Ladies and gentlemen, thank you for standing by, and welcome to Mineral Resources' Investor Call and Presentation for the Half Year twenty twenty one Financial Results. I'll shortly hand over to Chris Allison, 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.
Au. At the end of the Managing Director's address, there will be an opportunity for institutional investors, analysts and media to verbally ask questions. I will now hand over to Chris Allison.
Thank you. Thanks, everyone. Good morning. Welcome. This is the Mineral Resources half year result.
If you dialed in for that, you're in the right place. I'm Chris Ellison. I'm going to be joined by Mark Wilson, who's going to run us through the financials. We've had another fairly solid year. We've been able to follow on from our results from last year.
It's got better, solid, no surprises and probably almost predictable, but the business is operating extremely well. We've continued to manage through COVID. I mean, it's still out there in the world. I mean, it's something that we work on every day to make sure that our people are safe and well and healthy. Over the next few minutes, I'm going to tell you where we've been over the past 6 months.
I'll talk about the performance of the business. We'll have a look at where we're going over the next 3 years, where we're going to take the business, and we're going to give some guidance around production and opportunities towards the end. As I said earlier, Mark will come in and he'll walk us through the financials. And if we've got any time left at the end, we'll have some Q and A. Highlights for the year.
So far, we've survived these uncertain times. We've thrived in fact. We've done incredibly well. Revenues up 55%. Our first half EBITDA is almost equivalent to the whole of last year, and we're going to pay a dividend of $1 a share to keep our track record intact.
The mining services continues to grow at its good or if not better than its normal growth path. We're up 23% on volume, and we're up 37% on EBITDA. We're commissioning 3 plants right now, 3 crushing plants, all going well there, just over 31,000,000 tonnes of capacity. Commodities have performed incredibly well on the face of a number of challenges that that business has had to face this year. Control of costs has been a highlight.
Costs are extremely well managed. We've invested heavily in iron ore over the last few years. We're reaping the benefits of that. Production is up 38%. Lithium pricing, as we all know, is not great.
We've been in a very flat market. The Mount Marion Mine site has continued to run extremely well. Again, cost control has been another highlight and being able to pull the cost down. Probably the only spod producer out there that's running a mine at full production plus and we've been able to pull the cost down substantially. And the Kenneton hydroxide plant is progressing very well in light of the fact they've got a lot of challenges still around this COVID.
Sustainability, another outstanding result. Credit to the staff and everyone in the business and these sort of results, we've kept the LTI rate at 0, which is almost unheard of in a business like ours. The tripper is down below 3, which is our target. We're down at 2.75 mark. But while all that's been going on, we've added 800 new people to the business.
So to be able to bring them and to make sure that they've got the culture and make sure that they understand how important the well-being and safety of our people is always a challenge and to be able to bring those statistics back to the level they're at now is we'd be one of the few that's achieved that. We've put a lot more focus on our well-being of our people around mental health as well. It's another area that we're growing and I think we're seeing a lot of benefits out of that, making sure that the people know that they're cared for and their health and their state of mind is incredibly important, particularly in times like we're in now with this all of the different challenges that are getting around just in Australia with bushfires that keep coming and going and the COVID. And luckily, we had a flood to put the bushfires out, but I'm not sure what we're going to face next month. I mean, trying to keep our open pits running and trucks on the road and all that goes on has been quite challenging.
Sustainability performance again in terms of our people, new apprentice intake this year, the best we've had so far. We've got 16 were brought in, so we've got 54 in total. Incredibly important to make sure that we've got a workforce for the future. People are becoming the major focus in the mining industry and making sure that we've got good quality people that can deliver is important. Trainees and graduates, our intakes is around 72 people.
Our focus on supporting the community and issues out there. We've got 40 charities that we're supporting sitting around health, well-being, education, employment. Our spend in WA over $500,000,000 tax paid over $400,000,000 We've committed to 0 emissions by 2,050. At the latest, realistically, I think we're going to achieve it a lot sooner than that. We've developed a roadmap on how we're going to get there.
We've got some issues out there. We're yet to have technology to be able to solve, but we'll keep delivering at least twice a year on a roadmap on how we're going to progress through to achieve that result. It's easy to be able to stand here and say we're going to do it. But more importantly, it's how we're going to do it and how quickly we can get there. Stage 1 of our emissions control is simply try and eliminate diesel.
It's the worst pollutant that we have in our business. So we've been working on that over the last 4 years. We've made some good results. Our first step is to get rid of that by using solar power, wind power. We're going to use natural gas LNG.
So it's going to be a progression of being able to reduce the damage that we're doing getting right through to 0. And as I said, I think we can with the focus worldwide now, I think we're going to have better technology and better innovation to be able to bring that on a lot quicker. Financially, business remains in incredibly good shape, great balance sheet. We've got plenty of firepower. And more importantly, we've got some extremely good management around that.
So I'll pass over to Mark to let him walk you through that.
Thanks, Chris. Good morning. It's a pleasure to be here to walk you through the interim results for the group for the half. The numbers we've released this morning, I believe, reflect another strong half of operating performance across each of our businesses. I also believe they show the benefit of our commitment to reinvest for future growth.
Starting with underlying profitability, pleased to report the group has delivered record underlying profitability for the half for EBITDA of 763,000,000 and net profit after tax of 430,000,000 and those results have been achieved. They don't include unrealized gains of over $160,000,000 sitting in foreign exchange and in the value of our listed investments. Full reconciliation of that is in the appendix. Those items are non cash, I emphasize. As Chris said, the EBITDA result is broadly in line with what we delivered over the last sorry, over the previous 12 months, so a very strong result.
And it's come out of strong contributions of each of the Mining Services and Commodities businesses. As Chris said, revenue is up 55% and the underlying EBITDA is up 131% on the prior corresponding period. Depreciation and amortization, generally flat, in line with the growth of the business, effective tax rates back to 30% as we'd foreshadowed. And as Chris said, the Board has declared a fully franked dividend of $1 a share and that represents a payout ratio slightly less than half of net profit after tax. A year ago, we reported underlying EBITDA of $330,000,000 and this next chart shows the build to this current result.
