Australian Miner MinRes Stock Craters As EBITDA Drops By Half, Weather Adds To Woes

Australian mining giant Mineral Resources (MinRes) has had a rough start to the year, with its stock plunging 22.1% in a single trading day, wiping out nearly five years of stock gains. The company's adjusted EBITDA fell by a staggering 55% to roughly A$191 million, down from A$530 million in the first half of fiscal 2024. The net profit after tax went from A$530 million to a loss of A$807 million, including a post-tax impairment charge of A$352 million related to the Bald Hill lithium mine and an A$232 million foreign exchange impairment.

The company's mining services division delivered record earnings of A$379 million, up 49% from the prior year, driven by stable production volumes and contributions from the newly operational Onslow Iron Road Trust. However, iron ore shipments fell short of expectations, totaling 9.7 million wet metric tons (wmt), despite an 11% year-over-year increase. The weighted average realized price for iron ore dropped to A$83 per dry metric ton (dmt), a 25% decline compared to last year. The lithium segment struggled amid weak global demand, with shipments increasing to 261,000 dmt of spodumene concentrate, but prices plummeted to A$820 per ton from A$1,719 per ton in 1H24.

MinRes' energy business secured an A$1.1 billion transaction with Hancock Prospecting for its gas assets, providing a much-needed liquidity boost. However, the company sharply cut its iron ore shipment guidance for fiscal 2025, lowering expectations to 8.8–9.3 million tons from its previous 10.5–11.7 million tons forecast. CEO Chris Ellison blamed these reductions on extreme weather, particularly Cyclone Sean, which caused severe flooding and damaged parts of the Onslow Iron haul road. However, he expects the haulage to continue.

MinRes' stock decline comes amidst a broader market sell-off, with the S&P/ASX 200 index down 19.5% year-to-date. The company's shares are now trading at their lowest level since the Great Recession, with a price-to-earnings ratio of 15.2, compared to a five-year average of 27.5. Despite the short-term headwinds, MinRes plans significant growth across its businesses, with analysts cautiously optimistic about the company's long-term value creation potential.

In conclusion, MinRes' stock cratering is a result of a combination of factors, including weak global demand and pricing in the lithium segment, impairment charges, lower iron ore prices, and extreme weather events. While the company faces significant challenges, its diversified portfolio and strategic resource reallocation efforts may help it weather the storm and maintain a stable financial performance in the future. Investors should closely monitor MinRes' progress and assess the sustainability of these trends to make informed decisions.