29
August 2024
South32
Limited
(Incorporated in Australia under the Corporations Act
2001)
(ACN 093
732 597)
ASX / LSE
/ JSE Share Code: S32 ADR: SOUHY
ISIN: AU000000S320
south32.net
SOUTH32 LIMITED
FINANCIAL RESULTS AND
OUTLOOK
YEAR ENDED 30 JUNE
2024
South32 delivers strong second half results and accelerates
portfolio transformation
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•
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FY24 Underlying EBITDA of US$1.8B and Underlying earnings of US$380M
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•
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Sale of Illawarra Metallurgical Coal to simplify our portfolio
and further strengthen our balance sheet
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•
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Increased our capital management program by
US$200M, to be returned via an on-market share
buy-back
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"Improved operating performance,
disciplined cost management and higher prices for our key
commodities lifted our financial results to finish the year. As a
result, we recorded FY24 Underlying EBITDA of US$1.8 billion and
Underlying earnings of US$380
million.
"Reflecting our strengthened
financial position and disciplined approach to capital allocation,
the Board has resolved to pay a US$140 million fully-franked
ordinary dividend in respect of H2 FY24. The Board has also
expanded our capital management program by US$200 million, to be
returned via an on-market share buy-back, following the sale of
Illawarra Metallurgical Coal.
"During the year, we further
transformed our portfolio, with the approval to develop our Taylor
zinc-lead-silver deposit at our Hermosa project in Arizona and the
sale of Illawarra Metallurgical Coal which is expected to complete
later today.
"The sale of Illawarra Metallurgical
Coal simplifies our portfolio, strengthens our balance sheet and
unlocks capital to invest in our development projects and growth
options in base metals.
"In the near term, these investments
include the development of the Taylor deposit and projects to grow
our copper production at Sierra Gorda.
"In addition, we are seeking to
increase our base metals exposure over the longer-term by investing
in a pipeline of growth options which are being advanced through
study phases and a portfolio of exploration prospects in highly
prospective regions.
"Looking ahead, the outlook for our
business is positive as we focus on safe and reliable operations,
managing our costs, and capitalising on our transformed portfolio
which, more than ever, is focused on commodities critical to a
low-carbon future."
Graham Kerr, South32 CEO
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Financial Highlights
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US$M
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FY24
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FY23
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%
Change
|
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Revenue from continuing
operations
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5,479
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5,646
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(3%)
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Profit/(loss) before tax and net
finance income/(costs) from continuing operations
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(735)
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(466)
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(58%)
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Profit/(loss) after tax
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(205)
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(173)
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(18%)
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Profit/(loss) after tax attributable
to members(1)
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(203)
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(173)
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(17%)
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Basic earnings/(loss) per share (US
cents)(5)
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(4.5)
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(3.8)
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(18%)
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Ordinary dividends per share (US
cents)(6)
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3.5
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8.1
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(57%)
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Other financial measures
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|
|
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Underlying
revenue(7)(8)
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8,296
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9,050
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(8%)
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Underlying
EBITDA(7)(9)
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1,802
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2,534
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(29%)
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Underlying EBITDA
margin(7)(10)
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22.8%
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29.4%
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(6.6%)
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Underlying
EBIT(7)(9)
|
886
|
1,616
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(45%)
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Underlying EBIT
margin(7)(11)
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11.1%
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18.7%
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(7.6%)
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Underlying
earnings(2)(7)(9)
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380
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916
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(59%)
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Basic Underlying earnings per share
(US cents)(5)(7)
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8.4
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20.0
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(58%)
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ROIC(7)(12)
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4.5%
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10.0%
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(5.5%)
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Ordinary shares on issue
(million)
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4,529
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4,545
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(0.4%)
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Safety performance
Nothing is more important than the
health, safety and well-being of our people. We continue to
implement our Safety Improvement Program, a multi-year global
program of work launched in FY22, designed to enhance our safety
culture and achieve a step change in our safety performance. Our
'Lead Safely Every Day' program includes safety leadership
capability workshops and coaching which has been delivered to over
1,500 leaders since its launch in FY23. In FY24, we extended the
program to frontline employees and a subset of contractors that
perform high-risk work at our operations, and functional roles that
support them.
We use a range of leading and
lagging indicators to assess our safety performance. Our total
recordable injury frequency (TRIF)(13) for FY24 improved
by 14% to 5.1 (FY23: 5.9), while lost time injury frequency
(LTIF)(14) increased to 1.9 in FY24 (FY23: 1.6(15)). Our leading indicator, significant hazard
frequency(16), increased to 122.3 for
FY24 (FY23: 91.6), indicating improved hazard awareness and
a positive reporting culture.
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Health and safety
performance
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Performance metric
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FY24
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FY23
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Fatalities from health and safety
incidents
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0
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2
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Total lost time injury frequency
(LTIF)
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1.9
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1.6(15)
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Total recordable injury frequency
(TRIF)
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5.1
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5.9
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Total significant hazard
frequency
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122.3
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91.6
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People and culture
An inclusive culture and diverse
workforce supports greater collaboration, innovation and
performance. Building and maintaining a workforce that represents
the communities in which we operate, especially recruiting more
women into operational roles, is an industry-wide challenge that we
are working to address.
We track our inclusion and diversity
performance against a series of measurable objectives. The below
table shows the representation of women in our workforce,
leadership teams and Board, and the representation of Black
People(17) in our South African workforce. Performance
improved or was maintained year-on-year for five of the seven FY24
measurable objectives, and we achieved three of the seven FY24
measurable objectives.
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Inclusion and diversity
performance
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Diversity representation
(%)
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FY24 measurable objective
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FY24
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FY23
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Women in our workforce
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Achieve at least 23.5%
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20.6
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20.2
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Women on our Board
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Maintain at least 40%
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50.0
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44.4
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Women in Lead Team
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Maintain at least 40%
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50.0
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50.0
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Women in Senior Leadership
Team(18)
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Achieve at least 32.7%
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30.3
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30.3
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Women in Operational Leadership
Team(19)
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Achieve at least 31.5%
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25.7
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28.7
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Black People in South Africa in
total workforce
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Maintain at least 85%
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88.4
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86.9
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Black People in South Africa in
management roles(20)
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Achieve at least 60%
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51.8
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55.3
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Addressing climate change
We have set a target to halve our
operational greenhouse gas (GHG) emissions (Scope 1 and 2) by
2035(21) and a long-term goal(22) to achieve
net zero GHG emissions across all scopes (Scope 1, 2 and 3) by
2050. Our approach to climate change is focused on reshaping our
portfolio to commodities critical in the transition to a low-carbon
world, decarbonising our operations, and working with others to
decarbonise the value chain. In FY24, Worsley Alumina converted the
first two coal-fired boilers to natural gas, and Hillside Aluminium
converted a further 18% of pots to AP3XLE energy efficiency
technology, bringing the total to 36%. Our operational emissions
decreased by 6% and Scope 3 emissions
decreased by 17% in FY24.
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Greenhouse gas emissions
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Million tonnes of CO2
equivalent
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FY24
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FY23
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Operational GHG emissions
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20.3
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21.7
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Scope 3 GHG emissions
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54.2
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65.0(23)
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Business performance
Aluminium value chain
Alumina
Alumina production was largely
unchanged year-on-year at 5.1Mt, with improved plant availability at Brazil Alumina
partially offsetting a temporary bauxite conveyor outage at Worsley
Alumina in Q4 FY24. Production is expected to increase by
approximately 1% in FY25.
Underlying EBITDA increased by
US$106M to US$364M in FY24, for an
operating margin of 20%, as our average realised price of alumina
increased by 1% and caustic soda prices declined.
Aluminium
Aluminium production was largely
unchanged year-on-year at 1.1Mt, as Hillside Aluminium achieved record production, Brazil
Aluminium continued to ramp up, and Mozal Aluminium progressed its
recovery plan. Production is expected to increase by
approximately 6% to 1.2Mt
in FY25 as Brazil Aluminium continues to ramp up
and Mozal Aluminium delivers its recovery plan.
Underlying EBITDA decreased by
US$115M to US$121M in
FY24, for an operating margin of 4%, as a
6% reduction in the average realised price of aluminium and higher
energy prices more than offset lower smelter raw material input
prices.
Base metals
Copper
Sierra Gorda payable copper
equivalent production(24)
decreased by 15% to 73.8kt in FY24, as higher
plant throughput was offset by lower than planned copper grades.
Production is expected to increase by approximately 15% in FY25,
with the continued benefit of the plant de-bottlenecking project
and higher planned copper grades in the next phase of the mine
plan.
Underlying EBITDA decreased by US$83M to US$275M in FY24, for an
operating margin of 43%, as higher realised metal prices and lower
electricity costs were more than offset by lower volumes and a
one-off workforce payment.
Sierra Gorda progressed the
feasibility study for the fourth grinding line expansion, which has
the potential to increase plant throughput by ~20% to ~58Mtpa (100%
basis), ahead of a planned final investment decision in H1
FY25.
We consolidated our position in the
emerging copper district of San Juan, Argentina, acquiring a 50.1%
interest in the Chita Valley copper project, and increasing our
interest in Aldebaran Resources to 14.8%.
