- The long-running dispute between Rio Tinto and the Mongolian government over the Oyu Tolgoi project has finally settled.
- Lithium exploration licences of Rio Tinto have been recently revoked by the Serbian Government.
- Dedicated to net-zero targets, Rio Tinto is on the path of decarbonisation.
Anglo-Australian firm Rio Tinto Group, which is a leader in the global mining industry, is currently under the watch of investors after the recent release of its Q4 results and other major developments, including the agreement on Oyu Tolgoi (OT) project and the revocation of its exploration license in Serbia.
Let’s analyse if Rio Tinto shares are worth buying.
Why is Rio Tinto in news?
On 20 January, the lithium exploration licences of Rio Tinto were withdrawn by the Serbian Government as protestors were opposing the lithium project on environmental grounds. Rio Tinto CEO Jakob Stausholm recently expressed concerns regarding the remarks made by Serbian PM Ana Brnabic after Belgrade revoked its licences.
On the brighter side, the mining giant has entered into a deal with the Mongolian government and Turquoise Hill Resources (TRQ) regarding the development of the Oyu Tolgoi (OT) project, which will enhance the relationship between the two while increasing the value delivered by the project in Mongolia. The underground operations for the US$6.93 billion copper-gold mining project are expected to initiate in a few days, and in the first half of 2023, it is expected that the production will become sustainable.
However, the Omicron variant has impacted Rio Tinto’s operations as Australia is facing labour shortages amid the pandemic-related restrictions, affecting the output and shipment of the company. This has caused the iron ore prices to jump as other mining companies like BHP and Fortescue are also facing labour shortages.
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Rio Tinto’s performance update
In 2021, the demand for Rio Tinto products was solid despite prolonged disruptions due to the pandemic. Several projects were carried forward by the company, including the Pilbara replacement mines, with support from the local communities and host governments. Even though production growth wasn’t significant in any commodity last year, Rio Tinto has been resilient during these rough times, and has great potential for future growth.
The market cap of the FTSE100-listed mining giant stands at £67,823.96 million and it has provided its shareholders with a negative return of -6.31% in the last one year as of 27 January 2022, while its year-to-date return stands at 13.33%. Rio Tinto plc’s shares were trading at GBX 5,543.00, up by 2.01%, at 11:51 AM on 27 January 22.
Dedicated to net-zero targets, Rio Tinto is on the path of decarbonisation while it aims to create better value chains for its products. The group aims to enhance its operational performance in 2022 and strives to deliver solid returns to its shareholders while focusing on emission cuts. Although it is hard to predict what’s in store for the company in this year, the long-term prospects of Rio Tinto appear to be bright.