Some of the biggest investment banks are telling their clients that the miner is their top pick, especially as it increasingly diversifies away from iron ore.
Already a subscriber?Rio Tinto’s shares will grow at more than twice the rate of its major rival BHP, according to investment bank brokers, who say the miner is best placed for a boom in base metals.
For years, Rio has been under pressure from investors worried about the fallout from the Juukan Gorge scandal, and as it struggled to get big projects off the ground in Mongolia.Workers tie bags of copper concentrate in the bagging plant at the Oyu Tolgoi copper-gold mine. Rio owns 66 per cent of the mine, alongside the Mongolian government.But, according to Citi brokers, the consensus among analysts is that Rio shares will rise 20 per cent in 12 months compared to just 6 per cent at BHP.
That is part of the reason that brokers are expecting Rio will be a better pick for investors in the medium term. Australia’s key export has declined on concerns over China’s steel demand due to its struggling property market and weak infrastructure spending. Rio Tinto is also Morgan Stanley’s top pick among the iron ore giants. Like UBS, it too prefers the mining company’s more favourable commodity mix through its exposure to base metals.
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