Owners of Rio Tinto Limited (ASX: RIO) shares might be in for a pleasant shock next week when the miner releases its earnings for 2021.
One broker has bought into the iron ore-focused resources giant on the belief its results will be better than expected.
Additionally, they think Rio Tinto's current share price of $119.94 makes its valuation reasonable.
Let's take a closer look at what the market might expect from Rio Tinto next Wednesday.
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Could this help bolster the Rio Tinto share price?
Own Rio Tinto shares? Alphinity Investment Management portfolio manager Andrew Martin is expecting big things from the company's upcoming full-year results.
The fundie told the Australian Financial Review (AFR) the investment firm decided to buy into Rio Tinto, saying "its earnings are likely to surprise on the upside".
Additionally, Martin said the company's reserves of the red metal are "supported by similar reasoning to [BHP Group Ltd (ASX: BHP)]".
That reasoning, Martin outlined, was that higher Chinese demand for steel could see iron ore prices increasing.
Additionally, Rio Tinto's exposure to aluminium will likely be bolstered by high energy prices, the fundie told the publication.
A limit imposed on Chinese smelter capacity and demand for decarbonisation could also see its aluminium leg outperforming.
According to Wood Mackenzie's Julian Kettle, aluminium is necessary for low-carbon energy supply. However, producing the material has created one of the world's most carbon-intensive industries.
Fortunately, Rio Tinto is making moves to lower emissions associated with aluminium production.
Its partnership with ELYSIS saw it successfully produce aluminium without direct greenhouse gas emissions in November.
It also invested US$87 million in upping its low carbon aluminium production in Canada last year.
Rio Tinto's aluminium production for 2021 came to around 3.2 million tonnes – 1% less than that of 2020, the company announced within its fourth-quarter results. It predicts that will be relatively flat for 2022.
Its average realised aluminium price for 2021 came to US$2,899 – 49% more than in 2020.
Additionally, the company's Pilbara iron ore production and shipments were also down 4% and 3% respectively for the full year.
Rio Tinto shares finished Thursday's trading up 1.16% at $119.94.