You can see from it, the clear driver has been the increase in the iron ore price over that period. But the point I want to make is that this half is not just about the iron ore price. What we've seen is strong margins being maintained through the business, particularly in the Mining Services business. We've seen great cost control throughout the business. In very difficult circumstances, a lot of cost pressure starting to emerge in the business and the commodities costs generally performed extremely well.
Volumes are up across each of mining services and commodities. And if you were to exclude the impact of the iron ore price movement, the business underlying profitability is still up 25% year on year or half on half. In terms of our cash flow over the period, key impact has been working capital, a deterioration of $108,000,000 A major driver for that has been increase in trade receivables of $178,000,000 That balance started to increase towards the end of the half as volumes started to increase, shipping volumes started to increase and the iron ore price started to increase. And I would expect that balance to reduce over this coming half. Over the period towards the end of the period, we moved to respond to the federal government initiative to ensure fair payment terms for small business.
We've taken steps to implement change in our system to ensure the small businesses that supply us, they represent about 2 thirds of our suppliers paid within 30 days. Those changes won't have a material impact on our working capital position. Other drivers on cash flow through the period have been CapEx, which I'll talk about shortly and tax. At the end of the period, we paid $322,000,000 to the tax office for the final payment on Wodgina profit, making the total payments paid in respect to the tax payments paid in respect to that transaction just over $410,000,000 In terms of capital expenditure, the typical sort of sustaining CapEx spend on deferred strip and the commodities business continuing to invest in the support and growth of that business. In terms of growth aspects of CapEx, the major item in the commodities number there is the Wan Mana expansion Wan Mana investment, sorry, and delivery.
We've previously advised the market we expect to spend about 126,000,000 on that investment. You're starting to see that come through this half. On the mining services spend, that represents investment in growth, investment in opportunities, which will deliver higher production over coming periods. We're also investing this half. We previously advised that we've made an office acquisition.
We're investing again to support the growth of the business with supporting infrastructure as well. As a result of these changes over the half, we've increased our capital expenditure forecast for the year, our guidance to $600,000,000 Details are in the appendix. The major driver of that increase is 1 Mana. The balance represents increased investment in our Mining Services business. In terms of the balance sheet, I think the notes there are pretty self explanatory.
The key point I want to emphasize is we finished the period with over $1,100,000,000 in cash, a very strong performance. The following slide shows the movement in our net debt position over the half. We've taken the net cash position at the start, made a few adjustments, including for the Wodgina tax payment to get to a pro form a balance at 30 June of minus 8,000,000 in terms of net debt. You can see there that we finished the period at a net debt position of £75,000,000 so a small increase in the net debt over more than explained by the increase in trade receivables of £178,000,000 in the period. Before I hand back to Chris, I just want to take a couple of minutes to reflect on some of the financial aspects of the business over the last 4, 4.5 years.
Over that period, we've worked hard to grow our core mining services capabilities. We've broadened the offering. We're offering a broader range of infrastructure solutions to the mining industry throughout Australia. We've leveraged that capability, that deep capability into growing our commodities business and that commodities business is, as Chris said, performing extremely well. We've made these changes, this growth without increasing our equity base, issuing fresh equity.
We've maintained our gearing levels at conservative levels. The result of those changes has seen increased diversification of our business, greater production, greater production capacity, increased revenue and more reliable, more predictable earnings and cash streams. How do we do that? We do that by taking our capital base and ensuring we invest it prudently. We target returns of at least 20% after tax return on invested capital basis when we're evaluating our investment decisions.
We take conservative view in terms of the commodity price needed to make a project stack up. Over the last 4.5 years, we've accumulated $0.75 billion worth of free operating cash flow as a result. The group has an extremely bright future. We're well placed financially to ensure that we deliver on the opportunities in front of that. With that, I'd like to hand back to Chris.
Thanks.
Thanks, Mark. Operationally, let me just talk a little bit about the business. Anyone that's new to the business, I'll tell you a little bit about what MINRes is. We are a very unique organization on a world standard. We have a unique group of people, about 4,000 people in the business and without doubt the leaders of each of the divisions and parts of our business collectively the best group of people I've ever had the pleasure of working with in my career.
They've been around a while. I mean, they're incredibly good at what they do and they're the people who have created this business. We have hydrate mineral resources probably at the top of the mining services in Australia, possibly in the world because I think Australia is probably the best in the world at mining and commodities and all of the things that we do. So we're a West Australian headquartered business. We got about 4,000 people in our business full time.
We're headquartered in Perth, and most of our operations are in Western Australia, which is arguably possibly one of the best mining regions in the world. We've got a high social acceptability in WA for mining, but we're very good at it. We protect our land. We're very environmentally conscious, the mining industry right across Australia. And I think what we leave behind is without doubt probably the best in the world.
We have 4 pillars in the MINRes business. I mean they're basically our mining services, iron ore, our lithium and energy and innovation. The mining services part of the business is where we started. It's the heartbeat of MINRes, foundation of the group and it's that engine room that gives us the culture and the drive and that can do where we can make anything happen in a fairly short period of time, but we can do it extremely well. We can engineer everything in house.
We can construct it. We can own it. We can operate it. We can fund it. And we have incredible core competencies to achieve all of those parts.
The iron ore business, we got 3 operating mines, 2 in the Pilbara, 1 out in the Yilgarn. The Yilgarn Mine has been around probably for about 18 months now. We took it over and it was a forgotten child and we've rehabbed that. I'll talk a bit about that a bit more later. We're probably in the top 5 iron ore miners in Australia.
In the lithium business, we're probably in the top 5 producers in the world. I mean, our lithium business is very strong and robust. It's just the price of lithium isn't great at the moment. But I think given another couple of years, it's going to be a fairly significant contributor to the business. So we've got Mount Marion, a joint venture with Gangfang from China, a very, very good partner, very competent.
