Mineral Resources Faces Haulage Constraints and Port Levy Dispute Despite Operational Progress

Corporate Governance and Financial Position

Mineral Resources Limited (ASX: MIN) continues to strengthen its corporate governance framework with the recent resignation of three non-executive directors and an advanced search for a new Board Chair, supported by Korn Ferry. This leadership transition is expected to conclude in the June quarter, with a skills assessment underway to guide future board appointments. Financially, the company maintains a robust liquidity position exceeding $1.25 billion, including over $450 million in cash and an undrawn $800 million revolving credit facility. Net debt stands at $5.4 billion, reflecting ongoing capital expenditure and working capital outflows aligned with FY25 guidance. Importantly, the company confirms compliance with all financial covenants and has no plans for an equity raise, underscoring confidence in its capital markets access.

Operational Performance: Iron Ore and Mining Services

Quarterly production volumes across mining services reached 62 million tonnes, down 6 million tonnes quarter-on-quarter, primarily due to haulage constraints and weather disruptions impacting the Yilgarn Hub and Bald Hill. Iron ore production totaled 6.0 million wet metric tonnes with shipments of 5.9 million wmt. The Onslow Iron project, a key growth asset, experienced a slight volume downgrade to 8.5-8.7 million tonnes for FY25, driven by temporary haulage speed restrictions and roadworks. Despite these challenges, Onslow Iron remained cash flow positive throughout the quarter. The haul road upgrade, a $230 million investment to future-proof operations and enable autonomous jumbo road trains, remains on schedule for completion in Q1 FY26, targeting a nameplate capacity of 35 million tonnes per annum. The commissioning of the fifth transhipper vessel in early May will further increase port handling capacity to 35Mtpa.

Lithium Segment: Production Growth and Cost Discipline

Lithium production showed positive momentum with total quarterly attributable spodumene production of 133,000 dmt and shipments of 127,000 dmt. Mt Marion’s volume guidance was increased to 185,000-200,000 dmt SC6 equivalent, reflecting improved recoveries and higher quality feed, while cost guidance remains steady. Wodgina maintained its volume and cost outlook despite cyclone-related disruptions. Realised prices for spodumene concentrate remained resilient, with a slight increase quarter-on-quarter on a SC6 basis. Cost reduction initiatives announced earlier in the year are flowing through, contributing to improved operational efficiency.

Energy Exploration and Development Progress

In the energy division, Mineral Resources advanced its Perth Basin exploration with well testing and suspension of Moriary-2 and ongoing certification processes. The Lockyer-6 well reached 4,456 metres depth and completed a four-day flow test, with analysis underway. Drilling commenced on the Dandaragan Deep-1 well as part of the MinRes-Hancock joint venture. Preparations for a seismic survey in the Carnarvon Basin are scheduled for Q4 FY25, signaling continued commitment to expanding the company’s energy portfolio.

Operational Challenges and Legal Matters

The quarter was marked by operational challenges including haulage speed restrictions on the Onslow Iron haul road due to roadworks and a road train incident that temporarily paused haulage. These constraints impacted shipments but are expected to ease following the haul road upgrade. Additionally, Mineral Resources has initiated legal proceedings against the Pilbara Port Authority over newly imposed transhipping levies at the Port of Ashburton, which the company disputes as invalid. The outcome of this dispute could have implications for port operating costs going forward.

Outlook and Strategic Focus

Looking ahead, Mineral Resources is focused on completing the haul road upgrade to unlock full operational capacity at Onslow Iron, ramping up shipments in the June quarter, and maintaining cost discipline across its lithium operations. The company’s strong liquidity and capital structure provide flexibility to navigate market conditions and invest in growth. The ongoing board renewal process and resolution of the port levy dispute will be key developments to watch as the company advances its strategic objectives.