Mining billionaire Chris Ellison will step down as managing director of Australia’s Mineral Resources after a company review found he engaged in “profoundly disappointing” conduct by using company resources for his personal benefit.
Shares in the iron ore and lithium miner fell as much as 10 per cent on Monday after the company said it would accelerate a leadership succession plan to replace Ellison within 18 months.
The review included allegations that he failed to disclose revenue from overseas entities. Ellison had been under pressure to resign in recent weeks after admitting to purchasing mining equipment for MinRes through a British Virgin Islands-incorporated company in which he held a stake.
He reached a confidential settlement with the Australian Taxation Office in 2021 and paid A$4mn (US$2.6mn) in unpaid taxes in May 2023, but he only told the board about the settlement in November last year.
“At times, Mr Ellison has not acted with integrity,” said the MinRes board. “Mr Ellison has not placed sufficient separation between his personal interests and the interests of the company as a whole.”
Ellison said he was “deeply sorry” for the impact on his actions on the company’s reputation. “I acknowledge that I made mistakes, some of which were driven by my wish to keep private certain events that cause me great personal embarrassment,” he said.
Ellison, who will continue to serve as managing director until a successor is appointed, has been fined A$9mn by the company and stripped of nearly A$10mn of remuneration.
The market capitalisation of MinRes, which was built as a mining services business but has expanded into iron ore and lithium mining, has dropped almost 30 per cent in the past month to about A$7bn after the tax scheme was revealed by the Australian Financial Review newspaper.
The Perth-based company appointed law firm Herbert Smith Freehills to review its corporate governance and moved to reassure investors about the strength of its balance sheet in recent weeks. Last week, it struck a deal to sell oil and gas assets to Gina Rinehart’s Hancock Prospecting for A$1.1bn.
The review found that Ellison had “used company resources for personal benefit”, citing examples in which he directed employees to work on his private boat, properties and personal finances, as well as procuring goods and services for his own benefit through the company. MinRes said it had paid rent and afforded rent relief to entities in which Ellison and his daughter had an interest.
The company said Ellison had not sufficiently separated his personal interests with those of the company and “failed to appreciate the importance of transparent and timely disclosure”.
The move by Australia’s fourth-largest listed mining company to replace its founder comes less than two weeks after the founder of Wisetech, the country’s largest listed technology business, stood down from his role as chief executive following revelations about his personal life.
Citi analyst Kate McCutcheon slashed her target price on the stock by 30 per cent, saying in a note that the company faced uncertainty with a long handover period and a potential review by the corporate regulator.
“The slow pace of change will likely weigh on the stock,” she said.
