⛏️ Titans of the deep: Rio, Glencore, BHP, Vale - who will dig up the biggest profits? 💎
Company presentation
Rio Tinto, BHP and Vale are among the three largest iron ore producers in the world, while Glencore plays a key role in global commodity trading as a leading commodity trader and producer.
- Rio Tinto: An Anglo-Australian mining group with dual headquarters in London and Melbourne.
- BHP: Australia's largest industrial group, headquartered in Melbourne.
- Glencore: A Swiss commodities trading and mining company headquartered in Baar.
- Vale: A Brazilian mining group specializing in iron ore.
Historical development
Rio Tinto was founded in 1873 and developed into a global mining giant through the development of deposits in Africa, Australia and Canada. The current structure as a dual company was created in 1995.
BHP goes back to Charles Rasp's silver discovery in Broken Hill in 1883. With the diversification into iron ore, coal and oil and the merger with Billiton in 2001, BHP created one of the world's largest commodity groups.
Glencore, founded in 1974 as Marc Rich + Co AG, grew to become one of the most important commodity traders in the world and went public in 2011.
Vale was founded in 1942 as a state-owned company and privatized in 1997. The company's focus has always been on iron ore production in Brazil.
Business model and core competencies
Rio Tinto focuses on the extraction of iron ore, copper, aluminum and other metals. Efficient production and the operation of large-scale mines are among the company's core competencies.
BHP is active in the iron ore, copper, coal and oil sectors and has a diversified product range and an extensive global presence.
Glencore combines commodity production and trading and controls the entire value chain, from extraction to distribution. This vertical integration is one of the company's greatest strengths.
Vale specializes in iron ore exports, complemented by activities in nickel and copper.
Future prospects and strategic initiatives
- Rio Tinto is increasingly investing in copper, lithium and aluminum, which play a key role in electromobility and renewable energies.
- BHP is focusing on "future-proof" raw materials such as copper and nickel, which are needed for batteries and green technologies.
- Glencore is positioning itself as an important supplier to the battery industry and is investing in cobalt and nickel.
- Vale is increasing its involvement in the nickel business in order to benefit from the growing demand in the electric automotive sector.
Market position and competition
- Rio Tinto, BHP and Vale together control around 70% of the world's seaborne iron ore trade.
- Glencore is a leader in global commodity trading and is one of the largest producers of copper and cobalt.
Competition in this industry is focused on cost efficiency, the development of new resources and positioning in the growing market for metals that are essential for the energy transition.
Total Addressable Market (TAM)
The total addressable market (TAM) of the global mining industry is estimated at over USD 1.5 trillion. This figure is expected to rise further in the coming years, particularly due to the increasing demand for critical raw materials such as battery metals, which are essential for the expansion of green technologies.
Share performance
Mining company share prices are strongly linked to commodity prices, leading to high volatility. Glencore's TR over 5 years is 120%, Rio Tinto's TR is 92%, BHP's TR is 101% and Vale's TR is 116%.
For the development (company figures), a better view and more, check out the free blog: https://topicswithhead.beehiiv.com/p/titanen-der-tiefe-rio-glencore-bhp-vale-wer-gr-bt-den-gr-ten-gewinn-aus
Conclusion
Vale, BHP and Rio Tinto are not significantly different. Although BHP has clearly outperformed in some cycles, it has always subsequently adjusted to the average. Vale could be unfavorable from a regulatory perspective, but the industry is facing challenges anyway, and it's not as if the others are any better, as the mines are not exactly in the cleanest regions.
Looking at the individual stock data, BHP does seem like the best candidate, but I would never bet on just one when it comes to mining companies. Therefore, I would consider a combination of BHP and Rio Tinto, and if you want, you can also include Vale.
Glencore is large and well positioned, but the figures are not really convincing. Even after countless announcements about certain strategies, I don't like the results. The growth is impressive, but when the results deteriorate like this - especially in terms of sales - it doesn't help much. For me, Glencore is more of a trading candidate, as every year you experience a brief decline, then recover and then fall again.
So if you want to position yourself in mining and thus include the anti-cyclicals in your portfolio, it is best to look at BHP and Rio Tinto. In view of China's most important customer, however, you should also be aware that 50% of sales here also come from one country, which no longer seems so abnormal these days.
For myself, I am going with Vale, Rio Tinto and a possible entry into BHP as far as the situation allows. Entry prices for me are 24 euros for BHP, 10 euros for Vale and 60 euros for Rio Tinto and then down in 10-15% jumps.
