The BHP Group Ltd (ASX: BHP) share price has been falling in recent weeks. I think this is an opportunity to consider the ASX mining share.
Since 19 April 2022, the BHP share price has fallen by around 30%. Considering the size of BHP, that's a large decline.
Firstly, it's important to note that BHP recently divested its oil and gas business to Woodside Energy Group Ltd (ASX: WDS).
The business and the earnings composition have changed.
I think it is fairly simple to understand the movements of the share prices of resource businesses because they largely track the changes in their respective commodity prices.
BHP's current commodity portfolio includes iron ore, copper, nickel and metallurgical coal. It also has a potash project in Canada called Jansen.
Lower prices make it more attractive
It's very hard to know which direction resource prices are going to go in the shorter term and the longer term.
The unpredictability of resource prices also makes it a hard task to evaluate what the net profit after tax (NPAT) and cash flow of the companies will be in the medium-to-longer term.
But, I think it's fair to say that resource prices do move in cycles as the changes in supply and demand affect things.
When commodity prices and the BHP share price drops, like now, I think that can be the time to strike.
The BHP share price is back down close to 52-week lows seen in October 2021 and November 2021.
While the BHP profit isn't likely to do as well, I think the lower price reflects that and compensates for that.
The lower price boosts the potential dividend yield.
Financial estimates
Looking at estimates on CMC Markets, BHP is expected to pay a dividend per share of $3.38 in FY23 and $2.73 in FY24. That translates into forward grossed-up dividend yields of 13% and 10.5%, respectively.
Getting a dividend yield of more than 10% is an attractive payout whilst waiting for the next potential rebound in prices.
According to CMC, the BHP share price is valued at 8 times FY23's estimated earnings and 10 times FY24's estimated earnings.
Potash potential
BHP is working on a major potash project. Potash is seen as a greener form of fertiliser. It said that it's "low emission, biosphere friendly and positively leveraged to decarbonisation".
The resource business describes potash as a "future facing commodity with attractive long-term fundamentals and differentiated demand drivers" compared to other commodities.
BHP said there is reliable base demand, leveraged by population growth and higher living standards. The project provides a platform for growth through potential capital efficient expansions. Stage 2 studies for Jansen are being accelerated to provide maximum optionality.
The business is expecting Jansen to be low cost and to be able to generate a high profit margin for BHP.
For me, Jansen is a reason to be positive on the BHP share price over the long term.
