Rio Tinto copper surge offsets iron ore disruption

Rio Tinto (ASX, LSE: RIO), the world’s second-largest miner, reported stronger first-quarter output as copper gains from its Mongolia copper mine offset weather-driven iron ore disruptions and mounting geopolitical risks.

Copper production rose 9% year over year to 229,000 tonnes, driven by the continued ramp-up at the Oyu Tolgoi underground mine, where stronger throughput pushed output above expectations. BMO analyst Alexander Pearce said copper results beat the bank’s estimates by 9%, highlighting operational momentum despite uncertainty around the Entrée Resources licence.

The lack of clarity on the Entrée licence centres on delays in transferring the Shivee Tolgoi and Javkhlant mining licences from Entrée Resources to Oyu Tolgoi LLC, which is majority owned by Rio Tinto. The holdup has stalled underground development in parts of the joint venture area since early 2025 and forced adjustments to the mine plan, raising uncertainty around the pace of future copper growth.

“The Oyu Tolgoi copper mine continues to ramp up as planned,” CEO Simon Trott said, pointing to the asset as a key driver of near-term expansion.

The licensing dispute comes as Mongolia pushes for improved project terms, including earlier dividends and a larger share of returns from the $18-billion operation, in which the government holds a 34% stake. The negotiations add uncertainty to one of Rio’s most important growth engines as it targets annual copper output of 500,000 tonnes in the coming years.

Electrification

Rio’s copper gains underscore a broader strategy to expand in metals tied to electrification, offsetting declining grades at assets such as Chile’s Escondida, the world’s largest copper mine. This allowed the company to maintain full-year copper guidance of 800,000 to 870,000 tonnes unchanged, signalling confidence in continued ramp-up at Oyu Tolgoi.

Iron ore performance was mixed. Pilbara output rose 13% to 78.8 million tonnes, though cyclones disrupted shipments, and sales of 72.4 million tonnes missed analyst expectations. Rio held its full-year shipment guidance at 323 million to 338 million tonnes. Elsewhere, Simandou output in Guinea lagged forecasts due to ramp-up variability, even as the Simfer mine achieved first production and shipped initial volumes to China this month.

Aluminum output edged up 1% as supply cuts supported prices, while bauxite production fell 11%.

Middle East tensions

Rio warned it has limited visibility on how the Middle East conflict will affect the second half, with diesel and jet fuel shortages posing risks to operations and logistics.

“We continue to closely monitor the evolving situation in the Middle East,” Trott said in a statement, adding contingency plans are in place.

The company consumes about 1.6 billion litres of diesel annually, and rising fuel costs are already steepening the cost curve. Analysts flagged fuel supply as a key operational risk, though shipping disruptions have yet to materialize.

Rio is also pursuing asset sales, including its borates and titanium units, aiming to raise about $10 billion to reduce debt and strengthen its balance sheet. The company said it is testing market interest.

Despite external pressures, Rio maintained 2026 guidance across the rest of its portfolio, including iron ore shipments of 343 million to 366 million tonnes, aluminum production of 3.25 million to 3.45 million tonnes and lithium output of 61,000 to 64,000 tonnes.

Rio Tinto will hold its annual general meeting on May 6.