Rio Tinto, Codelco form lithium joint venture in Chile

SANTIAGO - Mining giants Rio Tinto (market capitalization: $100.78 billion) and Chile’s state-owned Codelco have announced the formation of a joint venture to develop the Salar de Maricunga lithium project, situated in the Atacama region, one of the world’s richest lithium reserves. According to InvestingPro data, Rio Tinto maintains a strong financial health score of "GREAT" and offers an attractive 7.12% dividend yield. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available through their comprehensive Pro Research Report. The collaboration marks a significant step in their strategic partnership aimed at cementing both entities’ roles as key suppliers in the global energy transition market.

Under the terms of the agreement, Rio Tinto will acquire a 49.99% stake in the project by contributing $350 million towards further studies and resource analysis, leading to a final investment decision. Subsequent to this, Rio Tinto has committed an additional $500 million for construction costs upon the project’s approval, with a further $50 million investment contingent on the start of lithium production by the end of 2030.

The joint venture is set to focus on updating the declared reserves and resources, while also progressing studies to facilitate future investment decisions. Both companies have emphasized their commitment to sustainable development practices, including shared infrastructure and water usage minimization strategies. Rio Tinto’s strong financial position, with a conservative debt-to-equity ratio of 0.26 and robust EBITDA of $19.06 billion, positions it well to fund such strategic initiatives.

Rio Tinto’s CEO, Jakob Stausholm, expressed pride in partnering with Codelco to deliver a world-class project using Direct Lithium Extraction technology. He highlighted the venture’s alignment with Rio Tinto’s growth strategy in critical minerals essential for energy transition.

Codelco’s Chairman, Máximo Pacheco, echoed the sentiment, emphasizing the strategic importance of the project for Chile and the value of partnering with Rio Tinto.

The transaction is expected to close by the end of the first quarter of 2026, pending regulatory approvals and customary closing conditions. The joint venture will also prioritize deep engagement with local communities and support infrastructure development, while employing advanced extraction, processing, and re-injection technologies to maximize mineral recovery and minimize environmental impact.

This move is part of a broader industry trend as companies seek to secure resources critical for the burgeoning electric vehicle and renewable energy sectors. Trading at a P/E ratio of 8.71, Rio Tinto presents an interesting opportunity for investors focused on the energy transition sector. InvestingPro subscribers can access detailed analysis, including 8 additional ProTips and comprehensive valuation metrics through the platform’s exclusive Pro Research Reports, available for over 1,400 US-listed companies. The information for this report is based on a press release statement.

In other recent news, Rio Tinto announced a substantial investment of $1.2 billion to modernize its Isle-Maligne hydroelectric power plant in Alma, Quebec. This project, the company’s largest investment in hydroelectric assets since the 1950s, aims to secure the long-term future of low-carbon aluminum production in the region. The modernization is expected to be completed by 2032 and will involve significant infrastructure overhauls, including turbine replacements and system rehabilitations. Meanwhile, JPMorgan reiterated its Overweight rating on Rio Tinto, setting a price target of GBP59.20. This comes amidst an upward revision in China’s GDP growth forecast, which could impact the Metals & Mining sector positively.

Additionally, Rio Tinto reported that extreme weather events impacted its Pilbara iron ore operations, leading to expected shipments at the lower end of guidance. To mitigate the effects, the company plans to invest approximately A$150 million in rectification efforts. Despite these challenges, Rio Tinto achieved record production at its Oyu Tolgoi copper mine and bauxite operations. The company also highlighted progress in its growth projects, including the first iron ore production at Western Range and the advancement of the Simandou project. Furthermore, Rio Tinto completed the acquisition of Arcadium, forming Rio Tinto Lithium to establish a leading lithium business.

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