The Mineral Resources Limited (ASX: MIN) share price has fallen more than 4% after handing in its March 2021 mining report.
Mineral Resources Q3 update
The miner said that its mining services production volume for the quarter was consistent with the prior corresponding period and in-line with expectations.
However, the business reported some problems with its iron ore shipments.
Iron ore shipments totalled 4.1 million wet metric tonnes (wmt), consistent with the second quarter of FY21 and up over 51% compared to the prior corresponding period.
However, Mineral Resources said that over the last six months it had produced 10.1 million wmt, but has only managed to ship 8.5 million wmt. What’s going on?
Haulage problems
The company explained it has been suffering from haulage constraints caused by a shortage of truck drivers resulting from the unplanned sudden state border closures, caused by COVID-19 outbreaks around the country.
The shortage of drivers has meant that, on average, hauling capacity of approximately 10,000 wmt per day was sitting idle.
Mineral Resources said that its FY21 guidance of 19.5 million wmt to 20.5 million wmt was based on an expected increase in shipments aligning with production. Management said it’s not clear when the haulage issues will be resolved.
It’s now expecting FY21 iron ore shipments to be in the range of 17.4 million wmt to 18 million wmt.
Production and price
The company said that iron ore production for the quarter of 4.9 million wmt, which was consistent with the second quarter of FY21 and up more than 44% on the prior corresponding period, in line with the mine plans.
Crushed iron ore stockpiles on site at 31 March 2021 increased by 1.3 million wmt since 30 June 2020, to finish at 1.4 million wmt.
The average realised iron ore price was US$144.8 per dry metric tonne (dmt), which was 5% higher than the previous quarter.
Other updates
The first iron ore shipments from the Wonmunna iron ore mine commenced during the quarter.
It also commissioned three crushing plants, including a NextGen 2 plant at Mount Whaleback, the Wonmunna plant and another at a third-party site. The combined capacity of these plants is 31 million tonnes per annum.
Mt Marion lithium production of 108,696 dmt was 16% lower than the second quarter of FY21 because of lower yielding ore being used in production, as part of the optimised long-term mine plan. However, year on year, the production was up 22%.
Shipments of spodumene concentrate were back in line with expectations and the mine remains on track to meet or exceed shipment guidance for FY21 of 450kt to 475kt.
Construction by Albemarle Corporation (NYSE: ALB) of the 50kt per annum Kemerton lithium hydroxide plant continued, with a workforce of approximately 1,250 people on site. The project remains on track for completion in the second half of the 2021 calendar year.
Summary thoughts
It’s disappointing that these haulage problems are happening right when the iron ore price is so high. I think it’s a shorter term problem and can be solved with the current COVID-19 situation looking good.
But I’m not sure when the right time to buy a miner like this is. I tend to look at ASX growth shares with consistent growth potential.
