Ladies and gentlemen, thank you for standing by and welcome to Mineral Resources Institutional Investor Call and Presentation for the full year 2021 financial results. I will shortly hand over to Chris Ellison, Managing Director of Mineral Resources. Please be advised that today's call is being recorded and the presentation contains forecasts and forward-looking information. You should carefully read the disclaimer at the back of the presentation. A copy of the presentation and a transcript of this call will be posted to Mineral Resources' website under the News section at mineralresources.com.au. At the end of the managing director's address, there is an opportunity for institutional investors, analysts, and media to verbally ask questions. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad.
If you wish to ask a question via the webcast, please type your question into the Ask a Question box. I will now hand over to Chris Ellison.
Thank you. Thanks, Rachel. Good morning, everyone. Thanks for joining us. This is the Mineral Resources full-year results. I'm Chris Ellison. I'm going to be joined by our CFO, Mark Wilson, Mark will walk you through the financial part of the business. Big year for Mineral Resources. Good results we've turned out, it's been a tough year on everyone trying to navigate and try and understand what effects this COVID virus is having on our business, it had effects on us pretty much on a daily basis. We've managed to get a landing. It has not been easy, it's been outstanding. We've had some record profits, record tons, moved a lot of dirt around, we've got some outstanding opportunities sitting in front of us over the next two to three years that we've got a challenge to be able to deliver on.
I'll talk about those a little more shortly. The safety in the business has been outstanding. The caring and the culture and the wellbeing. We've got some amazing people in our business, and we've got a lot of good people that have been around a long time. I'm going to talk a little bit about how we're caring for our planet, then we'll talk about where we've been over the last 12 months and where I'm taking the business moving forward. Some key highlights. We've invested heavily in the business in terms of our people, in terms of the culture, how we care about our people, how we look after them. We care about them around not just safety, but their mental wellbeing and their health. That's making a lot of inroads into us getting to a better place with our people.
We've had some outstanding innovations that we've developed over the last 12 months. We're able to turn those into projects. Our safety around our people has been significantly improved over the last year. Frankly, I thought we were sitting last year in terms of industry standard. I didn't think we could get better, Our team had delivered a 30% better result on that. EBITDA, we're up 148% at AUD 1.9 billion. AUD 1.5 billion cash in the bank. Mining services volumes are up, iron ore shipments are up. The lithium, it's been a tough market out there in the lithium. We've kept Mount Marion running and Mount Marion's delivered almost half a million tons of product. It's probably the only hard rock mine in the country that's been running at 100% production. On the energy front, we've increased our exploration footprint.
We're now the largest landholders in the Perth Basin, and also we've picked up a huge tract of land up in the onshore Carnarvon Basin in a joint venture. Innovation. We've had some great progress. We've delivered on the 15 million tons a year next-gen plant. It's fully operational and probably running a bit ahead of our expectations. We've developed some carbon fiber screens for our crushing and processing plants, in conjunction with Kenworth, we've delivered some 320-ton payload haul trucks. We've got five in operation and another one due shortly. Overall, it's the best year we've had to date, and that's really thanks to the dedication of an amazing team that we've got. In fact, probably the best by far management team I've had in my working career. Safety, as I said, outstanding result.
You consider that we've added over 1,500 permanent people to our payroll during these times which has been a difficult task. To bring them on board and to be able to get them to understand our culture, we've got them involved in a lot of the training we do, which is the core of our safety. Nonetheless, we did have one injury during the year. We had a crushed finger. We had an immediate response to that with all of the senior management involved. We got an evacuation. Our chairman of MinRes Health, Dr. Neale Fong, managed the case remotely. When I say remotely, I mean he was holidaying up in the Kimberley and he made sure that we got all of the right care wrapped around the young lady and we managed to save a finger and have a full recovery.
A big deal in our business, something like that happening. We've made changes across our business to make sure that we don't have a repeat of that. Our safety has been exceptional results. If you have a look at our peers, we sit at the very bottom of the curve. Wellbeing, another big focus in the business. Over the last three years, we've really looked long and hard at the culture of the business and the wellbeing of our people. We consider now not just to bring them home safely, but we want to bring them home mentally and physically strong and fit, and we want to make sure that our people understand that they are more than just employees for the business. We want them to be with us for a long time, their entire working career.
We're doing a lot of things to try and make the work environment for our people probably in the top 20% in the country. We're developing a new head office. It's going to have state-of-the-art facilities. We're going to have gym, wellness center, restaurant, cafe, and an amazing work environment where people are going to be able to work in good, peaceful areas. They can work in collaboration. They can do a whole range of things. We're going to carry that out to our mine site. New camps we develop are going to be more resort style than a camp. We're going to have bigger rooms. We're going to encourage couples to be able to work and live together on site. We're going to have Olympic-sized pools. We're putting in wellness centers, restaurants, taverns, cafes.
We're going to have, in some of the areas where we've got camps on the coast, we're going to have creches, as we are in our new head office. Look, some of the things that we've been doing, particularly around mental health, we have had a full-time psychologist on board for about a year now and making a huge difference in the business. We got 50 trained first responders through our Lifeline partnership. We've got over 700 people that have completed the mental health literacy modules. We're really starting to get a different focus in our workforce and around site around mental health. We've got a great partnership with Youth Focus. They've got a dedicated person that looks after our under 25-year-olds, and they can be in direct contact with that person.
The mental health training, we're trying to destigmatize people reaching out to get help, and we're making great inroads with that. We're growing the MinRes Health business. When we move into our new facility up in Osborne Park, we're going to be staffed with a medical facility. We're going to have a couple of doctors in it will take care of all our people medically. We've got over 40 nurses on the payroll, and we've got a physiotherapist coming on board to help around our wellness center. A lot of work we're doing around our people. The people are the core of this business, and they continue to deliver. Sustainability. We're developing our talent. We've got new apprentices that come on board. We do an intake every January. This year, we brought 14 on board. We got 63 in total in the business. We got 53 trainees.
They basically come on board at entry level. Most of them have never heard of a mine site before, let alone seen one. We try and get them into the business through dump truck operators as the easy entry for them. We get them onto site. We've got young people out there that start around AUD 90,000 a year on salary. Once they're in the business, there's a whole range of things we can do to progress them through in different career paths. That's working extremely well. Graduates, we got 14 that were brought on board recently. They range through accounting geologists, engineers, METS, environmental department, right across the business. Our contribution to society. We've put about AUD 1.3 billion spend into the WA economy over the last 12 months. We paid about AUD 700 million of our favorite thing, taxes, to our beloved governments.
