RIO - Rio Tinto

[tinhat]

Buy at the top, sell at the bottom. These big guys are geniuses at destroying shareholder value. Albanese was a clown. It takes an Aussie to clean up the mess.

Rio Tinto hires Deutsche Bank to sell coal assets

Read more: http://www.smh.com.au/business/rio-...coal-assets-20130404-2h81m.html#ixzz2PRp2Gs6B

I do agree with a strategy that would see RIO divest of everything except for iron ore and copper. They are essentially an iron ore miner and the world's lowest cost one at that which means that they will always be able to clear their production above cost. They have excellent copper assets although Mongolia is subject to some sovereign risk.

 

[upandup]

Where do you gentlemen think we will hit some resistance??

 

[MaZed]

Time to buy?

 

[burglar]

Time to buy?

You may ask ... but ...
Financial advice is a no-no on ASF

 

[coolcup]

Looks like a long term descending triangle on both RIO and BHP. Looking to avoid them both until they can break out of this formation. Had a good go at it, but failed recently. Also surprised at just how correlated the two share prices are despite having very different exposures to iron ore. I was expecting BHP to have outperformed much more reflecting its higher weighting to energy.

 

[notting]

Hmmmm>
AGO, FMG, MGX all having wonderful days whilst RIO is a mere .2% or there abouts up.
Am I smelling amateur vs pro or just an opportunity?

 

[tinhat]

Hmmmm>
AGO, FMG, MGX all having wonderful days whilst RIO is a mere .2% or there abouts up.
Am I smelling amateur vs pro or just an opportunity?

Looking across the bourse the past couple of weeks, I doubt much trading is going on based on fundamentals at this stage. Which is interesting because the market is at the fibonacci level of a 61.8% retracement from the GFC correction.

 

[Garpal Gumnut]

Looking across the bourse the past couple of weeks, I doubt much trading is going on based on fundamentals at this stage. Which is interesting because the market is at the fibonacci level of a 61.8% retracement from the GFC correction.

I agree, tinhat, a break above $75 could indicate a wave 3 taking us up to $120.

gg

 

[tinhat]

I agree, tinhat, a break above $75 could indicate a wave 3 taking us up to $120.

gg

GG - I was referring to the XAO. Interestingly, RIO reached its 61.8% retracement back in November 2010 and bounced around it for a while before heading down to the 23.6% retracement level. $120 here we come ... one day.

 

[piggybank]

Delivering the company’s fourth quarter operational review this morning, CEO Sam Walsh said: “These are excellent fourth quarter operational results, demonstrating continued delivery on our commitments”. It’s fair to say shareholders have had a tough ride in recent years. However, today’s news gives a new shine to the iron ore heavyweight. Higher production and lower spending were the goals set by senior management, including Mr Walsh, in early 2013. Here are some highlights from today’s results.

• Pilbara operations exceeded iron ore production forecasts by 2 million tonnes
• The ramp-up to 290 Mt/a is on track to be completed by the end of the first half of 2014
• Production at the miners huge Oyu Tolgoi gold and copper project is at full capacity
• Record annual production and shipments for bauxite
• Production of semi-soft and thermal coal improved significantly for the full year
• $2 billion of operating cash cost improvements were achieved (relative to 2012)
• Capex reduced by over $1 billion (exceeding the target of $750 million)
• $3.5 billion of non-core assets were divested
• The 290 Mt/a expansion is four months ahead of schedule and $400 million under budget, to be ready by the fourth quarter of 2013. Expansion of the port, rail and power infrastructure to 360 Mt/a is currently underway and due for completion by the end of the first half of 2015. A series of low-cost brownfield expansions will bring on additional tonnes, with a production of 330 million tonnes expected in 2015.

