(Reuters) -Rio Tinto slashed its interim dividend on Wednesday as the miner reported its lowest first-half underlying earnings in three years, with easing iron ore prices offsetting an uptick in shipments from Pilbara operations.
Iron ore accounts for 70% of Rio Tinto's profit and its prices could improve going forward as Beijing has pledged to roll out more policies to boost growth after the world's second-largest economy struggled with an uneven recovery in the first half.
Rio realised lower commodity prices during the six months ended June 30, in line with slowing global demand but continued to eye strong demand for its portside products in China.
Average realised prices for Pilbara iron ore slipped to $98.6 per wet metric ton (wmt) in the first half, 11.1% below last year. That offset a 7% rise in shipments of the steel-making ingredient from Pilbara to 161.7 million metric tons.
The Anglo-Australian miner declared an interim dividend of $1.77 per share, below last year's $2.67 apiece.
"We will continue paying attractive dividends and investing in the long-term strength of our business as we sustain and grow our portfolio," said Rio Tinto Chief Executive Jakob Stausholm.
The world's largest iron ore producer flagged a shortage of skilled workers in a tight labour market along with supply-chain issues.
"Our operations and growth projects continue to be impacted by high unplanned absences, tight labour markets, rising input costs and supply chain disruptions," the miner said in a statement.
Rio reported underlying earnings of $5.7 billion for the six months ended June 30, lower than last year's $8.63 billion and a consensus of $5.85 billion, according to Visible Alpha.
(Reporting by Rishav Chatterjee and Archishma Iyer in Bengaluru; Editing by Subhranshu Sahu)
