ASX Iron Ore Stocks: Top Iron Ore Shares in 2023

Key highlights:

• The ASX is home to some of the world's biggest iron ore companies and there are a number of contenders for the best iron ore stocks.
• Iron ore is a key material for steel production, which accounts for almost all of the iron ore demand.
• Western Australia's Pilbara region is responsible for the bulk of Australia's iron ore production.

Who is the biggest iron ore company in Australia?

Australia has several of the world's biggest iron ore producers and is the top country by total exports. The bulk of the iron ore industry is based in Western Australia, particularly around the Pilbara region in the state's northwest. These mining companies have built up extensive infrastructure over the years and are in an advantageous location to efficiently export large volumes of iron ore to Asia's coastal steel mills.

Rio Tinto ($RIO), BHP Group ($BHP) and Fortescue Metals Group ($FMG) are the largest producers after Brazil's Vale. According to West Australian government statistics, Rio Tinto was the top iron ore miner with 319 million tonnes in 2021-22. BHP's sales amounted to 284 million tonnes and Fortescue was at 89 million tonnes over the same period. They are also popular with investors, who've been rewarded from these dividend stocks over the years.

Top ASX iron ore stocks

Data as of 6 April 2023.

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Here are the top iron ore stocks on the ASX

1. Rio Tinto Limited ($RIO)

Market capitalisation: $165.34b

Stock price (as of 06/04/2023): $116.31

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 45% / 55%

As a multinational mining company founded in 1873, Rio Tinto operates in more than 35 countries across the globe. The company produces a variety of metals and minerals, including aluminium, copper, diamond, gold, and iron ore. However, iron ore is still its main commodity, accounting for the majority of volume and revenue.

Rio Tinto produces five different iron ore products from its 17 integrated mines in Western Australia. They benefit from a rail network with over 2,000 km of tracks and four port terminals in the Pilbara region. Their ventures are still expanding and Rio Tinto brought the Gudai-Darri iron ore mine into production in mid-2022. It was their first new project in the area in over a decade.

🆚 Compare RIO vs BHP→

2. BHP Group Limited ($BHP)

Market capitalisation: $228.22b

Stock price (as of 06/04/2023): $45.05

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 47% / 53%

Founded in 1885 as the Broken Hill Proprietary Company, BHP has grown to become one of the world's top producers of iron ore, copper, nickel, potash and metallurgical coal. The diversified metals company operates across Australia, North America, South America, Africa, and Asia. As of 6 April 2023, it was the largest company on the ASX with a market cap of $227.96b.

BHP has an integrated system called Western Australia Iron Ore. It consists of four processing hubs and five mining hubs that are connected by over 1,000 km of rail infrastructure and port facilities in the Pilbara. It includes some of Australia's largest iron ore mines like Yandi, Jimblebar and the Newman operations, formerly known as Mount Whaleback.

3. Fortescue Metals Group Ltd ($FMG)

Market capitalisation: $66.41b

Stock price (as of 06/04/2023): $21.57

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 50% / 50%

Fortescue Metals Group is a relatively newer iron mining company, established by Andrew Forrest in 2003. They have the world's fastest heavy haul railway line connecting their three mining hubs to facilities at Port Hedland in the Pilbara. As the company currently deals only with iron ore, its share price performance is quite exposed to changes in the price of the commodity.

The company reported record annual shipments of 189m tonnes but revenue fell 22% due to a reduction in the price of iron ore. Fortescue has established an interest in copper and gold assets through land leases and by investing in small mining companies. Forrest is still at the helm of the mining company as chairman and his $9b green energy plan is likely to impact the business over the coming years.

🆚 Compare FMG vs BHP→

4. Champion Iron Limited ($CIA)

Market capitalisation: $3.50b

Stock price (as of 06/04/2023): $6.76

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 44% / 56%

Champion Iron owns and operates the Bloom Lake Mine in Canada's Quebec Province. Champion Iron acquired the asset in 2016 and restarted operations in 2018. The project benefits from being able to primarily source energy from renewable hydroelectric power and having a railway line to transport ore to a port on the Atlantic Ocean already in place. Champion produces a 66.2% iron concentrate and is evaluating processing methods that could increase this level to 69%, which would attract premium prices.

