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Rio Tinto (RIO) Inks Deal to Buy 11.65% Stake in Boyne Smelters

Rio Tinto RIO has entered into an agreement to acquire the 11.65% interest in Boyne Smelters Ltd (“BSL”) from Mitsubishi Corporation MSBHF. The financial terms of the transaction have not yet been disclosed. BSL is located at Boyne Island in Central Queensland and is Australia’s second-largest aluminium smelter.

Earlier, on May 31, Rio Tinto entered into an agreement to acquire the 2.46% share in BSL that was held by Sumitomo Chemical Company Limited, a part of Sumitomo SSUMY. This arrangement with Sumitomo increased the company’s interest in BSL to 61.85%. With the recently struck deal with Mitsubishi, Rio Tinto’s share in Boyne Smelters will increase to 73.5%.

The deal with Mitsubishi is subject to various closing conditions, including approval from Australia’s Foreign Investment Review Board. It is expected to close in the second half of 2024. Following the closure, Mitsubishi will not have any stake in the BSL joint venture. Rio Tinto (73.5%) will have a majority stake in the joint venture and the remaining will be held by YKK Aluminium (9.50%), UACJ Australia (9.29%) and Southern Cross Aluminium (7.71%).

Boyne Smelters has been operating for more than four decades. Investments made in its operations over the past years have increased its annual capacity from 210,000 tons of aluminium to the current capacity of more than 500,000 tons of aluminium.

The facility’s activities include manufacturing carbon anodes in the carbon plant, aluminium production (smelting) in reduction lines and casting of molten metal into aluminium products ready for shipping. The smelter is connected through a conveyor belt to the Queensland Alumina Limited Refinery to ensure a seamless supply of alumina.

Rio Tinto produces some of the highest quality, lowest-carbon footprint aluminium in the world. The company’s share (then 59.4%) of aluminium production from BSL was around 295 Kt in 2023 and 75 Kt in the first quarter of 2024. It produced a total of 826 kt of aluminium in the first quarter, which was up 5% year over year. In 2023, Rio Tinto’s aluminium output was 3.27 Mt and it expects aluminium production between 3.2 Mt and 3.4 Mt in 2024.

Price Performance

In the past year, shares of Rio Tinto have lost 0.2% against the industry’s 5.2% growth.

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Zacks Investment Research

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Zacks Rank and a Stock to Consider

Rio Tinto currently carries a Zacks Rank #3 (Hold).

A better-ranked stock from the basic materials space is Carpenter Technology Corporation CRS, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.31 per share, which indicates year-over-year growth of 278%. The consensus estimate for earnings has moved 3% north in the past 30 days. It has an average trailing four-quarter earnings surprise of 15.1%. CRS shares have surged 105% in a year.


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Rio Tinto PLC (RIO) : Free Stock Analysis Report

Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

Sumitomo Corp. (SSUMY) : Free Stock Analysis Report

Mitsubishi Corp. (MSBHF) : Free Stock Analysis Report

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