Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Bottom-Up

<ul>
<li>
Context: The <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP (BHP AU)</a> vs. <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto (RIO AU)</a> price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.</li>
<li>
Highlight: Going long <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto (RIO AU)</a> and short <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a>  targets a 4% return.</li>
<li>
Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.</li>
</ul>



Context: The BHP (BHP AU) vs. Rio Tinto (RIO AU) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.

Highlight: Going long Rio Tinto (RIO AU) and short BHP Group (BHP AU)  targets a 4% return.

Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.


Rio Tinto (RIO AU) Vs BHP (BHP AU): Pair Trade Opens Between Mining Leaders

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<ul>
<li>Our insight <a href="https://www.smartkarma.com/insights/2024-high-conviction-junior-copper-miners" target="_blank" data-smartkarma-citation="insights:122425" rel="noopener">2024 High Conviction: Junior Copper Miners</a> garnered significant interest in late 2023, we hereby provide an update on our favorite junior copper names.</li>
<li>Copper prices have started to to tick up (+5% YTD) on the back of gold making new all-time highs late in 1Q24, and more importantly squeezed global supply.</li>
<li>
<a href="https://www.smartkarma.com/entities/entree-resources-ltd-3aeeb68c-80d0-4ada-822e-898883fbb28e" target="_blank" data-smartkarma-citation="entities:26727:1" rel="noopener">Entree Resources (ETG CN) </a>has performed strongest +22% while <a href="https://www.smartkarma.com/entities/arras-minerals-corp" target="_blank" data-smartkarma-citation="entities:40384:1" rel="noopener">Arras Minerals (ARK V EQUITY)</a> has been a laggard at -18% YTD.</li>
</ul>


Our insight 2024 High Conviction: Junior Copper Miners garnered significant interest in late 2023, we hereby provide an update on our favorite junior copper names.
Copper prices have started to to tick up (+5% YTD) on the back of gold making new all-time highs late in 1Q24, and more importantly squeezed global supply.

Entree Resources (ETG CN) has performed strongest +22% while Arras Minerals (ARK V EQUITY) has been a laggard at -18% YTD.


Junior Copper Miners: An Update After 1Q24

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Rio–Glencore failed not on strategy but arithmetic: at realistic synergies, premiums above low-20% compressed post-deal returns toward or below Rio’s 8.5% WACC, leaving no margin for execution risk.</li>
<li>Glencore’s ~40% premium ask was internally rational given governance asymmetry, but mechanically incompatible with Rio’s return discipline once exchange ratios, peer multiples and copper delivery risk were fully quantified.</li>
<li>The case reinforces a higher M&amp;A bar in mining: visible, self-funded synergies and deferred value recognition now matter more than scale, copper optionality or strategic narratives.</li>
</ul>


Rio–Glencore failed not on strategy but arithmetic: at realistic synergies, premiums above low-20% compressed post-deal returns toward or below Rio’s 8.5% WACC, leaving no margin for execution risk.
Glencore’s ~40% premium ask was internally rational given governance asymmetry, but mechanically incompatible with Rio’s return discipline once exchange ratios, peer multiples and copper delivery risk were fully quantified.
The case reinforces a higher M&amp;A bar in mining: visible, self-funded synergies and deferred value recognition now matter more than scale, copper optionality or strategic narratives.


Rio–Glencore: Why the Numbers Never Cleared and What It Means for Mining M&A

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

<ul>
<li>The BHP-China dispute seeks to revert to pre-2010 contractual norms, but we believe <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group Ltd (BHP AU)</a>  has the advantage, given its market position and strategic leverage.</li>
<li>Investigations into the<a href="https://www.mining.com/fatal-accident-forces-winning-to-halt-iron-ore-mine-at-simandou/" target="_blank" rel="noopener"> accident at Simandou</a> are underway, and the mine remains shut with no progress on construction until the issue is resolved. </li>
<li>We like <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> and are bullish on the name. Read our recent update, <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-exciting-value-adding-catalyst-can-triple-production-again" target="_blank" data-smartkarma-citation="insights:200341" rel="noopener">Fenix Resources (FEX AU): Exciting Value-Adding Catalyst Can Triple Production Again</a>. </li>
</ul>


The BHP-China dispute seeks to revert to pre-2010 contractual norms, but we believe BHP Group Ltd (BHP AU)  has the advantage, given its market position and strategic leverage.
Investigations into the accident at Simandou are underway, and the mine remains shut with no progress on construction until the issue is resolved. 
We like Fenix Resources (FEX AU) and are bullish on the name. Read our recent update, Fenix Resources (FEX AU): Exciting Value-Adding Catalyst Can Triple Production Again. 


