Look out for record profits and dividends as mining companies declare earnings

The biggest mining companies worldwide are about to start disclosing how much money they’re making from this year’s commodity boom. Be on the lookout for record profits and eye-popping dividend payouts.

According to analyst estimates, the top-five western diversified miners earned a combined USD 85 billion between January and June, more than doubling the level from a year ago. Rio Tinto Group, the first to report, is expected to report a profit of USD 22 billion, the same as for the entire year of 2020.

The mining industry has reaped significant benefits from the global effort to combat the pandemic. The trillions of dollars poured into stimulus packages have sparked demand for commodities like steel, iron ore, and aluminum, sending prices soaring and inflationary pressures sweeping the globe.

Unlike previous rallies, which enticed the industry to embark on largescale investment plans to build and expand mines, many producers appear content to hand over their profit windfalls to investors this time around. Rio Tinto and BHP Group, the two biggest, have already paid out record dividends to shareholders.

It is estimated that each of the five majors, which also includes Glencore Plc, Anglo American Plc, and Vale SA, is expected to report their highest-ever earnings for the six months ending in June. According to some analyst estimates, Rio could pay 60% of its underlying earnings.

For the largest producers, iron ore has been a significant source of profit. After hitting a record in the first half, the world’s second-largest commodity has spent the last three months hovering around USD 200 per ton, a level not seen in a decade. Steel and copper prices have both soared this year, as has thermal coal. Even diamonds have seen a resurgence.

Some prices have dropped recently due to rising Covid-19 cases and China’s efforts to contain rising costs. Nonetheless, commodity prices remain historically high for the time being.