Updated: Aug 19
Her name is Rio and she dances on the sands…
Granted. I used a Duran Duran reference in the for an article about a copper mining company. Too easy. But in a world that is building cars with a huge battery and motors at the wheel, that’s just how easy it is. Rio Tinto (NYSE:RIO) is sitting in a position of a supplier of need. As of today 8/17/2021 the price is 76.31 which is 20.5% down from the 52 week high of 95.97.
I have typically focused on lithium, but that is not all that is in play. Copper in an EV world is possibly the biggest behind aluminum and steel. Quality and length of runs will be engineered to bring greater efficiency.
But that’s not all.
The TVA (Tennessee Valley Authority) is looking into purchasing land in a rural area to build solar farms. Sounds great right? Well, there isn’t infrastructure out there. These pieces of land tend to be ideal because they don’t cost much. Few people need to be relocated, there aren’t businesses in the area driving up the price of real-estate.
We can see that the grid itself is built for power plants, normally near water. Over time, people build around these locations which drives up the real-estate near these plants. Power companies need huge open land that is cheap, ergo they go to rural unoccupied or underused areas. These are the solar areas of the future. Is it good? We can debate that ad nauseam.
My point is that there must be changes to the grid, and that will mean that more copper is required. RioTinto’s website says the work in about 35 countries. The word about is interesting there, but the take away is that there is a large catalog of mining going on.
Major players in mining are an easier play than penny stocks. Yes, you get bang when a penny stock moves, but there are true advantages in having a mature player. RioTinto has been in operation since 1880. They mine numerous metals and deal in volume.
Mining is a very dirty operation. The strike in the Copper mines in Chile are nothing new. They are the tip of the spear on many of these things. Also, many of these operations are not going to be economically pleasing. (Understatement.)
The strike is bad in Chile, no doubt. But in my opinion, it is the sign of a growing sector that needs some updating. Wages are one. This will add to the bottom line but that can be expected.
Let’s go all conditional reasoning style here…
Do you think we really will move to a more electric future?
Will the infrastructure need more capacity?
Will we be moving electricity more?
If you answered ‘YES’ three times then RIO is something you need to look into.
As always, thanks for reading. I hope this helps. Our goal at Charge Talk is to build understanding so you can understand what you are investing in. Any comments? Hit us up.
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This is not financial advice.