The Rio Tinto Limited (ASX: RIO) share price sunk today despite no market-sensitive news being released by the company.
At the final bell, Rio Tinto shares were at an 8-month low of $107.17, down a sizeable 5.73%. This means the company’s share price has lost almost 18% in the past week alone.
What’s happening with Rio Tinto?
Investors have been selling off Rio Tinto shares following the mining giant’s strong FY21 half-year result announced in late July.
A possible catalyst for the recent Rio Tinto share price weakness could be an issue with the Oyu Tolgoi mine in Mongolia.
According to an article in the Wall Street Journal, Rio Tinto has been accused of mismanagement at the mine. Allegedly, this has been the cause of a $1.4 billion cost overrun to build an underground pit at the giant copper site.
Rio Tinto said the cost blowout was attributed to challenging ground and geotechnical conditions encountered. However, this reasoning was rejected in a report commissioned by the owners of the Oyu Tolgoi mine.
Rio Tinto advised that it will review the 157-page report by the Independent Consulting Group. Once concluded, it will present its findings to the board of Oyu Tolgoi LLC.
Rio Tinto has an indirect interest in the mine through its 50.8% shareholding in Canadian-listed Turquoise Hill Resources. The remaining stake is held by Oyu Tolgoi LLC, of which Turquoise Hill Resources owns 66%, and the Mongolian government.
Further weighing down the Rio Tinto share price could be weakness in the iron ore spot price. The steel-making ingredient has dropped 5% in the past week and 30% in the past month after hitting record highs in May.
Rio Tinto share price snapshot
Over the last 12 months, Rio Tinto shares have gained just 5%, with year-to-date swinging the other way, down 5%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has travelled 21% higher since this time last year. For 2021, the ASX 200 is up almost 14%.
Based on today’s price, Rio Tinto commands a market capitalisation of roughly $39.7 billion, with approximately 371.2 million shares outstanding.