• Rio Tinto, FMG, PLS and IGO among the companies on the reporting calendar today
• Rio profit lifts despite iron ore earnings hit, but FMG cops 53% NPAT fall
• PLS and IGO head into the red as lithium prices remain weak

Rio Tinto (ASX:RIO) beat consensus estimates with its full-year payout, delivering 60% of 2024 profits to shareholders in the form of a $4.02 full year dividend.

That saw returns fall 8% to US$6.5bn ($10.24bn) as underlying EBITDA fell 2% to US$23.3bn, with free cash flow down 27% to US$5.55bn with iron ore prices sagging 11% year on year.

The world’s most prolific iron ore exporter saw its after-tax profit rise 15% to US$11.552bn.

Costs for its iron ore business continue to rise, though, clocking in at US$23/t, with guidance set at US$23-24.50/t for 2025, while Rio expects it can only mitigate around half of the 13Mt estimated to have been lost from a uniquely cooked wet season in the Pilbara dealing with four successive cyclones.

Rio said its iron ore price impacts, the largest part of a US$1.6bn earnings hit blamed on commodity prices, was offset by stronger copper, bauxite and aluminium prices.

But its boss Jakob Stausholm is also eyeing the potential impact of tariffs from the United States on its aluminium business as well as capital projects in the country where Donald Trump’s election has dramatically altered the political and business landscape.

He responded to claims from Peter Navarro, Trump’s top trade adviser that Australian aluminium is ‘killing’ the US market, with just 2.5% of imports reported to come from our shores.

“I’m struggling a little bit with the factual part of it because it’s actually very little aluminium that’s been exported from Australia into the US and the US is only producing around 15% of its aluminium needs,” he said on a media call.

“The US will in any case have to import aluminium, but I suppose when you have bilateral discussions there will be some rhetoric around.

“I’m convinced that our aluminium business in New Zealand, Australia and Canada is part of the solution for the US industry.

“I think it’s far too moving a landscape to take positions,” he said of the potential impact of tariffs on costs for work on its Kennecott mine in Utah, where US$1.3bn remains to be spent on open pit and underground extensions.

“I don’t think we know where this ends, but of course we are looking at all sorts of scenarios and we can act very quickly, but we’re not a trading company, we are a mining and processing company, so that’s how we act.”

While Rio’s diversification helped limit losses from the iron ore price, Andrew Forrest’s Fortescue (ASX:FMG) saw its NPAT drop 53% to US$1.553bn as its underlying EBITDA sank 38% to US$3.641bn for the first half.

That came as hematite revenue fell 21% to US$85.24/dmt and C1 cash costs rose 8% to US$19.17/wmt. FMG reported record half-year shipments from the Pilbara of 97.1Mt in the first half, 3% higher than in H1 FY24.

FMG chopped its interim dividend 54% to 50c, a 65% payout ratio, equivalent to around A$1.54bn, around $565m of that destined for the pockets of Andrew and Nicola Forrest.

On the green energy side, FMG warned the Trump administration’s instructions for federal agencies to pause Inflation Reduction Act grant payments, concerns over renewable policies in Europe and the Australian election had seen the company ‘reconsider’ development timeframes on its Arizona and Gladstone PEM50 projects.

Energy capex guidance has been reduced to $400m. FMG shares were down close to 5% in early trade, while Rio was down 1.55%, in line with other iron ore producers.

Lithium miners bleed out

Greenbushes owner IGO (ASX:IGO) did little to surprise, dumping its half-year dividend and reporting a $782.1m after-tax loss for the first half, swinging from a $288.3m profit this time last year.

That came largely from its lithium business, tortured by low prices, with its 49% share of its joint venture with Tianqi Lithium Energy Australia generating a net loss of $602.2m, compared with a $495.2m profit a year earlier.

That included an impairment charge of $524.6m on its misfiring Kwinana lithium refinery, where IGO and Tianqi decided to pause work on a second 24,000tpa stage amid ramp-up issues and weak demand for product from its first stage.

The financials give a snapshot of the challenges facing downstream processors in Australia, with conversion costs, minus spodumene input costs, falling from $45,432/t in H1 FY24 to $27,136/t in H1 FY25. Lithium hydroxide currently sells for under US$10,000/t ($15,760/t) in China.

Production for FY25 is expected to settle between 7000-8000t at costs of $22,000-25,000/t, including another unplanned shutdown in January and February.

