MinRes cuts jobs, costs amid CEO probe

Australia’s Mineral Resources (ASX: MIN), which is at the centre of a tax evasion probe involving its founder and CEO Chris Ellison, is cutting 570 jobs and slowing underground construction at its Mt Marion lithium project in Western Australia.

The layoffs disclosure was made alongside news of a A$1.1 billion sale of gas assets to mining magnate Gina Rinehart’s Hancock Prospecting, and the closure of its Yilgarn iron ore mine.

The cash-strapped iron ore and lithium producer noted the jobs have been cut over the past four months, coinciding with persistently low lithium prices.

MinRes updated the market on its ongoing cost-cutting efforts, noting it has identified around A$300 million in capital expenditures and cost savings. This includes A$180 million in savings from capital expenditures for the 2024–2025 period and A$120 million in operational cost reductions, notably within its lithium division.

“Cost savings in lithium include a reduction to operational headcount by transitioning to a two-weeks-on, one-week-off roster (from a two-weeks-on, two-weeks-off roster) at the Mt Marion and Wodgina operations,” MinRes stated.

Employees have been informed of these changes, to be implemented over the next four to six weeks.

“There is no change to the lithium FY25 production guidance or mining services FY25 volume guidance as a result of these operational changes,” the company added.

As part of these measures, workers at the two lithium mines in WA will either need to spend more time on-site or choose redundancy, as the heavily indebted company aims to reduce expenses.

MinRes shares gained 9.2% to A$39.40 apiece on Thursday in Sydney, valuing the company at A$7.7 billion. Its shares traded in a 52-week range of A$29.51 to A$79.76. 

Eyes on Ellison

MinRes has grabbed headlines in the past two weeks as its billionaire managing director, Chris Ellison, is being investigated for an alleged tax evasion scheme involving offshore companies. 

According to The Australian Financial Review (AFR), the company’s board knew about the issue and had launched a probe, but chose not to disclose any related information.

Earlier this week, and in response to the Australian stock exchange’s inquiries, MinRes said it was first informed of the allegations in June 2022, and brought in a lawyer to investigate. The company added it didn’t inform shareholders because the board “did not consider these matters to be materially price sensitive” and, therefore, did not have any obligation to inform its investors.

The Perth-based miner acknowledged that Ellison’s failure to declare income to the Australian Taxation Office (ATO) was a “serious lapse in judgment”, but noted the board still trusted his ability to manage MinRes.

The AFR reported that Ellison’s scheme involved selling equipment to MinRes at inflated prices through a vehicle registered in the British Virgin Islands, with profits distributed among former chairman Peter Wade, himself and four other founding executives of the company.