Rio Tinto’s recent capital markets day met market expectations, according to Barclays analyst Amos Fletcher. The presentation highlighted planned capital expenditure (capex) cuts, the divestment of US$5 billion to US$10 billion in assets, and ongoing cost reduction initiatives. Rio Tinto is a leading global mining group that focuses on finding, mining, and processing the Earth’s mineral resources. The company supplies materials essential to human progress.
Fletcher noted that the company’s cost-cutting targets, specifically a 4 per cent annual unit cost reduction, could substantially increase the 2030 consensus earnings before interest, taxes, depreciation, and amortisation (EBITDA). Rio Tinto projects potential EBITDA to be 40 to 50 per cent above 2024 levels, based on long-term prices. This ambitious target hinges on the successful execution of these cost-saving measures.
However, Rio Tinto’s near-term production guidance for 2026 fell 3 per cent below consensus estimates. Fletcher suggests that this shortfall will likely result in downward revisions to short-term financial estimates. While reinforcing the long-term investment appeal of Rio Tinto, the update has tempered expectations for the immediate financial year.
The revised production guidance impacted Rio Tinto’s share price, which experienced a 3.1 per cent decline in early afternoon trading on the ASX. Investors appear to be reacting to the near-term production concerns despite the company’s positive long-term outlook.
