Mineral Resources (MIN), Australia’s prominent iron ore and lithium producer, is cutting costs as lithium prices remain weak. CEO Chris Ellison remains calm despite the financial turbulence, reflecting in a 40% drop in full-year earnings and a 79% decrease in net profit after tax to A$158 million.

MinRes, renowned as the world’s largest crushing contractor, saw a significant plunge in EBITDA for its lithium business, down by 71% to A$384 million, while margins shrank to 27%. Conversely, the mining services division reached record EBITDA of A$550 million.

Lithium Market Challenges

Ellison acknowledges the tough market conditions and projected that weak lithium prices might persist for six more months. He emphasized that maintaining the workforce is critical, thus ensuring low-cost modifications across plants to reduce unit costs. Production at the Mt Marion mine will drop to between 150,000 and 170,000 tonnes this fiscal year.

Iron Ore Outlook

Ellison labeled iron ore as “boring” yet acknowledged its substantial revenue contribution. MinRes has commissioned its Onslow Iron project, aiming for a production of 21.5-24.7Mt in FY25, an increase from 18Mt in FY24. Iron ore prices have stabilized around $100 per tonne with expectations to rise in the future.

Financial Strategy

MinRes reported significant capital expenditure of A$3.3 billion, impacted by the Onslow Iron development. With gross debt at A$5.3 billion, the company aims to defer expansion projects while focusing on conserving cash. Already 140 jobs have been cut at the Perth head office.

Ellison reassures stakeholders, highlighting the company’s proactive steps, aiming for an improved financial standing post-market downturn. “We will manage the cash flows prudently and emerge stronger,” he stated confidently.

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