Rio Tinto will deliver a record payout to shareholders after stronger commodity prices nearly doubled its full year profit.

The mining giant declared a final dividend of $US1.80 per share, taking full-year dividends to a record $US2.90 a share, or $US5.2 billion in total.

Rio has also launched an additional buyback of $US1 billion of its London-listed shares, to be completed in 2018.

Its net profit soared 90 per cent to $US8.76 billion ($A11.13 billion), due mainly to higher iron ore and coal prices in 2017.

Underlying earnings, which excludes impairments and exchange losses, rose 69 per cent to $US8.63 billion ($A10.97 billion), matching analyst expectations.

Chief executive Jean-Sebastien Jacques said the gains were a result of resilient prices during the year, coupled with a robust operational performance.

“We are in good shape and well positioned for the future but I can assure you we are not going to be complacent,” he told reporters.

“We will be able to generate further cash this year and we will go through our disciplined cash allocation in order to generate returns for shareholders.”

Prices for iron ore, Rio’s primary earner, peaked at nearly $US95 a tonne in February 2017, and stayed between $US60 and $US70 through the year, helped by continued strong demand from Chinese steel mills.

The steel-making ingredient currently trades around $US76 a tonne.

Rio Tinto said higher prices boosted its underlying earnings by $US4.1 billion in the 12 months to December 31.

The company’s underlying profit from iron ore increased 45 per cent to $US6.7 billion, while in its energy division, which includes coal operations, underlying profit doubled to $US1.2 billion.

Aluminium earnings also jumped, by 67 per cent to $US1.6 billion.

“It is an excellent result from an operational point of view,” Fat Prophets mining analyst David Lennox said.

“Prices did the bulk of the heavy lifting for them, but they have also taken a further $US400 million out of costs.”

Mr Jacques said he remains optimistic about China over the medium-to-long term, though still had concerns of a slowdown in the short term.

“We acknowledge there is volatility but we are not too concerned about the outlook. We are well positioned to benefit from the situation in China with our premium product,” he said.

The new buyback of London-listed stock, which generally trades at a discount to the Australian-listed shares because of the absence of franking credits and currency differentials, is in addition to a $US1 billion buyback announced in August 2017, and $US2.5 billion of buybacks announced in September 2017.

Rio Tinto expects capital expenditure to remain at around $US5.5 billion in 2018 and around $US6 billion in both 2019 and 2020.

RIO TINTO’S PROFIT SOARS

* Full-year net profit up 90pct to $US8.76b

* Revenue up 64pct to $US13.88b

* Final dividend up 55 US cents to $US1.80 per share

By Prashant Mehra