QUARTERLY REPORT
March 2024
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•
|
FY24 production and operating unit cost guidance
is unchanged, with the exception of Australia
Manganese due to the impacts of Tropical Cyclone
Megan.
|
|
•
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Achieved major milestones in our portfolio transformation,
announcing final investment approval for the Taylor
zinc-lead-silver deposit at Hermosa1, and the sale of
Illawarra Metallurgical Coal for up to
US$1.65B2.
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|
•
|
Aluminium production increased 1%
year to date, as Hillside Aluminium achieved record production and
Brazil Aluminium continued to ramp up toward nameplate
capacity.
|
|
•
|
Alumina production decreased by 1%
year to date, as we completed planned calciner maintenance at
Worsley Alumina, while Brazil Alumina remains on track to achieve
production guidance.
|
|
•
|
Cannington payable zinc
equivalent3 production increased by 15% year to date, as
the operation realised higher average metal grades, and mitigated
the impact of heavy rainfall following Tropical Cyclone
Kirrily.
|
|
•
|
Sierra Gorda payable copper
equivalent4 production decreased by 13% year to date, as
higher throughput was offset by lower planned copper grades, and
lower molybdenum recoveries in the current phase of the mine
plan.
|
|
•
|
Cerro Matoso payable nickel
production decreased by 5% year to date, while increasing by 8% in
the quarter due to higher planned nickel grades.
|
|
•
|
Illawarra Metallurgical Coal
saleable coal production increased by 60% in the quarter, as the
operation completed two planned longwall moves in the prior
quarter, and delivered improved longwall performance at the Appin
mine.
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|
•
|
Operations at Australia Manganese
were temporarily suspended in March 2024 due to Tropical Cyclone
Megan5, with recovery plans underway to enable a safe
return to operations and ore exports.
|
|
•
|
South Africa Manganese achieved
record production, delivering an 8%
uplift in year to date
production.
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South32 Chief Executive Officer, Graham Kerr:
"During the
quarter, we achieved significant milestones aligned with our
strategy to transform our portfolio toward commodities critical in
the transition to a low-carbon future.
"We approved development of the Taylor zinc-lead-silver
deposit at our Hermosa project, which is expected to deliver
attractive returns over multiple decades and unlock further value
as the first phase of our regional scale
opportunity.
"We also announced our decision to sell Illawarra
Metallurgical Coal for up to US$1.65 billion, which will realise
significant value, further streamline our portfolio and unlock
capital to invest in our high-quality base metals
projects.
"This quarter, we delivered improved operating results,
highlighted by record year to date production at Hillside Aluminium
and South Africa Manganese and a 60 per cent uplift in quarterly
volumes at Illawarra Metallurgical Coal.
"Operations at Australia Manganese remain temporarily
suspended following Tropical Cyclone Megan, while we progress
recovery plans to enable a safe return to operations. We remain
focused on the safety and wellbeing of our workforce and the Groote
Eylandt community.
"With the exception of Australia Manganese, our FY24
production and Operating unit cost guidance is unchanged, placing
us in a strong position to capitalise on strengthening market
conditions for many of our key commodities."
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Production summary
|
|
|
|
|
|
|
|
|
|
South32 share
|
9M
YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
QoQ
|
|
Alumina production (kt)
|
3,852
|
3,814
|
(1%)
|
|
1,239
|
1,284
|
1,240
|
(3%)
|
|
Aluminium production (kt)
|
847
|
853
|
1%
|
|
279
|
287
|
278
|
(3%)
|
|
Payable copper production
(kt)
|
53.4
|
45.5
|
(15%)
|
|
15.5
|
15.6
|
13.9
|
(11%)
|
|
Payable silver production
(koz)
|
8,291
|
10,049
|
21%
|
|
2,479
|
3,624
|
3,050
|
(16%)
|
|
Payable lead production
(kt)
|
73.4
|
83.6
|
14%
|
|
21.0
|
30.3
|
24.8
|
(18%)
|
|
Payable zinc production
(kt)
|
43.0
|
43.3
|
1%
|
|
12.6
|
15.8
|
14.3
|
(9%)
|
|
Payable nickel production
(kt)
|
30.6
|
29.1
|
(5%)
|
|
10.2
|
10.0
|
10.8
|
8%
|
|
Metallurgical coal production
(kt)
|
3,993
|
3,031
|
(24%)
|
|
1,240
|
744
|
1,244
|
67%
|
|
Manganese ore production
(kwmt)
|
4,198
|
3,965
|
(6%)
|
|
1,261
|
1,272
|
1,175
|
(8%)
|
|
Unless otherwise noted: percentage
variance relates to performance during the nine months ended March
2024 compared with the nine months ended March 2023 (YoY), or the
March 2024 quarter compared with the December 2023 quarter (QoQ);
production and sales volumes are reported on an attributable
basis.
