 Good day, fellow investors. I often get questions about safe investments, about safe long-term investments, good dividend payers, growing dividend stocks. And in this video, I want to discuss Rio Tinto, which is, I believe, a very, very strong investment at this period in time, especially a very strong investment to average in over the long-term and to reinvest the strong dividends. The dividend yield is at 6%, which should be okay for most of you. The scale of the business, the diversification, the global, global, let's say, exposure to growth, to emerging markets, to Asia, to what however the world will develop over the next decades is what Rio Tinto brings to you. And over the past 40 years, Rio Tinto has really done well with double digits yearly returned to shareholders. I believe it's something about 12% over the last 40 years. That's what Rio Tinto is. And in this video, I want to discuss a little bit, my view, I want to analyze the company, especially the iron ore part of the company, as it leads to the highest EBITDA. But then don't forget, there is also copper, there's also other things that will balance out over time, depending on how those commodity prices are volatile. So let's start with the analysis of Rio Tinto, and then I'll give you my conclusion on it and how I see that when it comes to investing. So over the last years, we have seen iron prices, iron ore prices as very, very volatile, from $175 per ton going down to below 40 in 2016 and spiking up in 2019. There was the Vale Dam disaster in 2019 at the beginning. It spiked iron prices, but then over the long term, this is very important. I always like to look at cost curves, and this is a 2016 Fortescue presentation that I found. And you see how the cost curve got flatter, more production, and actually the cost of producing iron ore went down. This is continuing to happen. If you look at the 2018 cost curve, it's flatter, flatter, and flatter. So according to my calculations, when things normalize there, more operations are added, more production, iron ore prices should settle around $60, $50, $60 per ton. Rio Tinto will still be profitable over the long term, but not as much as currently, but there are also other metals. So this is something we have to expect. As I said, iron ore price spiked because the Vale Dam disaster that removed approximately 75 million tons of the company's supply and the disruption is expected to last until 2024. However, they are increasing production. Vale wants to bring production as soon as possible back to the previous levels. Fortescue announced the 1.6 billion, 20 million tons expansion of Iron Bridge and a 30 million ton, 1.3 billion new mind, Eliana. BHP, the same 4.7 billion South flank project. Rio will invest 3.5 billion in could-die-dairy mine, and their possibility of projects is really endless. This is from Rio Tinto. There is so much iron ore, so it's all about the cost and what happens to that cost. If they expend too much, then the cost will go down, they will not be profitable. The marginal producer on this cost curve sets the price for the whole sector because that simply demand, how demand and supply works. But don't be surprised if those costs, those prices of iron ore over the long-term go down. However, margins are really strong. Even if prices go down and they are working a lot on lowering costs, Rio will be still extremely profitable and that is what you invest over the long-term into the iron ore margins. And I have made some calculations. Average iron ore, EBITDA, should be around 11 billion total operating cash flows in 2018. We're 14.6 billion. We have to deduct 6 billion of CAPEX. And 2018 is the year I take for an average for iron ore prices and other metals over the next years. So you have 6 billion in free cash flow that can be distributed to shareholders that goes into dividend that goes into buybacks. So you have to compare the 6 billion in free cash flow because that is your shareholder reward to the price of the company. 6 billion or 97 billion is not 10, 15% return but when you add the growth and when you add the potential over the long-term then this is what you get. BHP is just in a similar situation to Rio. Free cash flows have been 10 billion. The market cap is a little bit higher. So we are on a similar return there. Now, there is something that we have to discuss here the long-term outlook. Despite the short-term threats of lower iron ore prices, lower commodities prices, when it comes to investing in companies like Rio, the world develops, the demand for metals will increase and consequently companies like Rio will do extremely well, like they did in the past and I'll show you that in a second. So we have here iron ore, steel versus GDP. You can see how it is a correlation and China is still below the curve, India is still below the curve. So there will be a lot of demand for iron ore and Rio Tinto has the know-how and the ore to produce that at a low cost with a high margin. So just imagine what will Rio's margins be 2025 if there is another bull market in commodities or in 2030, that's what you are investing in. So it's normal for iron ore to be consumed by the growing countries. We have China, we'll have India and we'll have still 4.5 billion people in Asia and 1 billion people in Africa still demanding large quantities of that to grow their economies as they are still growing very, very fast, no matter what's going on in the developed world. The UN predictions lead to an additional 200 billion tons of iron ore so the outlook is very positive for Rio Tinto. They don't know if the demand for steel will grow between 2% and 5.5% per year by 2030 depending on the scenario. But whatever happens, Rio Tinto will do well like it did in the past. Since 1998, Rio Tinto investors have achieved returns of about 3,000% and given the current situation is likely that you can achieve similar returns over the long term. So did beat the FTSE index, did beat also the S&P 500 by significant depending on the currency but still it is a very, very good return and this is also what Rio Tinto is. So as I said, I require a 15% investment return. Rio Tinto is currently at 9, 10, maybe going to 15 in that exuberant part of the commodity cycle that happens every 5, 10 years but that is a little bit too little for me. I have other investments that give me better rewards on let's say the same or even lower risks but still those who look for those big companies, those that want to have a portfolio of 20, 30 strong companies in a portfolio of 30 companies, Rio Tinto really fits well because you can average down if it goes down, you can add more true time because you know that over the next 30, 40 years Rio Tinto will be there. From my perspective, I would wait that Rio Tinto falls to a 15% business yield, the average business yield over time as we have seen that those things are always volatile and only then invest. Is that too crazy to ask? Well, no, because just a few years ago in 2016 when I was long Rio Tinto, I bought some stocks in the 20s, Rio Tinto offered a 15% long-term yield, business yield and that's also the story when it comes to these cyclicals. If you are like me, following a lot of companies constantly following the markets, then you can wait for things to be bad in the environment. Rio Tinto's stock, if there wouldn't be the Vele disaster would be much, much lower now and offering a much, much higher yield over the long-term investment return. But thanks to higher iron ore prices, the stock has also rebounded. So that's something to keep in mind. I'm following the market over the long-term and then investing when that particular stock is below my investing threshold or below a certain set price. That's me. If you can't follow the market like I do, then you can always invest in such stocks, have 30 of them, see which one is let's say below an average growth rate which should be for Rio Tinto, an average return of around 10, 11%, 6% dividend plus 2%, 3% growth plus the reinvestments. And then you see, okay, buy what is low and Rio Tinto at the current moment, it might go lower, but it already fits that perspective for a 10%, 11% long-term return. And as always, as we discussed in the long-term thesis, Rio Tinto offers you exposure to those commodities if those and when those, as those always boom sooner or later, then you find yourself really at a higher exposure and then you might think about trimming it in your portfolio. So Rio Tinto is definitely a stock to be in a 30, 40, 50 stocks portfolio over the very long-term and it surely will do good as it did in the past because compared to the SAP 500, maybe it didn't beat it or it beat it slightly, but over the next 40 years, Rio Tinto is still fairly priced while the SAP 500 is overvalued. Thank you for watching, looking forward to your comments, check my stock market research platform for many other miners research if you like this kind of commodities investing and commodities exposure to global growth. Ask me any questions in the comments. Thank you and I'll see you in the next video.