Rio Tinto Falls Below 5,000 as CEO Defends Dual Stock Listing

Rio Tinto's shares (LON: RIO) are 0.46% down on the day at 4,984; giving up the 5,000 level intraday as CEO Jakob Stausholm responded to activist shareholders by affirming the company's commitment to maintaining its primary listing on the London Stock Exchange.

This comes amidst calls from shareholders, particularly Palliser Capital, to rethink the dual-listed company structure. Palliser Capital, holding approximately $250 million in Rio Tinto shares, has criticised the dual listing for apparently destroying $50 billion in value and hampering mergers and acquisitions.

Stausholm remains steadfast in the belief that the dual-listed structure, which includes listings in both London and on the Australia Stock Exchange, continues to provide significant value to shareholders. He argues that there is no compelling evidence to warrant a shift solely to an Australian listing, despite claims from Palliser Capital that such a move could unlock $28 billion in shareholder value.

In addition to governance discussions, Rio Tinto has outlined several key growth and sustainability initiatives. Key among these is the planned expansion of production at the Oyu Tolgoi mine in Mongolia, where production is expected to increase by 50% in 2024, with a long-term target of producing 1 million tons of copper annually by 2030. The company also plans to ramp up its investments across various mineral projects.

The sale of a 30% stake in the Australian Winu project to Sumitomo for $399 million showcases Rio Tinto's strategic adjustment in its investment portfolio. Overall capital expenditures are projected to rise from $9.5 billion in 2024 to $11 billion in 2025, underpinning these investments.

Rio Tinto is also making strides in supporting the global energy transition. It continues to make significant investments in iron ore, lithium, and aluminum, all critical components for renewable energy technologies. While Pilbara's iron ore output is anticipated to remain stable, lithium operations are set for expansion. Moreover, the company's $6.7 billion bid for Arcadium Lithium marks a significant step towards boosting its operations in South America.

While shareholder discussions on governance structures continue, Rio Tinto's strategic focus on growth and sustainability positions it well for future challenges in the mining and resources sector. The dual-listed structure, robust growth plans, and investment in sustainable technologies underscore the company's aim to deliver long-term shareholder value and environmental responsibility.