Global mining companies will pay record dividends this year, as prices for metals continue to grow due to the ongoing support of Western economics by national governments.
For example, several days ago the world's second largest mining company Rio Tinto, announced that it paid its final dividend for the year totaling US$6.5 billion. Together with interim dividends, the company paid it shareholders more than US$9 billion in 2020. According to Financial Times, this is an absolute record for all the 148 years’ history of the company.
Moreover a day earlier, another Australian-British mining company, BHP, the world’s largest mining company, made a similar announcement. Its interim dividends (for the first half of fiscal 2021 ending December 31, 2020) totaled US$5.1 billion, which also became a record figure for the company.
The financial results of mining companies are also impressive. For example, BHP's revenue from August to December 2020 increased by 15% compared to the same period last year (to US$25.6 billion), while basic profit - by 16% to US$6 billion, net debt decreased by 7% to $11.84 billion.
In fact, mining industry has become one of the hottest sectors in the global economy due to the impressive rise in raw material prices, as iron ore rose in price by almost 85% last year, reaching a record level in nine years of US$175 per ton in December. At the same time copper prices, after a decline in March, also increased by 80% to a record level in 9 years of US$8400 per ton.
According to analysts, there is currently a super cycle of rising prices for raw materials, which is comparable to those, which observed during the 2000s, when oil and metals prices reached record highs due to the growth of demand, caused by rapid industrialization in China and some other emerging nations. Now China is also playing an important role, as the country is rapidly recovering from the pandemic-induced recession with rates significantly higher those of some leading Western economies.
By: Eugen Gerden