The Rio Tinto Limited (ASX: RIO) share price may be edging lower on Tuesday but that hasn’t stopped it from recording a solid gain over the last month.
Since this time in January, the mining giant’s shares are up 6%.
Can the Rio Tinto share price go higher from here?
Opinion is reasonably divided on the Rio Tinto share price and its future direction.
For example, the team at Macquarie Group Ltd has an outperform rating and $135.00 price target on its shares.
Whereas over at UBS, its analysts are bearish on the mining giant and have a sell rating and lowly $80.00 price target.
Elsewhere, the team at Morgans is sitting on the fence at the moment and has a hold rating and $104.00 price target on Rio Tinto’s shares.
Morgans has concerns around the long-term impact from what it believes to be a critical underspend in the Pilbara.
The broker commented: “RIO remains in the peculiar position for an iron ore miner of being mine constrained (with infrastructure normally the key bottleneck), with RIO now facing an increasingly tight schedule to bring on new replacement mines.”
“The implications being RIO is struggling to maintain Pilbara iron ore volumes (particularly of its premium Pilbara Blend product) while sustaining capex is highly likely to remain at levels well above its peers for the foreseeable future,” it added.
Morgans is now forecasting total iron ore capex of an average of US$2.8 billion per annum through to 2030. This is almost double its estimate of US$1.5 billion previously.
The broker concludes: “The difficult operating conditions at RIO’s flagship Pilbara iron ore business is unfolding just as the big miner launches an aggressive decarbonization strategy (US$7.5bn spend to 2030), which will further dent FCF [free cash flow] generation. With these risks in mind and RIO trading near our revised price target we maintain our Hold recommendation.”