The Figures
In 2013, global iron ore production rose to 266 million tonnes (209 million tonnes is Rio’s share). This is a new annual record, up 5% on the prior corresponding period (pcp). Pilbara iron ore set a new quarterly record of 66.5 million tonnes. Overall, mined copper was up 15% in 2013. Production at Kennecott Utah Copper was up 29% on the pcp, thanks to a quick recovery after the pit wall slide last year. Production of copper and gold at Oyu Tolgoi in Mongolia, was approximately 33,000 tonnes of copper and 73,000 ounces of gold in concentrate. Bauxite was up 10% overall, with Rio Tinto Alcan setting a new quarterly record, 7% higher than the pcp.

In the energy division, semi-soft and thermal coal production increased significantly during the year compared with 2012, with four mines achieving annual records – Hunter Valley Operations, Mount Thorley Warkworth, Bengalla and Clermont. Uranium production suffered because of leach tank failures at both Energy Resources of Australia Limited’s (ASX: ERA) Ranger Mine and Rössing in Namibia. After failing to sell its diamond business last year, production – largely led by Argyle mine – grew significantly in 2013 compared to the pcp, up 34%. Rio Tinto’s report will no doubt give shareholders renewed optimism moving forward. The most important earner for the miner is iron ore and ramping up production is a no brainer for a company which can produce and ship high quality ore for less than US$50 per tonne. Rio’s reliance on iron ore makes it a riskier investment than BHP Billiton Limited (ASX: BHP), which is a more diversified miner. However, if iron ore prices stay high, Rio shareholders should be handsomely rewarded in coming years.

 

[notting]

"Rio Tinto finance chief Chris Lynch says the sharp fall in the iron ore price in 2014 has caught the mining giant by surprise but rejects claims the company is flooding the market with excess supply."

Read more: http://www.smh.com.au/business/mark...at-5yr-lows-20141209-3m4wv.html#ixzz3LOxB7aRQ

Well thank fricken christ for that. Have you finally found your brain?
No.
'I think we have taken it a bit far boys and totally screwed ourselves.'

Sam Walsh tried to infer the other day that India might take up the slack.

 

[luutzu]

"Rio Tinto finance chief Chris Lynch says the sharp fall in the iron ore price in 2014 has caught the mining giant by surprise but rejects claims the company is flooding the market with excess supply."

Read more: http://www.smh.com.au/business/mark...at-5yr-lows-20141209-3m4wv.html#ixzz3LOxB7aRQ

Well thank fricken christ for that. Have you finally found your brain?
No.
'I think we have taken it a bit far boys and totally screwed ourselves.'

Sam Walsh tried to infer the other day that India might take up the slack.

Maybe it's all strategic.

They could live with Iron at $45/tonne? Smaller suppliers break even at $80 or $75? Opps... we made mistakes and you guys are now out of business

Once a mine is shut down, could take a year or two get back up again when the cycle comes round.

 

[notting]

Maybe it's all strategic.
Smaller suppliers break even at $80 or $75? .

The smaller players are irrelevant. The building massive over build in China is no longer hoodwinking anybody and the amount RIO and BHP have ramped up will still make for over supply even if everyone else falls over, apart from Vale maybe.

 

[herzy]

The smaller players are irrelevant. The building massive over build in China is no longer hoodwinking anybody and the amount RIO and BHP have ramped up will still make for over supply even if everyone else falls over, apart from Vale maybe.

I disagree slightly.

I know very little about this industry, BUT

- I imagine the small players cumulatively become significant
- I agree that they probably didn't plan this glut, it being largely due to enviro factors (China etc)
- I think that Rio and co will probably benefit from the lack of small players in the longer term.

 

[notting]

A 12% rise in dividend woopi doo(sarcastic), after a rather ordinary result with earnings down and margins down may have been better than expected but it's not worth a 6% bounce.
Tried to bury it with over production.
Oh they announced a 2B buy back. So what? That means the Chinese will have a greater percentage of it.

 

[notting]

China's consumption of electricity from coal-fired power stations fell 10 per cent over the first three months of the year, as overall electricity usage posted one of its weakest performances in two decades.

The National Energy Administration said China's power consumption fell 2.2 per cent in March compared with a year earlier, as the economy slowed and heavy industry cut back production.

