The Mineral Resources Ltd (ASX: MIN) share price is down 0.4% at the same time as the S&P/ASX 200 Index (ASX: XJO) is up 0.7%.
Other ASX mining shares are up, so Mineral Resources shares are materially underperforming today. For example, the Fortescue Ltd (ASX: FMG) share price is up 1.3%, and the BHP Group Ltd (ASX: BHP) share price is up 0.25%.
The ASX iron ore share is under the spotlight because the Australian Financial Review reported on commentary by governance advisory business Ownership Matters that a company run by the daughter of Mineral Resources' CEO Chris Ellison has earned millions of dollars in fees.
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Undisclosed payments
According to reporting by the AFR, Ship Agency Services, founded by Kristy-Lee Craker in 2011, may have made up to $10 million in fees from hundreds of ships being loaded with Mineral Resources iron ore. This company has been responsible for hiring more than 1,000 ships. Industry rates for this service can range up to $10,000 per engagement.
It was reported that ship owners have been required to use Ship Agency Services since at least 2016 when carrying the ASX mining share's iron ore export.
Shipping agents are an important part of the export process because they provide a wide range of services, including organising documentation for port authorities and shippers and monitoring vessel operations, transport, and crew arrangements.
The newspaper reported that Mineral Resources confirmed to Ownership Matters that Ship Agency Services was the preferred shipping agent. However, they stated that payments didn't need to be disclosed as related party transactions because Ship Agency Services "is engaged under contract with, and is paid by, the ship owner."
Ownership Matters "is not suggesting the arrangements are improper", according to the AFR. The governance advisory business did note that, unlike other miners like BHP and Fortescue, the "ship agency at MIN has never been subject to a competitive open tender process".
Mineral Resources also reportedly uses a marine surveyor company, Propel Marine, which was set up by Ms Craker in 2018 to "perform vessel draft surveys, inspections and marine warranty surveys on ships carrying the group's iron ore."
The AFR also reported that Ship Agency Services and Propel Marine operate out of offices leased by Mineral Resources from a trust that Chris Ellison owns 51% of. Ownership Matters was told by the miner that Ship Agency Services pays rent for the offices.
The payments are reportedly at market rates
The AFR reported that a Mineral Resources spokesperson told Ownership Matters:
These services were performed at arm's length rates. It is common in the commodity industry for industry participants to recommend the use of a preferred ship agency. This enhances efficiency, safety and productivity in the loading or cargoes.
Mineral Resources has a process in place to ensure its shipping arrangements are in line with the market and at commercial rates.
Mineral Resources share price snapshot
In 2024 to date, the ASX mining share has dropped more than 36%, as shown on the chart below.