We invested US$27M in greenfield
exploration programs in FY24, focused on copper exploration
prospects in highly prospective regions.
Following the end of the period, we
entered into an earn-in agreement and strategic alliance with
Noronex Limited to identify and test copper exploration prospects
across the Kalahari copper belt in Namibia.
Zinc
Cannington payable zinc equivalent
production(25)
increased by 10% to 285.2kt in FY24, despite
adverse weather impacts, as we realised higher average metal
grades. Production is expected to decline by approximately 12% in
FY25 as we rebuild run of mine stocks and continue to manage a
significant increase in underground activity and
complexity.
Underlying EBITDA increased by
US$76M to
US$289M, for an operating margin of
46%, reflecting higher production volumes and
average realised metal prices.
On 15 February 2024, we announced
final investment approval for the Taylor zinc-lead-silver deposit
at our Hermosa project(26), following completion of a
feasibility study which confirmed the potential for attractive
returns over multiple decades.
As the first phase of a regional
scale opportunity in Arizona, United States, Taylor's
infrastructure will unlock value for future growth options,
including the Clark battery-grade manganese deposit and potential
discoveries in our highly prospective regional land
package.
We invested US$372M at Hermosa in
FY24, as we installed critical path infrastructure and progressed
studies and permitting for Taylor and Clark. We expect to invest
US$600M at Hermosa in FY25 as we progress construction of Taylor,
and an exploration decline at Clark to enable access to ore for
further product test work.
We invested US$24M in exploration
work at Hermosa in FY24, successfully returning high-grade copper
and zinc results from Peake and Flux(27), respectively.
We expect to invest US$35M in FY25 as we
complete further exploration at Peake to test the potential for
a continuous structural and lithology controlled
system connecting Taylor and Peake.
Nickel
Cerro Matoso payable nickel
production was largely unchanged at 40.6kt in FY24, supported by
improved plant throughput and nickel grades to finish the year.
Production is expected to be 35.0kt in FY25, due to lower planned
nickel grades.
Underlying EBITDA decreased by
US$150M to US$96M in FY24, for an operating margin of 17%, as a
significant decline in the average realised nickel price and a
stronger Colombian peso more than offset lower price-linked
royalties.
We continue to progress our
strategic review of Cerro Matoso in response to structural changes
in the nickel market. We expect to provide information on the
outcomes of this review in H2 FY25.
Manganese
Australia Manganese
Australia Manganese production
decreased by 34% to 2.3Mwmt in FY24, as we temporarily suspended
operations in March 2024 due to the impacts of Tropical Cyclone
Megan.
Underlying EBITDA decreased by
US$187M to US$182M in FY24, reflecting the impact of Tropical
Cyclone Megan.
We continue to implement the
operational recovery plan, dewatering targeted mining pits and
commencing a phased mining restart. Mining activity is expected to
increase to support a planned build in stockpiles ahead of the wet
season, with FY25 production guidance set at 1.0Mwmt. Production is
expected to increase to 3.2Mwmt in FY26 as we complete the
operational recovery plan.
Capital expenditure for mine repairs
and infrastructure, including the wharf and a critical bridge, is
expected to be approximately US$125M in
FY25.
Wharf operations are scheduled to
recommence in Q3 FY25, subject to maintaining construction
productivity during the wet season, with sales volumes expected to
progressively increase over Q4 FY25.
Our insurers have confirmed that the
damage caused by Tropical Cyclone Megan is covered under our
property damage and business interruption insurance. We are
continuing to work with our insurers to assess the timing and value
of recoveries under these policies.
South Africa Manganese
South Africa Manganese production
increased by 3% to a record 2.2Mwmt in FY24, as we lifted output of
secondary products to capitalise on stronger manganese prices in Q4
FY24.
Underlying EBITDA decreased by 2% to
US$65M in FY24, for an operating margin of 19%, as higher sales
volumes were offset by lower average realised manganese
prices.
South Africa Manganese production is
expected to be 2.0Mwmt across FY25 and FY26, as we continue to use
higher cost trucking to optimise sales volumes and
margins.
Metallurgical coal
Illawarra Metallurgical Coal
saleable production decreased by 24% to 4.9Mt in FY24, consistent
with guidance, as we completed planned longwall moves.
Underlying EBITDA decreased by
US$333M to US$522M in FY24, for an operating margin of 40%, due to
lower planned volumes and metallurgical coal prices.
On 29 February 2024, 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, for cash consideration of up to US$1.65B(3)
(the Transaction). The Transaction is now unconditional and is
expected to complete on 29 August 2024.
Following the end of the period, we
completed the sale of our 50% interest in the Eagle Downs
metallurgical coal project to a subsidiary of Stanmore Resources
Limited for US$15M in cash, a contingent payment of
US$20M(28) and a price-linked royalty of up to
US$100M(29).
Financial performance
Profit and Loss
The Group reported a loss after tax
attributable to members(1) of US$203M in FY24, with
impairment expenses for Worsley Alumina (US$388M
post-tax)(30) and Cerro Matoso (US$248M post-tax),
partially offset by an impairment reversal for Illawarra
Metallurgical Coal (US$139M post-tax). Underlying
earnings(2) decreased by US$536M to US$380M in FY24. A
reconciliation of profit/(loss) to Underlying earnings is set out
on page 9.
Underlying revenue decreased by
US$754M (or 8%) to US$8,296M in FY24 due to lower average commodity
prices (-US$337M) and lower production volumes predominantly at
Illawarra Metallurgical Coal due to planned longwall moves
(-US$373M) and at Australia Manganese due to Tropical Cyclone Megan
(-US$159M). A reconciliation of Underlying revenue to statutory
revenue is included in Note 4 Segment information to the financial
statements in South32's Annual Report for the year ended 30 June
2024.
Underlying EBITDA decreased by
US$732M (or 29%) to US$1,802M in FY24, for a Group operating
margin(10) of 22.8%, as the aforementioned revenue
impacts more than offset a US$124M reduction in the Group's cost
base(31) as we continued our focus on disciplined cost
management and benefitted from lower raw material input
prices.
Underlying EBIT decreased by US$730M
(or 45%) to US$886M in FY24, as Underlying depreciation and
amortisation was largely unchanged at US$916M.
Cash Flow
Group free cash flow from
operations, excluding equity accounted investments (EAIs), was an
outflow of US$80M in FY24, reflecting lower commodity prices and
metallurgical coal volumes, and our investment in productivity,
improvement and growth projects.
Separately, we received net
distributions(32) of US$53M from our manganese and
Sierra Gorda EAIs in FY24 (FY23: US$187M). The decrease in net EAI
distributions in FY24 reflected the impact of Tropical Cyclone
Megan at Australia Manganese and our continued investment in
projects to grow future copper production at Sierra
Gorda.
Group capital expenditure, excluding
EAIs, increased by US$252M to US$1,042M in
FY24 as we invested in critical path infrastructure and studies at
our Hermosa project and additional ventilation capacity at
Illawarra Metallurgical Coal.
Group capital expenditure, excluding
EAIs, is expected to decrease by US$52M to
US$990M in FY25. Safe and reliable capital expenditure is expected
to decrease by US$293M with the divestment of Illawarra
Metallurgical Coal, while growth capital expenditure is expected to
increase by US$228M as we progress construction of Taylor at our
Hermosa project.
Capital expenditure for our EAIs
increased by US$36M to US$315M in FY24 and is
expected to increase by US$70M to US$385M in FY25 as we repair and
install critical infrastructure at Australia
Manganese.
We returned US$198M to shareholders
during FY24, with US$163M in fully-franked ordinary dividends and
US$35M via the on-market share buy-back.
Balance Sheet
The Group finished the period with
net debt of US$762M. Net debt reduced by
US$329M in H2 FY24, supported by improved operating performance,
higher commodity prices and an unwind of working capital to finish
the year.
The sale of Illawarra Metallurgical
Coal will further enhance the Group's balance sheet strength and
flexibility and unlock capital to invest in our high-quality
development projects and growth options in base metals.
Dividends and Capital Management
Consistent with our policy to
distribute a minimum 40% of Underlying earnings as ordinary
dividends, the Board has resolved to pay a fully-franked final
ordinary dividend of US 3.1 cents per share (US$140M) in respect of
H2 FY24, representing 41% of Underlying earnings.
Reflecting the Group's strengthened
financial position and our disciplined approach to capital
management, the Board has also resolved to allocate US$200M to our
ongoing capital management program, to be returned to shareholders
via an on-market share buy-back, commencing from completion of the
sale of Illawarra Metallurgical Coal. This will take returns under
our capital management program to US$2.5B, with the US$200M
increase in the program to be returned to shareholders by 12
September 2025.
Earnings reconciliation
The Group reported a loss after tax
attributable to members of US$203M in FY24,
with impairment expenses for Worsley Alumina (US$388M post-tax) and
Cerro Matoso (US$248M post-tax), partially offset by an impairment
reversal at Illawarra Metallurgical Coal (US$139M post-tax).
Underlying earnings decreased by US$536M to US$380M.
