Rio Tinto PLC
Materials
North America
Investment summary

Rio Tinto is one of the largest iron ore producers globally. The production of iron ore reached 324.1mt in 2022 (vs 319.7mt in 2021 100% basis) with most of it in Australia's Pilbara region. The company operates a large capacity of 3.0mt of aluminum output in 2022. Bauxite output reached 54.6mt in 2022, while mined copper was 521kt and iron ore pellets and concentrate output reached 10.3mt. Rio Tinto is a diamond producer in Canada with 3.8mn carats output in 2021. Refined gold (176k oz) and silver (2.6mn oz) are the company's by-products. Rio Tinto products include titanium dioxide slag (1.0mt in 2021), molybdenum (7.6kt), salt (5.8mt), and uranium (65k lbs U3O8). Diversified commodities output with a strong market position in iron ore for the steelmaking industry makes Rio Tinto one of the most influential players in the global metals market. The company benefits from vertical integrat... Rio Tinto is one of the largest iron ore producers globally. The production of iron ore reached 324.1mt in 2022 (vs 319.7mt in 2021 100% basis) with most of it in Australia's Pilbara region. The company operates a large capacity of 3.0mt of aluminum output in 2022. Bauxite output reached 54.6mt in 2022, while mined copper was 521kt and iron ore pellets and concentrate output reached 10.3mt. Rio Tinto is a diamond producer in Canada with 3.8mn carats output in 2021. Refined gold (176k oz) and silver (2.6mn oz) are the company's by-products. Rio Tinto products include titanium dioxide slag (1.0mt in 2021), molybdenum (7.6kt), salt (5.8mt), and uranium (65k lbs U3O8). Diversified commodities output with a strong market position in iron ore for the steelmaking industry makes Rio Tinto one of the most influential players in the global metals market. The company benefits from vertical integration controlling mining and refining operations, as well as from a large scale of operations that help to keep the operating costs under control. Rio Tinto benefits from commodity price growth in the post-COVID environment. However, lockdowns in China resulted in relatively weak steelmaking performance through 2022, pushing down iron ore and steel prices and valuations of iron ore producers.

Details
Ticker
RIO.L
Trading currency
GBp
Last close price, (currency)
5,548.0
Common shares outstanding
1,620,865,000
Preferred shares
0
MktCap, (currency) mn
113,836
Target price
Current opinion
Description

Rio Tinto plc is a UK-based metals and mining company operating in several segments: Iron Ore, Aluminium, Copper, Corporate, and Minerals. The Company has an integrated portfolio of iron ore assets, which includes a network of 17 mines, four independent port terminals, and a rail network spanning approximately 2,000 km. The Aluminium business includes 4 bauxite mines in Australia, Brazil, and Guinea; 4 alumina refineries in Australia, Brazil, and Canada; 14 aluminum smelters in Canada, Australia, New Zealand, and Oman; 7 hydropower plants in Canada. The Copper segment includes 3 copper operations in the US, Mongolia, and Chile; 3 copper projects in the US, Mongolia, and Australia. The compan... Rio Tinto plc is a UK-based metals and mining company operating in several segments: Iron Ore, Aluminium, Copper, Corporate, and Minerals. The Company has an integrated portfolio of iron ore assets, which includes a network of 17 mines, four independent port terminals, and a rail network spanning approximately 2,000 km. The Aluminium business includes 4 bauxite mines in Australia, Brazil, and Guinea; 4 alumina refineries in Australia, Brazil, and Canada; 14 aluminum smelters in Canada, Australia, New Zealand, and Oman; 7 hydropower plants in Canada. The Copper segment includes 3 copper operations in the US, Mongolia, and Chile; 3 copper projects in the US, Mongolia, and Australia. The company produces gold, silver, molybdenum, and other as by-products. The Minerals segment includes 4 sectors: borates, titanium dioxide, iron ore, and diamonds. The commercial segment encompasses global sales and marketing, procurement, and marine and logistics operations. Rio Tinto is present in 35 countries.

