Rio Tinto (ASX: RIO) is a diversified mining company producing iron ore, aluminium, copper and other critical minerals globally. Rio Tinto’s share price performance during the month was supported by a strong copper price amid global supply disruptions. The company also reported its quarterly earnings during the month, which showed solid productions and shipments across commodities. Bauxite production guidance was upgraded, reflecting higher utilisation rate especially at Weipa which continued to exceed nameplate capacity. The first ore was also loaded at the Simandou mine for movement down the rail with ramp-up remaining on track. Rio Tinto remains a core holding, given its pipeline of potential catalysts and improving sentiment toward China. Valuations also remain attractive as the current share price implies a significant discount to the current iron ore spot and midcycle commodity price.
South32 (ASX: S32) is a global mining and metals company that produces commodities used in many aspects of modern life. During the month the company sold a 10% equity stake in Trilogy Metals, South32’s joint venture partner in the Ambler Metals project, to the US government. The White House also approved the access road to this district, which had been the bottleneck in its development. The market had previously assigned little value to the project due to political and regulatory uncertainty. While the timing of final permits, potential legal challenges and first production are still to be determined, the
executive order removes a major barrier to the development, increasing the likelihood of the project proceeding and the project valuations for South32. We took the opportunity to tactically reduce our position post the re-rate event.
