- Glencore saw its net income fall by three quarters to $4.3 billion last year
- Rio Tinto revealed its after-tax profits fell 19 percent to $10 billion in 2023
- Both companies were among the biggest fallers on the FTSE 100 on Wednesday morning.
Two of Britain’s largest mining groups have reported lower profits for 2023, following a drop in commodity prices.
Glencore saw its net income fall by three quarters to $4.3 billion last year, while Rio Tinto revealed its after-tax profits fell 19 percent to $10 billion.
The former was affected by falling prices for coal, oil and liquefied natural gas as the international energy market recovered and reached more normalized trading conditions.
Tough market: Prices for many commodities fell sharply last year as supply chain problems improved and interest rate increases reduced industrial and consumer spending.
As a result, its total revenue fell 15 percent to $217.8 billion, with lower prices for zinc, cobalt and nickel also contributing to the decline.
Meanwhile, Rio Tinto’s profits were hit by lower prices for alumina, copper, diamonds and industrial minerals, but the British-Australian multinational was further hurt by impairment charges mainly related to its refineries. of alumina in Queensland.
Both companies were among the biggest fallers on the FTSE 100 index on Wednesday morning; Glencore shares fell 3.4 per cent to 377.05 pence, and Rio Tinto shares fell 1.1 per cent to £51.72.
Prices for many commodities fell sharply last year as supply chain problems improved and interest rate increases curbed industrial and consumer spending.
The problems were exacerbated by tepid economic growth in China caused mainly by a slump in the property market, substantial debt levels and subdued confidence among foreign investors.
Mining companies have responded by cutting their distributions to shareholders, including Glencore, which warned there would be no supplementary dividends due to rising net debts.
The Switzerland-based group declared a base dividend of $0.13 per share, equivalent to $1.6 billion, up from $5.1 billion in 2022.
Rio Tinto’s dividend payments have also fallen sharply, with investors receiving $6.5 billion in 2023, down from $11.7 billion the previous year.
However, the company plans to pay out an ordinary dividend of $7.1 billion, in line with its policy of delivering between 40 percent and 60 percent of underlying profits to shareholders.
Jakob Stausholm, CEO of Rio Tinito, said: “We will continue to pay attractive dividends and invest in the long-term strength of our business as we grow in the materials needed for a decarbonized world.”
In addition to reducing dividends, falling mineral prices have encouraged some mining companies to sell their operations.
Last week, Glencore agreed to divest its stake in Koniambo Nickel SAS, a joint venture managing the Koniambo project in the French territory of New Caledonia.
Having spent $4 billion on the project since 2013 but never turning a profit, the group said lower nickel prices and high operating costs meant the project was still loss-making.