Iron ore prices have surged to well over US$200 per tonne for the first time on record. This has helped iron ore heavyweight BHP Group Ltd (ASX: BHP) to remain sitting near all-time record highs.
While the BHP share price is up a solid 15% year to date, these smaller players have delivered even better year-to-date returns against their large-cap peer.
Mining shares beating the BHP share price this year
Champion Iron Ltd (ASX: CIA)
Champion Iron is a $3.7 billion market cap explorer and development company with major projects in southern Labrador Trough, Canada’s largest iron ore producing region.
The company is highly profitable, generating earnings before interest, tax, depreciation, and amortisation (EBITDA) of $598.5 million in the last 12-months.
Champion’s profitability is underpinned by its high-grade 66.3% Fe iron ore and ongoing phase II construction which is expected to double production in the short-medium term. The company believes the completion of phase II will position it as one of the largest high-grade iron ore producers in the world.
The Champion Iron share price is up almost 50% year to date, far outpacing the returns of the BHP share price.
Mineral Resources Ltd (ASX: MIN)
Mineral Resources is a diversified mining services provider, iron and lithium producer and a major holder of highly prospective gas permits.
The company’s recent financial performance has been driven by its record iron ore production, taking advantage of today’s sky-high prices.
Over the next five years, Mineral Resources is eyeing a number of revenue-growth initiatives. These include plans to double revenue from its mining services and ramp up iron ore production from 20Mtpa to 90Mtpa. Mining services currently accounts for approximately one-third of the company’s overall revenues.
The Mineral Resources share price has more than doubled in the last 12-months and has climbed by around 20% year to date. The company’s strong cash flow translated into a 355% increase on 1H20 dividends to $1.00 per share. This compares to the $1.311 interim dividend paid out by BHP shares.
BCI Minerals Ltd (ASX: BCI)
BCI Minerals is a much smaller company, boasting a market cap of just ~$260 million. The company’s main iron ore asset is its Iron Valley Mine which is mined under royalty payments from Mineral Resources. The mine has contributed record EBITDA for the company in FY21, with a $20.2 million contribution in 3Q21.
The BCI share price was relatively stagnant for most of 2021, bouncing around the 30 cents level. It’s finally broken above its trading range and is currently trading close to its 6-year high at 41.5 cents, or a year-to-date return of 38%.
While iron ore continues to be a significant earner for the company, it has also made a $60 million investment to accelerate its Mardie project to produce salt and potash.
Arguably though, BCI represents a much more speculative stock compared to BHP shares, which are considered blue chip.