It's been a very successful operation. The Marble joint venture, again, another world class partner in Albemarle. It's a forty-sixty joint venture with us having the 40. And we're currently building and getting ready to start commissioning a fairly major hydroxide plant down in Kemerton. That's getting very close to the first train going into commissioning phase.
Energy and innovation, we got a large land holding in the Perth Basin. The land is highly prospective. We've done a lot of work on it. We expect in the next couple of years to own and operate our own gas up there and be able to use that going forward to be able to reduce our carbon footprint. That'll be part of our journey.
And the multiple innovation projects we have, particularly around green energy and carbon fiber, transport systems, we've been incredibly innovative on how we can move dirt from mine site to the coast. And then we're working on the trans shipping, which I'll talk a bit more about when we get to Ashburton. So in our mining services business over the last 6 months, again, I mean, it's a carbon copy of the previous 6 months, performed extremely well, very competitive in the market, very strong on delivery to our clients. Volumes are up 23%. EBITDA, as I said earlier, up 37%.
We've had 2 new contracts during the period, and we've had 2 contracts renewed. So our customer retention remains at the very top end of the chart. So again, the people at our Mining Services business customers and very focused on making sure we do as we say. We're operating 23 crushing plants around the country. As I said, we've got contract mining.
We've got 19 open pits. Construction division, We generally run a fair number of people in there. We've had a lot of people in that division that have been with us 10 to 20 years, incredibly good at being able to deliver major projects on time and they generally bring them in on budget or a bit better and they've been like that for more than a decade. But just one very large core group of people and equipment that it's run incredibly well. We've built the Wan Mana mine site.
We acquired that in about September and we're turning that on as we speak now. Karina, we've recommissioned that mine. So we've got more iron ore going out of Karina and some of that's going up to Kwinana. We've just started loading out through Kwinana again. Again, as I said on the energy, we got exploration activities to progress well and we're preparing to sink a well up in the Perth Basin and the landowner negotiations are going extremely well.
So that's almost ready to go. It's just a matter of getting a hold of the drill rig. We're in line to get that sometime later this year. The long term on the mining services business, it generally grows at about 20% per annum. I know I say that every time I stand up here and it always does better than that.
I said probably 18 months ago to double over the next 3 years. I think it's close to getting there now. Our margins have always been very healthy inside that business mainly because we are innovative in being able to deliver high quality equipment. We're able to manage and operate that, control the costs and be consistent on putting the tonnes on the ground. Business provides very predictable cash flows and that business has got very, very long annuity streams.
So very easy to be able to understand where you're going to be at 5 or 10 years with that financially. And looking ahead, substantial growth opportunities. Commodities, we've provided what we think we're going to deliver in terms of tonnes, Costs revenue, again, the cost control, as I said earlier, has been again very good, incredibly good. I mean, it's been some tough times in there. We've had some challenges, as I said, down in the Yilgarn Hub.
We took over a mine that was extremely run down, way behind the 8 ball in terms of approvals, no mine planning in place. All the infrastructure was very tight, but we've been working hard on that and the team have fixed that up almost. We've got a bit more work to be done down there, but they've got it in incredibly good shape. We've got a pretty good mine plan down there. We're working that out to a 10 year plan.
We'll get there. We've had dewatering issues in the deception pit. We've overcome those. We finally got approval for that. So all of these things are going to help us to be able to better manage the quality of the blend coming out of there over the next 6 months.
As I said earlier, we're shipping out of Esperance and Kwinana. We've got Esperance pretty much choked. And as we get better and better each quarter, this financial year gets better in terms of volume and the better the volume again, the better the cost control. Utah Point Hub, again solid performance. That's mainly the dirt coming out of Iron Valley.
The lithium, we're seeing an increase in demand finally. We're starting to feel the prices are starting to lift out there. I mean, it's going to be gradual over the next sort of 6 months. But as I said, I think 2 years down the track, our lithium business is going to be a very strong performer. It's going to add a significant value to MinRes.
Now Marion, we have one shipment that was deferred from quarter 2 to quarter 3, otherwise everything went fairly normal down there. Production up 36%, exports were up 8%, and our costs 15% lower than the previous. So trending in the right direction again with Mount Marion. The Kemerton, the construction is going extremely well down there. The Albemarle team have done a great job.
They got about 12 50 people on-site. We've got probably 20 of our cranes down there, helping them. We've got, one of our core construction teams down there also just making sure that we help them wherever that we can to get that delivered. But around April for Train 1 October for Train 2 at this stage, all things going well. So it's sort of what we've done over the last 6 months.
It doesn't sound like a lot, but it kind of keeps us pretty busy here every day. I mean, we're all sort of here in the business every day. We're focused with running an essential service. We've been able to keep our core operational people in the office during the recent lockdown, but we're well versed on how to manage that and how to make sure that we got the right social distancing. Great credit to our people.
We had probably the largest COVID gold testing facility up and running within 24 hours of a case coming live. We have got probably the 2 largest testing stations in Wai. We opened that up to the government, to the public, so that we could help wherever we could with that. And we're still testing our people to make sure that every one of them goes to sites pre the virus. So growth strategy going forward is probably the part you'd like to try and glean as much out of as you can and we'll tell you as much as we can.
So our 4 pillars of the business is obviously where our focus is. We're going to continue to build the crushing business with the normal external work that we do out there. It's a good own operate model. It's got high quality equipment. We've got great innovation and that keeps us pretty much ahead of the competition.
We've got a balance sheet now that allows us to be able to take advantage of good opportunities when they come along. So the sort of things we're looking for going forward, just as a summary in the Mining Services business, we're looking at build own operate of our own ports. We've got a couple of them that we're looking at. We want to have privately owned transport systems. Again, we're looking at 2 of them up in the Pilbara.
