‘I got it wrong’: Chris Ellison’s lithium price mea culpa as Mineral Resources reveals massive full-year loss

Mineral Resources has swung to a massive full-year loss, with the diversified miner hit by weakness in global lithium markets.

The company posted a $904 million loss for the year to June 30, it said on Thursday. That’s worse than the $819.7m deficit estimated by analyst consensus and compares with a $125 million profit the year before.

MinRes is one of a slew of lithium producers hit by writedowns, cost controls and hard choices as the world’s electric vehicle transition runs into headwinds. Prices of the battery metal hit a record in 2022 but have since collapsed by nearly 90 per cent amid a deep supply glut.

“Looking back on the last two years, I also acknowledge that we got the lithium price wrong, and our earnings and net debt levels have been greatly impacted,” managing director and founder Chris Ellison said in a separate statement Thursday.

“Our focus of late has been on cost and performance to ensure the business is set up through the cycle, and we’ve made a lot of progress.

“I’ve been in the lithium business for 16 years, but I did not foresee that we’d face prices in the $US500-600/t range again in my lifetime.

“During this tough year, the support from our shareholders and partners has been invaluable and I’m proud our people remained focused on the right things – safely delivering on our promises and exceptional performance to create lasting shareholder value.”

But Mr Ellison said despite the market volatility, the “big picture had not changed — the global shift to clean energy requires an incremental, sustained increase in lithium supply. Our approach to lithium is to optimise performance and efficiency at our world-class assets to ensure we deliver value through the cycles”.

The result comes after Mineral Resources announced an internal probe late last year into undeclared payments, which found that Mr Ellison had engaged in “profoundly disappointing” conduct. He subsequently committed to leaving the business he founded within 18 months.

Chair Malcolm Bundey said the company was still searching for Mr Ellison’s replacement.

“I appreciate that shareholders are looking for clarity on succession planning,” Mr Bundey said. “This must be a process, not an event. Chris remains integral to this process.”

The miner said it had taken a “disciplined approach” to capital investment for the current fiscal year. It’s $1.1 billion of capex will include around $500m for its Onslow Iron project.

The company sees its full year outlook for Onslow’s iron ore shipped volumes of 17.1 million tonnes to 18.8mt. The upgrade of a private haul road to the project is scheduled for completion in mid-September, while its installed capacity is set to eventually increase above 35 million tons a year, it said.

Mineral Resources did not declare a full-year dividend. Its underlying loss was $112m.