Mineral Resources shares hit an almost 4-year low. What's going on?

It's been a fairly pleasant day for most ASX 200 shares this Thursday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has added a tentative 0.32%. Bu the same cannot be said of the Mineral Resources Ltd (ASX: MIN) share price.

Mineral Resources shares are having a horror show of a day, no other way to put it. The diversified mining company closed at $34.21 a share yesterday afternoon but opened at just $32.91 this morning. The falls have kept on coming, with Mineral Resources stock hitting a new 52-week low of $31.10 just after lunchtime today.

At the time of writing, the company has recovered a little but still remains down a horrid 6.5% at $31.98 a share.

Not only is that $31.10 price a new 52-week low for Mineral Resources shares, but it's also the lowest the company has traded at in almost four years. You'd have to go back to November 2020 to find the last time this company was going for the same price it is today. Check it out for yourself below:

So what on earth is happening to Mineral Resources shares today? Why does this one-time market darling appear to be falling off a cliff?

Why have Mineral Resources shares just hit a four-year low?

Well, it's not entirely clear, as there have been no fresh ASX announcements out of the company itself that might easily explain this weighty drop in Mineral Resources shares today.

However, we can speculate.

For one, two major commodities that Mineral Resources is involved with – lithium and iron – are currently enduring rather savage bear markets.

As my Fool colleague Bernd covered earlier this week, iron ore has had a terrible 2024 so far. The industrial metal was trading at more than US$144 a tonne back in January. But earlier this week, that same tonne fell under US$100. Today, it has gone down as low as US$92.50.

Lithium has also entered a very difficult pricing cycle. As my Fool colleague Tristan discussed last month, one of the ASX's largest lithium shares – Pilbara Minerals Ltd (ASX: PLS) – just reported that its realised lithium price collapsed by 74% over FY2024 to US$1,176 per tonne. We also noted at the time that broker UBS has reduced forecasted lithium prices for 2025 and 2026 by up to 23%.

Mineral Resources shares, which have significant exposure to both lithium and iron ore, are clearly being hammered by this reality.

Earnings saw investors rush for the exit

But we also should mention this company's own earnings, which also dropped late last month. As we covered at the time, Mineral Resources reported a 79% tank in its net profit after tax (NPAT) compared to FY2023, bringing in $158 million. That prompted the company to cancel its dividend, and Mineral Resources shares promptly cratered.

As a result, Mineral Resources managing director Chris Ellison told investors this:

Given the stubborn lithium price and our remaining investment in Onslow Iron, we will continue to take a conservative approach during FY 2025, deferring expansion projects and focusing on cost reduction and cash preservation.

So it's not too hard to see why some Mineral Resources investors are being spooked. This company's share price has fallen every single day since these earnings were announced. As of today, the shares are now down more than 28% since 29 August.

As such, perhaps we can conclude that today's drop is a continuation of this trend, potentially exacerbated by the continuing falls in commodity prices.

Whichever way you cut it, it's been a tough few days for Mineral Resources shares and their owners.

The post Mineral Resources shares hit an almost 4-year low. What's going on? appeared first on The Motley Fool Australia.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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