Johannesburg - Diversified mining and metals company South32 said on Thursday that it was on track to achieve full-year guidance for the majority of its operations, despite what it said was a challenging quarter to the end of December last year.
The Perth, Australia-based group, said output of manganese ore, used in steel making, increased to 1.25 million tons, from 909 000 tons in the corresponding period a year earlier.
South32, which is the world’s largest producer of manganese ore, said its Brazilian alumina operations had reported record production, “while our African aluminium smelters continue to operate at benchmark levels of current efficiency”.
South32 chief executive Graham Kerr said while stronger commodity prices and an operating leverage had enabled the company to strengthen its financial position, South32 continued to focus on safety and the optimisation of operations.
“At Illawarra Metallurgical Coal (in New South Wales, Australia) we have addressed a number of operational challenges during the quarter and our remediation activities are tracking to plan. We have demonstrated the flexibility of our manganese business to respond to favourable market conditions by opportunistically increasing ore production.
“We entered into a binding agreement to purchase the Metropolitan Colliery (in Australia), consistent with our strategy to invest in high quality mining operations where we can create value,” Kerr said.
The JSE-listed South32 said South Africa energy coal saleable production decreased by 1.6 million tons (9 percent) to 14.8 million tons. It attributed the decrease to the closure of the North Plant at the Wolvekrans-Middelburg Complex, scheduled maintenance and the repositioning of draglines. The energy coal operations are located near the towns of eMalahleni and Middelburg in the coalfields of Mpumalanga.
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South32 said its strong balance sheet and investment grade credit rating remained a priority. “During the period, Standard & Poor’s and Moody’s reaffirmed their respective BBB+ and Baa1 credit ratings, following their annual reviews. Our net cash position further benefited from gross distributions totalling $137 million (R1.85 billion, South32 share) from equity accounted investments in the December 2016 half year,” the company said.
South Africa manganese saleable ore production increased by 23 percent to 934 thousand wet tons “as market conditions supported a draw down of Wessels concentrate stockpiles and the use of higher cost trucking to access export opportunities,” said South32.
The Wessels Central Block project in the Northern Cape remains on track to be completed in the March 2017 quarter. The project is meant to enable mining to relocate closer to critical infrastructure and lower production costs in the underground mine.
Manganese alloy production decreased by 20 percent in the half year to last December as a result of furnace instability.
South32’s payable zinc production increased by 1 percent, while payable silver and lead production decreased by 27 percent and 24 percent, respectively.
South32 shares were down 1.43 percent on the JSE yesterday to close at R28.18.