Mineral Resources share price up 5% as miners lead the market on Tuesday

The Mineral Resources Limited (ASX: MIN) share price finished up 5.26% at $71.58 on Tuesday.

The ASX 200 miner didn’t release any news today, however, its home sector led the market.

The S&P/ASX 200 Materials Index (ASX: XMJ) closed up 2.67%. It was followed by S&P/ASX 200 Energy (ASX: XEJ) shares at 1.99%.

What’s pushing the Mineral Resources share price higher?

Mineral Resources has been in the news of late amid speculation it could demerge its lithium operations and list them on the New York Stock Exchange.

Top brokerage firm UBS says a lithium spin-off could be worth $17 billion. That’s actually more than the total market capitalisation for Minerals Resources as a whole today ($12.9 billion).

As my Foolish colleague James reported last week, UBS compared the NYSE-listed lithium business, Albemarle Corporation (NYSE: ALB), which trades at 10 times FY24 EBITDA, to the lithium business of Mineral Resources, which trades at just over three times FY24 EBITDA.

UBS doesn’t necessarily think that the lithium business of Mineral Resources would command as great a premium as Albemarle. But it does consider six times EBITDA possible, which would give the lithium spin-off a valuation of $17 billion.

UBS has a buy rating on Mineral Resources with a share price target of $83. This represents a potential upside of 16% over the next 12 months.

Additionally, as my Fool friend Zach reports, there’s been lithium mania in the market in recent years.

Surging demand for electric vehicles (EVs) around the world has led to a surge in the lithium price, as well as “a huge upswing in exploration, production, and delivery of the battery metal in its various forms”.

The post Mineral Resources share price up 5% as miners lead the market on Tuesday appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• ASX lithium mania: Is the ‘incredible amount of interest’ sustainable?
• Top brokers name 3 ASX shares to buy next week
• Top broker values Mineral Resources rumoured lithium spin-off at $17 billion
• Brokers name 3 ASX shares to buy today

Motley Fool contributor Bronwyn Allen 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 Scott Phillips.

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