Core Viewpoint - BHP and Rio Tinto are planning a collaboration in Australia's Pilbara iron ore region to increase steelmaking material production capacity to nearly 200 million tons starting in the next decade [1][2] Group 1: Collaboration Details - The two mining giants signed two non-binding agreements to explore cooperation on Rio Tinto's Wunbye deposit and BHP's Yandi project to enhance long-term capacity [1] - The first memorandum focuses on the joint development of the Wunbye deposit, while the second involves transporting some ore from the expanded Yandi project to Rio Tinto's processing facilities [2] Group 2: Market Context - Despite a shift towards metals needed for energy transition, mining companies are still looking for ways to maintain iron ore revenue due to ongoing demand for steelmaking raw materials from other Asian economies [1] - Pilbara has been a core area for global iron ore supply for the past 25 years, having delivered billions of tons to China, which has supported its rapid economic growth [2] Group 3: Challenges and Financial Strategies - Mining companies face challenges with declining ore grades, which have contributed to lower iron ore prices [2] - BHP and Rio Tinto are balancing capacity expansion with capital management while seeking to maximize the efficiency of existing infrastructure [2] - BHP recently sold a significant portion of its iron ore business's supporting power grid for $2 billion to BlackRock's Global Infrastructure Partners LP, with proceeds directed towards copper and other key business areas [2]

Geopolitical Landscape - Iran has closed its airspace to most flights amid rising tensions with the U.S., particularly with the repositioning of a U.S. carrier strike group, including the USS Abraham Lincoln, towards the region [2][7] - Iranian officials have threatened to strike American military bases in the Middle East if the U.S. takes military action, highlighting the fragility of regional stability and potential implications for global energy markets [2][7] U.S. Foreign Policy Developments - U.S. President Donald Trump is set to meet with Venezuelan opposition leader María Corina Machado, indicating potential shifts in U.S. foreign policy towards Venezuela following a military operation to remove Nicolás Maduro [3] - Colombian President Gustavo Petro will also meet with President Trump to discuss bilateral relations and regional issues, following a phone call that eased previous tensions [3] Technology Sector Developments - Alibaba Group has upgraded its Qwen app, allowing users to order food and book travel directly within the app, positioning it as an AI-powered lifestyle decision center [4] - This upgrade integrates services from Alibaba's ecosystem, intensifying competition in the AI e-commerce and super-app markets [4][7] Mining Sector Collaboration - Rio Tinto and BHP Group announced a collaboration to extract up to 200 million tonnes of iron ore in Australia's Pilbara region, focusing on developing Rio Tinto's Wunbye deposit and utilizing BHP's Yandi mine [5] - This joint venture aims to leverage existing infrastructure for additional production with minimal capital requirements, potentially impacting global iron ore supply [5][7] Market Performance - The Indonesia Stock Market reached a new record high of 9,081.069, rising 0.5% early on January 15, 2026, reflecting strong investor sentiment in the emerging market [6][7] Currency Market Dynamics - The AUD/USD currency pair fell below 0.6700, trading around 0.6680, influenced by easing inflation expectations in Australia, with Consumer Inflation Expectations for January decreasing to 4.6% from 4.7% [8][7]

Core Viewpoint - Investor Chamath Palihapitiya predicts that copper will experience a significant price increase, going "parabolic" by 2026 due to supply shortages and geopolitical strategies emphasizing national security and economic reshoring [1][3] Supply Dynamics - The Trump administration reclassified copper as a critical national security asset, imposing a 50% tariff on imported copper to protect domestic interests, which has led to a supply squeeze as the U.S. aims to rebuild its copper smelting and refining infrastructure [2] Demand Drivers - Copper is described as an essential material found in various applications, including data centers, chips, and defense systems, highlighting its ubiquitous demand across multiple sectors [4] - The demand for copper is further driven by the increasing Pentagon spending on defense systems and the ongoing energy transition towards electrification and grid modernization [6] Market Performance - Copper futures have reached record highs of approximately $6.10 per pound, reflecting market concerns over supply risks [5] - Investors are encouraged to consider both ETFs for broad exposure and individual mining stocks for targeted investments in domestic copper producers such as Southern Copper Corp., Rio Tinto Plc, and Freeport-McMoRan, Inc. [5][6]

Core Viewpoint - Rio Tinto and BHP have agreed to collaborate in the Pilbara region of Australia to extract up to 200 million tons of iron ore from their adjacent operations [1][1]. Group 1: Collaboration Details - The companies announced that they will consider developing Rio Tinto's Wunbye deposit under two non-binding agreements [1][1]. - They will also explore the possibility of BHP supplying its Yandi Lower Channel Deposit ore to Rio Tinto, which would process it using its existing wet processing plant [1][1]. Group 2: Market Position - Rio Tinto and BHP are the two largest mining companies globally by market capitalization and are also among the largest iron ore producers, which is essential for steel production [1][1]. - Matthew Holcz, head of Rio Tinto's iron ore business, stated that through smarter collaboration, they can better utilize existing infrastructure to release additional output with minimal capital requirements [1][1].

