Beleaguered Ellison faces MinRes shareholders
The board of under-siege Mineral Resources faced grilling in Perth over a governance scandal, amid unexpected expressions of support.
Australian diversified miner Mineral Resources reported a nearly 80% slump in its annual profit on Wednesday, hit by weaker lithium prices despite record shipment volumes.
The demand for lithium – a key raw material for electric vehicle batteries – has grown rapidly over the past decade, but oversupply from China and slowing EV adoption rates have weighed on prices.
Mineral Resources reported an underlying net profit after tax of A$158 million ($107.3 million) for the year ended June 2024, compared to a profit of A$769 million last year.
In April, the company said that lithium prices were improving but was holding off expanding production until prices make a sustained recovery.
The company produced 218,000 dry metric tonnes (dmt) of spodumene or lithium ore concentrate at the Mt Marion mine and 201,000 dmt at the Wodgina mine for the year, up 46% and 41%, respectively, from the previous year.
“Given the stubborn lithium price and our remaining investment in Onslow Iron, we will continue to take a conservative approach during FY25, deferring expansion projects and focusing on cost reduction and cash preservation,” managing director Chris Ellison said.
Group cash flow is expected to increase “significantly” into fiscal 2025 as the company’s Onslow iron ore project continues to ramp up to achieve its maximum production capacity from June 2025, Mineral Resources said.
The company sold a minority share in the project’s dedicated haul road to Morgan Stanley Infrastructure Partners for A$1.3 billion in June.
“We expect to de-leverage rapidly as Onslow Iron hits nameplate capacity and becomes cashflow positive over the next 12 months,” Ellison said.
Mineral Resources’ shares ended 3.1% lower at A$44.18 ahead of the results.
($1 = 1.4725 Australian dollars)
(By Ayushman Ojha; Editing by Sonia Cheema and Eileen Soreng)
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