IGO’s underlying net loss came in at $85m, with the miner, which also runs the Nova nickel mine in WA and booked a $115m impairment against the value of its exploration assets.

The struggling lithium and nickel miner ended the quarter with $247m in cash and $720m in undrawn debt, with boss Ivan Vella saying the headline results reflect challenges the company has faced but that he’s “proud of the difficult and disciplined decisions” the business has made to address them.

At the same time, Wesfarmers (ASX:WES) said it was 95% complete with construction of its own 50% owned Covalent Lithium refinery in Kwinana with SQM, with first product due in mid-2025.

Its WesCEF business sold 80,000t of spodumene concentrate from the Mt Holland mine during the first half at a loss of $24m. The conglomerate’s $1.467bn profit was powered by big earnings from its Bunnings and Kmart retail groups.

Fellow lithium miner Pilbara Minerals (ASX:PLS) saw a $69 million loss after tax for the first half, swinging 132% backwards from a $220m profit in H1 FY24.

While PLS generated a slim cash margin of $41m, it saw its cash balance drop 45% YoY to $1.2bn, with revenue off 44% to $426m and underlying EBITDA sagging 83% to $74m, with underlying loss after tax of -$7m.

Argonaut noted its profit and underlying EBITDA was pre-reported, making it “largely a non-event”. It still has a $3.90 price target and buy rating on PLS, implying a 95% return, with head of research Hayden Bairstow saying its cashflow metrics are expected to improve in the second half after the plant expansion for the P1000 project at the Pilgangoora mine was completed.

“Although this part of the cycle is tough, what that’s done is it’s made life much tougher for the competition, many of … whom have exited,” PLS boss Dale Henderson said on an earnings call, noting lithium demand rose 30% last year to over 1Mt lithium carbonate equivalent for the first time.

“Meanwhile, those demand indicators I mentioned a moment ago are showing incredible strength across the board.

“So we think the conditions are right and we look forward to the inevitable changes and pricing.”

But wait, there’s more …

Coal miners were also on the bill, with Whitehaven Coal (ASX:WHC) reporting a $77m statutory NPAT and fully franked 9c per share dividend, also announcing the restart of a buyback paused in 2023 to support its acquisition of BHP’s Daunia and Blackwater coal mines.

WHC will allocate $72m over the next six months, taking its capital return to $144m over the next half, 44% of underlying half-year NPAT. That comes before it receives over $1bn from the selldown of 30% of its Blackwater mine to Japanese steelmakers.

“The Board will be well placed to review Whitehaven’s capital allocation framework at the end of FY25 when we have seen a full year of cashflows from the larger business and received the US$1.08 billion of proceeds from the Blackwater sell down,” MD Paul Flynn said.

WHC generated half-year underlying EBITDA of $960m, compared to $632m in the same period in FY24, reflecting the addition of the Queensland met coal assets to its previously NSW thermal coal focused business.

“Operational performance at Daunia and Blackwater – and across our NSW mines – has been in line with or better than plan, and demand for Whitehaven’s metallurgical and thermal coal products continues to prove strong,” Flynn said.

“Prices held up well in the half year and margins remain attractive, despite relatively soft market conditions.

“For the half year, we delivered an underlying EBITDA of $960 million compared with $632 million in the first half of FY24. The first half result includes $588 million of EBITDA from the Queensland business.

“Whitehaven is benefiting from increased scale and diversification into metallurgical coal, and the structure of the acquisition including deferred payments, coal-price contingent payments and the sell down of 30% of Blackwater is creating value for Whitehaven’s shareholders.”

WHC says it’s still tracking at the upper half of guidance for sales (28-31.5Mt on a 100% basis), with unit costs of $137/t in the first half helping it track to the low end of its $140-155/t guidance range, excluding royalties.

Fellow Queensland met coal miner Coronado Global Resources (ASX:CRN) swung from a US$156.1m net profit to US$108.9m net loss as lower met coal prices saw adjusted EBITDA fall from US$381.7m in CY2023 to US$115.1m in CY2024.

CRN paid out 0.5c per share, the minimum under its dividend policy.

Other companies reporting today included gold miner Regis Resources (ASX:RRL), which generated a an $88m net profit after tax on record cash flow of $234m, flagging the potential resumption of dividend payments at its full year results, and copper producer Sandfire Resources (ASX:SFR), which swung from a US$53.9m half year loss in 2024 to a US$49.7m half year profit on a near doubling of half-year EBITDA to US$255.2m.