Fortescue Ltd (ASX: FMG) shares may have dropped almost 40% in 2024, but one leading broker believes they still have further to fall.

A recent note out of Bell Potter reveals that its analysts have a sell rating and $17.17 price target on the ASX iron ore stock.

But that doesn't mean you should avoid iron ore. Not when there is another mining share trading at a very attractive level.

Which ASX iron ore stock is a buy?

According to a note released this morning, Bell Potter is tipping Champion Iron Ltd (ASX: CIA) shares as a buy.

The note reveals that its analysts have reaffirmed their buy rating on the ASX iron ore stock with a slightly improved price target of $7.15 (from $7.10).

Based on the current Champion Iron share price of $5.69, this implies potential upside of almost 26% for investors over the next 12 months.

In addition, the broker is forecasting a 4% dividend yield in FY 2025, which brings the total potential return to approximately 30%.

What is the broker saying?

Bell Potter highlights that the Canadian iron ore miner has signed a binding agreement with Nippon Steel Corporation and Sojitz Corporation to form a partnership for the joint ownership and development of the Kami Project.

Nippon and Sojitz will contribute C$245 million for a combined 49% interest. CIA maintain operatorship of the project and each party will be entitled to its equity share of production.

The broker thinks this is a good deal for the ASX iron ore stock. It said:

Good deal, great partners & aligned interests. The look-through 100% value to the Kami Project of the Nippon-Sojitz partnership is C$500m and compares with our risked project valuation of around C$270m. CIA's Kami Pre-Feasibility Study (March 2024) had an un-risked NPV of C$541m. The selldown substantially derisks the funding requirements to take Kami through a DFS, to FID and ultimately develop the project. […] Both Nippon and Sojitz are highly credible Japanese entities seeking to reduce steelmaking carbon emissions.

Outside this, Bell Potter believes a shift to higher grade iron ore bodes well for the company and will be supportive of dividends. It concludes:

We see upside risks spot to iron ore prices as a near-term catalyst. The shift into higher grade production in 2H 2025 will then likely support average realised prices and earnings amid an iron ore price environment generally expected to weaken. CIA will also benefit from maturing higher-grade iron concentrate markets which recognise carbon emission reduction benefits. We expect Government policy to be increasingly supportive of processes which assist decarbonising the hard-to-abate steel sector. CIA is a dividend payer; we expect earnings to continue to support dividends.