While it might have been a blockbuster year for commodity prices in 2021, it was a patchy market for mining and resource shares across the S&P/ASX 200 Index (ASX: XJO).
It turned out not every commodity was hot last year. While lithium prices were going up, iron ore prices were going down. The variety in performance across commodities meant most of the winners during the year were benefitting from attractive supply and demand dynamics.
Unsurprisingly, ASX lithium shares dominated the market — proving to be a lucrative investment for shareholders.
The overall mining and resource sector's performance was average compared to the index. But, when companies in the sector performed, they performed extremely well. For that reason, some of these ASX 200 shares will be familiar if you've read our 5 best performing ASX shares of 2021 coverage.
5 top ASX 200 mining and resource shares in 2021
Liontown Resources Limited (ASX: LTR)
Investors weren't deterred by the fact Liontown Resources is still a pre-revenue lithium company.
During the 12 months of 2021, the company's share price latched onto the booming enthusiasm towards the electric battery material. This proved rewarding for shareholders, with shares gaining 388% in the year.
As the demand for lithium-ion batteries continues to grow, Liontown Resources attracted eager eyes with its Kathleen Valley lithium project. The company describes the project as "a world-class lithium deposit with a mineral resource estimate of 156 million tonnes at 1.4% lithium oxide".
Pilbara Minerals Ltd (ASX: PLS)
The next ASX 200 mining share making the list has been dubbed Macquarie Group Ltd's (ASX: MQG) top pick among ASX lithium shares. The Pilbara Minerals share price entered 2021 at 87 cents per share. By the end of the year, it had gained 267% to finish at $3.20.
Unlike Liontown Resources, Pilbara Minerals is already up and running, with the company booking record shipments of spodumene concentrate in 2021. In FY21, the lithium producer recorded $175.8 million in revenue — representing an increase of 109% on the previous year.
Macquarie currently holds a price target of $3.70 on Pilbara Minerals' shares.
Lynas Rare Earths Ltd (ASX: LYC)
Switching up gears, the next entrant in our best performing ASX 200 mining shares is not a lithium producer. Instead, Lynas Rare Earths is unearthing another crucial element group used in green technology — rare earth elements.
The Lynas share price surged 156% in 2021, giving shareholders something to smile about. Much like the companies mentioned before, this was mostly due to an increase in demand for the underlying commodity. Neodymium and praseodymium (NdPr) prices skyrocketed last year, greatly improving Lynas' revenue and profitability along with it.
However, two experts have recently tagged the mining company with a hold rating.
Chalice Mining Ltd (ASX: CHN)
Chalice Mining had a blast of a year in 2021. Shares in the mineral explorer enjoyed a 146% increase during a year to remember.
Shareholders willing to stick it out with Chalice basked in the glory of further positive updates in relation to its Julimar project in Western Australia.
On 9 November 2021, the company released its maiden mineral resource estimate for the Gonneville deposit. The estimate came out to be 10 million ounces of palladium, platinum, and gold — making it the largest nickel sulphide discovery in more than 20 years.
Bell Potter remains bullish on the ASX 200 mining share, placing a speculative buy and an $11.73 price target on it.
Allkem Ltd (ASX: AKE)
The last company on the list is lithium carbonate and boron producer, Allkem. This name is a bit of a new one, but its components are more familiar. During the year, the previously ASX-listed lithium companies of Orocobre and Galaxy Resources merged to form Allkem.
Thanks to the increase in lithium prices, this ASX 200 mining share notched up a 132% gain in 2021. Analysts at JP Morgan are convinced there's more still in the tank of this newly formed lithium giant. Currently, the broker holds an overweight rating on Allkem's shares.
