Mineral Resources Limited (ASX: MIN) today provided its annual report to shareholders for the financial year ended 30 June 2020.
In his letter to shareholders company chair, Peter Wade, said:
If the past year has taught us one lesson only, then it is that good systems and practices and strong leadership will prevail even during unprecedented times, which is why I am so extraordinarily proud of the achievements of the entire MRL team.
No business continuity management manual could have prepared us for COVID-19. Yet the speed at which MRL adapted its business practices to protect the health and jobs of the 3,100 men and women we employ, and the successful outcomes we achieved, were remarkable.
It is sometimes hard to fathom that MRL, notwithstanding its proud history of using an innovative approach to deliver exceptional outcomes, could have organised what is arguably the largest private-sector PCR COVID-19 swab screening operation in Australia. So far, MRL’s screening operations spread across Western Australia have tested more than 50,000 resource sector workers. These workers were not just MRL employees but those employed by our clients as part of a very deliberate pan-industry approach led by the Company to ensure the Western Australian resources sector – the backbone of the Australian economy – remains fully functioning and free of COVID-19.
I am confident MRL will remain vigilant and stay ahead of this insidious virus. MRL’s leadership has been exemplary and a credit to our entire team – as Shareholders, you should be immensely proud.
Globally, it has been an interesting year as the world reacted to the onset of the pandemic. Despite the challenges brought about by COVID-19, MRL delivered a record year of operational and financial performance. The results demonstrate MRL’s core strength of having the ability and agility to deal with the shifting sands of the resources sector.
Iron ore prices were up 16 per cent compared to last year and the US dollar exchange rate provided favourable support. It is not often that the USD/AUD exchange rate improves at the same time as the iron ore price increases and MRL was able to respond, which contributed to record earnings.
Lithium prices were under sustained pressure from the outset of 2020 and then came COVID-19, prolonging weakness in the market as supply chains were de-stocked. As a result of COVID-19, the global economy is forecast to contract in 2020/21 and industrialised countries to suffer economically. With industrial usage for lithium representing a significant portion of demand, this is expected to contract throughout 2020/21. Notwithstanding this, lithium is approaching a transition as long-term demand remains high and challenges for supply will become more pronounced. The lithium portfolio that MRL has developed with its partners positions the Company extremely well for when the market rebounds. MRL remains confident in the lithium market and the Company’s decision to invest in world-class, long-life operations.
While FY19 was a period of investment to build a 20 to 50-year operating horizon, the past year was about banking some of the early rewards, including from the sell-down of the Wodgina Lithium Project.
The Company generated record statutory earnings before interest, tax, depreciation and amortisation (EBITDA) of $2 billion, including a $1.3 billion gain on the sale of 60 per cent of Wodgina to Albemarle, and a statutory net profit of $1 billion, up 507 per cent on the prior year.
A strong balance sheet and confidence in the Company’s outlook allowed the Board to declare a fully franked final dividend of 77 cents per share. This brings the full-year payout to shareholders to $1 a share and continues MRL’s proud history of uninterrupted dividend payments since our listing in 2006. It is worth reminding shareholders that since MRL’s ASX listing in 2006, at 90 cents a share, the Company has paid out a cumulative $5.81 per share, on top of an industry leading share price performance.
Pleasingly, during the past year we also delivered success in other key areas with improved safety performance, a further reduction in our greenhouse gas emissions intensity and increased diversity right across our workforce, including the employment of 15 apprentices at our Kwinana workshop, an increase on the FY19 intake. It is testament to MRL’s passion to develop careers for young people and invest in a highly skilled and committed workforce.
FY20 has been an extraordinary year for all involved with MRL. I sincerely thank my fellow Directors for their efforts and dedication. On behalf of the Board, I also extend my gratitude to our Managing Director, Chris Ellison, and his leadership team for delivering such a tremendous outcome in a year dominated by the coronavirus pandemic.