Chris Ellison-led miner offloads mothballed iron ore mines
MinRes benefited to the tune of hundreds of millions of dollars under a royalty relief deal with WA. Now it has sold the mines involved.
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Mineral Resources has offloaded mothballed iron ore operations that were once the source of a free kick on mining royalties from Western Australia’s Labor government worth hundreds of millions of dollars.
MinRes has sold the Yilgarn hub operations, including the Koolyanobbing mine and infrastructure, for an immaterial amount to a private company which has agreed to take on all the associated mine closure and rehabilitation liabilities.
The deal involves Yilgarn Iron Investment, whose directors were previously involved in the sale of a separate iron ore project — Wonmunna — to MinRes.
MinRes shut down the high-cost iron ore operations in the Yilgarn last year, saying it would try to find other jobs for about 1000 workers affected by the closure.
The company said on Monday about 800 of the workers had been redeployed across its other mines and mining services division.
MinRes said the terms of the sale to Yilgarn Iron were “confidential and immaterial”.
“MinRes’ priority was to select the party most likely to sustain these nearly 80-year-old operations for the benefit of the region and community,” the company told investors.
“YII (Yilgarn Iron) will be responsible for and indemnifies MinRes against all environmental, closure and rehabilitation liabilities in relation to Yilgarn Hub assets.”
In a statement published online, Yilgarn Iron said it was well placed to operate and progressively rehabilitate one of WA’s oldest iron ore mining precincts,
“Its leadership team has substantial experience in iron ore operations in WA and is committed to working with a full range of stakeholders and partners, including the Marlinyu Ghoorlie native title group and the WA Government, to ensure the project is successful,” Yilgarn Iron said.
MinRes stepped in to take over the Koolyanobbing mine and infrastructure central to the Yilgarn hub in 2018 after the WA government became involved in trying to find a new owner in the wake of US company Cliffs moving to shut down the operations because of low prices.
In a deal negotiated with the office of then-Labor premier Mark McGowan, MinRes was not required to pay a cent in mining royalties for five years.
Unlike other royalty relief packages signed off by previous WA governments, the agreement did not include any clause that would see the royalty relief fall away if iron ore prices surged.
When the mines started generating huge profits for MinRes off the back of soaring iron ore prices, WA Treasury estimated the benefit to the company from the royalty relief at about $220m.
MinRes founder Chris Ellison, who is set to depart the company he co-founded over his role in tax evasion and other scandals, said on Monday the company had saved hundreds of jobs when it stepped up in 2018.
“As we transfer our Yilgarn operations to a new owner, we take great pride in everything the MinRes team has achieved in the region over the past 14 years, and that we were able to save hundreds of jobs at Koolyanobbing that would have otherwise been lost with the departure of Cleveland Cliffs,” he said
“This transaction ensures these mines will continue to support jobs and the economy for years to come and deliver ongoing benefits to the region and WA.”
Yilgarn Iron’s directors are Fergus Campbell and David Paull, who are also directors of Maiden Iron (formerly known as Australian Aboriginal Mining Corporation).
Prominent indigenous businessman Daniel Tucker resigned as chairman of Australian Aboriginal Mining Corporation (AAMC) in 2020 in the fallout from a deal to sell the Wonmunna iron ore project to MinRes for an immaterial sum and a royalty.
Mr Tucker said at the time the sale, understood to have been backed by Mr Campbell and Mr Paull as the only other directors, had scuttled his plans to create a substantially indigenous-owned iron ore mine.
MinRes will retain gold and lithium rights associated with the Yilgarn hub as part of the sale agreement with Yilgarn Iron.
Yilgarn Iron said its newly acquired assets included the sites of Koolyanobbing, Carina, Jackson Ranges, Mt Manning, Windarling and Parker Range plus exploration targets.
“The Yilgarn region has a long history of iron ore mining and is located in the shires of Yilgarn and Menzies with ore being railed to Esperance Port for export.” it said.
“The new management team has secured investment funding to acquire and continue to develop the Yilgarn Iron Ore Hub.
“Management will be refocusing operations around the Koolyanobbing ore processing facility with a planned recommencement of haulage operations in 2025 and initial mining in late 2025. The intention is to continue mining and rehabilitation activities hand-in-hand while also drilling exploration targets within the project area.”
Yilgarn Iron did not respond to a request to speak with Mr Campbell, who is an experienced mining engineer and the company’s managing director, or other executives about its plans and the deal with MinRes.
The Australian reported last week that Mr Ellison had written to current WA premier Roger Cook asking for him to intervene in a dispute over contested shipping levies involving MinRes, oil and gas giant Chevron and a state-owned port authority.
MinRes hired Mr Cook’s predecessor as Labor premier, Mr McGowan, as a part-time strategic adviser in 2023.
Originally published as Chris Ellison-led miner offloads mothballed iron ore mines
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