Which are the best ASX mining shares to buy now for 2023?

It’s almost the end of 2022. This could be a good time to go looking at ASX mining shares before 2023 starts.

There are a number of different businesses on the ASX, varying by size and commodity.

Due to the nature of changing commodity prices, and longer-term supply and demand factors, it may make more sense to look at some businesses more than others.

Before deciding which ASX mining shares to pick for this article, I was thinking I may include copper miner Sandfire Resources Ltd (ASX: SFR) because of the fall of the copper price over the year. But, since this article, it has gone on a big run over the last couple of weeks, soaring 34%. So, that idea was out.

I’m also a fan of what ASX lithium share Pilbara Minerals Ltd (ASX: PLS) is doing with its investing to be involved with more of the lithium supply chain, but it has also gone on a very strong run.

Indeed, a number of resource businesses have climbed during November to date. So, it’s not the most opportunistic time to be investing in ASX mining shares. But, with that in mind, these are the ones I’d choose.

BHP Group Ltd (ASX: BHP)

I’m not going for BHP because of its huge market capitalisation. Rather, I think its portfolio is positioned to do well in 2023 and beyond.

At the moment, BHP’s portfolio includes iron, coal, copper and nickel. There has been positive news regarding China recently that it’s going to provide support for its real estate sector, as well as an easing of COVID restrictions. This could be a boost for the Chinese economy, and could have a useful impact on the iron ore price next year.

More economic activity in China may also be useful for copper and nickel.

Coal is producing a lot of profit and cash flow for BHP, which can continue to offset lower earnings from other commodities in the shorter term.

Finally, I think ongoing progress of BHP’s potash (a greener fertiliser) project in Canada will help provide support for the ASX mining share as investors get closer to seeing further diversification of earnings.

South32 Ltd (ASX: S32)

South32 is another business with a diversified portfolio of commodities. It’s involved with bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese.

I think South32 is diversified enough that it only needs some of its commodities to do well to generate pleasing cash flow and pay good dividends. I think it’s good that the ASX mining share isn’t reliant on iron ore like some other major miners.

According to the broker Morgan Stanley, South32 is expected to pay a grossed-up dividend yield of 8.3% in FY23.

Lynas Rare Earths Ltd (ASX: LYC)

Lynas is one of the largest rare earth miners outside of China. For that reason, it’s seen as strategically important to the United States. That’s why the US government is helping Lynas fund rare earth separation facilities.

It’s also constructing a new Kalgoorlie rare earths processing facility.

Plus, the business has announced an increase to its Mt Weld capacity, with targeted production now being 12,000 tonnes per annum of finished NdPr (Neodymium and Praseodymium).

I think the ASX mining share is doing the right things to achieve long-term shareholder returns. It looks much better value after the Lynas share price dropped 20% this year to date.

The post Which are the best ASX mining shares to buy now for 2023? appeared first on The Motley Fool Australia.

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• 3 ASX mining shares on ice today pending big news
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Motley Fool contributor Tristan Harrison 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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