Cash dilemma for mining majors – by Staff (Mining Journal – February 6, 2017)

Rio Tinto (LN:RIO) is expected to post an annual profit of more than US$5 billion on Wednesday, according to the average analyst forecasts made to the Wall Street Journal.

The anticipated profit is in stark contrast to Rio’s previous result of an $866 million net loss. Increasing commodity prices and aggressive debt reduction strategies have seen miners’ balance sheets improve and shareholders could be rewarded for their loyalty.

Swiss trader and miner Glencore (UK:GLEN) announced in December it would reinstate dividends this year and pay US$1 billion in two tranches.

It has planned a new distribution policy from 2018, including a fixed dividend of $1 billion funded from marketing cash flow, along with a variable distribution of at least 25% of free cash flow from its industrial sector.

Meanwhile, Australian-based gold miner St Barbara (AU:SBM) has moved to a net-cash position and anticipates repurchasing its remaining US$20 million in US notes this quarter.

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