Rio Tinto and Antofagasta both benefit from Q2 production boost

The 7%-yielding shares of Rio Tinto Ordinary Shares (LSE:RIO) were in demand alongside Antofagasta (LSE:ANTO) today after the pair’s quarterly production figures boosted confidence in the run-up to half-year results.

Rio said its Pilbara iron ore operations in Western Australia, which are run by incoming group chief executive Simon Trott, achieved their best second-quarter output in seven years.

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Copper production is also on track for the higher end of full-year guidance, having increased by 13% on a year earlier and by 6% for the half year overall.

Rio’s interim results are due on 30 July and will be the last to be presented by Jakob Stausholm, who is stepping down on 25 August after five years in charge.

Announcing Trott’s appointment yesterday, chair Dominic Barton said Rio was focused on “unlocking significant value for shareholders” through operational performance as well as cost and financial discipline.

In terms of growth, Rio believes it has considerable options throughout the portfolio under the four commodity verticals of iron ore, copper, aluminium and lithium.

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UBS noted that Barton also played down recent speculation suggesting he was keen on a CEO who could focus on “transformative M&A”.

He instead flagged the optionality of the existing portfolio and the high hurdle rates for inorganic deals, quelling any hopes in the market of a revival of last year’s brief merger talks with Glencore (LSE:GLEN).

Rio’s shares rose 61.5p to 4,407p following today’s update, leaving them 7% higher since 25 June but still below where they stood prior to the tariffs sell-off in early April.

Metal prices have rallied over the course of the second quarter, aided by hopes of a de-escalation in trade tensions and amid structural US dollar weakness.

Deutsche Bank, which has a price target of 5,300p on Rio shares, said recently: “Near term, we do not believe global growth is strong enough for metal prices to sustainably break higher, but if trade uncertainties continue to clear, it could finally pave the way for a recovery in ex-China metal demand in 2026.”

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Antofagasta shares rose 17p to 1,856p after it reported a bigger-than-expected drop in second-quarter costs alongside unchanged full-year copper production guidance.

The group has four copper mines in Chile, with two of them at Los Pelambres and Centinela also responsible for significant volumes of molybdenum and gold as by-products.

The combination of gold and copper price strength has boosted the shares by about a third since 9 April, although they had been near 1,950p in March.

Near term, UBS is cautious on the outlook for copper as the unwind of physical market tightness created by US tariffs is likely to weigh on London Metal Exchange prices.

However, it believes uncertainty is likely to exacerbate medium-term supply challenges as a lift in new project approvals needed to match depletion and medium-term demand growth is likely to be pushed out.

The bank has a price target of 2,100p, regarding Antofagasta as its preferred copper pure-play based on an “attractive combination” of organic growth, free cash flow inflection and leverage to copper price upside.

It added: “We see any near-term copper/share price weakness as a buying opportunity for Antofagasta”.

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In today’s update, the FTSE 100-listed company said the completion of maintenance in the first half meant that production is expected to increase quarter-on-quarter for the rest of the year.

Net cash costs fell 27% on the previous three months, driven by an underlying improvement as well as an increase in by-product credits. The group’s interim results are due on 14 August.

Chief executive Iván Arriagada said: “Our conviction in copper as the metal of the future remains, with a positive outlook for copper over the medium-term.

“We see continuing demand support in the form of rising uses from key strategic sectors, driven by accelerating structural trends, such as energy security and modern technologies needed for decarbonisation, AI and infrastructure, with a supply-side that is becoming increasingly constrained.”