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BHP: more bang for your buck

The iron ore price has tumbled but the Big Australian is still our pick of the miners for yield
August 26, 2021

In cyclical industries, the wheel turns in the same old way and often companies make the same old mistakes. During the mining downturn five years ago, a stand-out case was Rio Tinto (RIO). It was left to rue the day it splurged A$3.9bn (£2.1bn) on a prospective coal mine at the high point of the previous bull market. 

But the memories of the last downturn have remained fresh this time around. With metal prices rising into the early part of this year, miners prioritised handing cash to shareholders and stripping out costly assets instead of searching for the next multi-decade project. 

New mines now getting green-lit have been on the books for years. The juniors and midcaps look on anxiously. Only distressed projects such as Woodsmith in North Yorkshire or very early development projects get picked up rather than the shovel-ready options the industry used to go for. 

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