Mineral Resources Share Price Down 4% on Strategy Update (ASX:MIN)

The Mineral Resources Ltd [ASX:MIN] share price is down 5% as the iron ore and lithium producer updated the market on its outlook.

MIN shares are currently trading for $38.87 a share.

ASX MIN - Mineral Resources Share Price ChartSource: Tradingview.com

A tale of two commodities — iron ore and lithium

MIN is a large producer of both iron ore and lithium.

At one point this year, both commodities were pulling in the same direction…and propelling MIN shares upward.

MIN stock rose as high as $65 in July this year on surging lithium and iron ore prices.

Of course, the two commodities are now not pulling in the same direction.

Iron ore spot prices are falling on waning China demand, worries swirling around Evergrande, and coming supply from Brazil’s Vale operation.

For the interested, our Editorial Director Greg Canavan, foreshadowed the fall in the iron price in his latest research brief, which you can read here.

Iron Ore ChartSource: Market Index

Of course, lithium prices are still elevated, as demand from battery manufactures and automakers for the white metal outstrips supply.

Lithium Prices ChartSource: Benchmark Mineral Intelligence

That hasn’t stopped MIN shares falling 39% from their 52-week high.

How to Limit Your Risks While Trading Volatile Stocks. Learn more.

Takeaways from MIN’s AGM address

Mineral Resources said its long-term iron ore strategy is to transition from a small high-cost miner to a high-volume, low-cost miner, with lost-cost mine and transport solutions.

Of course, reducing extraction and mining costs will improve MIN’s margins when producing iron ore. And improved margins can cushion prolonged periods of depressed iron ore prices.

MIN also said it’s aiming to develop iron ore three mining hubs in the next 2–5 years.

These include:

  • Ashburton – 30Mtpa, 2-year development
  • Southwest Creek – 30Mtpa, 2 years approvals plus 3-year development
  • Yilgarn – transitioning from hematite to magnetite.

As for MIN’s lithium strategy, the miner continues to focus on converting spodumene to high-quality lithium hydroxide.

Importantly, in the next 2–5 years, MIN expects to bring the Wodgina lithium mine back to full production in line with market demand.

This represents about 750ktpa, with MIN’s joint venture partner to convert all product to lithium hydroxide.

Now, if you want to learn more about the lithium industry, I suggest checking out this report.

And if you want an in-depth tour of investing in lithium, I suggest going over this guide that we published last month.

Regards,

Kiryll Prakapenka,

For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia