Rio Tinto profits buoyed by copper

By the new measuring stick of diversified miner earnings – how much did the company make from copper – Rio Tinto (RIO) had a successful year in 2025.

Underlying earnings from the red metal more than doubled to $7.4bn (£5.5bn) as production from the Oyu Tolgoi mine in Mongolia rose 61 per cent. The overall underlying earnings before interest, tax, depreciation and amortisation (Ebitda) performance, including the iron ore and aluminium divisions, was in line with the consensus analyst forecast at $25.4bn. 

The copper gains outweighed an 11 per cent drop in iron ore earnings to $15.2bn, after cyclones early in the year knocked exports and prices dropped, compared with 2024. 

Iron ore remains the biggest contributor by far to the top and bottom lines at Rio Tinto, compared with BHP (BHP) and Glencore (GLEN), either beating or approaching the 50 per cent Ebitda contribution mark for copper.

Just two weeks ago, Rio announced it would not be buying Glencore because of a disagreement over the price of the all-scrip deal. Glencore’s copper assets and growth prospects had attracted Rio given its own smaller basket of potential new mines. 

The Swiss miner and trader, the smaller company, had aimed for a 60/40 equity split in the combined entity. 

The focus has now turned to Rio’s copper growth prospects beyond this decade, given competitors pointing to projects offering expansion out to 2035. It has invested heavily in copper earlier this decade, including the Oyu Tolgoi underground expansion that boosted 2025 earnings, but has focused more on lithium in recent years. 

Lithium production came into the business in March through the completion of the Arcadium acquisition, bringing in $200mn in underlying Ebitda.

Aluminium sales climbed on higher prices, and earnings were up despite $1bn in gross tariff costs that hit from March as well, although by mid-year the premium paid for US supply covered this extra cost. 

The outlook for 2026 is largely stable, after the increase in copper production through Oyu Tolgoi last year. One change is more iron ore coming from Simandou, although the site shut down last week after a death at the site. Guidance for this year is for production (net to Rio) of 5mn-10mn tonnes, compared with total iron ore sales of around 350mn tonnes. 

Copper production will probably come down this year, with top-end guidance of 870,000 tonnes, compared with 2025 output of 883,000 tonnes.

Net debt almost tripled to $14.3bn in 2025, largely through the $8.9bn added from the Arcadium deal. The dividend was held at 402¢, equal to 60 per cent of underlying earnings, which were flat on 2024.

While the Glencore deal would have bolstered the base metals portfolio, Rio does have its own growth options. There are some complications – the Resolution Copper project in the US (owned 55 per cent by Rio, 45 per cent by BHP) has been held up by legal challenges from a local indigenous group and religious freedom campaigners. 

Rio chief executive Simon Trott said portfolio progress could come more broadly from partnering competitors on projects, saying this approach had “delivered enormous value to this organisation” in the past.

RBC Capital Markets analyst Ben Davis said a shift in market dynamics could bring back the Glencore tie-up. “If Glencore does outperform Rio this year, say on coal outperforming iron ore, we would not be surprised to see the deal back on,” he said.

Outside the clamour for deals, Rio’s past acquisitions and investments should help profits this year, namely from a higher lithium price and the higher-grade iron ore from Simandou. We’ll take that for now. Buy.

Last IC view: Buy, 4,578p, 30 Jul 2025