The Rio Tinto Ltd (ASX: RIO), Fortescue Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP) share price are all down more than 3%.
These businesses are three of the largest iron ore miners in the world, and three of the biggest miners in Australia. Together, they play an important part in Australia’s economy.
It’s rare for the miners to fall more than 3% in one day – there’s normally a reason. There appears to be a negative influence on the market today.
Simandou exports surge
Based on reporting by Bloomberg and Mining.com, the massive new iron ore project in Africa, called Simandou, could be the issue with its rising iron ore shipments.
Simandou is partly owned by Rio Tinto, but the global iron ore price is heavily influenced by global supply (and demand), so additional iron ore in the market is likely to have a negative impact on the ASX iron ore share’s margins, net profit and dividend.
According to the media reports, exports from Morebaya port – the port that Simandou utilises – rose to 2.2mt in May. according to ship tracking data from Kpler, representing a significant increase compared to April’s record of 1.3mt. The first three months of the year saw 0.6mt or less per month.
With how shipments are rapidly increasing, it seems like Simandou is quickly striving towards its full potential, though it could still take many months (or years) until it reaches its peak shipments.
What to make of this for the BHP share price?
BHP, Fortescue and Rio Tinto are all exposed to the iron ore, though some to a lesser degree than others.
Both BHP and Rio Tinto have been diversifying their earnings base away from iron ore in recent years. BHP is working on copper and potash, while Rio Tinto has grown its copper and lithium project base. This could be essential if the iron ore price does trend lower over the long-term.
Considering the BHP share price is still up 65% in the past year, I don’t think longer-term shareholders need to feel disappointed about today’s decline.
But, there are other ASX dividend shares I’d rather buy for long-term passive income.