We want to continue to identify joint venture opportunities with high quality complementary partners that we've been doing through the last decade and we've been very successful at that. That's something we want to carry forward. And in those joint ventures, we're able to be able to provide them security in terms of how they operate with our skills that we have here with the local guys on the ground, but we will be looking at securing more of those mining services contracts, life of mine type contracts in those joint ventures. In the iron ore business, we're going to extend the Yieldon and the Utah hubs. We're going to get a good mine plan around them for the next decade out to make that a lot easier to manage.
We're going to establish the Ashburton hub. We're going to develop a Cape Carrier capacity shipping through Port Hedland to support our Pilbara Hub. In the lithium, we're going to look over the next 2 to 3 years of being able to build out a lot of hydroxide capacity so that we simply stop selling spod. We want to be able to convert all the spod that we produce into hydroxide, and then we want to be able to deliver that out to the battery makers and we want to do that obviously with our partners. And the clean energy and the innovation side, we're going to we aim to own our own natural gas.
That's a key part of our strategy going forward. And then on all of our major projects, we're looking at solar, wind and any new developments that we can make work to eliminate firstly the diesel. So just a little more detail around where we're going on the mining services. As I said, that unique skill set, the innovative equipment that we create, develops the opportunities and we do that in multiple ways. We do that directly with our good clients that we've been out there working with for the last 10, 15 years and longer.
And then we also take advantage of opportunities where there's stranded deposits and commodities that are out there that we can use our skill sets, our equipment and be able to deliver that to value somewhere. We can get it to a port, get it to customers that want to buy those products and we do that sometimes on our own, sometimes we do it in joint venture or partnership with other organizations. We've got the balance sheet to be able to do that. We're looking at the moment on projects where we can set ourselves for 30 to 50 years and we want A grade infrastructure and resources to do that. So we've identified how we're going to do that.
So we're going in the mining services. We want to own and operate those ports, haul roads. We're looking at 4 to 5 major crushing hubs that we're going to develop over the next 3 years. And we're going to establish a trans shipping business and we aim to commence with about 4,200,000 tonneres that we've been able to design and develop not just in house but with some of the experts from around the world and North America and in Europe. So we're close to having a lot of that ready to go into construction phase.
We are always subject to approval. So we're working through a whole range of approvals you can imagine and through the mining, the haul roads, the miscellaneous licenses, getting the approvals with the ports and where we're going to put all the storage, all those things is intense. Our teams have been working on that now for close on a year, and we're getting very close to being in a position where we can make some sort of solid announcement. We'll keep you abreast of that. We're looking to develop, as I said, Southwest Creek and Port Hedland.
That was set aside by the government in 2,008 and it was to be used by emerging mining companies, juniors they call them. Junior miners are generally those companies that have got a balance sheet, but they don't own a rail and port system like the big guys. That would be us. Mineral Resources is probably the only emerging iron ore miner with the financial capability being able to develop those bests. And we're waiting on ministerial sign off and we anticipate the decision will be made sometime shortly after the election.
So growth strategy in iron ore, the hubs for our existing operations both in Utah and Ullghorn. The Utah hub, we're about to bring on the Wan Mana mine. So we were approached back in about September last year and we had it done by the end of September. We've started building fairly quickly on that. So a 4 month time frame, I mean, that's testimony to our people on how they deliver.
I mean, who does that in 4 months? I mean, we're going to be first ore coming out of there in the next couple of weeks. And we'll be at a 5,000,000 tonne run rate and we'll probably grow that. So incredibly innovative of our people. So crushing plants up there, mining equipment, camps, approvals, and we've had all of the government agencies join with us to make sure that that happened in the way it has.
Lamb's Creek, it's going to be construction ready by about second half of next year and Wedge, it'll be construction ready about 12 months down the track. Ashburton Hub, we're going to develop the Kymina and the Bangaroo South. We're finalizing the approvals in there now and there's I think there's over 200 approvals we've got to get for that project. A lot of them are in hand. We certainly have a good partnership going with the government agencies to make sure that they help us get that all the way through to operation.
We anticipate being ready to start construction about mid this year. It's about a 2 year build. It entails about a 25,000,000 to 30,000,000 tonne a year run rate. It'll be on road transport, but we've developed these very large trucks that can move about 3 30 tonne payload at a time. So our cost on transporting that ore from mine site to coast is probably in the order of about a third per tonne kilometer is what it is with the Iron Valley operation.
So fairly innovative again. We got they're the largest off highway road trains in the world. And then we're going to go to the trans shipping operation out of the Ashburton port. So we hope that we're going to start construction on those trans shippers probably before June. But again, once we've got all that wrapped up and it's approved to go ahead by our board, we'll come out with an announcement.
And again, Southwest Creek, as I said, that's simply waiting on us to get approval to build the best space we need in Southwest Creek and Marillana is basically construction ready. So we'll be turning our attention to both of those probably simultaneously. Growth and strategy on the lithium business, we'll simply continue where we are at Mount Marion. We'll continue with the focus on reducing costs. Production is probably where it's going to sit for the foreseeable future.
Wodgina remains on care and maintenance. Kemerton by the end of this year, we're going to have those 2 trains running. And once they get up and running, there's a period of time they've got to operate to produce what they call Panasonic grade, which is probably about 6 months. But you can see that that's going to be a high quality plant we've got based here in Western Australia, good for WA and good for Minnesh. We're committed to lithium long term.
We're certainly looking to invest a lot in the next 18 months to 2.5 years in terms of hydroxide. So hopefully, we'll be able to achieve all of those things. There's a lot there on our plate, they're all real and they're sitting there and we're pretty much ready to go on most of them. So guidance, we've got substantial opportunities. I'll just give you a taste of what they look like, both with existing customers, joint venture partners and new opportunities over the next 2.5 to 3 years.
I think 3 years down the track from now the MINRes business in terms of tonnes and in terms of revenue and bottom line will be at least double where we're sitting at the moment. So we've got some work to do. Commodities, obviously a key focus on being able to develop the business going forward. We've given you tons and we've shown you what we think the costs are back further. So you'll be able to kind of figure out where we're going on that.
