Mineral Resources Limited (MIN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Mineral Resources' investor call and presentation for the half year 2021 financial results. I'll shortly hand over to Chris Ellison, 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. [Operator Instructions] I will now hand over to Chris Ellison.

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 -- who'll 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 walk us through the financials. And if we've got any time left at the end, we'll have some Q&A. Highlights for the year. So far, we've survived these uncertain times. We've thrived. In fact, we've done incredibly well. Revenue is 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 [ and is good of ], 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 are just over 31 million tonnes of capacity. Commodities have performed incredibly well in 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, and 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 Mt Marion mine site has continued to run extremely well. Again cost control has been another highlight, and being able to pull the costs 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 costs down substantially. And the Kemerton 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 on these sort of results. We've kept the LTI rate at 0, which is almost unheard of in a business like ours. The TRIFR 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, 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 while 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 got 16 were brought in, so we 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 intake 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 $0.5 billion, tax paid over $400 million. We've committed to 0 emissions by 2050 at the latest. Realistically, I think we're going to achieve it a lot sooner than that. We've developed a road map 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 road map 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 to 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 we -- as I said, I think we can -- and 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 an EBITDA of $763 million and net profit after tax of $430 million, and those results have been achieved. They don't -- sorry. They don't include unrealized gains of over $160 million sitting in foreign exchange and in the value of our listed investments. Full reconciliation of that is in the appendix. Those items are noncash, 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 rate is 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 million, 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 is starting to emerge in the business, and 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 million. A major driver for that has been increase in trade receivables of $178 million. 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 that the small businesses that supply us, they represent about 2/3 of our suppliers, are 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 million (sic) [ $332 million ] to the tax office for the final payment on Wodgina [ profit ], making the total payments paid in respect -- tax payments paid in respect of that transaction just over $410 million. In terms of capital expenditure. The typical sort of sustaining CapEx spend on deferred strip in the Commodities business, continuing to invest in the support and growth of that business. In terms of the growth aspects of CapEx, a major item in the Commodities number there is the Wonmunna expansion -- or Wonmunna investment, sorry, and delivery. We've previously advised the market we expect to spend about $126 million on that investment, and 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 in this half. We've 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 million. Details are in the appendix. The major driver of that increase is Wonmunna. 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, though the key point I want to emphasize is we finished the period with over $1.1 billion 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 forma balance at June 30 of minus $8 million in terms of net debt. You can see there that we finished the period at a net debt position of $75 million, so a small increase in the net debt over -- more than explained by the increase in trade receivables of $178 million 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 results of those changes have 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. And anyone that's new to the business, I'll tell you a little bit about what MinRes. 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 are 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. I'd rate 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've 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. It 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've -- 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. And 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 got Mt Marion, a joint venture with Ganfeng from China, a very, very good part and very competent. It's been a very successful operation. The MARBL joint venture, again another world-class partner in Albemarle, it's a 40-60 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've got a large landholding 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 out there and be able to use that going forward to be able to reduce our carbon footprint that will 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 it ] from mine site to the coast. And then we're working on the transshipping, which I'll talk a bit more about that 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, people at our Mining services business are very focused on 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, a construction division. We generally run a fair number of people. And there we've had a lot of people in that division that have been with us 10 to 20 years and 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 Wonmunna mine site. We acquired that in about September and we're turning that on as we speak now. Carina, we've recommissioned that mine. So we've got more iron ore going out of Carina, and some of that is going up to Kwinana. We've just started loading out through Kwinana again. Again as I said, on the energy, we've got exploration activities that progress well. And we're preparing to sink a well up in the Perth Basin and the landowner negotiations have gone extremely well, so that's almost ready to go. It's just a matter of getting ahold 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. It -- I said probably 18 months ago to double over the next 3 years and I think it's close to getting there now. Our margins have always been very healthy inside that business mainly because we are innovative. And 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 on the Yilgarn hub. We took over a mine that was extremely run-down, way behind the eight 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 an incredibly good shape. We've got a pretty good mine plan down there. We're working that out to a 10-year plan, and 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 that 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 and it's going to add significant value to MinRes. Mt 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 Mt. Marion. And Kemerton. The construction is going extremely well down there. The Albemarle team have done a great job. They've got about 1,250 people on site. We've got probably 20 of our cranes down there helping them. We've got our -- 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 one and October for train two, at this stage all things going well. So that'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. We're 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 WA. We opened that up to the government, to the public so that we could help or if we could with that. And we're still testing our people to make sure that every one of them goes to sites free of the virus. But so growth strategy going forward. This 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 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 and 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, where 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 like we've been doing through the last decade, and we've been very successful at that. It'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 skill set 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 Yilgarn 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-carry capacity shipping through Port Hedland to support our Pilbara hub. In 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 are 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, then we're going to establish a transshipping business. And we aim to commence with about 4 20,000-tonners that we've been able to design and develop not just in house but with some of the experts from around the world in North America and 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 our 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 with that. We're looking to develop, as I said, South West Creek in Port Hedland. That was set aside by the government in 2008; 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 berths. And we're waiting on ministerial signoff, and we anticipate that 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 Yilgarn. The Utah hub, we're about to bring on the Wonmunna mine. So we were approached back in about September last year and we had it done by the end of September. We 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 million 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 happen. And the way it has: Lamb's creek, it's going to be construction ready by about second half of next year. And Wedge, it will be construction ready about 12 months down the track. Ashburton hub. We're going to develop the Kumina and the Bungaroo 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. And 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 million to 30 million tonne a year run rate. It will be on road transport, but we've developed these very large trucks that can move about 330 tonne payload at a time, so our cost on transporting that ore from mine site to coast is probably in the order of about 1/3 per tonne kilometer, as what it is with the Iron Valley operations. So fairly innovative again. We got the -- they're the largest off-highway road trains in the world. And then we're going to go to the transshipping operation out of the Ashburton port. So we hope that we're going to start construction on those transshippers 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, South West Creek. As I said, that's simply waiting on us to get approval to build the berth space we need in South West 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 Mt 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 called [ Panasonic ] grade, which is probably about 6 months, but we can see that that's going to be a high-quality plant that we've got based here in Western Australia, good for WA and good for MinRes. And 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, but 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 tonnes 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. 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 transshipping. 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 will deliver the iron ore road transport and port facilities for the Marillana operation. Again, that will be a life-of-mine mining services contract, so a lot of growth sitting inside that. 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 [ got ] a bit of criticism from the East Coast, but just to understand this: I mean we've all had our freedom for all but 1 week, most of the way through the COVID virus. Most importantly, we've been able to keep our mines running and our business running, and the best part of that is we keep all our people employed. They all remained on their same pay, and everyone has been able to get through this unscathed. I have no doubt we're probably in -- [ close 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 to 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. And also, welcome to Susie Corlett, a great addition to our Board, a 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 Grey, Mark Wilson, the guys that help 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 our -- 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 a last mention, I want to say we want to keep doing the things that we've done around the traditional landowners 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 landowners 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 the 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 is a core fabric in 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, are you going to join me?

