Rio Tinto has reported its best-ever annual profit and a record full-year dividend of US$16.8bn, boosted by higher iron ore prices and strong demand from top consumer China. The stellar results cap a mixed year for the world’s biggest iron ore producer, during which demand for its mainstay product picked up with the global economy slowly recovering from the coronavirus pandemic but inflation and Chinese scrutiny on prices created headwinds. Rio’s reputation suffered as it was caught in a scandal about poor workplace culture and, more recently, Serbia shut down a lithium project, a promising growth area. On the plus side, it resolved a long-running dispute over a massive Mongolian copper-gold mining project. The Anglo-Australian miner on Wednesday posted underlying earnings of $21.38bn for the year ended 31 December, up 72% from a year earlier. Analysts had expected underlying earnings of $21.63bn, according to Visible Alpha. “Our balance sheet is the strongest it’s been for at least 15 years,” Rio Tinto’s chief executive, Jakob Stausholm, told reporters in a news conference after the results were announced. Rio Tinto declared a final special dividend of 62 cents a share and a final dividend of $4.17 a share, higher than the $3.09 a share final dividend a year earlier, bringing the total dividend for 2021 to a record $10.40 a share. The company’s shares closed 1.2% higher on the Australia Stock Exchange ahead of the results. Rival miner BHP Group also declared a record dividend payout after reporting an estimate-beating first-half profit last week. Labour shortages induced by Covid-19 restrictions have hit Australian miners, with Rio previously forecasting weaker-than-expected iron ore shipments for 2022. “Rio Tinto remains a company in solid financial shape, and although facing higher costs like the rest of the industry we would expect the operations to post a better 2022,” RBC Capital said in a note. “We continue to see potential that Rio Tinto uses its strong balance sheet to pursue inorganic M&A through 2022.” Sign up to receive an email with the top stories from Guardian Australia every morning China, which accounts for more than half of Rio’s revenue, said on Wednesday that it would prevent “excessive hoarding” of iron ore, a move that analysts have said could impact the industry, although details of how this would be implemented were still unclear. Stausholm declined to comment on this saying there had been nothing officially communicated yet. Rio said in its results statement that it was committed to exploring all options in Serbia, which shut down its $2.4bn Jadar lithium project, and was “reviewing the legal basis of the decision” and the implications for the company’s activities in Serbia. “Ultimately, it is for the government of Serbia to decide whether they want to see this opportunity happening. Right now what we are offering is to have meaningful engagement with stakeholders,” the chief executive told reporters. Stausholm took over the top job in the wake of a widespread backlash against the company after it blasted the 46,000-year-old Juukan Gorge rock shelters to expand an iron ore mine. An external review of the miner’s workplace culture released earlier in February outlined a culture of bullying, harassment and racism, including 21 complaints of actual or attempted rape or sexual assault over the past five years. “We have become more humble and better listeners, both internally and externally as we extract the full learnings from Juukan Gorge,” Stausholm said.