Rio Tinto is searching for alternatives to accumulate crucial mineral property corresponding to lithium and nickel, regardless of admitting it stays “reluctant” to pursue non-organic enlargement.
The A$171bn (US$117bn) miner instructed an investor day in Sydney on Thursday it was “location agnostic” concerning such property however burdened it might stay disciplined in the way it spends its cash.
Peter Cunningham, chief monetary officer, instructed reporters on the sidelines of the convention: “On M&A we glance, however we’ve obtained very, very robust self-discipline on what we do. On the finish of the day, it’s obtained to be a match with technique. We’ve obtained to be the very best operator of something we purchase and the worth needs to be there.”
BHP’s $6.4bn bid for Australian rival OZ Minerals is anticipated to usher in a wave of consolidation among the many world’s largest miners, who can use large money flows generated by robust demand for minerals corresponding to iron ore and copper to take over smaller rivals.
Rio Tinto mentioned its personal technique on the investor day, following its $3.3bn buyout of Canada’s Turquoise Hill final week, which gave it larger management of the Mongolian copper mine Oyu Tolgoi.
Jakob Stausholm, chief govt of the Anglo-Australian mining group, stated he remained “a bit reluctant” to broaden its enterprise by way of big-ticket offers in markets corresponding to copper. He stated that miners may find yourself paying a “very full value” for property that wrestle to create worth.
Stausholm additionally argued that no different miner may match Rio Tinto, with its crucial minerals property in international locations together with Canada, Mongolia and Argentina, the place it acquired the Rincon lithium mine for $825mn in March.
Mining corporations have been growing their publicity to minerals corresponding to copper, lithium and nickel, which international locations have to decarbonise and open up various provide chains to China. Rio Tinto signed a memorandum of understanding with Ford this 12 months that might consequence within the US carmaker turning into a basis buyer for the miner’s Argentine lithium provide.
“Crucial minerals is clearly essential from a coverage perspective for a lot of governments for safety of provide,” stated Cunningham.
Stausholm added the corporate nonetheless hoped it might be capable to develop a $2.4bn lithium mine within the Jadar valley in Serbia. “The world wants it. Serbia wants it,” he stated. “We haven’t given up.”
The Serbian authorities revoked Rio Tinto’s licence in January following protests over the social and environmental impression of mining lithium — a key ingredient for electrical car batteries — and has not indicated it can backtrack on that transfer.
The choice got here at a time of heightened stress between Australia and Serbia over the deportation of tennis participant Novak Djokovic in January. Rio Tinto stated it had spent 20 years engaged on Jadar however maintained that it revered the Serbian authorities’s place.
Rio Tinto is among the largest exporters of iron ore to China. A slowdown in development in China had clouded the outlook of Australia’s largest mining corporations, however Simon Trott, head of iron ore at Rio, stated there have been indicators of extra stability in latest weeks. He added the outlook heading into 2023 was “constructive”.
Lachlan Shaw, a mining analyst with UBS, downgraded his ranking for Rio Tinto to “promote” this week, arguing that the miner’s dividend yield was not compelling sufficient for a cyclical inventory with restricted development.
He anticipated Rio to return round $7.5bn to shareholders in 2023, in contrast with $12bn yearly in the course of the earlier 4 years — a mirrored image of decrease commodity costs, greater capital expenditure and elevated debt as a result of acquisitions together with Rincon and Turquoise Hill.
