Improved operating performance, disciplined cost management and higher prices for its key commodities lifted South32’s financial results during the second half of its 2024 financial year, says Graham Kerr, CEO of the globally diversified mining and metals company.
The company declared a final dividend of $140m or 3.1 US cents per share, bringing total dividend payouts for the year to $158m.
“The board has also expanded our capital management programme by $200m, to be returned via an on-market share buyback, following the sale of Illawarra Metallurgical Coal,” Kerr said.
Still, average commodity prices were broadly lower in 2024, despite improved demand and constrained supply supporting prices during the second half. This had an impact on the group’s financials.
For the year to end-June, the company reported revenue from continuing operations of $5.4bn, down 3% compared with the previous year.
Underlying earnings before interest, tax, depreciation and amortisation was down 29% to $1.8bn.
The company, which is listed in London, Johannesburg and Australia, saw net losses after tax increase from $173bn to $203m. This was partly due to impairment expenses recognised for Worsley Alumina ($388m post-tax) in Australia and Cerro Matoso ($248m post-tax) nickel operations in Colombia.
The group produces commodities such as bauxite, alumina, aluminium, copper, zinc, lead, silver, nickel, manganese and metallurgical coal from operations in Australia, Southern Africa and South America. Across the business, it achieved 98% of its production guidance for the year.
Its manganese mining and aluminium smelting operations in SA both achieved record output this year, despite local headwinds such as load-shedding and rail and port challenges.
Hillside Aluminium in Richards Bay achieved record saleable production of 720 kilotonnes, despite the effect of load-shedding. Production is expected to be sustained at this level over the next two years.
“While operating unit cost guidance is not provided, the cost profile of the smelter will continue to be heavily influenced by the price of smelter raw material inputs, including alumina supplied by our Worsley Alumina refinery, and other external factors including the rand and inflation-linked energy costs,” the company said.
The smelter’s electricity is supplied by Eskom under a contract running to 2031, with tariff increases linked to the SA producer price index.
Its SA-based manganese production, based in the Kalahari Basin, increased by 3% to a record 2.2-million tonnes. “We lifted output of secondary products to capitalise on stronger manganese prices in the last quarter of the year,” the group said.
SA manganese production is expected to be maintained at 2-million tonnes in the 2025 and 2026 financial years.
Reiterating statements made earlier this year, Kerr told investors and journalists on Thursday that South32 remained open to buying Anglo American’s share of the manganese operations the companies jointly owned in SA and Australia if the price was right.
As part of a restructuring announced by Anglo CEO Duncan Wanblad in May, the company will be selling some of its assets as it pursues opportunities in other metals such as copper. No announcements have been made yet, but this might include Anglo selling its 40% stake in the manganese mines it owns with South32 in the Northern Cape.
“If it comes at a fair price, we will look at it, but if the price is above a level that won’t create value for our shareholders, we will be happy to work with another partner with us continuing to run operations,” he said.
Update: August 29 2024
This story has additional comment by South32’s CEO and new information.
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