Iron ore impairment weighs on MinRes profit

A revaluation of MinRes’ iron ore operations has triggered a $552 million impairment in an otherwise solid set of full-year results out of Chris Ellison’s multi-commodity miner.

Mineral Resources posted full year results for the 2023 financial year after market on Monday evening, outlining a 30 per cent fall in net profit after tax to $244 million.

The miner’s bottom line was hampered by a $552 million, non-cash impairment on its Utah Point and Yilgarn Hub assets, which was triggered on account of a re-estimation of available ore and increased operating costs across labour and transport.

Pre-tax, the write-down was estimated at $769 million.

Shipments across Yilgarn and Utah hit 17.5 million tonnes for the year in the lower end of MinRes’ 17.2mtpa to 18.8mtpa revised guidance.

Revenue lifted 40 per cent compared with last year due to strong sales in lithium and iron ore, as underlying EBITDA climbed 71 per cent to $1.8 billion. 

Managing director Chris Ellison said MinRes had delivered a strong set of results but that it had not been immune to inflationary pressures. 

“Statutory net profit after tax of $244 million was impacted by non-cash impairment charges of our Yilgarn and Utah Point iron ore assets," he said. 

“These operations continue to play a part in our transition to a lower-cost, longer-life iron ore portfolio. We are investing in exploration to maximise the value potential from the Yilgarn, while options for Utah Point are being considered as part of the South West Creek development."

Mr Ellison said his company had demonstrated agility by restructuring its lithium business earlier this year, in response to an evolving market.

The company in July abandoned plans to put $1 billion towards developing lithium chemicals plants in China, instead affirming intentions to build its own on home soil.  

MinRes said it would not invest any further in downstream investments planned with US lithium giant Albemarle.

“The expansion of the Mt Marion plant was completed and a major exploration program revealed strong underground potential, while our ownership of Wodgina will increase to 50 per cent,” Mr Ellison said.

Drilling at two prospects in the Perth Basin continued, with Mr Ellison making reaffirming previous comments regarding domestic gas policy. 

“The Energy division made another two natural gas discoveries in the Perth Basin," he said. 

"We have enough gas to help the Western Australian domestic market stay in long-term surplus, and to export to the world as LNG, but the significant capital investment required to maximise this potential is being held back by the current WA domestic gas policy."

Mr Ellison will present the results on Tuesday morning.