Rio Tinto has boosted its current share buyback to $4 billion with adding an additional $US2.5 billion to its program from the proceeds of the sale of Coal & Allied to Yan Coal of China.
$A700 million will be allocated to the Australian-listed shares, the rest to the UK-listed shares.
The company already had buybacks totalling $US1.5 billion in the market ($US500 million originally and $1 billion announced in August with the half year results.
Rio said in a statement released overnight that the capital return "will be executed through a combination of an off-market buy-back tender, targeting A$700 million (approximately $560 million) of Rio Tinto Limited shares, with the balance of approximately $1.9 billion of additional funds being allocated to Rio Tinto’s existing on-market purchases of Rio Tinto plc shares.
The move was approved at board meeting in Singapore this week. After a last-minute bid battle, Rio sold Coal & Allied in June to Yancoal, a state-backed Chinese mining company for a total of $US2.69bn, including future royalty payments. Yancoal subsequently sold a 49% stake in the business to Glencore, the losing bidder.
Rio Tinto CEO J-S Jacques said in a statement “Returning the $2.5 billion proceeds from our Coal & Allied divestment shows our continued commitment to delivering superior value and returning cash to our shareholders. This year we have announced cash returns to shareholders of $8.2 billion, comprising $4.2 billion of dividends and $4 billion of share buy-backs. Shareholder returns of this scale are made possible by maintaining the strongest balance sheet in the sector and a disciplined capital allocation process.”
