Discussion in 'Stocks' started by themickey, May 11, 2019.

  1. themickey


    RIO is a buy imo if anyone is interested.
    One of the most advanced producing miners in the world, iron ore, aluminium, uranium, copper, diamonds, lithium, gold, salt, titanium, multinational company, low PE ratio.
    A world leader in autonomous mine haulage vehicles, trains, trucks, drilling.
    Top 20 company on ASX.
    Winu copper find in East Pilbara could be big for Rio Tinto.
    Last edited: May 11, 2019
    vanzandt likes this.
  2. gaussian


    Interesting. I don't spend much time in this sector.

    Technicals aside, fundamentally the PB ratio is a little high (~2.27). It's likely overvalued at the moment. Additionally, there is some concern over the safety of an autonomous mining fleet. LIDAR doesn't work well in dirty caves - though I'm not an expert on the subject.

    Forward PE is 9.14. When compared to it's peers in the industry it's PE ratio is closer to the higher end than the lower end. It's higher than VALE, and around average with the rest of the industry save a few outliers. Being average-high is more bullish than neutral but still not convincing with the PB being as high as it is.

    I'll keep this one on my radar, but it seems little pricey at the moment. I think I'll let it drop a bit before thinking about buying in. Thanks.
    themickey likes this.
  3. themickey


    The reason RIO may appear expensive, Vale as you know is in deep poo re the recent dam disasters, BHP likewise has some big bills to pay along the same vein, dam collapse in S America.
    Iron ore prices are rising consequently.
    In terms of mine efficiency this is expected to climb due to rollout of more autonomous mining.
    In terms of cashed up miners, RIO has a great warchest, Winu mine is speculative atm, but RIO is on the hunt to expand further into copper & lithium.
    Good companies don't normally run on cheap valuation.
    RIO is placed closer to Asia for supply than Vale.
  4. themickey


  5. themickey


    Rio Could Fast-Track Key Australia Copper Find Before U.S. Asset
    By David Stringer, July 14, 2019, 10:00 PM GMT+8

    Potential for Winu discovery to move quickly into production.

    Rio Tinto Group’s much-followed copper discovery in remote Western Australia could leapfrog a key U.S. project to be fast-tracked into production by the world’s No. 2 miner, according to a senior executive.

    Work is progressing to assess the size and quality of the Winu exploration project in the Paterson province in the state’s north, Copper and Diamonds Chief Executive Officer Arnaud Soirat said after visiting the discovery for the first time this month.

    Dependent on further exploration work, the discovery -- where Rio now has as many as 190 staff, about 12 drilling rigs and is constructing a gravel airstrip -- could move ahead of the Resolution project in Arizona in the producer’s pipeline.

    The company is already advancing an underground expansion of the Oyu Tolgoi copper mine in Mongolia that’s scheduled to boost production from the early 2020s and expects key studies on Resolution to be completed by 2021. Rio has been working on the Resolution project — a joint venture with BHP Group — since 2004, and disclosed the first key details about Winu in February.

    “If the deposit is right, and the metallurgy is right, then potentially” Winu could come before Resolution, Soirat told reporters Friday at the Argyle diamond mine, also in Western Australia. The site looks “not that difficult to mine from what we have seen so far, and so potentially it’s a mine that could come in between” Oyu Tolgoi’s expansion and the development of Resolution, he said.

    Copper demand is seen growing about 2-3% a year, driven by urbanization, greater adoption of renewable energy generation and rising demand for electric vehicles. Rising global living standards as developing nations urbanize will require about an extra 428 million tons of copper by 2050, or about two-and-a-half times the current amount of the metal installed today, according to Glencore Plc.

    While the Winu find, about 350 kilometers (220 miles) southeast of Port Hedland, has excited investors and competitors -- prompting some to pour over satellite imagery to gauge the project’s potential -- more assessment is still needed, Soirat said. Additional drilling this year should allow Rio to understand “how rich the deposit is, and how big it is as well,” he told reporters.

    Exploration staff are also ready to begin studying potential other targets nearby, according to Soirat. There’s potential that the Winu discovery could be part of a much a larger system that may eventually host multiple different mines, Rio’s CEO Jean-Sebastien Jacques said in May.