Consistent with our accounting
policies, various items are excluded from the Group's profit/(loss)
to derive Underlying earnings. Total adjustments to derive
Underlying EBIT (US$983M), shown in the table below,
include:
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•
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Net impairment loss/(reversal) of
non-financial assets (+US$604M):
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|
|
Impairment expenses
|
|
|
◦
|
Worsley Alumina: (+US$554M)
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(30);
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◦
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Cerro Matoso: (+US$264M) reflecting
structural changes in the nickel market which are expected to
continue to place pressure on nickel prices and discounts for our
ferronickel product;
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Impairment reversals
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Illawarra Metallurgical Coal:
(-US$197M) following the announced sale to an entity owned by
Golden Energy and Resources Pte Ltd and M Resources Pty
Ltd(3); and
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Eagle Downs metallurgical coal
project: (-US$17M) following the announced sale to a subsidiary of
Stanmore Resources Limited(33).
|
|
•
|
Sierra Gorda (+US$155M) and
manganese joint venture adjustments (+US$129M): to reconcile the
equity accounting position to a proportional consolidation basis.
This included adjustment for idle capacity and other remediation
related costs (+US$93M) at Australia
Manganese as a result of Tropical Cyclone Megan;
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•
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Significant items (+US$50M): the
Group operates a captive insurance program, in which a wholly-owned
subsidiary of the Group insures a number of operations, including
Australia Manganese. As a result of Tropical Cyclone Megan, we have
recognised a self-insurance expense of US$50M with a partially
offsetting amount of US$30M (South32 share) recognised within
Australia Manganese and included in the manganese joint venture
adjustments noted above; and
|
|
•
|
Net impairment loss of financial
assets (+US$29M): periodic revaluation of the shareholder loan
receivable from Sierra Gorda reflecting copper prices and other
macroeconomic assumptions. An offsetting amount is recorded in the
Sierra Gorda joint venture adjustments noted above.
|
|
Profit/(loss) to Underlying EBITDA
reconciliation(7)
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Profit/(loss) before tax and net finance income/(costs) from
continuing operations
|
(735)
|
(466)
|
|
Profit/(loss) before tax and net finance income/(costs) from a
discontinued operation
|
638
|
664
|
|
Adjustments to derive Underlying
EBIT:
|
|
|
|
Significant items
|
50
|
(186)
|
|
Joint venture adjustments
|
284
|
291
|
|
Exchange rate (gains)/losses on the
restatement of monetary items
|
24
|
(62)
|
|
Net impairment loss/(reversal) of
financial assets
|
29
|
71
|
|
Net impairment loss/(reversal) of
non-financial assets
|
604
|
1,300
|
|
(Gains)/losses on non-trading
derivative instruments, contingent consideration and other
investments measured at fair value through profit and
loss
|
(8)
|
4
|
|
Total adjustments to derive Underlying EBIT
|
983
|
1,418
|
|
Underlying EBIT
|
886
|
1,616
|
|
Underlying depreciation and
amortisation
|
916
|
918
|
|
Underlying EBITDA
|
1,802
|
2,534
|
|
Profit/(loss) to Underlying earnings
reconciliation(7)
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Profit/(loss) after tax attributable
to members
|
(203)
|
(173)
|
|
Total adjustments to derive
Underlying EBIT
|
983
|
1,418
|
|
Total adjustments to derive
Underlying net finance costs
|
(228)
|
(203)
|
|
Total adjustments to derive
Underlying income and royalty related tax expense
|
(172)
|
(126)
|
|
Underlying earnings
|
380
|
916
|
External factors and trends affecting the Group's
result
Commodity prices and changes in product demand and
supply
The Group
produces metals, concentrates and ores, for which prices are driven
by global demand and supply for each of these commodities. Average
commodity prices were broadly lower across FY24, despite improved
demand and constrained supply supporting prices for our key
commodities to finish the year. The prices that the Group obtains
for its products are a key driver of business performance, and
fluctuations in these markets affect our results, including cash
flows and shareholder returns.
Details of the impact on Underlying
EBIT from changes in commodity prices are set out in the Earnings
Analysis on page 11.
Exchange rates
The Group is exposed to exchange
rate risk on foreign currency sales, purchases and expenses, as no
active currency hedging is undertaken. As the majority of sales are
denominated in US dollars, and the US dollar plays a dominant role
in the Group's business, funds borrowed and held in US dollars
provide a natural hedge to currency fluctuations. Operating costs
and costs of locally-sourced equipment are influenced by
fluctuations in local currencies, primarily the Australian dollar,
South African rand, Brazilian real, Colombian peso, and Chilean
peso.
The Group is also exposed to
exchange rate translation risk in relation to net monetary
liabilities, being foreign currency denominated monetary assets and
liabilities, including debt, tax and other long-term
liabilities.
Details of the impact of foreign
currency fluctuations on Underlying EBIT are set out in the
Earnings Analysis on page 11.
Earnings analysis
The following key factors influenced
Underlying EBIT in FY24, relative to FY23.
Reconciliation of movements in
Underlying EBIT (US$M)(9)(34)(35)(36)
|
Earnings Analysis
|
US$M
|
|
Commentary
|
|
FY23 Underlying EBIT
|
1,616
|
|
|
|
Change in sales price
|
(337)
|
|
Lower average realised prices for
our commodities, including:
Aluminium
(-US$169M)
Nickel (-US$143M)
Manganese (-US$103M)
Metallurgical coal (-US$26M) and
energy coal (-US$21M)
Partially offset by higher average
realised prices for copper (+US$48M), silver (+US$42M), and alumina
(+US$21M)
|
|
Net impact of price-linked
costs
|
422
|
|
Lower aluminium smelter raw material
input prices (+US$147M), including pitch and coke
Lower caustic soda prices at Worsley
Alumina (+US$83M) and Brazil Alumina (+US$32M)
Lower price-linked royalties
(+US$72M)
Lower coal and diesel prices
(+US$31M)
Lower freight and distribution costs
(+US$28M)
Lower electricity prices at
Illawarra Metallurgical Coal (+US$20M)
|
|
Change in exchange rates
|
66
|
|
Weaker Australian dollar (+US$58M),
and South African rand (+US$54M)
Partially offset by a stronger
Colombian peso (-US$39M) and Brazilian real (-US$12M)
|
|
Change in inflation
|
(224)
|
|
Inflation-linked indexation of our
Southern African aluminium smelter electricity prices
(-US$46M)
General inflation across Australia
(-US$87M), South America (-US$54M) and Southern Africa
(-US$36M)
|
|
Change in sales volume
|
(503)
|
|
Lower volumes at Illawarra
Metallurgical Coal (-US$373M), Australia Manganese (-US$159M) and
Sierra Gorda (-US$85M)
Partially offset by higher volumes
at Brazil Aluminium (+US$84M), Cannington (+US$33M), Brazil Alumina
(+US$24M) and South Africa Manganese (+US$8M)
|
|
Controllable costs
|
(181)
|
|
Inventory and volume related
movements (-US$184M) primarily due to a drawdown in inventories to
support higher sales volumes in our aluminium value
chain
A planned workforce payment at
Sierra Gorda (-US$20M), following the finalisation of a new,
three-year industrial agreement
Higher contractor and maintenance
costs (-US$14M) including at Sierra Gorda, Hillside Aluminium and
Mozal Aluminium
Partially offset by lower energy
costs at Sierra Gorda (+US$18M), following the transition to cost
efficient, 100% renewable energy supply
Lower consumable and maintenance
costs at Cerro Matoso (+US$15M) as we optimised our maintenance
activity
|
|
Other
|
27
|
|
Remediation costs and idle capacity
losses at Australia Manganese (+US$93M), reclassified as a
significant item in accordance with our accounting
policies
Higher third party product EBIT
(+US$12M)
Partially offset by our share of the
loss from Mineração Rio do Norte (MRN) due to
lower bauxite prices (-US$36M) and asset write-offs (-US$34M)
including at Australia Manganese due to Tropical Cyclone
Megan
|
|
FY24 Underlying EBIT
|
886
|
|
|
Net
finance income/(costs)
The Group's FY24 Underlying net
finance costs of US$249M primarily comprise the
unwinding of the discount applied to our closure and rehabilitation
provisions (US$165M), interest on lease liabilities (US$59M)
largely for our multi-fuel co-generation facility at Worsley
Alumina, and interest on our US$700M of senior unsecured notes
(US$31M) issued in H2 FY22 to partly fund the Sierra Gorda
acquisition.
|
Underlying net finance costs
reconciliation(7)
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Unwind of discount applied to
closure and rehabilitation provisions
|
(165)
|
(113)
|
|
Interest on lease
liabilities
|
(59)
|
(56)
|
|
Interest on senior unsecured
notes
|
(31)
|
(31)
|
|
Change in discount rate on closure
and rehabilitation provisions
|
8
|
-
|
|
Other
|
(2)
|
12
|
|
Underlying net finance costs
|
(249)
|
(188)
|
|
Add back earnings adjustment for
exchange rate variations on net debt
|
8
|
8
|
|
Joint venture
adjustments(37)
|
220
|
195
|
|
Total adjustments to derive Underlying net finance
costs
|
228
|
203
|
|
Remove net finance costs from a discontinued
operation
|
10
|
7
|
|
Net
finance income/(costs)
|
(11)
|
22
|
Tax
expense
The Group's Underlying income tax
and royalty related taxation expense, which includes our material
EAIs, decreased by US$253M to US$259M in FY24, for an Underlying
effective tax rate (ETR)(38) of 38.8% (FY23: 36.1%). Our
Group Underlying ETR reflects the corporate tax
rates(39) and royalty related taxes(40) of
the jurisdictions in which we operate and our geographical earnings
mix.