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CORPORATE UPDATE
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•
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We continued to implement our
multi-year Safety Improvement Program, including our investment in
safety leadership through our 'Lead Safely Every Day' training
which is being deployed across our frontline workforce.
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•
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Our FY24 Operating unit cost
guidance is unchanged, as we remain focused on driving operating
performance and further efficiencies across our
business.
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•
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We entered into a binding agreement
to sell Illawarra Metallurgical Coal to an entity owned by Golden
Energy and Resources Pte Ltd and M Resources Pty Ltd. The
consideration for the transaction is up to US$1,650M in cash,
comprising upfront consideration of US$1,050M, deferred
consideration of US$250M and contingent price-linked consideration
of up to US$350M2. The transaction is expected
to be completed in H1 FY25, subject to the satisfaction of
conditions including Foreign Investment Review Board (FIRB)
approval and the waiver or non-exercise of pre-emption rights held
by BlueScope Steel (AIS) Proprietary Limited.
|
|
•
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We entered into a binding agreement
to sell our 50% interest in the Eagle Downs metallurgical coal
project to a subsidiary of Stanmore Resources Limited, for upfront
consideration of US$15M, a contingent payment of US$20M and a
price-linked royalty of up to US$100M. We have now received joint
venture approvals for the transaction, which is expected to close
in the June 2024 quarter subject to FIRB approval and other
remaining conditions6.
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•
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Net debt7 decreased by
US$154M to US$937M in the March 2024 quarter as we benefited from
improved operating performance and a partial unwind in working
capital, as we drew down inventory at Hillside Aluminium, partially
offset by a temporary inventory build at Cannington due to weather
related disruptions to rail logistics.
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•
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We invested US$510M
in safe and reliable, and improvement and life extension, capital
expenditure (excluding EAIs) in the nine months ended March 2024.
Our investment decreased by 31% to US$135M in the March 2024
quarter as we realised capital efficiencies and deferred certain
non-critical projects. FY24 guidance of US$655M (excluding EAIs)
remains unchanged.
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•
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We received net
distributions8 of US$60M (South32 share) from our equity
accounted investments (EAI) in the nine months ended March 2024
(US$42M from our manganese business and US$18M from Sierra Gorda).
No distributions were received in the March 2024 quarter, following
the temporary suspension of operations at Australia Manganese, and
investment in projects at Sierra Gorda to improve productivity and
grow future volumes.
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•
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We made Group tax payments of
US$148M (excluding EAIs) in the nine months ended March 2024
(US$52M in the March 2024 quarter) as cash tax normalised following
one-off portfolio related tax payments in the prior
period.
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•
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Following the end of the quarter, we
paid a fully-franked interim dividend of US$18M in respect of the December 2023 half
year.
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DEVELOPMENT AND EXPLORATION
UPDATE
Hermosa project
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•
|
We approved development of our
Taylor zinc-lead-silver deposit, following completion of a
feasibility study which confirmed the potential for a long-life,
low-cost9, low-carbon10 operation, with an
initial operating life of ~28 years11, an average EBITDA
margin of ~50%12 and an internal rate of return of
~12%13.
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•
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We expect to invest direct and
indirect capital expenditure of US$2,160M14 to deliver
first production from Taylor in H2 FY27, with nameplate production
rates expected in FY30.
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•
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As the first phase of a regional
scale opportunity at Hermosa, Taylor's infrastructure including
dewatering, power, roads and site facilities, will unlock value for
future growth options. These include our Clark battery-grade
manganese deposit and potential discoveries in our highly
prospective regional land package, which has already returned
high-grade copper and zinc results from Peake and
Flux15.
|
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•
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We invested US$256M
of growth capital expenditure in the nine months ended March 2024
(US$68M in the March 2024 quarter) as we progressed
construction of key infrastructure and permitting for Taylor and
Clark.
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•
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Dewatering is a critical path item
that will enable access to both the Taylor and Clark deposits.
During the quarter, we completed our fifth surface dewatering well,
with the final two wells on track for the June 2024
quarter.
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•
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We completed planned pre-sink shaft
activity at Taylor during the quarter, with shaft construction on
track to commence during the September 2024
quarter.
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•
|
We directed US$21M to capitalised
exploration in the nine months ended March 2024 as we progressed
drilling programs at our polymetallic Peake and Flux
prospects15. Exploration results are expected across the calendar
year.
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Greenfield exploration
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•
|
We invested US$23M in our greenfield
exploration opportunities in the nine months ended March 2024, as
we progressed exploration programs targeting base metals in
Australia, USA, Canada, Argentina and Ireland.
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|
•
|
Following the end of the quarter, we
completed the acquisition of a 50.1% interest and operatorship of
the Chita Valley copper exploration project in San Juan,
Argentina.
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Other exploration
|
•
|
We invested US$51M (US$41M
capitalised) in exploration programs at our existing operations and
development options in the nine months ended March 2024, including
US$21M at the Hermosa project (noted above, all capitalised) and
US$11M for our Sierra Gorda EAI (all capitalised).