We've increased our social contribution to over 70 different charities. They're generally around health, wellbeing, education, employment, family violence, a whole range of issues that we think that we have a need to contribute heavily to. Our sustainable business. We're committed to zero emissions by 2050. We think that we're going to bring that in much sooner than that. We've reduced our emissions intensity by 5% this year. We've developed a transition plan to low carbon future. We want to achieve net zero emissions. We've outlined that in our sustainability report. That'll be out in October this year. Basically, look, in the short term, we're doing everything we can to reduce the burn that we have on diesel, and we're looking to replace that with a whole range of alternate clean fuels, and we're succeeding on that on a weekly basis.
We're very heavily focused on making sure that we can clean up the workplace that we're in and make sure that we're very much aware of the fact that we want a carbon neutral world. Financial performance. Good headline numbers. Return on invested capital, almost 40% this year. It shows that we are very focused on making sure that if we're going to invest in something, we've got a minimum return we expect. We've averaged almost 37% return over the last three years. Revenue up 76%. Underlying EBITDA, good delivery on that. The cash at bank, AUD 1.5 billion. We're putting out a second-half dividend of AUD 1.75, so that's AUD 2.75 for the full year. I'll just pause on that for a minute, and I'll let Mark Wilson walk you through where we've been on that financials.
Thanks, Chris, and good morning. It's a pleasure to be here with you this morning to walk you through the FY 2021 financial results. As I've done in previous years, I'll focus my comments on the underlying performance of the business. This year, we have continued to improve our disclosure. You'll find a reconciliation of our underlying earnings to our net earnings in the segment note to our financial statements. That note reports that over the course of the year, we've generated unrealized gains of approximately AUD 230 million pre-tax on our investment book. Unrealized FX gains of about AUD 52 million, impairments of about AUD 46 million, 10 of which were taken in the second half. We've also, for the first time, provided you additional information on mining services tonnages, actual tonnages to assist. Overall, I'd characterize this as another year of strong operating performance by the business.
We're benefiting from the significant investment we've made in recent years to support the development of our mining services core capability, which runs deeply through the business. We're using that capability to leverage into new opportunities in the commodities space. Starting with the P&L, as Chris said, record profitability for us, both at an EBITDA and an NPAT level. Very strong results across the business. The only part of the business that hasn't contributed strongly to the result is the lithium commodities business. Chris touched on this in his opening remarks. The volumes out of lithium were extremely strong. We shipped 23% more year-on-year, but the pricing remained soft through the course of the year. It's really only since the end of the year that we've started to see that lithium price start to move.
In terms of volumes through the whole business, they've been consistently strong in terms of growth, whether it be in iron ore shipments, lithium shipments, mining services volumes growth of 20%, strong growth activity through the business. Mining services margins have remained stable and strong through the year. A solid performance from that segment. Commodities margins have improved as a result of stronger commodities prices. We have started to see, particularly in the second half, cost pressures emerge through the business, and we expect those cost pressures to remain with us for a short period yet. As a result of the, and following the strong financial performance through the year, the board's resolved to declare a fully franked final dividend of AUD 1.75 per share.
That takes the total payment over the course of the year to AUD 2.75, fully franked, as I said, record payment. That's about a 47% payout ratio on underlying NPAT. The next slide attempts to describe the path of the year in terms of our EBITDA performance. Yes, we have grown underlying EBITDA by AUD 1.1 billion, which is a substantial result. What this slide shows is that leaving aside the performance of the commodities prices and the associated impacts of royalties and so on, the underlying business has performed very strongly.
We've seen 18% growth year-on-year across our operations on a like-for-like basis. In terms of our cash flow, on the next slide, we've seen very strong cash performance out of our core operations this year. We've had a very strong working capital performance. It means that our operating cash has been very strong at well over AUD 1.9 billion.
We have invested heavily in the year with CapEx at AUD 745, I'll talk to that in the next slide, a bit more detail. Over the course of the year, we did make the final payment of AUD 333 million on the tax on Wodgina gain, as previously foreshadowed. Over the course of the year, we've spent over AUD 900 million on taxes and dividends. In terms of the CapEx, we did guide earlier this year to a AUD 600 number for the full year. We've come up a bit higher than that. We've had some additional mining services opportunities that we've invested in. We've also started to spend on Ashburton and on oil and gas. We've landed the year at AUD 745. Guidance next year is a little bit below that.
As Chris said, we have also invested during the year in the new head office. We see that as a critical component of the offering for the business going forward. In terms of the balance sheet, cash, as Chris said, finished at just over AUD 1.5 billion cash, despite a significant year of investment and tax payments and so on. We have seen receivables and payables grow consistent with the growth in the business. As you would expect. I think one of the really interesting things for me is that whilst we've been able to deliver substantial growth in the business, we've held our inventories pretty much there or thereabouts. The working capital position has been extremely strong against the backdrop of a business that's growing at a significant rate.
There's a fair bit of commentary on the rest of that slide, so I won't go through all those points. I will note, though, in summary, whilst the balance sheet has grown significantly over the year, it's in a very strong position to support the growth opportunities that are in front of us. Next slide takes you through a waterfall movement of net debt over the year. We finished the year net cash AUD 280 million. When you adjust the opening position for certain events that relate to prior years, such as the Wodgina tax payment, we really started the year on a net debt basis of AUD 20. Looking at a AUD 300 million movement, positive over the course of the year.
Before I hand back to Chris, I just want to take a moment to go through a few more slides, show you a little bit about the history of the performance of the business over the last five years. The last five years, we've grown earnings strongly. We've done this by broadening the offering of our mining services business, developing those capabilities further, engaging with external clients, and leveraging into new commodity opportunities for the business. We've been able to grow the business significantly over the last five years. The balance sheet size has doubled. We've done that without raising any equity, and we've been able to maintain conservative gearing on the balance sheet through that period. Consequence of that is that we have improved diversification, increased scale of operations, and business is in a far more robust position.
We're now generating more predictable cash flows and earnings through the business. In terms of our free cash flow generation, we do believe, and we've said this consistently, that return on invested capital is the right measure for us to be focusing on. This industry is capital intensive. Projects do span a number of years. It is important that we retain capital discipline. We do focus on an after-tax measure of 20% at project level. We do that with the aim of delivering at least 12% at a corporate level. That discipline, that approach, has seen us generate about AUD 1.4 billion in cumulative free cash flow over the last five years. Finally, in terms of performance since listing.
You can see on the left our return on invested capital outcomes over the 15 years since the business listed, both on an actual annual basis and on a rolling four-year basis to show the cycles. What that discipline focus on ROIC has done, it has helped us deliver significant growth in operating cash flow. Through that, even over the last 10 years, we have delivered about AUD 6 billion of free cash flow through the operations.
That has allowed us both to strengthen the balance sheet through retaining earnings, but also to pay out dividends. The dividends have grown at an average of about 29% per annum over that period. The end result of all of that is that the business is extremely well-placed, with a strong balance sheet to leverage into the significant opportunities that we have in front of us going forward. On that point, I will hand back to Chris.
