If you're looking to diversify your portfolio with some exposure to the mining sector, you may want to check out the ASX mining shares listed below.
Both have been tipped as top options in the sector with significant upside potential. Here's what you need to know about these mining shares:
Iluka Resources Limited (ASX: ILU)
The first ASX mining share for investors to consider is this mineral sands and rare earths miner.
Iluka owns a number of quality projects across South Australia and Western Australia, including the exciting Eneabba project. At Eneabba, the company is developing a fully integrated rare earths refinery, which will be only the third of its kind outside China.
Goldman Sachs is very bullish on Iluka. The broker has the company on its highly regarded conviction list. It explained:
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 has a conviction buy rating and $13.30 price target on Iluka's shares.
South32 Ltd (ASX: S32)
Another ASX mining share that has been named as a buy is South32.
Morgans is positive on the miner due to the recent transformation of its portfolio to give it exposure to metals that will be important to the decarbonisation megatrend.
The broker believes that this leaves South32 well-placed for the long term and expects attractive dividends along the way. It explained:
S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32's risk and ESG profile. Unlike its peers amongst ASX- listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings- linked dividend policy.
Morgans has an add rating and $5.50 price target on South32's shares.
