Mon, Mar. 9, 3:59 AM
- Just weeks after the group announced a 10% drop in annual earnings and just days after iron ore tumbled to a six-year low, Rio Tinto (NYSE:RIO) is bracing itself for one of its biggest internal restructurings since Sam Walsh took the helm at the mining group two years ago.
- Hundreds of more roles are to be cut as Walsh demands Rio be "more responsive" in keeping up returns to investors, while the company slashes $750M in costs this year.
- Rio’s workforce has already gone from 71K at the end of 2012 (just before Walsh became CEO), to below 60K at the end of last year.
- Previously: Rio Tinto to condense corporate structure in cost cutting move (Feb. 27 2015)
Fri, Mar. 6, 8:25 AM
- Iron ore tumbles to a six-year low after China lowered its economic forecast, renewing concerns about its appetite for the steel-making material at a time when supplies are already outpacing demand.
- Steel demand growth in China - which buys three in every five tons of iron ore traded by sea - last year already was at its slowest in more than a decade.
- Australian iron ore miners have been laying off workers and cutting costs as they cope with lower prices, but they are not expected to curb production, particularly as a weaker Australian dollar helps cushion them from the impact of falling prices.
- RIO -1.4%, BHP -0.6% premarket; also VALE -0.8%.
Thu, Mar. 5, 7:59 AM
- Rio Tinto (NYSE:RIO) clears a major hurdle in its bid to expand the Mount Thorley-Warkworth coal mine, one of Australia's largest, with state planning officials in New South Wales recommending approval of a controversial extension.
- Rio has spent more than five years chasing government approvals for a A$600M (US$468M) expansion of the open-cut mine, but has faced repeated legal challenges that said the development would threaten endangered ecological areas and harm nearby residents.
- The mine is part of the Mount Thorley Warkworth complex that consists of two adjacent open-cut pits, and Rio says the expansion is needed to keep the mine in operation.
- The planning commission's report will now be considered by the state government before consent for the project is given.
Wed, Mar. 4, 8:38 AM
- Rio Tinto (NYSE:RIO) says its majority-owned Bengalla coal mine in Australia has been cleared to boost output by a third and operate for another two decades.
- Rio subsidiary Coal & Allied and 40% partner Wesfarmers (OTCPK:WFAFF) have been seeking the clearance by the New South Wales state government to continue mining and potentially lift production of thermal coal to 15M metric tons/year from 10.7M.
Fri, Feb. 27, 8:14 AM
- Rio Tinto (NYSE:RIO) says it is restructuring its main product groups into four units, part of its strategy of cutting costs as commodity prices slump.
- Rio is folding its coal and uranium units into existing business divisions, eliminating the job of its energy chief and other corporate roles; it also plans to cut hundreds of jobs in its iron ore unit in the Pilbara region, which it will announce in the weeks ahead.
- Rio's two other divisions, aluminum and iron ore, will not be restructured.
Wed, Feb. 25, 2:45 AM
- Rio Tinto (NYSE:RIO) will not be taken over by rival Glencore (OTCPK:GLNCY) because there is no value in it for shareholders and regulators will never let it happen, announced Rio Tinto chief executive Sam Walsh.
- Rio snubbed a takeover approach from Glencore last August to create a $160B mining and trading giant, but Glencore never ruled out making a fresh attempt.
- Under U.K. rules, it could return with an offer from April onward.
- Previously: Glencore confirms it is no longer considering merger with Rio Tinto (Oct. 07 2014)
- Previously: Rio Tinto says it turned down Glencore merger idea in August (Oct. 06 2014)
Tue, Feb. 24, 4:58 PM
- BHP Billiton (NYSE:BHP) racked up several positives in its H1 results, but the company’s valuations and challenges stemming from its U.S. onshore petroleum and potash operations, as well as the South32 de-merger mean Rio Tinto (NYSE:RIO) may be the better stock to play a possible recovery in commodities prices, according to a Barron's profile.
- From a valuation standpoint, BHP trades at 15.4x projected earnings and 2.1x book value, while Rio trades at 13.3x projected earnings and 2.1x book, Barron's Isabella Zhong writes.
- Rio's iron ore cash cost of $19.50/metric ton is even leaner than BHP’s $20.35, and Rio has a more focused business, with a concentration on iron ore, aluminum and copper., and - unlike BHP - no exposure to oil.
Fri, Feb. 20, 9:58 AM
- Indonesia's government will start allowing miners to renew contracts earlier than two years before they expire, a move that would favor Freeport McMoran (FCX -0.6%) and its expansion plans in the country.
- FCX, which runs the Grasberg copper and gold mining complex, has for years been seeking contract certainty before investing the $15B-plus needed to turn its Indonesia asset into the world's biggest underground mine after 2016.
- FCX's current deal is due to expire in 2021 but Indonesia's energy and mineral resources minister says a government decision on an extension would be reached before by this July.
- Rio Tinto (NYSE:RIO) has a joint venture with FCX for a 40% share of Grasberg's production above specific levels until 2021, and 40% of all production after 2021.
Thu, Feb. 12, 11:59 AM
- Rio Tinto (RIO +2.3%) has no major M&A plans in the works, preferring to focus on building new mines rather than buying low-quality assets in the current market environment, CEO Sam Walsh says.
- The CEO says shareholders have asked whether Rio had any interest in deals, with some wondering whether the company might consider approaching Freeport McMoRan (NYSE:FCX) or Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), but "we are not doing that," adding that shareholders had dismissed the idea that Rio would give Glencore (OTCPK:GLCNF, OTCPK:GLNCY) "any air at all" to consider a tie-up.
