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Rio Tinto to return up to US$4B for H1'19, but share buyback may hurt Chinalco

Rio Tinto is expected to return up to US$4 billion to investors upon the release of its first-half earnings, but a share buyback may force the company's top shareholder Aluminum Corp. of China, or Chinalco, to sell stock to meet the 15% ownership cap set by Australian regulators in 2008, The Wall Street Journal reported July 31.

Chinalco currently owns a 14.5% stake in Rio Tinto, and the buyback may tip the Chinese state-owned miner's stake over the 15% limit.

Chinalco previously voted against a share buyback at Rio Tinto's annual shareholder meeting in April, but the resolution passed with 79% votes.

Spokesmen for Rio Tinto as well as Australia's Treasurer declined to comment, according to the report.

Rio Tinto returned a record US$13.5 billion to shareholders in 2018, and started an on-market buyback in February 2019 of US$1.12 billion as part of its share buyback program to return US$3.2 billion in posttax coal disposal proceeds to shareholders.

Separately, Rio Tinto's 50.8% unit Turquoise Hill Resources Ltd. slipped into the red in the second quarter with a net attributable loss of US$446.5 million, or 22 cents per share, from a year-ago profit of US$171.3 million, or 9 cents per share, due to a US$596.9 million impairment of the Oyu Tolgoi copper-gold mine's cash-generating unit and adjustments in deferred tax assets during the period.

Revenue in the three months climbed to US$382.7 million, from US$341.7 million a year ago.