Usually, when a company like mining stock Rio Tinto (NYSE:RIO) opens a massive new project that can be described as a major milestone, investors are a lot happier about it. As it turns out, they aren’t happy at all, and shares of Rio Tinto are down modestly in Wednesday morning’s trading. The board at Rio Tinto just approved a massive new project in West Africa. It’s a project so big, in fact, that it represents a new world record.
It’s an iron ore project valued at around $20 billion, and Rio Tinto itself will put $6.2 billion into its operations. The remaining $13.8 billion will come from a larger partnership comprised of “…at least seven other companies,” reports note. Some companies, like Chinalco and Baowu, are still waiting on approval from the Chinese government. But given the state of the Chinese economy right now, it’s a pretty safe bet they’ll get it.
Rio Tinto’s Future Looks Bright
This project is actually just one of several that are likely to come up in the future. Rio Tinto recently revealed that it has the best exploration pipeline that it’s seen in years, suggesting that there are several other potential projects waiting in the wings as older projects exhaust their capacity. However, it’s worth noting that Rio Tinto has run into issues over commodity prices. The minerals they’re pulling out of the ground aren’t worth what they once were, and as a global economic slowdown comes into view, that might be a bigger problem than some might expect.
Is Rio Tinto a Good Long-Term Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on RIO stock based on three Buys assigned in the past three months, as indicated by the graphic below. After a 5.01% loss in its share price over the past year, the average RIO price target of $81.19 per share implies 24.75% upside potential.
