With China's reopening from the pandemic expected to lead to increased demand for commodities, the mining sector looks set to be the place to be again in 2023.
But which ASX 200 mining shares should you buy? Listed below are two ASX 200 mining shares that analysts are tipped as buys by analysts. Here's what they are saying about them:
Allkem Ltd (ASX: AKE)
Although Goldman Sachs expects lithium prices to tumble from the second half of 2023, it still believes that Allkem is an ASX 200 mining share to buy. This is because it expects Allkem's production growth to offset the softer prices.
This could make it a top option in the lithium space. Because if China's reopening means that lithium prices don't weaken as Goldman expects, it would likely lead to materially better earnings from Allkem. So, investors arguably win either way. Goldman commented:
Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis. This drives our forecast for the company's equity LCE production growth of >4x by FY27E, supporting earnings rebounding to near current record levels despite the declining lithium price environment.
The broker currently has a buy rating and $15.20 price target on Allkem's shares.
South32 Ltd (ASX: S32)
The team at Morgans believe that South32 is one of the best ASX 200 mining shares to buy right now.
This is because of the successful transformation of its portfolio, its exposure to copper, and its positive long term outlook. The broker expects this to support strong earnings and dividends in the near term.
Its analysts 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 $5.40 price target on South32's shares.