- Talks are still ongoing with the Mongolian government to settle all outstanding concerns about the development of the underground Oyu Tolgoi mine, Walsh says while indicating that Rio has not offered to increase its stake in the mine.
- Walsh also says Rio will not take part in any upcoming tender process for two blocks of the massive Simandou iron ore deposit in Guinea.
- Earlier: Rio Tinto's $2B buyback signals shift in strategy
Thu, Feb. 12, 7:49 AM
- Rio Tinto (NYSE:RIO) +3.3% premarket and leads the FTSE 100 after saying it will buy back $2B (£1.31B) of its shares this year, as it reported a strong increase in full-year net profit despite lower revenue due to weak iron ore prices.
- The buyback marks a strategy shift among the world's largest mining companies away from investing heavily in new mines - some of which have turned sour amid tumbling commodity markets - and toward a focus on higher shareholder returns.
- Rio's FY 2014 net earnings jumped to $6.5B from $3.67B a year ago, although the result fell short of the $8.38B consensus analyst expectations; a year ago, results were knocked back by multibillion-dollar writedowns against assets such as the Oyu Tolgoi copper project in Mongolia.
- FY 2014 revenues fell 7% Y/Y to $47.7B; despite increasing shipments by 18% last year, revenue from iron ore sales fell 10%.
- Rio also says it cut net debt sharply to $12.5B from $18.1B a year ago.
- Rio's full-year dividend will total $2.15/share, up from $1.92 a year earlier.
Wed, Feb. 11, 2:38 PM
- Iron ore miners in the next few months will have the opportunity to bid for the northern half of the Simandou deposit, one of the world's most sought-after iron ore deposits, Guinea's mining minster tells WSJ.
- The official claims he is not concerned that weak iron ore prices will affect the bidding for the assets, saying it could be at least five years until the mines actually begin producing.
- The Simandou deposits are at the heart of an international legal dispute: Guinea last year stripped the rights to mine the deposit from Vale (NYSE:VALE) and the mining arm of Israeli tycoon Beny Steinmetz’s conglomerate, with the government alleging that the rights were obtained through corrupt practices.
- The blocks once were controlled by Rio Tinto (NYSE:RIO), but a previous government in Guinea revoked its rights to mine them; Rio is still helping to develop the southern part of the concession.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) CEO Ivan Glasenberg has criticized the over-production of iron ore, but the company has held discussions with Guinean officials about mining rights in Simandou.
Tue, Feb. 3, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
Mon, Jan. 26, 8:31 AM
- Iron ore prices extend their retreat to the lowest levels in more than five years, due to slower demand growth for steel in China as the largest mining companies add to supply.
- Ore with 62% content delivered to Qingdao, China, fell 4.3% to $63.54/dry metric ton, the lowest price since May 2009, and extends its 11% YTD decline.
- Goldman Sachs last week joined other global banks in cutting price forecasts for 2015, predicting a return to a bull market is probably more than a decade away.
- VALE -2.5%, BHP -0.5%, RIO +0.4% premarket.
Fri, Jan. 23, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Tue, Jan. 20, 10:28 AM
- Rio Tinto (RIO -1.1%) says its flagship iron ore division produced 295.4M metric tons for FY 2014, up 11% Y/Y and narrowly beating its target of 295M metric tons but coming in slightly below analyst expectations.
- Rio sold even more during the year, shipping 302.6M metric tons of iron ore and 17% higher than 2013, as it attempts to ensure it can afford to give shareholders a special round of dividends or share buybacks ahead of any future overtures from Glencore.
- Rio continues to defy critics as a supply glut pushes iron ore prices to a five-year low, saying it plans to produce 330M metric tons of iron ore from the Pilbara in 2015, up 18% from a record 280.6M tons in 2014, which was 12% higher Y/Y.
- "Putting more material into an oversupplied market may seem foolish, but if you’re the best at what you do and the higher-cost mines drop out, why wouldn’t you do it?" says one Melbourne-based fund manager.
Wed, Jan. 14, 12:39 PM
- Citi cuts price targets for iron ore to $58 for 2015 and $62 for 2016, down from its prior estimates of $65 for both years, and lowers its outlook for thermal and met coal.
- Citi warns its downwardly revised forecast means it now expects earnings for major mining companies will fall by 9%-21% for 2015 and by 3%-16% in 2016.
- Rio Tinto (RIO -2.5%) is the exception, as Citi sees earnings rising 7.1% this year and 10.6% next year due to the company’s greater exposure to the weaker Australian dollar.
- The firm cuts its price target for Glencore (OTCPK:GLCNF -7.2%) by 8% to £3.60 from £3.90 and sees earnings falling 21% and 16% respectively in 2015 and 2016.
- Citi says it is still bullish on the sector, but warns that metals and mining companies will only slowly grind higher over the next few years.
- Also: BHP -4.5%, VALE -5%, FCX -12%, SCCO -4.9%, TCK -9.7%, CLF -4.4%, CENX -9.1%, MT -4.2%, X -4.9%, NUE -3.4%, STLD -2.6%, BTU -9.8%, ANR -8.8%, ACI -8.9%.
RIO vs. ETF Alternatives
Rio Tinto PLC is an international mining group engaged in finding, mining and processing the Earth's mineral resources. Its main products are Bauxite, Alumina, Copper, Gold, Molybdenum, Silver, Nickel, Diamonds and Rutile.
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