Morningstar has identified IGO and Mineral Resources as offering the best value among listed critical minerals stocks. According to market strategist Lochlan Halloway, IGO presents the most appealing opportunity in the lithium sector, trading at approximately a 20 per cent discount to its fair value. Mineral Resources, with its diverse interests spanning iron ore and mining services, also possesses significant lithium assets and is currently priced 25 per cent below its fair value.
Halloway noted a resurgence in the lithium market, spurred by the scaling back of Chinese lithium projects. He characterised the prospects for lithium as exceptionally strong, anticipating a demand growth of 22 per cent in 2025. Conversely, in the rare earths sector, Iluka Resources has experienced a price surge, which Halloway believes has diminished its investment appeal as its shares are now fairly valued.
Turning to copper, Halloway expressed a less optimistic outlook, citing limited opportunities among miners. This is largely attributed to China’s substantial copper consumption, heavily influenced by its challenging property and infrastructure sectors. While Freeport and Teck appear overvalued, major copper producers BHP and Rio Tinto are considered more reasonably priced; however, it’s important to note that a significant portion of their earnings remains linked to iron ore. BHP is a major diversified resources company. Rio Tinto explores for, mines, and processes mineral resources.