An expansion project at Bloom Lake has recently been commissioned by Champion Iron, which could double its level of iron ore production. Construction is expected to take around 21 months and fall within the current mine life of 20 years. They own additional leases in the surrounding area and have completed initial studies to assess the potential to expand their operations in the future.

5. Grange Resources Limited ($GRR)

Market capitalisation: $775.62m

Stock price (as of 06/04/2023): $0.68

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 53% / 47%

Grange Resources has an integrated iron ore mining and pellet production business in the north west of Tasmania. Iron ore production began in the 1960s at their Savage River Mine. They're completing studies to assess the potential to expand their operations underground. Grange also owns a facility in Port Latta that transforms the iron ore into pellets. It produces over 2.2 million tonnes of high quality iron ore products annually.

Grange is engaged in a joint venture with SRT Australia Pty Ltd to develop the Southdown Iron Ore Project. The asset is located near the town of Albany in Western Australia and iron ore reserves of 388 million tonnes have been established. The team's advancing with mine design plans and working on gaining various regulatory approvals, with the aim of starting operations by 2026.

6. Mineral Resources Limited ($MIN)

Market capitalisation: $14.69b

Stock price (as of 06/04/2023): $76.16

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 50% / 50%

Mineral Resources is the nation’s fifth largest iron producer, a holder of gas exploration projects and a provider of a range of mining services to other companies. They own iron ore assets in three separate hubs in Western Australia, including the Yilgarn, Pilbara and Ashburton. Their long term plan is to grow iron ore production from around 20 million tones per annum to 90 million.

The Onslow Iron Project will play an important role in this ramp up. Mineral Resources has 60% ownership and will provide the mining services and infrastructure. The firm also holds stakes in two of Australia's largest lithium mines - Mount Marion and Wodgina. As a diversified mining company, the iron ore price could have a weaker impact on its share market movements compared to single commodity producers.

💡Related: Lithium Stocks on ASX: Top Lithium Shares to Watch→

7. Fenix Resources Ltd ($FEX)

Market capitalisation: $140.20m

Stock price (as of 06/04/2023): $0.24

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 25% / 75%

Fenix Resources commenced production at its flagship project, Iron Ridge, in December 2020. They use their own haulage and logistics business to transport the materials to Geraldton, where they operate their own loading and storage facilities. On average, Fenix has been responsible for around 1.3 million tonnes of iron ore products annually.

With grades of 63% and 64% iron, the company can command premium prices for its inventory. Investors might be particularly interested in Fenix's policy to distribute between 50% and 80% of after-tax profits as fully franked dividends. However, they should also be wary of whether this is sustainable in the long run and note that Fenix's share price is quite exposed to fuel costs through their logistics unit.

8. Magnetite Mines Limited ($MGT)

Market capitalisation: $44.00m

Stock price (as of 06/04/2023): $0.58

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 46% / 54%

Magnetite Mines is focused on developing its flagship Razorback Iron Ore Project in South Australia. Recent drill programs have significantly increased the size of their estimated iron ore resource. The team's aiming to produce iron ore concentrate with purity levels of 67.5% to 68.5% iron. The volumes are expected to reach 8.2 million tonnes per year with a mine life of at least 25 years.

The team's currently completing further studies and other tasks to put together a more detailed mine plan. Magnetite acquired an additional asset, the Muster Dam Iron Ore Project, through a competitive bid by the South Australian Department of Energy and Mines. It lies 110km northeast of Razorback and could become another source of production in the future.

