3 ASX Mining Stocks Rallying While Iron Ore Falls: What’s Behind the Disconnect?

Despite a softening iron ore mining, Australia’s heavyweight miners, BHP Group (ASX: BHP), Rio Tinto (ASX: RIO), and Fortescue (ASX: FMG) are staging an unexpected rally. With iron ore hovering near US$105 per tonne, well below its recent highs, conventional wisdom would expect pressure on earnings and share prices. Yet the opposite is unfolding. This shift reveals a change in investor mindset, focusing more on companies that are branching out, managing their money wisely, and cutting carbon emissions, instead of just relying on iron ore prices.

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Copper Takes Centre Stage as Iron Ore Loses Its Grip

BHP and Rio Tinto are making more money from copper, just as iron ore prices drop. Copper demand is rising fast, driven by electric vehicles and clean energy projects.
For BHP, every US$1,000 rise in copper adds about US$500 million to earnings. For Rio, it’s around US$300 million. That helps when iron ore isn’t doing well.
BHP increased copper output by 4% last quarter and plans to grow even more. Rio is also boosting copper production, especially from its big mine in Mongolia. At current prices, that could add billions in annual revenue. Fortescue remains a pure iron ore play. That means it could benefit more if iron ore prices bounce back, but it also faces more risk when prices fall.

Iron Ore Defies Bearish Forecasts, But Risks Remain

Iron ore prices have surprised many in 2025. Despite predictions from analysts that prices would fall toward US$90 per tonne, iron ore has mostly held steady between US$100 and US$105. Morgan Stanley still expects a drop to US$94 in 2026, but so far, the commodity has resisted that downward trend.
This gap between forecasts and reality matters for investors. If iron ore stays at US$100 instead of falling to US$94, Fortescue could see its free cash flow yield rise from 5.0% to 8.6%. That’s an extra US$700 million in annual cash. BHP and Rio Tinto would also benefit, with each gaining about 1.4 percentage points in cash flow, worth hundreds of millions of dollars.
December may offer more support. Historically, iron ore prices tend to rise during this month. Since 2015, the commodity has gained an average of 9.6% in December, with positive returns in 90% of those years. This seasonal boost is driven by Chinese steel mills stockpiling ahead of Lunar New Year shutdowns in late January, creating a predictable spike in demand.

The Investor’s Takeaway: Diversification Delivers

Why BHP and Rio Stand Out

The recent performance tells a clear story about diversification value. BHP’s and Rio’s copper exposure creates stability that Fortescue cannot match. Several factors support continued strength:

• Copper’s structural demand from global electrification (multi-decade tailwind)
• Iron ore’s seasonal support through February
• Prices holding above bearish forecasts

Risks to Watch

However, meaningful risks persist. If iron ore breaks below US$100, a level it briefly tested in mid-2024, Fortescue’s earnings could fall 15-20% based on the company’s cost structure around US$85 per tonne. BHP and Rio would see single-digit declines, cushioned by copper’s 20-30% earnings contribution.

China’s property sector remains deeply troubled with no quick fix, while Rio’s massive Simandou iron ore project in Guinea began commissioning in October, adding supply pressure. For risk-conscious investors, BHP’s and Rio’s dual revenue streams provide materially better downside protection than Fortescue’s concentrated exposure.
For investors seeking stability in a volatile commodity cycle, diversified miners like BHP and Rio offer not just downside protection but a clearer path to long-term growth.