By David Winning

SYDNEY -- Rio Tinto PLC increased its midyear dividend payout despite a 20% fall in net profit, as it balanced high iron-ore prices with an uncertain outlook for the global economy.

Rio Tinto reported a net profit of $3.32 billion in the six months through June, down from $4.13 billion a year earlier when it wrote down its investment in the Oyu Tolgoi copper deposit in Mongolia. Management said the decline in statutory profit reflected higher impairment charges, exchange-rate losses and extra closure costs for some assets.

The company said Wednesday its first-half underlying earnings, which strip out some one-off items, fell by 4% to $4.75 billion, beating the $4.09 billion forecast of analysts polled by The Wall Street Journal.

Directors of the world's second-biggest mining company by market value declared an interim dividend of $1.55 a share, up 3% from a payout of $1.51 a year earlier.

The global economy suffered a severe contraction in the three months through June, as the U.S. grappled with rising coronavirus cases and other countries faced second waves of infections that are proving harder to contain than initial outbreaks. Many economies have started to reopen, but pandemic flare-ups have made it a bumpy process and authorities have often had to reverse course and tighten restrictions once again.

"Our industry has been hit by supply and demand shocks on a scale that has never been seen before," Chief Executive Jean-Sébastien Jacques said.

Navigating those shocks is a challenging task for global mining companies, with the potential to create winners and losers depending on where operations are based.

Iron-ore prices this month topped $110 a metric ton as supply from Brazil was disrupted by the spread of the coronavirus at some mine sites run by Vale SA. In contrast, Australia's iron-ore production is in a region largely unaffected by virus cases, enabling mining companies including Rio Tinto and BHP Group Ltd. to continue shipping the commodity at high rates.

Rio Tinto's iron-ore exports rose by 1% in the three months through June and it continues to forecast annual shipments of between 324 million and 334 million tons. BHP's iron-ore output rose by 11% in its most recent quarter.

A recent strengthening of demand in China, the world's top buyer of iron ore and many other commodities, has provided another boost. China this month said its economy grew 3.2% from a year earlier in the second quarter, as authorities benefited from an aggressive campaign to eradicate the virus within its borders. Steel capacity utilization rates in the country have improved.

Still, Mr. Jacques has been cautious about the outlook, particularly for copper. The Escondida copper mine in Chile is operating with fewer workers as part of a strategy to limit the risk of spreading the coronavirus. Rio Tinto estimates the pandemic has disrupted 3% to 4% of global copper supply, and warns this could increase further.

"Despite the challenging backdrop, we generated underlying earnings before interest, tax, depreciation and amortization of $9.6 billion, with a margin of 47%, driven by our strong and stable operations, with all of our assets continuing to operate throughout the first half," Mr. Jacques said.

Rio Tinto said its net debt totaled $4.83 billion at the end of June, down from $12.90 billion four years ago, as the Anglo-Australian company preferred higher shareholder returns over the heavy investments of previous commodity cycles.

Acting too cautiously on investment carries risks for mining companies, which must replace ore dug out of the ground with new deposits or risk being unable to capitalize on a future recovery in prices. Rio Tinto expects to spend $7 billion in each of the next two years, and has signaled a new round of early work at a large iron-ore deposit in Guinea that it owns with a Chinese partner.

On Tuesday, the company declared a maiden resource at its Winu copper discovery in Western Australia, and said preliminary study work points to a possible shallow open-pit mine development. It is targeting first production from Winu in 2023.

Write to David Winning at david.winning@wsj.com