South32 revises full-year zinc, nickel, coal guidance downward

24th April 2023 By: Marleny Arnoldi - Deputy Editor Online

South32 revises full-year zinc, nickel, coal guidance downward

South32 CEO Graham Kerr

Global diversified miner South32 has reported a mixed performance for the nine months ended March 31, with some of its commodities’ yearly guidance having been revised downward.

Notably, the Mozal Aluminium smelter, in Mozambique, has been trying to recover following two fatalities in November last year, with efforts now being hampered by severe flooding in the area.

Accordingly, the company has revised the operation’s yearly guidance downward by 8% for the full 2023 financial year, to 340 000 t, from the 370 000 t expected previously.

In the financial year to date, Mozal produced 263 000 t of aluminium.

Nevertheless, South32’s overall aluminium production increased by 15% in the year-to-date to 847 000 t. This is poised to improve further as the company continues to test the technical capacity of the Hillside Aluminium operation, in South Africa. The Hillside operation’s yearly guidance remains unchanged at 720 000 t for the full year.

While the Brazil Alumina operation is expected to produce 4% less than previously anticipated, at 1.3-million tonnes, guidance remains unchanged for the Worsley Alumina operation, in Australia, at four-million tonnes.

During the March quarter, South32 also had to temporarily suspend mining activity at the Cannington silver and lead mine, in Australia, owing to heavy rainfall, and has revised down the mine’s yearly payable zinc-equivalent production guidance by 6% to 195 900 t, from the 209 400 t guided previously.

Nickel production from the Cerro Matoso mine, in Colombia, has also been revised downward by 7%, owing to a reduction in access to higher-grade ore in the three months ended March 31.

The group now expects the mine to produce 40 500 t of payable nickel, instead of the previously expected 43 500 t for the full year.

Additionally,South32’s Illawarra Metallurgical Coal subsidiary’s Appin mine, in Australia, encountered challenging strata conditions in the quarter ended March 31, resulting in lower longwall productivity.

As a result, South32 expects the mine to produce 7% less coal for the full year, at 6.5-million tonnes, from the seven-million tonnes expected previously.

On the positive side, South32’s yearly production guidance for payable copper remains unchanged at 71 800 t, thanks to the Sierra Gorda copper mine, in Chile, having achieved strong volume growth in the period.

Moreover, record production in the nine months ended March 31 at the Australian manganese operations of 2.6-million tonnes has supported a 3% increase in yearly production guidance to 3.5-million tonnes.

Guidance remains unchanged for the South African manganese operations, at two-million tonnes, with 1.5-million tonnes produced in the year-to-date.

CEO Graham Kerr says improved market conditions in the quarter ended March 31 have supported higher prices across most of South32’s commodities, with strong price realisations in the premium hard coking coal and manganese products in particular.

The company’s strong financial position has enabled it to return $31-milion to shareholders through a share buyback programme in the quarter, with a further $128-million to be returned.

Kerr says the company remains well positioned to capitalise on improved market conditions for the remainder of the financial year.

He adds that South32 continues to reshape its portfolio towards commodities that are critical to a low-carbon future, while the company also progresses construction and development at key projects.

For example, critical path activity and study work continues at the Hermosa project, in the US, as well as construction of a second water treatment plant, which will be commissioned in the current quarter. South32 explains that dewatering at the Hermosa project is key to access the Taylor and Clark deposits.

The Clark deposit will see a pilot plant build for producing battery-grade manganese, which South32 will potentially supply to the North American market.

In the year to date, South32 has invested $28-million in greenfield exploration targeting base metals in Australia, the US, Canada, Argentina, Peru and Ireland. The company also invested $47-million in exploration programmes at existing operations in the year to date.