Australian pension fund HESTA has divested its remaining shareholding in mining services provider Mineral Resources (MinRes), citing unresolved governance concerns and a lack of confidence in the company's ability to implement necessary changes.

HESTA's stake in MinRes is valued at approximately A$14m, reported Reuters.

The decision follows the abrupt resignations of three directors in April, who were part of the ethics and governance committee established in November 2024.

These departures have intensified scrutiny over MinRes, particularly regarding allegations against the company's founder and managing director, Chris Ellison. Accusations include tax evasion and the misuse of company resources for personal endeavours.

HESTA stated that a potential future reinclusion of MinRes shares in the fund's portfolio would require a clear plan to address governance issues.

The company added that the establishment of effective safeguards to prevent future incidents and a well-managed succession for the managing director are prerequisites for any reconsideration of investment.

HESTA initially placed MinRes on its watch-list in October 2024, reflecting concerns over inadequate measures to tackle governance problems.

This divestment follows a prior reduction in the fund's holdings of MinRes last year. Despite the sale, HESTA will maintain a watching brief on the company.

HESTA CEO Debby Blakey said: “Last year we outlined our concerns that the managing director’s succession time frame did not reflect the seriousness of the issues, and the issues indicated a systemic failure of governance. We have since regularly engaged with senior leaders and directors at the business to encourage action we believe necessary to restore investor confidence.

“The departures of the directors on the ethics and governance committee last month in our view represented a significant step backwards in seeking to address the serious governance concerns. Given these departures and the forthcoming succession of the Chair, we don’t currently see a path to our concerns being addressed. 

“We are focused on the delivery of strong long-term returns to our members, and believe selling our remaining holdings was in their best interests at this time. We may reconsider our position if circumstances change.”

In November 2024, MinRes cut 570 jobs and slowed down the underground construction at its Mt Marion lithium project in Western Australia, amid Chris Ellison’s tax evasion probe.