ASX Iron Ore Stocks: Investing in 2023 Market Trends
Team Veye | 24-Aug-2023
Iron ore: An Overview
Iron ore (Fe) is a metallic element. The principal iron ores contain hematite and magnetite. Australia's iron ore reserves and resources consist of both hematite and magnetite. Owing to the high average grades of hematite ores when compared to average beneficiated grades of magnetite ores, it is necessary to report the national inventory in terms of contained iron as well as bulk iron ore. South Australia and Tasmania produced the remaining 1% of iron ore in 2018 with 6 Mt and 3 Mt, respectively.
Rio Tinto Limited sustained momentum from the Pilbara Iron Ore business with a 7% increase in production and shipments in the first half of 2023: Gudai-Darri reached capacity, and the company raised 2023 shipments guidance to the upper half of the 320 to 335 million tonne range.
Australia has been gaining traction as one of the largest iron ore producers in the world, but its iron ore resources are also the largest in the world, so the potential resource life of Australia's iron ore deposits is considerable. Australia contains the world’s largest economic resources of iron ore, with 29% of the global, followed by Brazil at 18% and then Russia at 14% as reported by geoscience Australia.
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What are ASX Iron Ore Shares?
There are peculiar irons ore companies listed on the Australian stock exchange that provide very good buying opportunities for short-term as well as long-term benefits. Some of these ASX iron ore shares with market caps dated (as of 22 August 2023) are as follows:
BHP Group Limited (ASX: BHP); market cap: $217.1 billion
Fortescue Metals Group Limited (ASX: FMG); market cap: $62.81 billion
RIO Tinto Limited (ASX: RIO); market cap: $38.8 billion
Mineral Resources Limited (ASX: MIN); market cap: $12.45 billion
Champion Iron Limited (ASX: CIA); market cap: $2.84 billion
Deterra Royalties Limited (ASX: DRR); market cap: $2.32 billion
Investors need to take a call as per their individual risk appetite. Investing in ASX iron shares might be risky in the short to medium term.
Investing in ASX Iron Ore Shares
The iron ore producers strongly depend on their crucial projects as well as key assets. There are Australian iron ore companies whose ASX iron ore shares highly correlate with the demand for iron ore and its production to meet the requisite need in the market.
Australia has a massive production of iron ore and huge iron ore resources. Therefore, resource life is considerable in Australia.
One of the key factors that influence the share price of ASX stock is the iron ore price. Investing in ASX iron ore would be beneficial when there is a potential rise in iron ore prices that reflects in the ASX share price.
ASX Iron Ore Stocks: Top Iron Ore Shares in 2023
The dominance of Western Australia in the iron ore industry in Australia is peculiar, as deposits occur in each Australian state and also in the Northern Territory. Here are some of the top iron ore shares that are being highlighted as follows:
Mineral Resources Limited (ASX: MIN) has a market cap of $12.45 billion and a current market price of $64.295 (as of August 22, 2023). It is actively engaged in mining services and has a portfolio of mining operations across lithium and iron ore.
The company has been providing safe, high-quality, low-cost mining construction and mining infrastructure services throughout Australia. The business comprises mining services, commodities, innovation, and infrastructure.
The company’s mining services production volumes were reported at 58 Mt in Q4, 2023, and totaled 248 Mt for FY2023, in line with revised guidance of 245-255 Mt.
Champion Iron Limited (ASX: CIA) has a market cap of $2.84 billion and a current price of $5.505 (as of August 22, 2023) and is heavily involved in development and exploration. The company aims to develop its noteworthy iron resources at the south end of the Labrador Trough in Quebec. The company has good-quality projects such as Bloom Lake and the Fire Lake Project.
The company recorded quarterly production of 3.4 million wmt, revenue of $297 million, EBITDA of $66 million, and EPS of $0.03 to discuss the results for the financial first quarter ended June 30, 2023.
The iron ore concentrate sales of 2.6 million dmt for the quarter ended June 30, 2023, were up by 27% from the same period in 2022.
Deterra Royalties Limited (ASX: DRR) has a market cap of $2.32 billion and a current market price of $4.36 (as of August 22, 2023). It operates a royalty business model that involves the management and growth of a portfolio of royalty assets across a range of commodities, primarily focused on bulk, base, and battery metals.
The company reported revenue for the period at $229.3 million, down 14% compared to the previous year. This decrease in revenue is largely due to a reduction in the one-off capacity payment from mining area C. Revenue royalties from MAC were recorded at $215.2 million, down 1.6% on FY2022, as a 14% increase in sales volumes largely offset a 15% decline in iron ore pricing.
Benefits of Investing in Iron Ore Shares
Advantages and disadvantages aside, investing in any shares is a regular part of the course of the market cycle. Some of the advantages are as follows:
Exposure to iron ore through investing in ASX iron shares and adding it to a portfolio would benefit in creating a diversified portfolio for the investors. Therefore, someone who is a pure long-term investor might take a calculative risk while investing in such stocks. During market volatility, ASX stocks tend to go up and down, so adding ASX iron stocks will provide some sort of balancing to the portfolio returns.
During the pandemic and also in the Russian-Ukrainian war, the ASX companies producing iron ore that are ASX stocks were highly volatile. Sometimes it is risky to hold; therefore, investors should take note that before investing in highly volatile ASX iron stocks, please do in-depth research.
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Frequently Asked Questions (FAQ)
Should you invest in iron ore?
Iron ore is a metallic element. The principal iron ores contain hematite and magnetite, which have several industrial applications and are considered key materials. It is mainly utilized in the production of steel. Iron ore prices have suffered in recent years, but some investors remain positive about this important industrial element.
What are the top iron ore companies in Australia?
There are dozens of companies listed in the Australian stock exchanges, who particularly involve in the production of iron ore companies that are ASX iron shares. Some of the top iron ore companies are: BHP Group Limited (ASX: BHP); Fortescue Metals Group Limited (ASX: FMG); RIO Tinto Limited (ASX: RIO).
Who is the world's largest producer of iron ore?
Vale S.A.is a Brazilian multinational corporation engaged in metals and mining and one of the largest logistics operators in Brazil. Vale is the largest producer of iron ore and nickel in the world.
Rio Tinto, is also the world's second-largest iron ore producer. The Australian company produced 161.7 Mt of Pilbara iron ore (shipments, 100% basis) in 1H2023, reported on July 26, 2023.
What is the best quality iron ore in the world?
Australia's iron ore exports are high-grade hematite of around 96% hematite, which has been mined from deposits in the Hamersley province of Western Australia. The Brockman iron formation in this province is the most noteworthy host for high-grade hematite iron ore deposits as reported by Geoscience Australia.
Who owns iron ore mines in Australia?
Fortescue Metals Group Limited (ASX: FMG) is an Australian stock exchange-listed company that is into the exploration, development, production, processing, and sale of iron ore and the transition to a global green renewables and resources company.
The Belinga iron ore project in Gabon has been progressing well, with the first ore loaded on a train and delivered to port during the June quarter of 2023.
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