A key part of the Australian economy is the mining sector.
In light of this, it will come as little surprise to learn that there are a large number of mining shares listed on the ASX.
But given the vast options it can be hard to decide which ones to buy above others. But don't worry, to help narrow things down, I have picked out two ASX 200 mining shares that come highly recommended right now. They are as follows:
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Allkem Ltd (ASX: AKE)
The first ASX mining share for investors to look at is Allkem.
The team at Morgans is bullish on this lithium miner, which owns a collection of high-quality projects across several lithium types. This includes Olaroz, Mt Cattlin, and the Sal de Vida brine project.
The broker likes Allkem due to its significant production growth potential and takeover appeal. It commented:
AKE is also potentially a target and holds a much larger resource base than PLS. However, the majority of its resource is in Argentina in lithium brines which are typically used for carbonate rather than hydroxide. We think both chemicals will be important over the long run but potential acquirers with pre-existing South American brine exposure may see fewer diversification benefits.
Morgans has an add rating and $15.10 price target on its shares.
Rio Tinto Ltd (ASX: RIO)
Another ASX 200 mining share that has been tipped as a buy is Rio Tinto.
Goldman Sachs is particularly positive on the miner and prefers it over fellow giant BHP Group Ltd (ASX: BHP). This is due to its positive production growth outlook and scope for improvements in its free cash flow generation. The broker explained:
Over the medium to long run, we think the development of Rhodes Ridge has the potential to be significant for RIO's Pilbara business as it could lift mine system capacity by >10% to >360Mtpa, utilise spare rail and port infrastructure, and help close the >US$10 FCF/t gap with BHP by US$6-8/t or by >50% by the end of the decade.
Goldman currently has a buy rating and $138.30 price target on Rio Tinto's shares.
