South 32 disappointed yesterday by missing its full-year production guidance for several commodities after bad weather and poor mining conditions at some operations hit performance.
South32 missed its annual production guidance for Worsley alumina in WA, South African energy coal, Australian manganese ore, silver and lead. While the spin off from BHP posted a 2% increase in aluminium production and a 5% lift in manganese ore production, output for all other commodities declined compared to the previous year.
“While we didn’t achieve the level of consistency that we expect from our broader portfolio, our alumina, nickel and manganese operations finished the year on a strong note,” CEO Graham Kerr told the ASX in comments with the June quarter production report. The news saw shares in South 32 fall 1.7% to $2.79.
But output of energy (thermal coal) coal fell 8%, metallurgical (coking, mostly hard) coal slumped 19%, while there was a 2% dip for production of manganese alloy.
Nickel production was down just 1%, but, silver plunged 27%, lead by 24%, and zinc 11% (from the Cannington mine in Queensland).
On a quarterly basis, fourth-quarter production in all commodities rose or was flat except for silver, lead and zinc, which fell.
Of growing concern is the mining situation at the Appin hard coking coal mine south of Sydney which has suffered from repeated increases of methane gas concentrations, leading to halts to mining and lost production.
Mr Kerr said production at the Appin remains suspended while operations there are reviewed so that the mine can be restarted safely and reliably.
Operations at the Appin colliery were suspended in June.
The NSW Department of Planning and Environment has expressed concerns over gas levels and operating practices at the Illawarra metallurgical coal operation.
Back in 1979, 14 of 46 men underground at Appin died in a tremendous explosion caused by a sharp rise in methane gas concentrations. In South Africa, South32 said adverse weather had affected development of new mining areas at the Wolvekrans-Middelburg Complex in South Africa, which led to a 9% fall in the annual production of South African energy coal.
Stronger demand and pricing helped boost production of South African manganese ore but output of Australian manganese ore fell because of heavy rainfall associated with tropical cyclone Alfred.
The Mozal aluminium smelter in Mozambique achieved a record performance for the year, lifting production by 2%.
