Diversified mining and metals group South32 has maintained annual production guidance for all its operations with a strong start to the year in aluminium and a 20% rise in copper equivalent volumes from Sierra Gorda.
During the September quarter, the group, which is listed in Australia and on the JSE, completed the sale of Illawarra Metallurgical Coal and received cash proceeds of $964m.
“Completing the sale of Illawarra Metallurgical Coal is a major milestone in our portfolio transformation which has unlocked significant value and streamlined our business towards commodities critical for a low-carbon future,” said CEO Graham Kerr.
“The sale has also lowered our sustaining capital intensity and strengthened our financial position, enabling us to self-fund our growth in base metals and deliver returns to shareholders via our on-market share buyback,” he said.
Aluminium production increased by 5% in the September quarter as Hillside Aluminium continued to test its maximum technical capacity. Production from Brazil Aluminium and Mozal Aluminium increased by 12%.
Worsley alumina saleable production declined by 7% as planned calciner maintenance was undertaken, while Brazil alumina saleable production was largely unchanged as plant availability continued to improve.
Sierra Gorda payable copper equivalent production increased by 20% due to higher planned copper grades and a significant increase in molybdenum recoveries as a result of improved ore quality. Cannington zinc equivalent production declined by 34% due to challenging ground conditions, resulting in the deferral of a higher-grade stope to the December quarter.
In SA, manganese production increased by 12% as the operation delivered a strong mining performance and continued to sell secondary products to maximise margins.
Australia Manganese remains on track to resume production in the December quarter.
The group is still busy with the construction of Hermosa’s Taylor zinc-lead-silver project as planned. The Clark deposit was selected for a $166m award negotiation from the US department of energy for a potential commercial-scale battery-grade manganese facility.
The group also entered into a strategic alliance to explore for copper in the Kalahari copper belt in Namibia and an earn-in agreement for a zinc-lead-silver prospect in Nevada, the US.
“Our transformed portfolio, focused on copper, zinc and our aluminium value chain, leaves us well placed to capitalise on the global energy transition and stronger market conditions to start the year,” said Kerr.
At the end of the quarter, net debt had declined $723m to $39m after the completion of the Illawarra sale.
Working capital increased by about $150m, primarily related to a temporary increase in work in progress and finished goods inventories in our aluminium value chain.
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