Big Global Miners: Priced for iron, built for copper – assessing diversified miners' implicit copper price

Despite copper prices trading near historically high levels, diversified miners do not appear to capture full credit for their copper exposure. Building on a report by our N. America Metals & Mining team on implied copper prices for pure-play miners, we extend the analysis to BHP, Glencore, Vale and Rio Tinto. On a P/NAV basis, most diversified miners trade at implied copper prices below both spot and the pure-play average (avg. discount for diversified miners of 9% and 6%, respectively). EV/EBITDA valuations point to a similar picture, with implied prices close to or below spot and below those of pure-play peers (avg. discount for diversified miners at 5% vs. spot and 3% vs. pure-play peers). BHP is the main exception, trading at a premium to spot copper prices and copper pure-plays from an implicit copper price perspective. Overall, the disconnect between implied and spot prices suggests potential for a re-rating for diversified miners. The question is whether Vale, Rio Tinto and Gle