Cliffs Natural Resources Inc (CLF), African Minerals Limited (AMI): Are Iron Ore Prices’ New Low a Buying Opportunity?

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African Minerals Limited (LON:AMI) is an interesting play. As the name suggests, Its operations are in Africa, a location I typically frown upon when I invest. However, the company is trading at a fairly cheap valuation and will have very competitive costs once it reaches a run-rate of 20 million tonnes later this year. There’s no rush to buy this stock with iron ore prices falling, but if prices stabilize at or above $100 per tonne, African Minerals could be a good stock to buy.

Conclusion

Vale, Rio Tinto, BHP, and to a lesser extent Fortescue Metals control close to 70% of the global iron market. Cliffs is too risky, with iron ore prices at $113 per tonne and potentially falling further. African Minerals is a stock to keep an eye on. It’s trading just 16% from its 52-week low. If iron ore prices settle at or above $100 per tonne, African Minerals Limited (LON:AMI) could be a good stock to buy.

Peter Epstein has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads.

The article Are Iron Ore Prices’ New Low a Buying Opportunity? originally appeared on Fool.com.

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