9. Mount Gibson Iron Limited ($MGX)

Market capitalisation: $607.21m

Stock price (as of 06/04/2023): $0.50

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 56% / 44%

Mount Gibson Iron has exported over 80 million tonnes of iron ore from its operations in Western Australia since sales began in 2004. The Koolan Island Mine is their flagship project and has an average iron ore grade of 65.3%. The processing plant was affected by a fire in 2022 and the completion of repairs should enable Mount Gibson to increase sales volumes in FY23.

The mining company also owns the Shine Iron Ore Project around 375km north of Perth. However, it has been put on care and maintenance since late 2021 after a decline in iron ore prices greatly affected the profitability of operations. Mount Gibson still owns storage facilities at Geraldton port and continues to generate some revenue from these units.

10. Hawsons Iron Ltd ($HIO)

Market capitalisation: $58.88m

Stock price (as of 06/04/2023): $0.06

Stake platform bought / sold (1 Jan 2023 - 6 Apr 2023): 50% / 50%

Hawsons Iron's flagship project of the same name lies near the mining town Broken Hill. The initial fieldwork has shown high grades of 70% iron, which could produce sought after materials for decarbonising the steel industry. The mining company could produce 20 million tonnes of iron ore annually over a 20 year mine life.

Hawson's share price dropped greatly when project plans were delayed in October 2022 due to increasing costs and deteriorating economic conditions. They've managed to raise $1m through a share purchase plan and $7.8m via an institutional placement in March 2023. Only time will tell whether this could signal a turnaround for Hawson's future.

What is the future of iron ore in Australia?

Australia is the world's top producer of iron ore and the nation earned $133b from exports in 2021-2022. More supplies are expected to come onto the market and the government has forecast an annual 1.9% increase in exports forward to 2028. Demand from the main export market China is anticipated to slow as part of the economy's longer term shift toward consumption-led growth.

Steel demand from other emerging Asian and Middle Eastern nations is likely to grow faster instead, driven by larger amounts of construction activity. One matter that investors should consider is the average grades of Australian iron ore. The steel industry is undergoing a shift to reduce the amounts of carbon emissions required in production driven by both institutional investors and government regulations.

Iron ore materials with higher grades of iron and fewer impurities require less processing, which means it can be more cost-effective. The Pilbara region tends to have lower than average grades, which are not best suited to deal with emerging green steel technologies and could command lower prices over the long term.

However, the landscape is still evolving and mining giants are investing considerable amounts into possible solutions for the future. They're also increasing their interest in other commodities that could see significant demand growth from the green transition, such as nickel and copper. Considering that the government projects the value of lithium exports could equal those from coal by 2028, there could be many more changes ahead for the industry.

💡Related: Nickel stocks on ASX: Top nickel mining companies→

💡Related: Top Energy stocks on ASX→

Iron ore stocks FAQs

Are iron ore stocks a good investment?

Iron ore's fortunes are tied to the global iron and steel industries. It's the primary raw material used in steel and needs to be combined with carbon to create the final stronger metal. Almost all of the material ends up in steel production, which has a wide variety of end uses and overall consumption levels are linked to general conditions in the economy. It's also highly exposed to the construction industry in China, which accounted for 71% of global imports in 2022.

ASX iron ore stocks could perform very differently depending on the specifics of their project or multiple assets. One big driver for the share price of producers is the iron ore price. Iron ore prices are usually benchmarked to grades of 62% and can attract a premium if above or a discount when below. Australia's largest iron ore shares by market cap are known for paying out large dividends and knowing the timing around these could be useful for investors.

What are the risks of investing in iron?

During a general economic downturn, there's usually less investment in large infrastructure and construction projects. Iron ore prices can remain depressed for longer periods and fewer new mining projects will be approved due to cost issues. There's also a risk that other countries will not have the same levels of iron ore demand in the future and a gap will be left in the market as China gradually shifts its economy to focus on services instead of heavy industry.

Pressures to reduce emissions from steel production is another major challenge for iron ore producers. Certain ASX iron ore firms could be better positioned to adapt than others. New technologies are likely to be developed and refined, while demand for specific products could outpace others.

This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking appropriate financial or taxation advice before investing.