As structurally opposed to a ‘White Elephant’ company chasing similar in-calls, Rio Tinto’s real redeem could be hedge forecasting in major trends from scalp traders within coal mining, being the investible assets of interests across composite indices board listings.
by Alexander Solomon
Rio Tinto Group is an Anglo-Australian multinational and the world’s second largest metals and mining corporation, behind BHP, producing iron ore, copper, diamonds, gold and uranium. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto, in Huelva, Spain, from the Spanish government. Since then, the company has grown through a long series of mergers and acquisitions to place itself among the world leaders in the production of many commodities, including aluminium, iron ore, copper, uranium, and diamonds. Although primarily focused on extraction of minerals, Rio Tinto also has significant operations in refining, particularly for refining bauxite and iron ore. Rio Tinto has joint head offices in London (global and “plc”) and Melbourne (“Limited” – Australia).
Rio Tinto is a dual-listed company, traded on both the London Stock Exchange, where it is a component of the FTSE 100 Index, and the Australian Securities Exchange, where it is a component of the S&P/ASX 200 index. Additionally, American Depository Shares of Rio Tinto’s British branch are traded on the New York Stock Exchange, giving it listings on a total of 3 major stock exchanges.
In the 2020 Forbes Global 2000, Rio Tinto was ranked as the 114th-largest public company in the world. [Reference: Wikipedia]
The all-time high Rio Tinto stock closing price was 138.73 on May 16, 2008, after which a series of corruption charges on its China staff crash the price through 2009-2010.
According to Wikipedia, The Rio Tinto espionage case began with the arrest on 5 July 2009, of four staff in the Shanghai office of the Rio Tinto Group, in the People’s Republic of China, who were subsequently accused of bribery and espionage.
Two days later, an import executive of the Shougang Group and Laigang Group was also arrested. The Rio Tinto employees, Australian Stern Hu and three Chinese colleagues, Wang Yong, Ge Minqiang and Liu Caikui, went on trial in Shanghai on Monday, 22 March 2010.
The arrests came during difficult negotiations over the price of iron ore for the 2009-2010 period. The government dropped the charges relating to the alleged theft of trade secrets before the trial, and the defendants admitted to having received bribes during the trial.
Following the trial, Stern Hu was sentenced to 10 years jail.
After steep increases in 2008, Chinese steelmakers hoped to see iron prices come down again because of the global recession. The Rio Tinto employees are accused of having industry data crucial to the negotiations too detailed to have been obtained legally.
On Thursday, July 16 Reuters reported that Rio Tinto had evacuated its iron ore and steel industry research staff from Shanghai the day before, as had “other foreign groups… until conditions there become more certain.“
Chongqing Evening News (重庆晚报) claims that fallout from the espionage scandal, on July 5, has caused Rio Tinto damages to its reputation worth up to 100 billion yuan in share price (US$14.6 billion, 17.4 billion AUD) after dropping from highs of 77 AUD on the Australian Stock Exchange (ASX).
Share market data shows that Rio Tinto stock (Public, ASX:RIO) actually started to decline on June 12, 23 days before the espionage case scandal was reported on, reaching the bottom on July 13 at 46.63 AUD before steadily rising to a price of 59.99 AUD as of August 15.
Rio Tinto paid US$5 million to Henry Kissinger, a former United States Secretary of State, to advise the company how to distance itself from Hu.
In August 2009, BHP called for iron ore to be traded on an open market like other commodities. BHP, CFO Alex Vanselow stated that selling iron ore on the open market like copper would mean that deals would be handled in a more transparent manner and that cases like the Stern Hu case would not be possible.
Another benefit would be that investors would have a better idea of price trends.
On February 6, 2008, Bloomberg published article “Why Chinalco’s Buying Into Rio Tinto” as stated its byline, ‘The Chinese giant’s new stake in the mining outfit is seen as Beijing’s attempt to head off a BHP Billiton takeover, to protect the mainland’s supply of ores.’
Since 2016, the share price of Rio Tinto has steadily risen up to its current levels in 2021, that catches up its lifetime high levels in 2008.
On 9 December 2020, BBC published “Rio Tinto ordered to rebuild ancient Aboriginal caves” and stated “Mining giant Rio Tinto must rebuild a 46,000-year-old Aboriginal cave system it blew up in May.”
Before their destruction as part of an iron ore exploration project, the Juukan Gorge caves in Pilbara, Western Australia had shown evidence of continuous human habitation since the last Ice Age.
In a report released on Wednesday, the Australian parliamentary inquiry blasted Rio Tinto’s “inexcusable” act, and said they should compensate the traditional owners.
Rio Tinto repeated its apology and pledged to change its practices.
Earlier this year several senior figures at the company, including Chief Executive Jean-Sébastien Jacques, resigned over the incident, following a backlash from shareholders and the public, following an outcry over their destruction.
According to Rio Tinto on its Twitter presence, “We’re changing our hiring practices to focus on diversity and potential – not just mining experience.”
This update parallels retracement exercises to market re-corrections by prime assets capital, from ‘top quality’ investors.
On March 1, 2021, Nikkei Asia published “Rio and Mongolia agree to replace $7bn plan to expand copper mine.” and stated ‘New leaders to work out deal to better share rising project costs.’
Suffice to explain at levels of matter in business trust policy, Oyu Tolgoi mine’s project financing has come in part from the Rio Tinto Group and an investment agreement between Ivanhoe Mines and the government of Mongolia since its site discovery in 2001.
On 7 March 2021, Financial Times published, “Rio Tinto set to start negotiations over Mongolian mine.” and stated ‘Row could derail expansion of giant Oyu Tolgoi copper mine.’
The article also stated ‘Rio Tinto is set to start face-to-face negotiations with the government of Mongolia as its seeks to complete the $6.75bn expansion.’ and ‘The Oyu Tolgoi mine, with Mongolian gers, or yurts, for accommodation close by: the project is two years late and $1.5bn over budget.’
According to the research platform for long term investors resource macrotrends.net, Rio Tinto market cap as of March 05, 2021 is $104.39B. This, as the current world affairs of Myanmar’s military coup, Rohingya-related issues and during time the Australian government meets terms with Facebook news postings.
Disclaimer: This is not a paid or sponsored article. The sources and information quoted are to correct time of reference. Opinions herewith are not intended to market make or manipulate trading interests of any parties. Readers may/may not forecast trading decisions from these findings. The writer bears no responsibility to market adjustments due from publish of this report.
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Alexander Solomon is an independent industry commentator and the author of adventure novels ‘Aces High @ 23 Wall Street’ and ‘F-A-M-E ‘ze Great’. He has worked in Singapore Police Force, Singapore International Monetary Exchange, Singapore Exchange, Mediacorp and Philip Capital.
Alexander Solomon LLP 