Rio Tinto Abandons Traditional Mining Model for Trading and Derivatives

Rio Tinto is shifting its century-old business model to include third-party commodity trading and financial derivatives. The move comes under new CEO Simon Trott, who aims to create a 'stronger, sharper and simpler Rio Tinto'.

The company plans to expand its trading floor in Singapore, with Chief Commercial Officer Bold Baatar leading the effort. The focus will be on rebalancing alumina surpluses and deficits, addressing spare smelting capacity in North America, and expanding copper cathode and sulphuric acid trading.

Rio Tinto won't engage in directional bets on prices like Trafigura or Glencore, instead using derivatives to hedge commercial positions and manage risk. The company is also exploring a potential freight and logistics joint venture with Vitol Group.