If it proves successful, the road will provide MinRes with a flow of cash to service its vast debt and keep the iron ore and lithium miner afloat during weaker periods in the commodity price cycle.
Such is its importance, Ellison and the company’s new chairman Malcolm Bundey personally accompanied a 50-strong group of analysts and investors on a tour along the road on Wednesday.
“There are not too many chairmen, or even board members, who typically participate in large investor and analyst tours,” said Matthew Frydman, mining analyst at MST Financial, who was on the site visit.
Ellison was, in the words of another attendee, “less bombastic” than his usual self – perhaps not surprising given the output downgrade the previous day, and following a string of corporate governance scandals that have centred on the New Zealander.
Ellison is contending with the fallout from his involvement in an alleged offshore tax evasion scheme revealed by The Australian Financial Review, as well as a probe by the Australian Securities and Investments Commission. He remains MinRes’ largest shareholder with an 11.5 per cent stake, but has pledged to quit as managing director by mid-2026.
The corporate governance failings at MinRes have obliterated billions in shareholder value, and the balance sheet is straining under the weight of $5.8 billion of debt.
Shares take a hit
The site visit – for which attendees paid $1000 – kicked off as the miner’s shares were taking a beating from its iron ore downgrade, closing down about 5 per cent on Wednesday.
Onslow is now expected to produce as little as 7.8 million tonnes of iron ore for MinRes this financial year, down 10 per cent from its recent expectations and one-third less than the miner had initially hoped.
MinRes blamed the downgrade on its use of contractors to transport its iron ore to port – a problem itself sparked by lowered speed limits and half a dozen crashes on the road network.
Still, analysts on the tour were upbeat about the company’s progress.
“It was clearly an important day for MinRes management – the whole show was on display, from pit to port,” said Rob Stein, an analyst at Macquarie who attended the trip.
Stein noted that MinRes was keen to outline how it planned to address problems with production, specifically how it would reach its 35 million-tonne annual target. He cited overcoming constraints at the miner’s transhippers – boats that transport iron ore to larger vessels offshore – as the key to hitting or exceeding that target, rather than the road.
“Everybody was pretty impressed with what they’ve done. Even for someone like me, who has been perhaps more critical than others,” said Jonathan Sharp, a CLSA analyst who also attended. “MinRes has been over-promising and under-delivering [on its iron ore output]. But that doesn’t take away from what we saw. What they have achieved [with Onslow Iron] in 23 months is no mean feat.”
‘Generational asset’
MinRes said in a statement following the site tour that Onslow Iron is a “generational asset” for the company, “and its delivery over the past two years is a testament to the hard work and ingenuity of our people”.
After arriving in Onslow on a flight from Perth on MinRes Air – the miner’s private airline that attendees praised for its “decent legroom” – the tour group viewed the port operations before boarding buses to traverse the haul road. Along the way, they inspected some of the $230 million repair work undertaken by the company.
Attendees said that analysts and investors on the tour, which included big shareholders AustralianSuper and L1 Capital, appeared impressed by much-needed improvements to the road. The road is 49 per cent owned by Morgan Stanley Infrastructure Partners, an investment unit of the Wall Street bank. AustralianSuper and L1 declined to comment.
“It’s a formidable piece of infrastructure. The parts that have been upgraded look to be constructed as well as any other piece of highway that I’ve ever driven on. It obviously has teething issues, but any kind of innovative or large-scale, large capital project is bound to have teething issues,” said MST’s Frydman.
