Rio Tinto shares: What’s the latest outlook?

Metals and mining behemoth Rio Tinto’s shares remained soft despite a new labour agreement in Canada and a stable outlook for copper.

  • Rio Tinto (ASX: RIO) share price falls to A$97.13 at Tuesday’s close
  • Analysts on average are eyeing an A$119.13 per share target
  • A prolonged strike at Rio’s Canadian operations is ending, with a new labour deal
  • Copper prices may trade sideways in the next few months, Fitch Solutions says
  • Keen to take advantage of Rio Tinto’s falling share price? Open an account with us to short the stock now.

Weakness persists in Rio Tinto stock price

Shares of Rio Tinto, the world’s second-largest metals and mining corporation, lost 0.4% on the day to finish at A$97.13 on Tuesday in Sydney.

Australian mining stocks had already slumped last Friday (01 October 2021), tracking copper prices lower as China’s power constraints prompted concerns about demand, Reuters reported. Rio Tinto fell about 2.9% then.

Year-to-date, the ASX-listed RIO counter has tumbled about 15.8%.

As of Tuesday night, 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. That implies a potential 22.7% upside based on Tuesday’s closing price.

Macquarie recommended ‘outperform’ alongside an A$148 target last Friday. Bernstein rated RIO ‘market perform’ with an A$127 target.

Strike ends at Rio’s Canadian unit

The company’s BC Works operations in the western Canadian province of British Columbia has confirmed a new collective labour agreement, putting an end to a bitter strike lasting more than two months.

On Monday, Rio said that ‘over the next few days’, BC Works management will initiate the return-to-work process for employees, followed by the progressive restart of the smelter’s production cells.

‘Our focus will now be on ensuring the return of workers and ramp-up of production at the smelter is managed in a safe and controlled manager over the coming months,’ Rio added.

Canadian union Unifor and the company had reached an agreement-in-principle last week, after which about 950 workers voted on the deal.

The strike began at the Kitimat shelter in late July, after the parties failed to agree on resolving hundreds of outstanding grievances and a new process to resolve disputes, CBC News reported.

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What's the outlook on copper prices?

Separately, talk of the US scaling back its pandemic stimulus weighed on copper prices last week.

However, losses for Rio Tinto were limited, as the company had declared force majeure on a few contracts for copper cathode and acid.

That followed Rio’s closure of a smelter at its Kennecott mine in the US, after an accident in the week prior, Reuters reported. There was a release of molten copper on 21 September 2021.

Fitch Solutions wrote that copper prices had ‘edged lower, but they have not collapsed since the highs reached in May, and we expect prices to trade sideways over the coming months’.

The Fitch research team also pointed out that copper prices remained elevated on the back of tight inventories. It upped its forecast to US$9,200 a tonne for 2021, and to S$8,800 for 2022.

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