Rio Tinto Likely To Pay Dividend in 2017 But Board to Decide--CFO

By Alex MacDonald

LONDON-- Rio Tinto PLC (RIO) is likely to pay a dividend next year despite volatile commodity prices but it's up to the board to make a final decision, the company's Chief Financial Officer said Thursday.

"I think it's highly unlikely" that Rio Tinto wouldn't pay a dividend in 2017, Chris Lynch told an investor conference in response to specific analyst question on the matter.

Rio Tinto, the world's second largest diversified miner by market value after BHP Billiton Ltd (BHP, on Thursday said it would payout at least $2 billion in dividends after scrapping a progressive dividend policy that led the company to pay $4 billion in dividends for 2015, up from $3.7 billion the year before and $3.3 billion in 2013.

"A number of people have criticised a progressive dividend policy in a cyclical industry," Chief Executive Sam Walsh said. "It works to some extent in an up cycle, but in a down cycle it becomes very difficult."

As a result the board took the decision to focus on ensuring that Rio Tinto is able to maintain a strong enough balance sheet to move solidly through the downturn cycle rather than focusing more on the company's long term outlook, he said.

Mr. Walsh said the company feels comfortable that the dividend payout guidance of at least $2 billion for this year is manageable despite the commodity price uncertainty.

Rio Tinto's London shares fell more than 6% earlier in the day before paring back losses to 1,696 pence a share, down 3% from Wednesday.

-Write to Alex MacDonald at [e-mail]

(END) Dow Jones Newswires

February 11, 2016 05:45 ET (10:45 GMT)

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