    “This is also a very big mining license, so we will also be looking at other potential sites in the region,” Soirat said. “There are some signs where our exploration team are saying it would be worth going to having a look.”

    Soirat also said:
    In Mongolia, Rio is continuing to review the schedule and construction costs of Oyu Tolgoi’s underground development amid difficult ground conditions that have slowed the planned $5.3 billion project, “looking at potential options” for copper acquisitions, but doesn’t regard M&A as a “must” and hasn’t found options that represent value, ...... is studying options to further extend the life of the Kennecott mine in Utah, and investigating potential options to carry out selective underground mining at the site
    Rio’s projects are “nicely timed to come online at a time when everyone expects the market to start becoming under-supplied,” he said
  6. themickey


    Concerns over the surging iron ore price and operational challenges in Mongolia and Australia overshadowed Rio Tinto's record $5 billion shareholder return program, driving down shares in the miner to their lowest level in three months.

    Rio on Thursday reported that underlying earnings for the first half rose 11 per cent to $4.93 billion. The company declared $US3.5 billion ($A5.01 billion) of shareholder returns, including a record ordinary interim dividend, and a special dividend totalling $US1 billion ($A1.45 billion)

    But the stock fell by as much as 4.25 per cent on Friday, touching a three month low. Shares closed 3.1 per cent lower at $94.77.

    The share drop illustrated the sentiment that Rio's growth, on the back of an iron ore price that soared by more than 60 per cent following January’s tailings dam collapse that stifled major Brazilian miner Vale’s production, masked the company's wider struggles.

    Mr Jacques told investors on Thursday that unclear energy policy and increased energy prices were putting Rio's aluminium smelters in Queensland and New South Wales "on very thin ice".

    "What we want is a globally sourced and competitive energy, to make sure our premium aluminium business in Australian remains competitive,” he said.

    "We’re not asking for anything special. But I’m looking at it from the outside and saying ‘Hang on, Australia is full of resources, it should be a place where energy is pretty cheap in a global landscape’ and that is not the case today."

    Rio's underlying aluminium profits dropped 64 per cent year-on-year to US$315 million, according to UBS analysis. Energy and minerals (28 per cent) and copper and diamonds (23 per cent) also decreased.

    Coupled with weakening aluminium demand - its price decreased 15 per cent in the last year - Mr Jacques acknowledged long-term closure of the smelters could be possible if government discussions were unfruitful.

    Iron ore "saved the day" with a 40 per cent underlying profit year-on-year increase - the only one of Rio's four sectors to grow - and makes up 60 per cent of Rio's overall profits.

    UBS, which revised its price target 3 per cent to a conservative $97, estimated that without the iron ore price hike, Rio's iron ore ROCE (return on capital employed) would have almost halved from 63 per cent to around 35 per cent.

    Mining analyst Glyn Lawcock consequently labelled Rio's reliance on iron ore "unsustainable" with worldwide supply, including from Vale, expected to lift and demand in China set to soften in the coming months.

    Shares in iron ore mining giants BHP (2.99 per cent) and Fortescue Metals (4.79 per cent) similarly dropped on Friday. Rio's London stock closed with a 3.37 per cent drop.

    Rio executives on Thursday also repeatedly acknowledged "operational issues" including poor fleet performance and high labor turnover at its Brockman mine in the Pilbara region.

    "We actually had literally some trucks standing because we didn't have the people," said head of Rio iron ore Chris Salisbury.

    While output from Brockman was also affected by a cyclone in March, Rio will put $80 million towards fixing its operational problems.

    The dual Australian-British listed company was also forced to record a US$2.3 billion writedown of its slated Oyu Tolgoi mine in Mongolia due to geotechnical problems that could delay the project up to 30 months.

    Mr Jacques remained buoyed by Rio's positive results, and on Thursday said he was "hopeful that common sense will prevail" between the US and China shortly before Donald Trump announced further sanctions on Chinese imports.

    Morgans senior analyst Adrian Prendergast said that Rio's overall EBITDA margin of 47 per cent meant its prospects remained positive, with key risks, including commodity prices and wider demand, out of its control.
    With Reuters
    Stockolio likes this.