South32’s South African manganese operations produced 2.18 million tonnes of manganese in the financial year ending June 30, 2024.
This output surpasses the 2.11 million tonnes produced in FY 2023 and exceeds the group’s forecast of 2 million tonnes.
In June, Samancor Manganese, a South32 subsidiary, entered into a binding agreement to sell the Metalloys manganese alloy smelter in Gauteng to Khwelamet, a joint venture between Menar and Ntiso Investing Holdings.
Production at Metalloys ceased in March 2020, and the site will remain on care and maintenance until ownership transfers to the buyer.
The group’s Australian manganese operations experienced a production drop to 2.32 million tonnes from 3.55 million tonnes in FY 2023, primarily due to tropical cyclone Megan in March.
Aluminum production remained stable year-on-year, with Hillside Aluminium in Richards Bay achieving record production. Brazil Aluminium continued ramping up, and Mozal Aluminium in Mozambique progressed in its recovery plan.
Hillside Aluminium produced 720,000 tonnes, slightly higher than the 719,000 tonnes produced the previous year, aligning with guidance.
Mozal Aluminium, however, delivered only 314,000 tonnes, down from 345,000 tonnes in 2023 and below the 320,000 tonnes guidance.
Alumina production remained largely unchanged. Improved plant availability at Brazil Alumina partially offset a temporary bauxite conveyor outage at Worsley Alumina in Australia, South32 reported on July 22.
South32 achieved 98% of its FY 2024 copper-equivalent production guidance and is on track to meet full-year operating unit cost guidance.
The group reported strong sales in the June quarter, benefiting from higher commodity prices and releasing working capital to end the year.
The company advanced its portfolio transformation, completing key milestones for the sale of Illawarra Metallurgical Coal in Australia and progressing construction at Hermosa’s Taylor zinc/lead/silver deposit in the US as planned.
“We delivered another quarter of improved operating performance, achieving sequentially higher volumes across most of our operations, and remaining on track to achieve 2024 financial year operating unit cost guidance.
Our performance enabled us to capitalize on stronger commodity prices, lift sales volumes, and release working capital, boosting cash generation in the quarter,” said South32 CEO Graham Kerr.
Cannington’s payable zinc equivalent production in Australia increased by 10% in FY 2024, despite adverse weather impacts, due to higher average metal grades.
Conversely, payable copper equivalent production at Sierra Gorda in Chile declined by 15% due to lower-than-expected copper grades and molybdenum recoveries.
Nickel production at Cerro Matoso in Colombia remained stable year-on-year, with higher plant throughput and nickel grades supporting a 6% increase in quarterly production.
As expected, Illawarra Metallurgical Coal’s saleable production decreased by 24% as the operation completed planned longwall moves.
The sale of Illawarra Metallurgical Coal is anticipated to be completed later this quarter, further strengthening South32’s balance sheet, simplifying its business, reducing capital intensity, and unlocking capital for high-quality development projects in zinc and copper.
Construction and permitting at the Taylor zinc/lead/silver deposit at Hermosa are progressing as planned, with the first phase aiming to supply commodities critical for the global energy transition, Kerr added.
The sale of Illawarra Metallurgical Coal to an entity owned by Golden Energy and Resources and M Resources, valued at up to $1.65 billion, received Australian Foreign Investment Review Board approval on July 5.
The transaction is expected to complete late in the first quarter of FY 2025, pending remaining foreign merger clearances. Consequently, South32 will record an impairment reversal of about $200 million in FY 2024, excluded from underlying earnings.
The sale of a 50% interest in the Eagle Downs metallurgical coal project in Australia to a Stanmore Resources subsidiary is expected to complete in the first quarter of FY 2025, with consideration comprising $15 million in cash, a contingent payment of $20 million, and a price-linked royalty of up to $100 million.
Worsley Alumina’s impairment is approximately $554 million, reducing its carrying value to about $2.02 billion due to increased uncertainty from the Western Australian Environmental Protection Authority’s recommended conditions for the Worsley Mine Development Project and challenging operating conditions.
Cerro Matoso’s impairment is about $264 million, reducing its carrying value to about $54 million, reflecting structural changes in the nickel market expected to pressure nickel prices and discounts for ferronickel products.
South32’s Australian manganese business incurred approximately $90 million in idle capacity and remediation costs due to tropical cyclone Megan, excluded from FY 2024 underlying earnings.
FY 2024 group underlying depreciation and amortization is expected to be about $915 million, including about $140 million for the manganese business and about $130 million for Sierra Gorda.
Additionally, FY 2024 group underlying net finance costs are expected to be about $250 million, primarily from the unwinding of the discount on closure and rehabilitation provisions, and interest on lease liabilities and long-dated debt.
