ii view: Rio Tinto repeats annual targets after strong Q3

Third-quarter and year-to-date production update to 30 September

• Continues to expect full-year 2026 Australian Pilbara iron ore shipments of 323-338 million tonnes (mt), potentially up from 2025’s 326.2 mt

Chief Executive Simon Trott said:

“We delivered strong operational performance in the third quarter. Our major projects remain on schedule and budget, underwriting our growth profile to 2030.”

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ii round-up:

Diversified miner Rio Tinto  Ordinary Shares (LSE:RIO) today maintained annual production forecasts, with copper output marginally exceeding City estimates.

Increase production at its now expanded Oyu Tolgoi copper mine in Mongolia contributed to Q3 production of 205 kilo tonnes (kt), a 1% increase year-to-date. Analysts had forecast output of 204 kt.

Third-quarter shipments of Australian Pilbara iron ore totalled 85.7 million tonnes (mt), a 4% increase year-to-date, leaving Rio on track to hit annual guidance of 323-338 mt versus 326.2 mt in 2025.

Shares in the FTSE 100 company fell slightly in UK trading having come into this latest news up by close to a fifth so far in 2026. Rival Glencore (LSE:GLEN), whose shares have just begun trading in Australia, are up by more than two-fifths year-to-date. The FTSE 100 index is up by 7% so far this year.

Iron ore, largely from Australia, generates almost half of Rio’s profits with copper generating a third. Output from the expanded Oyu Tolgoi mine is up by 29% year-to-date.

Similarly, lithium production, used widely in batteries, is up by a third year-to-date to 40.3 kt, aided by first production at the group’s Sal de Vida and Fénix mines in Argentina.

The miner’s operations include iron ore mines in Australia, copper operations in the US, Chile and Mongolia, aluminium extraction in Canada, and lithium mining in Argentina.

Aluminium production, generating a fifth of profits, remained flat year-to-date at 2.52 mt.

Previously announced asset sales have generated more than $2 billion of capital year-to-date, leaving Rio on track to more efficiently redeploy an initial $5 billion (£3.8 billion) of a $10 billion target under management’s business portfolio optimisation plan.

A fourth-quarter production update is scheduled for 20 January.

ii view:

Rio operates across four divisions: Iron ore, Copper, the combined Aluminium and Lithium, as well as other commodities. Geographically, China generated most sales in 2025 at 57%, with the US 17%, and other major markets Japan and Europe each at close to 6%.

For investors, elevated energy prices via the war in the Middle East may yet push interest rates higher to fight inflation, dampening commodity demand going forward. The group’s wide use of diesel leaves its own energy costs in focus. Trade tensions between China and the US persist, potentially hindering commodity demand, while a forecast price/earnings (PE) ratio above the 10-year average may suggest the shares are not obviously cheap.

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On the upside, moves to increase production of commodities such as copper and lithium used across products such as solar panels, wind turbines, and energy storage systems, are ongoing. A management focus on improving efficiency persists. Rio previously summarised the balance sheet as strong, with late June net debt of $14.1 billion (£10.6 billion) compared to a stock market value of £113 billion. Group actions to improve safety and ESG (Environmental, Social and Governance) policy are also ongoing.

On balance, and despite ongoing risks, diversified commodity exposure and a prospective dividend yield of around 5% offer grounds for continuing interest.  

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:

Strong hold