Since the Fortescue Metals Group Limited (ASX: FMG) share price peaked at $7.27 in February, it has fallen a disappointing 34% to $4.80.
This has left it trading just a fraction away from its 52-week low of $4.52.
What happened?
Although iron ore prices defied expectations for a long time, in recent months they have come under significant pressure as demand from China softened.
While the higher grade iron ore has started to show signs of recovery, the low grade 58% fines that Fortescue produces have continued their decline.
As of yesterday 58% fines were fetching just US$34.54 a tonne, close to multi-year lows and showing little sign of rebounding higher.
So much so Fortescue's management has responded by looking for ways to diversify its business.
As I mentioned last week, the company recently confirmed that it has begun exploring for lithium carbonate in Western Australia.
Considering how tight supply is and how demand is expected to rise considerably in the future as electric vehicle and renewable energy usage ramps up, I think joining the likes of Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS) in mining the element is a smart move by management.
But it is worth remembering that commissioning a lithium mine takes considerable time and this won't be a quick fix.
Should you invest?
Although I don't quite believe the 58% fines iron ore price has found its bottom yet, I do think that Fortescue is starting to look attractive once again and could be a good option for investors.
While it wouldn't be my first pick in the resources sector, I suspect it could be a market beater over the next 12 months if bought in or around the current share price.
