Rio Tinto – A Diversified Giant Positioned for the Green Energy Transition
By Muffett Investments
At Muffett Investments, we believe Rio Tinto (RIO) is one of the most attractive long-term holdings in today’s resource market. Despite weaker iron ore prices, the company delivered resilient HY25 results underpinned by its diversified portfolio, strong cash generation, and world-class growth projects.
Rio Tinto’s 2025 Half Year Results reinforce its status as a resilient, well-diversified mining leader with a clear strategy to capitalize on global decarbonization and commodity demand. Despite a challenging iron ore price environment, the company delivered robust financials and continued to advance world-class projects in copper, iron ore, and lithium. Here’s why we believe Rio Tinto remains a compelling long-term investment.
🏗️ Financial Resilience Amid Market Volatility
Underlying EBITDA: $11.5 billion (down 5% YoY, but resilient given 13% lower iron ore prices)
Net Earnings: $4.5 billion (attributable to shareholders)
Interim Dividend: $2.4 billion (50% payout ratio, consistent with policy)
Free Cash Flow: $2.0 billion (down from $2.8 billion in H1 2024, but strong given heavy investment phase)
These results underscore Rio Tinto’s ability to generate cash and returns even during cyclical downturns—a hallmark of a well-managed resources company.
📊 Commodity Breakdown: Diversification Driving Stability
CommodityRevenue ContributionUnderlying EBITDA MarginIron Ore49%61%Aluminium29%33%Copper23%61%Minerals*11%14%
Includes Lithium, Borates, TiO₂, Diamonds, and IOC.
Notably, Copper and Aluminium saw significant EBITDA growth (+69% and +50% YoY, respectively), highlighting the value of a diversified portfolio beyond iron ore.
⛰️ Simandou: The World’s Best Undeveloped Iron Ore Mine
Rio Tinto’s Simandou project in Guinea is on track for first shipments by November 2025. This is a game-changer:
High-grade, low-impurity iron ore—exactly what Chinese steelmakers need for efficient, lower-emission steel production.
Initial production of 0.5–1.0 Mt in 2025, ramping up to 60 Mtpa (27 Mtpa Rio Tinto share).
Simandou will become a preferred source of premium iron ore for China, reducing reliance on Australian and Brazilian volumes.
This project will solidify Rio Tinto’s iron ore dominance for decades.
🔋 Oyu Tolgoi: Becoming a Copper & Gold Powerhouse
The Oyu Tolgoi underground mine in Mongolia is ramping up ahead of schedule:
Copper production up 54% YoY in H1 2025.
On track to become the world’s 4th largest copper mine by 2030.
Significant gold byproduct—adding valuable exposure to the gold rally.
Oyu Tolgoi is a cornerstone of Rio Tinto’s copper growth strategy, leveraging strong demand for copper in electrification and renewables.
🧊 Resolution Copper: A Future Tier-1 Asset
The Resolution project in Arizona is progressing through regulatory processes. Once developed, it will be one of the largest copper mines in North America, supplying critical metals for the U.S. energy transition. Although permitting remains complex, its potential is enormous.
⚡ Lithium: Buying at the Bottom of the Cycle
In March 2025, Rio Tinto completed the $6.7 billion acquisition of Arcadium Lithium, forming Rio Tinto Lithium. This includes:
Operating assets: Mt Cattlin, Olaroz, Fenix, and Nemaska.
Development projects: Rincon (Argentina) and Salares Altoandinos (Chile).
Why this is smart:
Rio Tinto acquired these assets near the bottom of the lithium cycle. Prices fell 34% YoY in H1 2025, but long-term demand for EVs and energy storage remains unstoppable. Rio Tinto is now a top-tier lithium producer, positioned to benefit when prices rebound.
✅ Why Muffett Investments Is Bullish on Rio Tinto
Diversification: Reduced reliance on iron ore; growing exposure to copper, aluminium, and lithium.
World-Class Assets: Simandou, Oyu Tolgoi, and Resolution are long-life, low-cost, strategic projects.
Lithium Bet: Acquired quality assets at cyclically low prices—ideal positioning for the EV revolution.
Capital Discipline: Strong balance sheet (net debt increased to $14.6B due to acquisitions, but manageable), consistent dividends, and disciplined investment.
Rio Tinto is not just a mining company—it’s a strategic enabler of the global energy transition. We believe it is well-placed to deliver shareholder value through cycles.
