Rio Tinto: Set For A Better 2025 And Attractive Yields Despite Iron Ore Challenges

Bernard Zambonin
992 Followers
(12min)

Summary

  • Rio Tinto is diversifying beyond iron ore, investing heavily in lithium production, positioning itself as a major player in the battery metals sector.
  • The correlation between Rio Tinto's stock and iron ore prices has weakened recently, dropping below 0.5x due to the company's increased focus on lithium.
  • Iron ore prices are expected to fall to $75-$120/ton in 2025, though the company should still generate strong free cash flow.
  • Future near-term growth should be driven by copper and aluminum, with strong EBITDA from the Oyu Tolgoi mine and aluminum price recovery.
  • Rio Tinto's attractive dividend yield of 5%-6% is above the equity risk premium in the UK and Australia, making it appealing to dividend-focused investors.

La Cour Rio Tinto sign at their office in Montreal, QC, Canada.

JHVEPhoto

Investment Thesis

Rio Tinto (NYSE:RIO) is a century-old company, one of the largest and most recognized mining and metals companies in the world. At the moment, the ADR is down 12.3% over the last twelve months, linked to pressure on iron ore

This article was written by

992 Followers
As a researcher and operations manager at DM Martins Research, I leverage my deep understanding of global markets to provide valuable and actionable insights. Previously, I contributed to TheStreet and currently write for platforms such as TipRanks and GuruFocus. At Seeking Alpha, my focus is on delivering in-depth analysis of foreign equities, particularly in emerging markets. My goal is to offer readers unique, hard-to-find insights and detailed coverage of equities often overlooked by US-centric market reports. By doing so, I aim to empower investors with the knowledge needed to make informed decisions in dynamic and complex markets.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VALE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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