3 reasons why the Rio Tinto share price could be a buy

The Rio Tinto Ltd (ASX: RIO) share price has been a strong performer within the S&P/ASX 200 Index (ASX: XJO) over the past year, rising by 28%, as the chart below shows.

Rio Tinto is involved with a number of commodities including iron ore, copper, aluminium, bauxite and lithium. Not many miners around the world have as much commodity diversification as Rio Tinto.

The ASX mining share may be best known as an Australian iron ore miner, but there's a lot more to the business now. I think that makes it a much more appealing business than it was several years ago.

For me, there are at least three compelling reasons to consider the business.

Growing copper exposure

Iron ore prices can be volatile and don't seem to have a strong outlook at present because of headwinds for both supply and demand. Non-Australian regions are looking to increase iron ore production (supply), and the huge Chinese residential construction boom isn't happening these days (demand).

Rio Tinto has deliberately and significantly increased its exposure to copper with a number of projects. Copper is essential for a number of growth areas such as electricity grids, renewable energy, electric vehicles and so on.

One of the company's key growth projects is Oyu Tolgoi, a huge copper operation in Mongolia. At peak production, Oyu Tolgoi is expected to produce 500,000 tonnes per annum of copper.

I think the 2026 half-year result strongly demonstrated the copper division's performance. The sold copper price increased by 35.5%, while copper operating earnings (EBITDA) soared by 84% to US$5.7 billion. I'm not expecting every result to see that much growth.

Lithium mining

I think it was a smart move by Rio Tinto to acquire Arcadium Lithium a couple of years ago, at a time when the sector was facing significant pessimism.

Its exposure to lithium now looks very appealing, with how the lithium price has rebounded, and electric vehicle demand has increased following the fuel uncertainty because of the Middle East.

The company is not generating a lot of earnings from this division because it's still developing its projects. But in the first half of FY26, the average realised lithium carbonate price rose 22% to US$18,960, segment revenue rose 84% to US$568 million, and underlying operating profit (EBITDA) rose 419% to US$218 million.

If lithium battery demand continues to grow, predominantly due to electric vehicles, then this division could become a meaningful contributor in the coming years.

African iron ore

It's possible that Australian iron ore may lose some of its strategic significance in the coming years.

Fortescue Ltd (ASX: FMG) recently highlighted that there are ongoing negotiations with China Mineral Resources Group (CMRG), a key buyer of iron ore. It could become harder to get a great price for Australian iron ore.

Meanwhile, Rio Tinto is working on a huge African iron ore project called Simandou. The fact that it's in partnership with Chinese operators (and the Government of Guinea) hopefully bodes well for the future realised (sold) iron ore price.

The scale of this project could mean significant production and appealing profit margins. I think it's a good idea to diversify away from Australian ore.

Overall, I believe the three factors above could lead to strong profits and good dividends, making Rio Tinto's share price appealing.

The post 3 reasons why the Rio Tinto share price could be a buy appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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