Mineral Resources slumps to massive loss as woes continue

Mineral Resources has posted a massive first-half loss to compound the company’s woes as it deals with the fallout from scandals involving managing director Chris Ellison.

Mineral Resources’ Wodgina lithium project in the Pilbara Region of Western Australia.

Mineral Resources has posted a massive first-half loss to compound the company’s woes as it deals with the fallout from tax evasion and other scandals involving managing director Chris Ellison.

Perth-headquartered MinRes reported a net loss of $807m compared to net profit after tax of $530m for the same period last year, and made the stunning admission it needed to resurface with asphalt the entire length of a 150 kilometre-long iron ore haul road it only recently “finished” building.

The result included a $352m post-tax impairment on its mothballed Ball Hill lithium mine and a $232m foreign exchange hit.

MinRes also revealed it was still trying to repair the haul road it built to link stranded iron ore assets in the west Pilbara to port facilities at Onslow, and now intended to cover it with asphalt at a so far undisclosed cost.

The road was damaged by a recent cyclone in yet another setback for the company that is under investigation by the Australian Securities and Investments Commission.

The Australian revealed on February 6 that MinRes had suffered another accident involving jumbo road trains it has built to cart iron ore on the private haul road.

MinRes only finished building the haul road last year and sold a 49 per cent stake in the road to Morgan Stanley Infrastructure Partners for $1.3bn in a deal which was crucial to strengthening its balance sheet.

The company slashed full-year guidance on iron ore shipments to 8.8 million to 9.3 million tonnes, blaming cyclone activity and the damage to the haul road.

The first half results published well after market close on Tuesday reveal revenue fell 9 per cent year-on-year to $2.29bn and underlying earnings before interest, taxes, depreciation, and amortisation by 55 per cent to $302m.

MinRes plunged 6.1 per cent to $30.50 in trading on Tuesday before the release of the results.

The company has blamed high costs associated with building the Onslow Iron project and foreign exchange woes for its debt blowing out to $5.1bn at December 31.

Mr Ellison said cyclone activity and heavy rain in the Pilbara had caused flooding that damaged parts of the Onslow Iron haul road.

“We have decided to repair the damage with cement stabilisation and to resurface the haul road with asphalt, which will significantly reduce downtime and maintenance costs,” he said.

“Haulage will continue on the haul road while these works are carried out.

“I acknowledge investors’ focus on our balance sheet, which reflects a period of high construction spend at Onslow Iron. Capital expenditure peaked in the first half and Onslow Iron is now generating positive cash flow, which will enable us to accelerate efforts to deleverage the balance sheet.”

Mineral Resources managing director Chris Ellison

MinRes sold the lion’s share of its onshore oil and gas assets in WA to Gina Rinehart’s Hancock Prospecting for $1.1bn during the half.

The diversified mining contractor and iron ore and lithium producer has also been hit by weaker commodity prices.

It is also trying to sell high-cost iron ore mines in WA’s Yilgarn region and an associated rail fleet it shut down in 2024 in a move that affected about 1000 workers.

MinRes put the Bald Hill lithium mine into care and maintenance and scaled back operation at its Wodgina and Mt Marion mines. The company reported the weighted average price for sales of 6 per cent spodumene from the mines was $US820 a tonne, down from $US1719 a tonne in the first half of 2023-24.

MinRes confirmed last week that Mr Ellison had paid a $3.79m penalty imposed by the company as it investigated his behaviour and the misuse of company resources.

The company also said Mr Ellison, who remains the biggest shareholder with about 11.5 per cent of the stock, would be replaced as managing director sometime before the end of April 2026 in line with the leadership shake-up it announced last November.

Originally published as Mineral Resources slumps to massive loss as woes continue