South32 CEO Graham Kerr
PERTH (miningweekly.com) – Diversified miner South32 has reported declined production levels over a number of commodities, while also announcing a record year-to-date production at its Brazil alumina operations.
The miner on Thursday announced that alumina production for the second quarter ended December was up by 1% on the previous quarter, to 1.32-million tonnes, while aluminium production remained stable at 248 000 t.
Production at the Brazil alumina operation increased by 10% during the first six months of 2020, to a record 702 000 t, as the refinery benefitted from improved steam generation following the installation of package boilers in the June quarter, enabling the benefits of the de-bottlenecking Phase 1 project to be realised.
Both silver and lead production for the quarter were also up by 7% and 9% respectively, to 3.1-million ounces and 28 800 t.
However, both energy coal and metallurgical coal production for the December quarter declined by 12% and 25% respectively, to 5.8-million tonnes and 1.2-million tonnes.
South32 noted that production from the South Africa energy coal operation had declined by 3% in the first half ended December, as the operation demobilised contractors in response to market conditions, more than offsetting a 15% increase in export sales volumes following improved dragline availability at the Klipspruit project.
Despite the improvement in the dragline performance, the ramp-up to full use has been slower than anticipated, as a result of wet weather conditions.
South32 noted that combined with the company’s near-term outlook for domestic demand, and the demobilization of contractors operating the unprofitable pits, the company has adjusted the production expectations for the South African operations for the full 2020 to the bottom end of the 26-million-tonne guidance.
“We have acted decisively during the quarter in response to market conditions, reducing contractor activity at South Africa energy coal and higher costs trucking at our South Africa manganese business,” said South32 CEO Graham Kerr.
Meanwhile, coal production from the Illawarra metallurgical operation, in Australia, also decreased by 4% during the half-year, following the completion of a longwall move at the Appin mine. Full year production guidance for the operation has remained unchanged at seven-million tonnes, however.
Furthermore, South32 on Thursday also reported that manganese production for the quarter was down by 1%, to 1.39-million tonnes, while manganese alloy production was up by 7%, to 47 000 t during the quarter.
Both the Australian and South African manganese operations reported a fall in first-half production, with South32 noting that production at the South African operation had been affected by a decision to reduce the use of higher-cost trucking, and an extended maintenance shut at the Wessels mine in the December quarter, in response to market conditions.
Kerr on Thursday told shareholders that the company had taken action to reshape and improve its portfolio during the last six months, exercising its option to acquire a 50% interest in the Upper Kobuk mineral project, in Alaska, while also entering into a binding conditional agreement for the sale of its South Africa energy coal business, while progressing a review of its manganese alloy smelting exposure.
The miner in August last year flagged a review of the manganese alloy operations, with Kerr subsequently saying that the smelters had become more challenging, given that new smelters being developed in other parts of the world were making use of newer technologies, and often had subsidized power.
Kerr said that the options under consideration include outright closure of both the South African and Tasmanian operations, a mothballing of operations until a price rebound, or the outright sale of the assets to interested parties that had "a different view of the commodity or use of the equipment, and could make some money out of it".