Rio Tinto Upgraded to "Buy" from "Hold"

Dominic Turner
shareprices.com - Tuesday, February 02, 2010

Eurasian Natural Resources Corporation (ENRC) was the best performing stock, closing up 43p or 4.6% at 977p, but there was strength throughout the sector. Kazakhyms, Rio Tinto, Xstrata, Lonmin and Anglo American were all in positive territory and, collectively, managed to drag the FTSE 100 index into the blue, despite losses elsewhere. The leading share index closed up 35.90 points or 0.7% at 5,283.31.

Global mining giant Rio Tinto, which produces aluminium, coal, copper, diamonds, iron ore and uranium amongst other commodities, was the subject of an upgrade to "buy" from "hold". The broker attributed the upgrade to upgraded iron ore prices and strong cash generation in iron and copper. Rio Tinto also announced that it had completed the sale of parts of its Alcan packaging business to Amcor in Australia for $1.95 billion.

Rio Tinto borrowed heavily to acquire Alcan three years ago, but Chief Financial Officer, Guy Elliot, was quoted on the Reuters website saying, "Since the start of 2009 we have completed divestments of 5.6 billion US dollars despite a difficult environment created by the global financial crisis." Indeed, Rio Tinto appears to be doing something right because when the market closed on Tuesday its share price stood at 3,291p, up 108p or 3.39%, compared with 1,694p at the start of 2009.