Rare Earth Sector is Moving – RIO is One to Watch

Rio Tinto Plc （ADR） （NYSE: RIO） is a London-based mining company engaged in each stage of metal and mineral production. The company is engaged in the production of aluminum, copper, diamonds, coal, iron ore, uranium, gold and industrial minerals. The company’s production facilities are located primarily in Australia and North America. It operates in more than 50 countries.

Rio Tinto and BHP Billiton （ADR） （NYSE: BHP） ended plans for an iron ore production joint venture in Western Australia after extensive discussions with regulators. Both companies were recently advised that the joint venture would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office.

Tom Albanese, CEO of Rio Tinto, said that the full value of the synergies on an offer from a joint venture was a price well worth pursuing. Albanese said that he was disappointed that the regulators did not approve of a joint venture after the two companies worked together for 16 months to show the joint venture’s pro-competitive effects.

Last week, Rio Tinto gave a review of its operations in the third quarter. The company’s iron ore production set a quarterly record across is global operations. The company reported that its Pilbara system operated in excess of its nameplate capacity during the third quarter, matching third-quarter 2009 production of 56.8 million tons. The company reported that its mined copper and gold declined 19% and 33%, respectively, in the third quarter. The year-over-year decline was primarily due to lower grades of Grasberg. The company reported a 17% year-over-year increase in Bauxite production.

Commenting on the third-quarter operations, Albanese said that the company delivered consistently strong operating performance in 2010 and third quarter was no exception. He said that the company continues to run its operations at close to or above capacity rates, taking advantage of strong prices for its products.

Shares of Rio Tinto have a 52-week range of $39.30-$66.65. The shares are currently trading above their 50-day and 200-day moving averages. They have a support level at $64.49 and a resistance level at $66.89. Year-to-date, the shares are up 20.61%.