With iron ore, lithium and mining services, Mineral Resources seems to do it all
The post The Mineral Resources (ASX:MIN) share price rose 16% in June. Here’s why appeared first on The Motley Fool Australia. –
The Mineral Resources Ltd (ASX: MIN) share price made a breakthrough in June, surging 16.48% to a record closing price of $54.30.
Let’s take a look at what factors might have pushed the Mineral Resources share price to record territory.
Growing iron ore production
Mineral Resources is Australia’s fifth largest iron ore producer, according to its recent Macquarie Conference presentation.
The presentation highlighted the company’s ambitious plans. These include increasing iron ore production from 20 million tonnes per annum (mtpa) to 90 mtpa in the next 5 years.
With iron ore prices sitting near all-time highs of US$213/tonne, it’s no wonder Macquarie analysts think the Mineral Resources share price could pay some big dividends in the coming years.
Investment into lithium assets
Mineral Resources operates the Mt Marion mine in a 50-50 joint venture with Chinese lithium giant, Ganfeng.
According to Mineral Resources, Mt Marion in WA is the fourth largest hard rock lithium mine in the world.
An upgrade project is under way to expand Mt Marion’s production from 206,000 tonnes of spodumene concentrate per annum to 450,000 tonnes pa.
Additionally, Mineral Resources sold a 60% stake in its Wodgina lithium project to another lithium giant, Albemarle, back in 2019. Mineral Resources says the Wodgina project is the “largest hard rock lithium mine in the world”.
While production remains halted, the company’s third quarter results said the joint venture “regularly reviews market conditions with a view to resuming spodumene concentrate production as and when required and as driven by market demand”.
In addition, higher lithium prices and demand has helped the likes of Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) emerge as some of the best performing S&P/ASX 200 Index (ASX: XJO) shares in FY21.
Also, the resurgence of lithium could be a factor supporting the bullish performance of the Mineral Resources share price.
Growing mining services business
Mineral Resources also specialises in mining services, with operations including construction, crushing, processing and haulage.
According to the company’s half-year results, mining services contributed $784 million of the company’s total $1,531 million revenue (51%).
The company says it wants its mining services to “more than double” in the next 5 years.
Mineral Resources share price snapshot
Mineral Resources shares have hit the ground running this financial year, reaching a new high of $55.16 today. At the time of writing, they are priced at $55.05 — up 3.17% on yesterday’s close.
The company’s shares have surged 43% year-to-date, lifting its market capitalisation to $10.3 billion.
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Motley Fool contributor Kerry Sun 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 Bruce Jackson.