REG - South32 Limited - Quarterly Report: June 2024
22/07/2024 07:15
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RNS Number : 2437X South32 Limited 22 July 2024
QUARTERLY REPORT
June 2024
• Achieved 98% of current Group FY24 copper equivalent production guidance(1),
and remain on track to deliver FY24 Operating unit costs in line with current
guidance.
• Delivered strong sales in the June 2024 quarter, capturing higher commodity
prices and releasing working capital to finish the year.
• Advanced our portfolio transformation, completing key milestones for the sale
of Illawarra Metallurgical Coal(2), and progressing construction at Hermosa's
Taylor zinc-lead-silver deposit as planned.
• Aluminium production was largely unchanged year-on-year, as Hillside Aluminium
achieved record production, Brazil Aluminium continued to ramp up, and Mozal
Aluminium progressed its recovery plan.
• Alumina production was largely unchanged year-on-year, with improved plant
availability at Brazil Alumina partially offsetting a temporary bauxite
conveyor outage at Worsley Alumina in the quarter.
• Cannington payable zinc equivalent production(3) increased by 10% in FY24,
despite adverse weather impacts, as the operation realised higher average
metal grades.
• Sierra Gorda payable copper equivalent production(4) declined by 15% in FY24,
as higher plant throughput was offset by lower than planned copper grades and
molybdenum recoveries in the current phase of the mine plan.
• Cerro Matoso nickel production was 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% in FY24, as the operation completed planned longwall moves.
• Australia Manganese progressed recovery plans following Tropical Cyclone
Megan, while South Africa Manganese responded to stronger manganese prices,
achieving record annual production.
• FY25 production guidance revised lower for alumina (5%), Sierra Gorda payable
copper equivalent (7%) and Cannington payable zinc equivalent (9%).
• Impairment expenses for Worsley Alumina (~US$554M pre-tax) and Cerro Matoso
(~US$264M pre-tax) will be recognised in our FY24 financial results.
South32 Chief Executive Officer, Graham Kerr: "We delivered another quarter of
improved operating performance, achieving sequentially higher volumes across
the majority of our operations, and remaining on track to achieve FY24
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.
"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."
Production summary
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 QoQ
Alumina production (kt) 5,101 5,063 (1%) 1,249 1,240 1,249 1%
Aluminium production (kt) 1,133 1,138 0% 286 278 285 3%
Payable copper production (kt) 70.7 60.8 (14%) 17.3 13.9 15.3 10%
Payable silver production (koz) 11,813 13,273 12% 3,522 3,050 3,224 6%
Payable lead production (kt) 101.7 112.4 11% 28.3 24.8 28.8 16%
Payable zinc production (kt) 59.2 60.7 3% 16.2 14.3 17.4 22%
Payable nickel production (kt) 40.8 40.6 0% 10.2 10.8 11.5 6%
Metallurgical coal production (kt) 5,497 4,305 (22%) 1,504 1,244 1,274 2%
Manganese ore production (kwmt) 5,653 4,499 (20%) 1,455 1,175 534 (55%)
Unless otherwise noted: percentage variance relates to performance during the
financial year ended June 2024 compared with the financial year ended June
2023 (YoY), or the June 2024 quarter compared with the March 2024 quarter
(QoQ); production and sales volumes are reported on an attributable basis.
CORPORATE UPDATE
Sustainability
• We completed planned milestones in our multi-year Safety Improvement Program,
deploying our 'Lead Safely Every Day' program across our leadership and
frontline workforce.
• We advanced decarbonisation programs to support our target(5) to halve our
operational greenhouse gas (GHG) emissions by 2035. In FY24, Worsley Alumina
converted two coal-fired boilers to natural gas, expected to reduce the
refinery's operational GHG emissions by over 10% from FY21 levels. Hillside
Aluminium has now converted 36% of its pots to AP3XLE energy efficiency
technology.
Portfolio
• The sale of Illawarra Metallurgical Coal to an entity owned by Golden Energy
and Resources Pte Ltd and M Resources Pty Ltd, for up to US$1,650M(6),
received Australian Foreign Investment Review Board approval on 5 July
2024(2). The transaction is expected to complete in late Q1 FY25, subject to
receipt of the remaining foreign merger clearances. As a result of the
transaction, we will record an impairment reversal of ~US$200M (~US$140M
post-tax) in our FY24 financial results, which will be excluded from FY24
Underlying earnings.
• The sale of our 50% interest in the Eagle Downs metallurgical coal project to
a subsidiary of Stanmore Resources Limited is expected to complete in Q1 FY25.
The consideration for the transaction comprises US$15M in cash, a contingent
payment of US$20M(7) and a price-linked royalty of up to US$100M(8).
• On 13 June 2024, Samancor Manganese entered into a binding agreement to divest
the Metalloys manganese alloy smelter, subject to the satisfaction of
conditions(9).