On The BHP-China Impasse: Iron Ore Will Continue To Be Over 100 USD/Ton

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a> commenced operations of its third mine, the Beebyn-W11, with the shipment of 60k tons from the port of Geraldton.</li>
<li>Beebyn-W11, Fenix’s third operating mine in the Midwest, is now operating at the planned FY26 production rate of 1.5 million tonnes per annum (Mtpa).</li>
<li>As a result, Fenix is now mining, hauling, loading and shipping at a combined run rate of more than 4Mtpa from the Company’s three mines. </li>
</ul>



Fenix Resources (FEX AU) commenced operations of its third mine, the Beebyn-W11, with the shipment of 60k tons from the port of Geraldton.
Beebyn-W11, Fenix’s third operating mine in the Midwest, is now operating at the planned FY26 production rate of 1.5 million tonnes per annum (Mtpa).
As a result, Fenix is now mining, hauling, loading and shipping at a combined run rate of more than 4Mtpa from the Company’s three mines. 


Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF

Australia

Rio Tinto Limited is an international mining company.  The Company has interests in mining for aluminum, borax, coal, copper, gold, iron ore, lead, silver, tin, uranium, zinc, titanium dioxide feedstock, diamonds, talc and zircon. Dually-listed company with RIO LN.

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Rio Tinto Ltd (RIO AU)

Rio Tinto (RIO AU) Vs BHP (BHP AU): Pair Trade Opens Between Mining Leaders

4% target return as a statistical divergence emerges between Australia's two largest diversified miners. Essential for quantitative traders seeking...

Gaudenz Schneider

Junior Copper Miners: An Update After 1Q24

Update on favorite junior copper miners as copper prices rise, Entree Resources (+22%) outperforms while Arras Minerals (-18%) lags.

Nicolas Van Broekhoven

Rio–Glencore: Why the Numbers Never Cleared and What It Means for Mining M&A

Rio–Glencore didn’t fail on strategy but on numbers. Using undisturbed prices, exchange ratios and WACC, even modest premiums left no return...

Jesus Rodriguez Aguilar

On The BHP-China Impasse: Iron Ore Will Continue To Be Over 100 USD/Ton

BHP supplies 13% of China’s 1.24B tons of iron ore imports; Australia 60%. China accounts for 70% of seaborne imports. The recent ban likely...

Sameer Taneja

Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF

Fenix Resources (FEX AU) has achieved a significant milestone in increasing its production to 4 million tons. At a steady production price...

Sameer Taneja

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Rio Tinto (RIO AU) Vs BHP (BHP AU): Pair Trade Opens Between Mining Leaders

4% target return as a statistical divergence emerges between Australia's two largest diversified miners. Essential for quantitative traders seeking...

Gaudenz Schneider

Junior Copper Miners: An Update After 1Q24

​Update on favorite junior copper miners as copper prices rise, Entree Resources (+22%) outperforms while Arras Minerals (-18%) lags.

Nicolas Van Broekhoven

Rio–Glencore: Why the Numbers Never Cleared and What It Means for Mining M&A

Rio–Glencore didn’t fail on strategy but on numbers. Using undisturbed prices, exchange ratios and WACC, even modest premiums left no return...

Jesus Rodriguez Aguilar

On The BHP-China Impasse: Iron Ore Will Continue To Be Over 100 USD/Ton

BHP supplies 13% of China’s 1.24B tons of iron ore imports; Australia 60%. China accounts for 70% of seaborne imports. The recent ban likely...

Sameer Taneja

Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF

Fenix Resources (FEX AU) has achieved a significant milestone in increasing its production to 4 million tons. At a steady production price...

Sameer Taneja

Update on favorite junior copper miners as copper prices rise, Entree Resources (+22%) outperforms while Arras Minerals (-18%) lags.