The Rio Tinto Ltd (ASX: RIO) share price hit a new 52-week high today as the ASX mining share continues to climb higher.
In December to date, Rio Tinto shares have climbed 12% and in the past four months, they have risen by 37%.
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What's sending Rio Tinto shares higher?
The business hasn't announced anything market-sensitive for a few weeks. But, the strong iron ore price is helping.
For Rio Tinto, the iron ore operations have been the key profit generator in previous years. Thankfully, the iron ore price has rallied over the last few months. The iron ore price is currently sitting above US$135 per tonne – the longer it stays at this level, the stronger its profit and dividend will be.
A few months ago, the iron ore price was below US$105 per tonne, so Rio Tinto is able to make a lot more profit at the moment.
ASX iron ore shares normally trade on a fairly low price/earnings (P/E) ratio, meaning stronger profit can unlock a very large dividend yield, as we saw in FY21. Bigger dividends are attractive, so it's no surprise the Rio Tinto share price is going higher.
Investor seminar
Earlier this month, the miner held an investor seminar that outlined a number of things. It showed a "clear pathway" to achieve an annual capacity of 345 million tonnes to 360 million tonnes (mt) from its Pilbara iron ore business, which includes a pre-feasibility study that is underway on the Rhodes Ridge project, which Rio Tinto describes as the Pilbara's best-undeveloped iron ore deposit.
Production is also ramping up from the copper project Oyu Tolgoi in Mongolia, which is set to deliver 500kt of copper per year between 2028 to 2036.
It has formed the Matalco joint venture to achieve a leading position in the growing North American recycled aluminium market.
Rio Tinto also recently announced the estimate of its $6.2 billion share of capital investment to develop Simandou.
Rio Tinto share price snapshot
Since the start of 2023, Rio Tinto shares are up 16%.
The company is now valued at 12 times FY24's estimated earnings, with a possible grossed-up dividend yield of 7.9%.