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PRODUCTION SUMMARY
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Production guidance
(South32 share)
|
FY23
|
9M YTD24
|
FY24e(a)
|
Comments
|
|
Worsley Alumina
|
|
|
|
|
|
Alumina production (kt)
|
3,839
|
2,861
|
4,000
|
|
|
Brazil Alumina (non-operated)
|
|
|
|
|
|
Alumina production (kt)
|
1,262
|
953
|
1,300
|
|
|
Brazil Aluminium (non-operated)
|
|
|
|
|
|
Aluminium production (kt)
|
69
|
76
|
100
|
|
|
Hillside Aluminium16
|
|
|
|
|
|
Aluminium production (kt)
|
719
|
540
|
720
|
|
|
Mozal Aluminium16
|
|
|
|
|
|
Aluminium production (kt)
|
345
|
237
|
320
|
|
|
Sierra Gorda (non-operated)
|
|
|
|
|
|
Payable copper equivalent production
(kt)4
|
86.5
|
55.4
|
78.7
|
|
|
Payable copper production
(kt)
|
70.7
|
45.5
|
67.0
|
|
Payable molybdenum production
(kt)
|
1.2
|
0.7
|
0.8
|
|
Payable gold production
(koz)
|
28.8
|
18.7
|
22.5
|
|
Payable silver production
(koz)
|
630
|
448
|
550
|
|
Cannington
|
|
|
|
|
|
Payable zinc equivalent production
(kt)3
|
259.6
|
212.0
|
287.2
|
|
|
Payable silver production
(koz)
|
11,183
|
9,601
|
12,500
|
|
Payable lead production
(kt)
|
101.7
|
83.6
|
115.0
|
|
Payable zinc production
(kt)
|
59.2
|
43.3
|
62.0
|
|
Cerro Matoso
|
|
|
|
|
|
Payable nickel production
(kt)
|
40.8
|
29.1
|
40.5
|
|
|
Illawarra Metallurgical Coal
|
|
|
|
|
|
Total coal production
(kt)
|
6,520
|
3,450
|
5,000
|
|
|
Metallurgical coal production
(kt)
|
5,497
|
3,031
|
4,400
|
|
Energy coal production
(kt)
|
1,023
|
419
|
600
|
|
Australia Manganese
|
|
|
|
|
|
Manganese ore production
(kwmt)
|
3,545
|
2,324
|
n/a
|
Production guidance withdrawn in
March 2024 due to Tropical Cyclone Megan
|
|
South Africa Manganese
|
|
|
|
|
|
Manganese ore production
(kwmt)
|
2,108
|
1,641
|
2,000
|
|
a. The
denotation (e) refers to an estimate or forecast year.
s
WORSLEY ALUMINA (86%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Alumina production (kt)
|
2,827
|
2,861
|
1%
|
|
905
|
962
|
927
|
2%
|
(4%)
|
|
Alumina sales (kt)
|
2,706
|
2,793
|
3%
|
|
845
|
985
|
895
|
6%
|
(9%)
|
Worsley Alumina saleable production
increased by 1% (or 34kt) to 2,861kt in the nine months ended March
2024 with planned calciner maintenance completed in the September
2023 and March 2024 quarters. FY24
production guidance remains unchanged at 4,000kt, with the refinery expected to achieve nameplate production
rates (4.6Mtpa, 100% basis) in the June 2024
quarter.
We realised a circa
2% premium to the Platts Alumina index17 on a volume weighted
M-1 basis for alumina sales in the nine months ended March 2024,
which reflected market based prices with the exception of a legacy
supply contract with Mozal Aluminium which is linked to the LME
aluminium price.
During the March 2024 quarter, we
converted our second coal-fired boiler to natural gas, which will
further reduce the refinery's coal consumption and operational
greenhouse gas emissions.
BRAZIL ALUMINA (36% SHARE,
NON-OPERATED)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Alumina production (kt)
|
1,025
|
953
|
(7%)
|
|
334
|
322
|
313
|
(6%)
|
(3%)
|
|
Alumina sales (kt)
|
995
|
924
|
(7%)
|
|
317
|
375
|
277
|
(13%)
|
(26%)
|
Brazil Alumina saleable
production decreased by 7% (or 72kt) to 953kt
in the nine months ended March 2024 due to the previously
reported impact of third-party power outages and unplanned
maintenance. FY24 production guidance remains unchanged at
1,300kt.
We realised a circa
7% premium to the Platts Alumina index18
on a volume weighted M-1 basis for alumina sales
in the nine months ended March 2024, which reflected regional
premiums.
