The illustrious Australian mining powerhouse, Mineral Resources (MALRF), has witnessed its worst stock market performance since the infamous Great Recession. The firm’s shares tanked by a hefty 22.1% on the Australian Stock Exchange, wiping clean nearly half a decade of stock gains. Let’s delve into the specifics of this dramatic downfall and understand the underlying reasons for it.
The Cause of the Slide
The heart of the issue lies in the drastic fall in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and a serious reduction in the company’s fiscal 2025 production guidance. Astoundingly, the company’s adjusted EBITDA dropped by a staggering 55% to approximately $191 million (A$302 million), a significant reduction from the $428.5 million (A$675 million) the year before. Yet, it doesn’t stop here.
The after-tax net profit that was once boasting an impressive A$530 million in the first half of fiscal 2024 flipped to a distressing loss of A$807 million. This downfall includes a post-tax impairment charge of A$352 million, tied to the Bald Hill lithium mine, with an additional A$232 million impairment due to foreign exchange.
A Glimmer of Hope in Mining Services
Among the company’s dreadful numbers, the Mining Services division shines as the sole beacon of hope; achieving a record EBITDA of A$379 million. This surge, up by 49% from the previous year, was driven by stable production volumes and a significant contribution from the newly operational Onslow Iron Road Trust.
Sadly, this positivity was diluted by the dips in their iron ore shipments, which came in well below expected figures, hitting 9.7 million wet metric tons (wmt). This woe is despite an 11% year-over-year increase! The average realized price for iron ore also saw a substantial dip, declining 25% from the previous year at $83 per dry metric ton (dmt).
Lithium, Chief Executive Departure, and the Road Ahead
Not all is rosy for the Australian powerhouse in the lithium segment either. Despite seeing an increase in shipments to 261,000 dmt of spodumene concentrate, concern sprouted as prices heavily plunged to $820 per ton from a ceiling of $1769 per ton last year. Consequently, the Bald Hill mine had to be placed into care and maintenance in November in response to these turbulent market conditions.
Moreover, in a surprising turn of events, the firm’s CEO, Chris Ellison, will step down by April 2026. Ellison, who is a significant figure in the mining sector and also the largest shareholder at 11.5%, was fined A$3.79 million as part of an internal investigation into his alleged misuse of company resources.
Moving forward, Mineral Resources has cut its iron ore shipment guidance for 2025, lowering expectations to 8.8–9.3 million tons from its previous 10.5–11.7 million tons forecast. According to Ellison, extreme weather—including Cyclone Sean—contributed to the reduced forecast by causing severe flooding and relationship damage.
Despite these setbacks, Mineral Resources remains bullish. The company is focusing on strengthening the balance sheet and offsetting its high-cost iron ore mines in Western Australia’s Yilgarn region to navigate this tough season.
To sum it up, while it seems the scales are currently tipped against Mineral Resources, the mining giant is determined to tackle these hurdles head-on, shore up its financial strength and emerge stronger on the other side. Here’s to hoping better days are on the horizon for this industry stalwart.
