Rio Tinto Limited shares sink lower on quarterly update

The Rio Tinto Limited (ASX: RIO) share price hasn’t been able to continue its strong run and is down 0.5% to $81.42 in early trade following the release of its quarterly production update.

Here are key highlights from the release:

  • Quarterly iron ore shipments of 90Mt, up 3% on the prior corresponding period. Total shipments for 2017 of 330.1 million tonnes were in line with guidance.
  • Bauxite production of 50.8 million tonnes was 6% higher than 2016 and in line with its upwardly revised full-year guidance.
  • Aluminium production of 3.6 million tonnes was down 1% year-on-year but in line with guidance.
  • Copper production fell 9% year-on-year to 478,100 tonnes due primarily to the impact of a 43 day strike at Escondida. Production was in line with its revised guidance.
  • FY 2018 Guidance: Iron ore shipments expected to be 330 million to 340 million tonnes.

I felt this was a solid quarterly and full-year performance from the mining giant and goes to show why investors have been fighting to get hold of its shares in recent months.

Prior to today Rio Tinto’s shares had risen over 29% over the last 12 months compared to a 5.5% gain by the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

Should you invest?

While I think Rio Tinto is well positioned to profit greatly from rising commodity prices in FY 2018, I do think a lot of this has been built into its share price now.

In light of this, I would class Rio Tinto as a hold and choose rivals Fortescue Metals Group Limited (ASX: FMG) and BHP Billiton Limited (ASX: BHP) ahead of it.

In my opinion Fortescue is the best value of the three at this point. However, its lack of diversity does make it higher risk than BHP Billiton and subject to the ups and downs of the iron ore price.

Investors that are not confident on the iron ore price in 2018 may be better off considering one of these fast-growing blue chip shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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