Over the quarter, power consumption was up just 0.8 per cent compared with last year, well below market expectations.

"This is one of the lowest rates of quarterly growth in the last two decades," said Lin Boqing, director of the China Centre for Energy Economics Research at Xiamen University.

"It shows there is very large downward pressure on the economy, especially heavy industry."

Mr Lin said the figures were "very bad news" for Australian coal exporters, as it signalled Chinese demand would continue to decline.

China's coal imports fell 42 per cent over the first quarter of the year, compared with the same time last year, according to Customs Bureau figures released on April 13.

Mr Lin said China's tough new environmental restrictions had played some part in the weak power consumption numbers, but the main problem was a lack of demand from heavy industry.

Heavy industry guess that means making steel and stuff.

But Sam's not worried -

But Mr Walsh is confident that continued growth in China - even though it's slowed - will save the day in the long run.
"It should be remembered that growth of just one per cent per year is required for China to reach one billion tonnes of crude steel production by 2030," he said.

He still believes in the miracle of China that grows to infinity at which point it will have built ghost cities on all the stars in the universe.

I'm thinking $40 for RIO.

 

[luutzu]

A silly question:

How do you divy up the value of Rio Tinto Group among Rio Tinto PLC (UK) and Rio Tinto Ltd (AU)?

My understanding is this, but not sure if it's correct. Help please.

-----

Rio Group comprises of Rio UK + Rio Aus.

the Annual Report reports the Group results, in US dollar.

The latest 2014 report shows

Profit: $US 6,527 million
EPS: 353.1cent

Their notes work EPS out with weighted average shares as below

Rio UK: 1,414.147 million shares
Rio Aus: 435.76 Million shares

Totalling 1.8484B shares

----

Let say I value Rio Group at $100 billion AU, to work out the per share value for Rio Aus, do we take the proportion as above.

That is, $100B / 1.8484B shares = $67.35 per share.

Which mean Rio Aus is worth $67.35 x 435.76M shares that Rio Aus has.



thanks

 

[skyQuake]

A silly question:

How do you divy up the value of Rio Tinto Group among Rio Tinto PLC (UK) and Rio Tinto Ltd (AU)?

My understanding is this, but not sure if it's correct. Help please.

-----

Rio Group comprises of Rio UK + Rio Aus.

the Annual Report reports the Group results, in US dollar.

The latest 2014 report shows

Profit: $US 6,527 million
EPS: 353.1cent

Their notes work EPS out with weighted average shares as below

Rio UK: 1,414.147 million shares
Rio Aus: 435.76 Million shares

Totalling 1.8484B shares

----

Let say I value Rio Group at $100 billion AU, to work out the per share value for Rio Aus, do we take the proportion as above.

That is, $100B / 1.8484B shares = $67.35 per share.

Which mean Rio Aus is worth $67.35 x 435.76M shares that Rio Aus has.



thanks

Looks like you divided by 1.4848b to get $67.35

But everything else looks right, should be very close to $56aud which is around rio's last close

 

[notting]

Listening to Sams recent smug comments is really rather startling.
Claiming that there will be a happy ending to this shift from 'China build' to 'China serve' with unlimited IO supply really does seem foolish at best and delusional at worst.

 

[Value Collector]

Listening to Sams recent smug comments is really rather startling.
Claiming that there will be a happy ending to this shift from 'China build' to 'China serve' with unlimited IO supply really does seem foolish at best and delusional at worst.

He probably classes an Iron Ore price of over $40 as a happy ending for Rio.

Rio have been through this with Aluminium, throughout the down turn in aluminium, Rio focussed on reducing costs and now they have a very good aluminium business operating on good margins, Sure it wasn't a happy ending for the high cost producers, but hey, its a pretty good result for Rio, they are now producing more tonnes than they were, at a significantly cheaper cost per tonne and the higher cost producers have bailed leaving Rio to build market share as the price and demand volume continue to slowly improve.