市场见解

Rio Tinto (ASX:RIO) share price stumbles on geopolitical instability

Here’s what weighed on the Rio Tinto share price on Monday…
The post Rio Tinto (ASX:RIO) share price stumbles on geopolitical instability appeared first on The Motley Fool Australia. –

The Rio Tinto Ltd (ASX: RIO) share price finished a glowing a shade of red on Monday.

At market close, shares in the multinational mining company ended the day 0.84% down to $110.44.

Military coup weighs on West African mining potential

Investors in mining companies such as Rio Tinto were treading carefully today as reports flow in of a military coup in Guinea. Reportedly, a unit of the West African country’s military has overthrown the government.

Guinea is already one of Australia’s largest suppliers of bauxite, which is an unrefined form of aluminium. Consequently, this latest political instability could impact mining companies that operate in the area. Additionally, the development has cast a shadow on earlier optimism of Guinea becoming a major iron ore producer.

Following the boom in commodity markets, some investors have had high hopes for the Simandou mine in Guinea. The uncertainty was reflected in the weaker Rio Tinto share price before market close.

The site is believed to be the largest iron ore deposit of its kind, containing an estimated 10 billion tonnes of steelmaking ore.

In August, S&P Global reported that the deposit had been won by a Chinese-Singaporean-Guinean consortium. This consortium had been eyeing 2025 as the year to commission different blocks of the site, with Rio Tinto being involved through 2 mining leases.  

KPMG Geopolitics director Merriden Varral commented on the instability in the West African region, stating:

The issues driving terrorist activity in that region of the world are not set to be resolved in the immediate future, particularly as COVID-19 exacerbates existing inequalities and undermines poverty reduction.

An urgent meeting has been called by the African Union’s Peace and Security Council following the takeover.

Commodity pressures on the Rio Tinto share price

A steep and sudden fall in iron ore prices has weighed on many ASX-listed miners in the past month. The Rio Tinto share price is no exception, falling approximately 15% over that period.

Furthermore, this is not the only geopolitical uprising that the company has had to deal with in recent months. Rio Tinto has only recently resumed operations at Richards Bay Minerals in South Africa after widespread unrest across the region. This stemmed from the imprisonment of former President Jacob Zuma for contempt of court.

Lastly, the weakness in ASX-listed mining companies extends beyond the Rio Tinto share price on Monday. Fortescue Metals Group Ltd (ASX: FMG), BHP Group Ltd (ASX: BHP) finished the day down 11.08% and 0.52% respectively.

The post Rio Tinto (ASX:RIO) share price stumbles on geopolitical instability appeared first on The Motley Fool Australia.

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More reading

The Rio Tinto (ASX:RIO) share price has dropped 17% in one month. Is it a buy?
Why the Rio Tinto (ASX:RIO) share price is down 17% in a month
These were the worst performing ASX 200 shares in August

ASX 200 miners beware as UBS warns iron ore will sink under US$100 in 2022

August hasn’t been a great month for the Rio Tinto (ASX:RIO) share price

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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