First there was the commodity supercycle; now we have the AI and electrification transition. The former was driven to a large extent by Chinese demand for iron ore, whereas the latter is pumping up markets for copper, aluminium and a host of lesser-known metals.
Rio Tinto (RIO) posted a steep rise in interim earnings and surging free cash flows at the half-year mark, but of greater significance is that copper, aluminium and lithium accounted for more than half of underlying cash profits at the half-year mark.
The Anglo-Australian multinational has its 19th-century roots in an ancient copper mining site on the banks of the Rio Tinto River in Andalusia, Spain. But it became more synonymous with iron ore production due to its huge low-cost mines in the Pilbara region of Western Australia.
The results will undoubtedly please the group’s chief executive, Simon Trott, who has held the reins for just one year. While he deserves credit for taking steps to streamline the business, there is no doubt that the miner continues to benefit from wider industrial trends. However, there are still question marks over whether the group is utilising its productive assets as efficiently as possible, although he could point out that it is on track to achieve annualised run-rate efficiency savings of $1.8bn (£1.4bn) by the year-end, along with an estimated $5bn in asset divestments.
Copper equivalent production was up by 3 per cent on the 2025 comparator due to the continued ramp-up of the Oyu Tolgoi copper operation in Mongolia. Rio is engaged in discussions with government officials in the country in relation to tax assessments issued by the Mongolian Tax Authority relating to the 2021 and 2022 tax years – something of a distraction no doubt. Nonetheless, financial performance at the unit benefited from a 35 per cent increase in the average realised copper price to $5.91 per pound.
Underlying earnings came in at $6.85bn for the six months to June, up from $4.81bn at the 2025 half-year mark. This was broadly in line with consensus, as analysts have already factored in the ongoing impact of the spread of data centres and associated infrastructure.
FactSet consensus gives earnings per share of $6.12, rising to $6.25 in 2027.
Beyond the productivity savings in train, investments in copper and lithium are being prioritised. And investors can take comfort from the 3 percentage point increase in return on capital to 17 per cent. The shares trade at 11 times forecast earnings, which isn’t unreasonable given an implied dividend yield of 4.5 per cent. Buy.
Last IC view: Buy, 7,061p, 19 Feb 2026
RIO TINTO (RIO) ORD PRICE:6,948pMARKET VALUE:£113bnTOUCH:6,947-6,949p12-MONTH HIGH:9,117pLOW: 4,345pDIVIDEND YIELD:4.4%PE RATIO:12NET ASSET VALUE:4,016pNET DEBT:21%*Half-year to 30 JuneTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)202526.96.74279148202631.09.31410211% change+15+38+47+43Ex-div:13 AugPayment:24 Sep£1 = $1.33. *Debt includes $951mn in “other financial liabilities”