2 November 2017
The West Australian
By Stuart McKinnon
Gina Rinehart’s Roy Hill Holdings is celebrating its maiden annual profit, marking the first full year of commercial production from its $US10 billion namesake iron ore project in the Pilbara.
Roy Hill posted a profit of $331 million for the 12 months ending June 30, up from a $34 million loss the previous year.
Bottom line profit was $523 million. It included a $274 million gain on foreign currency hedging, with the company benefiting from a lower Australian dollar over the period. The company recorded sales revenue of $2.3 billion on selling about 33 million tonnes of iron ore for the year. The company had budgeted for 39.5Mt.
Roy Hill’s Australian Securities and Investments Commission filing showed it employed 1394 people and spent $9.3 million on key management remuneration in 2017, down from $12.6 million the previous year.
Roy Hill declined to comment on its financial results yesterday but said it was pleased with its progress as it continued the ramp-up of its project.
The company achieved its targeted run rate capacity of 55mtpa in September.
The milestone put Roy Hill into a 90-day test period after which its lenders and equity partners will declare final completion of the project and higher repayments on Roy Hill’s approximately $7 billion debt pile will kick in. Roy Hill began production in December 2015 and achieved practical completion of the project late last year.
However it was forced to push back the December 2016 target for achieving project design capacity, because of teething problems with its processing plant. Roy Hill’s chief executive Barry Fitzgerald told a mining conference in Melbourne this week that the company would start using driverless trucks at its mine in the second half of next year as it looked to boost efficiencies to exceed its 55mtpa capacity. The company is already pursuing full automation of its drill rigs and the partial automation of its trains as it looks to cut operating costs.
But Mr Fitzgerald said last month the company was already on the lowest-quartile cost curve among its competitors.
Roy Hill is 70 per cent owned by Mrs Rinehart’s Hancock Prospecting with Japan’s Marubeni holding 15 per cent, South Korea’s Posco 12.5 per cent and China Steel Corporation 2.5 per cent.