Rio Tinto Shares Drop as Profit Hits Four-Year Low Amid Iron Ore Price Slump

Rio Tinto (ASX:RIO) shares declined on Thursday after the mining giant reported its weakest first-half underlying profit since 2020. The world’s largest iron ore producer said earnings were hit by falling iron ore prices and rising production costs, despite gains in other metals.

For the six months ending June 30, Rio Tinto posted underlying earnings of $4.81 billion, a 16% decrease from $5.75 billion in the same period last year. The drop comes amid oversupply and softer demand from China, a key consumer of iron ore. However, stronger prices in copper, aluminium, bauxite, and gold provided partial support to overall performance.

The company’s stock fell as much as 3.3% to A$112.01 during early trade on the Australian Securities Exchange. Investors reacted negatively not only to the earnings decline but also to a significant dividend cut. Rio Tinto announced an interim dividend of $1.48 per share, down from $1.77 a year ago, marking its lowest interim payout in seven years.

The results highlight ongoing challenges for global miners as iron ore markets face downward pressure due to slowing Chinese construction activity and elevated supply levels. While diversified metal revenues helped cushion losses, iron ore remains Rio Tinto’s primary revenue driver, making the company sensitive to price swings.

Analysts are closely watching China’s economic recovery and infrastructure demand, which will be critical for Rio Tinto’s earnings outlook in the second half of the year. The company continues to focus on cost management and operational efficiency to navigate volatile commodity markets and sustain shareholder returns.

The weaker profit and reduced dividend may weigh on Rio Tinto’s near-term share performance as investors assess commodity price trends heading into 2025.