Analysts Upgrade Rio Tinto

Rio Tinto is one of the world's biggest miners. Operations include aluminium, coal, copper, diamonds, gold, iron ore, industrial minerals, and uranium

Mathew Hodge 17 August, 2016 | 4:28PM
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Morningstar stock analyst are raising their fair value estimate for Rio Tinto (RIO) to £19 per share from £15.40 as a result of slightly higher 2016 iron ore and metallurgical coal price forecasts, based on higher-than-expected prices realised so far this year.

Our long-term iron ore price forecast remains $35 per tonne by 2020, acknowledging the rapid industry cost cuts and a larger forecast drop-off in China's steel demand. A further decline to $30 per tonne mid-cycle by 2025 factors in rising substitution from scrap as China's stock of steel matures. In the same vein, our metallurgical coal forecast is USD 80 per tonne to 2020 before a further decline to USD 75 per tonne by 2025 as substitution from scrap takes hold.

Profitable Throughout the Commodity Cycle

Rio Tinto is one of the world's biggest miners, along with BHP Billiton, Brazil's Vale, and U.K.-based Anglo American. Above-average assets relative to peers and a solid operating record make Rio Tinto one of the few miners that are profitable throughout the commodity cycle.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Rio Tinto PLC4,793.50 GBX-0.77Rating

About Author

Mathew Hodge  is Morningstar's director of equity research, Australia & New Zealand.

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