Mineral Resources chairman Peter Wade says the iron ore company lost at least $369m in revenue in the last financial year thanks to the commodities slump.
Wade, speaking at MinRes’ 2015 Annual General Meeting on November 19, said the Pilbara iron ore miner and mining contractor had encountered a realised iron ore price of A$74 per wet metric tonne in 2014/15, down 34% on the average of A$111 per tonne realised in 2013/14.
Speaking after the meeting with Fairfax, Wade’s colleague – MinRes managing director Chris Ellison – predicted the iron ore price to stay around its current level of roughly US$50 a tonne for at least two years.
Despite the rough year, which saw MinRes’ EBITDA drop from $554m to $283m, and the tough iron ore forecast, Chairman Wade said he was pleased with how the company was travelling.
“In response to these external challenges, I am pleased to report that the company successfully achieved significant operational cost reductions and productivity improvements across both the mining services and bulk commodity business during 2015,” Wade said at the AGM.
“These achievements assisted our clients increase their mineral processing outputs and also helped to offset some of the impact of the significantly lower prices experienced by our iron ore business.”
Mineral Resources is a somewhat unusual business, in that it both mines iron ore, and offers contracting service – including crushing and processing – to other mining companies.
This level of diversification appears to have helped Mineral Resources survive relatively well through the tough market.
“One particular highlight in 2015 was the completion of the Nammuldi Below Water Table process plant for Rio Tinto,” Wade detailed.
“This 25mtpa wet front end processing plant was safely delivered for Rio under a fixed price EPC contract on time and within MRL’s original budget.”
Wade said the company was still looking to progress a number of innovative mining service initiatives in materials handling and transport.
This part of the business includes the company’s Bulk Ore Transport System (BOTS), a specially-designed iron ore railway featuring autonomous locomotives.
“BOTS comprises an elevated, relocatable below rail system with autonomous locomotives,” managing director Chris Ellison’s AGM presentation said.
“BOTS is less capital intensive than traditional heavy-haul rail … [the] low cost benefit of BOTS enables MRL to provide a mine to port or mine to existing processing/transport hubs solution to ore bodies that would otherwise be uneconomic to develop.”
In the near term, Ellison wants to set up a 400km BOTS line from Iron Valley to Port Hedland; Mineral Resources holds a profit share in the Iron Valley operation.
The line would have a capacity of 40mtpa, and Ellison also wants to build, own and operate a new bulk ore wharf or transhipping facility in Port Hedland, thus creating a full pit-to-port solution.
In the longer term, Ellison said a proof of concept at Iron Valley would allow Mineral Resources to offer the BOTS solution to others as a low-cost transport alternative to heavy haul rail or road.