Mineral Resources Limited

The Business

MinRes operates three linked businesses: mining services (crushing, haulage and processing for itself and third parties, $976 million EBITDA in FY26), iron ore (led by the newly ramped Onslow mine at $52/tonne free-on-board cost), and lithium (Mt Marion, Wodgina and Bald Hill). It is the only ASX miner running its own engineering, haulage, transhipping fleet and port logistics end to end, rather than outsourcing to contractors. That vertical integration is what let it build Onslow, a genuinely low-cost asset, largely with its own equipment.

Recent Performance

FY26 revenue rose 44% to $6.46 billion, and EBITDA more than doubled to $2.55 billion, from a FY25 base that had itself fallen 15%. Most of that swing came from two sources: Onslow shipping a full year of tonnes for the first time, and a lithium price spike in the second half (spodumene concentrate, SC6, doubled from roughly US$972 to US$2,290 per tonne). The share price has run hard on these results, and the analytical question now is how much of that earnings level is durable versus cyclical.

Outlook

We expect revenue to ease in FY27 as a partial sale of the lithium division to POSCO reduces MinRes's share of those earnings, and as spodumene prices normalise from their second-half spike. EBITDA margin is likely to compress from 39.5% in FY26 toward the low-to-mid 30s over the following two to three years as the lithium windfall fades, even as mining services keeps growing steadily on existing long-term contracts. Earnings per share are expected to fall materially over FY27-28 from the FY26 peak before stabilising as mining services' more stable earnings become a larger share of the group total.

Key Risks

A reversion in spodumene (lithium) prices toward more normal historical levels would materially reduce lithium division earnings from the FY26 peak, given the second-half price spike doubled in six months, a pattern that has historically unwound within 12-18 months. Chinese steel output fell 3% in the first half of 2026, and a further slide in iron ore prices toward the lower end of the current range would compress group margins meaningfully, though Onslow's low cost base offers some protection. An active ASIC investigation into related-party transactions, alongside a related class action, leaves an unresolved governance overhang with financial and management consequences that cannot yet be sized with confidence.

What to Watch

The thesis-defining event is the February 2027 half-year result, which will show the first full period of post-POSCO lithium earnings and confirm whether the expected margin normalisation is playing out.

• 6-12 months SC6 spot price trajectory — the single biggest swing factor in the earnings outlook, depending on where spodumene prices settle.
• 1H27 POSCO transaction completion — confirms proceeds and reduces leverage if it closes on schedule.

Company Description

Mineral Resources runs three operating divisions. Mining services provides crushing, screening and haulage, both for MinRes's own mines and external clients, and generated $976 million of EBITDA in FY26 at a 31% margin. Iron ore is dominated by the Onslow project (35 million tonnes per annum nameplate, delivered via a proprietary transhipping fleet that avoids the need for deepwater port infrastructure) alongside the older Pilbara Hub operations, together contributing $3.6 billion of FY26 revenue. Lithium spans Mt Marion, Wodgina and Bald Hill, contributing $1.3 billion of FY26 revenue but now partially diluted by a transaction with South Korea's POSCO.

Where the Growth Is

Mining services is the most durable growth line. External contract volumes are growing 6% in the near term, decelerating to 2-3% as the order book matures, on 15-year life-of-mine contracts with margins around 31%. New external contract wins over the next one to three years represent a modest but genuinely incremental contribution to earnings, one that does not depend on commodity prices.

Competitive Position

MinRes's advantage is structural rather than positional: it is the only ASX miner running engineering, haulage, transhipping and port logistics fully in-house, which management estimates saves $200-400 million a year versus an outsourced model. That integration let it build and commission Onslow largely without third-party contractors. The advantage is durable for perhaps five to seven years rather than indefinitely, since it depends on retaining specialist engineering and logistics talent rather than a hard-to-replicate physical barrier. Competitors with deep pockets could, in principle, replicate elements of the model over time.

Management & Capital Discipline

Operational delivery has been excellent: MinRes hit 100% of its FY26 guidance across volumes, costs and capital spending. Capital allocation has been more mixed. The Onslow build was a genuine success, but the 2022-24 spending intensity pushed net debt to 5.9 times EBITDA and forced a dividend suspension. Board renewal, five new independent directors, and a chief operating officer succession are underway, but governance credibility remains constrained while the ASIC investigation into related-party transactions is unresolved.

Financial Position

Net debt to EBITDA has fallen sharply from 5.9 times to an estimated 1.7 times as Onslow ramped and cash flow turned positive for the first time in five years ($849 million free cash flow in FY26). Capital spending is still elevated at $1.1-1.4 billion a year but is expected to taper. The balance sheet can comfortably absorb a commodity downturn at current leverage, though the improvement has occurred alongside peak earnings and would look less comfortable if EBITDA halves.