South32’s first-half operating unit costs were expected to be in line or below guidance for most of its operations, the Australia-headquartered metals and mining group said in an update yesterday.
“We are well positioned to capture the benefit of improved market conditions through expected production growth of 7% in the second half of 2024 and our ongoing focus on cost efficiencies,” said CEO Graham Kerr.
Record aluminium production was reached in the first half after Hillside Aluminium maintained its strong performance, and Brazil Aluminium delivered an 8% increase in quarterly production.
Cannington payable zinc equivalent production increased by 13% in the December 2023 half year, as a higher-grade sequence of stopes were mined.
Cerro Matoso nickel production improved 20% in the quarter, after planned maintenance was completed and a temporary reduction in third-party gas supply in the prior quarter.
Sierra Gorda production fell 14% in the half year, due to lower planned copper grades, and a temporary outage of the molybdenum plant.
Illawarra Metallurgical Coal production fell 39% as two planned long-wall moves were completed.
Manganese production fell 5% following lower yields, which impacted secondary production at Australia Manganese, and South Africa Manganese completed planned maintenance.
Alumina production was largely unchanged, while production guidance for Brazil Alumina fell by 7% due to third-party power outages and maintenance.
Production guidance for Mozal Aluminium was lowered by 12%, as pots in operation were reduced to enable the smelter’s recovery plan to deliver a sustained improvement in process stability.
“We continued our investment in critical infrastructure for the Hermosa project and remain on track to make a final investment decision for the Taylor zinc-lead-silver deposit in the March 2024 quarter,” said Kerr.
He said that in the quarter to end-December 2023, production results were mixed, with a 20% increase zinc and nickel and a 7% increase in silver.
Brazil Aluminium continued to ramp up. Production from Brazil Alumina, Mozal Aluminium and molybdenum output from Sierra Gorda was below plan, with flow on impacts to annual production guidance.
“With some of our commodities facing headwinds in the half, we continued to focus on delivering cost efficiencies and expect first-half operating unit costs to be below or in line with guidance for the majority of our operations,” said Kerr.
He said they were well positioned for higher margins in the second half due to planned 7% production growth and the focus on cost management.
He said they continued to invest to increase exposure to commodities critical to a low-carbon future.
“Sierra Gorda also continued work on the fourth grinding line expansion project, which has the potential to sustainably increase copper production," said Kerr.
Further details of a group-wide review focus on reducing expenditure in the 2024 and 2025 financial years would be provided in the interim results.
Trade receivables increased by the end of the half year due to the timing of sales, and the high-value aluminium inventory after port congestion at Richards Bay impacted the timing of shipments from Hillside Aluminium.
“We expect to complete additional shipments from Hillside Aluminium and draw down our aluminium inventory to normalised levels during the March 2024 quarter,” the group said.