Thank you.
Okay. I'll just run you through what the business has been up to over the last 12 months, then we'll get into where we're heading to over the next one to three years. Anyone that's new to the MinRes business, we have a reasonably unique business model. We started life as a mining services organization. We've had that in our DNA ever since, and we work hard to keep that. Over the years, we've grown into a range of different commodities where we've been able to do joint ventures, farm-ins, and in some cases, we've taken over businesses that have got good commodities sitting inside them. We've been able to develop them in a fairly unique way.
We can get them up and running reasonably quickly so that we make sure we catch the cycles in the market, and we can turn those projects into reasonably long-term operations. We're predominantly WA based. All of our commodities are WA based. We've got good infrastructure and supply chains up and down the coast. We're in Western Australia. By good fortune, it's one of the probably the best mining regions in the world. There's a high level of social acceptability by people that live in WA for the mining industry to be able to operate the way it does. We're very politically stable, and we've got a very savvy government that understands how WA is best positioned to generate the revenues that it does.
We're also very close to our trading partners, in particular, our biggest trading partner, China, who Western Australia very much values that relationship, and we're working hard to make sure that we can grow it. We're addressing our carbon footprint. We're looking at all different fuel types, whether it be from the sun or from batteries, and we're trying to make sure that we're up there with any new technology that comes out. We want to reduce our carbon footprint, and we're working as hard as anyone is to do that. The business is generally made up of three pillars. We've got the mining services, which is our foundation, we've got the commodities, and then we run what we call our innovation and new technology. That, over the last 20 or so years, has enabled us to be the leading crushing and mining services organization in Australia.
In fact, we rate in the world in terms of our capability and the amount of rock we crush. A good solid business. In terms of mining services, we've got a huge workforce that have been with us. Most of them have been with us for a long time, and that in itself is the culture and the reason why we're so good at what we do, is we got so many very, very good people. The iron ore, we've got three operating mines. Two in the Pilbara, one down in the Yilgarn. The lithium, we've got one up north in the Pilbara again, and JV with Albemarle from the U.S. That's a 60/40 JV with Albemarle at 60.
We call that the MARBL JV because it owns not just the Wodgina mine, but it also owns the Kemerton Hydroxide facility that's currently under construction, due for completion late this year. In terms of energy, we're the largest acreage holder in the Perth Basin. We have a huge amount of land up there. We're actually drilling our first hole. We've also got a large tract of land offshore the Carnarvon Basin up near Onslow. Innovation, as I said, we've got a lot of proprietary technology inside the business. We benefit through our crushing and processing hubs. We're in carbon fiber transport systems to make sure we've got long-term, low-cost supply chains, which is critical to get our product to the coast. We've been a market leader in mining services for over 20 years.
We've got a lot of energy in that space, and we're just getting started with that. There's some great opportunities ahead of us. The mining services performance over the last year, it's been exceptionally strong. We've grown by about 20%. It bounces around a little bit, the growth in the mining services, some halves we jump up by 30% or 40%. We seem to sit at an average of better than 20% over the last couple of decades. That's probably only gonna get better as we go forward over the next three years because we've got some incredibly good long-term mining services contracts that we've got locked away. Over the last 12 months, we've had three new contracts we've entered into. We've got five that were renewed. Our customer retention in our mining services business is always extremely high.
That's simply based on the value that we can return to our clients in terms of performance and cost. We run 26 operating plants around the country. We've got 17 open pits operating. In our construction division, we recommissioned the Carina mining iron ore hub, and we're using that to get more tonnes out of the Yilgarn. Wonmunna was designed, constructed, commissioned all in the space of five months. First ore, five months after we put the first shovel in the ground. That started at a 5-million-tonne run rate. We got 20 cranes and a couple of hundred people down at Kemerton supporting Albemarle with the construction. In the Ashburton, we're finalizing the design and trying to finalize to get all the approvals and orders so that we can get that started shortly. They've designed and constructed the Parker Range down in the Yilgarn.
That's due to come online next month. In the energy space, we've put down almost 700 km of seismic was completed, and we've got our first big drill rig on site, and we're over kilometer down in that hole at the moment. Had a bit of disruption with COVID getting people across borders, but they'll get that down over the next three or four weeks. Our energy guys are also installing a 2.1 MW solar power station up at our new Wonmunna site, and that's something that we're gonna be continuously doing right across our sites. We'll be adding that clean type energy wherever we can, which is most places. We are lucky that we've got lots and lots of sunshine in WA. MinRes Marine, which is a new part to the business, headed up by Jeff Weber. He's done an amazing job.
He's pulled together, finalized the design on a new concept of a transhipper. It's gonna be able to pick up 20,000 tons in about 5.5 meters of water, and take the ore out to Capesize carriers. We'll be able to load those. It'll in fact be our lowest cost port operation in WA once we get that into operation. Our long-term mining services, two charts in there that you'd like to see. The mining services business, as we say, it averages a bit over 20% a year. Over the last three years, it's averaged 30%. The margins are always strong. They're consistent through the cycles. They don't move around too much, regardless of commodity prices, and they've got very good, predictable long-term annuity streams. A very good part of our business.
Commodities performance, the numbers are all there to look at, costs and tonnes that we have. We had a lot of disruption with COVID, trying to move people across borders and people getting locked out. The upside of that is that our WA government has been very strong in making sure that WA is safe and all the mine sites have stayed open. We've had no mine sites in WA close through COVID, which has turned out to be a powerhouse for Australia. We come in at the bottom end of guidance, as I said, we've never been through a virus like this before, we're learning to manage it now, we're learning to live with it. Iron ore costs are up slightly due to increased costs we've got wrapped around trying to keep them to operate under these conditions.
We've got some short-term increase in our strip ratio, which will probably disappear by about the end of the calendar year. The Yilgarn Hub, we've got that bedded down well. Mine planning's running well, it's basically sitting in a steady state. We're slowly replacing all the big inland haulage fleet down there with our new 320-tonne road trains. We're pretty much running at capacity through the Esperance Port, we've got some material going back through the Kwinana Port where we used to export the Carina ore. Lithium prices are increasing out there in the market. We still see demand. It's a little bit rubbery, because there's much less product in the market than there was two and a half to three years ago, obviously, the supply-demand is moving reasonably quickly over the last sort of six or nine months.
We just got to wait and see where we head with that. If we turn too much supply on, we may end up in not a good spot. Our friends at Albemarle are very focused on where that's heading. The outlook certainly for lithium is looking extremely robust, and it's going to be a significant contributor to our business over the next decade or so to come. Mount Marion, it's been running well. Exports are up on the prior year. We've improved the yields. We've lowered the cost slightly. Marion's running well. Future direction, where the business is heading going forward. We've got lots of opportunities out there we've developed. Some of them we've been working on for a number of years, and they take time to come to fruition.
