Why are Rio Tinto shares outperforming the market on Wednesday?

Why are investors buying this mining giant's shares today?

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Rio Tinto Ltd (ASX: RIO) shares are edging higher on Wednesday.

At the time of writing, the mining giant's shares are up 0.5% to $123.04.

This compares favourably to the performance of the ASX 200 index, which is currently down a disappointing 1%.

Why are Rio Tinto shares outperforming?

Today's gain appears to be largely down to a positive night of trade for commodity prices, which has helped lift Rio Tinto and rival BHP Group Ltd (ASX: BHP).

In addition, there has been some news that could have caught the eye of investors today.

That news involves uranium developer Energy Resources Of Australia Ltd (ASX: ERA), which Rio Tinto has an 86.3% ownership.

Energy Resources of Australia has been one of Australia's largest uranium producers and operated Australia's longest continually producing uranium mine. However, after the closure of the Ranger Mine in 2021, it is now committed to creating a positive legacy and achieving world-class, sustainable rehabilitation of former mine assets.

This brings us to today's announcement. According to the release, Energy Resources Of Australia has appointed Rio Tinto to manage the Ranger Rehabilitation Project under a new Management Services Agreement (MSA).

The release notes that Energy Resources of Australia's Independent Board Committee (IBC) carefully considered the potential MSA and whether it was in the best interests of shareholders.

It concluded that there was significant value for the company, and potential cost savings, in directly leveraging Rio Tinto's mine rehabilitation, project management experience and capability to support the safe and efficient delivery of the Ranger Rehabilitation Project.

Management commentary

Energy Resources of Australia's Chairman, Rick Dennis, said:

We are pleased to have appointed Rio Tinto to manage the Ranger Rehabilitation Project. The Ranger Rehabilitation Project is a complex and globally significant rehabilitation and after extensive consideration the IBC has concluded that there would be significant value for ERA in directly leveraging Rio Tinto's mine rehabilitation, project management experience and capabilities.

Rio Tinto's Chief Executive of Australia, Kellie Parker, adds:

With the signing of this agreement, we are pleased to be able to directly provide more closure and project delivery experience and know-how to this critical task. We look forward to working in partnership with the Mirarr Traditional Owners and other stakeholders to complete the project.

In light of the appointment, an updated rehabilitation timeline for the Ranger project will be disclosed once finalised.

Rio Tinto shares are now up approximately 4% over the last 12 months.

Motley Fool contributor James Mickleboro 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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