Mineral Resources Ltd (ASX: MIN) shares are edging lower on Thursday morning.
At the time of writing, the mining and mining services company's shares are down 1% to $60.00.
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Why are Mineral Resources shares falling?
Investors have been selling the company's shares today in response to the release of a big announcement after the market close on Wednesday.
According to the release, Mineral Resources has completed a comprehensive assessment of the viability of the Yilgarn Hub iron ore operation.
Management notes that having carefully considered all options, the assessment confirmed that the continuity of the Yilgarn Hub is not financially viable beyond the end of 2024. As a result, it has made the decision to cease Yilgarn Hub iron ore shipments by 31 December.
Mineral Resources points out that the decision has been influenced by a combination of factors. This includes the limited remaining mine life across five operating mines that are spread over 220 kilometres, and the significant capital cost and lead time required to develop new resources to ensure continuity of supply.
What's next?
The company intends to safely ramp down the Yilgarn Hub operations in a staged approach over the next six months. This is expected to see up to four million wet metric tonnes shipped by the end of the calendar year.
Mining operations will then transition into care and maintenance from early 2025.
And while approximately 1,000 employees will be impacted by this change, Mineral Resources notes that it will work with them on redeployment opportunities across other operations. It has almost 800 vacancies across the business, with many more to open in coming months. This includes through the ramp up of the Onslow Iron project.
Mineral Resources' managing director, Chris Ellison, commented:
This prudent but difficult decision was not taken lightly and follows years of investment to extend the life of our operations in the Yilgarn. MinRes has operated in the region since our maiden shipment from Carina in 2011. In 2018, with the support of the WA Government, we stepped in to save hundreds of Western Australian jobs at Koolyanobbing that were set to be lost with the departure of Cliffs.
By the end of this year, we will have operated Koolyanobbing for six and a half years, exported almost 45 million tonnes via the Port of Esperance and spent $4.2 billion running our Yilgarn operation, exceeding our commitments. I want to thank everyone whose hard work and dedication over the past 13 years made this challenging operation a great success.
Mineral Resources shares are down 19% over the last 12 months.
