The mining sector is in turmoil. Concerns about the global economy have sent commodity prices crashing to multi-decade lows and, as a result, many miners are struggling to remain profitable.
However, this environment has presented a number of opportunities for Foolish investors with a long-term outlook.
Two such opportunities areRare Earth Minerals (LSE: REM) andAnglo American (LSE: AAL).
Over the past month, these two miners have fared better than most. Indeed, over the past 30 days Anglos shares have fallen 7.4% and Rare Earth has gained 13.5%. In comparison, larger peersGlencoreandBHP Billitonhave seen their shares fall by 31% and 9% respectively over the same period.
And its reasonable to believe that Rare Earth and Anglos outperformance will continue for the foreseeablefuture. Making the two miners a great duo for any investor looking to make a long-term bet on the mining sector.
Taking action
Anglo is one of the few miners thats taking drastic action to cut costs and adjust to the current commodity price environment.
The company is planning tolower costs by $1.5bn per annum over the next 18 months. 6,000 jobs will go as part of this plan and around $400m per annum will be saved by improved operational productivity.
Whats more, Anglo is planning toreduce its portfolio of assets from55 to 40, selling off non-core, low-return assets in favour of assets that produce a higher return on equity for the company.
Not only will these plans help Anglo weather the storm in the short term, but they should also help the company improve its long-term results. As a result, when the commodity market starts to rebalance, Anglo will be extremely well positioned to profit from the rebound.
Overall then, Anglos proactive restructuring is creating a business with an extremely attractive outlook for long-term investors. The companys shares currently trade at a forward P/E of 12.2 and support a dividend yield of 7.3%.
Blue-sky potential
Anglos blue-chip status, high single-digit dividend yield and ambitious cost-cutting plan make the company one of the best bets on the mining sectors recovery.
However, Anglos rebound will take time, and due to the size of the company, its unlikely to be a multi-bagger for investors. On the other hand, Rare Earthhas plenty of blue-sky potential. That said, the company is still in its early stages of development, so its not suitable for all investors.
Nevertheless, Rare Earths recentlithium supply deal with Tesla Motors has significantly de-risked the company. Rare Earths outlook is now brighter than it has been at any other point in the companys history.
With this deal in place, the sky is the limit for Rare Earth. The company may be a high-risk play, but with a potential upsideof more than 400%, the reward is certainly worth the risk.
Foolish summary
All in all, Anglo and Rare Earth are a perfect partnership but, as always, only you can decide if these two miners are suitable for your portfolio.
And if these two miners don’t fit your risk profile,this special reportfrom theMotley Fool is full of other ideas.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.