The Underlying ETR for our manganese
business was 71.3% in FY24, including the royalty related
tax(40) at Australia Manganese, reflecting the
derecognition of certain deferred tax assets and reduced
profitability as operations at Australia Manganese were temporarily
suspended following Tropical Cyclone Megan. The Underlying ETR for
our Sierra Gorda EAI was 0% in FY24, as royalty related
tax(40) was offset by the recognition of deferred tax
assets on carry-forward tax
losses.
|
Underlying income tax and royalty
related taxation expense reconciliation(7)
|
|
US$M
|
FY24
|
FY23
|
|
Underlying EBIT
|
886
|
1,616
|
|
Include: Underlying net finance
costs
|
(249)
|
(188)
|
|
Remove: Share of (profit)/loss of
EAIs
|
31
|
(11)
|
|
Underlying profit/(loss) before tax
|
668
|
1,417
|
|
|
|
|
|
Income tax expense/(benefit) from continuing
operations
|
(106)
|
174
|
|
Income tax expense/(benefit) from a discontinued
operation
|
193
|
212
|
|
Tax effect of other adjustments to
derive Underlying EBIT
|
122
|
(3)
|
|
Tax effect of other adjustments to
derive Underlying net finance costs
|
(2)
|
(3)
|
|
Exchange rate variations on tax
balances
|
(20)
|
4
|
|
Significant items
|
15
|
(23)
|
|
Joint venture adjustments relating
to income tax(37)
|
21
|
96
|
|
Joint venture adjustments relating
to royalty related tax(37)
|
36
|
55
|
|
Total adjustments to derive Underlying income tax
(expense)/benefit
|
172
|
126
|
|
Underlying income tax (expense)/benefit
|
259
|
512
|
|
Underlying effective tax rate
|
38.8 %
|
36.1 %
|
Cash flow
Group free cash flow from
operations, excluding EAIs, was an outflow of
US$80M in FY24, reflecting
lower commodity prices and metallurgical coal volumes, and our
investment in productivity, improvement and growth projects. Group
free cash flow for the year reflected a significant uplift in H2
FY24 (H2 FY24: +US$397M, H1 FY24: -US$477M), supported by improved
operating performance, higher commodity prices, and an unwind of
working capital (H2 FY24: US$182M
unwind, H1 FY24: US$276M build).
Group capital expenditure, excluding
EAIs, increased by US$186M to US$1,080M as we invested in critical
path infrastructure and studies at our Hermosa project and
additional ventilation capacity at Illawarra Metallurgical
Coal.
Group cash tax paid, excluding EAIs,
decreased by US$595M to US$223M as cash tax
normalised following one-off portfolio related payments in the
prior period.
Separately, we received net
distributions(32) of US$53M from our manganese and
Sierra Gorda EAIs in FY24. Net distributions from our manganese EAI
reflected US$30M of initial funding provided to Australia Manganese
to support recovery plans.
|
Free cash flow from operations
excluding EAIs
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Profit/(loss) from continuing and
discontinued operations
|
(97)
|
198
|
|
Non-cash or non-operating
items
|
1,408
|
1,852
|
|
Share of (profit)/loss from
EAIs
|
60
|
(246)
|
|
Change in working capital
|
(94)
|
10
|
|
Cash generated from operations
|
1,277
|
1,814
|
|
Total capital expenditure, excluding
EAIs, including intangibles and capitalised exploration
|
(1,080)
|
(894)
|
|
Operating cash flows generated from operations after capital
expenditure
|
197
|
920
|
|
Net interest
paid(41)
|
(54)
|
(45)
|
|
Income tax paid
|
(223)
|
(818)
|
|
Free cash flow from operations
|
(80)
|
57
|
|
Working capital movement
|
|
|
|
US$M
|
FY24
|
Commentary
|
|
Trade and other
receivables
|
(120)
|
Timing of shipments and higher
commodity prices in Q4 FY24
|
|
Inventories
|
27
|
Drawdown of aluminium inventory in
H2 FY24
|
|
Trade and other payables
|
(7)
|
|
|
Provisions and other
liabilities
|
6
|
|
|
Total working capital movement
|
(94)
|
|
Capital expenditure
The Group's capital
expenditure(42), excluding EAIs,
increased by US$186M to US$1,080M in FY24 as we continued
our investment in productivity, improvement and growth
projects:
|
•
|
Safe and reliable capital
expenditure (US$266M),
including Illawarra Metallurgical Coal (US$337M), increased by US$133M to US$603M, reflecting elevated
capital expenditure at Illawarra Metallurgical Coal for additional
ventilation capacity;
|
|
•
|
Improvement and life extension
capital expenditure increased by US$6M to US$64M as we completed
energy transition projects at Worsley Alumina and progressed the
De-bottlenecking Phase Two project at Brazil Alumina;
|
|
•
|
Growth capital expenditure increased
by US$116M to US$372M at Hermosa, as we installed critical path
infrastructure and progressed studies and permitting for Taylor and
Clark; and
|
|
•
|
Intangibles and capitalised
exploration expenditure was US$33M, as we completed multiple
exploration programs across our portfolio focused on base
metals.
|
Our share of capital expenditure for
our material EAIs increased by US$46M to US$329M
in FY24:
|
•
|
Capital expenditure for our
manganese EAIs increased by US$25M to US$109M, as South Africa
Manganese continued work to access new mining areas and improve
rail efficiencies, and Australia Manganese progressed construction
of the Eastern Leases South life extension project, prior to the
suspension of operations due to Tropical Cyclone Megan;
and
|
|
•
|
Capital expenditure for our Sierra
Gorda EAI increased by US$21M to US$220M, as the operation
continued its investment in deferred stripping, additional tailing
storage infrastructure, plant de-bottlenecking, and the feasibility
study for the fourth grinding line expansion project.
|
|
Capital expenditure (South32
share)(36)(42)
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Safe and reliable capital
expenditure
|
(266)
|
(228)
|
|
Improvement and life extension
capital expenditure
|
(64)
|
(58)
|
|
Growth capital
expenditure
|
(372)
|
(256)
|
|
Intangibles and the capitalisation
of exploration expenditure
|
(33)
|
(95)
|
|
Discontinued operation - Illawarra
Metallurgical Coal
|
(345)
|
(257)
|
|
Total capital expenditure (excluding EAIs)
|
(1,080)
|
(894)
|
|
EAIs capital expenditure
|
(329)
|
(283)
|
|
Total capital expenditure (including EAIs)
|
(1,409)
|
(1,177)
|
Balance sheet
The Group finished the period with
net debt of US$762M. Net debt reduced by
US$329M in H2 FY24, supported by improved operating performance,
higher commodity prices and an unwind of working capital to finish
the year.
The sale of Illawarra Metallurgical
Coal will further enhance the Group's balance sheet strength and
flexibility and unlock capital to invest in our high-quality
development projects and growth options in base metals.
We continue to prioritise a strong
balance sheet and investment grade credit rating through the
cycle. Our current BBB+/Baa1 credit ratings were
re-affirmed by S&P Global Ratings and Moody's, respectively,
during FY24. We also retain access to significant liquidity,
having successfully extended our undrawn sustainability-linked
revolving credit facility of US$1.4B to December 2027 and US$1.3B
to December 2028.
|
Net debt
|
|
|
|
US$M
|
FY24
|
FY23
|
|
Cash and cash equivalents
|
842
|
1,258
|
|
Lease liabilities
|
(710)
|
(674)
|
|
Other interest bearing
liabilities
|
(894)
|
(1,067)
|
|
Net
debt(a)
|
(762)
|
(483)
|
|
(a) Net debt includes Illawarra
Metallurgical Coal and Eagle Downs metallurgical coal which are
classified as held for sale.
|
Dividends and capital management
Our unchanged capital management
framework supports investment in our business and is designed to
reward shareholders as our financial performance improves.
Consistent with our policy to distribute a minimum 40% of
Underlying earnings as ordinary dividends, the Board has resolved
to pay a fully-franked final ordinary dividend of US 3.1 cents per
share (US$140M) in respect of H2 FY24, representing 41% of
Underlying earnings.
