Mineral Resources halts traffic on its troubled Onslow haul road after sixth trucking incident

Less than a month after Mineral Resources boss Chris Ellison said issues with the haul road were ‘not a big deal’, a $200m milestone payment is at risk if it doesn’t hit its ore volume target by the middle of next year.

One of the Mineral Resources rollovers which occurred last year.

Mineral Resources risks foregoing a $200m milestone payment if its beleaguered Onslow haul road doesn’t hit its ore volume target by the middle of next year.

And while the company has not deviated from its official guidance for hitting its target on time in the first quarter of the 2025 financial year - and declined to make any further comment on that forecast to The Australian on Wednesday - at least one broker has cast doubt over that timeline.

Morgan Stanley Infrastructure Partners (MSIP) in September last year agreed to pay MinRes up to $1.3bn for a 49 per cent stake in the haul road which had another setback this week when a truck rolled over on Monday. Hauling was halted while WorkSafe WA conducts investigations after the sixth incident of its kind on the privately owned road.

While MinRes has been paid $1.1bn by MSIP, the last $200m payment is contingent on “the Onslow Iron haul road achieving a 35 million wet metric tonnes per annum run rate for any quarter before 30 June, 2026’’ according to a market announcement last year.

The haul road was completed in October, and since then, as the triple-trailer road trains used to haul iron ore from the mine to the port have lost control, MinRes has conceded more work is required to upgrade the standard of the road.

It is understood that the rollovers have been caused in part by instability on the soft shoulders, while the company has cited operator error as a contributing factor in previous incidents.

MinRes, having reported a net interim loss of $807m in mid-February, said it would be asphalting the entire length of the 150km road to address the safety issues.

It’s aiming for this work to be completed by September 2025, with haulage continuing during the upgrade.

Outgoing managing director Chris Ellison said in February that the resurfacing of the Onslow haul road would result in “a minuscule three million tonnes” of full-year impact to what the road would ordinarily carry.

“It’s not a big deal, trucks are running and life is still going on,’’ he said.

The company told the ASX on Wednesday the latest incident, despite shutting the haul road down for an unspecified period of time, would not affect “financial year 2025 iron volume guidance”.

The announcement released to the ASX did not specifically refer to the run rate for the haul road itself, and when asked by The Australian whether the company would hit the nameplate capacity in time to earn the $200m milestone payment, MinRes declined to comment further.

RBC Capital Research, while not referencing the milestone payment, said it had doubts that MinRes would hit its current guidance for nameplate capacity by the first quarter of the 2026 financial year.

“We have a more conservative view - second to third quarter FY26 to hit nameplate,’’ the broker wrote in a note to clients.

This estimate is safely within the nominated period for MinRes to earn the $200m payment.

RBC added that the haul road issue was a negative for MinRes as it would affect free cash flow from Onslow iron, “which is critical for the company to de-gear near-term as Onslow ramps up’’.

“While the investigations are ongoing, from the current provided information, we expect a five to seven day impact (state government agency involvement) and increased FY25 unit costs.

“It is unclear if the tipping is localised to certain parts of the haul road (which are likely to be resolved with speed limits), and/or will the upgrade resolve these issues.

“We forecast Mineral Resources to start de-gearing in the first half of FY26 as iron ore capex declines and the Onslow project ramps up.’’

MinRes said in its statement to the ASX on Wednesday that haulage on the 150km road had been temporarily paused while the company engages with WorkSafe WA.

“MinRes reported to WorkSafe WA that the rear two trailers of a road train had tipped onto their side on the haul road on 17 March 2025,’’ the company said. No injuries occurred and the incident is being investigated.

WorkSafe WA told The Australian that MinRes had been issued with a prohibition notice regarding the incident, however it would not supply the details of that notice for privacy reasons.

“WorkSafe mines safety inspectors are making enquiries into a vehicle incident that occurred on 17 March 2025 on the Mineral Resources Onslow haul road,’’ WorkSafe said in a statement.

Mineral Resources founder Chris Ellison said earlier this year the haul road problems were not a big issue.

“There have been no reported injuries. WorkSafe mines safety inspectors have taken enforcement action in relation to ore haulage on the haul road to ensure that appropriate safety controls are in place.’’

The road is designed to carry a road train every few minutes, in order to hit the 35Mtpa run rate.

In the update on the haul road released in February, MinRes said issues relating to the spray seal were worsened by flood conditions.

“Following a detailed technical review, including by third-party experts, no fatal flaws have been identified, and works include seal binder upgrades, cement stabilisation in certain sections and asphalting across the full length of the haul road.

“The company is confident these measures will ensure the haul road can withstand the unique conditions, deliver nameplate haulage capacity and significantly decrease maintenance costs over the long-term.’’

MinRes shares closed 3.9 per cent lower at $23.88 on Wednesday. The company’s shares have traded as high as $79.76 in the past 12 months.

Originally published as Mineral Resources halts traffic on its troubled Onslow haul road after sixth trucking incident