Income statement
• We will record impairment expenses in our FY24 financial results, as set out
below, which will be excluded from FY24 Underlying earnings.
o Worsley Alumina: ~US$554M (~US$389M post-tax) to a carrying value of
~US$2,027M, 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
conditions10; and
o Cerro Matoso: ~US$264M (~US$248M post-tax) to a carrying value of ~US$54M,
reflecting structural changes in the nickel market which are expected to
continue to place pressure on nickel prices and discounts for our ferronickel
product.
• Australia Manganese incurred ~US$90M of idle capacity and other remediation
related costs as a result of Tropical Cyclone Megan. These costs will be
excluded from FY24 Underlying earnings as an earnings adjustment.
• FY24 Group Underlying depreciation and amortisation is expected to be
~US$915M, including ~US$140M for our manganese business and ~US$130M for
Sierra Gorda.
• FY24 Group Underlying net finance costs are expected to be ~US$250M, primarily
comprising the unwinding of the discount applied to our closure and
rehabilitation provisions and interest on lease liabilities and long-dated
debt.
Cash flow and balance sheet
• We delivered a strong sales result in the June 2024 quarter, drawing down
inventory and capturing the benefit of higher commodity prices. This is
expected to support an unwind of working capital of ~US$180M in H2 FY24 (H1
FY24: US$276M build).
• We received net distributions(11) of US$26M from our manganese equity
accounted investments (EAI) in FY24, as we provided US$30M of initial funding
to Australia Manganese in the June 2024 quarter to support recovery
plans.
• We received net distributions(11) of US$27M from our Sierra Gorda EAI in FY24,
including US$9M in the June 2024 quarter, as the operation invested in
deferred stripping and study work for the fourth grinding line expansion.
• FY24 Group capital expenditure (excluding EAIs and Hermosa) is expected to be
~US$670M, reflecting our planned investment in productivity and improvement
projects across our portfolio, including ~US$340M at Illawarra Metallurgical
Coal. Our share of capital expenditure for our manganese and Sierra Gorda EAIs
is expected to be ~US$315M in FY24.
• We returned US$198M to shareholders during FY24, including US$163M12 in
fully-franked ordinary dividends and US$35M via the on-market share buy-back13
Tax
• Our FY24 Group Underlying effective tax rate (ETR) is expected to be in a
range of approximately 40% to 42%, reflecting our geographical earnings mix
and the corporate tax rates(14) and royalty related taxes(15) of the
jurisdictions in which we operate.
• We made Group tax payments of US$223M (excluding EAIs) in FY24 as cash tax
normalised following one-off portfolio related tax payments in the prior
period.
DEVELOPMENT AND EXPLORATION UPDATE
Hermosa project
• We invested US$372M of growth capital expenditure at Hermosa in FY24, as we
progressed construction of key infrastructure and permitting for the Taylor
zinc-lead-silver and Clark battery-grade manganese deposits.
• Following final investment approval for Taylor in Q3 FY24(16), we completed
pre-sink shaft activity and construction of the main shaft headframe during
the quarter. Shaft construction is on track to commence in Q1 FY25.
• We completed construction of the final two surface dewatering wells during the
quarter, to support critical path dewatering activity for both the Taylor and
Clark deposits.
• Permitting activity continued to plan. During the quarter, we received an air
permit from the Arizona Department of Environmental Quality, the last required
state permit to enable full construction of Taylor.
• FAST-41 federal permitting for both Taylor and Clark progressed to the next
stage, with the US Forest Service publishing a Notice of Intent to prepare an
Environmental Impact Statement during the quarter.
• We advanced study and product qualification work for Clark. Construction of an
exploration decline to provide access to ore to facilitate demonstration scale
production remains on track to be completed by the end of CY25.
• During the quarter, we were awarded a US$20M grant from the US Department of
Defense under the Defense Production Act battery grant program to support
development activity at Clark.
• We directed US$24M to capitalised exploration during FY24 as we progressed
drilling programs at our polymetallic Peake and Flux prospects(17).
Exploration results are expected across the 2024 calendar year.
Greenfield exploration
• We invested US$27M in our greenfield exploration opportunities during FY24, as
we progressed multiple exploration programs targeting base metals in
Australia, USA, Canada, Argentina and Ireland.
Other exploration
• We invested US$62M (US$48M capitalised) in exploration programs at our
existing operations and development options during FY24, including US$24M at
the Hermosa project (noted above, all capitalised) and US$13M for our Sierra
Gorda EAI (all capitalised).