In February 2024, we took the
decision to cancel our on-market share buy-back to manage our
financial position and ensure we retained the right balance of
flexibility, efficiency and prudence. Reflecting the Group's
strengthened financial position and our disciplined approach to
capital management, the Board has resolved to allocate US$200M to
our ongoing capital management program, to be returned to
shareholders via an on-market share buy-back, commencing from
completion of the sale of Illawarra Metallurgical Coal. This will
take returns under our capital management program to US$2.5B, with
the US$200M increase in the program to be returned by 12 September
2025.
|
Dividends announced
|
|
|
|
|
|
Period
|
Dividend per share
(US cents)
|
US$M
|
Franking
|
Pay-out ratio
|
|
H1 FY22
|
8.7
|
405
|
100%
|
40%
|
|
H2 FY22
|
14.0
|
648
|
100%
|
41%
|
|
August 2022 special
dividend
|
3.0
|
139
|
100%
|
N/A
|
|
H1 FY23
|
4.9
|
224
|
100%
|
40%
|
|
H2 FY23
|
3.2
|
145
|
100%
|
41%
|
|
H1 FY24
|
0.4
|
18
|
100%
|
45%
|
|
H2 FY24
|
3.1
|
140
|
100%
|
41%
|
South32 shareholders registered on
the South African branch register will not be able to dematerialise
or rematerialise their shareholdings between 18 and 20 September
2024 (both dates inclusive), nor will transfers to/from the South
African branch register be permitted between 13 and 20 September
2024 (both dates inclusive).
Details of the currency exchange
rates applicable for the dividend will be announced to the relevant
stock exchanges. Further dividend information is available on our
website (www.south32.net).
South32 American Depositary Receipts
(ADRs) each represent five fully paid ordinary shares in South32
and ADR holders will receive dividends accordingly, subject to the
terms of the Depositary Agreement.
|
Dividend timetable
|
Date
|
|
Announce currency conversion into
South African rand
|
16 September 2024
|
|
Last day to trade cum dividend on
the Johannesburg Stock Exchange (JSE)
|
17 September 2024
|
|
Ex-dividend date on the
JSE
|
18 September 2024
|
|
Ex-dividend date on the ASX and
London Stock Exchange (LSE)
|
19 September 2024
|
|
Record date (including currency
election date for ASX)
|
20 September 2024
|
|
Payment date
|
17 October 2024
|
OUTLOOK
Production
We achieved 98% of revised FY24
copper equivalent production
guidance(43), as we set consecutive annual production
records at Hillside Aluminium and South Africa Manganese, and
lifted production at Cannington by 10% despite adverse weather
impacts.
In FY25, we expect to increase our
low-carbon aluminium(44) production by
17% as Brazil Aluminium continues to ramp up and Mozal Aluminium
delivers its recovery plan, and lift copper production by 15% as
Sierra Gorda realises higher planned grades.
Australia Manganese has commenced a
phased mining restart with mining activity expected to increase to
support a planned build in stockpiles ahead of the wet season.
Wharf operations are expected to recommence in Q3 FY25, subject to
maintaining construction productivity during the wet
season.
|
Production guidance (South32
share)(36)
|
|
|
FY24
|
FY25e(a)
|
FY26e(a)
|
Key guidance assumptions
|
|
Worsley Alumina
|
|
|
|
Constrained bauxite inventories in
FY25 and FY26
|
|
Alumina production (kt)
|
3,777
|
3,750
|
3,750
|
|
Brazil Alumina (non-operated)
|
|
|
|
Improved plant stability and
realisation of benefits from the De-bottlenecking Phase Two
project
|
|
Alumina production (kt)
|
1,286
|
1,350
|
1,380
|
|
Brazil Aluminium (non-operated)
|
|
|
|
Ramping up across all three
potlines
|
|
Aluminium production (kt)
|
104
|
130
|
160
|
|
Hillside Aluminium(45)
|
|
|
|
Expected to continue to test its
maximum technical capacity
|
|
Aluminium production (kt)
|
720
|
720
|
720
|
|
Mozal Aluminium(45)
|
|
|
|
Execution of operational recovery
plan and return to nameplate capacity in H1 FY26
|
|
Aluminium production (kt)
|
314
|
360
|
370
|
|
Sierra Gorda (non-operated)
|
|
|
|
Expected to increase copper
equivalent production by 15% in FY25 and a further 2% in FY26, with
the continued benefit of the plant de-bottlenecking project and
higher planned copper grades
|
|
Ore processed (Mt)
|
21.9
|
21.8
|
22.0
|
|
Payable copper equivalent production
(kt)(24)
|
73.5
|
84.8
|
86.1
|
|
Payable copper production
(kt)
|
60.8
|
70.0
|
74.0
|
|
Payable molybdenum production
(kt)
|
0.9
|
1.3
|
1.0
|
|
Payable gold production
(koz)
|
24.6
|
25.0
|
20.0
|
|
Payable silver production
(koz)
|
607
|
550
|
600
|
|
Cannington
|
|
|
|
Increased underground mine
complexity and rebuild of run of mine stocks in FY25
|
|
Ore processed (kdmt)
|
2,221
|
2,100
|
2,200
|
|
Payable zinc equivalent production
(kt)(25)
|
302.5
|
265.4
|
282.2
|
|
Payable silver production
(koz)
|
12,666
|
11,300
|
12,000
|
|
Payable lead production
(kt)
|
112.4
|
100.0
|
110.0
|
|
Payable zinc production
(kt)
|
60.7
|
50.0
|
50.0
|
|
Cerro Matoso
|
|
|
|
Lower planned nickel grades in
FY25
FY26 production guidance is not
provided, subject to strategic review
|
|
Ore processed (kdmt)
|
2,774
|
2,750
|
Subject to
review
|
|
Payable nickel production
(kt)
|
40.6
|
35.0
|
|
Australia Manganese
|
|
|
|
Mining activity to increase across
FY25 and FY26 as we implement the operational recovery
plan
|
|
Manganese ore production
(kwmt)
|
2,324
|
1,000
|
3,200
|
|
South Africa Manganese
|
|
|
|
Continued use of higher cost
trucking to optimise sales volumes
|
|
Manganese ore production
(kwmt)
|
2,175
|
2,000
|
2,000
|
|
|
FY24
|
FY25e(a)
|
Key guidance assumptions
|
|
Illawarra Metallurgical Coal
|
|
|
|
Guidance not provided, with the
Transaction expected to complete on 29 August 2024
|
|
Total coal production
(kt)
|
4,938
|
N/A
|
|
Metallurgical coal production
(kt)
|
4,305
|
|
Energy coal production
(kt)
|
633
|
(a) The denotation (e)
refers to an estimate or forecast year.
Costs and capital expenditure
Operating unit costs guidance
Operating unit costs were in line
with guidance across our operations in FY24, as we continued our
focus on disciplined cost management. This focus, combined with the
benefit of lower raw material input prices in our aluminium value
chain, resulted in a 2% reduction in our total cost base in
FY24(31).
Looking forward, we remain focused
on delivering further cost efficiencies to mitigate industry-wide
inflationary pressure and lower planned volumes at certain
operations in FY25.
While Operating unit cost guidance
is not provided for our aluminium smelters, their cost profile will
continue to be influenced by producer currencies, and the price of
raw material inputs and energy. FY25 Operating unit costs for
Brazil Aluminium and Mozal Aluminium are expected to benefit from
planned production growth of 25% and 15%, respectively.
|
Operating unit
cost(46)
|
|
|
|
|
|
|
FY24
|
H1
FY24
|
H2
FY24
|
FY25e(a)(b)
|
Key guidance assumptions
|
|
Worsley Alumina
|
|
|
|
|
|
|
(US$/t)
|
269
|
258
|
280
|
290
|
Constrained bauxite supply, higher
caustic soda prices and price-linked royalties
|
|
Brazil Alumina
(non-operated)
|
|
|
|
|
|
|
(US$/t)
|
323
|
325
|
320
|
Not
provided
|
Will continue to be influenced by
the price of raw material inputs and energy
|
|
Brazil Aluminium (non-operated)
|
|
|
|
|
|
|
(US$/t)
|
3,500
|
4,025
|
3,160
|
Not
provided
|
To benefit from a planned 25%
increase in production in FY25, and continue to be influenced by
the price of raw material inputs and energy
|
|
Hillside Aluminium
|
|
|
|
|
|
|
(US$/t)
|
2,115
|
2,135
|
2,097
|
Not
provided
|
Will continue to be influenced by
the price of raw material inputs, the South African rand and
inflation-linked energy costs
|
|
Mozal Aluminium
|
|
|
|
|
|
|
(US$/t)
|
2,371
|
2,461
|
2,238
|
Not
provided
|
To benefit from a planned 15%
increase in production in FY25, and continue to be influenced by
the price of raw material inputs and energy
|
|
Sierra Gorda (non-operated)
|
|
|
|
|
|
|
(US$/t)(c)
|
17.0
|
18.8
|
15.2
|
16.0
|
Moderation in labour costs following
the prior period's workforce payment
|
|
Cannington
|
|
|
|
|
|
|
(US$/t)(c)
|
154
|
150
|
159
|
170
|
Lower planned mill
throughput
|
|
Cerro Matoso
|
|
|
|
|
|
|
(US$/lb)
|
5.10
|
5.57
|
4.73
|
5.65
|
Lower planned nickel grades,
partially offset by lower price-linked royalties and a weaker
Colombian peso
|
|
Australia Manganese
|
|
|
|
|
|
|
(US$/dmtu, FOB)
|
2.32
|
2.15
|
N/A
|
Not
provided
|
Subject to operational recovery plan
and volumes in H2 FY25
|
|
South Africa Manganese
|
|
|
|
|
|
|
(US$/dmtu, FOB)
|
2.67
|
2.59
|
2.78
|
3.00
|
Higher price-linked royalties and
in-land logistics costs
|
(a) FY25e Operating unit
cost guidance includes royalties (where appropriate) and commodity
price and foreign exchange rate forward curves or our internal
expectations (refer to page 33
footnote 47).
