore saw its net income plunge by three-quarters to $4.3billion last year, while Rio Tinto revealed post-tax profits tumbled by 19 per cent to $10billion.
The former was impacted by falling coal, oil and liquefied natural gas prices as the international energy market rebounded back to more normalised trading conditions.
Difficult market: Many commodity prices declined heavily last year as supply chain snags improved, and interest rate hikes dampened consumer and industrial spending
Its total revenue declined by 15 per cent to $217.8billion as a result, with reduced zinc, cobalt, and nickel prices also contributing to the drop.
Meanwhile, Rio Tinto’s earnings took a hit from lower alumina, copper, diamonds and industrial minerals prices, but the British-Australian multinational was further hurt by impairment charges primarily related to its alumina refineries in Queensland.
Both companies were among the FTSE 100 Index’s biggest fallers on Wednesday morning; Glencore shares slid 3.4 per cent to 377.05p, and Rio Tinto shares dipped by 1.1 per cent to £51.72.
Many commodity prices declined heavily last year as supply chain snags improved, and interest rate hikes dampened consumer and industrial spending.
Problems were exacerbated by tepid economic growth in China caused mainly by a property market crash, substantial debt levels, and subdued confidence among foreign investors.
Mining firms have responded by slashing their shareholder distributions, including Glencore, which warned there would be no ‘top up’ dividend due to soaring net debts.
The Swiss-headquartered group declared a $0.13 per share base dividend equating to $1.6billion, compared to $5.1billion in 2022.
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Rio Tinto’s dividend payments have also decreased considerably, with investors receiving $6.5billion in 2023, against $11.7billion the previous year.
However, the company plans to disburse an ordinary dividend of $7.1billion in line with its policy to hand between 40 and 60 per cent of underlying earnings to shareholders.
Jakob Stausholm, Rio Tinito chief executive, said: ‘We will continue paying attractive dividends and investing in the long-term strength of our business as we grow in the materials needed for a decarbonising world.’
In addition to reducing dividends, falling mineral prices have encouraged some mining businesses to sell off operations.
Last week, Glencore agreed to offload its stake in Koniambo Nickel SAS, a joint venture which runs the Koniambo project in the French territory of New Caledonia.
Having spent $4billion on the project since 2013 but never turned a profit, the group said lower nickel prices and high operating costs meant the project remained lossmaking.
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