It's almost the end of 2022. This could be a good time to go digging for ASX mining shares to buy before 2023 kicks off.
There are many different mining businesses on the ASX, varying widely by size and commodity.
Due to the nature of changing commodity prices, and longer-term supply and demand factors, it may make sense to look more closely at some miners than others right now.
Before settling on which ASX mining shares to cover for this article, I was considering including copper miner Sandfire Resources Ltd (ASX: SFR) because of the fall of the copper price over the year. But, since I wrote this article mid-last month, it has gone on a big run over the last couple of weeks, soaring 34%. So, that idea was out.
I'm also a fan of what ASX lithium share Pilbara Minerals Ltd (ASX: PLS) is doing with its investing to be involved with more of the lithium supply chain, but it has also gone on a very strong run recently.
Indeed, a number of resource businesses have climbed during November to date. So, one could argue it may not be the most opportunistic time to be buying ASX mining shares. But, for those investors who are still keen to dive into the sector right now, these are the ones I'd choose.
Image source: Getty Images
BHP Group Ltd (ASX: BHP)
I'm not suggesting BHP purely for its huge (and therefore, arguably, safer) market capitalisation. Rather, I think the company's portfolio is also positioned to do well in 2023 and beyond.
At the moment, BHP's portfolio includes iron, coal, copper and nickel. There has been positive news recently that China is going to provide support for its real estate sector, as well as ease its COVID restrictions. This could be a boost for the Chinese economy and could have a useful impact on the iron ore price next year.
Greater economic activity in China may also be useful for the price of copper and nickel.
Furthermore, coal is generating a lot of profit and cash flow for BHP, which can continue to offset lower earnings from other commodities in the shorter term.
Finally, I think the ongoing progress of BHP's potash (a greener fertiliser) project in Canada will help provide support for the ASX 200 mining share as investors get closer to seeing further diversification of earnings.
South32 Ltd (ASX: S32)
South32 is another ASX 200 mining business with a diversified portfolio of commodities. It's involved with bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese.
I think South32 is diversified enough that it only needs some of its commodities to do well to generate pleasing cash flow and pay good dividends. I also think it's a positive that the miner isn't reliant on iron ore like some of the other ASX 200 miners.
According to the broker Morgan Stanley, South32 is expected to pay a grossed-up dividend yield of 8.3% in FY23.
Lynas Rare Earths Ltd (ASX: LYC)
Lynas is one of the largest rare earth miners outside of China. For that reason, it's seen as strategically important to the United States. That's why the US Government is helping Lynas fund rare earth separation facilities.
It's also constructing a new Kalgoorlie rare earths processing facility.
Plus, the business has announced an increase to its Mt Weld capacity, with targeted production now being 12,000 tonnes per annum of finished NdPr (Neodymium and Praseodymium).
I think this ASX 200 miner is doing the right things to achieve long-term shareholder returns. It also looks like reasonable value to me right now, with the Lynas share price down 20% this year to date.