PRODUCTION SUMMARY
Production guidance FY23 FY24 FY24e((a)) %((b)) Comments
(South32 share)
Worsley Alumina
Alumina production (kt) 3,839 3,777 4,000 94 % Temporary outage of the bauxite conveyor in Q4 FY24
Brazil Alumina (non-operated)
Alumina production (kt) 1,262 1,286 1,300 99 %
Brazil Aluminium (non-operated)
Aluminium production (kt) 69 104 100 104 %
Hillside Aluminium(18)
Aluminium production (kt) 719 720 720 100 %
Mozal Aluminium(18)
Aluminium production (kt) 345 314 320 98 %
Sierra Gorda (non-operated)
Payable copper equivalent production (kt)(4) 86.5 73.8 78.7 94 % Lower than planned copper grades in Q4 FY24, partly offset by higher
by-product volumes
Payable copper production (kt) 70.7 60.8 67.0 91 %
Payable molybdenum production (kt) 1.2 0.9 0.8 113 %
Payable gold production (koz) 28.8 24.6 22.5 109 %
Payable silver production (koz) 630 607 550 110 %
Cannington
Payable zinc equivalent production (kt)(3) 259.6 285.2 287.2 99 %
Payable silver production (koz) 11,183 12,666 12,500 101 %
Payable lead production (kt) 101.7 112.4 115.0 98 %
Payable zinc production (kt) 59.2 60.7 62.0 98 %
Cerro Matoso
Payable nickel production (kt) 40.8 40.6 40.5 100 %
Illawarra Metallurgical Coal
Total coal production (kt) 6,520 4,938 5,000 99 %
Metallurgical coal production (kt) 5,497 4,305 4,400 98 %
Energy coal production (kt) 1,023 633 600 106 %
Australia Manganese
Manganese ore production (kwmt) 3,545 2,324 N/A N/A Production guidance withdrawn in March 2024 due to Tropical Cyclone Megan
South Africa Manganese
Manganese ore production (kwmt) 2,108 2,175 2,000 109 %
a. The denotation (e) refers to an estimate or forecast year.
b. Reflects percentage of achieved production for FY24
compared to current FY24e.
MARKETING UPDATE
Commodity markets strengthened in H2 FY24 reflecting constrained supply and
improving demand.
The average realised prices achieved for our commodities are summarised below.
Outstanding concentrate sales were revalued at 30 June 2024 with the final
price of these to be determined in the December 2024 half year.
Realised prices(19) FY23 1H24 2H24 FY24 FY24 2H24
vs vs
FY23 1H24
Worsley Alumina
Alumina (US$/t) 357 344 376 360 1% 9%
Brazil Alumina (non-operated)((a))
Alumina (US$/t) 369 362 394 378 2% 9%
Brazil Aluminium (non-operated)((a))
Aluminium (US$/t) 2,452 2,275 2,435 2,373 (3%) 7%
Hillside Aluminium
Aluminium (US$/t) 2,535 2,318 2,448 2,389 (6%) 6%
Mozal Aluminium
Aluminium (US$/t) 2,653 2,377 2,610 2,491 (6%) 10%
Sierra Gorda (non-operated)(20(a))
Payable copper (US$/lb) 3.51 3.56 4.19 3.86 10% 18%
Payable molybdenum (US$/lb) 21.28 20.82 20.35 20.60 (3%) (2%)
Payable gold (US$/oz) 1,821 1,957 2,342 2,129 17% 20%
Payable silver (US$/oz) 21.9 23.3 26.3 24.8 13% 13%
Cannington(20)
Payable silver (US$/oz) 21.1 22.5 27.5 24.8 18% 22%
Payable lead (US$/t) 1,919 1,979 2,031 2,002 4% 3%
Payable zinc (US$/t) 2,151 2,085 2,358 2,230 4% 13%
Cerro Matoso(21)
Payable nickel (US$/lb) 7.76 6.00 6.30 6.17 (20%) 5%
Illawarra Metallurgical Coal
Metallurgical coal (US$/t) 279 276 275 275 (1%) 0%
Energy coal (US$/t) 144 101 113 107 (26%) 12%
Australia Manganese(22)
Manganese ore (US$/dmtu, FOB) 4.59 3.79 3.71 3.77 (18%) (2%)
South Africa Manganese(22)
Manganese ore (US$/dmtu, FOB) 3.58 3.03 4.05 3.53 (1%) 34%
a. While Brazil Alumina and Brazil Aluminium are non-operated,
South32 owns the marketing rights for our share of production. While Sierra
Gorda is also non-operated, the Joint Venture is responsible for marketing our
share of production.
OPERATING UNIT COST UPDATE
We expect to report FY24 Operating unit costs in line with FY24 guidance, as
we continued our focus on driving operating performance and cost
efficiencies.
Operating unit cost((a))
Current Guidance FY24e((b)(c)) FY24 Operating unit costs commentary
Worsley Alumina
(US$/t) 270 Expected to be in line with FY24 guidance.
Brazil Alumina (non-operated)
Not Expected to be consistent with H1 FY24 Operating unit costs (US$325/t).
provided
Brazil Aluminium (non-operated)
Not Expected to be ~10% below H1 FY24 Operating unit costs (US$4,025/t), as the
smelter continued to ramp-up all three potlines.
provided
Hillside Aluminium
Not
provided
The cost profile of our South African aluminium smelters is heavily influenced
by the South African rand, and the price of raw materials and energy.
FY24 Operating unit costs for Hillside Aluminium are expected to be consistent
with H1 FY24 (US$2,135/t).
FY24 Operating unit costs for Mozal Aluminium are expected to be ~4% below H1
FY24 (US$2,461/t), as the smelter progressed its recovery plan.
Mozal Aluminium
Sierra Gorda (non-operated)
(US$/t)((d)) 17.0 Expected to be in line with FY24 guidance.
Cannington
(US$/t)((d)) 155 Expected to be in line with FY24 guidance.
Cerro Matoso
(US$/lb) 5.20 Expected to be in line with FY24 guidance.
Illawarra Metallurgical Coal
(US$/t) 150 Expected to be in line with FY24 guidance.
Australia Manganese (FOB)
(US$/dmtu) N/A Operating unit costs for the period are expected to be ~US$2.25/dmtu.
Separately, we expect to incur remediation costs and idle capacity losses of
~US$90M, which will be excluded from FY24 Underlying Earnings.
South Africa Manganese (FOB)
(US$/dmtu) 2.60 Expected to be in line with FY24 guidance.
a. Operating unit cost is Revenue less Underlying EBITDA,
excluding third party sales, divided by sales volumes.
b. FY24e Operating unit cost guidance includes royalties
(where appropriate) and commodity price and foreign exchange rate forward
curves or our
internal expectations (refer to footnote 23).
c. The denotation (e) refers to an estimate or forecast year.
d. US dollar per tonne of ore processed. Periodic movements in
finished product inventory may impact Operating unit costs.
s
WORSLEY ALUMINA (86% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Alumina production (kt) 3,839 3,777 (2%) 1,012 927 916 (9%) (1%)
Alumina sales (kt) 3,817 3,767 (1%) 1,111 895 974 (12%) 9%
Worsley Alumina saleable production decreased by 2% (or 62kt) to 3,777kt in
FY24, achieving 94% of guidance, as a temporary outage of the bauxite conveyor
impacted bauxite supply to the refinery during the June 2024 quarter. FY25
production guidance has been revised lower by 6% to 3,750kt, as we complete
additional conveyor maintenance, and manage bauxite inventories due to delays
experienced with regulatory approvals for new mining areas.
On 8 July 2024, the Western Australian Environmental Protection Authority (WA
EPA) published its recommendation that the proposal for the Worsley Mine
Development Project may be implemented, subject to conditions. If imposed in
their current form, several conditions recommended by the WA EPA create
significant operating challenges for Worsley Alumina and impact its long-term
viability. Following what has been a long and protracted process, Worsley
Alumina intends to lodge an appeal in relation to the WA EPA assessment
report, and to work collaboratively with the Western Australian Government to
enable Worsley Alumina to continue to meet the State's robust environmental
standards and to continue the significant contribution Worsley Alumina has
made to the South West for the past 40 years. Worsley Alumina aims to secure
environmental approvals for the proposal by the end of CY24.
BRAZIL ALUMINA (36% SHARE, NON-OPERATED)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Alumina production (kt) 1,262 1,286 2% 237 313 333 41% 6%
Alumina sales (kt) 1,237 1,282 4% 242 277 358 48% 29%
Brazil Alumina saleable production increased by 2% (or 24kt) to 1,286kt in
FY24, achieving 99% of guidance, with improved plant availability supporting a
6% increase in production during the June 2024 quarter. FY25 production
guidance remains unchanged at 1,350kt.
BRAZIL ALUMINIUM (40% SHARE, NON-OPERATED)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Aluminium production (kt) 69 104 51% 24 26 28 17% 8%
Aluminium sales (kt) 68 102 50% 26 32 30 15% (6%)
Brazil Aluminium saleable production increased by 51% (or 35kt) to 104kt in
FY24, exceeding guidance by 4%, as the smelter continued to ramp up all three
potlines. FY25 production guidance remains unchanged at 130kt.
HILLSIDE ALUMINIUM (100% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Aluminium production (kt) 719 720 0% 180 181 180 0% (1%)
Aluminium sales (kt) 719 720 0% 185 209 184 (1%) (12%)
Hillside Aluminium saleable production increased by 1kt to a record 720kt in
FY24, achieving 100% of guidance, as the smelter continued to test its maximum
technical capacity, despite the impact of load-shedding. FY25 production
guidance remains unchanged at 720kt(18).
