The mining sector is crucial to the Australian economy. However ASX mining shares have had a rough time over the last 12 months. Investors often perceive these blue-chip options as set and forget, known for historically strong growth and consistent dividends.
However the Australian economy has seen a shift in recent years with a change in demand from Australia's largest export partner (China) and wider global uncertainty.
This combination has seen the three largest mining companies share prices fall considerably.
Investors may now be left wondering if it's time to scoop up these quality holdings at a discount or steer away from the battered sector.
Here's what broker Bell Potter is forecasting for these ASX mining shares.
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BHP Group Ltd (ASX: BHP)
BHP shares have fallen 11.22% over the past year.
BHP is the second largest Australian company on the ASX by market cap.
BHP is the world's largest producer of coal, the second-largest producer of iron ore and is also one of the leading producers of copper and nickel.
The falling share price reflects cyclical weakness in commodities, fragile demand (especially from China) and tariff uncertainty.
Despite these headwinds, broker Bell Potter sees its current share price of $38.60 as slightly undervalued.
At the time of writing, the broker has an "overweight" rating and $42.33 price target on the mining giant.
This indicates a 9.66% upside.
Rio Tinto Limited (ASX: RIO)
Having faced similar headwinds, Rio Tinto shares have fallen 9.41% over the last year.
It's the second-largest mining company in the world by global market capitalisation, after BHP.
Most of Rio's earnings come from its extensive iron ore assets. It also produces aluminium, copper, and other minerals, including diamonds.
Declining commodity prices globally—particularly iron ore and coal—have dented the entire mining sector, including peers BHP and Fortescue .
Despite falling nearly 10% this past year, broker Bell Potter indicates it may be undervalued.
The broker currently has an "overweight" rating and price target of $118.91. From its current share price this indicates an upside of 9.47%.
Fortescue Ltd (ASX: FMG)
Fortescue is the largest pure-play iron ore company currently trading on the ASX. It has large-scale mining projects in the Pilbara region of Western Australia.
Given that Fortescue doesn't have a diversified portfolio of mining assets (in the way BHP does for example), Fortescue's share price tends to move in tandem with the iron ore price.
Over the last year, this ASX mining company's share price has fallen by 25.11%.
FMG's steeper fall largely reflects a purer iron‑ore exposure.
Despite the share price falling significantly more than its peers, broker Bell Potter retains a "hold" recommendation and price target of $15.87.
This is approximately a 2.88% decline from its current share price.
The foolish takeaway
Based on Bell Potter's current valuations, it seems the broker is more optimistic about ASX mining shares BHP and RIO, while Fortescue's pure iron-ore exposure leaves it vulnerable.
It could be a rare opportunity to scoop up shares in blue-chip companies trading roughly 10% below fair value.
However its important prospective investors consider the short term volatility of struggling commodity prices and a blurry future regarding tariff decisions.
