Global miner South32 has maintained its June 30 production guidance after the three months to March saw its operations “continuing to deliver to plan (and) capitalising on strong prices.”
Strong reports from its alumina, aluminium, nickel and coking coal operations in the March quarter will add to the record half year performance reported in February and saw the company take advantage of the record prices of some key commodities, such as coking coal and nickel.
That saw long time CEO Graham Kerr comment in Tuesday’s report: “We achieved another excellent operating result, delivering to plan, capitalising on historically strong end markets for many of our commodities.”
But the company says its financial year unit cost guidance has been lifted to reflect stronger currencies in the countries it produces – such as nickel in Colombia and manganese and aluminium in South Africa.
As well as the higher costs there’s the rise in commodity prices, which “in many cases result in higher price-linked royalties at our operations.”
The company said that after paying out more than $US1.8 billion in the quarter – the interim dividend of $US404 million along with the $US1.4 billion payment in the quarter for its 45% stake in the Sierra Gordo copper mine in Chile – it still managed to end the period with cash of $US52 million.
So far as its performance in the quarter and for the rest of the year is concerned, the company was upbeat about the performances of its alumina and aluminium assets.
The company said the Worsley Alumina operations in WA “remains on-track to creep production beyond nameplate capacity in FY22, with the refinery benefitting from historical investment and ongoing improvement initiatives.
That will enable it and the company to benefit from the tightness and high prices for alumina at the moment.
South 32 said its Brazil Aluminium delivered first metal from the restart of the renewable-powered Alumar smelter following the end of the period.
The Hillside Aluminium and Mozal Aluminium operations in South Africa “continued to test their maximum technical capacity, taking advantage of record aluminium prices.”
And with the completion of the Sierra Gordo deal, South 32 included copper in its quarterly production report for the first time with 9,700 tonnes of copper equivalent in the data.
The Cannington mine in north Queensland delivered a 6% increase in year-to-date zinc equivalent production, benefitting from higher planned silver grades and a drawdown in the processing of run-of-mine stocks.
The Cerro Matoso operation in Colombia saw a 33% increase in year-to-date nickel production, due to higher grades and the prior period’s successful furnace refurbishment
Illawarra Metallurgical Coal (south of Sydney) saw a 42% increase in quarterly production, despite the lingering impact of wet weather and disruptions to labour availability caused by COVID-19 infections causing staffing shortage son some shifts.
Manganese production declined by 4% in the quarter with a 1% improvement at Australia Manganese, more than offset by the impact of planned maintenance at both of the company’s South African mines
South 32 said it “completed a pre-feasibility study for the zinc-lead-silver Taylor Deposit at the Hermosa project during the quarter, underlining its potential to be a globally significant and sustainable producer of base and precious metals in the industry’s first cost quartile.”
So good news all round, but to no avail as the shares were sold off heavily amid fears of a China slowdown. South 32 shares fell 7.8% to $4.46.
The report was a high quality quarterly, but that was ignored, even though it points to a repeat of the record first half performance by June 30 if (that that’s the key point) Chinese demand doesn’t collapse.