Industry view (TAM)

In 2021, the global production of usable iron ore was estimated at 2.6bt compared to 2.47bt in 2020. The largest iron ore-producing countries are Australia (c 900mt pa), Brazil (380mt), China (360mt), India (240mt), and Russia (100mt). Australia is the leading exporter of iron ore (53.6% of the global exports in 2021), followed by South Africa (4.7%), Canada (3.7%), Ukraine, Brazil, and others. Economic growth in China, the largest market for iron ore exports, was supportive of the miners' performance in 2021. However, crude steel production in the 64 largest steelmaking countries fell by 5.1% YoY to 1,253.9mt in January-August 2022, including a 5.7% decrease in crude steel output in China to 693.2mt. Lockdown in China and weak performance of the real estate sector were among the factors affecting the steelmakers and iron ore demand. Iron ore price was corrected from above $230/t in May 2021 to below $100/t in September 2022. Most of the metals were affected by the negative economic background in 2022 and demonstrated a negative price dynamic as of 27 September 2022: gold -6% YTD, silver -17%, copper -21%, steel -32%, HRC steel -58%, platinum -11%, aluminium -27%, tin -45%, zinc -5%. Among winners are nickel +16%, titanium +54% on the back of Russian supply risk, and lithium carbonate for battery use in China +193%.

Pros
  1. Large resource base, including the presence in Australia's largest iron ore region  
  2. The large scale of operations provides some flexibility of control the cash cost  
  3. A diversified product range with a large by-product portfolio contributes to both revenue and margin  
  4. Own delivery capabilities and marketing help to get the market price and maintain strong customer relations
  5. The demand recovery in the post-COVID environment in China will likely drive the price and volumes higher in 2023-24
Cons
  1. Exposure to volatile commodity markets with some price downside on the back of weak macro
  2. Growing cash costs due to inflation background driven by energy prices
  3. Exposure to geopolitical risks, including relations between China and the Western world
  4. Exposure to local currencies in producing countries, as well as local macro trends and inflation
Risks
  1. Geopolitical risks
  2. Macroeconomic risks
  3. FX risks vs US dollar in producing countries
  4. Failure to execute mining projects
  5. ESG risks in producing countries
Historical price chart
Loading...
Peer Group (top 5)

Company RIC Market Capitalization, $mn Last reporting year P/E Fwd 1Y P/E Fwd 2Y EV/EBITDA 1Y fwd EV/EBITDA 2Y fwd EV/Revenues 1y fwd EV/Revenues 2y fwd
Rio Tinto PLC RIO.L 112,729 2022-12-31 8.9 9.1 5.0 4.7 2.3 2.2
Anglo American PLC AAL.L 44,853 2022-12-31 8.2 8.5 4.3 4.3 1.6 1.6
Glencore PLC GLEN.L 71,256 2022-12-31 6.9 7.5 4.1 4.4 0.4 0.4
BHP Group Ltd BHP.AX 150,260 2022-06-30 9.9 9.8 5.3 5.2 2.9 2.8
Antofagasta PLC ANTO.L 18,117 2022-12-31 27.7 26.3 7.2 6.7 3.6 3.5
Boliden AB BOL.ST 10,497 2022-12-31 10.7 10.9 5.6 5.7 1.3 1.3
Financials
2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenue 40,030 40,522 43,165 44,611 63,495 55,554 50,993 49,944 49,954
Growth 1% 7% 3% 42% -13% -8% -2% 0%
EBITDA 17,945 17,618 21,087 23,868 36,850 25,997 23,560 23,138 23,296
EBITDA margin 44.8% 43.5% 48.9% 53.5% 58.0% 46.8% 46.2% 46.3% 46.6%
Net income 8,762 13,638 8,010 9,769 21,094 12,420 11,790 11,131 11,253
Net margin 21.9% 33.7% 18.6% 21.9% 33.2% 22.4% 23.1% 22.3% 22.5%
Net debt 3,571 -625 3,476 773 -1,757 3,364 3,364 3,364 3,364
MktCap 94,582 116,448 106,254 113,579 113,579 113,579 113,579

Historical Multiples

2019 2020 2021 2022 2023 2024 2025
EV/Revenue 2.3 2.6 1.6 2.1 2.3 2.3 2.3
EV/EBITDA 4.7 4.9 2.8 4.5 5.0 5.1 5.0
P/E 11.8 11.9 5.0 9.1 9.6 10.2 10.1
Charts