Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Another Reason to Get Your Hands on Rio Tinto

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

While the general economic uncertainty has clouded the prospects of the mining industry, the silver lining is that commodity prices have not fallen to the extent anticipated. That might be the reason why mining giants such as Rio Tinto (NYSE: RIO  ) are foraying into areas such as copper and gold.

Keeping this in mind, the cancellation of the "poison pill" plan by Ivanhoe Mines (NYSE: IVN  ) to pave the way for Rio's acquisition of one of the world's largest copper-gold reserves -- the Oyu Tolgoi project in Mongolia -- should work out well for the company.

Why Oyu Tolgoi?
And why not? With expected annual production of more than 544,000 tons of copper spread over the first 10 years once it begins commercial production in 2013, the Oyu Tolgoi project had long been on Rio's priority acquisition list. With the path cleared for a majority stake, Rio can now hope to cash in on a global scenario where demand for copper far exceeds supply, and the project has the potential to become one of its biggest new sources.

Rio Tinto's primary products are iron ore, copper, and aluminum, demand for which is expected to double in emerging markets in the next 20 years, with China and India at the forefront. So it's not for nothing that the company has spent around $4.2 billion to develop its existing 49% stake in the project. Plus, it's one of the few biggies in the mining sector to possess enough cash to fund a project valued at $6 billion.

Slowing things down
However, Rio Tinto has a long way to go if it fully wants to reap the benefits of the Oyu Tolgoi mines. The site has power supply problems. Moreover, with a 34% stake, the Mongolian government is sure to clamor for more local employment with the project.

The Foolish take
Oyu Tolgoi is slated to have a shelf life of at least 50 years. Its proximity to China, whose craving for copper is well-known, translates to lower transportation costs, apart from the availability of a ready market for Rio.

This is one company that is increasing its stakes to counter the effects of the European crisis and should make it in today's metal-starved economies, given the sheer value of its resources. Time to take a serious look at this one.

To stay updated on the latest developments about Rio Tinto, just add it to your watchlist. It's free.

Fool contributor Subhadeep Ghose does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1765502, ~/Articles/ArticleHandler.aspx, 10/21/2016 9:36:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,162.35 -40.27 0.00%
S&P 500 2,141.34 -2.95 0.00%
NASD 5,241.83 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:02 PM
RIO $32.42 Down +0.00 +0.00%
Rio Tinto CAPS Rating: ***
TRQ $3.03 Down +0.00 +0.00%
Turquoise Hill Res… CAPS Rating: *****