....does not sound like a nice book, this Chris Ellison, he is going to run his ruler across everyone, big layoffs ahead.
....he got one observation right though- you can partially blame those lazy first world car makers for backing out of their original EV rollout plans.
....but he didn't say the other obvious: lithium's customers are mainly EV battery makers, and the Chinese EV battery makers have access to their own lithium mines.
...meanwhile, LTR's Tony Ottaviano can't even bother to pick up his 49k performance shares, rather let them lapse, either the strike price is higher than market or he sees further downside.
by Brad Thompson AFR
Mineral Resources boss Chris Ellison said it is the “s---tiest time” to run a business exposed to a prolonged downturn in lithium prices, claiming that no one in the industry was making money.
The mining billionaire laid partial blame at the feet of “lazy, first world” car makers in Europe and the US, content to profit from producing internal combustion models instead of trying to compete with rivals in China churning out electric vehicles.
Mr Ellison said MinRes would cut spending on its three lithium mines in Western Australia to a minimum in 2024-25, but would not shut them down.
The company will not pay a final dividend for the first time since 2013 as it looks to preserve cash amid the lithium rout and market unease about the viability of high-cost iron ore operations. MinRes produces lithium and iron ore and runs a mining services business.
“There’s no lithium companies making money. We’re just battening down for the downturn … we feel like we’re dragging our feet along the bottom at the moment. So we’re just going to make sure that we throw everything off the deck, as we’ve done many times,” Mr Ellison said.
“I’ve been through all of the downturns. It’s not a fun time,” he said.
“This is the s---tiest time to be the managing director of the company. You’ve got to really cut the costs out of everything you’re doing. You look at every single person.”
MinRes is shutting down high-cost iron ore operations in the Yilgarn region of WA and has said it will try to find other jobs for about 1000 workers affected by the closure.
More jobs will go as MinRes completes construction of its $3 billion Onslow Iron project, which started shipping iron ore in May, and the company is in the process of sacking about 140 workers at its head office in Perth.
MinRes will defer expansion projects and focus on cost reduction and cash preservation in 2024-25 after ending June 30 with net debt of almost $4.4 billion, up from $1.9 billion last year.
Barrenjoey analyst Glyn Lawcock said the next six months would be tough for MinRes, with the market trying to work out if it had enough liquidity to get through to a point where Onslow Iron started to make money.
“The business is still burning cash and debt levels are still increasing, so he (Mr Ellison) needs to bunker down, and then, hopefully, into the New Year the business can turn free cash flow positive,” Mr Lawcock said.
The company remains wedded to lifting production at Onslow Iron to 35 million tonnes a year in 2024-25. It is confident that the operation will be cash flow positive and boost its mining services and infrastructure division.
The MinRes share price fell 8 per cent to a near three-year low of $40.61 on Thursday. The stock has fallen 42 per cent this year.
MinRes has about $2.8 billion in liquidity factoring in funds from the sale of a stake in the Onslow Iron haul road, $900 million in cash and an undrawn loan of $800 million.
Mr Ellison said the company was concerned about the health and wellbeing of its people and now employed nine psychologists. ‘Hold them captive’
He said he did not like employees leaving the company’s head office for coffee let alone working from home, which is banned at MinRes.
“I want to hold them captive all day long. I don’t want them to walk down the road for a cup of coffee. We kind of figured out a few years ago how much that costs, wandering out around lunchtime,” he said.
MinRes provides freshly cooked meals at its head office and is moving to introduce budget-priced day care.
The company reported its full-year result after the market closed on Wednesday. Underlying net profit was down 79 per cent to $158 million. It flagged capital expenditure of $1.9 billion in 2024-25, above consensus expectations of $1.6 billion, despite the balance sheet pressures and prevailing market conditions.
Almost $800 million is set aside for more work on Onslow Iron. That figure includes work on completing the haul road linking previously stranded iron ore reserves in the west Pilbara to port.
Mr Ellison said the $1.3 billion sale of a 49 per cent stake in the haul road to Morgan Stanley Infrastructure Partners was “bulletproof” and not subject to any conditions around volumes, performance or the iron ore price.
MinRes shelved plans to boost production at Onslow Iron from 35 million tonnes to 50 million tonnes at an estimated cost of $1.3 billion.
However, Mr Ellison remained optimistic the iron ore price would remain around or slightly below $US100 a tonne despite BHP and others warning of slowing demand in China. He conceded he never expected lithium to slide below $US1000 a tonne.
