Rio Tinto will wind down its NZ aluminium smelter business following the conclusion of the strategic review because it is no longer viable because of the aluminium price and energy costs. The wind-down is expected to be completed in August 2021.
Morgan Stanley values the company’s primary aluminium business at $11.50 a share, or $18.6bn. Tiwai Point is not valued separately and the impact of the closure is likely to be negligible as the smelter is loss-making.
Equal-weight rating retained. Industry view is In-Line. Target is $93.50.
Target price is $93.50.Current Price is $98.67. Difference: ($5.17) – (brackets indicate current price is over target). If RIO meets the Morgan Stanley target it will return approximately -6% (excluding dividends, fees and charges – negative figures indicate an expected loss).