Miners end the year on a major high

Australia's two biggest miners, BHP and Rio Tinto, have capped off a year of recovery by finishing 2017 at their highest stock prices in years.

Shares in Rio surged by 92 cents (1.2 per cent) on Friday to close at $75.81, its highest closing price since 2011. Shortly before the market closed it rose as high as $76.03.

And BHP, which last week crashed through the $29 mark to hit a 31-month high, kept moving up as it rose six cents on Friday to close at $29.63. It rose as high as $29.76 in early trade.

Weaker commodity prices in the first half of the year saw shares in the two major miners spend most of the early months of the year retreating, with Rio hitting a closing price low of $57.15 in May, and BHP a closing price low of $22.10 just a few weeks later.

But the two miners, two of Australia's biggest companies, reported strong profits at their August results and a boost in dividends. They have also benefited from strong commodity prices since, including stronger than expected iron ore prices and a buoyant copper price.

And now, analysts and investors are generally bullish about the sector.

In a recent report experts from the investment bank UBS predicted healthy cash returns from the miners in 2018.

"We expect China's focus on reform and pollution to remain through 2018 and together with producer discipline outside China, we expect elevated commodity prices, and with that healthy profits and increased returns," UBS said.

UBS also forecast that BHP would announce an on-market buyback of its London-listed stock at its interim results in February. It also said that the mid-tier miner South32 "may announce a special dividend".

And UBS lifted its price estimates for the major commodities of iron ore, thermal coal and hard coking coal for 2018, 2019 and 2020.

Meanwhile, Rio Tinto this week told the ASX it had completed $1.5 billion of buy-back programs of its London-listed shares, which were announced this year. It has also just started a further $1.925 billion on-market buyback of its London-listed shares.

Rio's chief executive officer, Jean-Sebastien Jacques said this week: "We are continuing to demonstrate our commitment to deliver superior returns for our shareholders."

This story Miners end the year on a major high first appeared on The Sydney Morning Herald.