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Fair Value Estimates Lowered for Most Iron Ore-Exposed Miners With Lower Near-Term Iron Ore Prices

Mathew Hodge, CFA Regional Director

Analyst Note

| Mathew Hodge, CFA |

Of the diversified majors, we now think BHP is the cheapest, trading at close to a 10% discount to our fair value estimate. We lower our fair value estimates for our iron ore-exposed miners Fortescue, Vale, Rio Tinto, BHP, and Deterra Royalties by about 30% to AUD 10 per share, 30% to USD 13 per share, 4% to AUD 89 per share, 5% to AUD 39 per share, and 7% to AUD 3.35 per share, respectively, after incorporating the lower iron ore futures prices given the significant softening in Chinese demand.

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Company Profile

Business Description

Vale is the world's largest iron ore miner and one of the largest diversified miners, along with BHP and Rio Tinto. Earnings are dominated by the bulk materials division, primarily iron ore and iron ore pellets, with minor contributions from iron ore proxies, including manganese and coal. The base metals division is much smaller, primarily consisting of nickel mines and smelters with a small contribution from copper.

Praia de Botafogo, 186, Offices 701 - 1901
Rio de Janeiro, RJ, 22250-145, Brazil
T +55 2134855000
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 74,316