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Despite its smaller profits and size, Citigroup analysts have rated Rio Tinto as a better investment than BHP Billiton.
The latest Citigroup investment research put the two companies toe-to-toe on production, price, cost, and capital expenditure.
While BHP trumped Rio in many of the categories, cash flow and capital expenditure swung the balance in Rio’s favour.
Both miners are planning unprecedented capital expenditure budgets in 2012, which will consume a large portion of cash flow.
Citigroup said when combined with dividends and acquisitions, Rio would spend an estimated 55 per cent of its cash flow over the next five years, while BHP would spend everything.
Analysts said BHP’s aggressive capital expenditure plans left the company vulnerable to falls in commodity prices.
They said Rio’s position was a safer bet and gave the company more scope for capital management.
The recent acquisitions of Petrohawk shale gas assets earlier this year have boosted BHP’s production forecasts to look far more impressive than Rio’s.
But analysts said the acquisitions skewed comparisons, and the base number of both companies revealed close competition.
Rio Tinto iron ore expansions head David Joyce yesterday reaffirmed the company’s June forecast that global iron ore demand would grow by at least 100 million tonnes a year over the next eight years.