I mean, the average job in our business probably takes about three years from when we first spot it to when we can actually get it on the ground, and it can take longer, four or five years. We've always got a long pipeline of projects that we're looking at, and they're always at different stages. The core of where we're going, future opportunities in the mining services, there are a lot of opportunities with the big tier one miners that we work with. We're not just out there turning up as a mining services contractor. When we turn up, we turn up probably with the best processing and crushing equipment in the country. Certainly very innovative, low cost. We can get to site.
Without doubt, we got the best workforce in terms of safety and the culture and the way they go about things and get things done. They're very consistent at the top end of the market on production and mining and crushing, processing. Our supply chain, very similar. We've got two big supply chains that run through the Pilbara and down here in the south. There's a combination of big off-highway trucks, trains, and on-highway road trains. We are, without doubt, the biggest haulers in the world when it comes to number of trucks on the road and off-highway and tonnes moved with rubber. There's probably a couple of good opportunities we're looking at putting to bed externally.
Over the next three years, the mining services part of the business is going to be adding some next-gen crushing plants through Ashburton and later through the South West Creek Hub. They will be adding at least 145 of these big jumbo road trains in the Ashburton, and they will also be owning and operating those four tran shippers that will run around the clock. All of those guys will be delivering about 30 million tons a year of production. We can see a bit of daylight where we can squeeze that a bit beyond. South West Creek Hub, it is probably going to come to light in the next month or two. The government’s decision, they have obviously been held up on that a little bit because they have been fairly full on managing COVID and a whole range of other issues and keeping us safe state.
We expect some announcement on that not too far down the track. If we can get that moving, then the mining services business will own the life of mine gate to FOB ships. The logistics supply chain part of that'll be theirs. Some big opportunities sitting in there for the mining services. Commodities, the iron ore, we are going to put first ore on ship out of the Parker Range in September. Mount Richardson's next, the Utah Hub, Iron Valley will continue forward, but at a reduced rate. Wonmunna is ramping up from 5 to 10 million tonnes over the next few months. Lambs Creek, we think we'll have that online by about the end of next calendar year. That's our Utah Hub, and good mine planning wrapped around that. We know where we're going with it. The Ashburton Hub, 30 million tonne operation.
Incremental parts of it have already started. It's approved by the board, but subject to us landing the final approval. The port approval is due out imminently. We've got a little part of the corridor for the off-highway road to get approved. We're aiming for feet on the ground up there in about September, and we're looking for first ore coming out of there in the first half of 2023, and it'll be at the back end of that first half. A great project. South West Creek, look, it's basically awaiting the government to announce what the channel and port allocations are for the inner harbor. We're hoping to be successful on that. If we are, on both those projects, we'll be making announcements probably between now and the AGM.
The AGM will be able to give you an awful lot of color about where they're at and where they're heading. Commodities on the lithium. Look, the Mount Marion will continue as it has over the last 12 months. It'll do that again this year. Wodgina, status quo remains that we're in caretaker mode up there, and at the appropriate time, that'll start, that'll come back online. We are focused at the moment on Kemerton. We're looking to have construction on train 1 complete by the end of the year, and sufficient product coming out of that so we can get it out and let the customers test it. Train 2, as Albemarle announced last week, is about 3 months later because the labor's come off that to make sure we deliver on train 1.
Generally speaking, under the conditions that have prevailed over the last year, they've done extremely well to get that plant where it is. Our focus on lithium over the next three years from a MinRes point of view is we want to try and make sure that all our SPOD gets converted to hydroxide. We've been working on that for the last six months, and we hope to have some developments on that over the next couple of months. Innovation. Look, we've spoke about that. We've developed some great pieces of kit and equipment. I mean, generally speaking, the train shippers and the big road trains, they allow us to be able to deliver commodities that are in regions previously stranded because there's no supply chain, there's no rail, there's no ports.
They're allowing us to be able to get into regions right around the country and be able to deliver product onto a ship at a very, very low cost, which means that they'll be sustainable projects through all of the cycles. Trucks next-gen. Lots and lots of development going to happen around those over the next two and half to three years. Finally, I think we're getting towards the end. Guidance. We've give you some tons. We'll give you an understanding roughly of what the costs are. We think certainly the mining services region is going to grow. We give you a peg in the sand on the CapEx. That CapEx is probably changeable.
Obviously, when the approvals come through and we get a grounding on Ashburton, we'll be coming back to the market, and we'll give you full details around where we're heading on that and what the costs look like. That'll probably crank up our CapEx once we get moving on that, without a doubt. Closing comments. It's been a tough year in some ways, but it's been a great year for the business. I mean, the business has developed extremely well. The business is running well. We've got an amazing management team sitting in the business. It's been frustrating in some areas. The government have been really working hard to keep our safe state. Approvals are a little slower than we'd like, but they're working through that and we're getting them out slowly. Held the projects up a little bit, but not too much.
We've got a lot ahead of us. We've got contracts coming through over the next 12 months. We've got, without doubt, two major iron ore projects that we'll be starting up. This COVID and this latest wave that we've had running around the world and through the East Coast has very disrupted the business. It's going to continue to be disruptive. It disrupts our supply chain. It makes sourcing people and getting them to our projects difficult, but we're learning to live with that. Look, there's huge opportunity out there, and we'll do what we always do. We've got a very strong board. They've been very focused. We've had a few of our board members that haven't been able to get over here. From time to time, we've got one, we've got Xi Xi sitting over in Hong Kong, and she can't get into the country. Incredibly supportive.
They've been on the screen. They've helped us get through the year. The management team, led by Brownie, Paul Brown, Mike Grey, Mark, looking after the money. A whole lot of amazing people that sort of sit under them, and that's the heart and soul of this business, and that's what drives the bottom line. It's driving an incredible future. Look, thanks to all of our people in MinRes that have delivered this year. We expect to have a very successful year going forward. Finally, look, thanks also to the McGowan government, who have without doubt made this state probably the best state in the world to live in. Financially, we're robust but we're also healthy, fit, and we can get out and about, and we can still enjoy life.
That pretty much wraps up the presentation. Mark will come back up and join me. If you've got any questions, we'll do our best to give you an answer.
Thank you. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. As a courtesy to others, please limit yourself to two questions at a time. If you have further questions, you are more than welcome to rejoin the queue to ask those. Your first question comes from Jack Gabb from Bank of America. Please go ahead.
Thank you and good morning. First question is just on the services division. I think you said on your first half results call, volume growth over the next three years would be about 30% per annum, excluding Ashburton. Just curious whether that 30% growth can still stand longer term. Obviously, I've seen the guidance for this year. Thanks.
No, look, that's going to be a mixture of what we call our contracts with our tier 1 customers and also with at least one, probably two joint ventures that we'll be working through.
