Rio Tinto Group (RIO)

NYSE - NYSE Delayed Price. Currency in USD

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73.13

-1.96

(-2.61%)

At close: 04:00PM EST

73.69

+0.56

(+0.77%)

After hours:

07:54PM EST

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J
News from Argentina. Salta province government site posted information about today’s meeting between the Governor and Rio Tinto representatives.
Start of quote (google translated from Spanish)
Governor Gustavo Sáenz received this morning at Government House directors of the Anglo-Australian mining company Rio Tinto, which is currently in the process of purchasing the Rincón Mining lithium project located in the department of Los Andes, in the Puna of Salta.
The general manager of the Rincón Mining project, Alejandro Moro and CEO Tim Goldsmith, and the Rio Tinto plant, Kevin Fox and Frank Arcese, participated in this meeting. During the meeting, the Rio Tinto businessmen explained to the Governor different aspects of the progress of the purchase of Rincón, his expectations regarding the project to be developed in the area and the important investments that will be carried out.
They explained that Rincón is a lithium project that is in an advanced exploration stage and that, with this purchase, it is expected that during the next three to five years a commercial plant can be set up to produce some 50,000 tons of carbonate. lithium at full capacity.
Rio Tinto directors added that the estimated investment for the next 2 years is US$100 million to deepen exploration and the pilot plant. As for the construction of the commercial plant, an investment of 1 billion dollars is estimated.
End of quote
J
According to today’s Reuters article “Iron ore rallies on Australia supply fears, China demand hopes”, Chinese January imports of iron ore are very strong.
Start of quote
The solid exports in recent months have shown up in China's import figures, with Refinitiv forecasting January imports at 117.41 million tonnes, which if confirmed by official customs data would be the highest on record, eclipsing the official 112.65 million from July 2020.
Commodity consultants Kpler are also expecting record iron ore imports by China in January, with their data pointing to arrivals of 117.42 million tonnes.
End of quote
It looks that Chinese steel makers actively buy the ore in advance, prior to removal of the industry restrictions by end of February, when the Olympics will be over.
J
I'm thinking copper will do really well with the transition to EV. and I think aluminum will do well too. I cam see homes with 100A services needing to upgrade. most likely aluminum for those upgrades.
p
Goldman Sachs owns a huge position in Rio, stock is very cheap w high divvy
J
Iron ore prices continue to recover, reaching $137 on Friday. This is the highest level since August last year. This comes at a time when restrictions on steel production in China, likely caused by Beijing Olympics, are still in place. China's steel production is expected to increase after the end of the Olympics; now their capacity utilization is only about 80%.
Analyst consensus on the price of iron ore is around $100 for 2022 and even lower in subsequent years. This explains the low target prices for the stock. On the other hand, these projections can also create a feeling of detachment from reality. Commodity prices rise with galloping inflation; this is the kind of common sense that many market analysts/watchers continue to ignore.
Next month one can expect the last dip in the iron price before ongoing recovery resumes. Chinese New Year holidays start in a week from now, followed by 2-week Olympics. Chinese steel production will be managed low over this period. This 3-week stretch can create an investment opportunity to increase position in this stock, if it dips again to 60s. Needless to say, this can happen only if general market weakness continues to February.
J
FWIW. Antipa Minerals, an Australian explorer reported operating results for 2021.
Start of quote
A significantly expanded exploration program was completed at the Citadel joint venture project in 2021, including Gradient Array Induced Polarisation (GAIP), detailed aeromagnetics and exploration drilling for a total of $25.4 million.
Drilling at the Calibre deposit extended the gold-copper-silver mineralisation outside the southern limits of the existing 2.1-million-ounce gold, 104,000-tonne copper and 1.3-million-ounce silver mineral resource, with key intersections including but not limited to: 10.6 metres at 2.12 g/t gold and 0.12% copper from 153.0 metres; and
31.9 metres at 1.07 g/t gold and 0.25% copper from 413.4 metres.
Rio Tinto and Antipa have agreed to a $10 million exploration program for the 2022 calendar year to follow up at the Rimfire deposit and test more regional targets.
End of quote
Rio owns 65% interest in the project and can increase it to 75% by continuing exploration.
J
As part of the deal, Turquoise Hill will waive $2.4 billion in debt owed to it by the Mongolian government. Additionally, construction will soon start on the underground portion of Oyu Tolgoi, with first production expected in the first half of 2023.

