Berenberg lowers target price on Rio Tinto following Q2 update

16th Jul 2026 12:21

(Sharecast News) - Analysts at Berenberg cut their price target on Rio Tinto from 8,200p to 8,100p on Thursday, saying higher‑than‑expected diesel costs in the Pilbara were likely to keep unit‑cost pressure elevated, while parts of the miner's Q2 production update pointed to downside risks in iron ore.

Berenberg said Rio Tinto's Q2 numbers were a mixed bag, with production guidance left unchanged across commodities, but Pilbara unit costs rising $0.80 per tonne year‑on‑year in the first half due to elevated diesel prices.

Copper C1 cost guidance was lowered to $0.30 to $0.50 per pund, helped by strong gold prices, while Rio flagged a $1.2bn working‑capital cash outflow tied to rising iron‑ore inventories and a $443m tax outflow in Mongolia.

Copper output of 213,000 tonnes was slightly below Berenberg's forecast, mainly due to a weaker quarter at Kennecott, where a furnace breach caused an unplanned outage, while iron ore was mixed, with Pilbara production and shipments marginally ahead of estimates, but IOC delivering just 2.9mt versus the broker's 4.2mt forecast, creating potential downside to full‑year guidance.

Rio Tinto delivered first lithium tonnes from Fénix 1B and Sal de Vida, but a development decision on the Nemaska Lithium project was pushed to the second half as the review continues.

Berenberg updated its model following the Q2 report, trimming its target price and keeping a 'hold' rating, noting Rio trades at 1.38x net asset value and 5.7x FY26 underlying earnings.

Reporting by Iain Gilbert at Sharecast.com