Okay. Is 30% realistic or not for the next couple of years?
Yep. Look, quite frankly, where we're going to land, I would say two and a half to three years moving forward, the entire MinRes business will double. That'll be in terms of long-term mining services contracts we'll have with both our external and joint venture partners and commodities. Commodities will be even stronger than that.
Perfect, thanks. My next question is just on iron ore. I guess you said that the board's approved the Ashburton project. Just clarity on the CapEx of the AUD 69 million. You'll give us the full sort of CapEx and OpEx breakdown post-receipt of the permits, I guess we're expecting that, what, in this month, essentially, because you're due to start work in September. Is that right?
Yeah. The CapEx that we've got there at the moment, that's just for incremental design, and some CapEx on a few long lead items where we're putting deposits down. We really can't get going in earnest until we get those two approvals that I mentioned, and we expect them to come through, look, in the next two to four weeks. Once that happens, the project will be a goer, and then we'll certainly be publishing the capital spend on it and the timing.
Great, thanks. Sounds like it's going to be a busy quarter. I'll pass it on.
Yeah, I think there's going to be quite a bit of news flow over the next three months coming out of us.
Thank you. Your next question is from Hayden Bairstow from Macquarie. Please go ahead.
Yeah, morning, Chris. Just a couple from me. Just on the lithium side of things, I know Albemarle said the other day their spot strategy hasn't changed either, but just interested to see any discussions with Ganfeng. Obviously, Pilbara pushing these much higher spot sales on pretty low volumes. Whether you see a potential shift in how spot spodumene is priced versus carbonate and hydroxide, and whether that would ultimately change a bit of the shift in the strategy going just pure downstream and no spot sales on spodumene. The second one on Ashburton, just keen to understand the structure of that with this Red Hill acquisition. Is that likely to be brought into the initial production scenario or are we still stick with the Bungaroo South as the base feed for the first few years? Thanks.
Well, look, firstly on the lithium, Hayden Bairstow. I think going forward, our strategy is going to be that we want to make sure that we pick up the downstreaming margins. We're really focused on making sure that we can build our own hydroxide plants, own them, and operate them. That'll be done obviously in joint venture with both our partners. We're not in a rush to open up Wodgina, and then just go sell rock into the market because it would be very short-term, and we're not really comfortable that the market can support that type of supply coming into it at the moment. What's the second question?
Ashburton.
Ashburton?
Yeah. On Bungaroo versus Red Hill.
No, look, at the moment, our focus is basically on Bungaroo South and Kumina. That's what all our planning's wrapped around. Going down the path with the Red Hill, it's simply an opportunity where obviously we want to gather as many tons in the region as we can for the long term. The offer we got on the table, it's obviously waiting on shareholder approval.
Get ahead of ourselves. We'll just wait and see what the shareholders think of our offer.
Okay, great. Thanks.
Thank you. Your next question comes from Harsh Bardia from Citi. Please go ahead.
Hi, Chris and team. Thanks for taking my question. The first one is for Mark on the balance sheet, net cash position of AUD 280. I know AUD 200 will be allocated to Red Hill acquisition. Beyond that, is there a target for net debt or is it like keeping powder dry for the development of iron ore hubs? Thanks.
If I think I've heard the question correctly is, I think the question is there a target for net debt going forward based on what we have in front of us?
Yes.
Yeah. The answer is we expect we'll move into net debt over the course of this next year off the back of the expected development of those iron ore opportunities. We haven't put a public target out in terms of what that number will get to.
Thanks. Just a clarification. FY 2022 mining services volume guidance, like 15%-20%. Does it include, or it assumes anything for Wodgina or Ashburton project?
No. There's nothing in there for those.
Okay, thanks. I'll pass it on.
Thank you. Your next question comes from Lyndon Fagan from JP Morgan. Please go ahead.
Thanks very much. Just in regards to your FY 2022 iron ore guidance, I can see that the Yilgarn is going to be 100% fine. I'm wondering whether there's any opportunity to get some lump product in the mix in FY 2022, sorry, FY 2023 and beyond. I'm wondering if you can give us a feel for Utah Point as well, noting that the lump portion has gone down there as well. The next question is just on Ashburton. I'm still struggling with the timeframe that you guys are targeting. It looks like if you're going for 2023 first half ramp up, Ashburton is going to be built in 18 months, basically. Without material CapEx approvals right now, it just feels a bit optimistic, and I'm wondering if you can share a bit more color on the timeframe that you're targeting for that project. Thanks.
Look, firstly, the Yilgarn will remain on fines. The logistics down there in the supply chain, if we run all fines, it allows us to get quite a bit more out in terms of tonnage rather than trying to run two products. When we first opened the mine, in fact, we were probably running close to four, and it was just really inhibiting our ability to be able to get them on ships, get tons on ships. Look, up north, we're sort of heading mainly in the same direction, and we're just probably stepping away from lump up there again, really around the supply chain. When we start moving lots of tons, we got limited space at the port. Then timeframe around the build on the Ashburton. I hear what you say.
I don't think anyone predicted that we were going to build and turn on Wonmunna in five months, and I'm guessing that you're struggling with Yeah, I can understand that, but that's just what we do. I mean, we're going to turn Ashburton on and probably first ore coming out around June of 2023.
Thanks very much.
Thank you. Your next question comes from Matthew Frydman from Goldman Sachs. Please go ahead.
Yeah, sure. Thanks. Morning, Chris and team. A couple of questions. Firstly, I guess the capital guidance you've given across the commodities business, AUD 140 million in growth capital for FY 2022. I'm guessing part of that's maybe the expansion of Wonmunna. You also mentioned replacing the haulage fleet at Yilgarn. Was there any other key projects you wanted to highlight in that bucket? Also sustaining capital up about AUD 70 million again across the commodities business year-on-year. Just wondering if there's any key drivers in that that you'd like to call out.
Hi, Matthew. The answer to the first question is we're also looking to open up other areas up in Utah around Lamb Creek, for example, over the next 12- 18 months. So that's a key part of the strategy going up there. We also have some spend earmarked, development spend, drilling and so on around Marillana or Ophthalmia. So that's up in that part of the world. In terms of the sustaining, what we're doing is we're actually trying to upgrade the depth and capability through the commodity business. So we are actually investing more heavily in areas like camps and so on, key infrastructure, which probably suffered from a little bit of underspend in the past. So there is a heavy component of that going forward as well.
Yeah, got it. Thanks, Mark. I guess second question on, I guess the ramp up of Kemerton and how that's going to impact the P&L this year. Just wondering when you expect to see an earnings contribution from Kemerton, and whether you could maybe give us some more color or some more detail on, I guess, how you're expecting to set realized pricing on those hydroxide sales. How you're expecting to pass through your feedstock costs. I know obviously that Albemarle in their earnings call talked about the potential for spodumene swaps at Mt Marion to, I guess, effectively feed your equity component of the feed. Just wondering if you could just give a bit of a breakdown on how that might work. When you guys expect to receive Kemerton, as a post commercial production from Albemarle.
