MinRes cuts 570 jobs in four months amid rout in the lithium sector
Gina Rinehart paid tribute to her friend, MinRes boss Chris Ellison, after pulling off a huge WA gas buyout, as MinRes revealed it had cut over 570 jobs in the last four months.
BRAD THOMPSON
Gina Rinehart’s Hancock Prospecting plans to supply gas to the market as soon as possible after striking a $1.13bn deal to buy assets in the Perth Basin from embattled rival Mineral Resources.
The deal takes some of the financial heat off MinRes and its managing director Chris Ellison amid a tax evasion scandal and question marks over the strength of the company’s balance sheet.
The buyout was announced as MinRes revealed it had cut 570 jobs across over the past four months as it tries to manage the rout in the lithium sector and transition its iron ore operations.
Mrs Rinehart said she welcomed the opportunity to work alongside “my friend Chris Ellison and his MinRes team”.
“Gas is critical to underpin base load power requirements and support local industry with the provision of reliable energy,” she said.
It comes after The Australian’s DataRoom column first revealed the sales of Mineral Resources energy business, in a move later confirmed by the company and that Mrs Rinehart was among the frontrunners to buy the operations.
Hancock Prospecting will pay $803m up front for the Lockyer/ North Erregulla project that is the most prized of the MinRes oil and gas assets in the Perth Basin, and another $327m if certain performance targets are hit.
The deal sees Hancock Prospecting take a 50 per cent share in MinRes’ remaining Perth Basin and Carnarvon Basin permits and part ownership of a drilling rig.
MinRes had been facing the prospect of an equity raising amid a board-ordered investigation into Mr Ellison’s involvement in a tax evasion scheme as well as scrutiny from the ASX and the Australian Securities and Investments Commission.
Mrs Rinehart and Mr Ellison first flexed their muscle in the Perth Basin in late 2022, launching separate takeover bids for Warrego Energy and Norwest Energy.
MinRes was involved in the bidding war for Warrego that also involved Kerry Stokes-backed Beach Energy before selling its stake to Hancock Prospecting. MinRes went on to secure Norwest.
Mrs Rinehart and Mr Ellison also crossed paths in 2023 as they embarked on a spending spree on lithium assets in WA.
It is understood Hancock Prospecting pulled together the acquisition of Lockyer and the other MinRes assets over the past six weeks, encouraged by the WA government moving to relax its ban on exports from onshore oil and gas projects.
In September, WA said it would allow onshore producers a six-year window to sell 20 per cent of their gas to more lucrative LNG export markets.
Hancock said Lockyer was one of the largest onshore discoveries in WA, with high quality gas reservoirs.
“As Australia’s most successful private resource company, with proven project development and operational expertise, Hancock intends to make use of its strong financial position to progress this exceptional project,” it said.
“Hancock will evaluate opportunities to accelerate development at Lockyer, and enable production to be brought to market as soon as possible.”
Hancock’s takeover of Warrego, completed in 2023, gave it a 50 per cent share of the adjacent West Erregulla gas field alongside Strike Energy.
Hancock intends to review its interests across the Perth Basin to identify opportunities and synergies, including for the location and scale of gas processing infrastructure.
MinRes previously flagged building a 250 terajoule-a-day plant at a cost of up to investing $1bn.
Mrs Rinehart said gas was essential for Australia to function given the ineffectiveness solar and wind generation in providing reliable and steady baseload power.
“Hancock is delighted to have made this investment to acquire 100% of this standout WA gas project at Lockyer, the development of which can have meaningful future benefits for local customers providing access to reliable energy, as well as providing new employment opportunities,” she said.
“To enable these projects to come timely online, without needing to raise costs to the consumer, less government tape will be required.”
Mrs Rinehart acknowledged WA premier Roger Cook for a policy change to allow gas exports from onshore project, saying it would enable investment and ultimately boost supply to local customers.
“Enabling more sales to higher-priced customers overseas enables marginal or uneconomic gas fields to supply locally, that otherwise would not be economic to develop,” she said.
MinRes chief executive of energy Darren Hardy said MinRes and Hancock had a long history built on a strong relationship.
“This transaction maximises the value of our exploration success for shareholders and again showcases our ability to unlock significant capital from MinRes’ portfolio of assets,” he said.
Mr Hardy said the new exploration joint ventures with Hancock in the Perth and Carnarvon basins would immediately decrease risk and accelerate its work in the highly prospective onshore petroleum acreage.
