Glencore and Rio Tinto: Should you add these stocks to your portfolio?

Highlights

Investing in shares in a volatile market can be riskier than usual market developments

Glencore has signed a binding agreement with MAC regarding the acquisition of its CSA copper mine in New South Wales, Australia.

Rio Tinto has announced that it has endorsed an Option to Earn-in Agreement with Lion Copper and Gold to study and further explore the copper assets of Lion CG in Nevada’s Mason Valley.

It is no more news that Russia’s invasion of Ukraine has shaken the stock exchanges across the world. The war has added new uncertainty to the already battered markets that were trying to recover after the pandemic period. The geopolitical crisis also saw the Western countries imposing sanctions on Russia that led to global commodity prices fluctuating worldwide. With the crisis raging on, the financial implications of this war could be long-lasting, which may send the global markets into a free fall.

In such cases, most investors tend to pull out their money from the stock markets. But experts have different takes and advice for a sound investment plan as most stock markets have seen a recovery in the last one week. Let’s discuss two stocks that have been making news and are worth a watch.

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Anglo-Swiss firm engaged in commodity trading and mining Glencore plc (LON: GLEN), has been in the limelight lately due to several reasons. On 17 March 2022, Glencore has signed a binding agreement with an NYSE-listed Special Purpose Acquisition Company (SPAC) called Metals Acquisition Corp (MAC) regarding the acquisition of its CSA copper mine in New South Wales, Australia. When the sale and purchase of the mine will be done, cash worth US$1.05 billion along with MAC’s equity stake worth US$50 million would be received by Glencore. Glencore would also get a net smelter return of 1.5% as royalty.

On 22 March 2022, Glencore has signed another binding agreement with ASX-listed KGL Resources Ltd regarding the sale of the entire copper concentrate that would be generated from its Jervois Copper Project, which is a high-grade project in Australia’s northern region. By the second quarter of 2022, the feasibility study is expected to be concluded. The agreement is evergreen, and until a two-year notice is given by Glencore or KGL in advance, the agreement will stay in place.

Glencore is focused on transitioning to a low-carbon economy and the move to sell the CSA mine is aligned with its approach of reducing the cost of operations and focusing on long-life assets. The company aims to remain a leader in the Australian metals and minerals market while focusing on its global portfolio comprising more than 150 sites.

Should you buy Glencore shares?

Glencore has recently released its 2021 annual report on 16 March 2022. As per its report, the company’s performance has significantly improved over the past year after battling with the economic impact of the pandemic. In 2020, the company suffered from a net loss of US$1,903 million, which turned into a net income of US$4,974 million last year.

Glencore’s earnings-per-share (EPS) also went up from negative $0.14 to positive US$0.38 in 2021. Additionally, as compared to an adjusted EBITDA of US$11,560 million in 2020, Glencore reported a record high adjusted EBITDA of US$21,323 million in 2021.

Glencore is listed on the LSE’s main market since 2011. With a market cap of £65,563.87 million, Glencore’s shares were trading at GBX 503.50, up by 1.20%, at around 10:00 AM on 22 March 2022. The FTSE100-listed firm has been performing very well despite the pandemic-related disruptions, and it has given a return of 78.51% to its shareholders over the last one year as of 22 March 2022, while its year-to-date return stands at 34.23%.

Glencore vs Rio Tinto

Like Glencore, Rio Tinto plc (LON: RIO) is also a metals and mining company. The Anglo-Australian group operates across the globe and is the second-largest metals miner after BHP Group. Rio has recently dropped its commercial association with Russia due to the ongoing geopolitical developments. On 21 March, Rio Tinto has announced that it has endorsed an Option to Earn-in Agreement with Lion Copper and Gold to study and further explore the copper assets of Lion CG in Nevada’s Mason Valley.

2022 Kalkine Media®

Rio Tinto is also an FTSE 100 constituent like Glencore, and its shares are listed on the LSE’s main market since 1973. With a market cap of £72,504.48 million, Rio Tinto’s shares were trading at GBX 5,834.00, up by 0.52%, at around 10:00 AM on 22 March 2022. The company has given lower returns to its shareholders as compared to Glencore, with its one-year return standing at 6.82% as of 22 March 2022, and its year-to-date return standing at 19.44%.