What's going on?

Anglo-Australian mining giant Rio Tinto is sharing the love: it�s celebrating its highest half-year profit since 2014 by distributing an extra $1 billion to shareholders.

What does this mean?

The price of iron ore has risen over 70% this year, after a Brazilian dam disaster in January saw authorities massively curtail supply from the world�s top exporter, Vale. Rio�s rival said on Thursday it produced 34% less iron ore last quarter than it did a year ago.

While Rio�s also cut production twice in 2019, higher prices more than made up for lower volumes: iron ore sales were responsible for three quarters of Rio�s profit, up from 60% in 2018. But it�s not all gravy: investors watching iron�s price tick up already expected a bumper payout, and worries about future productivity and lower Chinese demand saw Rio�s shares fall 3% on Thursday.

Why should I care?

For markets: Leave the stock; take the cannoli.
Rio plans to pay its investors a total of $3.5 billion in cash dividends, but it won�t buy back shares as it has in previous years. That�s not because the company lacks self-confidence, mind you. Back in 2008, concerned regulators stipulated that Chinese aluminum maker Chinalco could own no more than 15% of Rio, Australia�s fifth-largest employer. $10 billion of share buybacks since 2017 have helped bolster the value of Rio�s remaining public stock, but they�ve also pushed Chinalco perilously close to that 15% limit. Any more buybacks might�ve seen the Chinese company forced to sell against its will.

The bigger picture: Steel mad with you.
China is the world�s biggest buyer of iron ore, which it uses to make enormous amounts of steel � over half the global total, in fact. But the rising cost of ore has hit steelmakers� profits, and dwindling stockpiles have prompted some Chinese companies to call for government intervention. They�re not alone: steelmaking giant ArcelorMittal reported its worst quarterly profit in three years on Thursday, partly thanks to higher iron prices.