Today, iron ore led gains amidst industrial metals, as China, the world’s biggest metal buyer, vowed to put more monetary tools to use for advancing its economy. Futures in Singapore surged over 3% to more than $130 per ton.
Iron is facing a positive outlook from both developed and developing countries due to the expectation of eventual stabilization of the COVID-19 situation and steel-consuming nations returning to normalcy. The global iron ore market is predicted to reach 2.7 billion metric tons by 2026, expanding at a 3.7% CAGR. With this favorable demand outlook, iron ore prices are set to trade at $122.36 per metric ton by the end of this quarter.
Rio Tinto Group (RIO)
RIO explores mines and processes mineral resources worldwide. The company, headquartered in London, the United Kingdom, offers aluminum, copper, diamonds, gold, salt, and iron ore. It also owns and operates open pits and underground mines, mills, refineries, and power stations.
On January 10, RIO announced that it had agreed to purchase four battery-electric trains in the Pilbara region of Western Australia. The purchase aligns with the company’s strategy to reduce its carbon emissions by 50% by 2030.
On December 21, RIO declared that it had entered into a binding agreement to acquire the Rincon lithium project in Argentina. About this acquisition, RIO’s Chief Executive Jakob Stausholm said, “This acquisition is strongly aligned with our strategy to prioritize growth capital in commodities that support decarbonization and to continue to deliver attractive returns to shareholders.”
For the six months ended June 30, 2021, RIO’s underlying EBITDA increased 118.2% year-over-year to $21.04 billion. Net earnings rose 271.3% from the prior-year quarter to $12.31 billion, while underlying EPS improved 156% from the same period last year to 751.90 cents.
The stock has gained 7.9% over the past three months and 16.7% over the past month to close yesterday’s trading session at $75.73.
RIO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
RIO has a Value, Stability, and Quality grade of B. In the 35-stock Industrial – Metals industry, it is ranked #4. Click here to see the additional POWR Ratings for RIO (Growth, Momentum, and Sentiment).
Champion Iron Limited (CIAFF)
CIAFF acquires, explores, develops, and produces iron ore deposits in Canada. The company’s flagship project includes the Bloom Lake Mine, located in southern Labrador, and the Consolidated Fire Lake North project, located in Quebec. It is headquartered in Rozelle, Australia.
On October 27, CIAFF reported the completion of several critical items, including the major tie-in between Phase I and Phase II and the expected completion of the project by mid-2022. The Phase-II project is expected to double Bloom Lake’s nameplate capacity.
CIAFF’s revenues increased 6.4% year-over-year to CAD331.01 million ($264.24 million) in the fiscal second quarter ended September 30. Gross profit improved 5.4% from the prior-year quarter to CAD210.69 million ($168.19 million). Net income came in at CAD114.60 million ($91.48 million), up 2.2% from the prior-year period.
Over the past year, CIAFF’s stock has gained 11.9% to close yesterday’s trading session at $4.50. It has gained 26.8% over the past month.
It’s no surprise that CIAFF has an overall B rating, which translates to Buy in our POWR Rating system. CIAFF has an A grade for Quality and a B grade for Value. It is ranked #7 of 39 stocks in the Miners – Diversified industry.
To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for CIAFF, click here.
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RIO shares were trading at $78.15 per share on Wednesday afternoon, up $2.42 (+3.20%). Year-to-date, RIO has gained 16.75%, versus a -4.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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