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Rio Tinto Financial Analysis Essay

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Executive summary
The report consists of three major parts, which are firstly divided into providing background information of Rio Tinto and its biggest competitors BHP and Vale in the mining industry. A SWOT-analysis takes into consideration the external factors of the market as well as the internal factors which may have an impact on the financial statements of Rio Tinto.
Secondly, the main purpose of this paper is to compare Rio Tinto’s financial ratios to its biggest competitor BHP. Investors may consider them as good predictors of failures or advantages in the business and may predict if a company can survive in the future. The results illustrated in this paper, show that there are some differences between the two companies in …show more content…

Rio Tinto’s strongest competitors are BHP Billiton Ltd. and Vale. Together with Rio Tinto they hold 65 per cent of the entire iron ore section (Mining Australia 2013).
BHP Billiton Restricted (BHP) has the most diversified portfolio of high quality resources in the entire world. All companies have in common the generation and dissemination of minerals and their products, but BHP is the only company which focuses also strongly on petroleum. Therefore BHP has a competitive advantage against rising costs, which have in total a negative effect on the companies’ earnings (BHP Annual report 2013).
Contrastingly Vale is the second biggest mining company on the planet, likewise Vale represents to be the world’s largest producer iron mineral and -pellets. Logistic frameworks such as railroads, airports and harbours in Brazil are another big operating factor. Also several joint-ventures gives the company the opportunity to invest in steel and energy sections. Vale also operates in different countries than Rio Tinto and BHP do that gives them another competitive advantage. (Vale Annual Report 2013).

3. SWOT-Analysis of Rio Tinto
Due to recent announcements in the mining industry and changes throughout the globe, a SWOT-Analysis provides Rio Tinto with supporting information and data of which problems can arise and how the position

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