Rio Tinto (NYSE:RIO) executives highlighted stronger production, higher earnings and an unchanged commitment to returning 60% of underlying earnings to shareholders during the company’s 2025 full-year results presentation, while also addressing a fatality at the Simandou project and providing updates on major growth initiatives in copper, iron ore, aluminum and lithium.
Safety incident prompts work stoppage and independent review at Simandou
Chief executive Simon (last name not provided in the transcript) opened by focusing on safety and said he was traveling to Guinea to spend time with the Simandou team following the death of a colleague at the mine site the prior Saturday.
2025 results: higher volumes, stable earnings, and a 60% payout
Management described 2025 as a year of strong operational performance and improving financial results driven primarily by higher volumes. Simon said the company delivered an “industry-leading 8% equivalent increase in copper equivalent production,” setting annual production records for copper and bauxite. He also said Pilbara operations rebounded from four cyclones early in the year and achieved production records from April.
Financially, Simon said underlying EBITDA rose 9% to $25.4 billion, supported by contributions from copper and aluminum. He said underlying earnings were $10.9 billion and the company would return 60% of that to shareholders, totaling $6.5 billion.
CFO Peter Cunningham said the year-on-year improvement was “largely driven by volume growth,” including higher copper volumes from Oyu Tolgoi (O.T.). He cited “nearly $3 billion of volume improvement” year-on-year and said cost discipline improved late in 2025, with reductions expected to flow more fully into 2026 results.
Cunningham said net debt increased to $14.4 billion following the Arcadium acquisition and then fell slightly in the second half due to strong operating cash flow. He said gearing was 18% and described the balance sheet as in good shape and consistent with a Single A credit rating target. He reiterated the company’s shareholder returns policy of paying 40% to 60% of underlying earnings and noted a 10-year track record of paying at the top end of the range.
Markets and segment performance: copper and aluminum offset iron ore softness
In his market commentary, Cunningham emphasized “the resilience of iron ore” and said it remained supported by Chinese steel export growth and a structurally balanced market. He also described a steep cost curve with “over 100 price-sensitive producers from more than 20 countries” supporting the top end.
He said copper and aluminum prices both rose 9% on average for the year, while noting copper ended the year 44% higher than 12 months earlier and aluminum 17% higher. He said demand growth was uneven—construction remained weak—but the “backbone of growth” was the energy transition, particularly power systems and electrification. He also said lithium ended the year with strong momentum as markets returned to balance earlier than expected, and highlighted battery storage as an emerging demand driver.
On segment EBITDA, Cunningham said iron ore EBITDA fell 11% year-over-year but was more than offset by copper and aluminum.
- Iron ore: EBITDA of $15.2 billion. Unit costs were in line with guidance at $23.50 per ton. For 2026, Rio guided to $23.50 to $25 per ton, partly reflecting a stronger Australian dollar.
- Copper: Cunningham called copper “the standout,” with EBITDA more than doubling to $7.4 billion on higher prices and volumes. Shipments at O.T. rose 60% as underground development was completed. Unit costs were down 53%, and 2026 unit cost guidance was described as comparable to 2025.
- Aluminum: EBITDA rose 20%, with management pointing to operational stability in smelting and record bauxite production. Cunningham said the commercial team was working to optimize the vertically integrated position amid a changing tariff environment.
- Lithium: Cunningham said the newly formed lithium business was not yet a significant contributor. The focus remains on in-flight projects targeting capacity of around 200,000 tonnes per annum by 2028.
Productivity, costs, CapEx, and capital release initiatives
Simon and Cunningham repeatedly returned to the company’s focus on “stronger, sharper, simpler” ways of working. Simon said Rio had unlocked a $650 million run rate of annualized productivity benefits and would achieve that run rate by the end of the first quarter. He also said cash improvements in 2026 would be “materially above” that first-quarter run rate.
Cunningham described the $650 million as a near-term program driven by operational discipline, streamlining and portfolio focus. He said by the end of Q1 the company would be in the next phase of the program, larger in scale and multi-year, with more delivery expected in 2027 and 2028. He outlined operational focus areas in Pilbara (system operation, contingency stockpiles, asset shutdown sequencing), copper (underground equipment productivity and metal recoveries), and aluminum (smelter stability, maintenance quality, contractor performance), along with central efforts to clarify accountabilities and streamline workflows.
On capital spending, Cunningham said 2025 CapEx was at the high end of guidance at around $11 billion, including $1.6 billion at Simandou and just over $1 billion for lithium growth projects. He said Simandou was nearly two-thirds complete and growth commitments should ease over the next few years. He said guidance remained up to $11 billion for the next two years, stepping down to $10 billion thereafter. He also said a final decision on expanding the Amrun mine at Weipa would be considered later in the year.
Both executives also referenced capital release from the asset base. Simon reiterated a target of $5 billion to $10 billion in cash proceeds and said the company was “actively testing the market” for RTIT and its Borates businesses.
Project pipeline and strategic questions: Simandou ramp, Oyu Tolgoi, lithium, and Glencore talks
On growth projects, Simon said Oyu Tolgoi’s underground development is complete and fully invested, with the ramp-up underway, and the company is on track to deliver on average around 500,000 tonnes of copper per year from 2028 to 2036. He said the company achieved its first shipment of high-quality iron ore from Simandou in December and reaffirmed a 60 million tonnes per annum ramp-up. In lithium, he reiterated the 200,000 tonnes per annum capacity target by 2028.
He also said Rio is directing 85% of its exploration budget toward copper and named longer-dated copper options including La Granja in Peru, Resolution in Arizona, and Nueva Cobre in Chile, while emphasizing that geology must translate into “value-accretive projects.”
During Q&A, analysts focused heavily on Rio’s past discussions with Glencore. Simon said the company engaged constructively and assessed the full perimeter of Glencore’s business, including coal, through the lens of asset quality and whether a combination could create incremental shareholder value. He said Rio concluded it could not reach an agreement that would deliver value for Rio Tinto shareholders, describing valuation as grounded in underlying asset value and potential synergies, evaluated against Rio’s base case.
Other Q&A topics included possible capital release tools such as streaming (which Simon said was among the options being reviewed systematically), iron ore strategy and customer discussions in China, lithium capital allocation discipline given price volatility, and how Rio evaluates geopolitical risk through tools such as higher discount rates and return hurdles. Asked about dividend calibration, Simon said he was comfortable with the existing payout policy framework.
About Rio Tinto (NYSE:RIO)
Rio Tinto is a global mining and metals company that explores for, mines, processes and markets a wide range of commodities. Its principal products include iron ore, aluminum, copper, diamonds and various other minerals and industrial materials. The company’s activities span the full value chain from exploration and project development to mining, processing, smelting and refining, supplying raw materials to industries such as steelmaking, automotive, packaging, electronics and construction.
The origins of Rio Tinto date back to mining operations in the Rio Tinto region of Spain in the 19th century, and the group has since grown into a multinational enterprise.
