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I actually assume some FTSE 100 shares have did not sustain with their true valuation in 2025. Rio Tinto‘s (LSE: RIO) one in every of them.
Mining might be cyclical, and the Rio Tinto share value had been sliding till it began to choose up this summer time. And we’re nonetheless a five-year fall of 9.5%.
It comes at a time when metals are in rising demand — and have gotten a part of rising commerce wars. Disputes have an effect on uncommon earth metals, and plain outdated copper and aluminium in excessive demand for electrification.
Within the third quarter of 2025, Rio produced 204,000 tonnes of copper — 10% greater than the identical quarter final yr. And its value is 25% larger now than a yr in the past.
Rio additionally finds a spread of aluminium merchandise, led by bauxite ore. Rio Tinto produced 16.4 million tonnes of it in a single quarter — with round 60 million tonnes anticipated for the complete yr.
After which we come to lithium. Within the quarter, Rio’s output of lithium carbonate equal got here to 13,000 tonnes. Which may not sound as spectacular as copper and aluminium, however batteries require so much much less tonnage than energy grids do of their respective metals.
Good worth?
The important thing query is whether or not Rio Tinto shares are good worth on a ahead price-to-earnings (P/E) ratio of 12. And that’s concerning the highest it’s been up to now few years, with earnings per share a bit erratic. It’s nonetheless beneath the FTSE 100 common, although that’s pretty widespread for a cyclical business.
Some would possibly say it’s about truthful worth. However I reckon a P/E falling below 11 on 2026 forecasts appears to be like enticing — particularly if we’re seeing indicators of higher international financial instances. And the forecast 2025 dividend yield of 5.3% may rise to over 6% if forecasts show correct.
Analysts have a mean goal value on Rio of round 5,680p, which is a modest 5.5% forward of the worth on the time of writing. So which may not appear too convincing.
However for me, Rio Tinto’s all about long-term money movement and dividend prospects. And I feel it appears to be like good on that rating.
Care wanted
There are clear dangers related to a mining inventory like this. Commodity costs can falter, and we should be particularly conscious of that when costs have been rising. Maybe the most important unknown is demand from China, which might be unstable on a year-by-year foundation.
Then there’s the hazard of a man-made intelligence bubble bursting. AI, particularly the huge knowledge centres it wants, is a giant driver of all types {of electrical} demand as of late.
And we musn’t overlook that US import tariffs proceed to hamper Rio’s exports from its key websites in Australia. However all advised, I can solely see demand for Rio’s key merchandise rising in the long run. I feel buyers may do nicely to think about it right now.
