The Alumina Limited (ASX: AWC) share price caught the eye on Tuesday.
The ASX 200 mining share jumped almost 8% to 98 cents.
This was driven by news that its joint venture partner Alcoa Corporation (NYSE: AA) plans to fully curtail production at the Kwinana Alumina Refinery in Western Australia from the second quarter of 2024.
Alumina Limited's CEO, Mike Ferraro, said: "Alumina Limited fully supports the decision by Alcoa in response to losses incurred at the Kwinana refinery together with its age, scale, operating costs and current bauxite grades."
Should you buy this ASX 200 mining share?
The team at Goldman Sachs has responded positively to this news.
So much so, this morning the broker upgraded the ASX 200 mining share to a buy rating with a $1.43 price target.
Based on the current Alumina share price, this implies a potential upside of approximately 46% for investors over the next 12 months.
Goldman believes that the market is too negative on Alumina and sees significant value in its shares. Particularly given its belief that the alumina price will recover in 2024 and the company's margins will improve. It said:
[O]ur review of the loss making refineries and global cost curve suggests that the alumina price is not pricing any possible supply side disruptions, and we expect a recovery to >US$370/t in 2024. We believe that AWC has been oversold and the stock is undervalued on numerous metrics and that margins will start expanding in mid-24, and we upgrade the stock to a Buy as we believe the stock is attractive on a 12m view.
This could potentially make the company a good option if you're looking for exposure to the mining sector in 2024.
