Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Peter, the dividend policy and the dividend today, obviously great consistency and predictability, having paid 60% of EPS over the past nine years. If I look through the detail, however, obviously the dividend represents a payout greater than 100% of the free cash generation. Are you comfortable adding debt to maintain that EPS payout level in future periods? A: Peter Cunningham, CFO: We are investing in attractive growth projects like OT Underground and Simandou, which will add incremental cash flows. We had a small deficit of free cash flow to investment, but these projects give us confidence to maintain the dividend level.
Q: Jakob, under a scenario where tariffs on Canadian goods come in, how would the aluminum business cope with that? A: Jakob Stausholm, CEO: The economic impact of tariffs on Rio Tinto might be both positive and negative, depending on how they are applied. If tariffs are applied to all countries, the impact is neutral. We could redirect aluminum to other markets if needed. It's too early to conclude anything definitive.
Q: Are you more or less minded to make more investments in the US and Canada given the volatility on tariffs? A: Jakob Stausholm, CEO: We are keen to invest in the US, particularly in copper, and also in Canada. Despite some uncertainty, we see opportunities arising from changes and are not cutting down on investments in Canada.
Q: Can you comment on the Pilbara replacement mines and when you expect to achieve the 345 to 360 shipment range? A: Jakob Stausholm, CEO: We are progressing as expected with our four big replacement mines. There is no change to the timelines, and we are making progress on approvals. The constraining factor is access to land, but we are confident in our current guidance.
Q: What are your observations on why Chinese iron ore imports continue to rise despite falling steel production? A: Peter Cunningham, CFO: Chinese steel production remains around 1 billion tonnes, driving iron ore demand. We see a robust market with cost support around the supply curve. Simandou's high-grade, low-cost iron ore fits well into this market balance.
Q: Of the $2.5 billion for Rincon, how much would you expect to spend this year? A: Peter Cunningham, CFO: This year is the first year of construction, so we expect to spend around $0.5 billion.
Q: Are we expecting upside risk to the $11 billion CapEx guidance with the Arcadium acquisition? A: Peter Cunningham, CFO: Our guidance is $11 billion for 2025, with a focus on maintaining it towards the $10 billion level. We have space for project funding in 2026 and 2027, accommodating Arcadium's projects within our current guidance.
Q: Can you give us an update on your discussions with Entree Resources regarding their JV with OT? A: Jakob Stausholm, CEO: There is no significant update, but we are working closely with the Mongolian government to resolve the tax dispute, which is a priority. Progress on this front will facilitate resolving the Entree Resources issue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.