As news breaks this morning about South32's cash splash, Rio Tinto's mid-year dividend could be almost four times higher than in 2016 thanks to its surging free cashflow, strong balance sheet and limited growth plans.

That's the view of respected UBS resources analyst Glyn Lawock, who says Rio's interim dividend in August could be greater than $US1.65 a share.

That compares to the $US1.25 final dividend the company paid in February and the US45¢ payout in made in August 2016, when tumbling commodity prices had the world's resources giants bracing for an extended period of pain.

Rio, like rival BHP Billiton, has seen its shares, earnings and cashflow surge in the last six months thanks to soaring iron ore prices, which have averaged more than $US85 a tonne since the start of the calendar year.

Mr Lawcock says that at current spot prices, Rio, which reports on a calendar year basis, could throw off $US12.5 billion ($16.4 billion) in free cashflow in 2017.

By way of comparison, Rio generated $US5.8 billion in free cashflow in the 2016 financial year.

But the $US12.5 billion figure is optimistic given many commentators expect commodity prices will moderate over the year as Chinese demand falls.

Based on the consensus estimates of analysts of Bloomberg, where iron is tipped to fall back to $US60 a tonne and copper from its current level of $US2.60 a pound to $US2.45 a pound, Rio would generate $US7.5 billion in free cashflow.

Under UBS's own base case (iron ore at an average price of $US71 a tonne this calendar year and copper at $US3 a pound) the mining giant would throw off $US10 billion in free cash.

Using this $US10 billion figure as a mid case, and taking into account Rio's capital allocation priorities of sustaining capital expenditure and a ordinary dividend equivalent to 40 per cent to 60 per cent of underlying earnings, Mr Lawcock believes Rio will has as much as $5 billion in spare cash.

Rio says it has three options for excess cash - compelling growth, debt management or cash returns to shareholders.

Read more at the AFR.