Rio Tinto Ltd [ASX:RIO] shares were on an upward climb within minutes of the ASX opening this morning.
At time of writing, their share price is sitting at $72.30, signalling an increase of 1.75% over yesterday’s market price.
Of course, this isn’t a jaw-dropping climb in share value. But in the tremulous climate of today’s commodities market, thrown off-balance by aggressive trade sanctions made by President Trump, any climb is worth noting.
Rio Tinto recent news
The company’s head office in London (Rio Tinto plc) have announced their decision to award Key Management Personnel a chunk of performance shares. They voluntarily notified the ASX of these recent material dealings in Rio Tinto plc, honouring its dual listed company structure with the London Stock Exchange.
Jakob Stausholm, who was appointed Chief Financial Officer of Rio Tinto on 12 June 2018, is the recipient of this award. Just under 30,000 shares were awarded to Stausholm on Monday.
Value is based on average share price for the year leading up to the start of the performance period. In this case, the value is £34.10, as advised in the 2017 Annual report.
How did this spark a climb?
Performance shares are given to executives only if the performance criteria of the company as a whole are being met, particularly the value of shares. The receiver gets them as compensation for meeting company targets.
Their distribution aims to more closely tie the interests of shareholders with those of the company’s executives and managers, as growing share value will be monetarily beneficial for both parties.
So put simply, releasing performance shares means the team are drawing their focus and efforts on maximising shareholder value. That’s a good sign for investors.
With an interim dividend of $2.2 billion for 2018, which will be distributed as AU$1.708 per share this time next week, it seems these figures look ripe for future growth in the company.
Any news for the road ahead?
Of course, the road ahead is still hazy, and the fog isn’t expected to clear until China figure out just how much damage they have to take from the US. Only then will they really know what kind of demand they can maintain on raw materials.
But a light seems to have been switched on at the end of this tunnel.
Iron ore, like coal, isn’t traded on a minute-to-minute basis. And yet, these resources have held up respectable figures throughout this whirlwind of resource trading. What this points to is not a drastic fall in world demand for raw materials.
So our mining sector, which is the main driver of Australia’s economy, hasn’t hit a dead-end yet.
Keep an eye on this space for the latest updates on this rocky sector of the market.
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