[Operator Instructions] Your first question comes from Hayden Bairstow with Macquarie.

Chris and Mark, yes, great result. I just want a couple of things on iron ore, first. So just to get an understanding of sort of timing on what you're thinking with Bungaroo and sort of how that might play out in terms of the second half. Or is it literally this is going to be an FY '22 story in terms of real spend on that project? And just secondly, on lithium: [ I mean Mt Marion ] sort of cost performance is 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 to our results out. I mean record time. It must have been about 8 minutes. So congratulations on that, good writeup. So Ashburton, Bungaroo South, Kumina, up there it's, look, we can't say too much more than where we're at, 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 and 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 given you too much information. So I probably don't want to spoil.

Your next question comes from Matthew Frydman with Goldman Sachs.

Chris and Mark, a couple of questions from 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 have to potentially revisit your time lines on any of those projects if there was a change in the approvals process?

Yes, no, look, I mean, there is -- everything is going exceptionally well on the approvals and even like on the Section 18s. 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 is 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 -- happening around that -- are still okay. We have always been very engaged with 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 expect to probably pretty much be there with them over the next 3 or so months.

Yes, fantastic. 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 MIN retaining 100% of the equity exposure in that particular part of the Commodities business?

No. Look, we would certainly consider somewhere around a 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 2 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 -- we are considering in a couple of areas of doing just that, partnerships, JVs. And that would include sell-down down the track.

Sure. 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 at this time.

Your next question comes from Levi Spry with JPMorgan.

So just on lithium and Wodgina. So what exactly, I guess, is required to turn that on and ramp it up in the context of Kemerton and potentially Kemerton being fed by Greenbushes? 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 till around June.

Okay. And so just in the context of Albemarle raising equity to build more downstream in China and stage 2 at Kemerton. So does that fit into your June time line, 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 in to -- sort of to your JV with Albemarle.

Yes. Look, I think it's probably only in the last 30 days where the market seems to have turned somewhat and everyone is enthusiastic about lithium again, and that created 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 will probably take 3 to 6 months for us to get there and get a landing on what we're going to do.

Yes, okay. And just sneaking one on Utah Point. So Lamb Creek and Wedge are new to me. Are they mine replacement projects? And do I think about Utah Point production ramping up to 13 million tonnes or so over the next couple of years? Is that sort of a number?

You can think about it heading towards about 14 million over the next 6 to 9 months. That's probably sort of the number. And those, the other 2 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 Wonmunna 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 Wonmunna just to get that blend the way we want it.

Your next question comes from Georgina Fraser with UBS.

Congratulations again on the results today. Just to circle back on this topic, and it's been touched on a couple of times by the [ analysts' questions ], but hoping to get a little bit more clarity around this Kemerton-Wodgina relationship. So if Kemerton -- if Wodgina was to feed Kemerton and the time lines that you flagged earlier on the call, about the trains commissioning time line, 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 time line 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 spod and not being brought down to Kemerton 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 we -- 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. So what will feed Kemerton for the commissioning? You've talked about that 6 months of qualification with the [ Panasonic ] product. What will be the ore that will be creating that product or being used to, yes, bring that product online?

Look, we've got a couple of options with that. We can obviously -- Albemarle managing that, but they'll obviously do something around the Greenbushes. But we also have product that comes out of Mt 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.

Your next question comes from Rahul Anand with Morgan Stanley.

Look, the first one is on 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 '22? 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.

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. Then the second one was on Ashburton. So you flagged the mid-2021 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 transshipping port that you talked about as well and also product grades, if you can comment on that.