South32 exceeds June manganese production expectations
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MINING company South32 said yesterday that its South African and Australian manganese operations had exceeded expectations during June 2021.
The Australian-headquartered South32 said South Africa Manganese had recorded a 21 percent year-on-year improvement in saleable ore production to 2.26 million tons, as the operation recovered from an extended shutdown in response to Covid-19 restrictions and market conditions in the prior year.
“Strong production in the June 2021 quarter supported higher sales, with an increase in our use of opportunistic, higher cost trucking lifting sales volumes by 28 percent,” said South32. South Africa produces most of the world’s manganese, which is primarily used in steel production.
Mining companies, including Exxaro Resources, have previously complained that rail constraints had affected sales. Transnet Freight Rail, which has underperformed, said earlier this month it was investigating the root cause of the derailments of its wagons on its train lines.
South32 said it did not produce any manganese alloy in the 2021 financial year as the Metalloys smelter remained on care and maintenance. A year ago South32 placed the Metalloys smelter in Meyerton, Gauteng, on temporary care and maintenance, after considering the future economic viability of the operation.
Australia Manganese’s saleable ore production increased by 2 percent to a record 3.5 million tons in the 2021 financial year, despite the impact of higher-than-average rainfall during the wet season. However, the group said it slashed the value of Illawarra Metallurgical Coal in Australia by almost $1 billion (R14.6bn). The group said it would recognise a $728 million pretax, non-cash impairment charge for Illawarra in the 2021 financial year.
South32, which was spun out of BHP in 2015, said South Africa Energy Coal’s (SAEC) saleable production fell by 20 percent to 18.1 million tons in the 2021 financial year, following the divestment of the operation, and booked an unaudited loss on sale of $160m. The company said the loss would be excluded from underlying earnings in 2021.
SAEC, which was sold to Seriti Resources, was renamed Seriti Power and comprises the Khutala, Klipspruit, and Middelburg Mines Services, North and South mines. The mines provide coal to the Kendal and Duhva power stations, and export coal via the Richards Bay Coal Terminal.
Seriti holds a 90 percent interest in Seriti Power, while an Employee Trust and Community Trust each hold a 5 percent interest.
South32 said while SAEC would be presented as a discontinued operation, it also expected to report an underlying earnings before interest and taxation loss of $150m, including third party products and services with its 2021 results.
The group said it had invested $23m in sustaining capital expenditure and $53m in major project capital expenditure at the operation during the 2021 financial year, prior to its divestment.
South32’s shares closed 1.89 percent higher at R30.80 on the JSE yesterday.