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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

BHP is a leading global diversified miner supplying iron ore, copper, oil, gas, and metallurgical coal. A 2001 dual-listed merger of BHP Limited (now BHP Ltd.) and Billiton PLC (now BHP PLC) created the present-day BHP. Shareholders in each company have equivalent economic and voting rights in BHP as a whole. Major assets include Pilbara iron ore, Queensland coking coal, Escondida copper and conventional petroleum assets, principally in Australia and the Gulf of Mexico. Onshore U.S. oil and gas assets were sold in 2018.

160 Victoria Street, Nova South
London, SW1E 5LB, United Kingdom
T +44 2078024000
Sector Basic Materials
Industry Other Industrial Metals & Mining
Most Recent Earnings Dec 31, 2003
Fiscal Year End Jun 30, 2021
Stock Type
Employees 40,100