South32 sticks to plan in June quarter

25th July 2022 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH ( – Diversified miner South32 has seen production increases in alumina, aluminium, copper, nickel and manganese ore for the three months to June, with operations delivering to plan despite weather impacts and labour availability issues.

“Our teams delivered another strong operating performance in the June quarter, despite challenges that included extreme weather, supply chain disruptions and reduced labour availability caused by the Covid-19 pandemic,” said CEO Graham Kerr on Monday.

“Record annual production at Worsley Alumina, along with record quarterly production at South Africa Manganese and a strong sales result in June, capturing the benefit of high prices, capped another year of substantial progress for South32.

“We achieved further significant milestones as we reshape our portfolio towards the metals critical for a low carbon future. In May, we completed the acquisition of an additional shareholding in the hydro-powered Mozal Aluminium smelter. We also completed our acquisition of an additional interest in the MRN bauxite mine and delivered first production from the restart of our Brazil Aluminium smelter, powered by 100% cost efficient renewable power.”

Alumina production for the fourth quarter ended June was up 3% on the previous quarter to 1.3-million tonnes, while aluminium production was up 5%, to 255 000 t. Copper production increased by 101% on the previous quarter to 16 900 t, with South32 securing a 95% interest in the Sierra Gorda project in February this year.

Meanwhile, nickel production for the quarter was up 2% on the third quarter, to 10 800 t, while manganese ore production was up 22% to 1.4-million tonnes with the South Africa Manganese operation delivering record production.

Silver production for the quarter declined by 22%, to 2.8-million ounces, with payable lead production down 25% to 25 800 t, while zinc production was down 6% to 15 400 t. Metallurgical coal production for the quarter was also down 12% on the previous quarter, to 1.38-million tonnes, as adverse weather conditions impacted the Illawarra Metallurgical Coal operation, along with Covid-19-related labour restrictions.

In the full year, South32 has reported a 1% decline in alumina production which reached 5.28-million tonnes, and a 1% increase in aluminium production reaching 992 000 t. Copper production in the full year was reported at 25 300 t.

Silver production for the full year was down 3%, to 13.19-million ounces, while lead production was down 8%, to 120 600 t, and zinc production was down by 5% to 64 500 t. Nickel production, for its part, was up by 22% in the full year, to 41 700 t.

Both metallurgical coal and manganese ore production in the full year fell by 7% and 3% respectively, to 5.7-million tonnes and 5.4-million tonnes.

South32 told shareholders that the company’s stable operating performance during the period allowed the company to capitalise on record conditions for a number of its commodities, with strong sales in the June quarter capturing the benefits of higher prices.

The company noted that innovative logistic solutions were established across multiple operations to mitigate the impact of ongoing port congestion, tight freight markets and the broader disruption of global supply chains, contributing to its strong sales performance in the June 2022 quarter.

This enabled the group to capitalise on strong markets, lowering its inventory position by the end of the financial year, with the working capital benefit of this work expected to be realised in the first quarter of 2023.

Meanwhile, operating costs for the 2022 financial year are expected to be in line with guidance at the majority of operations, with lower than anticipated producer currencies benefiting costs in the June 2022 quarter.

Looking forward, higher volumes at some of South32's operations and the tailwind of lower producer currencies are expected to provide partial relief from the ongoing effect of industry-wide labour, raw material and energy cost inflation that impacted the company’s cost base in the second half of 2022.