BRAZIL ALUMINIUM (40% SHARE,
NON-OPERATED)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Aluminium production (kt)
|
45
|
76
|
69%
|
|
22
|
26
|
26
|
18%
|
0%
|
|
Aluminium sales (kt)
|
42
|
72
|
71%
|
|
23
|
32
|
32
|
39%
|
0%
|
Brazil Aluminium saleable
production increased by 69% (or 31kt) to 76kt in
the nine months ended March 2024 as the smelter continued to
ramp up all three potlines. FY24 production
guidance remains unchanged at 100kt.
HILLSIDE ALUMINIUM (100%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Aluminium production (kt)
|
539
|
540
|
0%
|
|
177
|
179
|
181
|
2%
|
1%
|
|
Aluminium sales (kt)
|
534
|
536
|
0%
|
|
197
|
157
|
209
|
6%
|
33%
|
Hillside Aluminium saleable
production increased by 1kt to an equal record of
540kt in the nine months ended March 2024 as the smelter continued to test its maximum technical
capacity, despite the impact of load-shedding. FY24
production guidance remains unchanged at
720kt16.
Sales increased by 33% in the March
2024 quarter with three carry-over shipments from the prior quarter
supporting a drawdown in inventory.
MOZAL ALUMINIUM (63.7%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Aluminium production (kt)
|
263
|
237
|
(10%)
|
|
81
|
82
|
71
|
(12%)
|
(13%)
|
|
Aluminium sales (kt)
|
220
|
225
|
2%
|
|
43
|
90
|
58
|
35%
|
(36%)
|
Mozal Aluminium saleable
production decreased by
10% (or 26kt) to 237kt in the nine months ended March
2024, as the smelter continued to implement its
recovery plan, while managing the impact of load-shedding. Saleable
production volumes in the March 2024 quarter were in line
with our previously revised guidance, and metal
production was returned to 100% LME-grade quality by the end of the
quarter. FY24 production guidance remains unchanged at
320kt16.
Sales
decreased by 36% in the March 2024 quarter
due to lower product availability and the timing of
shipments.
As previously disclosed, we continue
to work with Eskom and the Government of the Republic of Mozambique
to secure the smelter's hydro-electric power supply beyond 2026, as
there are currently no viable alternative suppliers of renewable
energy at the required scale.
SIERRA GORDA (45% SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Payable copper equivalent production
(kt)4
|
64.0
|
55.4
|
(13%)
|
|
19.2
|
18.3
|
16.8
|
(13%)
|
(8%)
|
|
Payable copper production
(kt)
|
53.4
|
45.5
|
(15%)
|
|
15.5
|
15.6
|
13.9
|
(10%)
|
(11%)
|
|
Payable copper sales (kt)
|
53.8
|
45.6
|
(15%)
|
|
15.4
|
17.2
|
13.1
|
(15%)
|
(24%)
|
Sierra Gorda payable copper
equivalent4 production decreased by 13% (or 8.6kt) to
55.4kt in the nine months ended March 2024 as higher plant
throughput delivered by the de-bottlenecking project (annualised
rate of 48.6Mtpa, 100% basis), was more
than offset by lower planned copper grades, and lower molybdenum
recoveries in the current phase of the mine plan. FY24 production
guidance remains unchanged at 78.7kt payable copper equivalent
(copper 67.0kt, molybdenum 0.8kt, gold 22.5koz and silver
550koz), with higher copper grades expected in the
June 2024 quarter, consistent with the mine plan.
Sierra Gorda progressed the
feasibility study for the fourth grinding line expansion, which is
expected to deliver an increase in plant throughput to
approximately 58Mtpa (100% basis). The feasibility study and a
final investment decision by the joint venture partners is now
expected in H1 FY25.
CANNINGTON (100% SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Payable zinc equivalent production
(kt)3
|
185.1
|
212.0
|
15%
|
|
54.3
|
76.9
|
64.8
|
19%
|
(16%)
|
|
Payable silver production
(koz)
|
7,815
|
9,601
|
23%
|
|
2,341
|
3,474
|
2,897
|
24%
|
(17%)
|
|
Payable silver sales
(koz)
|
7,495
|
8,739
|
17%
|
|
2,412
|
3,656
|
2,210
|
(8%)
|
(40%)
|
|
Payable lead production
(kt)
|
73.4
|
83.6
|
14%
|
|
21.0
|
30.3
|
24.8
|
18%
|
(18%)
|
|
Payable lead sales (kt)
|
73.0
|
74.5
|
2%
|
|
21.7
|
31.0
|
17.9
|
(18%)
|
(42%)
|
|
Payable zinc production
(kt)
|
43.0
|
43.3
|
1%
|
|
12.6
|
15.8
|
14.3
|
13%
|
(9%)
|
|
Payable zinc sales (kt)
|
36.3
|
39.9
|
10%
|
|
8.8
|
14.4
|
11.6
|
32%
|
(19%)
|
Cannington payable zinc equivalent
production3 increased by 15% (or 26.9kt) to 212.0kt in the nine months
ended March 2024, as the operation realised higher average silver
and lead grades, and mitigated the impact of widespread flooding
following Tropical Cyclone Kirrily during the quarter. FY24
production guidance is currently unchanged at 287.2kt payable zinc
equivalent production (silver 12,500koz, lead 115.0kt and zinc
62.0kt), subject to accessing higher grade slopes planned at the
end of the June 2024 quarter.
