Australia’s Mineral Resources (ASX: MIN) is slashing costs to ride out the weak lithium price but founder and chief executive Chris Ellison said the company wasn’t panicking.
The iron ore and lithium producer, which is also the world’s largest crushing contractor, posted a 40% drop in earnings and a 79% drop in underlying net profit after tax to A$158 million (US$107.4 million) for the year ended in June.
While earnings before interest, tax, depreciation and amortization (EBITDA) in the company’s mining services division rose to a record A$550 million, EBITDA for the lithium business plunged 71% to A$384 million, while margins fell from 70% to 27%.
“We’re in a tough market. We’re in one of those downturns. It’s nothing we need to panic about. You just need to close your eyes and go, ‘We’re in a downturn. No one’s making money,’” Ellison told analysts during a briefing in Sydney last week.
MinRes operates the Mt Marion mine in joint venture with China’s Ganfeng Lithium, the Wodgina mine with Albemarle (NYSE: ALB) and the more recently acquired Bald Hill mine, all in Western Australia.
In response to market conditions, MinRes will pull back production at Mt Marion to 150,000-170,000 tonnes of spodumene this financial year from 218,000 tonnes in the year that just ended.
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