Why this expert thinks lithium could be a big deal for Rio Tinto shares

Let's dig into what lithium could mean for Rio Tinto.

| More on:
Two young African mine workers wearing protective wear are discussing coal quality while on site at a coal mine.

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

The Rio Tinto Ltd (ASX: RIO) share price could be greatly influenced by its potential success with its lithium operations in the future. A leading expert has given their view on how the ASX mining share's push into the battery commodity could be significant.

Created with Highcharts 11.4.3Rio Tinto Group PriceZoom1M3M6MYTD1Y5Y10YALL21 Jan 202421 Jan 2025Zoom ▾Mar '24May '24Jul '24Sep '24Nov '24Jan '25Apr '24Apr '24Jul '24Jul '24Oct '24Oct '24Jan '25Jan '25www.fool.com.au

As the chart above shows, the Rio Tinto share price has been highly volatile in the last few years. That volatility has been largely caused by the shifting iron ore price.

However, the mining giant is exploring different, future-facing commodities such as copper and lithium to diversify and grow its global operations and profit.

One expert has outlined their positivity on Rio Tinto and how lithium could become a significant player in that commodity.

Broker Ord Minnett positive on the miner

Writing on The Bull, Tony Paterno from Ord Minnett has called Rio Tinto shares a buy.

Paterno highlighted the ASX mining share recently at an investor conference, providing an update regarding its volume guidance.

The Ord Minnett expert also noted that Rio Tinto reiterated its confidence about the outlook for the Arcadium Lithium CDI (ASX: LTM) transaction and the lithium market as a whole. Its US$7 billion acquisition of Arcadium is expected to be completed by mid-2025.

Paterno highlighted that Rio Tinto's management team was bullish about lithium and expected the market size to "grow five-fold" by 2035.

Combining Arcadium with Rio's Jadar and Rincon assets would make it "the third biggest lithium miner in the world", according to the Ord Minnett expert.

Rio Tinto advised that the development of the "super sites" in Argentina was expected to come with production costs in the lower quartile of its competitors.

At the time of the US$2.5 billion announcement to expand Rincon, Rio Tinto CEO Jakob Stausholm said:

The attractive long-term outlook for lithium driven by the energy transition underpins our investment in Rincon. We are dedicated to developing this tier 1, world-class resource at scale at the low end of the cost curve.

We are equally committed to meeting the highest ESG standards, leveraging our advanced technology to halve the amount of water used in processing, while continuing to grow our mutually beneficial partnerships with local communities and Salta province.

Building on Argentina's supportive economic policies, skilled workforce, and exceptional resources we are positioning ourselves to become one of the top lithium producers globally.

This investment alongside our proposed Arcadium acquisition ensures that lithium will become one of the key pillars of our commodity portfolio for decades to come.

The ASX mining share certainly appears confident that lithium will play a major part in its future.

Rio Tinto share price snapshot

In the last 12 months, the Rio Tinto share price has fallen by 6%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Materials Shares

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Materials Shares

Mineral Resources shares sink on Onslow Iron blow

This miner is having a tough session. Let's find out why.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

MAC Copper shares in trading halt as miner flags 'potential control transaction'

MAC Copper shares are frozen while Sandfire Resources shares are the fastest risers of the ASX 200 today.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Materials Shares

Bell Potter says this ASX lithium stock could rise ~50%

The broker has just put a buy rating on this lithium stock.

Read more »

A woman stands next to a large green battery smiling and eating an apple with a lifting green arrow line in the background, indicating rising stock prices.
Share Market News

Are Liontown Resources shares a buy, hold or sell according to Macquarie?

Here’s what the broker has to say about this Lithium miner. 

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Rio Tinto share price tumbles on CEO bombshell news

The mining giant is now looking for a new leader.

Read more »

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.
Materials Shares

What's going on with the Fortescue share price today?

This mining giant is making changes to its leadership.

Read more »

Happy construction worker at a building site with a group of workers at the background.
Materials Shares

After its result, does Macquarie rate James Hardie shares a buy, hold or sell?

The company announced its FY25 earnings on Wednesday.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Fortescue shares fall on Iron Bridge blow

Iron Bridge is taking longer to ramp up than planned.

Read more »