Forget Pilbara Minerals, I'd buy this ASX mining stock instead

Pilbara Minerals is a fine company, but I'd rather own another one instead…

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ASX lithium mining stock Pilbara Minerals Ltd (ASX: PLS) has a lot of fans on the ASX. That's probably due in no small part to this mining stock's incredible trajectory over the past few years.

Remember, although Pilbara was trading at $3.60 a share this week, it was only back in 2020 that those same shares were asking 15 cents each.

Today, Pilbara is the leading lithium share of the ASX.

But I still don't own Pilbara Minerals shares, and I have no plans to. There's another ASX mining stock I'd rather own instead if I had to choose one.

Now, I'm not a lithium naysayer. I would happily bet that lithium will be one of the most important minerals of the 21st century. Its applications in battery technology, along with a raft of other future-facing technologies, remain very exciting.

Sure, Pilbara's fortunes have skyrocketed in recent years thanks to the surging price and demand for lithium. It's even recently started paying a healthy dividend, which was previously a pipedream for the ASX lithium sector.

My problem with Pilbara is that it's a bit of a one-trick pony. This company's fortunes are almost entirely dependent on what one single commodity — lithium — is being priced at any given moment. That's something that is completely out of the company's control.

Which ASX mining stock would I choose over Pilbara Minerals?

I don't like that in an investment. So if I had to choose an ASX mining share to buy instead of Pilbara, it would probably be South32 Ltd (ASX: S32).

South32 is the company that was spun out of BHP Group Ltd (ASX: BHP) back in 2015. Today, it is one of the most diversified ASX mining stocks on the ASX.

As we covered last month, South32 has significant operations in at least eight different commodities. Its largest exposure is to metallurgical coal (used for steelmaking, not energy), which contributed 41% of South32's FY2023 earnings.

But a further 19% came from manganese, 13% from copper, 11% from nickel, 8% from aluminium products and 8% collectively from silver, lead and zinc.

If the bottom fell out of the lithium market tomorrow, it would damage Pilbara Minerals' financial health enormously. But South32 has plenty of other pillars to lean on if the market for one of its commodities goes through a downturn.

This would give me a lot of comfort as an ASX mining stock investor, whereas with Pilbara, I think I would have far more sleepless nights.

I don't normally invest in commodity companies. But if I did, I would seek out diversity, such as what South32 shares provide.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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