Rio Tinto Ltd (ASX: RIO) shares are edging lower on Thursday morning.
At the time of writing, the mining giant's shares are down almost 1% to $119.35.
Why are Rio Tinto shares falling?
The company's shares are falling this morning after investors gave a lukewarm response to the release of a couple of updates after the market close on Wednesday.
The first update relates to the Rincon Lithium Project in Argentina which is currently being developed by Rio Tinto.
According to the release, the mineral resources inclusive of ore reserves for the Salar del Rincon lithium brine deposits comprise:
- 54 Mt Lithium Carbonate Equivalent (LCE) of Measured Resources
- 85 Mt LCE of Indicated Resources
- 29 Mt LCE of Inferred Resources
Management believes this supports production of up to 60kt of battery grade lithium carbonate per year for a period of 40 years and be in the first quartile of the cash cost curve.
The Rincon 3000 starter plant is scheduled for completion in the first half of 2025.
What else?
Rio Tinto also held an investor seminar in London overnight where it provided updates on its strategy of investing for a stronger, more diversified and growing portfolio to ensure the long-term delivery of attractive shareholder returns.
At the seminar, Rio Tinto's chief executive, Jakob Stausholm, said:
We have all the building blocks we need to become a global leader in energy transition materials, and we have a clear plan for a decade of profitable growth.
As we ramp up the Oyu Tolgoi underground copper mine, deliver the Simandou high-grade iron ore project in Guinea, and build out our lithium business through the proposed acquisition of Arcadium, we are underwriting a decade of profitable growth. We plan to utilise our strong balance sheet to unlock and accelerate Arcadium's tier one projects, timed to meet future demand growth.
FY 2025 guidance
The company also released its production guidance for FY 2025. It expects:
- Pilbara iron ore shipments to be flat at 323Mt to 338Mt
- Copper production to increase to 780kt to 850kt
- Aluminium production up slightly to 3.25Mt to 3.45Mt
Broker reaction
Goldman Sachs was pleased with the update and notes that everything was largely in line with expectations. It said:
RIO's 2024 Investor Seminar focused on the company's next phase of growth projects with the company reiterating the 3% medium-term production growth target (4% with lithium) and adjusting capex guidance slightly for the latest project sequencing and the announced acquisition of Arcadium Lithium.
Overall, key growth projects are on track including Simandou iron ore in Guinea and the Oyu Tolgoi copper/gold underground project in Mongolia, which combined are expected to contribute 2/3 of RIO's CuEq growth and help drive a 5% lift in margins to 50% (GSe), and >30% increase in our EBITDA and DPS forecasts from 2024E-28E. Production guidance for 2025 was also provided which was broadly in-line with GSe and implies 7% CuEq growth. RIO also outlined a potential change in Pilbara iron ore product strategy by low grading to maximise margins and value given current demand dynamics and supply side constraints.
