The Rio Tinto Limited (ASX: RIO) share price is in focus after the miner told the market about some of its progress on its long-term strategy.
Strategy update
The ASX mining share wanted to tell investors about how it is strengthening the business, growing in a decarbonising world and continuing to deliver returns for shareholders.
Demand and production comments
Rio Tinto noted that the energy transition is expected to add as much as 25% in new demand above traditional sources on a copper equivalent basis across its key products by 2035.
The miner is targeting an investment of up to $3 billion per year in growth to meet this demand, including the Oyu Tolgiu copper, Rincon lithium and Simandou iron ore projects.
Rio Tinto said that there are now 30 deployments of the Rio Tinto ‘safe production systems’ which are expected to improve safety and increase production by up to 5 million tonnes at its iron ore assets in 2023.
The business also pointed to guidance, showing that 2023 Pilbara iron ore shipments are expected to total between 320 mt to 335 mt, while refined copper is predicted to be between 180 kt to 210 kt.
In terms of unit cost guidance iron ore is expected to be between US$21 per tonne to US$22.5 per tonne, while copper is US$1.60 to US$1.80 per pound.
Decarbonisation
Rio Tinto touted its plans that it’s aiming to halve its scope 1 and scope 2 emissions by 2030. These are the emissions that the business is responsible for. It’s also “on the road” to net zero by 2050. It has projects underway to meet these targets.
The large iron ore miner said that six large emission reduction programmes are focused on renewable power, process heat, diesel and the ELYSIS zero carbon aluminium smelting technology to drive the transition to net zero by 2050.
Rio Tinto said that investments of around $7.5 billion are expected between 2022 to 2030, including around $1.5 billion over the next three years.
Investments are being “prioritised and phased in the most logical way, with consideration for near-term work around energy inputs and attractive economics.”
Final thoughts
It’s good to see that Rio Tinto is going to work towards reducing emissions. I think this will be important for the Rio Tinto share price in the long run.
But, for investors worried about if this may mean less cash returns from the company, the boss Jakob Stausholm said:
The quality of our assets, resilience of cashflows and strength of our balance sheet ensure we are well positioned to continue to invest with discipline for the long term and deliver attractive returns to our shareholders throughout the cycle.
After a 20% rise of the Rio Tinto share price over the last month, I don’t think now is the best time to buy. A share price under $95, or even $90, would probably be better.
