Rio Tinto's Fair Value Estimate Reduced on Lower Iron Ore, Copper, and Aluminum Prices

Rio Tinto is one of the world’s largest miners with operations in iron ore, aluminum (including bauxite and alumina), copper, and minerals (mineral sands, borates, salt and diamonds). Commodity demand is tied to global economic growth, China’s in particular. Rio Tinto benefited greatly from the China boom over the past two decades. The company’s largest customer by far is China, accounting for about 60% of sales in 2023. We think the outlook is for earnings to materially decline with demand for many commodities likely to soften with the end of the China boom, particularly for iron ore which has disproportionately benefited from the boom in infrastructure and real estate investment.