Iron ore production going forward for this quarter and the next quarter are going to be always more than the previous. I don't know why that is. Our second half production is always higher than the first. Our second half results always seem to be higher than the first. I don't know why it is.
There's no reason that it just happens that way, but it's going to happen again this year in the same way. Lithium production, look, it's going to remain stable. And I think around the mining services, just to give you a bit of a color on that, I expect that probably about 30% growth per annum over the next 3 years year on year. That does not include what we would do with Ashburton and South West Creek. So with Ashburton, we would probably have a mining services arrangement sitting in there where we do the crushing, the road haulage and the trans shipping.
That's all using proprietary MinRes innovation and that's not something that we let outside of the business, so we control that. So there'll be mining services coming out of there probably. That's a substantial life of mine contract, probably 30 years plus. And then we'll be sitting in a similar position where we'll deliver the iron ore road transport and port facilities for the Marilana operation again that will be a life of mine mining services contract. So a lot of growth sitting inside there.
So we'll see if we can make all that work, but I think we will. And then look, just to wrap it up, closing comments. I want to acknowledge Mark McGowan and his team. I mean, they've been pretty amazing in managing us through this COVID. I think we caught a bit of criticism from the East Coast.
But just to understand this, I mean we've all had our freedom for all but one week most of the way through the COVID virus. Most importantly, we've been able to keep our minds running, our business running. And the best part of that is we keep all our people employed. They all remained on the same pay, and everyone's been able to get through this unscathed. I have no doubt we're probably in place on the best region in the world for lifestyle right here right now.
So well done to Mark and his team and also the support that we've been getting out of the government agencies and being able to get the projects going. They're very focused on trying improve the timing on getting these approvals done and work a lot closer with industry to make sure we've got plenty of jobs going forward for our people. I want to thank our Board. They've been incredibly supportive. A lot of them have been operating remotely, but keeping their finger on the pulse and making sure that we've got the support we need and all the right controls are in place.
Also welcome to Susie Collett, a great addition to our Board, very savvy lady, understands what's going on under the earth and she understands what's happening commercially in the business. So a great skill set that she's brought on to our board and she's going to be very invaluable to us going forward. So welcome Susie and thanks for joining us. Huge thanks of course mostly to the MINRes team for the management that support me for the effort you guys put in and for putting up with me. I don't think I'm, according to my wife, the easiest person to put up with.
But thanks, guys, for being there, and thanks to everyone out on the sites for the effort you put in, particularly over the last 12 months. It's been nothing short of outstanding. My team, Paul Brown, Mike Gray, Mark Wilson, the guys that helped me make this work, to all of you that have believed in the MINRes business so far, thanks for that. We've got miles to travel. A lot of opportunity ahead of us, particularly around the mining services and the commodities.
We're going to continue to deliver to our clients. We're going to put safety and well-being of our people in front of everything we do. And most importantly, we're going to make sure that our customers, the people we work with, everyone that we deal with, we're going to do it with respect and with dignity. I mean, most important for the culture that we have in MINRes. It's one of those things that is getting stronger and it glues us together.
And I want to just to last mention, I want to say we want to keep doing the things that we've done around the traditional land owners for the last 25 years. We want to make sure that we continue to engage with them. We're looking at better ways of doing that. We're looking at better ways of bringing more of the traditional land owners inside our business. We're putting a lot more effort on that.
We're going to understand what they require and we're going to make sure that commitments that we've made to them we will always continue to deliver. And we're certainly going to always acknowledge them as custodians of this land that we live on and we operate on. So with the utmost respect for all people that we deal with regardless of who they are as core fabric and MinRes. So with that, we're done. Thanks.
And if there's any questions out there, glad to see if we can answer them. Mark, you're going to join me?
Thank
Your first question comes from Hayden Bairstow with Macquarie.
Just wanted a couple of things on iron ore first. So just to get an understanding of sort of timing on what you're thinking with Bangaru and sort of how that might play out terms of the second half? Or is it literally just going to be an FY 'twenty two story in terms of real spend on that project? And just secondly, on Luthio in Mount Marion, sort of cost performance really impressive. Have you sort of advanced any thoughts on going downstream in that JV with Ganfeng and the discussions with Albemarle, obviously, with Kemerton finishing.
Are we expecting Wodgina to be turned on sort of the day Kemerton gets commissioned? Or are you going to give yourself a bit of a head start ahead of that? Or maybe afterwards, just sort of keen to see how those sort of levers might play out over the next 12 months?
Yes. Okay, Hayden. Well done on getting your response our results out. I mean, record time. It must have been about 8 minutes.
So congratulations on that. Good write up. So Ashburton, Bangaru South, Kymina, up there, it's look, we can't say too much more than where we're at the moment because we're still working on getting a few of the approvals finalized and we're still working through with a couple of government agencies on a bit of detail. But look, we're optimistic that in the next couple of months that we'll have all that done, being a bit conservative saying we're going to start construction by about mid June and it's about a 2 year build. But I mean, I can't tell you a lot more on that side.
And look, certainly on the downstreaming around our lithium business, it's something that we're heavily engaged in. Nothing not a lot that I can tell you on that other than the fact that we're engaged in doing it, we're going to do it. I can't exactly tell you what yet. And I think probably in fairness, I mean, I don't think I have ever give you too much information. So I probably don't want to spoil you now.
Your next question comes from Matthew Frydman with Goldman Sachs. Please go ahead.
Yes, thanks. Good morning, Chris and Mark. A couple of questions for me if I can. Firstly, just on the iron ore business and I guess picking up on your last comments there, Chris. You've clearly got a number of new iron ore projects in the pipeline.
Can you talk through where you're at with heritage approvals across those projects? Where do you see where does Section 18s exist across that portfolio? And I guess, do you expect you'd have to potentially revisit your timelines on any of those projects if there was a change in the approvals process?
