Australia’s big three miners set to shed $11 billion in combined market value

Australian mining giants Rio Tinto, BHP and Fortescue Metals Group are on course to lose more than US$11.12 billion (A$16 billion) in combined market value today, on the back of a commodities selloff and fears of an imminent global recession.

Rio Tinto’s Australia-listed shares look set to shed nearly A$2 billion in value, BHP more than A$10 billion, and Fortescue over A$4 billion, following a slump in Chinese demand for iron ore – the commodity mass produced by all three in Western Australia’s Pilbara region.

This comes at a time when copper and aluminium – more key commodities for the Aussie big three – prices are also falling in response to aggressive interest rate hikes by the US Federal Reserve and other central banks, which could tip the global economy into a recession.

Rio, BHP and Fortescue have already lost around A$30 billion in combined market value this month, and are facing a third straight week of losses after hitting multi-week lows on Monday.

“Are we doomed? Or is it darkest before dawn?,” Jefferies analysts asked in a note on Saturday with reference to recent economic data, China’s COVID-19 lockdowns and the Fed’s latest policy.

The analysts seemed to lean towards the latter, confident that the slowdown in demand for commodities would be followed by a recovery that would be led by miners, adding that recession fears and inflation would give way to recovery.

Analysts at JP Morgan echoed risks to the sector but said fresh policy support along with easing COVID-19 lockdowns in China would spur a rebound in the second half of 2022, and maintained their ‘neutral’ view on Rio Tinto and BHP.