Global miner South32 (ASX:S32) reported a 60% fall in underlying earnings for the 2023-24 financial year, but it tempered the impact of this significant drop with a new $US200 million share buyback following the sale of its Illawarra Metallurgical Coal business.
The company had flagged that the buyback would be set when the sale was finalised, which occurred yesterday.
South32 reported underlying earnings of $US380 million for the year, down more than 59% from 2022-23, but still better than market forecasts of $US334.2 million.
However, it reported a statutory loss of $US203 million (up 17% from a loss of $US173 million a year earlier) due to post-tax impairment expenses of $US388 million at its Worsley alumina refinery in WA and $US248 million at the Cerro Matoso ferronickel mine in Colombia.
The latter mine is the subject of a review by the company, with findings to be revealed in the June half of next year.
Given the price pressures and BHP’s decision to idle its significant WA nickel business, a similar decision for Cerro Matoso would not be surprising, especially considering there are no signs of any slowdown in cheaper nickel material coming out of Indonesia and flowing into China.
This increasing flow has destabilised global nickel prices and led to a slew of mines and projects being axed.
The board declared a final dividend of 3.1 US cents per share, down from 3.2 US cents in FY23, which will be paid in addition to the buyback.
South32 said it transformed its portfolio in FY24, with the approval to develop its Taylor zinc-lead-silver deposit at its Hermosa site in Arizona and the sale of Illawarra Metallurgical Coal.
The company stated that the Illawarra Metallurgical Coal sale simplifies its portfolio, strengthens its balance sheet, and unlocks capital to invest in new development projects and growth options in base metals.
