The BHP Group Ltd (ASX: BHP) share price is having a rough session on Thursday.
At the time of writing, the mining giant's shares are down over 3% to $62.71.
That is a meaningful move for a business of BHP's size, particularly after the stock has had such a strong run recently.
So, what is going on?
Image source: Getty Images
Iron ore concerns are weighing on sentiment
The weakness appears to be linked to concerns about the iron ore market.
Iron ore remains a major earnings driver for BHP, so anything that changes the supply outlook can quickly affect investor sentiment toward the stock.
The latest concern is coming from Africa, where exports from Guinea's giant Simandou iron ore project have surged.
According to Bloomberg, shipments from the project's Morebaya port reached 2.2 million tonnes in May, up from 1.3 million tonnes in April. That compares with 0.6 million tonnes or less in each of the first three months of the year.
That ramp-up has caught investors' attention because Simandou has long been viewed as a project with the potential to upend the global iron ore market over time.
More supply from a large, high-grade project can add pressure to prices, particularly if demand does not grow quickly enough to absorb it.
Why this impacts BHP
BHP is a diversified miner, but iron ore is still central to its earnings and cash flow.
When the market becomes more cautious on iron ore prices, large producers such as BHP, Rio Tinto Ltd (ASX: RIO), and Fortescue Ltd (ASX: FMG) can all come under pressure.
There has also been broader caution around the sector. RBC downgraded Rio Tinto shares this week on expectations of a weaker iron ore price outlook. While that downgrade was about Rio Tinto, the concern is relevant to BHP as well, as both companies remain heavily exposed to the iron ore market.
If investors believe iron ore prices could be weaker in the future, they may mark down the expected earnings, cash flow, and dividends of the big miners.
Why I remain positive
Even so, I do not think today's fall changes the long-term BHP investment case.
Iron ore weakness is a real risk, and investors should not ignore it. Commodity markets can turn quickly, and BHP's earnings will always be affected by prices it cannot control.
But I still like BHP shares as a long-term buy and hold.
The biggest reason is copper.
Copper demand could be supported for many years by electrification, data centres, renewable energy, electricity networks, industrial growth, and electric vehicles. At the same time, new copper supply can be difficult, expensive, and slow to bring online.
That gives BHP a valuable long-term growth angle beyond iron ore.
I also like that BHP has scale, strong assets, financial strength, and a diversified commodity base. Iron ore may be under pressure today, but the group also has copper and potash exposure, which could become more important over the next decade.
Buy the dip?
I think today's weakness in the BHP share price could be a buy-the-dip opportunity for patient investors.
That does not mean BHP will rebound immediately. If iron ore prices remain under pressure, the share price could stay volatile.
But I would rather buy a high-quality resources giant when the market is worried about one part of the business than wait until everything looks perfect again.
BHP is not cheap after its strong run, and the iron ore outlook deserves attention. But I think the company's copper exposure, balance sheet strength, and long-term optionality still make it one of the best ASX mining shares to own.
Foolish Takeaway
The BHP share price is sinking today as investors react to a weaker-looking iron ore backdrop, including the faster ramp-up of exports from Guinea's Simandou project.
That is a valid concern. Iron ore remains extremely important to BHP.
But I do not think it is the only story. BHP's copper exposure is a powerful long-term growth driver, and I think that could become increasingly important over time.
For investors willing to look through short-term commodity worries, today's pullback may be an opportunity to buy a world-class miner at a more interesting price.
