FMG, BHP, and RIO Fly High on Soaring Iron Ore Prices

Source: John Carnemolla, Shutterstock


  • Huge demand from the Chinese steel making industry is pushing iron ore prices to north.
  • Australia gained the most from higher iron ore prices and contributed towards 50% of all seaborne iron ore exports in 2020.
  • Fortescue Metals, BHP Group, and Rio Tinto banked on the high rising price of the base metal and have given robust return to their investors.

Iron ore prices are on a surge amidst robust demand from the Chinese steel industry and fear of disrupted supply. In the first quarter of 2021, the price of the base metal crossed its 10-year high level. The estimate from the Resource and Energy Quarterly, March edition, indicates that the price will remain above US$100/tonne in the international market.

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Australia dominated the global iron trade and exported nearly 50% of all seaborne ore in 2020. The upward move in the iron ore prices has well translated into dividend payouts and share prices of the three largest ASX-listed iron ore players.

The company which banked the most on the rise in iron ore prices is Fortescue Metals Group Ltd (ASX:FMG). FMG has given an excellent return of 85% to its shareholders in the last 52 weeks. FMG also stands at the top when it comes to the dividend payout. The Company last paid a dividend of A$1.47 per share. Its current annual yield stands at 11.76%.

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Recent update: Why are Fortescue Shares on the Move Today?

Global mining behemoth BHP Group Limited (ASX:BHP) was firing on all cylinders when the copper and iron ore prices broke previous years’ records. The hydrocarbon to coal to base metal producer is banking on a robust market performance after the sluggish demand in 2020.

Good Read: Where will BHP Group’s share price go from here?

BHP stock prices have gained nearly 50% in the last one year. The excellent cash flow due to higher price realised from the sales of copper and iron ore led to a dividend roll-out of A$1.311 per share in March this year. The figure is the highest in the last five dividend payouts. As of 9 April 2021, annual dividend yield is around 4.38%.

Another mining giant whose shares performed handsomely during the current commodity supercycle is Rio Tinto Limited (ASX:RIO). Investors bid aggressively for the iron ore players during the March 2021 quarter. Rio and the other two, all touched their 52-week high during the last quarter, while copper touched its 9-year high, and iron crossed its 10-year high price.

Informative Read: Rio Tinto Kicks Off Lithium Production from Waste Rocks at US Site   

Rio has delivered a decent return of ~30% to its shareholders in the last one year. A dividend payment is scheduled for this month, and shareholders will receive an amount of A$5.17 per share on 15 April 2021. The dividend amount is the highest in the last four payouts. The company has an annual dividend yield of around 6.33%.

Iron ore Outlook

Iron ore exports are likely to go up from Australia. During the last financial year, iron ore has become the only commodity that surpassed the A$100-billion mark in earnings. For 2020-21, earnings from iron ore exports are forecast to touch A$136 billion.

Rio Tinto’s Pannawonica site is expected to come online during mid-2021. The South Flank project of BHP Group is also likely to commence production during the year. FMG’s Eliwana project is ramping up production and forecast to reach 30 MMT by 2021.

The prices of iron ore are expected to remain above US$100/tonne through the year 2021 and 2022. So, we can see some more flights in the share prices of these major players in the coming days.

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