Chart of the Week: ASX mining valuations return to more reasonable levels
As some commodity prices cool, mining valuations look less demanding.
Mentioned: Albemarle Corp (ALB), Whitehaven Coal Ltd (WHC), Mineral Resources Ltd (MIN), Iluka Resources Ltd (ILU)
This week’s insights come directly from our equity research team on the Industry Pulse Mining: 2026 Q3 report.
Lithium and gold lower but coal stronger
The lithium price recovery has partially reversed, with spot down around one-third since last quarter on mine restarts and slower growth in electric vehicles. Gold is around 10% lower on rising real interest rates, which increase the opportunity cost to hold it.
By contrast, lower China domestic supply on safety concerns sees the metallurgical coal price up nearly 25%, belying a 5% weaker iron ore price due to lower China imports and elevated China port inventories.
Disruptions to LNG supply resulting from the Iran conflict are accelerating coal to gas switching in Asia, driving a 17% increase in the thermal coal price. Copper is broadly flat and at around USD 6.50 per pound remains near historical highs.
While China demand is subdued, optimism over artificial intelligence and energy transition demand along with US tariff-related trade distortions and near-term supply issues at various mines support the price. The aluminum price is down about 5% on higher China and Indonesia exports along with a partial recovery in Middle East production.
Sub-industry valuations now more reasonable on average
The unweighted average price/fair value estimate is 1.16, down materially from 1.54 last quarter as most miners’ share prices fell over this period, driven by lithium and iron ore companies.
The overvaluation is driven by strong base metals and gold prices. There are opportunities in generally less-favored commodities led by lithium, coal, and mineral sands, with some iron ore miners also undervalued.
Albemarle (ASX.ALB) is undervalued as the recovery in the lithium price partially reverses on mine restarts and slower growth in electric vehicle sales. However, in the medium term we expect the price to recover as demand growth remains strong and supply growth slows. It should also benefit from falling unit costs as production increases in the coming years.
Weaker near-term lithium and iron ore prices see investors once again focused on Mineral Resources’ (ASX.MIN) net debt. However, we think it will improve on proceeds from lithium mine equity sell-downs, higher lithium and iron ore volumes, and improving lithium prices.
Iluka (ASX.ILU) is also undervalued despite improving mineral sands markets, with prices likely to recover further. There are also likely long-term structural supply challenges for high-grade zircon and titanium dioxide feedstocks. The West’s attempts to create a rare-earth supply chain independent of China bode well for its refinery being constructed at Eneabba.
Whitehaven (ASX.WHC) trades below our intrinsic assessment and should benefit from higher thermal coal demand due to disruptions to LNG supply caused by the Iran war. We also think the energy transition will occur more slowly than implied by its share price. We see solid demand and prices for its metallurgical coal, too.
