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Investing.com — Anglo Australian miner Rio Tinto Ltd (ASX:RIO) posted a sharp decline in its 2022 profit on Wednesday, hit chiefly by shrinking margins on its iron ore production as weak demand in China dented iron ore prices.
The miner’s profit attributable to shareholders for the year to December 31 fell to $12.42 billion from $21.09B a year ago, the miner said in a statement. Consolidated sales revenue also shrank to $55.55B from $64.49B a year ago.
Rio Tinto declared a full-year dividend of $4.92 per share, less than half of 2021’s record-high $10.40 per share.
Iron ore prices fell sharply from record highs in 2022, especially in the second half of the year as an economic slowdown in China intensified. This saw Rio Tinto, which is the world’s largest producer of iron ore, log smaller realized prices on sales of the steelmaking material, with its core earnings from iron ore down 33% from the prior year.
Earnings from aluminum and copper also shrank 16% and 40%, respectively, on waning demand across the globe. Rising interest rates and inflation saw a sharp pullback in economic growth across most major economies in 2022.
Rio Tinto’s iron ore shipments were flat at 322 million tonnes. But they were also at the lower end of the miner’s guidance.
Still, the miner said it will continue to invest in expanding its projects in Pilbara and Mongolia.
A slowdown in China weighed heavily on global commodity markets, as a rash of COVID-related disruptions dented the country’s appetite for metal and energy imports.
While the country has now withdrawn most anti-COVID restrictions, economic data released so far has painted a mixed picture of recovery, especially in the manufacturing and real estate sector.
Rio Tinto’s Australian peer BHP Group Ltd (ASX:BHP), the world’s largest miner, also logged a steep decline in earnings for the last six months of 2022, owing to a slowdown in China. But the company forecast a strong rebound in commodity demand this year on the back of a Chinese recovery.
