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

Source: John Carnemolla, Shutterstock

Summary

  • 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.

Copyright © 2021 Kalkine Media Pty Ltd.

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%.

Copyright © 2021 Kalkine Media Pty Ltd.

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.


Disclaimer
The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK