Diversified miner South32’s South African manganese operations produced 2.18-million tonnes of manganese in the 2024 financial year, ended June 30, higher than the 2.11-million tonnes produced in the 2023 financial year, and above the two-million tonnes the group had expected to produce.
Group subsidiary Samancor Manganese in June entered into a binding agreement for the sale of the Metalloys manganese alloy smelter, in Gauteng, to Khwelamet, an entity jointly owned by Menar and Ntiso Investing Holdings.
Samancor stopped production at Metalloys in March 2020 and has said that it will keep the site on care and maintenance until ownership transfers to the buyer.
Meanwhile, the group’s Australian manganese operations recorded a drop in production to 2.32-million tonnes, from 3.55-million tonnes in the 2023 financial year, mainly as a result of the impact of tropical cyclone Megan in March.
Aluminium production remained largely unchanged year-on-year, the company reported, with Hillside Aluminium, in Richards Bay, achieving record production, Brazil Aluminium, in Brazil, continuing to ramp up, and Mozal Aluminium, in Mozambique, progressing its recovery plan.
The group’s Hillside Aluminium operation produced 720 000 t in the year under review – marginally higher than the 719 000 t produced the year before and in line with guidance.
Its Mozal Aluminium operation, however, delivered only 314 000 t, compared with the 345 000 t produced in 2023 and lower than the 320 000 t guided.
Alumina production remained largely unchanged, with improved plant availability at Brazil Alumina, in Brazil, partially offsetting a temporary bauxite conveyor outage at Worsley Alumina, in Australia, South32 reported on July 22.
Further, South32 reported that it achieved 98% of its 2024 financial year copper-equivalent production guidance and remains on track to deliver full-year operating unit costs in line with guidance.
The group reported strong sales in the June quarter, capturing higher commodity prices and releasing working capital to finish the year.
Additionally, it advanced its portfolio transformation, completing key milestones for the sale of Illawarra Metallurgical Coal, in Australia, and progressing construction at Hermosa’s Taylor zinc/lead/silver deposit, in the US, as planned.
“We delivered another quarter of improved operating performance, achieving sequentially higher volumes across the majority of our operations, and remaining on track to achieve 2024 financial year operating unit cost guidance.
“Our performance enabled us to capitalise on stronger commodity prices, lift sales volumes and release working capital, boosting cash generation in the quarter,” South32 CEO Graham Kerr said.
Payable zinc equivalent production at Cannington, in Australia, increased by 10% in the 2024 financial year, despite adverse weather impacts, as the operation realised higher average metal grades. However, payable copper equivalent production at Sierra Gorda, in Chile, declined by 15% owing to lower-than-planned copper grades and molybdenum recoveries.
Nickel production at Cerro Matoso, in Columbia, remained largely unchanged year-on-year, with higher plant throughput and nickel grades supporting a 6% increase in quarterly production.
Consistent with guidance, Illawarra Metallurgical Coal saleable production decreased by 24% as the operation completed planned longwall moves.
“The sale of Illawarra Metallurgical Coal is expected to be completed later this quarter, further strengthening our balance sheet, simplifying our business, reducing our capital intensity, and unlocking capital to invest in our high-quality development projects in zinc and copper.
“Construction and permitting are tracking to plan at the Taylor zinc/lead/silver deposit at Hermosa, the first phase of a regional-scale opportunity to supply commodities critical for the global energy transition,” Kerr said.
The sale of Illawarra Metallurgical Coal to an entity owned by Golden Energy and Resources and M Resources, for up to $1.65-billion, received Australian Foreign Investment Review Board approval on July 5. The transaction is expected to be completed late in the first quarter of the 2025 financial year, subject to the receipt of remaining foreign merger clearances.
As a result, South32 said that it would record an impairment reversal of about $200-million in the 2024 financial year financial results, excluded from underlying earnings.
The sale of a 50% interest in the Eagle Downs metallurgical coal project, in Australia, to a subsidiary of Stanmore Resources is expected to be completed in the first quarter of the 2025 financial year, with a consideration comprising $15-million in cash, a contingent payment of $20-million, and a price-linked royalty of up to $100-million.
Worsley Alumina’s impairment is about $554-million to a carrying value of about $2.02-billion, reflecting increased uncertainty created by the Western Australian Environmental Protection Authority’s recommended conditions for the Worsley Mine Development Project approval and associated challenging operating conditions.
Cerro Matoso’s impairment is about $264-million to a carrying value of about $54-million, reflecting structural changes in the nickel market expected to continue placing pressure on nickel prices and discounts for ferronickel products.
South32’s Australia Manganese business incurred about $90-million of idle capacity and remediation costs owing to tropical cyclone Megan, excluded from 2024 financial year underlying earnings.
Meanwhile, the 2024 financial year’s group underlying depreciation and amortisation is expected to be about $915-million, including about $140-million for the manganese business and about $130-million for Sierra Gorda.
Additionally, the 2024 financial year group underlying net finance costs are expected to be about $250-million, primarily from the unwinding of the discount on closure and rehabilitation provisions, and interest on lease liabilities and long-dated debt.