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“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So, we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.”
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Rio Tinto Limited (ASX: RIO) will be terminating all commercial ties with Russia amid the Ukraine invasion.
The Rio Tinto share price dropped 7.73% today to close at $110.61. For comparison, the S&P/ASX 200 Index (ASX: XJO) climbed 1.1% today.
So how will this decision impact Rio Tinto?
Russia boycotted
Rio Tinto confirmed it is cutting ties with Russia, Reuters reported. In an email statement, a company spokesperson said: “Rio Tinto is in the process of terminating all commercial relationships it has with any Russian business.”
The decision has sparked speculation about Rio Tinto’s Queensland Alumina Limited refinery, based in Gladstone. Russian company Rusal has a 20% stake in this business.
Sources told the Sydney Morning Herald the joint venture has been placed “under immediate review”. However, the publication reported Rio may need to buy out Rusal’s stake in this venture.
Rusal is Russia’s largest aluminum producer. An expert predicted Rio’s move could tighten aluminum supply. In a Bloomberg article cited by Yahoo Finance, mining analyst at Shaw and Partners Peter O’Connor said:
Rio’s move could keep things tight in the aluminum market until trade flows can adjust.
Rio is said to not have any operational assets or employees in Russia or Ukraine. The company joins other giants including Shell PLC (NYSE: SHEL), BP PLC (NYSE: BP), and Exxon Mobil Corp (NYSE: XOM) in pulling out of Russia.
Rio Tinto share price snapshot
As my Foolish colleague Aaron reported earlier, Rio Tinto shares were trading ex-dividend today. Anyone who buys shares from today will miss out on the dividend, hence the share price fall.
The Rio Tinto share price has leapt 10% this year to date but has fallen 3% over the past 12 months.
In the past month, Rio Tinto shares have slipped by 5%, while they are down 10% over the past week.
Rio has a market capitalisation of about $41 billion based on its current share price.
The post Rio Tinto (ASX:RIO) is cutting all ties with Russia. What does this mean for the mining giant? appeared first on The Motley Fool Australia.
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More reading
- Why Newcrest, Nickel Mines, Rio Tinto, and Woodside shares are dropping today
- ASX 200 (ASX:XJO) midday update: Rio Tinto goes ex-div, tech and travel shares rebound
- Here’s why the Rio Tinto (ASX:RIO) share price is sliding 7% today
- 5 things to watch on the ASX 200 on Thursday
- Record $36bn in dividends could help ASX share market recovery
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 Bruce Jackson.
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