Why did the Rio Tinto share price (ASX:RIO) have such a lousy 2021?

We look at what happened to this ASX 200 mining giant’s shares last year

| More on:
Worker in hard hat looks puzzled with one hand on chin

Image source: Getty Images

The Rio Tinto Limited (ASX: RIO) share price came crashing down in 2021, despite a positive start to the year.

The mining company’s share price fell from $113.83 to $100.11 during the year, shedding 12%. In comparison, the S&P/ASX 200 Index (ASX: XJO) gained around 13%.

Let’s examine what may have impacted this ASX 200 share in 2021.

Iron ore prices

The Rio Tinto share price recorded gains in the first half of the year before collapsing from August to November. The company’s share price then picked up in late November to finish the year off in style.

In the first six months of the year, Rio Tinto shares gained nearly 12%. Shares in the mining giant climbed 15% between market close on 5 February and 25 February. Strong iron ore prices, a record dividend payout from the company, and positive financial results all weighed positively with investors.

The company reported a 3% increase in sales revenue to US$44,611 million and a 13.4% boost in iron revenue. Rio Tinto also rewarded shareholders by declaring a fully franked final dividend of US$4.02 (A$5.19) per share.

March to May also saw the company’s share price explode on the back of record iron ore prices and well-received first-quarter production results. In the first quarter of FY 2021, the company shipped 77.8 million tonnes of Pilbara iron ore, a 7% increase. Rio Tinto shares surged more than 24% between 22 March and 10 May.

However, from August to November the Rio Tinto share price came crashing down to earth. As Motley Fool Australia noted at the time, investors were selling down the mining company’s shares due to falling iron ore prices.

The company also downgraded its production targets for 2021. A third-quarter trading update in mid-October slightly pushed the share price down, with the Covid-19 virus impacting production results. Between market close on 4 August and 5 November, the Rio Tinto share price dropped 30%. Iron ore prices fell 48% in this same time frame.

Then came the bounce back. The Rio Tinto share price recovered nearly 12% between 18 November and 31 December. The iron ore price increased nearly 31% during this same time period, likely impacting investor sentiment.

The company also announced two major lithium projects. Rio Tinto will acquire the Rincon lithium project in Argentina for $1.15 billion and the Jadar project in Serbia for $3.3 billion.

Rio Tinto share price snapshot

In the past month, the company’s shares have gained around 7%, while they are up 2% this week. At the time of writing, they are trading at $102.23, up 1.74%.

Looking ahead, as my Foolish colleague James reported this week, opinion on the outlook for the company’s share price is divided.

Macquarie Group Ltd has a $135 price target, while Morgans has a hold rating and a $104 price target.

The company has a mammoth market capitalisation of nearly $37 billion based on its current share price.

Should you invest $1,000 in Rio Tinto right now?

Before you consider Rio Tinto, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Rio Tinto wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

asx share price growth represented by cartoon man flexing biceps in front of charged battery
Resources Shares

Lighting up the market: ASX lithium stocks surge again on Tuesday

Chalk up another green day for lithium stocks...

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Broker Notes

Broker names 3 reasons the South32 share price could be cheap

South32 shares could be great value according to one leading broker...

Read more »

a man in a hard hat and checkered shirt holds paperwork in one hand as he holds his hands upwards in an enquiring manner as though asking a question or exasperated by uncertainty.
Resources Shares

The Poseidon Nickel share price has dumped 24% in a month. What’s happening?

Why is the Poseidon Nickel share price struggling so much?

Read more »

Resources Shares

Why is the Lynas share price powering ahead today?

Shares in the rare earths company are off to a great start this week.

Read more »

A green fully charged battery symbol surrounded by green charge lights representing the surging Vulcan share price today
Resources Shares

Here’s why the Core Lithium share price is racing higher today

This lithium share is having a strong day...

Read more »

Resources Shares

Critical Resources share price leaps 12% on latest lithium project news

Shares in the emerging base metals company are up and away today.

Read more »

Three satisfied Whitehaven coal miners with their arms crossed looking at the camera proudly
Resources Shares

Oz Minerals share price rallies on potential $200m acquisition

Big news for the miner today has pushed the company's shares higher.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Resources Shares

Latin Resources share price races 9% higher on lithium update

The Latin Resources Ltd (ASX: LRS) share price is having a strong day on Tuesday. In morning trade, the lithium…

Read more »