Lower sales volumes in the March
2024 quarter reflected lower product availability and the deferral
of shipments to the June 2024 quarter due to a temporary outage of
a third-party rail line following Tropical Cyclone Kirrily. With
the rail line now restored, we expect to drawdown inventory in the
June 2024 quarter.
CERRO MATOSO (99.9%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Payable nickel production
(kt)
|
30.6
|
29.1
|
(5%)
|
|
10.2
|
10.0
|
10.8
|
6%
|
8%
|
|
Payable nickel sales (kt)
|
30.4
|
28.8
|
(5%)
|
|
10.6
|
9.5
|
10.8
|
2%
|
14%
|
Cerro Matoso payable nickel
production decreased by 5% (or 1.5kt) to 29.1kt in the nine months
ended March 2024, while improving by 8% (or 0.8kt) in the March
2024 quarter due to higher planned nickel grades. FY24 production
guidance remains unchanged at 40.5kt.
Sales increased by 14% in the March
2024 quarter due to the timing of
shipments. Year to date price realisations for our
ferronickel product reflected a discount of ~27% to the LME Nickel
Index19, as market dynamics remained largely unchanged
(FY23: ~29% discount).
We continue to progress our
strategic review of Cerro Matoso and expect to provide an update
with our FY24 financial results.
ILLAWARRA METALLURGICAL COAL (100%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Total coal production
(kt)
|
4,767
|
3,450
|
(28%)
|
|
1,436
|
877
|
1,405
|
(2%)
|
60%
|
|
Total coal sales
(kt)20
|
4,662
|
3,334
|
(28%)
|
|
1,477
|
900
|
1,238
|
(16%)
|
38%
|
|
Metallurgical coal production
(kt)
|
3,993
|
3,031
|
(24%)
|
|
1,240
|
744
|
1,244
|
0%
|
67%
|
|
Metallurgical coal sales
(kt)
|
3,873
|
2,812
|
(27%)
|
|
1,195
|
763
|
1,053
|
(12%)
|
38%
|
|
Energy coal production
(kt)
|
774
|
419
|
(46%)
|
|
196
|
133
|
161
|
(18%)
|
21%
|
|
Energy coal sales (kt)
|
789
|
522
|
(34%)
|
|
282
|
137
|
185
|
(34%)
|
35%
|
Illawarra Metallurgical Coal
saleable production decreased by 28% (or 1,317kt) to 3,450kt in the
nine months ended March 2024. Saleable production increased by 60%
(or 528kt) to 1,405kt in the March 2024 quarter as the operation
completed two planned longwall moves in the prior quarter and
delivered improved longwall performance at the Appin mine, which
more than offset challenging strata conditions at the Dendrobium
mine during the quarter.
Looking forward, the operation plans
to complete a longwall move at Appin and commence the next longwall
move at Dendrobium by the end of the June 2024 quarter. FY24
production guidance remains unchanged at 5.0Mt, reflecting a
further expected improvement in longwall performance and the
shorter duration of planned longwall moves in the June 2024
quarter.
AUSTRALIA MANGANESE (60%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Manganese ore production
(kwmt)
|
2,676
|
2,324
|
(13%)
|
|
832
|
789
|
645
|
(22%)
|
(18%)
|
|
Manganese ore sales
(kwmt)
|
2,395
|
2,573
|
7%
|
|
743
|
924
|
709
|
(4%)
|
(23%)
|
Australia Manganese saleable
production decreased by 13% (or 352kwmt) to 2,324kwmt in the nine
months ended March 2024 as we temporarily suspended operations due
to the impacts of Tropical Cyclone Megan.
On 16 to 17 March 2024, Tropical
Cyclone Megan severely impacted operations at Groote Eylandt, with
record rainfall of 681mm and the second strongest wind gusts in the
past 20 years.
The intense weather system resulted
in widespread flooding across Groote Eylandt and significant damage
to critical infrastructure, including the wharf and port
infrastructure and a haulage road bridge that connects the northern
pits of the Western Leases mining area and the processing
plant.
The operational recovery has focused
on re-establishing critical services and dewatering targeted mining
pits.
Engineering studies are underway on
the wharf and haulage road bridge infrastructure restoration. These
studies will inform the final schedule and capital costs. Based on
our preliminary schedule estimate, we expect to recommence wharf
operations and export sales in Q3 FY25.
Alternative shipping options are
being evaluated to mitigate the impact of the wharf outage. These
options may establish partial ore export capability in advance of
the wharf restoration.
Further detail and anticipated
capital costs will be provided once the recovery plans are
sufficiently progressed. Guidance for Australia Manganese remains
withdrawn.
