Rio Tinto (NYSE: RIO) has made significant strategic moves with the focus of diversifying into critical minerals essential for the energy transition, such as lithium and bauxite. Rio Tinto is a vertically integrated mining company—it controls the entire value chain from exploration and extraction to processing and export. This helps manage costs, ensure quality, and respond to global demand shifts.
Iron Ore is the primary business segment, contributing the largest share of Rio’s revenue. Iron Ore (mostly from Western Australia) continues to generate reliable cash flow due to demand from steel production, particularly in China, India, and Southeast Asia. Aluminum demand is rising due to its role in lightweight transport, construction, and packaging, especially in low-carbon forms. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
The global shift toward decarbonization is fueling massive demand for lithium and copper. Lithium is used for electric vehicle batteries and grid storage. Copper is used in EVs, solar/wind infrastructure, and electrification. Rio Tinto’s growth drivers in 2025 center around global megatrends like clean energy, electrification, and sustainable infrastructure.
For lithium, the company is investing up to $900 million for a 49.99% stake in the Maricunga lithium project, partnering with Chile’s state-owned Codelco. This project aims to utilize direct lithium extraction (DLE) technology, which is more environmentally friendly but remains unproven at a commercial scale. Additionally, in March 2025, Rio Tinto completed its $6.7 billion acquisition of Arcadium Lithium, enhancing its position in the global lithium market.
Rio Tinto projects a 50% surge in copper output from the Oyu Tolgoi mine in 2025, aiming for 110,000–150,000 tonnes, up from 73,000 tonnes in 2024. This expansion is central to Rio Tinto’s goal of achieving 1 million metric tons of annual copper production by 2030.
RIO is a metals and mining company that has demonstrated remarkable resilience and growth in the post-COVID era. While it is a solid stock, if you want even lower volatility while maintaining the upside, consider the High Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.
We estimate Rio’s valuation to be $80 per share, reflecting a solid nearly 29% upside. At its current price of $62, Rio stock trades at just 8 times trailing earnings. This represents a discount compared to the company’s five-year average P/E ratio of 10.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
