Iron Ore Wrap: Vale Gains as China Buys More

Brazil's Supreme Court has formed a majority to uphold a foreign profits tax on overseas subsidiaries, including Vale. The vote is part of an ongoing virtual session closing on 28 August 2026. The tax, disputed since 2001, affects corporate income tax and social contributions. Vale's potential liability is estimated at R$22 billion (US$4.26 billion). The court's final ruling is not yet certain, as any justice can request a review.

Australian shares are expected to rise 0.2% at open after a 1% drop due to rate hike concerns. Tech stocks fell, with Xero, WiseTech, and NEXTDC declining. Qantas rose 4.8% on revenue growth forecasts. US markets gained, led by Nvidia's 8.7% surge. European markets fell 0.8%.

The FTSE 100 remained flat as falling crude prices hurt oil majors Shell and BP, each down over 1.5%. Gains in homebuilders and miners offset some losses. A UK housing program supported domestic equities, while Brent crude fell to $86/barrel. Industrial metals rallied, benefiting miners like Rio Tinto and Anglo American.

Rio Tinto faces a deadline to secure a new power deal for its Bell Bay Aluminium smelter in Tasmania. The current deal expires at year-end, and failure to renew may risk closure. Hydro Tasmania and Rio Tinto are negotiating, with a $60M price gap. Local leaders urge government action to secure the smelter's future, citing its economic importance.

The Australian government has agreed to a AUD$2.5 billion bailout to save the Tomago aluminium smelter, majority-owned by Rio Tinto, ensuring its transition to renewable energy by 2033. The deal includes a 10-year below-market power supply guarantee and AUD$1.1 billion investment by Tomago Aluminium. The smelter produces 40% of Australia's annual aluminium.

UBS reports diversified miners are focusing on copper expansion for higher valuations. The bank rates Anglo American (£46 target) and Teck Resources (C$105 target) as buys, citing portfolio restructuring and earnings beats. Freeport-McMoRan (NYSE:FCX, $77 target) is also a buy due to Grasberg mine recovery. BHP, Rio Tinto, and Glencore are rated neutral with respective targets of £29.50, £73, and 570 pence. Shares of these companies showed mixed movements in afternoon trading.