MOZAL ALUMINIUM (63.7% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Aluminium production (kt) 345 314 (9%) 82 71 77 (6%) 8%
Aluminium sales (kt) 334 326 (2%) 114 58 101 (11%) 74%
Mozal Aluminium saleable production decreased by 9% (or 31kt) to 314kt in
FY24, achieving 98% of guidance, with production increasing by 8% during the
June 2024 quarter as the smelter progressed its recovery plan, despite the
impact of load-shedding. Production is expected to increase by ~15% to
360kt(18) in FY25 (previously 372kt) as the smelter returns toward nameplate
capacity.
Sales increased by 74% during the June 2024 quarter as we drew down inventory
to normalised levels by the end of the financial year, capitalising on
strengthened market conditions.
As previously disclosed, we continue to work with the Government of the
Republic of Mozambique and Eskom to secure the smelter's hydro-electric power
supply beyond Q3 FY26, as there are currently no viable alternative suppliers
of renewable energy at the required scale.
SIERRA GORDA (45% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Payable copper equivalent production (kt)(4) 86.5 73.8 (15%) 22.5 16.8 18.4 (18%) 10%
Payable copper production (kt) 70.7 60.8 (14%) 17.3 13.9 15.3 (12%) 10%
Payable copper sales (kt) 71.8 60.9 (15%) 18.0 13.1 15.3 (15%) 17%
Sierra Gorda payable copper equivalent production(4) decreased by 15% (or
12.7kt) to 73.8kt in FY24, achieving 94% of guidance, due to lower than
planned copper grades in the June 2024 quarter.
Looking forward, higher clay content in the current phase of the mine plan is
expected to continue to impact molybdenum production in FY25, with FY25
payable copper equivalent production guidance revised lower by 7% to 85.3kt
(copper 70.0kt, molybdenum 1.3kt, gold 25.0koz and silver 550koz).
Sierra Gorda continued to progress the feasibility study for the fourth
grinding line expansion, which remains on track to support a final investment
decision in H1 FY25.
CANNINGTON (100% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Payable zinc equivalent production (kt)(3) 259.6 285.2 10% 74.5 64.8 73.2 (2%) 13%
Payable silver production (koz) 11,183 12,666 13% 3,368 2,897 3,065 (9%) 6%
Payable silver sales (koz) 10,739 11,793 10% 3,244 2,210 3,054 (6%) 38%
Payable lead production (kt) 101.7 112.4 11% 28.3 24.8 28.8 2% 16%
Payable lead sales (kt) 99.0 102.4 3% 26.0 17.9 27.9 7% 56%
Payable zinc production (kt) 59.2 60.7 3% 16.2 14.3 17.4 7% 22%
Payable zinc sales (kt) 58.1 60.1 3% 21.8 11.6 20.2 (7%) 74%
Cannington payable zinc equivalent production(3) increased by 10% (or 25.6kt)
to 285.2kt in FY24 as the operation managed the impact of widespread flooding
following Tropical Cyclone Kirrily, and processed a sequence of higher grade
stopes in the June 2024 quarter, achieving 99% of guidance.
Looking forward, a significant increase in underground activity and complexity
is expected to drive greater variability in mine performance as the
underground mine progresses towards the end of its life. Due to these factors
and the need to re-establish run of mine stocks following adverse weather
impacts in H2 FY24, we have lowered FY25 guidance for mill throughput to
2,100kdmt and payable zinc equivalent production by 9% to 250.1kt (silver
11,300koz, lead 100.0kt and zinc 50.0kt).
Higher sales volumes in the June 2024 quarter reflected timing differences
following widespread flooding in the prior quarter that caused a temporary
outage of a third-party rail line.
CERRO MATOSO (99.9% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Payable nickel production (kt) 40.8 40.6 0% 10.2 10.8 11.5 13% 6%
Payable nickel sales (kt) 40.8 40.9 0% 10.4 10.8 12.1 16% 12%
Cerro Matoso payable nickel production was largely unchanged at 40.6kt in
FY24, achieving 100% of guidance, with higher planned throughput and nickel
grades supporting a 6% increase in production during the June 2024 quarter.
FY25 production guidance remains unchanged at 35.0kt, reflecting lower planned
nickel grades.
We continue to progress our strategic review of Cerro Matoso and expect to
provide information on the outcomes of this review in H2 FY25.
ILLAWARRA METALLURGICAL COAL (100% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Total coal production (kt) 6,520 4,938 (24%) 1,753 1,405 1,488 (15%) 6%
Total coal sales (kt)(24) 6,359 4,871 (23%) 1,697 1,238 1,537 (9%) 24%
Metallurgical coal production (kt) 5,497 4,305 (22%) 1,504 1,244 1,274 (15%) 2%
Metallurgical coal sales (kt) 5,402 4,172 (23%) 1,529 1,053 1,360 (11%) 29%
Energy coal production (kt) 1,023 633 (38%) 249 161 214 (14%) 33%
Energy coal sales (kt) 957 699 (27%) 168 185 177 5% (4%)
Illawarra Metallurgical Coal saleable production decreased by 24% (or 1,582kt)
to 4,938kt in FY24, achieving 99% of guidance, as the operation completed
three planned longwall moves and commenced a fourth planned move in the June
2024 quarter.
