Metal mining company Rio Tinto (RIO) is gearing up for a crucial shareholder showdown that could shake up its corporate structure. Investors will decide whether the company should review its decades-old dual listing in London and Sydney. Activist investor Palliser Capital argues that this structure limits Rio Tinto’s ability to pursue stock-based deals and fully benefit from Australian tax credits. Palliser Capital is pushing for Rio Tinto to transition into a fully Australian company with its primary listing on the Australian stock exchange.
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The company, however, disagrees, saying a change would be too costly. Rio Tinto warns that unifying its structure could cost between $7 billion and $15 billion in taxes and fees. It also says the move could reduce dividends and slow down key mining projects.
Shareholders Divided on the Issue
The vote will take place on April 3 in London and May 1 in Australia. For the resolution to pass, it needs 75% approval, but opinions are split.
Norges Bank, which manages Norway’s sovereign wealth fund, supports keeping the current setup. Meanwhile, California’s Calpers pension fund is in favor of a review.
Even if the resolution fails, strong support from investors could still push Rio Tinto’s board to reconsider its stance. Analysts say that if at least 20%-50% of shareholders vote in favor, the company may face pressure to engage in discussions.
Rio Expands in Lithium amid Structural Debate
Even as Rio Tinto faces pressure over its corporate structure, it has been making big moves in the mining sector.
The company recently completed a $6.7 billion acquisition of Arcadium Lithium, making it one of the world’s top lithium producers. Lithium is a key material for electric vehicle batteries, and Rio Tinto sees it as a long-term growth driver.
Is RIO Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Rio Tinto is Strong Buy based on three Buy and one Hold ratings over the last three months. The RIO share price forecast is $76, which is 26.18% above the current trading level. Year-to-date, RIO stock is 6.1%.
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