‘The world is changing’: CEO reveals what will help drive Rio Tinto shares in 2023 and beyond 

Automakers are waking up to the pending bottlenecks in supplies of battery and low carbon materials.

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Key points

  • Rio Tinto shares in focus following earnings call 
  • CEO says booming EV growth and global sustainability push is “changing the commercial landscape” 
  • Rio produces some of the lowest CO2 aluminium in the world 

Rio Tinto Limited (ASX: RIO) shares are off to a positive start in early trade, up 1.3%.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday at $96.58 and are currently trading for $95.99.

That’s this morning’s price action for you.

Now here’s what CEO Jakob Stausholm says will help drive Rio Tinto shares in the future.

A new kind of partnership

On 21 July Rio Tinto announced it had signed a memorandum of understanding (MOU) with Ford Motor Company (NYSE: F) to supply the automaker with battery and low carbon materials in support of a net-zero future.

Among those materials, Rio will be the primary supplier of aluminium raw materials for Ford’s F-150, the world’s first all-aluminium body pick-up truck. Or ute, if you prefer.

Responding to a question regarding Rio’s MOU with Ford and how things might evolve with agreements with automakers during the mining giant’s earnings call, Stausholm said (lightly edited for readability):

What you see is that EVs is happening now and it’s an irreversible process. In the beginning, people were afraid of investing in the new platform of EV. But now all of the automakers have done it, and they really have to scale that up. And suddenly, they’re all realising that some of the bottlenecks are actually in the materials.

That’s one dimension.

The other thing is they’re making commitments that their products will have less CO2 in them. For both reasons, we [Rio Tinto] become very, very relevant.

Stausholm also noted the low emissions levels related to miners’ aluminium production, which should offer future tailwinds for Rio Tinto shares.

“We also are very relevant [because] we are producing some of the lowest CO2 aluminium in the world,” he said.

“So, it’s a different kind of partnership with customers that we can start forming compared to a history of very much commodity trade from our side. The world is changing in the commercial landscape, and I find it very exciting.”

How have Rio Tinto shares been performing longer-term?

So far in 2022 the mining giant is down 4%, compared to an 8% year to date loss posted by the ASX 200.

Over the past five years Rio Tinto shares have gained 52%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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