AUSTRALIA MANGANESE (60% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Manganese ore production (kwmt) 3,545 2,324 (34%) 869 645 - N/A N/A
Manganese ore sales (kwmt) 3,261 2,573 (21%) 866 709 - N/A N/A
Australia Manganese saleable production decreased by 34% (or 1,221kwmt) to
2,324kwmt in FY24 as we temporarily suspended operations in March 2024 due to
the impacts of Tropical Cyclone Megan.
We continued to implement the operational recovery plan, dewatering targeted
mining pits and commencing a phased mining restart during the quarter. Mining
activity is expected to increase, supporting a planned build in stockpiles
ahead of the wet season. Wharf operations are scheduled to commence in Q3
FY25, subject to maintaining construction productivity during the wet season.
FY25 production and capital expenditure guidance will be provided with our
FY24 financial results.
We are working closely with our insurers to assess the timing and value of
recoveries under our property damage and business interruption insurance.
SOUTH AFRICA MANGANESE (ORE 54.6% SHARE)
South32 share FY23 FY24 YoY 4Q23 3Q24 4Q24 4Q24 4Q24
vs vs
4Q23 3Q24
Manganese ore production (kwmt) 2,108 2,175 3% 586 530 534 (9%) 1%
Manganese ore sales (kwmt) 2,065 2,116 2% 541 485 549 1% 13%
South Africa Manganese saleable production increased by 3% (or 67kwmt) to a
record 2,175kwmt in FY24, exceeding guidance by 9%, as the operation delivered
improved mining performance and lifted output of secondary products to
capitalise on stronger manganese prices. FY25 production guidance will be
provided with our FY24 financial results.
NOTES
1. Group payable copper equivalent production based on current FY24 production
guidance, calculated by applying FY23 realised prices for all operations.
2. Refer to market release "Illawarra Metallurgical Coal Sale Update" dated 5
July 2024.
3. Payable zinc equivalent production (kt) was calculated by aggregating revenues
from payable silver, lead and zinc, and dividing the total Revenue by the
price of zinc. FY23 realised prices for zinc (US$2,151/t), lead (US$1,919/t)
and silver (US$21.1/oz) have been used for FY23, FY24 and FY24e.
4. Payable copper equivalent production (kt) was calculated by aggregating
revenues from copper, molybdenum, gold and silver, and dividing the total
Revenue by the price of copper. FY23 realised prices for copper (US$3.51/lb),
molybdenum (US$21.28/lb), gold (US$1,821/oz) and silver (US$21.9/oz) have been
used for FY23, FY24 and FY24e.
5. Target is defined as an intended outcome in relation to which we have
identified one or more pathways for delivery of that outcome, subject to
certain assumptions or conditions. Our medium-term target is to halve our
operational greenhouse gas (GHG) emissions by 2035 compared to our FY21
baseline. FY21 baseline adjusted to exclude GHG emissions from South Africa
Energy Coal and TEMCO, which were divested in FY21.
6. Refer to market release "Sale of Illawarra Metallurgical Coal" dated 29
February 2024.
7. Subject to the Eagle Downs project reaching metallurgical coal production of
100,000 tonnes.
8. Price-linked royalty calculated based on potential future metallurgical coal
production and a metallurgical coal index price of at least US$170/t.
9. Refer to media release "Agreement to divest Metalloys manganese alloy smelter"
dated 13 June 2024.
10. Refer to market release "Worsley Alumina Approvals Update" dated 22 July 2024.
11. Net distributions from our material equity accounted investments (EAI)
(manganese and Sierra Gorda) includes dividends, capital contributions and net
repayments/drawdowns of shareholder loans, which are unaudited and should not
be considered as an indication of or alternative to an IFRS measure of
profitability, financial performance or liquidity.
12. Comprised of US$145M in respect of the June 2023 half year paid in the
December 2023 quarter and US$18M in respect of the December 2023 half year
paid in the June 2024 quarter.
13. We returned US$35M via the on-market share buy-back in FY24, purchasing 16M
shares at an average price of A$3.37. Since inception, US$1.7B has been
returned via the on-market share buy-back (795M shares at an average price of
A$3.05 per share).
14. The corporate tax rates of the geographies where the Group operates include:
Australia 30%, South Africa 27%, Colombia 35%, Mozambique 0%, Brazil 34%, and
Chile 27%. The Mozambique operations are subject to a royalty on revenues
instead of income tax.
15. Australia Manganese is subject to a royalty related tax equal to 20% of
adjusted EBIT. Sierra Gorda is subject to a royalty related tax based on the
amount of copper sold and the mining operating margin, the rate is between 5%
and 14% for annual sales over 50kt of refined copper. These royalties are
included in Underlying tax expense.
