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Rio Tinto’s single-commodity exposure not a bad thing, says Investec

Posted on 20 August 2014

Rio Tinto’s heavy exposure to iron ore shouldn’t necessarily be seen by the market as a bad thing, according to Investec. The broker has maintained its ‘hold’ rating for the stock, but hiked its target price from 3,220p to 3,552p. Investec analyst Hunter Hillcoat said that the miner’s single-commodity exposure is ‘often portrayed as a weakness’.
However, he said that the iron ore division’s ‘exaggerated operating margins’ means that Rio Tinto has the capacity to withstand high price volatility. Iron ore margins are running at 60-70% this decade, twice that of other commodity classes………………………………………..Full Article: Source


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