The Rio Tinto Ltd (ASX: RIO) share price has come back a fair way from its recent highs.
Shares in the mining giant are trading around $150.13 on Thursday, down approximately 23% from their previous peak.
That's a sizeable decline for one of the world's largest resources companies.
But has the sell-off created an opportunity for long-term investors? Here's my view.
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Why I like Rio Tinto
There are several reasons I would be comfortable owning Rio Tinto for the long term. The company has a portfolio of major mining operations, with its Western Australian iron ore business providing an important foundation.
I especially like the scale of these operations and their ability to generate substantial cash flow when commodity prices are favourable.
That cash flow helps Rio Tinto fund new projects and return money to shareholders.
But there is also plenty happening elsewhere in the business. Rio Tinto has been investing in expanding its copper operations, including the development of Oyu Tolgoi in Mongolia.
I think copper offers an attractive long-term opportunity, given the growing need for electricity networks, industrial infrastructure, and data centres.
The company also has significant aluminium operations and investments in expanding its iron ore production.
For me, this combination of established mining assets and opportunities to increase production provides a good foundation for the coming years.
Does the Rio Tinto share price look attractive?
At approximately $150.13, the Rio Tinto share price looks quite reasonable based on consensus earnings forecasts.
Analysts currently expect earnings per share (EPS) of $11.93 in FY26 and $12.12 in FY27.
Based on those estimates, Rio Tinto shares are trading on a forward PE ratio of approximately 12.6 times FY26 earnings and 12.4 times FY27 earnings.
I think that's a reasonable price to pay for a major resources company with Rio Tinto's assets and long-term growth opportunities.
There is also a healthy dividend on offer. Consensus forecasts suggest fully franked dividends of $6.56 per share in FY26 and $6.66 per share in FY27.
At the current share price, that represents dividend yields of approximately 4.4% in both years.
I think that provides a reasonable income return while investors wait for the company's longer-term growth investments to deliver.
What could go wrong?
The biggest concern I have is the outlook for iron ore prices. China remains a major source of demand, and weakness in its property sector and steel industry could continue to weigh on the market.
At the same time, additional global iron ore supply could put pressure on prices.
That creates uncertainty around Rio Tinto's earnings outlook.
Although analysts currently expect relatively stable earnings over the next couple of years, those forecasts could prove too optimistic if iron ore prices weaken meaningfully.
And because mining businesses have substantial fixed costs, lower commodity prices can have a considerable impact on profitability.
Foolish takeaway
I think the Rio Tinto share price offers good value around $150.
There is a chance that weaker iron ore prices could put pressure on earnings and lead to further share price volatility.
But after a 23% pullback, I think much of the near-term uncertainty is already reflected in the valuation.
With a healthy dividend and opportunities to grow its business over time, I would be happy buying Rio Tinto shares today.
