Mineral Resources Faces Liquidity Focus as Losses Mount and Dividends Halted

A Challenging Half-Year for Mineral Resources

Mineral Resources Limited (ASX: MIN) revealed a stark financial downturn in its half-year results for the period ending 31 December 2024. The company reported a net loss after tax of $809 million, a dramatic reversal from the $530 million profit recorded in the previous corresponding period. This loss was primarily driven by a combination of lower revenues and substantial impairment charges, particularly linked to the Bald Hill lithium project.

Revenues from ordinary activities fell by 8.9% to $2.29 billion, reflecting the impact of softer commodity prices across the board. The iron ore division, traditionally a strong contributor, saw a 17% decline in revenue to $1.11 billion, weighed down by a 25% drop in realised iron ore prices and the transition of the Yilgarn Hub into care and maintenance.

Impairment and Operational Shifts

The company took a significant $352 million post-tax impairment charge related to the Bald Hill lithium operation, which was placed into care and maintenance in November 2024 due to the weak lithium price environment. This move underscores the challenges facing the lithium sector amid volatile market conditions. Additionally, the Yilgarn Hub also incurred impairment charges as it transitioned to care and maintenance, with management actively pursuing a potential sale of these assets.

Despite these setbacks, the Onslow Iron project emerged as a bright spot. The ramp-up of operations contributed to record earnings in the Mining Services division, with underlying EBITDA increasing 49% to $379 million. The sale of a 49% interest in the Onslow Iron haul road to Morgan Stanley Infrastructure Partners for $1.1 billion further bolstered the company’s liquidity position.

Financial Position and Dividend Suspension

Mineral Resources ended the half with $720 million in cash and cash equivalents, supplemented by $800 million in undrawn debt facilities, providing a total liquidity buffer of $1.52 billion. The company’s capital structure remains weighted towards long-tenor US dollar senior unsecured bonds, with no maturities before mid-2027, offering financial flexibility amid uncertain market conditions.

In light of the financial results and the need to preserve liquidity during the ongoing Onslow Iron development, the Board elected not to declare an interim dividend. This marks a departure from previous periods where dividends were paid, reflecting a cautious stance as the company navigates a challenging commodity cycle.

Governance and Leadership Transition

Alongside financial disclosures, Mineral Resources announced governance enhancements aimed at strengthening corporate oversight. New protocols for managing related party transactions and conflicts of interest have been introduced. The company is also progressing the appointment of a new Board Chair, expected to be announced in the June quarter, who will play a key role in selecting a successor to the current Managing Director, Chris Ellison, who is set to transition out in line with a previously outlined timeline.

Outlook Amid Market Volatility

Looking ahead, Mineral Resources remains focused on completing the Onslow Iron project, which is positioned to transform the company into a low-cost, long-life iron ore producer. The lithium division is adapting to market realities by reducing volumes and cutting costs, with benefits expected to materialise in the second half of FY25. The company’s energy division is advancing exploration joint ventures with Hancock Prospecting, aiming to de-risk and accelerate natural gas exploration in Western Australia, supporting the region’s energy transition.