Rio Tinto is one of the largest iron ore producers globally. The production of iron ore reached 324.1mt in 2022 with most of it in Australia's Pilbara region. Rio Tinto is a diamond producer in Canada with 3.8mn carats output in 2021. Refined gold (176k oz) and silver (2.6mn oz) are the company's by-products. Rio Tinto products include titanium dioxide slag, molybdenum, salt, and uranium. Diversified commodities output with a strong market position in iron ore for the steelmaking industry makes Rio Tinto one of the most influential players in the global metals market. The company benefits from vertical integration controlling mining and refining operations, as well as from a large scale of operations that help to keep the operating costs under control.
Rio Tinto plc is a UK-based metals and mining company operating in several segments: Iron Ore, Aluminium, Copper, Corporate, and Minerals. The Company has an integrated portfolio of iron ore assets, which includes a network of 17 mines, four independent port terminals, and a rail network spanning approximately 2,000 km. The Aluminium business includes 4 bauxite mines in Australia, Brazil, and Guinea; 4 alumina refineries in Australia, Brazil, and Canada; 14 aluminum smelters in Canada, Australia, New Zealand, and Oman; 7 hydropower plants in Canada. The Copper segment includes 3 copper operations in the US, Mongolia, and Chile; 3 copper projects in the US, Mongolia, and Australia. The compan... Rio Tinto plc is a UK-based metals and mining company operating in several segments: Iron Ore, Aluminium, Copper, Corporate, and Minerals. The Company has an integrated portfolio of iron ore assets, which includes a network of 17 mines, four independent port terminals, and a rail network spanning approximately 2,000 km. The Aluminium business includes 4 bauxite mines in Australia, Brazil, and Guinea; 4 alumina refineries in Australia, Brazil, and Canada; 14 aluminum smelters in Canada, Australia, New Zealand, and Oman; 7 hydropower plants in Canada. The Copper segment includes 3 copper operations in the US, Mongolia, and Chile; 3 copper projects in the US, Mongolia, and Australia. The company produces gold, silver, molybdenum, and other as by-products. The Minerals segment includes 4 sectors: borates, titanium dioxide, iron ore, and diamonds. The commercial segment encompasses global sales and marketing, procurement, and marine and logistics operations. Rio Tinto is present in 35 countries.
In 2021, the global production of usable iron ore was estimated at 2.6bt compared to 2.47bt in 2020. The largest iron ore-producing countries are Australia (c 900mt pa), Brazil (380mt), China (360mt), India (240mt), and Russia (100mt). Crude steel production fell by 4.2% YoY to 1,878.5mt in 2022, including a 2.1% decrease in crude steel output in China to 1013mt. Lockdown in China and weak performance of the real estate sector were among the factors affecting the steelmakers and iron ore demand. Iron ore market demonstrated some recovery throughout 2023.
- Large resource base, including the presence in Australia's largest iron ore region
- The large scale of operations provides some flexibility of control the cash cost
- A diversified product range with a large by-product portfolio contributes to both revenue and margin
- Own delivery capabilities and marketing help to get the market price and maintain strong customer relations
- The demand recovery in the post-COVID environment in China will likely drive the price and volumes higher in 2024
- Exposure to volatile commodity markets with some price downside on the back of weak macro
- Growing cash costs due to inflation background driven by energy prices
- Exposure to geopolitical risks, including relations between China and the Western world
- Exposure to local currencies in producing countries, as well as local macro trends and inflation
- Geopolitical risks
- Macroeconomic risks
- FX risks vs US dollar in producing countries
- Failure to execute mining projects
- ESG risks in producing countries
| Company | RIC | Market Capitalization, $mn | Last reporting year | P/E Fwd 1Y | P/E Fwd 2Y | EV/EBITDA 1Y fwd | EV/EBITDA 2Y fwd | EV/Revenues 1y fwd | EV/Revenues 2y fwd |
|---|---|---|---|---|---|---|---|---|---|
| Rio Tinto PLC | RIO.L | 108,944 | 2023-12-31 | 8.3 | 8.8 | 4.6 | 4.7 | 2.1 | 2.1 |
| Anglo American PLC | AAL.L | 32,952 | 2023-12-31 | 11.5 | 10.4 | 5.0 | 4.9 | 1.7 | 1.7 |
| BHP Group Ltd | BHP.AX | 146,596 | 2023-06-30 | 10.3 | 10.7 | 5.5 | 2.9 | 2.9 | |
| Glencore PLC | GLEN.L | 67,120 | 2023-12-31 | 13.1 | 12.2 | 5.9 | 5.3 | 0.4 | 0.4 |
| Antofagasta PLC | ANTO.L | 25,405 | 2023-12-31 | 27.4 | 25.4 | 8.6 | 7.1 | 4.3 | 4.0 |
| Vale SA | VALE3.SA | 55,370 | 2023-12-31 | 5.4 | 5.4 | 3.6 | 3.6 | 1.6 | 1.7 |
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 40,030 | 40,522 | 43,165 | 44,611 | 63,495 | 55,554 | 54,041 | 54,707 | 52,624 | 52,620 |
| Growth | 1% | 7% | 3% | 42% | -13% | -3% | 1% | -4% | 0% | |
| EBITDA | 17,945 | 17,618 | 21,087 | 23,868 | 36,797 | 26,090 | 23,671 | 25,459 | 24,041 | 24,408 |
| EBITDA margin | 44.8% | 43.5% | 48.9% | 53.5% | 58.0% | 47.0% | 43.8% | 46.5% | 45.7% | 46.4% |
| Net income | 8,762 | 13,638 | 8,010 | 9,769 | 21,115 | 12,392 | 10,058 | 12,863 | 11,622 | 11,551 |
| Net margin | 21.9% | 33.7% | 18.6% | 21.9% | 33.3% | 22.3% | 18.6% | 23.5% | 22.1% | 22.0% |
| Net debt | 3,571 | -625 | 3,476 | 773 | -1,757 | -1,757 | -1,757 | -1,757 | -1,757 | -1,757 |
| MktCap | 94,582 | 116,448 | 106,254 | 8,118,078 | 8,118,078 | 8,118,078 | 8,118,078 | 8,118,078 |
Historical Multiples
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|---|---|
| EV/Revenue | 2.3 | 2.6 | 1.6 | 146.1 | 150.2 | 148.4 | 154.2 | 154.2 |
| EV/EBITDA | 4.7 | 4.9 | 2.8 | 311.1 | 342.9 | 318.8 | 337.6 | 332.5 |
| P/E | 11.8 | 11.9 | 5.0 | 655.1 | 807.1 | 631.1 | 698.5 | 702.8 |