so this will affect earnings ? Or just debt ratio ?
J
Take it easy, folks. The lithium project, while being big and important for Serbia, is less important for Rio. This company produces iron ore plus variety of auxiliary products. Lithium could become one of these auxiliaries or could not. It is more important that China intends to continue making steel, by buying the iron ore, and recent rate cut over there indicates that Chinese government prioritizes economic growth over anything else.
Talking about the market situation, it goes full way to stagflation scenario. Please note, before jumping out of windows, that market performed very well in 1979-80, when stagflation ruled US last time. Certainly, some sectors are suited better for this environment and industrial miners are the best fit.
J
Oyu Tolgoi new deal has been signed. It is disappointing a bit to waive $2B, but super strong copper price pays for this.
s
Low PE and 9+% divy,how can you not own this stock?
Bullish
R
Is it too late to come in?
J
The guidance for 2022 is likely the most important part of today's report. Production of iron ore and aluminum will grow slightly, almost flat. Copper and diamonds show more growth. No big surprises in development projects are expected. One can say that the guidance is solid, but not entirely brilliant.
j
Admit it or not we are in correction territory.
J
Lithium news are relevant for Rio, obviously, and copper can be relevant. Hey, even talk about “green energy” can be relevant for mining. However, one better keep clear sight of this stock; this is an iron ore play. Iron ore is used, primarily, by construction industry, especially in places where construction is active and growing. In this regard, Chinese construction demand is very important.
Rio investment looks positive now, because inflation goes higher helping industrial miners a lot. Also, this is because China buys enormous amount of iron ore while production potential is limited. It is very difficult to build new competitive iron ore mine, even in the most barren places of this planet. Iron ore mines are truly enormous and environmental impact is very big. Rio is lucky to have iron ore mines that are already built and will be in production for many decades. Also, these mines are in Australia. This is not a perfect location; perfect locations for mining do not exist anymore on this planet. However, Australia is still a much better place for mining than almost any other location.
p
vanguard has a buy w 85 PT for RIO
J
The market reaction to production/guidance report was quite positive. Flat iron ore output is not a bad thing; it helps to get better pricing. This is much better to produce at few percentage points below capacity and get 20-30% better price comparing to producing at capacity. Hopefully, other two iron ore producers have brains too.
P
It looks like 80 is the next resistance area... You might want to add some protective puts at that level... Also, think about having puts when the Div is paid out in March, because the stock price will drop right after. I am going to guess we get at least $3 Div this time.
Bullish
J
Iron ore up 8% overnight and this #$%$ down 4%
J
Higher inflation helps all stock sectors, just because all asset prices get inflated. However, stocks linked to industrial commodities are the main beneficiaries. More specifically, mining enterprise get in better position, financially, comparing to other industries, when inflation goes higher. Mining enterprises have expenses frontloaded, good part of investment happens when a mine gets build; the expense is fixed in past. Once it’s built, miners sell products, getting new higher prices with higher inflation.
This process is not automatic, however. In many places of the world governments steal mining super-profits. When mining profits go higher this encourages demagogues of various stripes, usually leftwing, to demand “fait share”. Fortunately, Rio is in better position in this regard, comparing to many other miners, because it has main mining assets in Australia, still the best mining jurisdiction of the world, where taxes are not set arbitrarily by leftwing mobsters.
J
FWIW. As it is reported today, British Columbia court dismissed environmental case brought by two native tribes against Rio. The natives demanded to remove hydroelectric dam, generating electricity for aluminum smelters in the province and, of course, compensate unhappy folks. The company has proven that the dam was built in full compliance with government authorizations and permits and if natives want to extort few bucks through litigation then they should deal with the government.
The case has been closed. However, one can expect that it will be mentioned in next round of anti-mining hysterics whenever they appear, something in tune “a mining giant Rio Tinto destroyed well-being of native tribes of Canada”.