Australia Manganese maintains
property damage and business interruption insurance. We are working
with our insurers to assess the impact of Tropical Cyclone Megan
and expected insurance recoveries.
SOUTH AFRICA MANGANESE (ORE 54.6%
SHARE)
|
South32 share
|
9M YTD23
|
9M YTD24
|
YoY
|
|
3Q23
|
2Q24
|
3Q24
|
3Q24
vs
3Q23
|
3Q24
vs
2Q24
|
|
Manganese ore production
(kwmt)
|
1,522
|
1,641
|
8%
|
|
429
|
483
|
530
|
24%
|
10%
|
|
Manganese ore sales
(kwmt)
|
1,524
|
1,567
|
3%
|
|
492
|
564
|
485
|
(1%)
|
(14%)
|
South Africa Manganese saleable
production increased by 8% (or 119kwmt) to a
record 1,641kwmt in the nine months ended March 2024 as the
operation delivered improved mining performance, and planned
maintenance was deferred to the June 2024 quarter. FY24 production
guidance remains unchanged at 2,000kwmt.
Sales decreased by 14% in the March
2024 quarter due to the timing of shipments. Our year to date
realised price for manganese ore sales was a premium of
approximately 6% to the medium grade 37% manganese lump ore
index21 on a M-1 basis, as we increased volumes of
premium material from our Wessels mine.
NOTES
|
1.
|
Refer to market release "Final
investment approval to develop Hermosa's Taylor deposit" dated 15
February 2024.
|
|
2.
|
Refer to market release "Sale of
Illawarra Metallurgical Coal" dated 29 February 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.
|
Refer to market release "Australia
Manganese Update" dated 18 March 2024.
|
|
6.
|
Refer to media release "Agreement to
divest interest in Eagle Downs" dated 12 February 2024.
|
|
7.
|
Net debt number is unaudited and
should not be considered as an indication of or alternative to an
IFRS measure of profitability, financial performance or
liquidity.
|
|
8.
|
Net distributions from our material
equity accounted investments (EAI) (manganese and Sierra Gorda)
includes dividends 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.
|
|
9.
|
Based on estimated all-in sustaining
costs in the Taylor Feasibility Study benchmarked against the Wood
Mackenzie Zinc Mine Normal Costs League (Q4 2023 dataset). Costs
are calculated as the sum of direct costs, indirect cash costs,
interest charges and sustaining capital expenditure.
|
|
10.
|
Taylor's mine design utilises
automation and technology to minimise our environmental impact and
lower our greenhouse gas emissions. Discussions are ongoing to
support our aim of securing 100% renewable energy for the
project.
|
|
11.
|
The information in this announcement
that refers to Production Target and forecast financial information
for Taylor is based on Probable (61%) Ore Reserves and Measured
(1%), Indicated (5%), Inferred (9%) Mineral Resources and
Exploration Target (24%) for the Taylor deposit, and was originally
disclosed in "Final investment approval to develop Hermosa's Taylor
deposit" dated 15 February 2024. The Ore Reserves, Mineral
Resources and Exploration Target underpinning the Production Target
have been prepared by Competent Persons in accordance with the JORC
Code. South32 confirms that all the material assumptions
underpinning the Production Target in the initial public report
referred to in ASX Listing Rule 5.16 continue to apply and have not
materially changed. There is low level of geological confidence
associated with Inferred Mineral Resources and there is no
certainty that further exploration work will result in the
determination of Indicated Mineral Resources or that the Production
Target will be realised. The potential quantity and grade of the
Exploration Target is conceptual in nature. In respect of
Exploration Target used in the Production Target, there has been
insufficient exploration to determine a Mineral Resource and there
is no certainty that further exploration work will result in the
determination of Mineral Resources or that the Production Target
itself will be realised. The stated Production Target is based on
South32's current expectations of future results or events and
should not be solely relied upon by investors when making
investment decisions. Further evaluation work and appropriate
studies are required to establish sufficient confidence that this
target will be met. South32 confirms that inclusion of 33% of
tonnage (9% Inferred Mineral Resources and 24% Exploration Target)
is not the determining factor of the project viability and the
project forecasts a positive financial performance when using 67%
tonnage (61% Probable Ore Reserves and 1% Measured and 5% Indicated
Mineral Resources). South32 is satisfied, therefore, that the use
of Inferred Mineral Resources and Exploration Target in the
Production Target and forecast financial information reporting is
reasonable.
|
|
12.
|
Average EBITDA margin calculated
over steady state production years (FY30-FY51).
|
|
13.
|
Post tax internal rate of return
(nominal) calculation is reflective of cash outflows from 1 January
2024.
|
|
14.
|
Pre-production direct and indirect
capital expenditure, in real terms, from 1 January 2024 to first
expected production in H2 FY27.
|
|
15.
|
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.
|
|
16.
