MINING titan Rio Tinto came in for harsh criticism for its proposed $5bn (£3.1bn) share buyback yesterday, with leading investors reportedly labelling the plan “a pathetic gesture”.
Rio Tinto, which said it would speed up its $5bn buyback to complete it by the end of next year, reported record profits of $20.6bn and a higher-than-expected dividend payment last week on the back of surging commodities prices.
But investors, who shelled out £9.5bn for a rights issue in 2009, told the press that they were not being rewarded for their support and would consider blocking Rio’s future expansion plans.
The Anglo-Australian miner said last week it plans to focus on the growth of its existing assets, including its massive Pilbara iron ore mine.
But shareholders have voiced concerns that Rio is hoarding its cash in order to fund another large-scale acquisition, to follow on from its £2.4bn bid for Riversdale Mining in December.
Rio’s shares closed at £43.97 on Friday, valuing the firm at £67.2bn.