Rio Tinto chief executive Jakob Stausholm says the price of iron ore remains elevated by historical standards despite collapsing by more than half in the past 12 months and pummelling the mining giant’s core profits

The nation’s second-largest miner on Wednesday reported a 30 per cent drop in half-year underlying earnings, and sharply reduced its interim dividend to $US2.67 a share, well below the $US3.05 that most analysts had been expecting.

Stausholm described the global economic outlook as “truly unpredictable” amid new waves of COVID-19 outbreaks, supply chain disruptions, the fallout from Russia’s invasion of Ukraine, inflation and the risk of recession.

While the market conditions for Rio Tinto’s core commodities had weakened compared to last year, Stausholm said they remained strong, and urged shareholders to remember that the company’s 2021 profit result had been a “record for the records”, boosted by a stunning rally in the price of the critical steel-making raw material, iron ore, to an all-time high $US230 a tonne.

“Now it’s less than half – but $US100 is still an attractive price for iron ore,” he said. “It’s all about what you compare it against.”

Rio Tinto’s first-half dividend, Stausholm added, amounted to a $US4.3 billion payout, which ranked as one of the biggest in Rio Tinto’s history. “It’s massive numbers,” he said.

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Iron ore – the raw material processed in steel-making furnaces to churn out molten pig iron – is Rio Tinto’s biggest earner and Australia’s most lucrative commodity, bringing in $133 billion to the nation’s overall export earnings in the past financial year.

Benchmark iron ore prices reached a record high of $US230 a tonne in the first half of 2021, underpinned by an aggressive infrastructure building blitz in China fuelling enormous demand for steel at the same time as drawn-out supply disruptions dragged on iron ore mines in Brazil.