The S&P/ASX 200 Index (ASX: XJO) lithium stock IGO Ltd (ASX: IGO) is a surprise name that's involved in speculated interest in a Rio Tinto Ltd (ASX: RIO) asset.
IGO is looking to develop and produce commodity products critical to the clean energy transition. Its current lithium interests are held through its 49% shareholding in Tianqi Lithium Energy Australia (TLEA), a non-operated joint venture with its partner Tianqi Lithium Corporation.
TLEA owns a 51% stake in the Greenbushes operation and a 100% interest in the Kwinana Lithium Hydroxide Refinery in WA.
IGO also owns and operates the Nova nickel operation in WA.
According to reporting by The Australian, IGO is looking to expand its portfolio.
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IGO interested in Rio Tinto asset
The newspaper reported that IGO is considering buying one of Rio Tinto's assets in WA, but it is not a lithium asset.
The Australian speculated that IGO is looking at the Winu copper-gold project, a copper-gold deposit in the Pilbara region located approximately 320km east of Port Hedland.
Why would Rio Tinto want to sell this asset? The new mining project was called "sub-scale" for Rio Tinto.
Rio Tino has reportedly lodged an application with the WA government to develop this project on the land of the Aboriginal Nyangumarta and Martu people's Native Title Determination Areas.
What would IGO gain from this?
IGO recently held a strategy day to give investors a presentation.
The Australian reported that after reviewing the presentation, some investors believe the ASX 200 lithium stock needs to refocus on acquisitions despite the difficult experience following the purchase of nickel miner Western Areas. The nickel price has sunk in the last few years after cheap nickel from Indonesia.
It was suggested in the newspaper that diversification could be beneficial because the take-up of electric vehicles could be slower than previously expected, hurting short-term demand for lithium from the Greenbushes project.
Finding a copper deposit and developing it could take a long time, so it could be easier for the company just to acquire an existing project.
The Australian also reported that another option for IGO is that it could buy lithium assets globally in markets including the US.
Do analysts like IGO shares right now?
Over the past year, the IGO share price has dropped by approximately 60%.
According to FactSet, there are currently nine buy ratings on IGO shares, six hold ratings and four sell ratings.
According to FactSet, the average target price across those analyst ratings is $6.17. A price target is the analyst's prediction of the share price 12 months from the time of the rating.
At the current IGO share price, the average price target from those analysts suggests it could rise 19% from where it is now.
