MinRes cuts iron ore guidance

Mining boss Chris Ellison has described labour shortages in Western Australia as the worst he has ever seen after announcing plans to shut some high-cost iron ore mines.

“Right now, it’s the worst time in my career,” the Mineral Resources managing director told a media briefing today.

Despite the challenges caused by labour shortages, he continued to strongly support the McGowan government’s hardline border policy.

“We need to get up around 90 per cent [vaccination rate],” he said.

Mr Ellison suggested that the removal of interstate border restrictions would not be a panacea for WA’s labour shortages, as similar conditions existing across the country.

“When the borders open, it will be different to the last boom,” he said.

“Its going to be tough to attract people.

”We will be stuck with [shortages] for a lot of next year.”

Mr Ellison was speaking after MinRes announced a cut in its iron ore production guidance from its Yilgarn operations while also flagging a shift to magnetite production.

The diversified miner said Yilgarn production will be between 8 million tonnes and 8.5mt in the year to June 2022.

It had previously forecast production of between 10.5mt and 11mt.

In a market update at its annual general meeting today, the company said the operating environment had changed extremely quickly, with big falls in the benchmark iron ore price and wider discounts for low-grade ore.

The company plans to remove high-cost tonnage from the Yilgarn, where it operates multiple small pits.

It has also commenced a drilling program to assess potential production of high-grade magnetite ore.

Mr Ellison said the company was targeting a resource of 400mt to support annual production of 5mtpa.

The company has put a four-year timeframe on this development.

Despite the more difficult market conditions, the company is persisting with its small-scale Utah Point operation at Port Hedland.

“It’s not in the red but it’s getting close,” Mr Ellison conceded.

He acknowledged one factor in keeping Utah Point was to support staff and sub-contractors ahead of growth opportunities in future.

In this regard, the company is pressing ahead with its planned Ashburton hub, where it is aiming to export 30mtpa.

It is aiming for first ore on ship by the end of December 2023 after a two-year construction period.

The project involves development of the Bungaroo South mine, construction of a private haul road and a transhipment port near Onslow.

Mr Ellison said the project has a capital cost of $80 per tonne and an operating cost of between $30 and $35/t, which made him confident it would be profitable.

The company is also aiming to develop a new export berth at South West creek, at Port Hedland, but is waiting for government approvals.

The new berth would allow for development of the Marillana mine, with annual exports of 30mt.

MinRes anticipates a two-year approvals period followed by a three-year development period.

The company said it was well-placed to “weather the storm” as the lithium market had rebounded.

It recently announced plans to reopen its Wodgina lithium mine to take advantage of higher prices.