Rio Tinto, the Anglo-Australian mining giant, announced an increase in its capital expenditure guidance for 2025 and forecasted higher copper production, primarily driven by a projected 50% output surge from its Mongolian assets. The company is forecasting a 3% compound annual growth rate from 2024 onward across its operations.
While Rio Tinto’s profits are mainly derived from iron ore, the company is shifting its focus towards copper, a key metal for the growing clean energy sector. The demand for copper is expected to rise with the global transition to renewable energy, and Rio aims to reach annual copper production of 1 million metric tons by 2030. This would position Rio as a leading player in the clean energy supply chain, emphasizing high-quality, low-emission raw materials.
CEO Jakob Stausholm emphasized the company’s growth strategy, noting that as Rio ramps up the Oyu Tolgoi underground copper mine in Mongolia, progresses with the Simandou high-grade iron ore project in Guinea, and expands its lithium business through the proposed acquisition of Arcadium, Rio is positioning itself for a decade of profitable growth.
The company raised its overall capital expenditure forecast for fiscal 2025 to $11 billion, which is $1 billion more than previously anticipated, up from $9.5 billion in 2024. This increased investment will help fund projects, including the Simandou iron ore mine, set to become the world’s largest new iron ore mine. When it begins production in late 2025, Simandou is expected to contribute around 5% of global seaborne supply. Rio Tinto is planning to allocate $6.2 billion to the Simandou development, with a significant portion of that funding directed toward port and rail infrastructure.
In addition to its iron ore and copper ambitions, Rio Tinto is making strategic moves into the lithium sector. In October, the company agreed to acquire lithium producer Arcadium for $6.7 billion, which will make Rio Tinto the world’s third-largest lithium producer. This acquisition is part of the company’s effort to strengthen its position in the electric vehicle battery supply chain. Rio’s Rincon lithium project in Argentina achieved its first production last week. However, the large Jadar lithium project in Serbia faces environmental protests and could experience delays of at least two years before securing necessary permits.
Rio Tinto also expects its copper production to increase significantly in fiscal 2025, with an estimated output of 780,000-850,000 tons, up from 660,000-720,000 tons the previous year.
While Rio Tinto is focusing heavily on clean energy initiatives, the company is maintaining its capital expenditure budget for decarbonization at the lower end of the $5 billion-$6 billion range through 2030, after a reduction from an earlier estimate of $7.5 billion.
Despite these ambitious projects, Rio Tinto’s shares have been down by 12% in Sydney and 14% in London this year. On Wednesday, activist investor Palliser Capital urged Rio Tinto to scrap its primary listing in London and unify its corporate structure in Australia. Palliser claims that the dual listing has led to a loss of about $50 billion in shareholder value. In response, CEO Stausholm stated that the company has yet to see any compelling evidence that its current structure is not the optimal one.
