This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Which Global Miner Will Outperform in 2011?

(Mining sector article updated with details on the floods in Australia.)

NEW YORK ( TheStreet) -- Diversified global mining giants experienced a volatile 2010, with their stocks diving in spring and early summer only to rip higher in the last half of the year.

The macro-economic drivers -- demand from China and the other fast-growing emerging economies such as Brazil and India -- pushed the prices of industrial metals higher. But the overall rise came with some sharp swings as Chinese monetary authorities made high-profile moves to stem potential inflation.

Meanwhile, M&A fever has gripped the mining industry in full as companies look to expand their reach and take advantage of projected expansion in industrial-metals demand. Just this month, Rio Tinto (RIO) moved to acquire Australia's Riversdale for A$3.9 billion.

For the year, investors who parked money in global mining stocks did well. The Dow Jones Industrial Average gained about 10% in 2010, the S&P 500 12%. By comparison, shares of Rio Tinto returned 30%, BHP Billiton (BHP) 21%, Vale (VALE - Get Report) 18%.

BHP had its own issues to deal with during 2010 -- namely, its dashed attempt to acquire the fertilizer producer Potash Corp. (POT) -- but rising iron-ore prices helped all three names during the year.

Those miners that deal heavily in copper performed the best in 2010 on the back of record prices for the red metal. Copper giant Freeport McMoRan (FCX - Get Report) saw its stock add 47% for the year. Shares in Canada's Teck Resources, which also has big copper assets, soared 70%.

The copper market has been tight, not only because of global demand but also speculative bets on the London Metals Exchange that have hoarded copper. Some market watchers, including commodities analysts at Goldman Sachs (GS), expect more copper price appreciation next year.

Business fundamentals aren't the only thing affecting miners of late. Many of the world's biggest -- especially the Anglo-Australians Rio Tinto and BHP Billiton -- have had to contend with some of the worst flooding in the history of Australia, as monsoon rains cause catastrophic deluges across the northeastern state of Queensland.

Queensland happens to be home to some of the world's richest coal fields. The floods have forced Rio Tinto, BHP, Vale, British giant Anglo-American and many other companies to declare "force majeure" on sales of coal extracted from their mines in Queensland (mostly for coal used in steelmaking, called coking coal). By enacting a force majeure clause in a sales contract, a company can't be held responsible -- or pay penalties -- on late shipments to customers caused by events outside its control.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BHP $47.10 0.00%
FCX $18.80 0.00%
RIO $41.88 0.00%
TCK $13.86 0.00%
VALE $5.67 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs