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The world’s second largest miner posted on Wednesday a net profit of $12.42 billion in 2022, down from $21.09 billion the previous year.

It also announced a full-year dividend of $4.92 per share, less than half of the record payout of $10.40 per share given in 2021.

Rio attributed the bleak results to strict covid-19 measures remaining in place in top steel producer China, which accounts for more than half of the miner’s revenue. This, Rio noted, dragged down iron ore and copper prices from the record highs they hit in 2021.

The Anglo-Australian firm, the world’s largest producer of iron ore, saw earnings from the unit drop 33% last year. Financial gains from aluminum and copper also shrank 16% and 40%, respectively, on waning demand across the globe.

The company, however, said it was “quietly confident” the outlook for the global economy had improved after China, the world’s second-biggest economy, relaxed its pandemic restrictions.

Beijing re-opened the country’s borders and eased quarantine requirements for travellers in January, after three years of rigorous controls.

The nation is now putting in place policies to boost its economy and Rio Tinto’ CEO Jakob Stausholm believes that Chinese demand would be “a stabilizing factor for the global economy in 2023.”

“What I’m seeing gives me confidence that we are on the right track,” Stausholm said in a statement, referring mainly to a recovery in China’s construction sector, a key end market for the company’s iron ore, which is used to make steel.

“The US economy and energy markets in Europe are in better shape than might have been expected a few months ago, too,” he said.
Sights set on green energy metals

Stausholm, who took the top post in January 2021, expects the global transition to greener forms of energy will boost commodity demand at a rate roughly 3.7% a year to 2035.

The executive noted the company was not looking to use its strong balance sheet to conduct “transformative M&A”, despite a recent wave of consolidation in the mining sector.

Rather, Rio plans to grow its business mostly via projects it already owns and, ideally, increase its exposure to lithium.

“But assets in that industry are very expensive right now,” Stausholm said.

Last year, Rio Tinto paid $3.3 billion for Canada’s Turquoise Hill, which gave it direct control over the giant Oyu Tolgoi copper-gold mine in Mongolia.