Mineral Resources to keep Koolyanobbing mine open after Cliffs deal
Mineral Resources will keep WA’s Koolyanobbing complex open after buying Cleveland-Cliffs’ local iron ore assets.
Mineral Resources will keep open Western Australia’s Koolyanobbing iron ore mine, saving hundreds of jobs, after a deal to acquire US mining company Cleveland-Cliffs’ Asia Pacific iron ore portfolio.
MinRes (MIN) managing director Chris Ellison said the deal, for which a price was not disclosed, will deliver a “win-win” outcome for all parties involved.
“Mineral Resources will continue sending tonnes down the rail to Esperance and by doing so continue to provide jobs for hundreds of West Australians for the next five to six years,” he said.
“The remaining iron ore left on the Cliffs tenements will be extracted and sold to create ongoing economic activity and benefit for Western Australia.”
The deal, which includes the sale of tenements and all remaining iron ore as well as the fixed plant and equipment, would give MinRes ownership of Cliffs’ fixed infrastructure assets at the Port of Esperance, including a rail car dumper and two large storage sheds.
Cleveland-Cliffs’ Asia Pacific iron ore portfolio consists of the wholly-owned Koolyanobbing complex, a collective term for the operating deposits at Koolyanobbing, Windarling and Mount Jackson.
The US company had previously announced it planned to exit its Australian operations to pursue a US-centric strategy. In January it said it would accelerate the closure on the back of an evaluation of market conditions and the iron ore price, as well as an assessment of the quality of its remaining ore reserves.
“The sale of these assets to Mineral Resources marks Cliffs’ exit from the Australian iron ore business, and represents the final step in the implementation of our US iron ore-centric strategy,” said Cleveland-Cliffs chairman and CEO Lourenco Goncalves.
“We are pleased to have reached agreement on a transaction that not only brings real value to Cliffs’ shareholders, but also represents the potential for continued job opportunities for employees in Western Australia who would be impacted by the pending closure of the Koolyanobbing complex.”
The sale, which Cliffs said is supported by the Western Australian government, is expected to reduce the company’s closure costs by between $65 million and $75m.
In April, Cliffs said the portfolio, which had ceased all mining activity, contributed an adjusted negative earnings before interest, tax, depreciation and amortisation of $40m for the first quarter, which included several closure-related charges.
“I commend the Cliffs’ Australian team for an outstanding job achieving great safety, production and quality results over the years and also maintaining a positive attitude and accomplishing our operating objectives the last few years in spite of the many headwinds the direct-ship iron ore industry has faced during this period,” Mr Goncalves said.
The deal will likely be completed by the end of June.
At about 10.30am (AEST), Mineral Resources stock had fallen 2.54 per cent to $16.85.