Rio Tinto needs to spend money to make money

A world-wide shortage of many major commodities is a headache for most companies these days. But for Australian metals heavyweight Rio Tinto, one of the world’s largest mining companies, it adds up to a bonanza. The main question, as always, is what to do with that bounty.

For now, Rio’s answer is quite clear: give boatloads of cash to shareholders. The company said Wednesday that it will pay out record total dividends of more than $10 a share for 2021, or 79% of its underlying earnings. For long-term investors who witnessed the investment splurge of the go-go early 2010s and then the iron-ore price crash a few years later, that represents a welcome tack toward capital discipline. But with signs that China’s long housing boom is winding down and a battery-powered energy transition is gaining steam, Rio needs to show it is investing for the future too. Yet in contrast to the big investor payout, the company’s exploration and…

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