Yes. No, look, I mean, there is everything's going exceptionally well on the approvals and even like on the Section 18, so they're probably not a great topic to talk about. But I think, look, Section 18s are still being issued to mining companies out there where as they have in the past, but I think everyone's heavily focused on that, no doubt. And we've recently had one issued to us. But I mean, again, I think all the normal things out there that are happening around that are still okay.
We have always been very engaged with the TLOs and I think we've always delivered on our commitments. We're not going to change from that. We've obviously got a much stronger emphasis on that now because we don't want to have a slip. But the approvals, look, all I can say is they're going well. There's a lot of them we're doing out there, and we
Chris. And then just secondly, again, still on the iron ore business, and particularly the bigger projects that you've got in the pipeline, would you consider a sell down on those assets over time, I guess post completion of construction to crystallize value in the same way that you've done at Wodgina or do you see me in retaining 100 percent of the equity exposure in that particular part of the commodities business?
No, look, we would certainly consider somewhere around partial sell down or a joint venture, and those things are being considered. And hence, the reason why we do with every project we develop like that, we carve out the mining services parts that are important to us for two reasons. One is that, that proprietary equipment, we don't let it outside of the business. And secondly, our mining services business is probably the core to what we do. So everything we do has that focus front and center.
So yes, but the answer is we would say we are considering in a couple of areas of doing just that, partnerships, JVs and that would include sell down down the track.
Sure. Thanks for that, Chris. Look, I've got a few more questions on the lithium business and the mining services business as well, but I'll get back in the queue if there's time. Thanks.
Your next question comes from Levi Spry with JPMorgan. Please go ahead.
Yes. Good day, Chris and Mark. Thanks for the call. So just on lithium and Wodgina. So what exactly is required to turn that on and ramp it up in the context Kemerton and potentially Kemerton being set by green bushes.
Can you just step us through the process there over the next 18 months?
Yes, sure. Look, there's no firm understanding of when we can turn Wodgina on. I mean, I think we're just a little more enthusiastic now than we were 6 months ago. There is no doubt that you can see demand out there is growing. No one can I don't think anyone can guess when we're going to have enough demand to turn Wodgina on?
And when we turn it on, we'll probably do it a train at a time. But I don't think we can get an understanding yet of what the demand looks like, but I think we will over the next 6 months. I can probably give you some a little more color around it, but it won't be until around June.
Okay. Thanks. And so just in the context of Albemarle raising equity to build more downstream in China and Stage 2 at Kemerton. So does that fits into your June timeline, thinking about building stage 2 there, keeping construction guys on-site, making it dovetailing sort of those construction works. Is that how we think about that?
And I'm still not clear on this how Greenbushes fits into the your JV without Ma?
Yes. Look, I think it's probably only in the last 30 days where the market seems to have turned somewhat and everyone's enthusiastic about lithium again and that created now an opportunity for Albemarle to go and do their cap raise. We are talking to them about how we're going to move forward. They are just back into growth phase again. So look, it's going to take some time to work out where the best opportunities are and the best bang for our buck is.
But I think it'll probably take 3 to 6 months for us to get there and get a landing on what we're going to do.
Yes, okay. Thank you. And just a sneaky one on Utah Point. So Land Creek and Wedge are new to me. Are they mine replacement projects?
And do I think about Utah Point production ramping up to 13,000,000 tons or so over the next couple of years, is that sort of a number?
You can think about it heading towards about 14,000,000 over the next 6 to 9 months. That's probably sort of the number. And yes, those the other two projects, they're a combination of replacement tonnes and also blending tonnes. It's just we're just getting our blend better and better up in that region. Bringing Wan Mana into the Iron Valley blend is going to make quite a significant difference.
So we'll probably be backing off on Iron Valley tonnes shortly and ramping up Wanmano just to get that blend the way we want it.
Your next question comes from Georgina Fraser with UBS. Please go ahead.
Thanks, Chris and Mark, and congratulations again on the results today. Just to circle back on this topic and been touched on a couple of times by the Anderson questions, but hoping to get a little bit more clarity around this Kemerton Wodgina relationship. So if Wodgina was to feed Kemerton and the timelines that you flagged earlier on the call about the trains commissioning timeline, Wouldn't Wodgina need wouldn't you guys have to be starting to think about ramping Wodgina up now? What would be the kind of timeline that you'd be looking at to get the Wodgina trains up and running? Or do you are you still seeing Wodgina just purely selling spot and not being brought down to Kensington for conversion?
No. Look, like I said earlier, I mean, we need a lot more demand out there in the market to be able to consider turning Wodgina on. I mean, it's quite a commitment putting a workforce out there, but we just don't have that demand out there. So we need to see that. To turn it on is no big deal.
I mean, it's a process. I mean, we've got to go and move some people around and bring some more people into our workforce to make that happen. But I mean 3 or 4 months probably to turn it on when the time is right. But I don't think we're even considering turning Wodgina on in the foreseeable future until we can see that demand. So I mean, it's just not worth talking about at the moment.
Okay. Thanks for that. So what will feed Kemerton for the commissioning? You talked about that 6 months of qualification with the Panasonic product. What will be the ore that will be granting that product or being used to bring that product online?
Look, we've got a couple of options with that. We can obviously, Albemarle are managing that, but they'll obviously do something around their green bushes. But we also have product that comes out of Mount Marion. So we've got a few considerations on what to do. But again, look, they'll be commissioning it and ramping it up on the Greenbushes dirt.
But in the medium term, I don't think we've sort of figured out the best way of doing that yet.
Okay. Thank you.
Your next question comes from Rahul Anand with Morgan Stanley. Please go ahead.
Hi, Chris and team. Thanks for the opportunity. Look, the first one is on the mining services. You did flag that one of the contracts wasn't renewed. I just wanted to firstly check with Mark.
Mark, is the revenue and EBITDA contribution of that already out of the numbers or does it come out in FY 2022? And then Chris for you, if you could shed some light on the contract and perhaps a bit more detail, that would be good. I'll come back with the second question.
Hi, Rahul. Thanks for the question. So the answer is the contribution of that contract is not substantial for the Mining Services business. It's not a core crushing contract. It's one of the ancillary services that we provide to clients through Western Australia and you'll see those numbers disappear.
