It's been a good few years for ASX mining shares with many companies delivering solid performances.
Yet, one investment expert believes there's plenty still on the table, with a decade of positive catalysts ahead for the resource sector. This is despite materials pulling through as the third-best performing sector in the last 12 months, rallying more than 13%.
So, what exactly has this experienced fund manager of more than 27 years excited about ASX mining shares?
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Where is all the supply?
Regal Investment Management chief investment officer Phil King is bullish on ASX mining shares. The investing veteran has supported this belief by holding an overweight position in the resources sector through his Australian equity fund.
In an interview with The Australian Financial Review, King detailed his fund's perspective, stating:
We remain very positive on the outlook for the Australian market and we think it will be one of the best performing markets over the next decade. We have a large and increasing exposure to miners and already, we're seeing that outperformance.
There are a few key reasons why the fund manager considers the sector a red hot opportunity looking forward. Firstly, the proliferation of electrification as the world pushes towards a greener alternative is creating new demand for resources.
Secondly, the supply to meet demand is non-existent. In short, ASX mining shares are not investing the same level of capital in creating new supply as they had once before. King notes this might partly be due to the increasing difficulty in getting mine approvals.
Furthermore, King highlights lithium as a big potential opportunity. Much like iron ore 20 years ago, the fund manager thinks prices will benefit from the drawn-out process to bring new supply online. This comes amid increasing demand for lithium in manufacturing electric vehicle batteries.
Picking favourites among ASX mining shares
While King has shared his optimism for the resources sector, there are a handful of specific ASX mining shares the fund manager named as preferred picks.
These companies included Allkem Ltd (ASX: AKE), Galan Lithium Ltd (ASX: GLN), and Firefinch Ltd (ASX: FFX).
You might have noticed these are all lithium producers or explorers. Though, King is also bullish on mineral sands, rare earths, energy, and aluminium companies — without naming specific shares.
