Rio Tinto Needs to Spend Money to Make Money

A world-wide shortage of many major commodities is a headache for most companies these days. But for Australian metals heavyweight Rio Tinto , one of the world’s largest mining companies, it adds up to a bonanza. The main question, as always, is what to do with that bounty.

For now, Rio’s answer is quite clear: give boatloads of cash to shareholders. The company said Wednesday that it will pay out record total dividends of more than $10 a share for 2021, or 79% of its underlying earnings. For long-term investors who witnessed the investment splurge of the go-go early 2010s and then the iron-ore price crash a few years later, that represents a welcome tack toward capital discipline. But with signs that China’s long housing boom is winding down and a battery-powered energy transition is gaining steam, Rio needs to show it is investing for the future too. Yet in contrast to the big investor payout, the company’s exploration and evaluation spend last year rose only 16%.