Core Viewpoint - Rio Tinto announced an investment of $733 million to develop new iron ore deposits at the West Angelas hub in Western Australia, in collaboration with joint venture partners Mitsui and Nippon Steel Corp [1] Investment Details - The investment of $733 million will be utilized for the development of new iron ore deposits [1] - Joint venture partners involved in this investment include Mitsui and Nippon Steel Corp [1] Location and Project Scope - The project is located at the West Angelas hub in Western Australia [1] - The focus of the investment is on expanding iron ore production capabilities [1]

Core Viewpoint - China has suspended the purchase of Australian iron ore from BHP due to a decline in ore quality and a failure to negotiate lower prices, signaling a shift in global iron ore pricing power and China's ability to reshape the steel industry [2][4][6]. Group 1: Industry Dynamics - The global iron ore market is dominated by three major players: BHP (Australia), Rio Tinto (UK), and Vale (Brazil), which have historically controlled pricing [4]. - During the Morrison administration, Australia attempted to leverage its position against China's steel industry, leading to inflated iron ore prices that reached $267 per ton, significantly impacting China's steel profits [4][6]. - In 2024, these three companies are projected to earn a net profit of 184 billion yuan, while China's entire steel industry is expected to generate only 29 billion yuan, highlighting the disparity in profit distribution [4][6]. Group 2: China's Strategic Moves - China established the China Mineral Resources Group to consolidate negotiations and enhance its bargaining power in the iron ore market, moving away from fragmented negotiations by individual steel mills [6][8]. - China's recent decision to halt Australian iron ore imports reflects the culmination of years of strategic planning and positioning in the global iron ore market [6][10]. Group 3: Alternative Supply Sources - China is strengthening its relationship with Brazil's Vale, which is the only competitor capable of challenging Australian iron ore dominance, with Brazil's iron ore production reaching 328 million tons last year and expected to hit 400 million tons this year [9]. - The Simandou iron ore project in Guinea, with reserves of 5 billion tons and high-grade ore, represents a significant asset for China, with initial production capacity projected at 12 million tons per year [10][12]. - The timing of the suspension of Australian iron ore imports coincides with the arrival of the first shipment from the Simandou project, indicating a strategic shift in sourcing [10][12]. Group 4: Future Outlook - China's steel industry, despite its technological advancements, has been hampered by reliance on imported iron ore, but recent developments suggest a move towards greater control over the supply chain [14]. - The restructuring of the steel industry could mirror the successful consolidation seen in China's rare earth industry, potentially leading to improved profitability and market stability [14].

Core Viewpoint - China has requested domestic buyers to suspend purchases of BHP's iron ore priced in USD, allowing only RMB transactions for already delivered shipments, indicating a shift in negotiation dynamics with Australian iron ore suppliers [1][23]. Group 1: Negotiation Dynamics - The suspension of USD transactions is linked to ongoing negotiations between China Mineral Resources Group and Australian iron ore giants, with significant disputes over pricing mechanisms [2][5]. - Key points of contention include the pricing cycle, where Australian companies prefer long-term contracts with price increases, while China advocates for quarterly pricing linked to current market rates [3][6]. - The price difference between the two approaches could lead to an additional cost of over $200 billion for China if the Australian pricing is accepted, significantly impacting domestic steel manufacturers [3][5]. Group 2: Market Dependence and Strategy - China is the largest consumer of iron ore, accounting for over 75% of global consumption, which has historically placed it in a vulnerable negotiating position [8][9]. - The establishment of China Mineral Resources Group aims to consolidate negotiation power and improve pricing strategies, moving away from fragmented negotiations by individual steel companies [22][24]. - The group’s formation has already led to a noticeable decrease in iron ore import prices since 2022, reflecting a more unified and strategic approach to negotiations [22][23]. Group 3: Currency and Pricing Mechanism - The push for RMB pricing is part of a broader strategy to reduce reliance on USD and enhance the internationalization of the Chinese currency [6][23]. - The introduction of a new iron ore price index in RMB by the Beijing Iron Ore Trading Center marks a significant step towards establishing a pricing mechanism that reflects China's actual supply and demand [26][27]. - This shift in pricing strategy is expected to increase China's influence in the international iron ore market, leading to more transactions priced in RMB in the future [27].

Group 1 - Macquarie has lowered the target price for BHP by 2% to AUD 42 per share [1] - Macquarie has raised the target price for Rio Tinto by 4% to AUD 115 per share [1] - Macquarie has decreased the target price for Beach Energy by 2.2% to AUD 0.90 per share [1] - Macquarie has reduced the target price for Woodside Energy by 4% to AUD 24 per share [1]

Core Viewpoint - Investors in the Mining - Miscellaneous sector should consider Rio Tinto (RIO) and Anglo American (NGLOY) for potential value opportunities, with RIO currently showing a stronger investment outlook [1]. Valuation Metrics - RIO has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision compared to NGLOY, which has a Zacks Rank of 3 (Hold) [3]. - RIO's forward P/E ratio is 11.14, significantly lower than NGLOY's forward P/E of 34.32, suggesting RIO may be undervalued [5]. - RIO's PEG ratio is 4.74, while NGLOY's PEG ratio is 6.29, indicating RIO's expected earnings growth is more favorable relative to its valuation [5]. - RIO has a P/B ratio of 1.34 compared to NGLOY's P/B of 1.57, further supporting RIO's valuation advantage [6]. Value Grades - RIO has earned a Value grade of A, while NGLOY has a Value grade of C, reflecting RIO's stronger overall valuation metrics [6]. - The improving earnings outlook for RIO enhances its attractiveness as a value investment option [7].