|
Production guidance for Hillside
Aluminium and Mozal Aluminium does not assume any load-shedding
impact on production.
|
|
17.
|
The sales volume weighted average of
the Platts Alumina index (FOB) on the basis of a one-month lag to
published pricing (Month minus one or "M-1") was US$342/t in the
nine months ended March 2024.
|
|
18.
|
The sales volume weighted average of
the Platts Alumina index (FOB) on the basis of a one-month lag to
published pricing (Month minus one or "M-1") was US$341/t in the
nine months ended March 2024.
|
|
19.
|
Our realised price for nickel sales
in the nine months ended March 2024 was US$5.95/lb, which
represented a ~27% discount to the average LME Nickel index price
of US$8.13/lb.
|
|
20.
|
Illawarra Metallurgical Coal sales
are adjusted for moisture and will not reconcile directly to
Illawarra Metallurgical Coal production.
|
|
21.
|
The sales volume weighted average of
the Metal Bulletin 37% manganese lump ore index (FOB Port
Elizabeth, South Africa) on the basis of a one-month lag
to
published pricing (Month minus one
or "M-1") was US$2.87/dmtu in the nine months ended March
2024.
|
The following abbreviations have
been used throughout this report: US$ 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
|
9M YTD23
|
9M YTD24
|
|
3Q23
|
4Q23
|
1Q24
|
2Q24
|
3Q24
|
|
Worsley Alumina (86% share)
|
|
|
|
|
|
|
|
|
|
Alumina hydrate production
(kt)
|
2,876
|
2,860
|
|
921
|
957
|
973
|
961
|
926
|
|
Alumina production (kt)
|
2,827
|
2,861
|
|
905
|
1,012
|
972
|
962
|
927
|
|
Alumina sales (kt)
|
2,706
|
2,793
|
|
845
|
1,111
|
913
|
985
|
895
|
|
Brazil Alumina (36% share)
|
|
|
|
|
|
|
|
|
|
Alumina production (kt)
|
1,025
|
953
|
|
334
|
237
|
318
|
322
|
313
|
|
Alumina sales (kt)
|
995
|
924
|
|
317
|
242
|
272
|
375
|
277
|
|
Brazil Aluminium (40% share)
|
|
|
|
|
|
|
|
|
|
Aluminium production (kt)
|
45
|
76
|
|
22
|
24
|
24
|
26
|
26
|
|
Aluminium sales (kt)
|
42
|
72
|
|
23
|
26
|
8
|
32
|
32
|
|
Hillside Aluminium (100% share)
|
|
|
|
|
|
|
|
|
|
Aluminium production (kt)
|
539
|
540
|
|
177
|
180
|
180
|
179
|
181
|
|
Aluminium sales (kt)
|
534
|
536
|
|
197
|
185
|
170
|
157
|
209
|
|
Mozal Aluminium (63.7% share)
|
|
|
|
|
|
|
|
|
|
Aluminium production (kt)
|
263
|
237
|
|
81
|
82
|
84
|
82
|
71
|
|
Aluminium sales (kt)
|
220
|
225
|
|
43
|
114
|
77
|
90
|
58
|
|
Sierra Gorda (45% share)
|
|
|
|
|
|
|
|
|
|
Ore mined (Mt)
|
20.5
|
15.0
|
|
5.1
|
5.5
|
5.9
|
6.0
|
3.1
|
|
Ore processed (Mt)
|
15.8
|
16.4
|
|
5.1
|
5.4
|
5.5
|
5.4
|
5.5
|
|
Copper ore grade processed (%,
Cu)
|
0.43
|
0.36
|
|
0.40
|
0.40
|
0.37
|
0.38
|
0.34
|
|
Payable copper equivalent production
(kt)4
|
64.0
|
55.4
|
|
19.2
|
22.5
|
20.3
|
18.3
|
16.8
|
|
Payable copper production
(kt)
|
53.4
|
45.5
|
|
15.5
|
17.3
|
16.0
|
15.6
|
13.9
|
|
Payable copper sales (kt)
|
53.8
|
45.6
|
|
15.4
|
18.0
|
15.3
|
17.2
|
13.1
|
|
Payable molybdenum production
(kt)
|
0.7
|
0.7
|
|
0.3
|
0.5
|
0.4
|
0.1
|
0.2
|
|
Payable molybdenum sales
(kt)
|
1.0
|
1.1
|
|
0.2
|
0.3
|
0.4
|
0.3
|
0.4
|
|
Payable gold production
(koz)
|
21.5
|
18.7
|
|
6.2
|
7.3
|
6.3
|
7.1
|
5.3
|
|
