Grange Resources Posts $58.5M Profit Despite Market Headwinds

About Grange Resources Limited

Grange Resources Limited (ASX: GRR) is an Australian premier producer of iron ore pellets, with over 55 years of experience. Operating at the Savage River magnetite mine and Port Latta pellet plant in Tasmania.  Grange Resources Limited was listed on the ASX on 27 March 1986 at an issue price of AUD 0.05 per share.

Financial Performance

Grange reported a FY24 profit after tax of AUD 58.5 million, representing a sharp decline from AUD 150.1 million the previous year. Revenue dropped to AUD 520.8 million, primarily driven by a fall in average realised product prices to AUD 182.94 per tonne (FY23: AUD 212.83). Operating costs rose to AUD 146.14 per tonne, reflecting higher energy and mining movement costs. Despite this, the company paid out $29 million in dividends and strengthened its balance sheet, closing the year with AUD 298 million in cash and liquid investments.

Growth Pipeline

Despite challenging market conditions in 2024, GRR remains committed to long-term growth through its underground development strategy and investment in the Southdown Magnetite Project. A definitive feasibility study confirmed the technical and economic viability of transitioning to underground mining at North Pit. While development was temporarily paused in December 2024 due to weakened iron ore prices and the need for long-term funding, GRR expects works to resume in 2026. Additionally, the Southdown Project, which contains over 1.2 Bt in Mineral Resources, continues progressing with studies focused on water access, energy optimisation, and environmental approvals. Once operational, Southdown could double GRR’s iron ore output and strengthen its market presence in Asia-Pacific and beyond.

Strategic Development

Grange completed 3km of underground decline development at North Pit and made significant progress on ventilation and material handling infrastructure. It also received full regulatory approval for underground mining. Operationally, the company achieved over 600 days of injury-free operation and implemented technology such as fatigue alert and collision avoidance systems to bolster safety. Furnace upgrades at Port Latta reduced reliance on coal, resulting in an 8% drop in CO₂ emissions per tonne of pellet. These sustainability efforts are supported by federal decarbonisation grants and align with Grange’s goal of halving emissions by 2030.

Industry Context

Global iron ore markets faced challenges in 2024, driven by ongoing weakness in China’s property sector and a broader slowdown in construction demand. Stimulus measures introduced by the Chinese government have yet to yield meaningful recovery in steel production or demand for construction inputs. As a result, iron ore producers globally experienced pressure on margins and export volumes.

New trade tensions are arising from tariffs imposed by the United States on key trading partners, including China, Canada, and Mexico. These protectionist measures have increased fears of a global trade slowdown, with ripple effects anticipated in the commodities sector. For Grange Resources, whose magnetite pellets are mostly exported to Asia-Pacific markets, particularly China, the tariffs could indirectly affect demand and pricing if global steel output diminishes further or buyers pursue alternative sources due to rising uncertainty. Furthermore, any retaliatory trade actions or changing geopolitical alliances could modify supply chains, potentially delaying contract negotiations or decreasing the appetite for premium iron ore products. Although GRR is not directly involved in the US market, the globalised nature of the steel industry indicates that widespread economic disruptions could impact pellet pricing, contract stability, and long-term expansion plans.

Grange Resources offers investors exposure to premium magnetite products with a long operational track record and a clearly defined decarbonisation roadmap. Its integrated operations and substantial cash reserves provide resilience during commodity cycles. The strategic focus on underground development and the Southdown expansion could unlock significant value in the years ahead, especially as demand for low-emission iron ore intensifies.