Group 1: Report Industry Investment Rating - No information provided about the report industry investment rating Group 2: Core Viewpoints of the Report - In Q4 2025, supported by increased supply and high molten iron production for export, the fundamentals of iron ore are decent. The price is expected to show no strong trend and maintain a moderately bullish oscillating pattern. Domestic demand remains stable overall, while overseas demand is strong. However, long - positions should pay attention to overseas risks [3][88] - The price range in Q4 is expected to be between 90 and 115 for Platts 62 and between 700 and 900 for the iron ore index [4][89] - Industrial risk management suggestion: interval trading [5][90] Group 3: Summary by Relevant Catalogs 1. 2025 H1 Iron Ore Price Review - From January 15 to February 21: Pessimistic expectations were reversed, and supply disruptions supported the price increase. The black market followed the stock market, and both domestic and overseas macro - sentiments were positive. Hurricanes affected iron ore shipments, and the spot was in short supply [5] - From February 22 to April 8: Both expectations and fundamentals weakened. After the hurricane, shipments returned to normal, and the relationship between the stock market and the black market diverged. Tariffs and anti - dumping concerns, along with the expectation of crude steel reduction, pushed the price down [6] - From April 9 to June 18: After the risk release, there was a temporary balance. The iron ore valuation was low, but the actual demand was stable. The Geneva Agreement led to a price increase, but then the market entered a low - volatility state [7] - From June 19 to the present: The iron ore price bottomed out and then rose. The reasons were the promotion of anti - involution and the repair of pessimistic expectations under high molten iron production [8] 2. Supply - **Overall Supply in 2025**: The supply of iron ore in the first three quarters of 2025 was tight at first and then loosened. The global shipment volume in the first three quarters was about 1.133 billion tons, a year - on - year increase of 0.78%. It is expected that the shipment in Q4 will be relatively sufficient, with a year - on - year growth rate of about 1% [11] - **China's Supply**: From January to August, the cumulative import of iron ore and its concentrates was 801.618 million tons, a year - on - year decrease of 1.6%. In August, the import was 10.5225 million tons, a month - on - month increase of 0.6% [17] - **Shipment by Country**: Australia and Brazil are still the top two suppliers, but their shipment volumes declined. India's exports to China dropped significantly, while Russia's and Mongolia's exports increased [19][20] - **Four Major Mines**: In H1 2025, the four major mines generally overcame adverse factors, and their production remained stable or increased slightly. Vale and Rio Tinto are expected to be the main contributors to the incremental production in H2 [24] - **Domestic Mines**: From January to August, the iron concentrate output of 332 mines was 172.55 million tons, a year - on - year decrease of 2.5%. The annual output is expected to be lower than last year, with a year - on - year growth rate of about - 2% [48] 3. Demand - **Demand Revision**: The view on demand in the semi - annual report needs to be revised. Currently, external demand is the dominant factor. Domestic demand in infrastructure and real estate remains weak, while exports, both direct and indirect, are becoming the leading force in black demand [51][52] - **Molten Iron Production**: In the first three quarters of 2025, the average daily molten iron production was 237210 tons, a year - on - year increase of 3.73%. It is expected that the production in Q4 may first remain stable and then decline [58] - **Steel Mill Supply Adjustment**: In the first three quarters, downstream steel mill demand was decent supported by exports. Building materials demand declined, while plate demand maintained positive growth. Steel mills adjusted their supply through production transfer [63][64] - **Export Support**: In the context of weak domestic demand, overseas exports are an important support for steel demand. Although the cost advantage is weakening, the export volume is expected to be supported in the second half of the year [68] 4. Inventory - **Port Inventory**: Due to hurricane disruptions and high molten iron production in the first three quarters, port inventory decreased. However, with the recovery of shipments and low steel mill profits, port inventory may start to accumulate again [73] - **Steel Mill Inventory**: Steel mills adhere to the low - inventory strategy for raw materials, and the proportion of trading ore is relatively high [75] - **Global Seaborne Inventory**: The global seaborne inventory of iron ore is high, and the shipping speed has returned to normal, which may accelerate the arrival of iron ore at ports [77] 5. Valuation - **Term Structure**: The term structure of iron ore remains in a back structure, but the contango of far - month contracts has significantly shrunk. In Q4, attention should be paid to steel mill production cuts for reverse arbitrage [79] - **Iron - Scrap Price Difference**: Scrap steel has been less cost - effective compared to iron ore in the past year. The scrap addition ratio in blast furnaces has decreased [82] - **Coking Coal/Iron Ore Seesaw Effect**: In 2025, the price seesaw effect between coking coal and iron ore is more significant. If coking coal prices remain strong in Q4, it may continue to suppress iron ore prices [84] - **Volatility**: The implied volatility of iron ore options decreased in H1 2025 and then rebounded after the anti - involution trading in late June [86]

