The slowdown in the global economy hurt the stock of three mining firms recently. Cleveland-Cliffs
(CLF), Vale, and BHP Group (BHP) dipped, creating a potential entry point for resource stock investors.
Cleveland-Cliffs earned 29 cents a share. Revenue fell by 5.8% Y/Y to $5.65 billion. The weak results
upset investors because the CEO did not warn shareholders ahead of time. Fortunately, the company is
investing in infrastructure. This will pay off starting in the next quarter.
Investors sold BHP Group on worries that iron ore prices would keep falling. On Oct. 27, iron ore traded
to a 2.5-year low at $82.45 per metric ton in Singapore. Markets are anticipating a steep slowdown in
China’s economy. During its 20th Congress, the Chinese Communist Party appointed Xi Jinping for a
third term. Draconian measures to avoid Covid entirely will hurt its economy. The country must also
manage through a real estate crash that began more than a year ago.
Vale posted a Q3 net profit drop. Iron ore prices fell as inflation increased its costs. Markets are
overreacting. Vale posted a free cash flow of over $2 billion. It used only 25% of its buyback plan. When
the economic activity rebounds, VALE stock will rise again.
