Investors that are wanting to diversify their portfolio with some mining sector exposure might want to check out the two ASX 200 shares listed below.
Both have been tipped as top options for investors in the sector with meaningful upside potential. Here's what you need to know about these mining shares:
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BHP Group Ltd (ASX: BHP)
The first ASX 200 mining share that has been named as a buy is BHP.
The Big Australian is of course one of the world's largest miners with a collection of high quality operations across a range of commodities. This includes coal, copper, iron ore, and nickel.
The team at Morgans are bullish on the mining giant. This is thanks to the company's diverse operations, which they feel make it a lower risk option for investors. The broker commented:
We view BHP as relatively low risk given its superior diversification relative to its major global mining peers. The spread of BHP's operations also supplies some defence against direct COVID-19 impact on earnings contributors. While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.
Morgans has a buy rating and $48.00 price target on BHP's shares.
Iluka Resources Limited (ASX: ILU)
Another ASX 200 mining share for investors to consider is Iluka.
It is a mineral sands and rare earths company that owns a number of quality projects across South Australia and Western Australia. One of these is the exciting Eneabba project, where the company is developing a fully integrated rare earths refinery.
Goldman Sachs is very positive on Iluka. This is due to its strong production growth outlook and exposure to in-demand rare earths. The broker commented:
We are positive on ILU's project pipeline and forecast >40% production growth in mineral sands volumes, c.18ktpa of Rare Earths (~3.5-4ktpa of high value NdPr). We think ILU's Eneabba RE refinery is a strategic asset considering it will be only the third western world RE refinery
Goldman Sachs currently has a conviction buy rating and $13.30 price target on Iluka's shares.
