Mining Weekly

JOHANNESBURG (miningweekly.com) – Despite the impact on production of load-shedding, the Hillside Aluminium in KwaZulu-Natal achieved record saleable production output of 540 000 t in the nine months ended March 30, as the smelter continued to test its maximum technical capacity.

Hillside Aluminium is considered an essential business in South Africa for the maintenance of power generation, given the role it plays in the sustainability of Eskom’s generation network.

As a result, the smelter continued to operate despite the nationwide lockdown that is scheduled to expire on 30 April 30, diversified mining company South32 said on Monday.

But owing to uncertainty around the Covid-19 pandemic, production guidance for the 2020 financial year has been withdrawn by South32, which is headed by CEO Graham Kerr.

Guidance for sustaining capital expenditure (capex) has been reduced by 48% to $12-million.

Mozal Aluminium saleable production was unchanged at 201 000 t in the nine months and guidance remains unchanged at 273 000 t while guidance for sustaining capex has been reduced by 8% to $11-million.

South African Energy Coal saleable production decreased by 5% to 17.4-million tonnes in the nine months ended March 2020. Higher export sales volumes were achieved as a result of improved dragline availability at Klipspruit and the diversion of lower calorific value coal to the export market to take advantage of favourable market conditions.

Notwithstanding the increased tonnages in the nine-month period, export sales declined 7% during the quarter, owing to the deferral of shipments caused by the temporary lockdown-induced closure of the Richards Bay Coal Terminal.

South32 said in its release to Mining Weekly that the average price it realised for domestic coal in the nine months was $24/t. In the June 2019 quarter, it invoked a hardship clause in its contract to supply coal from the Wolvekrans-Middelburg Complex to the Duvha power station with a view to securing a long-term pricing tariff that supports the sustainability of the business. During the March 2020 quarter, an interim pricing arrangement had been agreed to ensure continuous supply while Eskom undertook their review of the hardship claim.

While domestic operations were deemed essential for the maintenance of power generation and are exempt from the lockdown, domestic demand was expected to be impacted by lower total power generation during the June 2020 quarter.

Export operations were placed on temporary care and maintenance at commencement of the lockdown, with subsequent government approval partially remobilising operations at a reduced rate.

Guidance for sustaining capex has been reduced by 32% to $44-million.

South32’s South Africa manganese saleable ore production decreased by 7% to 1 504 000 wmt in the nine months as the company reduced its use of higher cost trucking and undertook an extended maintenance shutdown at the Wessels manganese mine in the December quarter, in response to market conditions.

The company’s manganese ore and alloy operations were placed on temporary care and maintenance at commencement of the lockdown, but manganese ore mining has remobilised at a reduced rate.

Manganese alloy saleable production increased by 2% to 48 000 t in the nine months but the Metalloys smelter in Meyerton remains on temporary care and maintenance.