Why are Rio Tinto shares falling today?

The miner has released a couple of big updates. Here's what you need to know.

| More on:
a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rio Tinto Ltd (ASX: RIO) shares are edging lower on Thursday morning.

At the time of writing, the mining giant's shares are down almost 1% to $119.35.

Why are Rio Tinto shares falling?

The company's shares are falling this morning after investors gave a lukewarm response to the release of a couple of updates after the market close on Wednesday.

The first update relates to the Rincon Lithium Project in Argentina which is currently being developed by Rio Tinto.

According to the release, the mineral resources inclusive of ore reserves for the Salar del Rincon lithium brine deposits comprise:

  • 54 Mt Lithium Carbonate Equivalent (LCE) of Measured Resources
  • 85 Mt LCE of Indicated Resources
  • 29 Mt LCE of Inferred Resources

Management believes this supports production of up to 60kt of battery grade lithium carbonate per year for a period of 40 years and be in the first quartile of the cash cost curve.

The Rincon 3000 starter plant is scheduled for completion in the first half of 2025.

What else?

Rio Tinto also held an investor seminar in London overnight where it provided updates on its strategy of investing for a stronger, more diversified and growing portfolio to ensure the long-term delivery of attractive shareholder returns.

At the seminar, Rio Tinto's chief executive, Jakob Stausholm, said:

We have all the building blocks we need to become a global leader in energy transition materials, and we have a clear plan for a decade of profitable growth.

As we ramp up the Oyu Tolgoi underground copper mine, deliver the Simandou high-grade iron ore project in Guinea, and build out our lithium business through the proposed acquisition of Arcadium, we are underwriting a decade of profitable growth. We plan to utilise our strong balance sheet to unlock and accelerate Arcadium's tier one projects, timed to meet future demand growth.

FY 2025 guidance

The company also released its production guidance for FY 2025. It expects:

  • Pilbara iron ore shipments to be flat at 323Mt to 338Mt
  • Copper production to increase to 780kt to 850kt
  • Aluminium production up slightly to 3.25Mt to 3.45Mt

Broker reaction

Goldman Sachs was pleased with the update and notes that everything was largely in line with expectations. It said:

RIO's 2024 Investor Seminar focused on the company's next phase of growth projects with the company reiterating the 3% medium-term production growth target (4% with lithium) and adjusting capex guidance slightly for the latest project sequencing and the announced acquisition of Arcadium Lithium.

Overall, key growth projects are on track including Simandou iron ore in Guinea and the Oyu Tolgoi copper/gold underground project in Mongolia, which combined are expected to contribute 2/3 of RIO's CuEq growth and help drive a 5% lift in margins to 50% (GSe), and >30% increase in our EBITDA and DPS forecasts from 2024E-28E. Production guidance for 2025 was also provided which was broadly in-line with GSe and implies 7% CuEq growth. RIO also outlined a potential change in Pilbara iron ore product strategy by low grading to maximise margins and value given current demand dynamics and supply side constraints.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Stressed man looking ahead with a lot of paperwork on both sides.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

ASX tech shares had the strongest sector gains for the fifth week out of the past six, rising by 1.96%.

Read more »

Human head and artificial intelligence head side by side.
AI Stocks

The future of AI: Best ASX shares to buy now

Brokers are backing these 3 ASX shares for future growth amid the artificial intelligence revolution.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Share Market News

Up 11% in 2024, can ASX 200 shares shine again next year?

AMP Chief Economist Shane Oliver reveals where he thinks the ASX 200 will be at the end of 2025.

Read more »

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted.
Broker Notes

These ASX shares could rise 19% and 35%

Analysts expect these shares to deliver big returns over the next 12 months.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Broker Notes

2 exciting ASX shares this fund manager thinks are buys

These stocks could be exciting opportunities to buy.

Read more »

Three happy construction workers on an infrastructure site have a chat.
Resources Shares

3 ASX lithium stocks primed for an electric performance: Macquarie

Time to charge up?

Read more »

Happy woman in purple clothes looking at asx share price on mobile phone
Record Highs

Why is this ASX 300 stock soaring 9% to a new record high?

This stock is catching the eye on Friday. What's getting investors excited?

Read more »