Agree re copper. If I had to do it again and we were at the...

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Exised

6,099 Posts.

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10/01/24

16:16

Post #: 71816153
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Originally posted by Gindaldan: ↑

correct, unheard of, because the bulk of it is concentrated to a few big miners with significant scale. The issue is sub scale small or low grade miners elsewhere in the world often have a cost base circa $US80-100 a tonne. Australia was blessed with large scale high grade deposits that were close proximity to the customer, the only other places on earth are really Brazil and Africa. Brazil - shipping costs, and Africa, well speaks for itself, never took off because they continent is a s%^*hole filled with corrupt directors.

These prices won’t last, but what it does it change their balance sheets yet again. RIO acquired the rest of the Mongolian copper mine, BHP, OZL for copper. 1 year of these prices pays for those acquisitions extinguishes the debt and also funded the large capex spend elsewhere in the portfolio. So essentially lower risks and ups the dividend going forward.

In short, love it.

Elephant in the room is copper… more so BHP than RIO for now, but what if the shortage trade kicks in and we see it to $5 USD a pound? Well, hate to think of the share prices given where iron ore is. I would have thought a copper spike was more likely than iron ore like this. But I’ll take it, iron ore more profitable due to the scale I mentioned above.

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Agree re copper. If I had to do it again and we were at the commodities nadir (2015/16), I'd probably have a more Fe centric mining portfolio rather than Cu centric. That whole Green Energy, Low-carbon and Electrification (vehicle or otherwise) narrative got me hook line and sinker...

I've lived through a couple of commodities boom the last 20+ years of investing. It has been the same story for Cu all along. There is always a bullish case for Cu (and Au) but never the run that you want. At least when Fe runs it runs, none of this Copper price Cha-cha (3 steps forward, 3 steps back then sideways, rinse repeat)

No such shenanigans in bulk mines (IO/Fe). If I had to complain about Fe, getting the mine/plant online in the first place is the main bottleneck. Case in point would be my IO cornerstone FMG. Iron Bridge was 1 year late and $US1.3 billion cost blowout. I used to shiver whenever I think about it but all good now that it is up and running. Maybe that is just how things go in building mines these days Fe, Cu, Au, Li or otherwise because S32's Hermosa looks to be following the same impairment then cost blowout extravaganza and that is definitely not IO.

The price we pay for investing in the mining neck of the woods...

Last edited by Exised: 10/01/24

RIO Price at posting: $128.90 Sentiment: Hold Disclosure: Held
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1 Great analysis

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