Melbourne — South32 said on Monday that the future of its Western Australian Worsley Alumina business was in question due to environmental permit requirements, as it flagged a $554m charge on the business. Its shares slid more than 10%.
The Australian diversified miner’s Worsley Alumina operations began an environmental approval process with the Western Australia Environmental Protection Authority (WA EPA) in 2019 to mine more bauxite in native forest south of Perth.
The regulator in early July approved the proposal for mine development but attached a swathe of conditions on mining in the environmentally sensitive forest area that suggested the operations which employ more than 2,000 people were untenable.
“If imposed in their current form, several conditions recommended by the WA EPA create significant operating challenges for Worsley Alumina and impact its long-term viability,” said South32, which plans to challenge the decision.
South32 said that it will recognise an additional pretax impairment expense of $264m for its Cerro Matoso nickel project in Colombia in its operational results that also included downgrades to production expectations for the financial year that began in July.
Both impairments were non-cash impairments.
It cut Worsley production guidance for this financial year by 6%, Sierra Gorda copper production by 7% and zinc production at Cannington by 9%.
Shares in South32 fell 12.9% to A$2.98.
Jefferies said that while the lower production guidance was negative for the miner, the impending sale of its Australian steelmaking coal assets would provide development capital for its Hermosa project in the US.
That sale was on track for the first quarter of calendar 2025, after a consortium led by Singapore's Golden Energy and Resources secured $850m to buy South32’s Australian coking coal assets, two sources told Reuters, with private credit continuing to fill a funding gap for the largely debanked sector.
South32’s fourth-quarter manganese ore production plunged more than 60%, hurt by the temporary suspension of operations at its Groote Eylandt Mining Co (GEMCO) unit in the Gulf of Carpentaria, which has been suspended since mid-March after a cyclone.
As a result, the diversified miner’s manganese output for the quarter ended June 30 fell to 534,000 wet metric tonnes (kwmt) from 1,455 kwmt a year earlier. That compares with a Macquarie estimate of about 508 kwmt.
Reuters
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