PERTH (miningweekly.com) – Diversified miner South32 has maintained its production guidance for 2022 following a strong March quarter, while operating cost expectations for its Australian and South African operations have increased on the back of stronger producer currencies, higher raw material costs and an increase in commodity prices which has resulted in higher price-lined royalties.
“We achieved a number of significant milestones in the quarter, making further progress to reshape our portfolio for a low carbon future,” said CEO Graham Kerr on Tuesday.
“We reported copper production for the first time, having completed our acquisition of a 45% interest in the Sierra Gorda copper mine. We moved a step closer to doubling our share of green aluminium production, delivering first metal from our Brazil Aluminium smelter following the end of the period. We also reported the prefeasibility results for our Taylor deposit, underlining its potential to add further growth in the metals critical to a low carbon future.
“We achieved another excellent operating result, delivering to plan, capitalising on historically strong end markets for many of our commodities. Our strong financial position allowed us to close the acquisition of Sierra Gorda and return our balance sheet to a net cash position by the end of the March quarter,” said Kerr.
Alumina production for the March quarter was down 1% on the previous quarter, to 1.3-million tonnes, while aluminium production in the same period also declined by 1%, to 243 000 t.
During its first quarter of copper production, South32 delivered 8 400 t of copper, following the completion of the 45% interest in the Sierra Gorda project.
Manganese ore production for the March quarter was down 4% on the previous quarter, to 1.2-million tonnes, while metallurgical coal production was up by 31% in the same period, to 1.5-million tonnes. South32 in December completed an extended longwall move at the Dendrobium mine, in New South Wales, with the December quarter also impacted by Covid-19 workforce restrictions impacted by labour availability.
Meanwhile, nickel production for the March quarter was up 1%, to 10 600 t, payable zinc production was down by 5% on the previous quarter, to 16 400 t, and payable lead production was up by 22%, to 34 600 t.
In the nine months to date, both alumina and aluminium production remained stable at 3.9-million tonnes and 737 000 t respectively, while manganese ore production declined by 5% on the previous corresponding period, to 3.9-million tonnes.
Metallurgical coal production in the nine months to March declined by 10% on the previous corresponding period, to 4.3-million tonnes, while nickel production was up by 33% in the same period, to 30 900 t. Zinc production for the year-to-date was up 2%, to 49 100 t, while lead production was up 5%, to 94 800 t and silver production was up by 9%, to 10.3-million ounces.
South32 told shareholders that the Worsley Alumina operation, in Australia, remains on track to creep production beyond nameplate capacity in 2022, with the refinery benefitting from historical investment and ongoing improvement initiatives.
South32’s Brazil Aluminium operation delivered first metal from the restart of the renewable-powered Alumar smelter following the end of the period, while the Hillside Aluminium and Mozal Aluminium continued to test their maximum technical capacity, taking advantage of record aluminium prices.
The Cannington operation delivered a 6% increase in year-to-date zinc equivalent production, benefitting from higher planned silver grades and a drawdown in run-of-mine inventory.
South32 also reported that the Cerro Matoso operation achieved a 33% increase in year-to-date nickel production, owing to higher grades from the Q&P pit and the prior period’s successful furnace refurbishment.
Meanwhile, South32 on Tuesday also told shareholders that the company had been awarded a A$15-million grant from the New South Wales government in April to construct a commercial pilot ventilation air methane abatement facility at its Illawarra Metallurgical Coal operations.
The new facility, featuring cutting-edge technology to tackle fugitive methane emissions will be established with the support of the Commonwealth Scientific and Industrial Research Organisation and its own co-funding of A$4.5-million.
The project will make up part of South32’s use of innovative technologies to reduce emissions, in line with its goal to halve operational carbon emissions by 2035 as part of its pathway to achieve net-zero operational carbon emissions by 2050.
The miner has, meanwhile, also downwardly revised its capital expenditure guidance for 2022, by $36-million, to $702-million, reflecting a deferral of capital spend at Worsley Alumina until 2023, reducing the 2022 improvement and life extension capital expenditure estimate by $11-million to $91-million, while also accounting for slower-than-expected contractor mobilisation at the Hermosa project, which has reduced the growth capital expenditure estimate for 2022 by $25-million to $90-million.
The company has also revised its operating cost guidance for the full-year, at the majority of its operations, to reflect the impact of stronger producer currencies, higher prices for raw materials and an increase in price-linked royalties.