PERTH (miningweekly.com) - Despite a strong December quarter, diversified miner South32 on Monday warned shareholders that labour shortages and freight bottlenecks would impact global operations this year.
“We achieved a number of strong production results across our portfolio and realised significantly higher commodity prices in the December 2021 half-year, lifting operating margins across the group,” said CEO Graham Kerr.
“We delivered higher base metals production and our integrated aluminium supply chain benefitted from additional alumina volumes and record aluminium prices. We took further steps to reshape our portfolio for a low carbon future, increasing our exposure to critical metals with our planned acquisition of a 45% interest in the Sierra Gorda copper mine in Chile and further investment in green aluminium.”
Alumina production for the second quarter ended December was up by 4% on the previous quarter, to 1.3-million tonnes, bringing half-year production to 2.6-million tonnes, down 4% on the previous half.
The quarterly increase in alumina production was due to the Worsley alumina project continuing to operate above nameplate capacity, as well as as a result of record production from Brazil alumina, as it returned to normalised rates following a bauxite unloader outage in the September quarter.
Aluminium production in the December quarter was down 1%, to 246 000 t, while half-year production remained stagnant at 494 000 t.
“We expect to grow our total share of aluminium production by approximately 24% to 1.2-million tonnes in 2023, through our proposed acquisition of an additional interest in the hydro-powered Mozal Aluminium smelter and the restart of the Brazil Aluminium smelter using 100% renewable power,” Kerr said on Monday.
Metallurgical coal production for the quarter was down 24% on the previous quarter, to 1.1-million tonnes, and down 15% in the half-year to 2.8-million tonnes. South32 told shareholders that the company had completed an extended longwall move at the Illawarra metallurgical coal project, in Australia, during the quarter, which resulted in the lower coal productions.
Manganese production for the quarter was down 17% on the September quarter, to 1.2-million tonnes, and down 2% in the half-year to 2.8-million tonnes.
South32 told shareholders that Australia manganese saleable production decreased by 7% to 1.7-million tonnes in the December half-year with lower yield at the primary concentrator, while the PC02 circuit continued to deliver production above nameplate capacity.
South Africa Manganese saleable production increased by 7% to 1.1-million tonnes in the same period, as planned maintenance completed in the December quarter was more than offset by higher volumes of premium material from the Mamatwan mine as it optimised its product mix.
Meanwhile, nickel production in the December quarter was up by 11%, to 10 700 t, and by 26% in the half-year to 20 300 t. South32 increased payable nickel production at Cerro Matoso by 26% with plant availability benefitting from completion of the furnace refurbishment in 2021.
Silver production was down 8% in the quarter, to 3.2-million ounces, but up by 12% in the quarter to 6.7-million ounces. Lead production in the quarter was down 11%, to 28 300 t, but up 5% in the half-year to 60 200 t, while zinc production was up 12% in the December quarter, to 17 300 t, and up 8% in the half-year, to 32 700 t.
“We returned $316-million to shareholders during the period through our on-market share buy-back and the payment of ordinary and special dividends. Looking forward our shareholders are well positioned to benefit from stronger markets and production growth, with our capital management framework designed to reward owners as our financial performance improves.” Kerr said.
However, the miner noted that the Covid-19 pandemic continues to impact operations and supply chains in different ways, across its global portfolio. The miner said that it had seen an increase in case numbers and workforce restrictions in many of the jurisdictions in which it operates, impacting labour availability.
“Port congestion and tight global freight conditions continue to impact our supply chains, slowing the movement of inventory, most notably for our aluminium smelters in Southern Africa. While the resultant build in aluminium inventory during the December 2021 half-year is expected to persist in the near term, we have and continue to establish alternative shipping solutions and points of dispatch to minimise the impact. We expect the working capital build to unwind once we realise the full benefit of our initiatives, and port congestion and general freight tightness is alleviated,” said South32.