Rio Tinto Limited (ASX: RIO) share price has been going backwards in recent weeks. Is this the time to buy into the giat ASX mining share?
Rio Tinto is one of the biggest iron ore miners in the world, so what happens with the iron ore price is undoubtedly going to impact the Rio Tinto share price, profit and dividend.
I don’t know what’s going to happen next with the iron ore price – for starters it’s unpredictable, and it relies on demand from China.
At the current iron price of close to US$130 per tonne, I think Rio Tinto can make good profits and dividends.
The forecast on CMC Markets suggests that Rio Tinto shares could generate earnings per share (EPS) of $10.92 in FY23, with an annual dividend per share of $6.87.
But, that’s just FY23. I think the business has a promising outlook because of three commodities.
Iron
I’m not going to try to predict what’s going to happen with the iron ore price in FY23.
But, I like that the miner is looking to diversify its sources of iron. Rio Tinto says that the Simandou project in Africa has a very large higher-grade, lower-impurity iron deposit. Rio Tinto says that the iron from this project will be a “sought-after” resource by steelmakers for the energy transition.
This seems like a good move for the long-term by the company and could be a key factor for the Rio Tinto share price in the decade ahead.
Copper
Copper may be one of the most important resources to enable the transition to a lower emission world, with there being a large move to electrification.
Rio Tinto points out that we use copper in “pots and pans, in the water pipes in our homes, and in the radiators in our cars. Copper also plays an essential role in computers, smartphones, electronics, appliances and construction.”
One 1MW wind turbine uses three tonnes of copper, while electric cars use three or four times more copper than normal cars. This could see copper demand rise in the coming years.
That’s why Rio Tinto has been increasing its exposure to one of the largest copper deposits in the world, with the Oyu Tolgoi deposit.
Lithium
Rio Tinto is part of its portfolio for a low-carbon future. It could see significant growth as electric vehicle and other electric batteries become even more widespread.
Not too long ago, the business acquitted the Rincon
lithium project in Argentina.
While the lithium price may be volatile in the months and years ahead, the business can generate pleasing cash flow from its operations.
It is also hopeful of developing the Jadar project in Serbia, Europe.
Final thoughts on the Rio Tinto share price
With the Rio Tinto share price down 10.6% from 1 February 2023, I think it’s a useful time to consider the major miner.
While I’d prefer to invest at a share price under $100, or even $90, I think this is a decent entry price.
