Mineral Resources Ltd (ASX:MIN) has criticised major automakers in developed countries for not speeding up the transition from traditional polluting vehicles to electric vehicles (EVs).
This criticism comes as a slowdown in EV sales has led to a significant drop in lithium prices, putting pressure on lithium producers.
“Our lazy First-World car manufacturers ... all of the leaders of those companies are making great profits out of combustion engines,” MinRes CEO Chris Ellison said. “They don’t want to invest the money and waste their profits on developing the electric vehicle.”
According to the Perth-based billionaire, the electrification trend isn’t going away any time soon and manufacturers need to get on board quicker. Ellison said global car manufacturers prefer to continue profiting from traditional vehicles rather than invest in competing with Chinese firms in the EV market.
“The world’s not going to stop demanding we get carbon out of the atmosphere,” Ellison said.
“Probably by the time we get up around late ’26, early ’27, we’re going to see a big change in the supply and demand curve.”
Ellison described the current period as the "shittiest time" for companies involved in lithium mining, saying no lithium companies are currently profitable. The downturn in price has forced the company to aggressively cut costs and forgo paying dividends to shareholders for the first time in over a decade.
Ellison highlighted that Mineral Resources is doing everything possible to conserve cash.
Australia holds some of the world's largest lithium reserves, but has seen its lithium sector impacted by declining prices, largely attributed to reduced consumer demand in China and higher interest rates globally.
Mineral Resources sees mixed FY24 results
The company announced its financial results for the fiscal year ending June 30, 2024. The company reported a revenue increase of 10% to $5,278 million, despite a 76% decrease in lithium prices.
However, underlying EBITDA fell 40% to $1,057 million, and underlying net profit after tax (NPAT) dropped 79% to $158 million. Statutory NPAT also decreased by 53% to $114 million. Operating cash flow before financing and tax increased 9% to $1,909 million, bolstered by iron ore prepayments of $600 million.
The company maintained a strong liquidity position with $2,833 million available, including $908 million in cash. Net debt rose significantly to $4,428 million. In mining services, production volumes increased by 9%, and underlying EBITDA reached a record $550 million.
Iron ore exports totalled 18.1 million wet metric tonnes, with revenues up 20% to $2,578 million.
In lithium operations, shipments rose despite lower prices, with significant contributions from Wodgina and Mt Marion.
The company also completed strategic acquisitions and restructured its MARBL joint venture. In energy, notable achievements included high flow rates from wells in the Perth Basin.
Strong business model
Overall, Ellison was pleased with this financial year’s results.
“Overall, the results highlight the strength of MinRes’ business model, with our diverse income streams all contributing to solid group earnings, despite a depressed lithium price. Our core Mining Services division increased Underlying EBITDA by 14%, driven by record production and new external contracts, with its growing infrastructure focus spearheading a new era of future growth,” Ellison said.
“The Lithium division achieved record shipments from Wodgina and Mt Marion, where we began the transition to an open pit and underground operation. During the year we also acquired a third lithium mine, Bald Hill, and expanded our strategic footprint in the Goldfields, providing low-cost optionality when lithium prices rebound.
“The Iron Ore division increased shipments by 3% and revenue grew 20%. In June we announced that, after 13 years, exports would cease from the Yilgarn Hub. This was a difficult decision to make and one we did not take lightly. We have prioritised approximately 1,000 employees in the Yilgarn for redeployment, particularly to Onslow Iron.
“The Energy division enjoyed further success in our natural gas exploration program in the Perth Basin. We continue to encourage the State Government to update the WA Domestic Gas Policy to incentivise investment, exploration and additional supply.
“Given the stubborn lithium price and our remaining investment in Onslow Iron, we will continue to take a conservative approach during FY25, deferring expansion projects and focusing on cost reduction and cash preservation. This approach was reflected by the Board’s decision to not declare a final dividend for FY24.
“Our management team has decades of experience through commodity peaks and troughs. I have full confidence in our ability to manage the balance sheet and keep delivering leading returns for our shareholders.”