MinRes Shares Slide as Lucky Bay Mine Heads for Shutdown

Mineral Resources shares (ASX: MIN) fell back on Thursday, as the miner announced it will suspend operations at its recently acquired Lucky Bay garnet mine from July, citing Middle East conflict disruptions and rising costs that have rendered the asset uneconomical less than twelve months after purchase.

The MinRes share price closed down 2.61 percent at A$64.14 ahead of Friday’s final session, with markets digesting the news that Lucky Bay will enter care and maintenance following a strategic review. The move marks a swift reversal for an asset MinRes acquired from administrators in September 2025, and underscores the vulnerability of niche commodity operations to geopolitical and cost pressures even as the company’s core iron ore and lithium divisions deliver record results.

Why Shutter Lucky Bay?

MinRes disclosed that Lucky Bay’s financial performance has been severely impacted by disruption to sales in the Middle East, a key export market for industrial garnet used in sandblasting and water-jet cutting applications. The regional conflict has constrained shipping routes and customer demand, while simultaneously driving up diesel and freight costs that have eroded already thin margins at the Western Australian operation.

Around 110 employees will be affected by the suspension, though MinRes has committed to offering redeployment opportunities across its broader operations where possible. The company will book a non-cash impairment of approximately A$40 million in its full-year FY26 results, reflecting the write-down of the asset’s carrying value. Management indicated it will now assess strategic options for Lucky Bay, including a potential divestment once market conditions stabilise.

The Lucky Bay acquisition came via MinRes’ purchase of assets from the administrators of Resource Development Group in early September 2025, a transaction in which MinRes already held exposure as both creditor and investor. The rapid move from acquisition to care and maintenance has raised questions among some market participants about due diligence and the risks inherent in diversifying beyond the company’s core iron ore and lithium franchises.

Operations Remain Solid

Yet the Lucky Bay setback remains modest in the context of MinRes’ broader FY26 performance trajectory. Mineral Resources shares continue to trade 15.69% higher YTD, and 217% up over the past 12 months, cementing their position among the top ASX mining stocks on the period.

In February, the company reported record first-half results with revenue of approximately A$3.1 billion and underlying EBITDA of around A$1.2 billion, driven by strong contributions from its Onslow Iron project and Mining Services division. Net profit after tax reached A$573 million, while free cash flow totalled A$293 million, enabling the company to reduce net debt by A$471 million to A$4.9 billion and lift liquidity to A$1.4 billion.

Onslow Iron, which achieved nameplate capacity of 35 million tonnes per annum in August 2025, contributed approximately A$519 million in EBITDA during the first half alone, with FOB costs tracking at the lower end of guidance. The Mining Services division posted record production of 166 million tonnes and EBITDA of A$488 million, up 29 percent year-on-year. Subsequent quarterly reports through March 2026 showed continued volume upgrades across both iron ore and lithium operations, with realised lithium prices surging 92 percent quarter-on-quarter to around US$2,105 per dry metric tonne as the battery materials market recovered from multi-year lows.

Importantly, MinRes noted in its Q3 FY26 disclosure that its major operations had experienced no disruption to fuel supplies or production from the Middle East conflict, maintaining FOB cost guidance across divisions. The operational impact has been confined to Lucky Bay’s specific customer base and shipping routes, rather than representing a systemic risk to the broader business.

The Lucky Bay suspension, while a visible blemish on the company’s recent acquisition track record, appears unlikely to derail the broader investment case so long as core operations continue to deliver on volume and cost targets. The share price has hit resistance above $70 three times now in recent months, setting up the level as a key watch point if sentiment shifts back. For now, MinRes shares trade as a play on iron ore volume growth and lithium price recovery, with Lucky Bay likely to be relegated to a footnote in the FY26 story as we move into the second half.