Mining Services EBITDA Surges 49% as Onslow Iron Ramps Up Despite $807M Loss

Financial Overview Amid Challenging Market Conditions

Mineral Resources Limited (ASX: MIN) has revealed a mixed half-year performance for the six months ending December 2024, marked by a sharp decline in profitability driven primarily by a weaker pricing environment for iron ore and lithium. Revenue fell 9% to $2.29 billion, while underlying EBITDA halved to $302 million. The company reported an underlying net loss after tax of $196 million, a stark contrast to the prior year's profit, reflecting the pressure from commodity price softness and impairment charges.

Statutory net loss widened dramatically to $807 million, incorporating $352 million in post-tax impairments mainly related to the Bald Hill lithium operation and a $232 million foreign currency translation impact. Despite these setbacks, Mineral Resources maintained a robust liquidity position with $1.52 billion available, supported by significant upfront payments from strategic transactions.

Mining Services: A Bright Spot

The Mining Services division emerged as a standout performer, delivering record underlying EBITDA of $379 million, up 49% year-on-year. This growth was underpinned by stable production volumes of 136 million wet metric tonnes and the inaugural contribution from the Onslow Iron Road Trust. The division also secured new contracts and renewed existing ones, reinforcing its position as a key earnings pillar for the company.

Onslow Iron: Transformational Project Progresses

The Onslow Iron project continues to be a strategic focus, with production reaching 6.3 million tonnes and shipments at 4.6 million tonnes (100% basis). The project turned cash flow positive in November 2024, a milestone that bodes well for future deleveraging efforts. However, severe weather events, including Tropical Cyclone Sean and subsequent heavy rains, caused flooding and damage to the haul road infrastructure. Mineral Resources has committed to upgrading the haul road with cement stabilisation and asphalt resurfacing to reduce downtime and maintenance costs, with haulage operations continuing during repairs.

These weather disruptions have led to a downward revision of FY25 attributable volume guidance to 8.8–9.3 million tonnes from the previous 10.5–11.7 million tonnes, and an increase in forecast FOB costs to $60–$70 per tonne. The arrival of additional transhippers is expected to boost capacity to 35 million tonnes per annum by early FY26, positioning Onslow Iron to reach its nameplate capacity despite recent setbacks.

Lithium and Energy Divisions Respond to Market Pressures

The Lithium division faced a challenging environment with prices halving compared to the prior period, leading to the decision to place the Bald Hill operation into care and maintenance. Shipments increased by 28%, reflecting a focus on higher-quality production and cost control. The Energy division progressed a significant transaction with Hancock Prospecting, receiving $780 million in initial consideration for asset sales and forming joint ventures to accelerate natural gas exploration in key basins, underscoring the company’s commitment to energy transition fuels.

Governance and Strategic Outlook

In response to evolving corporate governance expectations, Mineral Resources announced new protocols to strengthen oversight, including related party transaction policies and whistleblower management. A new Board Chair appointment is anticipated in the June quarter, coinciding with the planned transition of the Managing Director.

Looking ahead, Mineral Resources is focused on completing Onslow Iron’s ramp-up, realising operational efficiencies in lithium, and leveraging its diversified portfolio to navigate commodity cycles. The company’s decision to suspend dividends reflects a prudent approach to balance sheet management amid ongoing capital demands.