UBS selects top iron ore producers based on profit margins and cost performance

Investing.com — UBS has released the latest rankings of iron ore producers, evaluating each company based on profit margins, cost efficiency, and operational metrics. The analysis highlights BHP as the leading company in the sector, while also pointing out key opportunities and challenges faced by major producers.

As these rankings are published, iron ore companies are dealing with different cost structures and price dynamics, with quality premiums and operational efficiency becoming critical differentiators in the current market environment.

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BHP Group is one of the most profitable iron ore producers. The company’s prices in the first half of December were not significantly affected by its dispute with CMRG. However, UBS notes that the discount at Jimblebar widened in the March quarter of 2026, which could impact future performance.

In a recent report, Morgan Stanley downgraded BHP from a previous “Overweight” rating to “Hold.”

Rio Tinto saw its EBITDA per ton increase by $2 quarter-over-quarter in December 2025, benefiting from the recovery in production after hurricane disruptions in the first half of 2025. UBS points out that Rio Tinto’s reported C1 cash costs are about $5 higher per ton than BHP and Fortescue, representing a key opportunity for the company’s new management team to address.

Morgan Stanley also downgraded Rio Tinto from “Overweight” to “Hold.”

Fortescue Metals Group reported the lowest C1 cash costs among the group. Despite its cost advantage, its EBITDA per ton is over $10 lower than BHP, which UBS attributes to ore quality and lower realized prices.

Vale (Vale S.A.) achieved a quarter-over-quarter increase of $8 in EBITDA per ton in the second half of 2025, driven by stronger sales volumes and improved realized prices supported by its product strategy. Despite high-grade premiums being suppressed in the market, this improvement was maintained.

Morgan Stanley also adjusted its rating for Vale, downgrading it from “Overweight” to “Hold.”

Anglo American’s iron ore assets, including Kumba and Minas Rio, maintained quarter-over-quarter EBITDA per ton stability in December 2025. Although high-grade and lump ore premiums were suppressed during this period, the company managed to sustain this stability.

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