Wednesday, June 7, 2023
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Bloomberg: Rio Tinto Slashes Dividend, Trying to Find Lithium Deals


Rio Tinto CEO Jakob Stausholm discusses full-year results and the challenges of growing the company’s lithium business on “Bloomberg Surveillance Early Edition.”

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Transcript

You’ve had some windfall profits in recent times and investors may have got spoiled is this new level of returns a new normal that that investors need to get used to look thank you very much we we actually reported a very good result today it’s one of our best in history and we

Declared the second highest ordinary dividend in the 150 years history of Ryu Tinto but it was lower than last year and that was simply because we were having record high prices in 2021 but if you compare to almost any other year 2022 was was an an excellent result and

May I remind you the return on our Capital employed and we are very physical Long-term business is was 25 so it was a very very good Financial results that we had in the year and we also during the year improved our operational performance so uh you are separating though some businesses and I want to get down to that Nicole from The Copper uh

Uh or sorry the Rival Miner is is separating some business a coal and a copper this is Tech resources and you have long admired some of their copper mines do you think there’s an opportunity for you to get in here and make some purchases I mean you talk

About the investment uh the capex it’s a very long term a business does this make sense to you so what we’re doing is we are working and shaping our portfolio and actually last year was probably the year where we shaped our portfolio the most for at

Least the last 10 15 years but it was mainly about developing things we already had in the corporate development such as as the oil tulcoi mine in Mongolia but we also acquired the the minority shareholders took trq private we did an acquisition of a project in Argentina of lithium Rincon but some of

The internal developments meant more iron ore in Western Australia roads Rich Western Range so we had a lot of of ongoing Business Development I don’t really believe in that this company needs major Acquisitions but we are actively looking at smaller things that could work for us but my focus is always

Are we the right owner does it make industrial sense for us and what guides us right now is the demands from our customers and we can still strengthen our business in battery materials and copper Etc but but I think that’s what you can see we did last year and we will

Try to continue to do so but we’re not growing for the sake of being becoming bigger it has to we have we have to be able to create value otherwise we won’t pursue any m a you good morning Jacob it’s guy uh thank you very much indeed for your time let

Me add my thanks to Matt’s um you talk about what is happening with battery materials you’ve talked in the past about the fact that you would like to acquire lithium and lithium mines we do have some of the big EV car makers Tesla’s the name that Springs to mind

Also actively trying to pursue those products they are willing to pay and they are willing to pay handsomely and I’m wondering when you talk about value whether or not you think you’re going to be able to compete with those other potential owners of those assets well we certainly don’t want to overpay

But what I suppose my assumption is that what the car maker wants is lithium and you also have to have the competences of being a minor so maybe maybe there’s something that can be done together and that’s what we are doing right now we are selling lesion to some of the car

Makers whereas we are the miners of it because that’s that’s what we are good at we we don’t we are not going to go into car making no battery making for that sake but but we want to both extract and process lithium uh I yeah be interesting to see you

Going to car making um I guess we could talk about that offline um let’s talk a little bit about the cost base uh one of the things that makes a good Miner is managing the cost base and that is incredibly challenging right now Jacob where do you see what

Kind of inflation are you seeing right now and do you see any signs of it peaking yeah yes yes I do see uh See peaking if you look at our results uh last year compared to the previous year then there was a significant increase in cost and

It was basically in three areas one area is energy second area is General inflation and the third area is very high increases in input prices to our aluminum business but I do think that we are seeing now and we have seen lately that energy prices have been falling so

We’re not going to see that increase this year and that doesn’t mean that there’s not inflation in the system but you don’t have inflation on such a wide range as you have now so so I’m I’m cautiously optimistic of lower inflation but there are some inflation that stays and unfortunately we have very

Significant business in areas where there is a very tight labor market and that means that there will be some pressure on on on on wages for example in Western Australia where we have our big eye on all mines there it is very difficult to to to get sufficient labor

At this point in time so there are some bottlenecks in this system but it’s not it’s manageable and I don’t see as much inflation as last year to add to a couple of those things you have a stake an investment uh here in um Guinea in Iron ore salmon do that project there

Um arguably according to our reporters a great Prospect but if Chinese steel making declines are you worried that there could be oversupply in that market yeah look that’s that’s always uh that’s always a risk but we are we are quite confident the steel is needed uh steel is needed in urbanization in the

Developing world you see growths of course you also see more uh circularity in society but there will still be a very strong demand for iron ore in the foreseeable future and right now we see a China opening up and a lot of the world’s iron or demand is coming from

China so at least the short-term Outlook looks looks attractive it is indeed a very very interesting project that we’re doing in Guinea it’s it’s going to be maybe the biggest mining project in in the world and right now we are sitting and negotiating and all parties are very

Interested in progress so I hope that we will come to an agreement with the government of Guinea and and can start making it making it real Jacob you mentioned China a couple of quick questions um firstly how are you thinking about the Chinese recovery it looks like it’s happening

More quickly than many people had anticipated how are you thinking about it and when you think about what’s happening in Europe and the United States do you see a recession in those economies yeah no look I was in in the U.S just 10 days ago and it’s probably fair to say

That three or four months ago people were very concerned about recessions in the west but so far the economy of the U.S economy has been stronger than anticipated and I guess the recession risk is lower now secondly the energy crisis in Europe seems to be much less than what was anticipated and therefore

The European economy is also stronger than expected and then finally China is opening up and you have already seen the market reacting back in November and there were actually some data points because we could see for example that the stocks were very low of iron ore in China and therefore some restocking

Would be necessary of course partly because of high consumption so we have already seen it for a while this is happening in China and it seems to be happening in a in a good controlled positive way there’s also been a lot of alarms tested around the property Market

But actually when we look at the whole property Market in aggregate it looks in a better shape than some of the indicators so so we are kind of quietly confident that the demand factors are attractive for our industry this year mainly from China but probably from the whole world

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10 COMMENTS

  1. You guys are not a good company because you don't take care of those who work for you . Win i got hurt in 2003 and later became disabled in 2006 and put on ssi you refuse to settle the case amount ssi set which was only 275 thousand and i have life time medical but because i now live in Mississippi its no good

  2. Hit 200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with 14k in June 2022

  3. Thanks Jacob, I'm not selling any of my shares with Rio Tinto anytime soon. I haven't found a good opportunity since I bought my original US shares, I will add when and if the opportunity arises. Both SCCO and RIO have been money well spent.

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