Tumbling iron ore price hits MinRes but lithium pivot in full swing
Mineral Resources says its pivot back towards lithium is in full flight but as rapidly falling prices and labour shortages have undermined iron-ore operations.
Mineral Resources says its pivot back towards lithium is in full flight, as rapidly falling prices and Western Australia’s labour shortages hit its iron-ore operations.
MinRes released its December-quarter production report on Tuesday and still expects first production from its restarted Wodgina lithium mine in the Pilbara in the September quarter.
The company said it expected its 40 per cent-owned Kemerton lithium hydroxide refinery, operated by Albemarle, to begin commercial production by the middle of the year, with commissioning of the plant now in full swing.
But, while this year’s lithium surge have helped prop up MinRes’ shares, the company said its iron-ore operations were hit by industry labour shortages and sharply lower pricing in the December period.
MinRes was paid an average $US63.23 ($88.34) a dry tonne for its iron ore in the period, 19 per cent below the average September quarter price, and only 58 per cent of the benchmark iron-ore price for the period.
Fortescue Metals also saw discounting of its shipments, and said the sharp fall in pricing in the quarter was the result of additional lower-grade ores entering the market, as well as surging metallurgical coal prices – which generally send steel mills in search of higher-grade ore to minimise their coal usage.
MinRes said its mining operations were still suffering from a shortage of workers in the WA mining sector, with production marginally down at its Yilgarn mines in the south of WA.
Pilbara production rose as the company ramped up its new Wonmunna mine, however. MinRes shares slumped $4.60, or 7.5 per cent, to close at $57.12 on Tuesday.