(b)
The denotation (e) refers to an estimate or forecast
year.
(c) US dollar per tonne of
ore processed. Periodic movements in finished product inventory may
impact Operating unit costs.
Capital expenditure guidance (excluding exploration and
intangibles)
FY25 Group capital expenditure,
excluding EAIs, is expected to decrease by US$52M to US$990M,
reflecting lower sustaining capital expenditure with the divestment
of Illawarra Metallurgical Coal, partially offset by higher growth
capital expenditure at Hermosa as we progress construction of
Taylor and the exploration decline for Clark:
|
•
|
Safe and reliable: expected to
decrease by US$293M to US$310M following the divestment of
Illawarra Metallurgical Coal;
|
|
•
|
Improvement and life extension:
expected to increase by US$13M to US$80M, as we complete work for
new mining areas and decarbonisation projects at Worsley Alumina;
and
|
|
•
|
Growth: expected to increase by
US$228M to US$600M at Hermosa, as we construct infrastructure for
Taylor (~US$530M), progress studies and key infrastructure for
Clark (~US$40M) and complete work across the broader project
(~US$30M).
|
FY25 capital expenditure for our
material EAIs is expected to increase by US$70M to
US$385M, as we invest to support the resumption of
operations at Australia Manganese and advance projects to grow
future copper volumes at Sierra Gorda:
|
•
|
Manganese EAIs: expected to increase
by US$67M to US$175M as we invest US$125M at
Australia Manganese to repair and install infrastructure, including
the wharf and a critical bridge. Our insurers have confirmed that
the damage caused by Tropical Cyclone Megan is covered under our
property damage and business interruption insurance. We are
continuing to work with our insurers to assess the timing and value
of recoveries under these policies; and
|
|
•
|
Sierra Gorda: expected to be largely
unchanged at US$210M as we continue to invest in deferred stripping
and additional tailings capacity. We expect to update guidance
following a final investment decision for the fourth grinding line
expansion, planned for H1 FY25.
|
|
Capital expenditure excluding
exploration and intangibles (South32 share)(36)
|
|
US$M
|
FY24
|
FY25e(a)
|
|
Worsley Alumina
|
69
|
90
|
|
Brazil Alumina
|
58
|
60
|
|
Brazil Aluminium
|
8
|
10
|
|
Hillside Aluminium
|
38
|
60
|
|
Mozal Aluminium
|
22
|
25
|
|
Cannington
|
37
|
45
|
|
Cerro Matoso
|
34
|
20
|
|
Illawarra Metallurgical
Coal
|
337
|
-(b)
|
|
Safe and reliable capital expenditure (excluding
EAIs)
|
603
|
310
|
|
Worsley Alumina
|
37
|
45
|
|
Brazil Alumina
|
22
|
3
|
|
Other operations
|
8
|
32
|
|
Improvement and life extension capital expenditure (excluding
EAIs)
|
67
|
80
|
|
Hermosa
|
372
|
600
|
|
Growth capital expenditure
|
372
|
600
|
|
Total capital expenditure (excluding EAIs)
|
1,042
|
990
|
|
Total capital expenditure (including EAIs)
|
1,357
|
1,375
|
|
Capital expenditure for EAIs
excluding exploration and intangibles (South32
share)(36)
|
|
US$M
|
FY24
|
FY25e(a)
|
|
Sierra Gorda
|
175
|
185
|
|
Australia Manganese
|
39
|
125
|
|
South Africa Manganese
|
31
|
35
|
|
Safe and reliable capital expenditure (EAIs)
|
245
|
345
|
|
Sierra Gorda
|
32
|
25(c)
|
|
Australia Manganese
|
26
|
-
|
|
South Africa Manganese
|
12
|
15
|
|
Improvement and life extension capital expenditure
(EAIs)
|
70
|
40
|
|
Total capital expenditure (EAIs)
|
315
|
385
|
(a) The denotation (e)
refers to an estimate or forecast year.
(b)
FY25 capital expenditure guidance is not provided for Illawarra
Metallurgical Coal, with the sale expected to complete on 29 August
2024.
(c) We expect to update
FY25 capital expenditure guidance following a final investment
decision for the fourth grinding line project, planned for H1
FY25.
Capitalised exploration guidance
FY25 Group capitalised exploration,
including EAIs, is expected to be US$50M as we continue base metals exploration
programs across our portfolio. This includes exploration programs
at our Hermosa project as we continue to test the Peake copper
deposit(27), and at Sierra
Gorda's Catabela Northeast copper porphyry exploration
prospect.
|
Capitalised exploration (South32
share)(36)
|
|
US$M
|
FY24
|
FY25e(a)
|
|
Capitalised exploration (excluding
EAIs)
|
34
|
40
|
|
EAIs capitalised
exploration
|
14
|
10
|
|
Capitalised exploration (including
EAIs)
|
48
|
50
|
(a) The denotation (e)
refers to an estimate or forecast year.
Other expenditure guidance
Other expenditure items presented
below are on a proportional consolidation basis including our
manganese and Sierra Gorda EAIs.
|
|
FY24
|
FY25e(a)
|
Commentary
|
|
Group and unallocated expense in Underlying EBIT (excluding
Hermosa, greenfield exploration and third party products and
services EBIT)
|
|
(US$M)
|
96
|
100
|
Reflects a normalised
run-rate
|
|
Hermosa expenses included in Underlying EBIT
|
|
(US$M)
|
24
|
30
|
Work across the broader Hermosa
project
|
|
Underlying depreciation and amortisation
|
|
(US$M)
|
916
|
810
|
Reflects divestment of Illawarra
Metallurgical Coal
|
|
Underlying net finance costs
|
|
|
|
|
(US$M)
|
249
|
190
|
Reflects divestment of Illawarra
Metallurgical Coal
|
|
Greenfield exploration
|
|
|
|
|
(US$M)
|
27
|
30
|
Greenfield exploration activity
targeting base metals in
highly prospective
regions
|
(a) The denotation (e)
refers to an estimate or forecast year.
OPERATIONS ANALYSIS
A summary of the underlying
performance of the Group's operations is presented below and a more
detailed analysis is presented on pages 21 to 31. Unless otherwise stated: all
metrics reflect South32's share; Operating unit cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services divided by sales volumes; Operating cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services; and Realised sales price is calculated as Underlying
revenue excluding third party products and services divided by
sales volume.
|
Operations table (South32
share)(36)
|
|
|
|
|
|
|
Underlying revenue
|
Underlying EBIT
|
|
US$M
|
FY24
|
FY23
|
FY24
|
FY23
|
|
Worsley Alumina
|
1,356
|
1,363
|
131
|
68
|
|
Brazil Alumina
|
484
|
456
|
(11)
|
(45)
|
|
Brazil Aluminium
|
242
|
166
|
(121)
|
(136)
|
|
Hillside Aluminium
|
1,720
|
1,823
|
130
|
191
|
|
Mozal Aluminium
|
812
|
886
|
(30)
|
56
|
|
Sierra Gorda
|
647
|
684
|
143
|
217
|
|
Cannington
|
631
|
542
|
206
|
142
|
|
Hermosa
|
-
|
-
|
(28)
|
(19)
|
|
Cerro Matoso
|
556
|
698
|
35
|
189
|
|
Australia Manganese
|
436
|
688
|
61
|
266
|
|
South Africa Manganese
|
343
|
344
|
45
|
45
|
|
Third party products and
services(48)
|
388
|
399
|
7
|
12
|
|
Inter-segment / Group and
unallocated
|
(780)
|
(782)
|
(123)
|
(84)
|
|
South32 Group (excluding Illawarra Metallurgical
Coal)
|
6,835
|
7,267
|
445
|
902
|
|
Illawarra Metallurgical
Coal(49)
|
1,461
|
1,783
|
441
|
714
|
|
South32 Group
|
8,296
|
9,050
|
886
|
1,616
|
WORSLEY ALUMINA
(86% SHARE)
Worsley Alumina is an integrated
bauxite mining and alumina refining operation in the South West of
Western Australia. Alumina from Worsley Alumina is exported to our
Hillside Aluminium and Mozal Aluminium smelters and other smelters
around the world.
Volumes
Worsley Alumina saleable production
decreased by 2% (or 62kt) to 3,777kt in FY24, as a temporary outage
of the bauxite conveyor impacted bauxite supply to the refinery in
Q4 FY24. Production is expected to be 3,750kt across FY25 and FY26
as we manage bauxite inventories due to delays in regulatory
approvals for new mining areas, and complete additional conveyor
maintenance. The refinery is expected to operate at nameplate
capacity of 4.6Mtpa (100% basis) from FY27, subject to the receipt
of approvals for new mining areas.
