Morningstar senior equity analyst Mark Taylor suggests Mineral Resources presents a buying opportunity for investors. In a recent note, Taylor stated, “We think the worst of the financial risk is behind” the mining company, signalling confidence in its future performance amidst current market conditions. Mineral Resources is an Australian-based resources company, specialising in mining and processing commodities, with a significant focus on lithium and iron ore production, as well as providing mining services. The company aims to deliver long-term value through its diversified operations and strategic investments in the resources sector.
Taylor anticipates a market correction by 2026, further projecting a substantial increase in lithium prices by 2028. “We forecast the lithium price to rise to over $US20,000 per tonne by fiscal 2028, from about $US8000 now,” he noted. This optimistic outlook is underpinned by an expected slowdown in supply growth, from a compound rate of 40 per cent between 2022 and 2024, to a more moderate 13 per cent between 2024 and 2026. Several growth projects have been scaled back or delayed, with some miners, including Mineral Resources, implementing supply cuts to manage the oversupply.
On the demand side, Taylor remains upbeat, citing strong growth driven by the electric vehicle sector. “We expect strong lithium demand growth, led by secular [electric vehicle] demand, to resolve the oversupply and for prices to nearly double to $US15,000 per tonne by end fiscal 2027. We expect lithium demand growth of 22 per cent in 2025, reflecting 24 per cent growth in batteries, mainly for EVs and stationary batteries.”
Despite the positive outlook, Mineral Resources shares experienced a decline of 3.2 per cent on Monday, closing at $47.29. However, the stock has nearly doubled in value over the past six months. Taylor maintains a “fair value” estimate of $68 on the stock, indicating further potential upside according to Morningstar’s analysis.
