Rio Tinto eyes rare earths sector

Rio Tinto (ASX: RIO) is considering a move into rare earths and other critical minerals as it responds to shifting global market dynamics and trade tensions.

Following the company’s annual general meeting in Perth on Thursday, CEO Jakob Stausholm said the board had discussed rare earths this week and would take a “serious look” at their potential role in Rio Tinto’s portfolio.

Stausholm said that as the company continues to optimize its iron ore operations in the Pilbara and advance developments like Simandou in Guinea, it’s also reshaping its aluminum, copper, and lithium businesses to support the energy transition.

“So you could say, the next thing is to look a little bit deeper on critical minerals, and you have to think about that, not necessarily as separate mines,” Stausholm told reporters. He noted critical minerals are often present at Rio’s operations as by-products, so “it’s a question of whether we should process them more deliberately.”

Rio Tinto already produces scandium as a by-product of titanium dioxide in Quebec and at its Boron mine in California and is weighing the production of gallium from its aluminium operations. The absence of a robust spot market for many critical minerals means Rio must ensure demand before scaling up production, Stausholm said. 

Chairman Dominic Barton echoed the cautious approach, pointing to the limited scale of the sector. “That’s why you don’t typically see the top five [largest miners] in this space,” he said. But with global supply chain diversification becoming a priority, Barton said they are asking themselves whether they should revisit what they already have and assess the economics.

Barton also said critical minerals could help strengthen Rio’s social licence to operate. “It’s interesting how often those with fewer resources are the most vocal,” he added.

Tariffs, Canada and aluminium

On tariffs, Barton said Rio could compete under the current global framework, though the company isn’t enthusiastic about trade barriers. “We’re not excited about tariffs, but we’ve got to live with what governments are doing,” he said, adding that if they’re applied uniformly, the company “would manage” because of its position on the cost curve.

Barton welcomed the recent Canadian election results, suggesting they provide a mandate for continued negotiations. He praised the country’s recognition of aluminium’s economic importance, especially given Rio’s workforce in Canada.

As a former Canadian ambassador to China, Barton said the East Asian giant’s economy could absorb short-term tariff impacts.

“Urbanization, GDP consumption rates, and green infrastructure investment all support long-term steel demand,” he said. “We expect a new equilibrium despite near-term discomfort.”

Working in the US

Stausholm highlighted Rio’s significant presence in the United States, including the Kennecott copper mine and smelter in Utah, its boron mine in California, and the Resolution copper project in Arizona.

“The U.S. government is very, very keen on seeing us getting the most out of those assets, so it provides opportunities to serve the U.S. government,” Stausholm said.

He added that tariff policies wouldn’t necessarily affect Rio’s long-term investment decisions. Last month, the U.S. government fast-tracked permitting for the Resolution project, and Stausholm said the joint venture with BHP (ASX: BHP) is moving forward.

“Unlike Australia, the U.S. has seen limited mining development in recent decades—this represents a shift”, he said.

Activist campaign fails

A proposal from U.K.-based hedge fund Palliser Capital to force a review of Rio’s dual-listed company (DLC) structure failed to gain traction. The company rejected the motion, with Barton stating the board had already reviewed the structure in detail last year with advice from five external consultants.

“All of this work showed that a unification of the DLC would be value destructive for the group and its shareholders,” Barton said.

Only 19.35% of shareholders supported the motion. Under U.K. law, a 75% majority is required to mandate a review, while 20% support would have required the company to engage further with shareholders.