Rio Tinto's Sale of Simandou May See China Develop a Strategic Iron Ore Deposit

Our Rio Tinto Fair Value Estimate Lifts Marginally to AUD39 Per Share With Solid Finish to 2016

China Steel the Start of the Supply Response !!!

Leading Independent Investment Research, Morningstar, Inc.

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Equity Bottom-Up

Temporary tightness should abate as demand falters and supply surges.<ul><li class="p1">Iron ore prices have surged to $69 per tonne, up 23% from last week and continuing their recent upward trend from a bottom of $37 per tonne in December.</li><li class="p1">Leveraged mining stocks are also up by double-digit levels this week, having already more than doubled since February.</li><li class="p1">We think this rally is unsustainable, as it is based on short-lived demand measures and near-term supply disruptions.</li><li class="p1">As temporary tightness in the market abates, iron ore prices should fall by more than half to $30 per tonne in the long term, driven by falling Chinese steel demand and rising scrap availability.</li></ul>Analysts: David Wang, Daniel Rohr and Mathew Hodge

Temporary tightness should abate as demand falters and supply surges.Iron ore prices have surged to $69 per tonne, up 23% from last week and continuing their recent upward trend from a bottom of $37 per tonne in December.Leveraged mining stocks are also up by double-digit levels this week, having already more than doubled since February.We think this rally is unsustainable, as it is based on short-lived demand measures and near-term supply disruptions.As temporary tightness in the market abates, iron ore prices should fall by more than half to $30 per tonne in the long term, driven by falling Chinese steel demand and rising scrap availability.Analysts: David Wang, Daniel Rohr and Mathew Hodge

Rio Tinto Ltd

Iron Ore Rally Unsustainable