Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • News
  • carbon transition
  • clean energy
  • clean tech
  • fossil fuel free
  • rare earths

Will investing in clean energy boost Rio Tinto’s share price?

Rio Tinto’s share price rally that started back in October has continued into the New Year. This marks a turnaround for a stock that slumped over the summer as commodity prices fell and a drop in demand from China. Longer-term, Rio Tinto is looking to reduce emissions and expand copper production.

Rio Tintos [RIO.L]  share price has had a strong start to 2023.

Despite JPMorgan downgrading the stock to underweightfrom neutral’ in December, this hasnt had much effect on Rio Tintos share price, which was up 2.45% this year at Thursdays close. This continues a rally that began in October last year. Rio Tintos share price has surged over 32.41% since 28 October, closing Thursday 5 January at 5,940p.

The JPMorgan analysts did also say they were expecting strong tailwinds” from the miner in the first quarter of 2023.

One person cashing in on the recent upswing in the stock is Rio Tintos chief commercial officer Alfredo Barrios who sold 25,000 shares at 5,850p, worth £1.5 million, on Thursday 29 December.

The turnaround in Rio Tintos share price was no doubt welcomed by its shareholders after the stock slumped in the summer of 2022 due to falling commodity prices and a slowdown in Chinas economy. In October, Rio Tinto trimmed its full year production guidance across several commodities as weakening demand was felt in the third quarter.

Tailwinds for the miner include the reopening of China's economy, with the country being one of the miners biggest iron ore customers.

Rio Tinto looks to cut emissions

Efforts to reduce carbon emissions are not the first thing to come to mind with Rio Tinto. Yet, the Anglo-Australian mining giant hopes to halve emissions by 2030 from 2018 levels and achieve net-zero emissions by 2050.

As part of this, Rio Tinto has signed a memorandum of understanding with Japanese trading house Mitsui & Co [8031.T] to explore ways to reduce carbon emissions. Under the memorandum, the pair will look into decarbonising steel making and developing new renewable energy sources.

One key area is steel and iron production, with end users, such as car manufacturers, facing stiff pressure from governments and consumers to decarbonise. Mitsui says that it will help the miners decarbonisation efforts with technology from companies that it holds stakes in, as well as providing alternative fuel sources such as ammonia, methanol and hydrogen.

M&A activity continues

Last year, Rio Tinto delivered record profits last year thanks to heightened commodity prices. However, longer-term it plans to shift to metals that will help shape future technologies. One such metal is copper, which is used in the manufacturing of electric vehicles.

In December, it was announced that Nuton, a Rio Tinto cleantech venture, had taken a 16.5% stake in Regulus Resources [RGLSF] for $15m. Nuton has developed technology that can process arsenic-bearing copper and will use this to process samples from Reguluscopper project in northern Peru.

December also saw Rio Tinto close its $3.3bn deal to buy up the shares of Canadian miner Turquoise Hill. The deal gives Rio more control of the Oyu Tolgoi copper mine in Mongolia. The mine is crucial for Rio Tintos metal expansion strategy as it will become the biggest copper mine when it reaches full production of around 500,000 tonnes per year by 2030.

Yet, the miner has maintained it is taking a disciplined approach to its acquisitions. At an investors' day last month, Rio Tintos chief financial officer Pete Cunningham said On M&A… weve got very, very strong discipline on what we do. At the end of the day, its got to be a fit with strategy. Weve got to be the best operator of anything we buy and the value has to be there.”

As it stands, the 21 analysts polled by Refiniv have a 5,719.06p median price target on Rio Tintos stock. Hitting this would see a 3.7% downside on Thursdays close.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

Latest articles