A Western Australian mining giant which received a five-year royalty holiday from the state government to keep an iron ore mine open says further taxpayer assistance would not have affected its decision to close.

ASX-listed Mineral Resources is set to shut its Yilgarn iron ore operations near Southern Cross by the end of the year and plans to redeploy 1,000 workers who will be affected by the closure.

The Perth-based company run by billionaire Chris Ellison said the “prudent but difficult decision” reflected diminishing economic resources across five operating mines spread over 220 kilometres.  

The closure follows the end of a five-year relief package from the WA government which in 2018 agreed to forego millions of dollars in royalties to save hundreds of jobs.

That deal covered the Koolyanobbing mine in the Shire of Yilgarn after its previous owners, US miner Cleveland-Cliffs, threatened closure.

The company has made a number of high-profile spending decisions over the period, including a state-of-the-art headquarters in Perth, “resort style” camps for its workers, and an “airline” to fly its workforce around the country.

A spokesperson for the Department of Energy, Mines, Industry Regulation and Safety said the total royalty rebate had cost $270.4 million.

Cleveland-Cliffs, as the mine’s previous owners, received an additional $5 million.

The spokesperson said the rebate only ever applied to a maximum of 30 million tonnes of ore, and always had a five-year lifespan.

A Mineral Resources spokesperson said it had reached the 30 million tonne mark in February 2023, and had paid $77 million in royalties since.

Mineral Resources’ iron ore CEO Chris Soccio said further government assistance would not have made a difference as the Yilgarn operations were no longer “financially viable”.

Years of royalty relief

Nationals MP and Member for Roe Peter Rundle said while times and commodity prices were now different, he will approach the WA mines minister to investigate if a similar scheme could be warranted this time around.

“I’m not too sure whether this is about royalty relief or whether it’s actually about the viability of the mines,” he said. 

“Sometimes you can have a balance of a package that will encourage the company to go on. Originally, they were looking to go on until 2031, so that could be an opportunity for sure.” 

Mr Rundle said he will have discussions with Mineral Resources as the dust settles on the announcement.

The closure is yet another blow for Esperance Port which has exported almost 45 million tonnes of iron ore from the Yilgarn operations since 2018.

The port has already lost one of its biggest customers after the Ravensthorpe nickel mine was placed into care and maintenance earlier this year.

Future options unclear

Mr Soccio said the Yilgarn operations would ramp down in stages over the next six months, with four million tonnes of iron ore still to be shipped before the end of the year.

The mine will then be placed in care and maintenance from early 2025.

“This difficult decision was not taken lightly and follows years of investment to extend the life of our operations in the Yilgarn,” Mr Soccio said.

He said the company will continue to explore for resources in the region and will have further discussions with third parties such as Southern Ports as to what the future holds.

“Going forward we will maintain a presence at the Port of Esperance by the spodumene concentrate shipments,” Mr Soccio said.

“However, we acknowledge that the iron ore contribution is the the biggest user of the Port of Esperance so there will be an impact going forward.”

Big blow to Esperance

Shire of Esperance president Ron Chambers said the news was a blow to the community.

“There’s an awful lot of people that are involved, either in the rail or the actual port itself,” he said.

“The impact that’s going to happen on the community is around job security.”

But he suggested the existing rail and infrastructure at the Yilgarn site might make it an attractive proposition to a new operator.

“It’s not as if someone’s trying to set a project up, but they have to come up with a cost for all that infrastructure,” he said.

“I think there’s a good opportunity.”

It comes as the state government continues working through plans to expand the Helena and Aurora Ranges National Park, north of Koolyanobbing. 

This includes an area where Mineral Resources previously had two mining applications rejected.

Additional reporting by Emily Smith.