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Financial Investment in Rio Tinto

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Financial Investment in Rio Tinto
BFA 103
ACCOUNTING & FINANCIAL DECISION MAKING

Semester 1, 2013

School of Accounting & Corporate Governance
Faculty of Business

Case Study Assignment
By

Tutor : Word count : 732 words
Submission date : 14th April 2013

In this 21st era, mining sector had lead to rapid economics growth and improvement of social welfare in Australia (Kate Penney, et al., 2012). As can be seen, between 2010 and 2011 roughly 85 percent out of the total commodities export in Australia was from mining sector (BREE, 2011). This condition has attracted investor overseas to come and invest in Australian mining company, especially on Rio Tinto. Before the investor made a decision, this essay is carried out in aligning to the aim of helping the investor wether or not to go ahead with financial investment in Rio Tinto Company by identifying the company financial performance and the future mining market condition.

Resource sector in Australia is highly competitive in the world. As can bee seen, the study of Geoscience Australia (2011) has shown that Australia has the world largest resources such as mineral sands, silver, uranium nickel brown coal to name a few. However, the mining sector market in Australia could stay strong is not apart from China’s contribution. Since 2003 China was the determinants of high energy and metal price, this situation happened due to the high demand that market could not anticipate. Although China itself is a major resource producer but the domestic productions are still unable to keep up their own country demand’s pace. Hence, many countries in the world such as Africa, Latin America, Central Asia, and Middle East have been starting to innovate and invest in mining sector in order to offset the world demands (RBA, 2010).

Despite the strong market growth at the past, during 2011 there were four Australian mining companies including Rio Tinto that experienced a decrease in their record profitability for up to 25 percent due to
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