Mineral Resources shares surge on news of cost-cutting drive

Chris Ellison’s Mineral Resources is cutting costs worth $300m in a move that has pleased investors and sent the stock price soaring.

Mineral Resources’ Mt Marion lithium mine, where the fly in, fly out roster is being reorganised to slash costs. Picture: Mineral Resources

Mineral Resources has found $300m in cost savings across the business and will slash staff in its lithium division by tightening up fly in, fly out rosters – moves that have sent its shares soaring.

The company, led by billionaire Chris Ellison, also announced that the sale of 49 per cent of the Onslow Iron haul road to investment funds managed by Morgan Stanley Infrastructure Partners had been approved by the Foreign Investment Review Board, bringing in $1.1bn within the next two weeks.

Another $200m will be paid once production at Onslow Iron hits its full capacity of 35Mt per year for any quarter out to June 30, 2026.

MinRes said once the initial $1.1bn had been paid, it would cancel its undrawn $US750m bridge facility.

MinRes is struggling under a large debt load, recently reporting that its net debt at the end of the financial year came in at $4.43bn, up from $1.89bn in the previous period.

MinRes shares surged 15.9 per cent to close at $35.12 on the news, bouncing off year lows which recently saw the company’s stock trading below $30, compared with 12-month highs of $79.76.

MinRes’s focus is on bringing Onslow into full production by mid-next year, with its lithium operations struggling with low commodity prices and the company shutting down its high-cost Yilgarn iron ore operations earlier this year, necessitating the redeployment of 1000 staff.

Onslow started shipping iron ore in May but would be “operationally complete” once the haul road is finished in October, MinRes said, and is on track to hits its nameplate 35Mtpa run rate from June next year.

“At current iron ore prices and while still ramping up, MinRes’s operations at Onslow Iron will be cashflow positive from October,” the company said.

“As production volumes rise, cash inflows will increase significantly, facilitating a rapid deleveraging of the balance sheet.

“As outlined in the 2024 full-year result, Onslow Iron remains on time and fully funded to ­completion.’’

MinRes said to date, Onslow had shipped more than one million tonnes of ore, with 532kt shipped in August and 720kt expected to be shipped this month.

One of the cost-cutting measures announced on Wednesday involves cutting staff numbers by transitioning to a two weeks on, one week off roster, from a two weeks on, two weeks off roster at the Mt Marion and Wodgina lithium mining operations.

“Employees have been notified and these changes will take effect over the next four to six weeks,’’ the company said.

“There is no change to the lithium FY25 production guidance or mining services FY25 volume guidance as a result of these operational changes.’’

Mr Ellison said the company was continuing to identify measures to reduce capital and operational expenditure.

“As the haul road partnership demonstrates, we have many non-dilutionary levers at our disposal across the business to release additional value for shareholders,” he said.

“Importantly, under this partnership, MinRes maintains majority exposure to the stable earnings that the haul road will deliver over the project’s life.’’