Scandal-plagued miner’s haul road problems behind its latest iron ore guidance downgrade

Mineral Resources has blamed problems with its accident-prone private haul road, which is central to its Onslow Iron ore operations, but insists there is reason to be optimistic.

One of Mineral Resources’ transhippers that operates out of Onslow.

Mineral Resources has disclosed another downgrade related to the troubled haul road that underpins its Onslow iron ore operations, but says there is light at the end of the tunnel.

Chris Ellison-led MinRes said late on Tuesday that its share of iron ore shipments for 2024-25 would be 7.8-8 million tonnes, down from previous guidance of 8.5 million to 8.7 million tonnes.

The downgrade was announced as MinRes hosted an investor and analyst tour of the Onslow Iron operations in Western Australia’s Pilbara region with Mr Ellison and Malcolm Bundey, who is due to take the reins as chairman of the scandal-plagued company on July 1.

The MinRes share price plunged in March after it revealed a first-half loss of $807m and admitted it would need to spend $230m repairing and upgrading the 150km-long haul road that connects an iron ore mine to port facilities at Onslow.

The scene of an accident involving a MinRes jumbo road train.

The debacle over the haul road compounded a scandal over Mr Ellison’s involvement in a tax evasion scheme, dubious related party transactions and the improper use of company resources. MinRes blamed the latest Onslow Iron downgrade on lower-than-expected availability of contractor road trains to haul ore from its Kens Bore mine to port. Only 65 trucks were available compared with its target of 85 to 100.

The company has had to rely heavily on contractors and public roads because of the problems with its private haul road and its fleet of jumbo road trains each capable of carrying 330 tonnes of iron ore. However, it noted a steady improvement in haulage volumes and said its jumbo road trains were now performing as expected.

The jumbo road trains were involved in a series of rollovers that led to a safety authority to call a temporary halt on use of the haul road in March.

MinRes said that for the month of May to date, Onslow Iron had shipped 1.7 million tonnes.

Over the past seven days, an average of 74,000 tonnes per 24 hours have been loaded on to ships, and on some days up to 100,000 tonnes have been loaded for export.

Perth-headquartered MinRes expects to ship 1.9 million tonnes in May, compared with 1.3 million in April. It said the May shipments equated to a an annual run rate of 23 million tonnes.

Mineral Resources managing director Chris Ellison.

“The significant month-on-month increase highlights the acceleration of Onslow Iron’s ramp-up, with the project remaining on schedule to achieve its nameplate capacity of 35 million tonnes in the first quarter of 2025-26,” MinRes told the market. “MinRes anticipates shipping circa 2.3 million to 2.6 million tonnes in June.”

MinRes has commissioned a fifth transhipper, which it relies on to carry iron ore from port facilities at Onslow to bulk carriers anchored offshore. The company said its fifth transhipper was being commissioned and awaiting the arrival of its tug to boost shipping capacity.

The Australian revealed in April that oil-and-gas giant Chevron stands to pocket more than $1bn from MinRes over the life of Onslow Iron under the terms of a secret port agreement with the West Australian government.

MinRes is refusing to pay the port fees and now is in a legal battle with the government’s Pilbara Port Authority.

Originally published as Scandal-plagued miner’s haul road problems behind its latest iron ore guidance downgrade