Mining giants squeeze their dividends to fund growth
This earnings season has seen large miners pay out the lowest dividends they have paid in years. Mineral prices are falling and they must retain cash to fund their massive development plans, all while keeping costs down.
BHP is expected to continue this trend when it releases its earnings on August 19, along with Anglo American, Rio Tinto and Glencore.
After years of high profits driven by China, backed up by supply problems linked to COVID-19 and Russia, these companies are now facing lower profits, capital spending plans or, in the case Anglo American, a complete restructuring.
Analysts and fund managers have said that this is the maximum amount of money that miners will return to their shareholders.
Iron ore and coal prices have fallen by around 13% in the first half of this year. Instead, they are doubling down their projects in copper. Copper is up by 8% on the expected demand for energy transition, but still too small to offset other losses.
Brenton Saunders is a portfolio manager with Pendal Group, Sydney.
Saunders said that "in the absence of an increase in commodity prices, it is likely that payouts will remain relatively low."
BHP, for example, announced last month that it would spend $7.4 billion on the first phase of its Jansen Potash Mine in Canada, up from an earlier estimate of $5.7.
Rio Tinto is expecting to spend over $13 billion in just three years to replace iron ore mining in Western Australia. Anglo is selling its coal and diamond businesses, while Glencore's key commodity coal prices have been a problem.
Glencore reported on Wednesday a drop of 14% in its first-half earnings, due to lower coal prices and a decrease in copper production. It also revealed an increase in the company's net debt. The company did not announce any further share buybacks and kept its dividend at the same level.
It stated that it would maintain its base dividend at $0.05 per share. This is the lowest level since 2021.
Rio Tinto reported last week its lowest first-half profit since 2020, and its lowest interim dividend for seven years. This was due to the decline in iron ore and increasing costs in its Australian operations.
Anglo American reported $1.9 billion in losses in the first half 2025. It also reduced its dividends to their lowest level in at least five year and continued restructuring efforts.
Analysts predict BHP's full-year dividend will be $1.02 – the lowest payout in eight years. (Reporting by Melanie Burton. (Reporting by Melanie Burton. Additional reporting by Pratima Deai in London, and Rajasik Mukherjee from Bengaluru. Editing by Christian Schmollinger.
(source: Reuters)