Payable gold sales (koz)
|
21.8
|
19.0
|
|
6.4
|
7.3
|
6.3
|
7.5
|
5.2
|
|
Payable silver production
(koz)
|
476
|
448
|
|
138
|
154
|
145
|
150
|
153
|
|
Payable silver sales
(koz)
|
482
|
441
|
|
137
|
157
|
140
|
160
|
141
|
|
Cannington (100% share)
|
|
|
|
|
|
|
|
|
|
Ore mined (kwmt)
|
1,592
|
1,679
|
|
469
|
631
|
551
|
599
|
529
|
|
Ore processed (kdmt)
|
1,594
|
1,664
|
|
452
|
562
|
562
|
577
|
525
|
|
Silver ore grade processed (g/t,
Ag)
|
179
|
208
|
|
191
|
210
|
206
|
216
|
200
|
|
Lead ore grade processed (%,
Pb)
|
5.5
|
5.9
|
|
5.5
|
5.8
|
5.8
|
6.2
|
5.6
|
|
Zinc ore grade processed (%,
Zn)
|
3.7
|
3.5
|
|
3.8
|
4.0
|
3.2
|
3.6
|
3.8
|
|
Payable zinc equivalent production
(kt)3
|
185.1
|
212.0
|
|
54.3
|
74.5
|
70.3
|
76.9
|
64.8
|
|
Payable silver production
(koz)
|
7,815
|
9,601
|
|
2,341
|
3,368
|
3,230
|
3,474
|
2,897
|
|
Payable silver sales
(koz)
|
7,495
|
8,739
|
|
2,412
|
3,244
|
2,873
|
3,656
|
2,210
|
|
Payable lead production
(kt)
|
73.4
|
83.6
|
|
21.0
|
28.3
|
28.5
|
30.3
|
24.8
|
|
Payable lead sales (kt)
|
73.0
|
74.5
|
|
21.7
|
26.0
|
25.6
|
31.0
|
17.9
|
|
Payable zinc production
(kt)
|
43.0
|
43.3
|
|
12.6
|
16.2
|
13.2
|
15.8
|
14.3
|
|
Payable zinc sales (kt)
|
36.3
|
39.9
|
|
8.8
|
21.8
|
13.9
|
14.4
|
11.6
|
|
Cerro Matoso (99.9% share)
|
|
|
|
|
|
|
|
|
|
Ore mined (kwmt)
|
3,941
|
3,669
|
|
1,189
|
1,619
|
940
|
1,243
|
1,486
|
|
Ore processed (kdmt)
|
2,105
|
2,028
|
|
713
|
702
|
594
|
723
|
711
|
|
Ore grade processed (%,
Ni)
|
1.62
|
1.57
|
|
1.58
|
1.62
|
1.57
|
1.53
|
1.61
|
|
Payable nickel production
(kt)
|
30.6
|
29.1
|
|
10.2
|
10.2
|
8.3
|
10.0
|
10.8
|
|
Payable nickel sales (kt)
|
30.4
|
28.8
|
|
10.6
|
10.4
|
8.5
|
9.5
|
10.8
|
|
Illawarra Metallurgical Coal (100% share)
|
|
|
|
|
|
|
|
|
|
Total coal production
(kt)
|
4,767
|
3,450
|
|
1,436
|
1,753
|
1,168
|
877
|
1,405
|
|
Total coal sales
(kt)20
|
4,662
|
3,334
|
|
1,477
|
1,697
|
1,196
|
900
|
1,238
|
|
Metallurgical coal production
(kt)
|
3,993
|
3,031
|
|
1,240
|
1,504
|
1,043
|
744
|
1,244
|
|
Metallurgical coal sales
(kt)
|
3,873
|
2,812
|
|
1,195
|
1,529
|
996
|
763
|
1,053
|
|
Energy coal production
(kt)
|
774
|
419
|
|
196
|
249
|
125
|
133
|
161
|
|
Energy coal sales (kt)
|
789
|
522
|
|
282
|
168
|
200
|
137
|
185
|
|
Australia Manganese (60% share)
|
|
|
|
|
|
|
|
|
|
Manganese ore production
(kwmt)
|
2,676
|
2,324
|
|
832
|
869
|
890
|
789
|
645
|
|
Manganese ore sales
(kwmt)
|
2,395
|
2,573
|
|
743
|
866
|
940
|
924
|
709
|
|
Ore grade sold (%, Mn)
|
44.1
|
42.6
|
|
44.0
|
43.1
|
42.9
|
42.2
|
42.2
|
|
South Africa Manganese (54.6% share)
|
|
|
|
|
|
|
|
|
|
Manganese ore production
(kwmt)
|
1,522
|
1,641
|
|
429
|
586
|
628
|
483
|
530
|
|
Manganese ore sales
(kwmt)
|
1,524
|
1,567
|
|
492
|
541
|
518
|
564
|
485
|
|
Ore grade sold (%, Mn)
|
39.1
|
38.7
|
|
38.8
|
39.4
|
39.0
|
38.4
|
38.7
|
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
Ben Baker
M +61 403 763 086
E
Ben.Baker@south32.net
|
MEDIA RELATIONS
Miles Godfrey
M +61 415 325 906
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 April
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