Mineral Resources forgoes a final dividend as Chris Ellison paints a grim picture of ‘sh**tiest time’

Managing Director Chris Ellison says it’s the “sh**tiest time” to be the boss of Mineral Resources, proclaiming “no one” is making money from lithium and warned of a bigger Perth workforce cull than previously expected.

A penny-pinching MinRes is also putting expansion projects on ice and has decided not to give shareholders a final dividend for the first time in 11 years.

The tough calls come less than a month after MinRes told a big chunk of the white-collar workforce at its plush Osborne Park headquarters that their services were no longer required.

The number of job losses was at the time thought to number around 100, but Mr Ellison revealed the situation is more dire than first thought.

“We’ve moved about 140 people out of the Perth office, so there’s going to be a downturn in headcount between now and Christmas,” he told investors and analysts on Thursday morning.

“I mean, this is the sh**tiest time to be the MD of the company. You’ve got to really carve the costs out of everything you’re doing.”

There was also an ominous warning that more pain may be on the way.

“You look at every single person, we’re doing that, we’re throwing everything off the deck just to make sure we conserve cash.”

Late on Wednesday MinRes lodged its 2024 financial year accounts, outlining a net profit figure of $114 million, down from $244m for the prior period. This was despite revenue rising 10 per cent to $5.3 billion.

Margins were whacked by weaker lithium prices. Underlying earnings from lithium were $917m lower than FY2023 and Mr Ellison conceded his MinRes was losing money in the current market, but claimed everyone else is as well.

“I mean, just for the record, no one is making money in this market . . . let’s be really, really clear on that there are no lithium companies making money,” he said.

“We’re just battering down for the downturn while we feel like we’re dragging our feet along the bottom at the moment.”

Analysts estimate the huge Greenbushes lithium mine in WA’s South-West would still be profitable even if prices for spodumene concentrate fell to about $US420 a tonne, about half the current price of the commodity.

MinRes’ cash pile was reduced by $471m over the year to June 30. Its net debt has ballooned from $1.9b to $4.4b.

The cash drain was exacerbated by a $1b extra spent to develop the Onslow Iron project — which shipped first iron ore in May.

Onslow currently has a nameplate capacity of 35 million tonnes per annum but MinRes had outlined plans to step up to 50mtpa, which have now been pushed to the right.

Elsewhere on the iron ore front MinRes booked a $90m impairment on its Yilgarn hub, writing the value down to nil.

In June the company announced it would cease shipments from Yilgarn by the end of this year in a bombshell move that impacted about 900 jobs.

MinRes had already made a $311m impairment on Yilgarn in FY2023, on top of a $240m write-down for its Utah Point iron ore hub.

“Given the stubborn lithium price and our remaining investment in Onslow Iron, we will continue to take a conservative approach during FY25, deferring expansion projects and focusing on cost reduction and cash preservation,” Mr Ellison said in MinRes’ ASX announcement on Wednesday.

“This approach was reflected by the Board’s decision to not declare a final dividend for FY24.”

MinRes shareholders received a 70 cent per share dividend at the same time last year.

Despite all the gloom Mr Ellison told investors to hang in there despite the “tough market”.

“It’s nothing we need to panic about, you just need to close your eyes and go, we’re in a downturn,” he said.

“No one’s making money.”