Is Mineral Resources Ltd (ASX: MIN) Undervalued Right Now? | Analyst Take

Mineral Resources Ltd (ASX: MIN) has built a reputation as one of Australia’s most dynamic mining companies, known for its bold growth strategy, diversification, and strong operational capability. With exposure to iron ore, lithium, mining services, and energy, the company has become a key player in both traditional and emerging commodity markets.

But as 2025 draws to a close, investors are asking a crucial question — is Mineral Resources undervalued right now, or are the current headwinds too strong to ignore? Let’s take a closer look at the company’s performance, market conditions, and valuation metrics to uncover the answer.

Strong Operational Performance Amid Market Challenges

Despite a volatile year for the mining sector, Mineral Resources delivered a solid operational performance in FY25. The standout achievement was the ramp-up of its Onslow Iron Project, which has quickly become one of the most significant growth drivers in the company’s portfolio. The project reached its nameplate capacity of 35 million tonnes per annum (Mtpa), contributing to record output across the business.

The mining services division, the backbone of MIN’s recurring income, also recorded exceptional activity with 280 million wet metric tonnes (wmt) handled in FY25 — a record for the company. This segment remains a core earnings contributor, ensuring stability even when commodity prices fluctuate.

However, the company has not been immune to global headwinds. The sharp decline in lithium prices — a key revenue stream for MIN — prompted management to take proactive measures, such as cost reductions at the Wodgina and Mt Marion operations and placing the Bald Hill project under care and maintenance. These steps were aimed at preserving long-term value amid a softer market environment.

Despite these challenges, Mineral Resources’ operational resilience remains impressive, driven by its integrated model that spans mining services, production, logistics, and energy infrastructure.

Financial Highlights: A Year of Mixed Results

Financially, FY25 presented a mixed picture. While the company continued to demonstrate operational strength, falling commodity prices, asset impairments, and higher depreciation costs took a toll on profitability.

1. Total revenue: $4.47 billion (down from $5.28 billion in FY24)
2. EBITDA: Healthy but lower year-over-year due to pricing pressure
3. Net profit after tax: Loss of approximately $904 million, primarily driven by non-cash impairments
4. Operating margin: Declined sharply from 13.8% in FY24 to 2.8% in FY25
5. Cash balance: $443 million, providing a cushion for near-term obligations

While a headline loss might alarm some investors, it’s worth noting that much of the decline was non-cash in nature — meaning the company’s actual operational cash generation remains intact.

Management’s decision to maintain balance sheet strength and prioritize cash flow preservation over aggressive expansion in a weak pricing environment shows prudence.

Valuation and Market Sentiment: Signs of a Discount

At the time of writing, Mineral Resources trades around $48 per share, translating to a market capitalization of approximately 9.5 billion. The current valuation suggests that investors may be pricing in too much pessimism regarding lithium markets and near-term profitability.

According to recent analyst models, the intrinsic value of MIN shares could be closer to AUD 70 per share, assuming moderate recovery in lithium and iron ore prices over the next 12–18 months. This points to a potential upside of over 40% if the company can maintain operational discipline and commodity conditions improve.

Moreover, Mineral Resources’ unique hybrid business model — spanning both mining services (which offer steady margins) and commodity production (which provides upside leverage) — makes it distinct from peers that rely solely on one segment.

Broker sentiment has recently turned more constructive, with several firms noting that MIN’s underlying assets and infrastructure investments are undervalued compared to replacement cost.

Growth Catalysts and Strategic Moves

Despite a tough year, MIN’s long-term growth story remains compelling. The Onslow Iron project is expected to be a cash engine for years, thanks to its large-scale production, efficient infrastructure, and cost advantages.

The company also continues to strengthen its energy and lithium strategy, both of which could unlock significant future value.

A major positive development in 2025 was the energy joint venture with Hancock Prospecting, which delivered $780 million in upfront proceeds. This deal not only strengthened the balance sheet but also created new avenues for growth through energy diversification.

On the lithium front, while prices are currently depressed, the long-term fundamentals — driven by the global push toward electrification and renewable energy — remain intact. As demand for electric vehicle batteries revives, MIN’s Wodgina and Mt Marion assets are well-positioned to benefit from the next upcycle.

Risks to Watch

Of course, no investment comes without risks. The biggest near-term headwinds for Mineral Resources include:

1. Commodity price volatility, especially lithium and iron ore.
2. High capital expenditure requirements tied to infrastructure projects.
3. Debt levels, which could become a concern if cashflows weaken further.
4. Global economic slowdown, which might dampen demand for steel and EV materials.

However, the company’s diversified model, experienced management, and ability to generate consistent service revenues provide some insulation against these risks.

Conclusion: Undervalued with Conditions

So, is Mineral Resources Ltd undervalued right now?
The answer depends on your investment horizon.

In the short term, earnings will likely remain under pressure due to soft commodity prices and cost adjustments. But from a long-term perspective, the current share price arguably underestimates the company’s asset quality, project pipeline, and cash-generating capacity.

If market conditions stabilize and lithium prices recover, MIN could see significant re-rating potential. Its strong operational track record, strategic diversification, and disciplined financial management make it one of the more attractive turnaround opportunities on the ASX.

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