The Lucky Bay mine is located between the WA regional towns of Kalbarri and Northampton, 530km north of Perth.
It's owned by Mineral Resources, a listed mining services group holding iron ore, lithium and energy assets, which acquired the mine from its former distressed operator in September 2025.
However, the conflict in the Middle East, which began in late February when the US attacked Iran and triggered the closure of major oil shipping route the Strait of Hormuz, has hurt the mine's profitability.
Mineral Resources said the impact was material, given that the region accounts for a significant proportion of Lucky Bay's sales of heavy sands, which are used for sandblasting and water-jet cutting.
"Combined with materially higher diesel and shipping costs, a strategic review of Lucky Bay has determined it is in the best interests of the company and shareholders to cease operations," it told the stock exchange on Thursday.
The mine will move into a care-and-maintenance stance from July 1.
"The decision will impact approximately 110 employees, who will be supported by MinRes and offered redeployment opportunities across the company's other operations, where suitable," it added.
"MinRes will assess all options for Lucky Bay's future, including a potential divestment."
The company estimates the decision will result in a non-cash impairment in its full-year accounts, after writing down the value of the mine by around $40 million.
Mineral Resources had owned a stake in the previous mine owner, Resource Development Group, and acquired the asset under a complex debt forgiveness and cash injection deal after pouring millions of investment dollars into the company.
Mineral Resources shares closed on Wednesday at $65.86.
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