South32 (S32) has reported third-quarter coking coal (for steelmaking) production in Australia fell more than analysts estimated as mine work was undertaken as the company continues to accumulate hundreds of millions of dollars in cash.
The company also reported lower silver, led, zinc and bauxite output, but small rises in production of aluminium and manganese. It has trimmed 2016-17 guidance for some of these commodities.
Coking coal production fell to 1.43 million tonnes in the three months to March 31, from 1.64 million a year ago, the company told the ASX yesterday in its latest production report.
The company maintained its annual production forecast at 7.9 million tonnes.
South32 ended the $200 million deal to purchase a mine near Wollongong from Peabody Energy after the competition regulator, the ACCC raised concerns about the sale.
For the three months to March 31, alumina output came in at 1.29 million tonnes as against market estimate for a slightly higher figure.
The group’s energy coal output of 6.86 million tonnes was well short of forecasts for 8.1 million thanks to wet weather in South Africa, while the fall coking coal production was due to “challenging (mining) ground conditions” in Illawarra.
Manganese alloy output was also short of market projections, but manganese ore just edged expectations and aluminium output matched forecasts.
Silver output from the Cannington mine in Queensland, the world’s largest, fell 21% to 3.55 million ounces due to lower grades, and now the impact of a fire.
The fire at the mine in early April month forced the company to cut its annual production guidance to 16.5 million ounces, down from last year’s output of 21.4 million ounces.
New guidance for lead is 135,000 tonnes of lead and 70,000 tonnes of zinc. That’s are down sharply from the original forecast of 19.05 million ounces of silver, 163,000 tonnes of lead and 80,000 tonnes of zinc.
The company’s manganese ore output rose to 1.29 million tonnes during the third quarter from 1.21 million a year ago
Aluminium production was 245,000 tonnes compared with 240,000 tonnes last year.
“Despite several operational challenges during the quarter we increased our net cash balance by $645 million to $1.5billion,” Chief Executive Officer Graham Kerr said in the statement. He made no comment about what the company would do with its growing cash pile.
South32 shares ended up 1% at $2.81.
