Rio Tinto Shares (LON: RIO) Hits New High

Rio Tinto shares (LON:RIO) surged to a new high of 6,352p today, reflecting a 1.45% increase at the time of writing. This upward momentum is fuelled by renewed merger talks with Glencore, positive analyst adjustments, and significant progress in strategic projects.

The stock's performance underscores investor confidence in the mining giant's prospects. The resurgence of merger discussions with Glencore, potentially creating a $260 billion behemoth, has particularly excited the markets. The proposed merger aims to capitalize on the escalating demand for crucial metals such as copper and iron, which are vital for the global green transition. Rio Tinto faces a February 5 deadline to formalize an offer or withdraw from discussions for a specified period, according to UK securities regulations.

Analyst firms have recently recalibrated their outlooks on Rio Tinto. Morgan Stanley increased its price target to AUD121.00 from AUD118.00, maintaining an Equalweight rating. This adjustment reflects a slight reduction in the fiscal year 2025 earnings per share estimate, but anticipates increases for 2026 and 2027.

On the other hand, Jefferies lowered its price target to 6,000 GBp from 6,400 GBp, citing a cautious outlook for the metals and mining sector in 2025 due to cyclical factors. Despite this, Jefferies maintains a Buy rating, projecting a stronger demand environment in 2026 and 2027. Rio Tinto's stock previously reached a 52-week high of $77.71 USD on December 18, 2025, demonstrating a 38.04% total return over the past year.

Strategic investments and project developments further bolster Rio Tinto's position. The acquisition of Arcadium Lithium in March 2025 for $6.7 billion positions Rio Tinto as the world's third-largest lithium miner, aligning with the growing demand for lithium in electric vehicles and renewable energy storage. Additionally, the first shipment of high-grade iron ore from the Simandou project in Guinea on December 8, 2025, represents a significant milestone. This $6.2 billion venture is expected to substantially increase Rio Tinto's iron ore production capacity, catering to global demand for high-quality iron ore.

Favorable market dynamics also play a crucial role in Rio Tinto's share price surge. Copper prices have reached near-record highs, surpassing $12,000 per tonne, driven by supply deficits and the metal's critical role in electrification and AI infrastructure. Rio Tinto's diversified portfolio, including substantial copper operations, is poised to benefit from this trend. While China's steel output has experienced fluctuations, robust iron ore imports have sustained profitability for Rio Tinto's Pilbara operations. The company's strategic investments in high-grade iron ore projects like Simandou further solidify its market position.

Analyst Summary: Bull and Bear Cases

The convergence of strategic mergers and acquisitions, positive analyst outlooks, successful project developments, and robust commodity market dynamics underpins the recent surge in Rio Tinto's share price. These factors collectively contribute to a positive market sentiment, driving the stock to new heights and suggesting a potentially strong outlook for the company.