The Rio Tinto Limited (ASX: RIO) share price is having a subdued start to the week.
In afternoon trade, the mining giant's shares are down almost 1% to $91.53.
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Where next for the Rio Tinto share price?
One leading broker that believes Rio Tinto's shares could be heading higher from here is Citi.
According to a note this morning, the broker has retained its buy rating and $115.00 price target on the company's shares.
Based on the current Rio Tinto share price, this implies potential upside of over 25% for investors.
But it gets even better, with Citi forecasting a ~$11.00 per share fully franked dividend in FY 2022. If you include this, the total potential return stretches to almost 38%.
What did the broker say?
Citi is bullish on the Rio Tinto share price largely due to its exposure to aluminium. The broker expects the aluminium market to fall into a deep deficit in 2022. This is expected to be driven by growing demand and tight supply.
In addition to this, Citi sees Rio Tinto as well-positioned to benefit from demand for higher grade iron ore from China.
Anything else?
The broker has previously spoken about the company's decarbonisation plans. While this led to a reduction in its earnings estimates to account for higher production costs, it wasn't enough to put Citi off. This is due to its generous yield outlook and the attractive Rio Tinto share price.
Citi commented: "RIO has gone earlier than peers on decarbonisation commitments and set out capital cost estimates. Others will likely have to follow suite. That said, what caught our attention was the implied mid-term increases in Pilbara iron ore unit costs and higher sustained capex. We've reduced CY23/24E NPAT by 9%/10% and reduced our DCF. Nevertheless, RIO trades on CY23E EV/EBITDA of 4.5x at $80/t Fe for a div. yield of ~8% and at an 18% discount to our DCF. We stay Buy-rated."
