The miner reported underlying earnings jumped to $5.1bn (£4.1bn), up 12 per cent from $4.5bn in 2015.
Rio Tinto PLC pleasantly surprised the market on Wednesday by launching a share buyback programme and paying out a larger dividend than expected, as its 2016 results came in ahead of analyst forecasts.
"Our exit from Bunder...simplifies our business, allowing us to focus on our world-class assets", said Arnaud Soirat, Rio Tinto's copper and diamonds chief executive, in a prepared statement.
Other commodities including coal and copper rose in price as well.
"Today's results show we have kept our commitment to maximise cash and productivity from our world-class assets, delivering USD3.60 billion in shareholder returns while maintaining a robust balance sheet". Operating profit margins improved to 38% in 2016, compared with 34% a year earlier, reflecting the positive impact of the cash cost improvements.
Receive Rio Tinto PLC News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Rio Tinto PLC with MarketBeat.com's FREE daily email newsletter. This will be helped in my view by a balance sheet which is getting stronger, with net debt reduced to $9.6 billion. It returned US$3.6 billion to shareholders and plans share buy back of US$500 million over the course of 2017.
In February a year ago, the miner abandoned its progressive dividend policy saying it could no longer justify the commitment when the outlook for the global economy was worsening.
Rio said the total payout represented 70 per cent of its 2016 underlying earnings.
The company is in a "strong position to deliver superior shareholder returns", he added.
Rio Tinto PLC has 1,798,800,000 shares which are now outstanding with shareholders and have a price of 3385 bringing Rio Tinto PLC's market capitalisation to 60.89B GBP. The miner last month said it produced 6% more iron ore from its Western Australia mining operations during the year.
Capital expenditure will be $5 billion this year before rising to $5.5 billion for the following two years.