Rio Tinto’s Blistering Rally Hits a Legal Pothole in Madagascar
03.06.2026 - 16:24:00 | boerse-global.de
The past year has been extraordinary for Rio Tinto shareholders. The miner’s stock has climbed roughly 85%, driven by a copper price surge that pushed three-month metal above $13,925 a tonne on the London Metal Exchange – its highest level since mid-May. But that momentum faces a stark counterweight: more than 6,000 villagers living near the company’s ilmenite and monazite operation in southeastern Madagascar are preparing a lawsuit alleging that hazardous substances, including uranium, have contaminated local water sources.
The legal action, being orchestrated by UK law firm Leigh Day, targets the QIT Madagascar Minerals (QMM) joint venture near Fort Dauphin, in which Rio Tinto holds an 80% stake alongside the Madagascan government. The project produces ilmenite and monazite – a rare-earth mineral critical for high-performance magnets used in wind turbines and electric vehicles. Leigh Day has said it will file the suit before the end of this year unless a settlement is reached.
Rio Tinto pushes back hard against the accusations. The company points to an independent radiological study conducted in 2023 that found local food, water, air and dust to be radiologically safe, with a 2024 monitoring exercise confirming those findings. On the water management front, it notes that since a pilot plant came online in 2022 and the permanent full-scale facility started up in March 2024, nearly 15 million cubic metres of process water have been treated before discharge.
Should investors sell immediately? Or is it worth buying Rio Tinto?
The lawsuit is just one ESG headache on the radar. In May, Reuters reported that the Jesuits in Britain are considering selling their Rio Tinto stake, citing unsuccessful talks with the company over environmental problems in Madagascar and Guinea. At the annual general meeting, chairman Dominic Barton told investors that external audits had consistently found regulated metals below laboratory detection limits.
None of this has stopped the share price from charging higher. The rally is anchored in a diversified commodity portfolio: first-quarter 2026 copper-equivalent production rose 9% year-on-year, helped by the ramp-up of the Oyu Tolgoi underground mine in Mongolia. The integrated aluminium business also posted strong numbers, with the Persian Gulf’s roughly 9% share of global output keeping a geopolitical risk premium on the energy-intensive metal amid Middle East tensions. For the full 2025 financial year, Rio reported EBITDA of $25.4 billion and operating cash flow of $16.8 billion, with copper-equivalent production up 8%.
On the iron ore side, the company struck a symbolic milestone in May when the eight-billionth tonne of ore left the Cape Lambert terminal in the Pilbara. The long-term Rhodes Ridge project is expected to keep Pilbara capacity at 345–360 million tonnes annually, securing the iron ore franchise while copper drives growth. The stock, which closed recently at €94.34 after a 1.7% daily dip, still sits roughly 31% above its 200-day moving average and has gained nearly 39% since the start of the year.
How much financial damage a lawsuit could inflict remains unclear, but the strategic stakes are high. Rare earths and water pollution sit at the intersection of commodity supply chains and ESG scrutiny – precisely the fault line where Rio Tinto now finds itself. Whether Leigh Day proceeds with litigation or an out-of-court settlement emerges will shape the news flow around the stock for months to come.
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