On 8 July 2024, the WA Environmental
Protection Authority (WA EPA) published its recommendation that the
Worsley Mine Development Project be approved, subject to
conditions. If imposed in their current form, several conditions
would create significant operating challenges. We have lodged an
appeal in relation to the WA EPA assessment report, and
continue to work collaboratively with the
Western Australian Government to enable Worsley Alumina to continue
to meet the State's robust environmental standards. We are aiming
to secure the required environmental approvals by the end of
CY24.
Operating costs
Operating unit costs decreased by 8%, to US$269/t in FY24, as lower caustic
soda prices (FY24: US$460/t, FY23:
US$659/t), freight rates and a weaker
Australian dollar, more than offset higher energy costs as we
converted the first two coal-fired boilers to natural
gas.
We expect FY25 Operating unit costs
to increase by 8%, to US$290/t, due to the
impact of constrained bauxite supply, higher caustic soda prices
(FY25e: ~US$500/t) and price-linked royalties. Exchange rate and
price assumptions for FY25 Operating unit cost guidance are
detailed on page 33, footnote 47.
Financial performance
Underlying EBIT increased by 93% (or
US$63M), to US$131M in FY24, as higher average alumina prices
(+US$11M), lower caustic soda costs (+US$81M) and freight rates on
sales (+US$18M), more than offset lower sales volumes (-US$18M) and
higher energy costs (-US$8M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$20M to US$69M in FY24 and is expected
to be US$90M in FY25 as we continue our investment in
infrastructure to access new mining areas and additional bauxite
residue disposal capacity.
Improvement and life extension
capital expenditure increased by US$4M to US$37M in FY24 and is
expected to be US$45M in FY25 as we progress the Worsley Mine
Development Project and decarbonisation projects at the
refinery.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
1.6
|
0.6
|
|
Total Recordable Injury Frequency
(TRIF)
|
8.0
|
8.6
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Alumina production (kt)
|
3,777
|
3,839
|
|
Alumina sales (kt)
|
3,767
|
3,817
|
|
Realised alumina sales price
(US$/t)
|
360
|
357
|
|
Operating unit cost
(US$/t)
|
269
|
291
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
1,356
|
1,363
|
|
Underlying EBITDA
|
324
|
251
|
|
Underlying EBIT
|
131
|
68
|
|
Net operating assets
|
1,813
|
2,457
|
|
Capital expenditure
|
106
|
82
|
|
Safe and reliable
|
69
|
49
|
|
Improvement and life extension
|
37
|
33
|
|
Social Investment
|
0.9
|
1.1
|
BRAZIL ALUMINA
(36% SHARE, NON-OPERATED)
Brazil Alumina includes our 33%
interest in the Mineração Rio do Norte (MRN) bauxite mine and a 36%
interest in the Alumar alumina refinery. Our share of bauxite
produced from MRN is supplied to the Alumar refinery. The alumina
produced from Alumar refinery is supplied
to the co-located Alumar aluminium smelter and exported to other
smelters around the world.
Volumes
Brazil Alumina saleable production
increased by 2% (or 24kt) to 1,286kt in FY24, with improved
plant availability in H2 FY24. Production is expected to increase
by 5% to 1,350kt in FY25 and a further 2% to 1,380kt in FY26 as the
refinery begins to realise the benefits of the De-bottlenecking
Phase Two project.
Operating costs
Operating unit costs decreased by
12%, to US$323/t in FY24, as the refinery delivered improved
volumes and benefitted from lower prices for caustic soda (FY24:
US$469/t, FY23: US$722/t), coal-linked energy, and bauxite from MRN
linked to alumina and aluminium prices on a trailing
basis.
While Operating unit cost guidance
is not provided for this non-operated facility, we expect FY25 Operating unit costs to benefit from higher
planned volumes and a further reduction in energy
prices.
Financial performance
Underlying EBIT improved by US$34M,
to a loss of US$11M in FY24, as higher sales volumes (+US$16M) and
average realised alumina prices (+US$12M), together with lower
prices for caustic soda (+US$32M), energy (+US$28M) and bauxite
(+US$9M), more than offset a stronger Brazilian real
(-US$4M).
Our share of the loss from our
equity interest in MRN was US$30M in FY24 (FY23: profit of US$6M),
which reflected lower bauxite
prices.
Capital expenditure
Safe and reliable capital
expenditure increased by US$13M to US$58M
in FY24 and is expected to be US$60M in FY25 as we continue our investment in
additional bauxite residue disposal capacity.
Improvement and life extension
capital expenditure increased by US$9M to
US$22M in FY24 as we completed key work for
the refinery's De-bottlenecking Phase Two project. Our spend is
expected to significantly reduce to US$3M
in FY25.
The partners of MRN continue to
progress a feasibility study for the West Zone project, which has
the potential to extend the life of the bauxite mine by more than
20 years(50). A final investment decision for an
enabling transmission line to connect MRN to the Brazilian power
grid is anticipated during FY25. The transmission line will enable
MRN to replace its current diesel-powered generation with renewable
energy sources, reducing operating costs and GHG
emissions.
|
South32 share
|
FY24
|
FY23
|
|
Alumina production (kt)
|
1,286
|
1,262
|
|
Alumina sales (kt)
|
1,282
|
1,237
|
|
Realised sales price
(US$/t)
|
378
|
369
|
|
Operating unit cost
(US$/t)(a)
|
323
|
368
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
484
|
456
|
|
Underlying EBITDA
|
40
|
7
|
|
Underlying EBIT
|
(11)
|
(45)
|
|
Net operating assets
|
736
|
738
|
|
Capital expenditure
|
80
|
58
|
|
Safe and reliable
|
58
|
45
|
|
Improvement and life extension
|
22
|
13
|
(a) Excludes the
profit/(loss) from our equity interest in MRN.
BRAZIL ALUMINIUM
(40% SHARE, NON-OPERATED)
The Brazil Aluminium smelter was
restarted during FY22 after being on care and maintenance since
2015. Brazil Aluminium produces aluminium for domestic and export
markets, with alumina supplied by the co-located Alumar refinery.
Our share of Brazil Aluminium production is powered by 100%
renewable power.
Volumes
Brazil Aluminium saleable production
increased by 51% (or 35kt) to 104kt in FY24, as the smelter
continued to ramp up all three potlines. Production is expected to
increase by 25% to 130kt in FY25 and a further 23% to 160kt in
FY26.
Operating costs
Operating unit costs decreased by
20%, to US$3,500/t in FY24, as the smelter continued to ramp up and
benefitted from lower prices for smelter raw material
inputs.
While Operating unit cost guidance
is not provided for this non-operated facility, we expect FY25
Operating unit costs to benefit from a 25% increase in production
volumes as the smelter continues to ramp up.
Financial performance
Underlying EBIT improved by US$15M,
to a loss of US$121M in FY24, as higher sales volumes (+US$84M) and
lower smelter raw material input prices
(+US$26M), more than offset lower average realised aluminium prices
(-US$8M), a stronger Brazilian real
(-US$8M), and production and inventory related costs (-US$75M) as
the smelter continued to ramp up.
Capital expenditure
Capital expenditure
was US$8M in FY24 and is expected to be US$12M in
FY25.
|
South32 share
|
FY24
|
FY23
|
|
Aluminium production (kt)
|
104
|
69
|
|
Aluminium sales (kt)
|
102
|
68
|
|
Realised sales price
(US$/t)
|
2,373
|
2,452
|
|
Operating unit cost
(US$/t)
|
3,500
|
4,357
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
242
|
166
|
|
Underlying EBITDA
|
(115)
|
(129)
|
|
Underlying EBIT
|
(121)
|
(136)
|
|
Net operating assets
|
68
|
28
|
|
Capital expenditure
|
8
|
9
|
|
Safe and reliable
|
8
|
9
|
|
Improvement and life extension
|
-
|
-
|
HILLSIDE ALUMINIUM
(100% SHARE)
Hillside Aluminium is located in
Richards Bay, South Africa, and is the largest aluminium smelter in
the southern hemisphere. The smelter produces high-quality, primary
aluminium for domestic and export markets.
Volumes
Hillside Aluminium saleable
production increased by 1kt to a record 720kt in FY24, as the
smelter continued to test its maximum technical capacity, despite
the impact of load-shedding. Production is expected to be sustained
at 720kt(45) across FY25 and FY26.
Operating costs
Operating unit costs decreased by 3%, to US$2,115/t in FY24, as the
smelter continued its strong operating performance and benefitted
from lower prices for smelter raw material
inputs, more than offsetting additional maintenance.
While Operating unit cost guidance
is not provided, the cost profile of the smelter will continue to
be heavily influenced by the price of smelter raw
material inputs, including alumina supplied by our Worsley
Alumina refinery, and other external factors including the South
African rand and inflation-linked energy costs.
The smelter's electricity is
supplied by Eskom under a contract to 2031, with a tariff that is
South African rand based and a rate of escalation linked to the
South Africa Producer Price Index. We continue to work with Eskom
and other stakeholders in the South African energy sector on
pathways to secure lower carbon(51) electricity
supply.
Financial performance
Underlying EBIT decreased by 32% (or
US$61M), to US$130M in FY24, as lower average realised aluminium
prices (-US$107M) and maintenance costs (-US$9M), more than offset
lower prices for smelter raw material
inputs (+US$89M).
