Rio Tinto Ltd (ASX:RIO) (LSE:RIO, ASX:RIO, OTC:RTNTF) Canadian aluminium assets are world-class, under-appreciated assets, says broker Jefferies and make a key differentiator in the investment case for the mining giant.
During a visit to its upgraded AP60 plant, Rio predicted North American aluminium demand (both primary and recycled) would grow at 4% compound annually through 2028.
“Rio is well positioned to be among the primary beneficiaries of this market growth through its diversified product offerings, integrated supply chain, low-cost assets, and potential for further reductions in the carbon intensity of its production,” said Jefferies.
An emphasis on being the "largest metals and mining company in North America" and Rio's continued investment in Canada is also noteworthy, given recent media reports of M&A involving both it and other Canadian miners.
While Jefferies says copper is the energy transitional metal that most in the market expect to be heading into sizeable deficits, aluminium should be supported by much of the same demand drivers as well as substitution in high-priced copper environments.
Reiterate ‘buy’ with a price target of 6,400p is Jefferies’ view.