Morningstar | Rio Tinto's Market Value Primarily Hinges on China Continuing to be a Massive Steel Demand Outlier
Like its peer BHP Billiton, Rio Tinto has ridden the commodity supercycle since the early 2000s. Rio Tinto's asset portfolio is less diversified, with iron ore generating the majority of its value. Aluminium and copper are moderate contributors with all coal assets sold in 2018. Aluminium should constitute a substantially larger share, given the USD 40 billion that Rio Tinto controversially paid for Alcan in 2007, but much of that investment is money gone to heaven. Rio has the lowest operating costs of all the iron ore players, but despite this being the bulk of company earnings, excess returns were destroyed by procyclical overinvestment during the China boom.Rio Tinto is engaged in finding, mining and processing mineral resources. Co. has four product groups: iron ore, which supplies the global seaborne iron ore trade; aluminium, which includes bauxite mines, alumina refineries, and aluminium smelters; Copper and Diamonds, which has managed operations in Australia, Canada, Mongolia and the U.S., and non-managed operations in Chile and Indonesia, with by-product including gold, silver, molybdenum and others such as sulphuric acid, rhenium, and lead carbonate; and Energy and Minerals, which comprises mining, refining and marketing operations across borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium sectors.
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