When you expect that handover to occur and how that breakdown could occur in terms of supplying spodumene?
In terms of Kemerton, Albemarle have stated that they're targeting to have completion towards the end of the half this year, end of this calendar year. That will enable them to start to generate samples of products, samples of hydroxide that then need to go to their customer base for qualification. That process can take between three to six months. When we put our budgets together internally, we've assumed no contribution, as you can see on the guidance slide, for Kemerton over this current new financial year. There may be minor immaterial sales, but they won't contribute. In terms of the question of FEED and SPOD and swaps and where the product's coming from and where it's going to and so on, we've been consistent in our messaging for some time now that our focus is on downstreaming of the SPOD.
We see opportunity to do that, at Kemerton, but we also see opportunity to do that offshore where the capital intensity is considerably lower. We do have the ability to direct our share of the Mount Marion feed. That is something that is open to us going forward. Historically, the relationship with Ganfeng's worked well, but we're keeping our options open with respect to that feed. It may form part of other options for us, possibly overseas.
Sure. Thanks, Mark. Just quickly before I come back with more questions while we're on Kemerton. Obviously again, Albemarle talked to the cost pressures and the capital budgetary pressures they're experiencing as Chris mentioned. Can you just remind us, I guess, what your CapEx exposure is at Kemerton, if any, and what you're expecting Albemarle will capitalize versus, I guess, what they'll hand over to you? It sounds like that probably won't be till FY 2023.
We have no exposure to Albemarle's cost outcomes on Kemerton. When we did the deal some time ago, we drew the line in the sand and the cost was the cost. We have no exposure going forward.
Got it. Thanks, Mark. I'll come back with some more. Cheers.
Thanks.
Thank you. The next question is from Rahul Anand from Morgan Stanley. Please go ahead.
Hi, Chris and Mark. Thanks for the opportunity. First one is around costs, especially at the iron ore division. Just wanted to talk around Iron Valley at around AUD 100 a ton and then also Yilgarn moving up a bit. How should we think about this? Is this a new cost base for the business? Do you think this continues into the future? I guess, how should we think about the growth aspirations as well, from that perspective in terms of the operating and capital costs for Ashburton, given where the market is in terms of labor and inflation? I'll come back with a second question. Thanks.
I think, look, we're under some cost pressures with COVID, around labor and a range of other things that have come along. We've also had an awful lot of wet weather over in this side of the country over the last few months. Iron Valley's a relatively high-cost operation. It always has been, and we've always had a red flag out there with that. When we get to the Ashburton, it's a very different cost structure down there. We'll be moving more tons, but the nature of what we can do between site and those supply chain, those big road trains, they're probably, in terms of per ton kilometer, less than half our haulage costs up in the Pilbara. We won't be in the very bottom of the cost quartile, but we'll be down there.
Rahul, hi.
Thank you.
Just further to what Chris says, in relation to Utah Point and specifically Iron Valley, bear in mind that we operate that mine through a mine gate sale arrangement with the BCI. The royalties on that project have gone up significantly as the iron ore price has moved. You would expect those costs to come down as the iron ore price comes off.
That's fair. Just one follow-up to that one. In terms of the trucking solution for Ashburton, does that remain to be the choice or is there any other choice, Chris, in terms of the carbon intensity? I know you were looking at an electric solution as well previously. Any movements on that before I ask my second question, please?
Yeah. We're looking at different fuel sources to put in those trucks as everybody is. We've got the mining fleet and the trucks we've got to consider going forward. Look, there's an opportunity to be able to take the next step with them towards gas. We haven't got anything final on that. They're a low-cost solution. Even if we run trains, the trains we're running down in the south, they all run on diesel. Part of our challenge is to be able to get out of diesel, and that's something the whole industry is working extremely hard on.
Gotcha. Okay. The second question is around Wodgina. Just wanted to get an update from you on the conversion side. Obviously, Albemarle's talked about trying to find a conversion opportunity in China, by either purchasing a plant or building one. Do you have any updates? How are your conversations going there? Have you thought of timelines? Obviously, a big project, admittedly. Still, you can bring the project on in terms of three phases as well, in terms of 250 at a time. Is there an opportunity here to perhaps do that in steps and is there any update in terms of your conversation?
Look, when Albemarle are able to secure hydroxide by either one way or the other, that'll give us the timeline. It's going to take us, look, I'm going to guess, it's a good six months to be able to crank Wodgina up again to get the right people on it, the right equipment. All of the things that we need to turn that on are in short supply. We'll have ample warning on it. No, look, it's just solely dependent on whether they can, or when, not whether, but when they can bring hydroxide online in China.
Perfect. Okay. That's very helpful. Thank you. I'll pass on.
Thank you. Our next question is a written question submitted by Brad Thompson from the Australian Financial Review. He asks: Albemarle on its results call last week seemed to suggest that it might not restart Wodgina until it acquires downstream processing capacity in China. What is the MinRes understanding on a Wodgina restart, and is it dependent on Albemarle acquiring downstream capacity? Do you have workforce capacity in WA for a restart?
Yeah. On the first side, yes, it is quite clearly. Wodgina will restart once Albemarle are in a position to be able to convert the SPOD to hydroxide. Secondly, yes, we can put the workforce together again and to be able to bring Wodgina back online. A lot of the key people that were at Wodgina through the previous commissioning, are still sitting inside the business. We've got a lot of people spread over a lot of sites, so we can pull a very good crew back together again to make that work.
Further to that, Wodgina is a fantastic project. People will want to be there. It's got great facilities, and it's going to deliver a great product when it gets going.
Thank you. We will now return to phone questions. The next question is from Peter Ker from The Australian Financial Review. Please go ahead.
Hi, guys. Double teaming with Brad. Regarding Ashburton, have Baowu signaled to you that they are keen to go ahead and develop the iron ore tenements in the West Pilbara that you and they both have a mutual interest in?
Yeah, look, the answer is they are relatively keen to be able to get those developed in operation and, we've been working through. I've only just recently joined the Aquila board. We're working through a range of issues in there. I think somewhere down the track, there's no doubt they would like to get that into operation and we're working with them to try and make that happen.
I guess as we've seen it unfold this year, we viewed it as a bit of a, in some ways, a boom time play. The way you're talking today about unit costs, are we wrong to see it that way? Do you see that these West Pilbara tenements are viable through iron ore market downturn?
Absolutely. Yeah. The Ashburton project, as I said earlier, it would survive. It would make money in a downturn environment. Certainly any of the downturns I've seen over the last 15 years, it'll still contribute good cash.
Great. If I may.
