The mining industry has become one of the hottest spots in a global economy fighting its way back from the pandemic. Mining company BHP declared a record dividend and industry rival Glencore said it would resume payouts to investors.
A blazing run in the price of commodities from their Covid-induced lows in March is causing speculation that the world may be in the first leg of a supercycle, fuelled by robust appetite in China and expected demand from elsewhere as governments are planning large infrastructure projects in order to revive growth.
BHP, the world’s largest miner, declared on Tuesday that it would pay a provisional dividend of $5.1bn as profits have hit a seven-year high.
As chief executive Ivan Glasenberg bows out of office, Glencore said it would resume its payout with a $1.6bn return after scrapping its annual dividend in August.
With their debts under control, the world’s biggest miners — who dominate the production of everything from iron ore to copper and platinum — are now choosing to return cash to shareholders rather than stake it on risky new projects or chartbuster takeovers.
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Driven by a powerful recovery in China and supply disruptions in several markets, including copper and iron ore, the mining industry is enjoying the most soothing conditions in more than a decade.
“It is looking strong,” Glasenberg said on Tuesday after the big commodities trader reported better-than-expected annual results. “Supply is getting tighter. China. . . (has) been very strong post-Covid,” said Glasenberg. “If infrastructure spending starts happening in the US then, you are going to have a nice commodity boom.”
Rio, the biggest iron ore producer, is forecast by analysts to declare a final dividend of $5.2bn when it reports results on Wednesday, taking its returns over the past financial year to $7.8bn.
The price of iron ore has climbed almost 85% over the past year, hitting a nine-year high of $175 a tonne in December before easing. Copper has rallied 80% from its March lows to an eight-year high above $8,400 a tonne.