Rio Tinto: Commodity Risks Keep Us Neutral

What happened: Rio Tinto's Q3 iron ore production rose 2% with stronger Pilbara shipments supporting unchanged full-year guidance. Oyu Tolgoi copper output rose 27%, offsetting weaker Escondida performance and disruptions at Kennecott. Key numbers: Q3 iron ore production up 2%. Oyu Tolgoi copper output up 27%. Higher diesel costs and a stronger Australian dollar could add about $694 million in annual Pilbara costs on a 100% operations basis. Why it matters: The analyst says normalized EBITDA valuation offers only modest upside and reiterates a neutral rating, citing commodity risks.

Rio Tinto's Q3 iron ore production rose 2% with stronger Pilbara shipments supporting unchanged full-year guidance. Oyu Tolgoi copper output rose 27%, offsetting weaker Escondida performance and disruptions at Kennecott.

The analyst says normalized EBITDA valuation offers only modest upside and reiterates a neutral rating, citing commodity risks.