Well, actually, you won't see them because they're not going to make that big a difference in the second half.
Okay. Well noted. Okay. So then the second one was on Ashburn. So you flagged the 21 construction.
Chris, I wanted to quickly check, obviously, this private haul road, you're using a new type of road train. Are there sort of different types of requirements and costs perhaps for this road? Or can we just use a general industry average? I mean, I'm just trying to get my head around how much CapEx could be and obviously the trans shipping port that you talked about as well? Thanks.
And also product grades, if you can comment
on that. Raul, it's probably easier if you let me give you that detail once we get to a point where it's a goer. But look, on building private haul roads, it's something that we do inside the business. We've just built about 130 kilometers of private haul road over the last 6 or 8 months, mainly down around the Yilgarn operation, built it and bituramized it, so that it's all weather. We can build them fairly efficiently.
We've probably got 200 ks to 250 ks that we'll be building in the Ashburton region. We'll probably have 2 mining hubs there with our next Gen 2 crushing plants. The big road trains that we run, as I said, they carry 3 30 tonne, they'll go into a port, they'll be all of the iron ore will be covered on the transport and it'll stay covered until it gets out onto the Cape Carriers about 20 miles offshore. And yes, there is a fair bit of CapEx in setting that up, but it's going to be operating at 25,000,000 to 30,000,000 tonne run rate. And the good thing about that is that the ore bodies are relatively close to the port.
So our cost of getting the dirt to the port is fairly low and trans shipping is fairly low compared to it's less than half the cost of putting ore over Utah Point or over Kwinana, for example. So it's an there's a bit of CapEx involved, but it's a 20 to 30 year type operation and it's got fairly good payback.
Okay, perfect. Just one on lithium, if I may, for Wodgina. Just how do you see the capability there of having similar sorts of recoveries going forward in terms of what you've been able to achieve at Mount Marion in terms of cost out, which is quite remarkable? Do you think there's opportunities on in Wodgina as well, similar in nature?
Yes, look, absolutely. The commodities business has done the work on that. They understand what the recoveries are going to look like there. They're going to be very similar, if not the same. And they've reworked what they think their cost structure will be on that, and it's obviously going to be less than what it was in the past.
So yes, we've got a pretty good result out of that. And the capability of that plant in terms of tonnes per annum of production is probably up, probably more than 20%.
Okay, perfect. Thanks for that.
Your next question comes from Jack Gabb with Bank of America. Please go ahead.
Thanks and good afternoon, good morning. Just wanted to follow-up one more on Ashburton. You obviously talked to potential OpEx savings from trucking or larger trucks relative to Iron Valley and obviously, transshipping relative to Utah Point. I just wondered if you want to take the opportunity to put it all together and just give us an approximate operating cost or indeed capital intensity as well for the project. You obviously have the numbers.
So whether you want to guide, or are you going to wait until the full year?
Yes. No, look, we're not ready to release those costs yet. Look, I promise you, as soon as we've got the approvals and we know that those both those projects are clear to go, we'll give you all the detail around them. We're just not in a position to be able to release any of those numbers at the moment. I mean, I've given you as much as I can around what I expect the tonnes to be and look, we'll be certainly in a good position.
The Ashburton project is going to be in the low cost quartile that we're aiming for so that we've got security for long term and so will the Pilbara project coming out of Marillana.
Thanks. And then I guess broader picture on Ashburton, I guess it really opens up the West Pilbara to you. At what point does it make sense or would it have made sense to put in a Capesize berth at Ashburton? I guess the channel is big enough. Is it 50,000,000 tonnes?
And what's the potential longer term from post the initial 2,530? Thanks.
Yes, look, good question. I mean, probably, does it ever make sense? I mean, the capital you've got to spend and the dredging and the disruption out there with the dredging is something we've considered, but the cost of trans shipping is not that big a deal. I mean and the trans shipping is a business that we want to get into because the focus on that is to be able to exploit stranded tonnes and there's a lot of them around Australia. So we want to be able to hone our skills and be very good on that trans shipping operation.
I mean and you don't just need to tranship from areas where they don't have Capesize carrier capacity. I mean, there's even capacity to be able to transship out of places like Port Hedland and Karratha. So it's a business we want to develop and I don't foresee that we would ever be looking at Capesize Carriers and Ashburton.
Perfect. Thanks very much. I'll pass it on.
Your next question comes from Stuart MacKinnon with The Waste Australian. Please go ahead.
Good day, Chris and Mark. Yes, look, I just wanted to get some color around obviously, there's a lot going on in the state's resources sector at the moment. And I was just wondering if you were finding any sort of issues with skill shortages, wage inflation, getting equipment to sites, getting equipment delivered and equipment built. Yes, and how does this boom, this mini boom, if you like, compare to the last
one? Thanks, Stuart. Yes to all of the above. Do you want more detail around that? Yes, there is a skill shortage.
We are all fishing out of the same pond in WA. It's very difficult when the borders open and close, but there's a positive and negative of that. It's hard to get people from interstate, but because the borders were closed, we kept our mines open and kept them operating. So as the borders open out east, it does make it a little easier for us and we've spent a lot of time and money with heavily incentivizing any of our East Coast people to consider coming over to WAFD families and to live here. We've got quite a number of packages that we've put together to be able to subsidize them and just simply pay them to relocate.
We keep growing our training facilities and we're looking at a whole new style of training facility where we can take people and that haven't considered going to the mining industry and be able to train them to do operate, to do processing, a whole range of things. Getting equipment to site is okay. Securing equipment is getting much harder the lead times along. So good planning and being well organized is the key. But in saying that too, we've been able to be able to secure the equipment that sort of met where we're going and we've been able to make sure that we got those forward orders.
