A solid December quarter for South32 which reported quarter on quarter production growth across most of its commodities while the half year on half year performance was a little weaker.
The miner told the ASX on Monday that it is “well positioned to capture the benefit of improved market conditions, with further expected production growth in H2 FY23 and our ongoing focus on cost management to mitigate inflationary pressures.
On costs, South32 said it expects first half 2023 operating costs “to be in line or below FY23 guidance at the majority of our operations”.
South32 said its 2022-23 production guidance at Cannington silver mine in northern Queensland had been “revised lower by 11% due to lower mill throughput and labour availability impacting mining rates,” and at Brazil Aluminium by 25,000 tonnes (or 25%) “due to a slower ramp-up to nameplate capacity”
Among the quarter’s highlights were a 17% increase in metallurgical coal production in NSW to 1.483 million tonnes, a 13% increase in nickel production to 10,800, and a 17% lift in zinc production to 16,400 tonnes
And while South32’s copper production fell 1% quarter on quarter, this couldn’t stop the miner from recording a first half copper equivalent production increase of 12%. This reflects recent investments in copper and capacity.
Over the December half year, aluminium production increased by 15%, with a 50% uplift in low-carbon aluminium, following the acquisition of an additional shareholding in Mozal Aluminium and restart of the Brazil Aluminium smelter.
South32 said Worsley Alumina and Brazil Alumina operated at more than 100% of the nameplate capacity in the final quarter for an 8% lift in output which boosted the half year performance.
And the December half also saw South32’s Illawarra metallurgical coal operation finished strongly thanks to improved volumes and labour productivity in the December quarter (referred to above).
This almost offset a very poor first quarter, with first half production ultimately falling 1% over the same period last year to 2.753 million tonnes
The Sierra Gorda operation in Chile realised sequentially higher copper grades, delivering 45,000 tonnes of payable copper equivalent production in the December 2022 half year
Cerro Matoso commissioned the Ore Sorting and Mechanical Ore Concentration project in the December 2022 quarter, underpinning a 15-year extension to the mining contract, and supporting higher expected nickel production in the June half year.
And the company’s Australia Manganese achieved record half year production, supporting a 7% increase in total manganese production
South32 CEO Graham Kerr said in the statement:
“Despite industry wide inflationary pressures, we expect Operating unit costs for the first half to be in-line with or below guidance for the 2023 financial year at the majority of our operations.
“We remain focused on delivering safe and stable operational performance, and efficiencies to mitigate cost pressures and capture higher margins as markets improve.
“We returned US$927 million to shareholders during the period, paying record fully-franked dividends in respect of the June 2022 half year and continuing our on-market share buy-back.
“We have returned US$2.2 billion under our capital management program since inception, with US$108 million remaining to be returned to shareholders ahead of its extension or expiry in September 2023.
“Looking forward, our capital management framework and disciplined approach to capital allocation is designed to reward shareholders as we grow our production and realise the benefits of improving market conditions. At the same time, we continue to reshape our portfolio toward metals critical for a low-carbon future, advancing construction work, studies and exploration at our high-quality development options.”
The company said that November saw the death of two South32 employees who were fatally injured during maintenance work on a raising girder at the company’s Mozal Aluminium operation in Mozambique.
“Our deepest sympathies are with the families and colleagues of the deceased, to whom we have provided our support and counselling,” the company said in a statement.
“Key learnings from the incident are being shared across our organisation and within the industry. As an immediate step, additional controls were put in place for all raising girders at Mozal Aluminium and Hillside Aluminium.”
South32 shares rose 1.3% to $4.63.
