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I actually suppose some FTSE 100 shares have didn’t sustain with their true valuation in 2025. Rio Tinto‘s (LSE: RIO) one among them.
Mining will be cyclical, and the Rio Tinto share value had been sliding till it began to choose up this summer time. And we’re nonetheless taking a look at 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 previous 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 12 months. And its value is 25% greater now than a 12 months in the past.
Rio additionally reveals 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 total 12 months.
After which we come to lithium. Within the quarter, Rio’s output of lithium carbonate equal got here to 13,000 tonnes. That may not sound as spectacular as copper and aluminium, however batteries require loads 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 trade.
Some may say it’s about truthful worth. However I reckon a P/E falling beneath 11 on 2026 forecasts seems to be enticing — particularly if we’re seeing indicators of higher world financial instances. And the forecast 2025 dividend yield of 5.3% may rise to over 6% if forecasts show correct.
Analysts have a median 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 circulation and dividend prospects. And I believe it seems to be good on that rating.
Care wanted
There are clear dangers related to a mining inventory like this. Commodity costs can falter, and we must be particularly conscious of that when costs have been rising. Maybe the most important unknown is demand from China, which will be risky on a year-by-year foundation.
Then there’s the hazard of a man-made intelligence bubble bursting. AI, particularly the large information centres it wants, is an enormous driver of all types {of electrical} demand lately.
And we musn’t overlook that US import tariffs proceed to hamper Rio’s exports from its key websites in Australia. However all informed, I can solely see demand for Rio’s key merchandise rising in the long run. I believe buyers may do properly to contemplate it right this moment.
