ii view: Rio Tinto ramps up copper production
With management focused on simplification and shareholder value, we assess prospects for this UK listed mining giant.
21st January 2026 11:26
by Keith Bowman from interactive investor
Fourth-quarter production update to 31 December
- Copper production of 240 kilo tonnes (kt), up from 204 kt in Q3
- Australian Pilbara iron ore production of 89.7 million tonnes (mt), up from 84.1 mt in Q3
Guidance:
- Now expects Australian Pilbara iron ore shipments of between 323 and 338 mt for the full year 2026 versus 326.2 mt in 2025.
Chief Executive Simon Trott said:
"Our operations delivered exceptional production performance, both on a quarter-on-quarter and full year basis, as we leverage our strong foundation of operating excellence and project delivery across our portfolio.
"Implementation of our stronger, sharper, simpler way of working continues, and is delivering results and creating value."
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ii round-up:
Rio Tinto Ordinary Shares (LSE:RIO) today detailed production for its two biggest profit generators that exceeded City hopes, with analysts upgrading annual profit estimates by around 4%.
Fourth-quarter copper production of 240 kilo tonnes (kt), driven by the completion of its underground expansion project at the Oyu Tolgoi mine in Mongolia, surpassed forecasts of 219 kt. Copper accounts for a quarter of overall profits. Australian Pilbara iron ore output for Q4 of 89.7 million tonnes beat estimates of 88.1 mt. Iron ore generates around 60% of Rio Tinto’s profits.
Shares in the FTSE 100 company rose 4% in UK trading having come into this latest news up by just over a quarter in 2025. The FTSE 100 index rose 21.5% last year. Fellow miners BHP Group Ltd (LSE:BHP) and Glencore (LSE:GLEN) each gained around 15%.
Rio operations include iron ore mines in Australia, copper operations in the US, Chile and Mongolia, aluminium extraction in Canada, and lithium mining in Argentina.
Full-year 2025 copper production rose 11% from 2024 to 883 kt. Rio is forecasting 2026 copper output of between 880 kt and 870 kt, potentially ahead of current City estimates at 852 kt.
Final-quarter shipments for its key Australian Pilbara iron ore of 91.3 mt topped estimates by 3%. Full-year 2025 shipments of at 326.2 mt matched management’s previous estimate. The miner is now predicting 2026 shipments for this key product of 323 to 338 mt range, the same as the estimate range for much of 2025.
Elsewhere, annual aluminium output rose marginally, while final quarter Argentinian production for lithium, widely used in battery production, hit a quarterly record.
Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the news. Annual results are scheduled for 19 February.
ii view:
Under the relatively new leadership of Simon Trott, Rio Tinto has implemented a new operating structure. To simplify the business and aid shareholder value, Rio’s new structure comprises of iron ore, aluminium & lithium; and copper, with other commodities such as borates and titanium placed under strategic review. Geographically, China generated most sales in 2024 at 57%, with the USA 17%, and other major markets Japan and Europe each at close to 7%.
For investors, attempts to navigate US trade tariffs have impacting standard operations, with shipping destinations for aluminium previously changed. The weather can impact production with early 2025 Australian iron ore output dented by cyclones. A forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while tensions between its two biggest customers, China and the USA, could be problematic in future.
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On the upside, moves to increase production of commodities such as copper and lithium used in energy transition across products such as solar panels, wind turbines, and energy storage systems, are ongoing. Rio considered its previous acquisition of lithium miner Arcadium as counter-cyclical, with the price of lithium down more than 80% since its peak at the time of approach. Efforts to improve its environmental, social and governance (ESG) policy persist, while Rio previously summarised the balance sheet as strong with late June net debt of $14.6 billion (£10.8 billion) compared to a stock market value of £107 billion.
There's also the merger talks with Glencore to consider. Shares in both companies rose sharply when rumours first surfaced earlier this month, although there's no guarantee a deal will get over the line. For now, and while many risks remain, diversified exposure to core industry metals and forward dividend yield of around 4.6% is likely to keep investors interested.
Positive
- Selection of different commodities mined
- Attractive dividend payment (not guaranteed)
Negative
- Uncertain global economic outlook
- The weather can impact performance
The average rating of stock market analysts:
Buy
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