16. Refer to market release "Final investment approval to develop Hermosa's Taylor
deposit" dated 15 February 2024.
17. Exploration Results and Exploration Targets: The information in this
announcement that relates to the Exploration Results and Targets for Taylor,
Clark, Peake and Flux is extracted from the market release "Final investment
approval to develop Hermosa's Taylor deposit" dated 15 February 2024. The
information was prepared by D Bertuch, Competent Person in accordance with the
requirements of the JORC Code. South32 confirms that it is not aware of any
new information or data that materially affects the information included in
the original market announcement. South32 confirms that the form and context
in which the Competent Person's findings are presented have not been
materially changed from the original market announcement.
18. Production guidance for Hillside Aluminium and Mozal Aluminium does not assume
any load-shedding impact on production.
19. Realised prices are unaudited. Volumes and prices do not include any third
party trading that may be undertaken independently of equity production.
Realised sales price is calculated as sales Revenue divided by sales volume
unless otherwise stated.
20 Realised prices for Sierra Gorda and Cannington are net of treatment and
refining charges.
21 Realised nickel sales prices are inclusive of by-products.
22 Realised ore prices are calculated as external sales Revenue less freight and
marketing costs, divided by external sales volumes.
23. FY24 Operating unit cost guidance includes royalties (where appropriate) and
the influence of exchange rates, and includes various assumptions for FY24,
including: an alumina price of US$340/t; an average blended coal price of
US$296/t for Illawarra Metallurgical Coal; a manganese ore price of
US$4.58/dmtu for 44% manganese product; a nickel price of US$8.67/lb; a silver
price of US$22.7/troy oz; a lead price of US$2,105/t (gross of treatment and
refining charges); a zinc price of US$2,446/t (gross of treatment and refining
charges); a copper price of US$3.67/lb (gross of treatment and refining
charges); a molybdenum price of US$19.22/lb (gross of treatment and refining
charges); a gold price of US$1,892/troy oz; an AUD:USD exchange rate of 0.64;
a USD:ZAR exchange rate of 19.12; a USD:COP exchange rate of 4,050; USD:CLP
exchange rate of 924; and a reference price for caustic soda; which reflect
forward markets as at January 2024 or our internal expectations
24. Illawarra Metallurgical Coal sales are adjusted for moisture and will not
reconcile directly to Illawarra Metallurgical Coal production.
The following abbreviations have been used throughout this report: US$ million
(US$M); US$ billion (US$B); grams per tonne (g/t); tonnes (t); thousand tonnes
(kt); thousand tonnes per annum (ktpa); million tonnes (Mt); million tonnes
per annum (Mtpa); ounces (oz); thousand ounces (koz); million ounces (Moz);
thousand wet metric tonnes (kwmt); million wet metric tonnes (Mwmt); million
wet metric tonnes per annum (Mwmt pa); dry metric tonne unit (dmtu); thousand
dry metric tonnes (kdmt).
Figures in Italics indicate that an adjustment has been made since the figures
were previously reported. The denotation (e) refers to an estimate or forecast
year.
OPERATING PERFORMANCE
South32 share FY23 FY24 4Q23 1Q24 2Q24 3Q24 4Q24
Worsley Alumina (86% share)
Alumina hydrate production (kt) 3,833 3,779 957 973 961 926 919
Alumina production (kt) 3,839 3,777 1,012 972 962 927 916
Alumina sales (kt) 3,817 3,767 1,111 913 985 895 974
Brazil Alumina (36% share)
Alumina production (kt) 1,262 1,286 237 318 322 313 333
Alumina sales (kt) 1,237 1,282 242 272 375 277 358
Brazil Aluminium (40% share)
Aluminium production (kt) 69 104 24 24 26 26 28
Aluminium sales (kt) 68 102 26 8 32 32 30
Hillside Aluminium (100% share)
Aluminium production (kt) 719 720 180 180 179 181 180
Aluminium sales (kt) 719 720 185 170 157 209 184
Mozal Aluminium (63.7% share)
Aluminium production (kt) 345 314 82 84 82 71 77
Aluminium sales (kt) 334 326 114 77 90 58 101
Sierra Gorda (45% share)
Ore mined (Mt) 26.0 19.9 5.5 5.9 6.0 3.1 4.9
Ore processed (Mt) 21.2 21.9 5.4 5.5 5.4 5.5 5.5
Copper ore grade processed (%, Cu) 0.42 0.36 0.40 0.37 0.38 0.34 0.37