Innovation that we bring both on a CapEx and an OpEx. We'll have lower capital intensity through the design and the installation of the next-gen crushing plants. The jumbo road trains that Chris has outlined earlier give us a great operating advantage. We have this great transhipping solution that also offers CapEx and OpEx benefits.
I think too, Peter, when the transshippers are running, Onslow will be our lowest cost port in WA, and that'll be the fourth port that we operate out of. Yeah, it'll be the lowest.
Great. Could I just ask you about the substantial shareholding you've taken in Venturex, the ASX listed company. Can you tell us about the strategic rationale for that and if it's about wanting to get exposure to mining services in the underground realm, is that not something MinRes could have done, I guess, just by expanding its own mining services division?
No. We like the skill sets that Bill Beament and his team will have. They probably rank them as probably the best underground miners in Australia. We just see opportunity going forward where we could possibly work together on different projects.
Beauty. Thank you.
Thank you. The next question is from Danielle Le Messurier from The West Australian. Please go ahead.
Hi. Good morning. Just on the issue of vaccines, there's obviously been a lot of discussion around businesses mandating COVID vaccines for workers following SPC making it compulsory for their workforce. Chris, will you be mandating vaccines for MinRes workers?
Look, we're going down the path at the moment of trying to secure vaccines for our workforce and for their families. Our first course of action is to try and get our entire workforce vaccinated, and then, look, we'll just have to see what happens in the environment. I don't think we want to be out there scaring our workforce off. I mean, yeah, look, our first port of call is to get them vaccinated, and our aim is to be able to secure our own vaccines and be able to run it through our COVID testing facilities that we run right around the state, and just make sure we get them all done. Look, we think we're going to be living with this thing for, who knows, the next five or 10 years.
All of our people are going to regularly need to have booster shots. I don't think we're going to come out and say that it's mandatory, that they've got to have it to go to site at this stage.
Just on that, have you had any more feedback from the federal government on your push to get involved with the rollout?
Sorry, Daniel, on the push to? Couldn't hear the end of the question.
Sorry. On the push to get involved with the vaccine rollout.
Yeah. No, that's something we're working on behind the scenes. As I just said, it's our preference to be able to go and secure our own vaccine and be able to administer that to our workforce. We are working on that behind the scenes to try and see if we can make that happen.
Thank you. Just one more quick one on skills shortages. I am sure you probably saw the McGowan government came out last week and announced an AUD 4 million advertising blitz to lure workers from interstate and New Zealand following the skills summit. Is it your opinion that these incentives will work, or are they short-sighted?
No, look, I think as long as the international borders are closed, we've just basically got that 150 or 170,000 migrants that aren't coming in the country. I think all of those things add value. I don't think there's any doubt about that. The key thing that we've got to do is we've got to be able to get fresh people into Australia. We're trying to work through that in the mining industry through the CME to see if we can get something happening around quarantine facilities. We're gonna need 30 to 40,000 people over the next two to three years in the mining industry in WA alone. We've just simply got to figure out a way of being able to safely bring people into WA.
Thanks very much for your time.
Thank you. The next question is from Nick Maclean from Surrey Asset Management. Please go ahead.
Hi, guys. A question more longer term and to you, Chris. You've built this business from scratch. Where do you see it in 10 years in terms of what you want MIN to be in 10 years?
I think probably a bigger version of what it is today. I think we'll still be a little conglomerate. We're going to own commodities. We're focused on what kind of commodities we want to own. We certainly want to keep growing our commodity business, and we want to grow the mining services. The better our balance sheet gets, the better the quality of assets. If we're lucky enough to be able to be involved in the Port Hedland harbor, for example, and we can end up with a Cape carrier berth up there, those are the sort of assets that we'd like to be adding to the business. Those supply chains where we can, where a project will support rail, we'll be adding that to our business.
Yeah, look, we've got to be focused on developing clean commodity products wherever we can and obviously, getting down to zero carbon emissions is a big part of that. That's obviously playing a big part in the commodities people choose to go and mine now and how we go about doing that. Look, I think in short, I'm happy at the way the business is. We're working hard on making sure that we've got a really high-quality environment inside our business for all of our family, our people, and trying to make sure that we've got generations of people in the business. That's equally as important to me as making sure that the people make this their home.
Yeah. I get that, Chris, for sure. You've returned great returns over the last, whatever it's been, 20 years or so. How do you keep doing that for the next 20 years?
Listen, I'm not gonna lie. I sometimes stare into the crystal ball and wonder that myself. Look, we've been able to do it, and I know that subject to the world not changing too much, I know that over the next, say, three to five years, we can at least keep that up, if not better that. We should be able to better what we've done over the last five years. If I'm thinking 5-10 years out, pass. I need a little more time to see where the world's gonna be in three years from now.
I'm not sure I believe that, Chris, okay. Let's take that.
Thank you. The next question is a written question from Heath Andrews at PAC Partners. He asks, "Can you comment on the time frame for Wonmunna to ramp 10 MT, and do you see Lambs Creek as replacing Iron Valley when it operates?"
Yeah, look, I think Wonmunna will probably hit that number around the end of the calendar year. look, yeah, I think the Lambs Creek will probably eventually take over from Iron Valley. I think our impurities at Iron Valley are getting out there a little bit and we're currently blending. At a point in time, yeah, I think that Lambs Creek and Wedge will probably take over.
Thank you. The next question is a written question from Darren Lucas from ABC News. He asks, "When you purchased the Yilgarn assets, I understand the mine life was around three years. What have you got in it through now with the introduction of Parker Range ore? Is the state government's original deal on royalty relief for the Yilgarn due to expire anytime soon?"
Let's tackle the royalty relief. That hasn't got that much longer to go, and that's for specific pits down in the Yilgarn. The Fraser Range is not one of them. Yes, we did it based on the information that was available to us. At the time, originally we thought we had about 6 million tons per annum production down there for about five years, was the original. We're currently running at, not quite double that, but we're sitting up around the 10.5 million ton run rate. That's determined by the port capacity. We think that we've probably got somewhere between seven and 10 years left down there at that rate.
Thank you. We will now return to the foreign questions. The next question is a follow-up from Lyndon Fagan from JP Morgan. Please go ahead.
Thanks for that. Just on the South West Creek berth, I was hoping to gauge your level of confidence on being awarded those. You mentioned there might be more to say in the next few months. Are you able to share what those milestones are? How many other players are in the mix to try and win that access? If you are awarded access, how ready is that project? Whether you are willing to share capital intensity, I suspect not, but I figured I'd ask. The next one is on Mount Marion. We are obviously seeing spodumene prices over AUD 1,200 in the market. What sort of lag is at Mount Marion? When should we expect those prices coming through to your revenue? Thanks.
