Rio Tinto Links New Ore Platform - Analyst Blog

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Last week, Rio Tinto plc ( RIO ) inked a collaborative affiliation with a new iron ore trading network, named China Beijing International Mining Exchange ( CBMX ). With the acquired membership of an electronic trading platform, Rio Tinto will now be able to easily sell its available iron ore to Chinese market.

Moreover, the online trading platform will allow members selling over and above the contracted quantity.  

Alan Smith, the president of Rio Tinto Iron Ore Asia, expects strong response from participants to significantly develop the new Exchange, enhancing Rio Tinto's Grasp in the Chinese market.    

The metals and minerals market is highly competitive. Particularly in Asia, the present instability and lower-than-expected growth rate raise concerns on the domestically confined mining stocks. Thus, sharing a trading platform with one of the Asian giants is expected to bring in a massive, material- intensive growth cycle while opening a wider gateway to the emerging economies in South and South East Asia.                      

Rio Tinto, a London and New York Stock Exchange-listed company, is already trading on the Australian Securities Exchange-the bull's eye for almost all the biggest ore traders of the world. Amid the novel CBMX collaboration, RIO will now bring both the Australian buyers/suppliers together-providing opportunities to share the stage with key Asian spot iron ore traders.

Mention may be made of Brazilian giant, Vale S.A ( VALE ), who also signed a memorandum of understanding with CBMX just a day before that of Rio Tinto. Australian ore producer BHP Billiton Ltd ( BHP ), however, refrained from such collaboration. The industry believes that BHP's year-old support to Singapore-based Global Ore platform--which could have ignited fierce competition within the trading network--was a major reason for the abstinence.  

The flipside depicts a different story. The industry experts expect the price of iron ore to soften in the global market, making the trading volume of iron ore weak in the imminent future.

The miner competes with global mining giants including BHP Billiton Ltd and Vale S.A. We currently have a long-term Neutral recommendation on the stock. Also, Rio Tinto carries a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.


 
BHP BILLITN LTD ( BHP ): Free Stock Analysis Report
 
RIO TINTO-ADR ( RIO ): Free Stock Analysis Report
 
VALE SA ( VALE ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BHP , CBMX , RIO , VALE

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