Mineral Resources to close Yilgarn iron ore leaving 1000 workers in the lurch

Mineral Resources will cease shipments from its Yilgarn iron ore hub by the end of this year in a bombshell move that will impact up to 1000 jobs, following what managing director Chris Ellison said was a “prudent but difficult” decision.

The iron ore and lithium miner announced the decision to the ASX on Wednesday, saying that continuing the Yilgarn Hub was “not financially viable beyond the end of the calendar year.”

About 1000 jobs are expected to go as a result of the decision, but the company says it has 800 vacancies that need to be filled. That leaves a shortfall of about 200 people. That figure excludes contractors to the operation, of whom there are believed to be hundreds.

Mr Ellison said the company would redeploy as “many as possible” of its own staff and would work “closely” with employers of impacted contractor staff.

“This prudent but difficult decision was not taken lightly and follows years of investment to extend the life of our operations in the Yilgarn,” he said.

“With our investment across Western Australia, we have almost 800 vacancies and will redeploy as many of our people as possible to other MinRes operations, including to our low-cost, long-life Onslow Iron project.”

Operations will be ramped down over the coming six months before being shifted to care and maintenance in early 2025. From there, MinRes will consider rehabilitating the assets or selling them up.

MinRes said the decision to close the sprawling Goldfields-located operation was based on the high costs and lengthy lead times required to get new supply going. The financial impact of the closure is expected to be revealed in its full-year results.

A raft of equipment including 28 trucks will need to be redeployed across the company’s operations.

The Yilgarn Hub is located in Western Australia’s Goldfields region and includes the Koolyanobbing, Parker Range and Carina mines.

MinRes got the all-clear to restart the Yilgarn iron ore hub in 2018 after securing an agreement with the then-McGowan government to pay no royalties on the iron ore it shipped from the Koolyanobbing, which had been making losses under previous owner Cleveland-Cliffs.

Part of the deal struck was that MinRes would ship about 6Mtpa of ore through Esperance Port for five years. Yilgarn has been operating for about six and a half years and shipped nearly 45mt, metrics Mr Ellison said “exceeded commitments”.

In a note to clients, Morgan Stanley analysts said they saw the decision as “positive” because they expected the operation to be cash-flow negative for the quarter.

“We continue to see MIN transitioning its focus to its ramping, low-cost and long-life Onslow Iron asset,” they said.

MinRes shipped first ore from Onslow last month, a new mine set to employ 1600 people at its peak pump out about 35 million tonnes of the steelmaking commodity a year.