RIO reports great earnings and the stock falls? Overnight, RIO fell 60c after an excellent report as investors weigh up the future capital returns against cost to growth. Chart1 illustrates the gap in dividend yield between BHP/CBA, has narrowed from ~5% in 2011 to ~1.4%. If the IronOre Price can remain above US$90/tonne, then the 3 Australian big miners will become large cashcows, assuming they do not repeat poor acquisitions, investors should benefit from increased dividends. I am neutral our big miners, avoidance over the last ~5 years was wise, but this is no guarantee for the next 5. I am not keen investing in price takers as they have limited control over ultimate profits.but the big 3 miners look very interesting for people who have a strong understanding of China and India, hence the Iron Ore price. I remain a trader of these stocks but with a more interested eye.


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James Marlay

Interesting to see RIO reveal their cost of production at $20/tonne. It could get interesting if the supply response does start to see higher cost producers bow out of the market.