The Fortescue Ltd (ASX: FMG) share price dropped 6% on the day of its result – it was a rough week for the ASX mining share. In the past 12 months the valuation has dropped by around a third. Ouch.

Miners like Fortescue have previously been good cyclical opportunities as the iron ore price rises and falls amid Chinese demand shifts. But, the FY25 half-year result included a lot of pain for Fortescue. Is this the worst of it for the company or is it a trap even at the current lower valuation?

Let's look at what the iron ore miner reported, and then I'll consider whether it's appealing.

Earnings recap

Despite increasing its iron ore shipments by 3% to 97.1mt during the half-year period, the company's revenue fell by 20% to US$7.6 billion because of a 21% decline in the average revenue per tonne for its iron ore to US$85.24.

Underlying operating profit (EBITDA) fell 38% to US$3.6 billion, and net profit after tax (NPAT) declined 54% to US$1.55 billion. The annual dividend per share was reduced by 54% to 50 cents. Those are large reductions, so it's no wonder the Fortescue share price dropped so much.

The company reported that its C1 cost (production costs) rose by 8% to US$19.17 per tonne, so its expenditures significantly increased while the iron ore price dropped heavily.

Fortescue also noted that its green energy projects were facing uncertain market conditions because the Trump Administration has instructed federal agencies to pause grant payments under the Inflation Reduction Act. Questions remain over the implementation of the Renewable Energy Directive III (RED III) in Europe, and uncertainty surrounds various upcoming elections globally, including in Australia.

As a result, the development timeframes for Fortescue's Arizona projects and Gladstone PEM50 project are being "reconsidered".

But, Fortescue said it retains a portfolio of green energy projects that show "significant potential." Feasibility studies and planning approvals continue to progress for the Norwegian Holmaneset project and the Brazilian Pecem project.

Is the Fortescue share price a buy?

The miner's success for the foreseeable future is largely tied up with the iron ore price, which has actually recently risen to around US$107 per tonne, according to Trading Economics.

Trading Economics explained this rise has occurred amid expectations for stronger demand from major customers. New data showed that new government bonds issued by Chinese authorities more than doubled in January 2025 compared to January 2024.

This shows that officials are starting to follow through on earlier pledges to stimulate the country's slowing economy.

On top of that, local authorities reportedly started the process of buying property from major distressed developers, signalling a willingness to aid the sector that is among the world's top steel consumers. Central bank interest rate cuts could also help demand.

However, it's also important to note that while demand may increase, iron ore supply is increasing too, with Fortescue, BHP Group Ltd (ASX: BHP), and Rio Tinto Ltd (ASX: RIO) all looking to increase their production in the coming years.

Due to the increased iron ore supply, I'm not expecting the iron ore price to climb above US$150. With the weaker outlook for green energy in the foreseeable future, the iron ore division is absolutely key for Fortescue. It doesn't have a copper division like Rio Tinto and BHP to offset any weakness in iron ore earnings.

If the iron ore price stabilises or rises from here, perhaps due to Chinese stimulus, the Fortescue share price may be underpriced on a medium-term basis. However, if I were looking to invest for the long-term, I'd want to invest at a lower Fortescue share price for a bigger margin of safety, partly because it seems as though the dividend income will be smaller for the foreseeable future compared to the large COVID-era dividends.