Group 1 - The analyst has over 10 years of experience researching more than 1000 companies across various sectors including commodities and technology [1] - The focus has shifted from a personal blog to a value investing-oriented YouTube channel, emphasizing research on hundreds of companies [1] - The analyst particularly favors covering metals and mining stocks, while also being comfortable with consumer discretionary, REITs, and utilities [1]

Core Viewpoint - Rio2 Limited's Chilean subsidiary, Fenix Gold Limitada, has signed two MOUs with companies for the potential supply of desalinated water to the Fenix Gold Mine, marking a significant milestone for the mine's expansion [1][2]. Company Developments - The MOUs will lead to studies evaluating the expansion of desalination facilities and the construction of a pipeline to supply water to the mine [1][3]. - A 4-month conceptual study will be conducted by the water companies, after which Fenix Gold will select a preferred provider to develop a feasibility study [2][3]. - The Fenix Gold Mine aims for an expanded production rate of 80,000 tonnes of ore per day, targeting at least 300,000 ounces of gold annually for approximately 10 years [4]. Project Details - The Fenix Gold Project is one of the largest undeveloped gold oxide heap leach projects in the Americas, with a Measured and Indicated mineral resource of 4.8 million ounces of gold [5]. - The project represents a significant investment of approximately US$235 million, expected to create 1,200 jobs during construction and 800 jobs during the 17-year operational phase [5]. - The mine will utilize a run-of-mine heap leach operation, minimizing environmental impact by not requiring crushing or tailings storage facilities [5]. Timeline for Expansion - Key milestones include: - Completion of a pre-feasibility study by Q1 2026 - Mineral reserve and resource update by Q4 2026 - Completion of a feasibility study by H2 2027 - Capital expenditure approvals by Q1 2029 - Completion of desalinated water supply works by H2 2030 - Ramp-up to higher production rates by H2 2030 [6].

Core Viewpoint - The US Defense Logistics Agency (DLA) plans to purchase up to $40 million worth of scandium oxide from Rio Tinto over the next five years to enhance the US defense stockpile, aiming to secure a stable supply of this critical rare earth element following China's export controls [1][3]. Group 1: Acquisition Details - The DLA intends to acquire 6.4 tonnes of scandium oxide over five years, starting with nearly 2 tonnes in the first year, which represents about 5% of the global scandium oxide production of 40 tonnes last year [2]. - The current production capacity for scandium oxide is 80 tonnes, indicating a significant reliance on global supply chains [2]. Group 2: Supply Chain Context - China's export controls on scandium, imposed in late 2024, have constrained the supply chain, prompting the DLA's acquisition strategy for the National Defence Stockpile [3]. - Rio Tinto has been identified as the only vendor capable of meeting the government's product needs at the required capacity [3]. Group 3: Domestic Production Efforts - Rio Tinto is collaborating with the US Government to identify opportunities to increase domestic production and strengthen supply chains for the US market [4]. - In August, the US awarded up to $10 million to Elk Creek Resources to bolster domestic sources, highlighting ongoing efforts to reduce reliance on foreign materials [4]. Group 4: Technological Advancements - Rio Tinto achieved a breakthrough in 2020 by developing a method to extract high-purity scandium oxide from waste streams during titanium dioxide production, which eliminates the need for additional mining [5]. - The Canadian facility in Quebec has an annual production capacity of 3 tonnes of scandium oxide, indicating potential for increased domestic supply [5]. Group 5: Financial Implications - Rio Tinto announced gross costs of up to $300 million due to US tariffs on its primary aluminium exports from Canada during the first half of 2025, which may impact its financial performance [6].

Core Insights - The U.S. Defense Logistics Agency plans to purchase up to $40 million worth of scandium oxide over the next five years to secure supplies for the national stockpile, following China's export controls on the material [1][2] - The acquisition includes a target of 6.4 metric tons of scandium oxide, with nearly 2 tons sought in the first year, representing about 5% of last year's global production [2][3] - Rio Tinto has been identified as the sole vendor capable of meeting the government's requirements for scandium oxide, with the company actively collaborating with the U.S. government to enhance domestic production [4][5] Company Insights - Rio Tinto's facility in Quebec, Canada, produced its first batch of scandium oxide three years ago and currently has an annual production capacity of 3 metric tons [5] - The company has developed a process to extract high-purity scandium oxide from titanium dioxide production waste, which eliminates the need for additional mining [4]