Rio Tinto has copped a serve from its shareholders for what they see as miserly dividend payout. Source: AAP
RIO Tinto has copped a serve from its shareholders for what they see as miserly dividend payouts from the mining giant.
Richard Giles from the Australian Shareholders Association told Rio Tinto's annual general meeting in Sydney that his members thought the miner should be paying much higher dividends.
"We believe that you should be moving to a more traditional dividend policy whereby you pay out 60, 70 or 80 per cent of the profits you earn every year as opposed to your so-called progressive policy which over the last five years had paid out only 20 per cent of profits as dividends," he said.
"I think it's pretty clear from the media that this is what shareholders want."
But chairman Jan Du Plessis said the company had recently reassessed its dividend policy and decided to stay with the one it had had for a number of years.
"We believe that's right and its also the policy of all the major mining companies," he said.
Mr Giles also said Rio Tinto had built up billions in franking credits and could use them to pay its Australian shareholders.
"Because your Australian operations are so successful relative to the rest of the world, there's a huge built-up surplus of franking credits," he said.
"And I believe that a higher dividend policy would contain that but in addition given the size of the surplus I think the company has an obligation to do something about it for Australian shareholders."
But Mr Du Plessis said if the company used its franking credits to pay shareholders, it would not have enough money to reinvest in the company.
He also said the payout would have to be to all shareholders.
"I guess if we sold all our assets and gave it to shareholders we could do that," he said.
"Shareholders need to understood that it is what it is. It doesn't belong to shareholders."
Rio Tinto chief executive Sam Walsh said the company was continuing to work on divesting non-core assets as it strives to save $US5 billion ($A4.94 billion) over the next two years.
He said they were currently reviewing a number of non core assets, in addition to those already targeted for divestment such as Pacific Aluminium and Diamonds.
However, he was quick to point out that the main parts of the business would not be touched.
"It is not a fire sale," he said.
Mr Walsh also said that state and federal governments needed to ensure they had business-friendly policies to maintain Australia's competitive position.
He said the recent decision of the NSW Land and Environmental Court to overturn the approval of its Mount Thorley Warkworth Mine extension was an example of where an Australian business had potentially been compromised.
At 1425 Rio Tinto shares were down 64 cents, or 1.09 per cent, to $58.26.
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