Jefferies-Metals Mining Iron Ore：Analysis of What is Priced-in-20260108

Shares of the major iron ore miners have outperformed the price of iron ore by~40% since the start of 2025, on average. Our refreshed analysis of what ironore price is discounted in the shares of Rio, BHP and Vale suggests the marketis now 'pricing in' an average iron ore price of $100/t for 2026—well above whathas historically been priced in, but still ~8% below current spot.

Our Approach: In our analysis, we once again estimate what iron ore price is currently discountedin the shares of the major iron ore miners by using 2026 EV/EBITDA multiples. Our approach isto use our price forecasts for all commodities other than iron ore, and then flex iron ore pricesuntil we arrive at 'normalized' EV/EBITDA multiples for each of the major iron ore miners. Weassume a normalized EV/EBITDA of 6.5x for BHP (strong balance sheet, relatively low operatingrisk, and franking credits in Australia), 6.0x for Rio plc (no franking credits on plc line, but exposure toaluminum and copper growth), and 5.0x for Vale (higher operating and geopolitical risk, no frankingcredits, but base metals upside and capital return catalysts). These multiples are not inconsistentwith historical averages, although estimating 'normalized' multiples in a world where things arerarely 'normal' is admittedly as much of an art as it is a science.