AusSuper says Chris Ellison-led miner Mineral Resources has cleaned up its act

AusSuper says the Chris Ellison-led Mineral Resources is back on track after a $50m share spree that has Australia’s largest superannuation fund racing up the miner’s register.

New Mineral Resources chairman Malcolm Bundey.

The nation’s biggest superannuation fund has endorsed Chris Ellison-led Mineral Resources as back on track after a governance scandal that is on track to cost the managing director his job and cleaned out the boardroom.

AustralianSuper resumed its position as a major shareholder in the company and now holds a 5.48 per cent stake in MinRes, making it the third-biggest shareholder behind Mr Ellison, who owns 11.5 per cent.

The AusSuper market disclosure on Tuesday coincided with No. 2 shareholder and long-time supporter L1 Capital revealing it had sold down its stake in MinRes from 7.79 per cent to 6.42 per cent.

AusSuper acquired more than a million MinRes shares last Friday at $48 a apiece.

Yet Mr Ellison remains at the helm as managing director, a year after he apologised for his role in an offshore tax scheme and related party dealings that elicited his resignation.

MinRes also remains under investigation by the Australian Securities and Investments Commission.

AusSuper was encouraged by the turnaround inside the lithium and iron ore miner since the appointment of Mal Bundey to lead the board.

“Since the new chair started there has been improved governance, more rigorous capital allocation processes and increased disclosure,” an AusSuper spokesman said.

“Meaningful board renewal has also taken place under the new chair. We know there is more to be done and we support the chair and the board as they continue the turnaround of Mineral Resources.”

The MinRes share price closed at $46.02 on Tuesday after recovering from a low of $14.06 in the past 12 months.

AustralianSuper sold more than a million shares in October last year after Mr Ellison’s conduct came to light, including staffing his private boat with MinRes employees.

Some investors, including Rafi Lamm at L1 Capital, pushed for Mr Ellison to stay at the helm because of his track record of creating value and turning the mining services provider to a diversified group with iron ore and lithium production.

At the time of its selldown, AusSuper said it was engaging with the board on its longer-term position.

AusSuper boasts that it sets high environmental, social and governance standards for investments: “Companies which effectively manage financially material ESG issues are likely to provide better investment returns,” it states.

It's buying follows the release last week of better than expected September quarter results for MinRes. The company has also been buoyed by a turnaround in analyst sentiment and suggestions from chief financial officer Mark Wilson that it may not have to sell off lithium assets as it manages a $5.4bn debt pile.

In reshaping its board, Mr Bundey has overseen the appointment of four new directors: Lawrie Tremain, Ross Carroll, Susan Ferrier, and resources sector veteran Colin Moorhead. Former Test cricketer Justin Langer resigned in August.

MinRes also completed the upgrade of a troubled haul road crucial to its Onslow Iron project and boosted production to a rate of 35 million tonnes of iron ore a year.

This feat triggered a $200m milestone payment from Morgan Stanley Infrastructure Partners.

The share price has more than tripled since early April, and short positions in the stock have dropped from 15.5 per cent in June to less than 9 per cent.

Originally published as AusSuper says Chris Ellison-led miner Mineral Resources has cleaned up its act