Core Viewpoint - Rio Tinto and BHP have entered into non-binding MOUs to collaborate on extracting up to 200 million tonnes of iron ore from their adjacent Yandicoogina and Yandi operations in the Pilbara region, building on previous agreements to enhance productivity and resource utilization [1][2][3]. Group 1: Collaboration Details - The collaboration aims to leverage existing infrastructure to unlock additional production with minimal capital requirements, thereby extending the life of operations and creating value for local communities [2][3]. - The companies will conduct a conceptual study followed by an order of magnitude study, with the first ore expected to be produced early next decade, pending regulatory and joint venture approvals [3]. Group 2: Operational Synergies - BHP will supply ore from its Yandi Lower Channel Deposit to Rio Tinto for processing at its existing wet plants under agreed commercial terms, enhancing operational efficiency [4]. - The partnership is expected to create new value and benefits for stakeholders, including employees, partners, customers, and local communities [3].

Group 1 - Morgan Stanley raised the target price for Rio Tinto from 6060 pence to 6090 pence [1]

Core Viewpoint - The proposed merger between Rio Tinto and Glencore aims to create a mining powerhouse with an enterprise value of US$260 billion, positioning them ahead of BHP Group Ltd. [1] Group 1: Merger Implications - If the merger between Rio Tinto and Glencore is completed, it is expected to stimulate further deal-making within the mining industry [1] - The merger will likely pressure BHP to pursue its own mega merger, with expectations of aggressive acquisitions from BHP throughout 2026 [2] - Other major players in the industry, such as Southern Copper Corp., Freeport-McMoRan Inc., and Vale S.A., may also feel compelled to make acquisitions to avoid being left behind [2] Group 2: M&A Environment - The current environment for mergers and acquisitions is bolstered by strong credit metrics among mining companies, which have deleveraged due to record-high commodity prices since 2020 [3] - Mergers can enhance companies' operating asset scale and diversification, while also allowing for risk reduction through portfolio re-evaluation and divestment of non-core assets [3]

Group 1 - Rio Tinto is considering the acquisition of Glencore, which could result in the formation of the world's largest mining company valued at over $200 billion [1] - JPMorgan and two other advisers have been engaged by Rio Tinto to assist in this potential acquisition [1] Group 2 - The deal represents a significant consolidation in the mining industry, potentially reshaping market dynamics and competitive landscape [1] - The acquisition, if successful, would enhance Rio Tinto's portfolio and operational scale, positioning it as a dominant player in the global mining sector [1]

Core Insights - Rio Tinto Group (RIO) shares have increased by 38.5% over the past six months, outperforming the industry and the S&P 500, which returned 19.3% and 14.1% respectively [1] Performance Overview - RIO's stock closed at $82.88, nearing its 52-week high of $85.46 and significantly above its 52-week low of $51.67, indicating strong upward momentum [4] - The stock is trading above both its 50-day and 200-day moving averages, reflecting confidence in the company's long-term prospects [4] Production and Operational Highlights - RIO's consolidated copper output rose by 10% year-over-year in Q3, aligning with the high end of its 2025 guidance [7][9] - The company achieved its first copper production at Johnson Camp using Nuton technology, targeting 30,000 tons over four years [10][11] - Iron ore shipments increased by 6% quarter-over-quarter, with improvements in aluminum and alumina output due to enhanced operations [13] Growth Projects - RIO's Rhodes Ridge joint venture approved a $191 million feasibility study for developing a major undeveloped iron ore deposit in Western Australia, aiming for initial production of 40-50 million tons annually [14] - The Simandou iron ore project in Guinea has commenced commissioning, marking a significant milestone in the company's growth pipeline [14] Challenges and Market Position - The company faced challenges such as weather-related disruptions, planned maintenance activities, and cost pressures from inflation, which impacted margins [15] - RIO operates in a competitive market with peers like NioCorp Developments and TMC, which have shown lower performance compared to RIO [15] Financial Outlook - The Zacks Consensus Estimate for RIO's bottom line for 2026 has increased by 10.1% in the past 60 days, indicating positive revisions [18] - RIO is trading at a forward price-to-earnings ratio of 11.71X, significantly lower than the industry's average of 16.87X, suggesting potential undervaluation [20] Conclusion - Despite facing some challenges, RIO's growth projects and rising copper production position the company favorably for long-term growth, making it an attractive opportunity for investors [21]

Key Information - The discloser is Dimensional Fund Advisors Ltd., which is acting as an investment advisor and disclaims beneficial ownership of the shares mentioned [1][4] - The relevant securities pertain to Rio Tinto PLC, with disclosures also made for Rio Tinto Ltd and Glencore PLC [1] Positions of the Discloser - Dimensional Fund Advisors holds 4,604,521 shares of Rio Tinto PLC, representing 0.37% of the total relevant securities [3][5] - There are no short positions disclosed for the relevant securities [3] Dealings - A purchase of 912 shares of Rio Tinto plc ADR was made at a price of 82.88 USD per unit [9] - A transfer out of 31,772 shares of 10p ordinary was also noted [9] Other Information - There are no indemnity or option arrangements related to the relevant securities [13] - No agreements or understandings regarding voting rights or future acquisition/disposal of relevant securities were disclosed [14] - The date of disclosure is 13 January 2026, with contact information provided for further inquiries [15]