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Why are Rio Tinto shares on the rise?

The iron ore miner’s shares rallied over 2% after it revealed plans to lower carbon steel emissions.

rio tinto stocks share price target ratings analyst trade live chart Source: Bloomberg
  • Rio Tinto (ASX: RIO) share price closed over 1% higher on Thursday (14 October)
  • The mining company unveiled a new technology with the potential of lowering carbon emissions in the steel value chain
  • The stock is down some 4% in the last one month, amid falling copper prices
  • Keen to take advantage of Rio Tinto’s rising share price? Open an account with us to long the stock now.

Rio Tinto stock price: why is it up?

Rio Tinto shares rallied as much as 2.3% on Thursday, after announcing that it is developing an innovative new technology that will be able to deliver low-carbon steel.

The iron ore miner hopes that the technology, which uses sustainable biomass in place of coking coal in the steelmaking process, could become a cost-effective option in cutting industry carbon emissions in the future.

Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic iron during the steelmaking process.

The patent-pending process, one of a number of avenues the company is pursuing to try to lower emissions in the steel value chain, is now being further tested in a small-scale pilot plant.

If this and larger-scale tests are successful, there is the potential over time for this technology to be scaled commercially to process Rio Tinto’s iron ore fines.

‘We are encouraged by early testing results of this new process, which could provide a cost-efficient way to produce low-carbon steel from our Pilbara iron ore,’ said Rio Tinto Iron Ore Chief Executive, Simon Trott.

‘More than 70 per cent of Rio Tinto’s Scope 3 emissions are generated as customers process our iron ore into steel, which is critical for urbanisation and infrastructure development as the world’s economies decarbonise. So, while it’s still early days and there is a lot more research and other work to do, we are keen to explore further development of this technology.’

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How do analysts view RIO?

The ASX-listed RIO counter has fallen around 4% in the last one month, thanks in part to declining copper prices. It has tumbled about 13% on a year-to-date basis.

As of last week, eight analysts said the shares were a ‘buy’, seven suggested ‘hold’, and only one gave a ‘sell’ call, according to Bloomberg data.

Their average 12-month target price stood at A$119.13 per share, which equates to a potential 18.5% upside based on the stock’s closing price.

Macquarie recommended ‘outperform’ alongside an A$148 target on 01 October, while Bernstein rated RIO ‘market perform’ with an A$127 target.

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