So look, we're surviving okay. I think our growth plans that we've put forward, they'll be achievable, but we've just got to do things a lot differently. Again, with the way that we care about our people. We've always cared very much about their safety, but now we're caring about their well-being and their health and making sure that we can add value to that. So we've got nurses in the business, we've got psychiatrists and we're bringing doctors inside our business to be able to make sure that we can take care of all of our people's medical needs.
Your next question is a webcast question from Nick MacLean with Surrey Asset Management and Reed. You referenced your core pillars of the business as it is now. In 5 years, what, if any, new pillars would you like to add to Mineral Resources? Also, when you retire in 20 years or so, what do you want mineral resources to look like? Is it a major resources business across different commodities?
And if so, what commodities would you like to be a leader in?
20 years is a long way. Will I still be here? Probably. Look, we're certainly heading down the path of making sure that we're in greener commodities. So we're looking at a number of other products out there.
And for obvious reasons, I really don't want to disclose what we're looking at doing because if I do, then we just add to our competition. 20 years' time, I'd like to make sure that MinRes is it's a business where the people that are working with it know that they can be here for a lifetime and that they can they've got the total package inside the business. I mean, we're working incredibly hard to make sure that we keep our people long term and to do that we're building a new office at the moment that's going to be a very state of the art building. It will be very different to anything in Perth. So we're trying to create an environment for our people in Perth.
Trying to do the same on our camps. So we're going to change the style of the new camps that we build. So it's more of a resort style accommodation than it is, just dongers in the desert. But I'd like to think that people can be with the business. They can start out here as an apprentice or a trainee or a junior accountant and they can be with the business long term with the aim of being able to progress through it and be able to run it.
So the commodities we're going to be in, too hard to tell at the moment, but we've got some good vision on where we want to be in over the next 10 years. We've got that mapped out and we've got some new products that we will be bringing on board over the next couple.
Your next question comes from Matthew Frydman with Goldman Sachs. Please go ahead.
Yes. Thanks for taking follow ups, Chris. Just a quick one as obviously we've gone over the hour already. But just wondering on the lithium business, appreciate that obviously you're still working through the details with your JV partner on how you're going to grow that business. Alba Mar has talked in the past about the capital intensity being much more favorable in China and clearly they see that as a focus or a priority for lithium hydroxide conversion growth.
Is that an option that you're happy to consider within the Marvel JV? And I guess how does that fit in with the key focus of MINRes being Australia and specifically Western Australia?
Look, obviously, I mean, we like to spend our money here in WA as much as we possibly can. And we're much more focused now on trying to bring a lot of the products that we make back to WA. I mean that's important to us, but we want surety of supply, but we also want to support the industries here in WA to make sure that they can supply to us going forward. I'm not quite sure. What do you think?
I think we I
think kind of
Look, in China, let me say this that I mean, China has been they're our biggest trading partner for Western Australian products. I mean, we've got some extremely good partnerships and customers we've had with China over a long, long time and our relationship with China and our JV partners has never been stronger. So we want to keep growing that, but we've also got other countries that we deliver product to, nowhere near as much. But when people say we should go and find other markets for our product, I mean, that's just simply not possible. I mean, Australia is awfully good at trading worldwide, and I think that we trade all of the products we can right across the world.
It just happens that we happen to have a lot of iron ore and a lot of gas, and we're very close to China. So our relationship with China will I hope will continue to grow over the years and strengthen. And look, we're certainly looking at best places that we can strategically put plants like our hydroxide in downstream. We've obviously invested heavily in WA. We'll continue to do that, but we probably will look at opportunities in China as well.
Yes, that's pretty clear. Thanks very much for taking the time on the questions, Chris.
Your next question comes from Damian Williamson with Bell Potter. Please go ahead.
Hi, Chris and Mark. Just can I get some clarity on what your medium term targets are for you annual line ore shipments out of Yilgarn and Utah Point? And also just a quick update on the status of the One Mana leading challenge and as well, I'll just get an answer on that. Thank you.
Yes, look, I think we've highlighted that heading out of the Yilgarn Hub, we're looking at sort of around 12 ish million tonne run rate. There's some difficulties in achieving those tonnes. I mean, it's always challenging on that railway line and the pits that we're mining out of. We're slowly getting a better and better mine plan down there, but we're probably 6 months away from getting more security. We need to bring Parker range and those sort of deposits into the blend.
But 12 ish million tonnes sort of the aim down there and up north out of Utah, it's about 14,000,000 tonnes where we'll be sitting.
Okay. And just in terms of Wanmana, just a quick update on where the legal case for the SKU Board? Is that
You really want me to comment on that? I mean
Okay. I don't want to say, just quit shooting because you're starting shipping while the
Yes. Look, we see that as a nothing thing. It's I mean, just we're a little mining outfit and we're just simply being bullied into trying to reduce the tonnes that we're putting out and we're just simply ignoring that. As a matter of interest, they're actually suing the Minister for Mines and they're using they had a case with around the Mindaru where because when the mining the mining was applied for, they didn't put the mineral rights in it exactly the same time. But I mean that doesn't apply to One Manor in the sense that one manor has changed hands twice with arm's length transactions, so that no longer applies.
So I don't know where they're going other than trying to bully us into not putting tons in the market.
There are no further questions at this time. I'll now hand back to Mr. Ellison for any closing remarks.
Okay. Well, thanks everyone for joining us. I hope that, look, we work hard to try and deliver the results that we do. I think we're getting a little more predictable in what we're doing. There's obviously a certain amount of information that we're not ready to hand out.
I don't want to go and give you budgets, costs and tonnes and what we think we're going to do at Ashburton and then come back in 6 months' time with changes. Those things are the things that you guys remember. So just give us the time that we're growing our business and we are delivering a bottom line and we're delivering dividends. So, and they're difficult times that we're working through at the moment with what's happening out there in the world, but we will certainly as soon as we are in a position where we know that we can give you real information, I mean, we'll always make sure it's available to you. So look, thanks for your support, everyone out there, and thanks for especially from my staff.
And we'll be back in 6 months' time. So thanks.
That does conclude our conference for today. Thank you for participating. You may now disconnect.