RIO

Rio Tinto Shs Sponsored American Deposit Receipts Repr 1 Sh

Industrial/Transportation, Energy


Presented:09/16/2015
Price:$37.21
Cap:$68.95B
Current Price:$66.47
Cap:$83.25B

Presented

Date09/16/2015
Price$37.21
Market Cap$68.95B
Ent Value$106.23B
P/E Ratio24.04x
Book Value$23.35
Div Yield4.4%
Shares O/S1,852.87M
Ave Daily Vol2,953,805
Short Int1.13%

Current

Price$66.47
Market Cap$83.25B
Rio Tinto Plc is engaged in the business of finding, mining and processing of mineral resources. It operates through five product groups: Aluminium, Copper, Diamonds & Minerals, Energy and Iron Ore. The Aluminium product group produces bauxite, alumina and primary aluminum production. The Copper product group produces copper, with valuable by products of gold, molybdenum, silver and nickel. The Diamonds & Minerals product group is engaged in mining, refining and marketing operations across three sectors. The Energy product group includes thermal coal, coking coal and uranium. The Iron ore product group supplies the global seaborne iron ore trade. The company was founded on March 30, 1962 and is headquartered in London, the United Kingdom.

Publicly traded companies mentioned herein: BHP Billiton Ltd (BHP AU; BHP), Fortescue Metals Group Ltd (FMG AU), Rio Tinto Ltd/ PLC (RIO AU; RIO), Vale SA (VALE)

Highlights

The presenter expects iron ore prices to remain depressed for the foreseeable future and is short a basket of companies that are exposed to the issue, including Fortescue, BHP, Rio Tinto and Vale. He focused the discussion on Rio Tinto (RIO), as it is the lowest-cost producer of iron ore in the world and its balance sheet has helped support the stock (shares are "only" down 15%-20% year-to-date, which is "not that bad" compared to shares of Fortescue and Vale which have suffered 65% and 50% declines over the same time frame, respectively). The four largest seaborne suppliers cannot avoid the fact that China is slowing and is the source of 2/3 of seaborne iron ore demand. If his estimates prove to be accurate and the price of iron ore settles in the $40-$45/ ton range, all of the producers’ FCF will be negatively impacted and shares of RIO could decline 50%.

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