Mining giant Rio Tinto () announced recently that it intends to command over 25% of additional global iron ore production, according to Alan Davies, the company’s President of International Operations. Davies added that the firm believes the Chinese construction story still has plenty of room to grow.
After reviewing the firm’s corresponding presentation to this announcement, we think it’s clear that Rio Tinto, one of the world’s most diversified mining companies, sees true potential for long-term global economic growth thanks to wealth gains in India and China. In fact, Rio Tinto expects 3 billion people to urbanize over the next forty years, suggesting there will be no demand shortage for necessary building materials like iron ore. We think it’s important for investors to take a long-term view with respect to the company’s fundamentals and not be too swayed by short-term concerns regarding the US economy or a slowdown in China.
Rio’s shares are very attractive at current levels based on our DCF valuation, and we hold the company in our Best Ideas portfolio. The firm also flashes a 9 on our innovative Valuentum Buying Index (VBI), among the top scores a firm can achieve.