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Highlights:
- Rio Tinto’s Canadian aluminium assets are considered world-class and poised for growth as North American demand is set to rise.
- The company’s diversified product offerings, low-cost assets, and potential for carbon reduction enhance its market position.
- Aluminium is expected to benefit from the same demand drivers as copper, with Rio Tinto well-positioned for future growth.
Rio Tinto’s (LSE:RIO) Canadian aluminium operations are a standout feature in the mining giant’s portfolio, according to broker Jefferies, who highlighted their world-class status and underappreciated value. During a visit to Rio’s upgraded AP60 plant, the company projected that North American demand for both primary and recycled aluminium would grow at an annual rate of 4% through 2028.
Jefferies noted that Rio Tinto is well-positioned to benefit from this market growth, thanks to its diversified product offerings, integrated supply chain, and low-cost assets. Additionally, the potential for further reducing the carbon intensity of its production strengthens the company’s competitive edge in the aluminium sector.
Rio Tinto’s commitment to being a major player in North American metals and mining, alongside its continued investment in Canada, also stands out, especially amid recent media speculation about mergers and acquisitions in the region.
Jefferies pointed out that while copper is often viewed as the primary metal driving the energy transition, aluminium is expected to benefit from similar demand drivers. It is also likely to serve as a substitute in environments where copper prices are high.
Jefferies reiterated its positive outlook on Rio Tinto, maintaining a ‘buy’ rating and a price target of 6,400p.
