Wednesday, December 8, 2021

Australia's MinRes cuts iron ore output guidance - Argus Media

Last updated Sunday, November 21, 2021 23:14 ET , Source: NewsService

Lower iron ore prices, increased discounts for low-grade ores and higher costs caused by skills shortages have prompted Australian iron ore producer Mineral Resources (MinRes) to cut its output guidance for the 2021-22 fiscal year to 30 June.

MinRes has cut its guidance for its Yilgarn operations in Western Australia (WA) to 8mn-8.5mn wet metric tonnes (wmt) from 10.5mn-11mn wmt, as it removes the high-cost Yilgarn tonnes from production. It maintained its guidance from its WA Pilbara operations at 10.5mn-11mn wmt, taking its total to 18.5mn-19.5mn wmt from 21mn-22mn wmt. The firm shipped 17.3mn wmt in 2020-21, which was just below its sales guidance of 17.4mn–18mn wmt that it had revised down from 20.5mn-23.2mn wmt in February.

Yilgarn is MinRes' lower cost mine to run at a budgeted cost of A$85-89/wmt ($61.50-64/wmt) for 2020-21 but it produces lower grade ore than the Pilbara operations, which have costs of A$99/wmt. The firm received an average realised price across both operations of $78.32/dry metric tonne (dmt) during July-September, down from $178/dmt for April-June.

Prices have fallen further since the beginning of October, putting pressure on MinRes' margins. The Yilgarn and Pilbara mines are not yet operating at a loss but could soon be, MinRes executive chairman Chris Ellison said last week. He expects to keep operating them if they become loss making on the expectation that prices will rebound as part of the price cycle.

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