Look, based on the way we sell Marion, we've probably got a couple of month lag on the prices. That's sort of a lead lag. It happens the other way when the prices are going down, it's about the same. It's a couple of months on that. Yeah, look, the month-on-month, the value that we get per ton down there has grown substantially. On South West Creek, look, there's not a lot I can say on that. Obviously, all of the users of the inner harbor in Port Hedland would like to increase their channel allocation. There's two things out there. There's the allocation in the channel on how many tons you're allowed to ship out the channel. They're chopped up into A and B class. D class are basically just tons that you can get through being efficient.
We can't give any indication on anything until we know, A, if we've got access to the berth or we get the right to develop them. Secondly, how much channel allocation we actually get. That could be anything from 0- 50 million tons. Once we understand the volume that we can get, we can then determine how many tons per annum are going through there and what the capital cost is to get them delivered. We've sort of got most of that figured out, but it just depends wholly and solely on what we're able to get, if anything. Our level of confidence out there, on being able to get something, is extremely high.
Originally, those berths in South West Creek were in 2008, set aside, as we all know, for junior miners so that a company like us can one day become a major. Our level of confidence is extremely high.
Thanks. If I could just squeeze another one in. On Utah Point, you've got 14 million tons that you could use there. What's the bottleneck preventing you from being at that run rate in FY 2022? Thanks.
Just the COVID virus.
Specifically around the haulage. There are challenges with haulage. You need drivers, obviously, for the trucks, and a lot of the drivers come from the eastern states. Some of the guys up there have been on long swings without seeing their families. That's the challenge. One of the many challenges that Chris was referring to when he was talking about the COVID challenges earlier.
Thanks, guys.
Thank you. Once again, to ask a question via the phone, please press star then one on your telephone keypad. To ask a question via the webcast, please type your question into the ask a question box. Your next question is a follow-up from Matthew Frydman from Goldman Sachs. Please go ahead.
Yeah, sure. Thanks for taking a few more questions. Firstly, on the mining services business. Wondering if you can just give a little bit more context on what is in the pipeline to deliver that 15%-20% growth. Just wondering, in your discussions with the majors, where are you seeing the opportunities in volume growth? Is it from crushing, is it from dirt moving? Where are they needing MinRes services? Also wondering if you can give any color around whether that growth is going to be weighted more towards internal projects or expected external wins, and whether there's any weighting to the first half or the second half, whether it's a relatively even split. Thanks.
Yeah, look, firstly, most of it will be external. What you're referring to is external. Secondly, I don't like to give too much detail around what we're looking at or who we're talking to because obviously we have competitors out in the market. My preference is to be able to let you know after we've secured it.
Okay, thanks, Chris. Then secondly, there were some questions earlier around the timing and the timeline for Ashburton and you've given us some guidance there in terms of expecting that project to be online by 2023. Clearly, there's still a big build to happen there. You talked about over 100 road trains, four transhippers, lots of kilometers of railroad to build. While you said the project might be online in 2023, just wondering if you could give us some context around how long you expect the ramp-up will be to get to that 30 million tonnes per annum. I mean, how long is it going to take for your partner to build and deliver 100 road trains to be able to get to that 30 million tonnes random number?
Yeah, look, I think that a combination of approvals and, quite right, the supply of the equipment. We're probably going to take a good solid 12 months from when we turn on to be able to get up to around the 25 million-30 million tonne run rate. There's no doubt about that. I think in the first 12 months of operation, we'll probably do somewhere around about 12 million-15 million tonnes. The second year of operation we'll probably be bringing on a bit more horsepower in terms of equipment and road trains. The second year we'll probably be up around the 30 and maybe a touch better.
Thanks, Chris. That's really helpful. Maybe just last one quickly. You've been pretty clear and consistent in terms of your spodumene conversion strategy and how you're seeing that. Just wondering, you've talked a lot on the call about, I guess, price strength in lithium and particularly spodumene. You guys have obviously got a very successful track record in terms of developing spodumene deposits. Do you see an opportunity currently to bring any new deposits online, perhaps outside of the MARBL JV? Is that something that you think MinRes could still have, I guess, an edge in? Are you not particularly interested in that, given you've already got pretty significant idle capacity?
No, look, we're out there looking at a couple of different regions. We've got some drill rigs out there at the moment looking for some more SPOD, which is away from both the MARBL and the Ganfeng JV. No, we are hunting pretty much everywhere that we think that there's an opportunity and we're very keen to get another deposit.
Okay, great. Thanks, Chris. Thanks for all the questions.
Thank you. The next question is a follow-up from Rahul Anand from Morgan Stanley. Please go ahead.
Hi, Chris and Mark. Thanks for the opportunity to ask another one. Look, I only have one question on Mount Marion. I just wanted to understand the cost trajectory there. We've obviously moved to new grades for the spodumene, and that's helped recoveries higher. I was expecting costs to be somewhat better than what they were in the second half. Could you provide some color as to how we should think about the cost performance first half versus second half and maybe even versus FY 2020 and the second half? Is there a grade drop-off, perhaps, in terms of the material you're mining from the pit? Is that one of the drivers for this cost increase, or how should we think about it?
A couple of things. Firstly, Mount Marion's run under a mining services contract. MinRes run that on behalf of the joint venture. Secondly, the dirt that we've been mining down there hasn't been yielding quite as much over the last nine or 12 months, but that's just a function of where we are in the different pits, and I think we're probably going to overcome a lot of that moving forward over the next half. I wouldn't be counting on the cost coming down a lot, but there is some opportunity out there for us to move them down a little.
Okay. Just one follow-up. In terms of the strip ratios, I would suspect we're probably around the 8.5 mark at the moment. Do you still expect them to come off to around 7.5 over time, or do you think we're going to see the strip remain high as well?
I think they're probably going to keep the strip about where it is. They work the pits where we've got stuff at depth and not so deep. They work them to try and maintain that average. I think at the moment, it's going to be the average for the next couple of years going forward.
Okay, perfect. That's very helpful. Thank you very much.
Thank you. There are no further questions at this time. I'll now hand back to Chris for closing remarks.
Okay. Well, look, thanks everyone for joining. We sort of already passed the year we're delivering now, and we're sort of head down and full on into this financial year. I mean, so far things are going well. Look, we are going to have probably an awful lot more news flow when it comes to the AGM, and we'll make sure that we can lay out fairly clearly where these projects are going. That is all approvals being in place. Look, I expect over the next couple of months, we'll get all of that bedded down. We'll save everything up for the AGM. Look, thanks to everyone. Again, thanks to all of the staff that we've got in MinRes that made this happen.
Thanks to all our shareholders, our investors, and particularly all of the moms and dads out there that bought our shares back on the float, and they're still sitting out there with them. It's really nice to see that a lot of those long-term people have got some great rewards out of what we've been able to deliver. Look, thanks everyone for joining in. We'll see you at the AGM. Thank you.