Rio Tinto H1 Earnings Call Highlights

Key Points

• Strong first-half results: Underlying EBITDA rose 28% to $14.8 billion and free cash flow increased 75%, driven by higher copper and aluminium prices plus $1.2 billion in controllable improvements. Rio Tinto raised its year-end productivity run-rate target to $1.8 billion.
• Higher shareholder returns and financial flexibility: The company increased its interim dividend 43% to $3.4 billion while reducing net debt despite substantial capital spending and dividend payments. It is also targeting up to $5 billion in asset-related cash releases during 2026.
• Growth projects advancing: Rio Tinto is targeting 1 million tonnes of annual copper production by 2030, while Oyu Tolgoi and Simandou continue to ramp up. Lithium projects in Argentina are progressing, with the company aiming for 200,000 tonnes of lithium capacity by 2028.

Rio Tinto NYSE: RIO reported a stronger first half of 2026, with underlying EBITDA rising 28% to $14.8 billion and free cash flow increasing 75%, as higher copper and aluminium prices combined with productivity gains and operational improvements.

Chief Executive Officer Simon Trott said the company was building momentum through a strategy centered on performance, returns, portfolio quality and disciplined capital allocation. However, he began the presentation by noting that two colleagues had died during the half year.

“Nothing we report today means anything if our people do not go home safely,” Trott said, adding that safety remains the company’s first priority.

Higher Prices and Productivity Lift Earnings

Chief Financial Officer Peter Cunningham said stronger commodity markets, particularly for copper and aluminium, supported the financial result. Copper and aluminium accounted for nearly 60% of Rio Tinto’s first-half EBITDA, according to the company.

Higher commodity prices added $3.6 billion to underlying EBITDA, including $2 billion from copper and $1.3 billion from aluminium, Cunningham said. These gains more than offset $1.5 billion in external headwinds related to foreign exchange, inflation and higher market-driven input costs.

The company also reported $1.2 billion of controllable improvements. Rio Tinto said it had banked $870 million in productivity benefits through the end of June, exceeding the $650 million target it outlined at its capital markets day in December.

Trott said the company now targets a year-end productivity run rate of $1.8 billion, nearly triple the level anticipated seven months earlier. The effort includes more than 80 initiatives involving contractor management, procurement, digital investment, team structures and operational processes.

• Oyu Tolgoi generated about $80 million in productivity improvements through changes to underground development and drawbell construction.
• Pilbara operations delivered about $55 million in annual benefits by removing redundant capacity and improving system resilience.
• Atlantic Operations produced roughly $40 million in annual savings through contractor-management measures.

Cunningham said the productivity program consisted of approximately $530 million of cost benefits and the remainder from volume improvements during the first half. He said the company expected a broadly similar mix for the full year, although the precise composition could change as individual operating initiatives progress.

Dividend Rises as Debt Declines

Rio Tinto declared an interim dividend of $3.4 billion, a 43% increase from the prior period. The company said the payment represented a 50% payout of underlying earnings, consistent with its usual interim-dividend approach.

The group reduced net debt during the half despite spending $5 billion on capital expenditure and paying a $4.2 billion final dividend for 2025, Cunningham said. He described the balance sheet as being in “very good shape” and said Rio Tinto retained a single-A credit rating.

The company reiterated capital expenditure guidance of up to $11 billion in both 2026 and 2027, with spending expected to decline from 2028 to $10 billion in real 2025 terms. Sustaining capital is expected to remain around $4 billion annually, while sustaining, replacement and decarbonization investment is expected to total roughly $7 billion to $8 billion per year.

Rio Tinto is also advancing work intended to release up to $5 billion of cash from its asset base in 2026, with a broader pipeline of opportunities exceeding $10 billion. Trott said the company was targeting $5 billion of announcements this year but would seek full value in any divestment decisions.

Copper Growth, Simandou and Lithium Projects Advance

Copper was the company’s strongest-performing product group during the half, with EBITDA up 84% and free cash flow more than tripling. The result reflected improved prices and continued production ramp-up at the Oyu Tolgoi mine in Mongolia.

Rio Tinto is targeting production of 1 million tonnes of copper by 2030. Oyu Tolgoi continues to ramp toward 500,000 tonnes a year, while Kennecott is targeting production growth of 40% to 50%, Trott said.

At Kennecott, mining performance is expected to improve in the second half as geotechnical work concludes and access to planned mining areas is restored. Cunningham said a furnace breach in late June would shift some metal sales and related cash flows into 2027 while remediation work is completed.

The company is progressing work to extend Kennecott beyond 2032 and into the 2040s. Trott said a decision on the Apex extension was expected in the “not-too-distant future,” although further work is needed on associated commitments and geotechnical matters.

Rio Tinto said construction of the Simfer mine and port components of the Simandou iron ore development in Guinea was more than three-quarters complete. The company is building inventory across the system as it prepares to ramp up production, while completion of Simandou remains planned by the end of 2027.

In lithium, Rio Tinto said Fénix 1B and Sal de Vida in Argentina were delivered ahead of schedule, while the Rincon project remains on track. The company continues to assess expansion opportunities and is targeting 200,000 tonnes of lithium capacity by 2028.

Iron Ore and Aluminium Operations

Rio Tinto reported its highest first-half Pilbara iron ore production since the 2018 record. Productivity improvements offset foreign-exchange and diesel-cost pressures, and the company said it remained on track to meet full-year unit-cost guidance.

Trott said replacement mines in the Pilbara should provide material similar to what is currently available, while the longer-term development of Rhodes Ridge is expected to introduce higher-grade material. He said a study on Rhodes Ridge is advancing on schedule.

Aluminium EBITDA rose 31%, supported by strong smelting performance and stronger market conditions. Trott said the company views aluminium as a core commodity because of expected long-term demand growth and Rio Tinto’s position across bauxite, alumina and aluminium.

Addressing trade-policy changes and U.S. Section 232 tariffs, Trott said the company’s aluminium commercial teams had adjusted flows to respond to policy developments, with a relatively modest impact on the business. He said the company expects trade policy to remain an important consideration for the sector.

Rio Tinto also said it continues to engage with the Mongolian government regarding matters related to Oyu Tolgoi, including a tax dispute that is proceeding through formal arbitration. Trott said maintaining community and government support remains important as the mine continues its ramp-up.

About Rio Tinto (NYSE:RIO)

Rio Tinto is a global mining and metals company that explores for, mines, processes and markets a wide range of commodities. Its principal products include iron ore, aluminum, copper, diamonds and various other minerals and industrial materials. The company's activities span the full value chain from exploration and project development to mining, processing, smelting and refining, supplying raw materials to industries such as steelmaking, automotive, packaging, electronics and construction.

The origins of Rio Tinto date back to mining operations in the Rio Tinto region of Spain in the 19th century, and the group has since grown into a multinational enterprise.

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