Iron ore miners outperform BHP (ASX: BHP) share price in 2021
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Iron ore prices soared to over US $ 200 per tonne for the first time on record. It helped iron ore heavyweights BHP Group Ltd (ASX: BHP) to sit near the all-time records.
While the BHP share price is up 15% year-to-date, these smaller players have delivered even better returns since the start of the year compared to their large-cap peers.
Mining stocks beat BHP share price this year
Champion Iron Ltd (ASX: CIA)
Champion Iron is a $ 3.7 billion market capitalization exploration and development company with major projects in southern Labrador Trough, the largest iron ore producing region in Canada.
The company is very profitable, generating earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 598.5 million in the past 12 months.
Champion’s profitability is supported by its high grade iron ore at 66.3% Fe and construction underway in Phase II which is expected to double production in the short to medium term. The company believes that the completion of Phase II will position it as one of the largest producers of high-grade iron ore in the world.
The Champion Iron stock price is up nearly 50% year-to-date, far outpacing the BHP stock price returns.
Mineral Resources Ltd (ASX: MIN)
Mineral Resources is a diversified mining services provider, iron and lithium producer and a major holder of very promising gas permits.
The company’s recent financial performance has been driven by its record production of iron ore, taking advantage of today’s sky-high prices.
Over the next five years, Mineral Resources is considering a number of revenue growth initiatives. These include plans to double revenues from its mining services and increase iron ore production from 20Mtpa to 90Mtpa. Mining services currently account for around a third of the company’s overall revenue.
The Mineral Resources share price has more than doubled in the past 12 months and has climbed about 20% since the start of the year. The company’s strong cash flow translated into a 355% increase in 1H20 dividends to $ 1.00 per share. This compares to the interim dividend of $ 1,311 paid by BHP shares.
BCI Minerals Ltd (ASX: BCI)
BCI Minerals is a much smaller company, with a market capitalization of only around $ 260 million. The Company’s primary iron ore asset is its Iron Valley mine which is operated under royalty payments from Mineral Resources. The mine contributed record EBITDA for the company in fiscal 21, contributing $ 20.2 million in 3Q21.
BCI’s stock price has been relatively flat for most of 2021, rebounding around the 30-cent level. It is ultimately broken above its trading range and is currently trading near its 6-year high at 41.5 cents, a return of 38% year-to-date.
While iron ore continues to be an important source of revenue for the company, it has also invested $ 60 million to accelerate its Mardie salt and potash production project.
It can be argued, however, that BCI represents a much more speculative stock than BHP stocks, which are considered blue chip.