Payable copper equivalent production (kt)(4) 86.5 73.8 22.5 20.3 18.3 16.8 18.4
Payable copper production (kt) 70.7 60.8 17.3 16.0 15.6 13.9 15.3
Payable copper sales (kt) 71.8 60.9 18.0 15.3 17.2 13.1 15.3
Payable molybdenum production (kt) 1.2 0.9 0.5 0.4 0.1 0.2 0.2
Payable molybdenum sales (kt) 1.3 1.3 0.3 0.4 0.3 0.4 0.2
Payable gold production (koz) 28.8 24.6 7.3 6.3 7.1 5.3 5.9
Payable gold sales (koz) 29.1 24.9 7.3 6.3 7.5 5.2 5.9
Payable silver production (koz) 630 607 154 145 150 153 159
Payable silver sales (koz) 639 605 157 140 160 141 164
Cannington (100% share)
Ore mined (kwmt) 2,223 2,252 631 551 599 529 573
Ore processed (kdmt) 2,156 2,221 562 562 577 525 557
Silver ore grade processed (g/t, Ag) 187 205 210 206 216 200 199
Lead ore grade processed (%, Pb) 5.6 5.9 5.8 5.8 6.2 5.6 5.9
Zinc ore grade processed (%, Zn) 3.8 3.7 4.0 3.2 3.6 3.8 4.1
Payable zinc equivalent production (kt)(3) 259.6 285.2 74.5 70.3 76.9 64.8 73.2
Payable silver production (koz) 11,183 12,666 3,368 3,230 3,474 2,897 3,065
Payable silver sales (koz) 10,739 11,793 3,244 2,873 3,656 2,210 3,054
Payable lead production (kt) 101.7 112.4 28.3 28.5 30.3 24.8 28.8
Payable lead sales (kt) 99.0 102.4 26.0 25.6 31.0 17.9 27.9
Payable zinc production (kt) 59.2 60.7 16.2 13.2 15.8 14.3 17.4
Payable zinc sales (kt) 58.1 60.1 21.8 13.9 14.4 11.6 20.2
Cerro Matoso (99.9% share)
Ore mined (kwmt) 5,560 5,195 1,619 940 1,243 1,486 1,526
Ore processed (kdmt) 2,807 2,774 702 594 723 711 746
Ore grade processed (%, Ni) 1.62 1.60 1.62 1.57 1.53 1.61 1.70
Payable nickel production (kt) 40.8 40.6 10.2 8.3 10.0 10.8 11.5
Payable nickel sales (kt) 40.8 40.9 10.4 8.5 9.5 10.8 12.1
Illawarra Metallurgical Coal (100% share)
Total coal production (kt) 6,520 4,938 1,753 1,168 877 1,405 1,488
Total coal sales (kt)(24) 6,359 4,871 1,697 1,196 900 1,238 1,537
Metallurgical coal production (kt) 5,497 4,305 1,504 1,043 744 1,244 1,274
Metallurgical coal sales (kt) 5,402 4,172 1,529 996 763 1,053 1,360
Energy coal production (kt) 1,023 633 249 125 133 161 214
Energy coal sales (kt) 957 699 168 200 137 185 177
Australia Manganese (60% share)
Manganese ore production (kwmt) 3,545 2,324 869 890 789 645 -
Manganese ore sales (kwmt) 3,261 2,573 866 940 924 709 -
Ore grade sold (%, Mn) 43.9 42.5 43.1 42.9 42.2 42.2 -
South Africa Manganese (54.6% share)
Manganese ore production (kwmt) 2,108 2,175 586 628 483 530 534
Manganese ore sales (kwmt) 2,065 2,116 541 518 564 485 549
Ore grade sold (%, Mn) 39.2 38.8 39.4 39.0 38.4 38.7 39.1
Forward-looking statements
This release contains forward-looking statements, including statements about
trends in commodity prices and currency exchange rates; demand for
commodities; production forecasts; plans, strategies and objectives of
management; capital costs and scheduling; operating costs; anticipated
productive lives of projects, mines and facilities; and provisions and
contingent liabilities. These forward-looking statements reflect expectations
at the date of this release, however they are not guarantees or predictions of
future performance. They involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, and which may cause
actual results to differ materially from those expressed in the statements
contained in this release. Readers are cautioned not to put undue reliance on
forward-looking statements. Except as required by applicable laws or
regulations, the South32 Group does not undertake to publicly update or review
any forward-looking statements, whether as a result of new information or
future events. Past performance cannot be relied on as a guide to future
performance. South32 cautions against reliance on any forward-looking
statements or guidance.
FURTHER INFORMATION
INVESTOR RELATIONS MEDIA RELATIONS
Ben Baker Jamie Macdonald Miles Godfrey
M +61 408 925 140
M +61 403 763 086
M +61 415 325 906
E Jamie.Macdonald@south32.net
E Ben.Baker@south32.net E Miles.Godfrey@south32.net
Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
22 July 2024
South32 Limited
(Incorporated in Australia under the Corporations Act 2001 (Cth))
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32; ADR: SOUHY
ISIN: AU000000S320
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