130 pots were relined at a cost of
US$327k per pot in FY24 (FY23: 96 pots at US$281k per pot), with
~130 pots scheduled to be relined in FY25.
The smelter is deploying AP3XLE energy efficiency technology in its
pot relining activity to further enhance the smelter's energy
efficiency and reduce GHG emissions. At the end of FY24, 36% of the
pots had been relined using AP3XLE technology.
Capital expenditure
Capital expenditure increased by
US$22M to US$40M in FY24 and is expected to increase to US$65M
in FY25 as we replace the
smelter's pot tending assemblies. We expect capital
expenditure to remain elevated across FY25 and FY26 as we
substantially complete our investment in pot tending
assemblies.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
0.8
|
1.7
|
|
Total Recordable Injury Frequency
(TRIF)
|
1.6
|
3.0
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Aluminium production (kt)
|
720
|
719
|
|
Aluminium sales (kt)
|
720
|
719
|
|
Realised sales price
(US$/t)
|
2,389
|
2,535
|
|
Operating unit cost
(US$/t)
|
2,115
|
2,178
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
1,720
|
1,823
|
|
Underlying EBITDA
|
197
|
257
|
|
Underlying EBIT
|
130
|
191
|
|
Net operating assets
|
805
|
845
|
|
Capital expenditure
|
40
|
18
|
|
Safe and reliable
|
38
|
16
|
|
Improvement and life extension
|
2
|
2
|
|
Social Investment
|
7.3
|
9.1
|
MOZAL ALUMINIUM
(63.7% SHARE)
Mozal Aluminium is located near
Maputo, Mozambique, and is a significant industrial employer in the
country. The smelter produces high-quality, primary aluminium for
domestic and export markets.
Volumes
Mozal Aluminium saleable production
decreased by 9% (or 31kt) to 314kt in FY24, as the smelter
progressed its recovery plan, while managing the impact of
load-shedding. Production is expected to increase by 15% to
360kt(45) in FY25, and a further 3% to
370kt(45) in FY26 as the smelter returns toward
nameplate capacity.
FY26 production guidance is subject
to the extension of the current power supply agreement for Mozal
Aluminium, which expires in March 2026. We continue to work with
Eskom and the Government of the Republic of Mozambique to extend
the smelter's hydro-electric power supply, as there are currently
no viable alternative suppliers of renewable energy at the required
scale.
Operating costs
Operating unit costs increased by 2%, to US$2,371/t in FY24, with sequentially
lower Operating unit costs across H2 FY24 of US$2,238/t (H1
FY24: US$2,461/t) as the smelter progressed its
recovery plan and benefitted from lower smelter raw material input
prices.
While Operating unit cost guidance
is not provided, we expect FY25 Operating unit costs to benefit
from a 15% increase in production volumes as the smelter delivers
its recovery plan. The smelter's cost base will continue to be
heavily influenced by the price of smelter raw material inputs,
including alumina supplied by our Worsley Alumina refinery, and
other external factors including the South African rand and
inflation-linked indexation of energy costs.
Financial performance
Underlying EBIT decreased by
US$86M, to a loss of
US$30M in FY24, as lower average realised aluminium prices
(-US$54M) and sales volumes (-US$20M), together with higher energy
(-US$17M) and maintenance costs (-US$9M), more than offset lower
prices for smelter raw material inputs (+US$60M).
136(52) pots were relined
at a cost of US$377k per pot in FY24 (FY23: 82 pots at US$318k per
pot) using AP3XLE technology. We expect to reline ~150 pots in FY25 as we progressively return pots to
operation as part of the recovery plan.
Capital expenditure
Capital expenditure was US$23M in
FY24 and is expected to be US$25M in FY25 as we continue our
investment in plant upgrades.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
0.6
|
0.4
|
|
Total Recordable Injury Frequency
(TRIF)
|
1.5
|
1.5
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Aluminium production (kt)
|
314
|
345
|
|
Aluminium sales (kt)
|
326
|
334
|
|
Realised sales price
(US$/t)
|
2,491
|
2,653
|
|
Operating unit cost
(US$/t)
|
2,371
|
2,329
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
812
|
886
|
|
Underlying EBITDA
|
39
|
108
|
|
Underlying EBIT
|
(30)
|
56
|
|
Net operating assets
|
498
|
578
|
|
Capital expenditure
|
23
|
17
|
|
Safe and reliable
|
22
|
16
|
|
Improvement and life extension
|
1
|
1
|
|
Social Investment
|
2.2
|
1.8
|
SIERRA GORDA
(45% SHARE, NON-OPERATED)
Sierra Gorda is a large scale,
open-pit mine in the prolific Antofagasta copper mining region,
that produces copper, molybdenum, gold and silver.
Volumes
Sierra Gorda payable copper
equivalent production(24) decreased by
15% (or 12.7kt) to 73.8kt in FY24, as higher plant
throughput delivered by the de-bottlenecking project was more than
offset by lower than planned copper grades and molybdenum
recoveries in the current phase of the mine plan.
Production is expected to increase
by approximately 15% to 84.8kt in FY25 and a further 2% to 86.1kt
in FY26, as the operation continues to benefit
from the de-bottlenecking project and realises higher metal grades
in the next phase of the mine plan.
Operating costs
Operating unit costs
increased by 10%, to US$17.0/t ore processed in
FY24, in line with guidance, as the operation incurred a planned
one-off workforce payment following the finalisation of a new
three-year industrial agreement.
We expect FY25 Operating unit costs
to decrease by 6% to US$16.0/t ore processed, reflecting the normalisation of labour
costs, and maintenance efficiencies. Exchange rate and price
assumptions for FY25 Operating unit cost guidance are detailed on
page 33, footnote
47.
Financial performance
Underlying EBIT decreased by 34%, (or US$74M) to US$143M in FY24, as
higher average realised metal prices (+US$48M) and lower
electricity costs (+US$18M), under a cost efficient, 100% renewable
electricity contract, were more than offset by lower sales volumes
(-US$85M), the one-off workforce payment (-US$20M), higher
maintenance costs (-US$10M) and local inflationary pressures
(-US$14M).
Capital expenditure
Safe and reliable capital
expenditure was US$175M in FY24 and is expected to
be US$185M in FY25 as the operation
continues deferred stripping activity and invests in additional
tailings infrastructure.
Improvement and life extension
capital expenditure was US$32M in FY24 as the operation completed
plant de-bottlenecking work and progressed the feasibility study
for the fourth grinding line expansion.
We expect to spend US$25M in H1
FY25, ahead of the planned completion of the feasibility study for
the fourth grinding line project. The project has the potential to
increase plant throughput by ~20% to ~58Mtpa, lifting copper
production and lowering Operating unit costs.
We expect to update FY25 capital
guidance following the final investment decision for the fourth
grinding line project.
|
South32 share
|
FY24
|
FY23
|
|
Ore mined (Mt)
|
19.9
|
26.0
|
|
Ore processed (Mt)
|
21.9
|
21.2
|
|
Ore grade processed (%,
Cu)
|
0.36
|
0.42
|
|
Payable copper equivalent
production
(kt)(24)
|
73.8
|
86.5
|
|
Payable copper production
(kt)
|
60.8
|
70.7
|
|
Payable molybdenum production
(kt)
|
0.9
|
1.2
|
|
Payable gold production
(koz)
|
24.6
|
28.8
|
|
Payable silver production
(koz)
|
607
|
630
|
|
Payable copper sales (kt)
|
60.9
|
71.8
|
|
Payable molybdenum sales
(kt)
|
1.3
|
1.3
|
|
Payable gold sales (koz)
|
24.9
|
29.1
|
|
Payable silver sales
(koz)
|
605
|
639
|
|
Realised copper sales price
(US$/lb)
|
3.86
|
3.51
|
|
Realised molybdenum sales
price
(US$/lb)
|
20.60
|
21.28
|
|
Realised gold sales price
(US$/oz)
|
2,129
|
1,821
|
|
Realised silver sales price
(US$/oz)
|
24.8
|
21.9
|
|
Operating unit cost
(US$/t ore processed)(53)
|
17.0
|
15.4
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
647
|
684
|
|
Underlying EBITDA
|
275
|
358
|
|
Underlying EBIT
|
143
|
217
|
|
Net operating assets
|
1,664
|
1,588
|
|
Capital expenditure
|
207
|
196
|
|
Safe and reliable
|
175
|
151
|
|
Improvement and life extension
|
32
|
45
|
|
Exploration expenditure
|
13
|
7
|
|
Exploration expensed
|
-
|
4
|
CANNINGTON
(100% SHARE)
Cannington is an underground mine
located in north-west Queensland, Australia, that produces
high-grade lead and zinc concentrates with a high silver
content.
Volumes
Cannington payable zinc equivalent
production(25) increased by 10% to 285.2kt in FY24,
despite adverse weather impacts, as the operation realised higher
average metal grades.
Looking ahead, a significant
increase in underground activity and complexity is expected to
drive greater variability in mine performance as the underground
mine progresses toward the end of its life. Due to these factors
and the need to rebuild run of mine stocks following adverse
weather impacts in H2 FY24, payable zinc equivalent production is
expected to be 265.4kt in FY25 (ore processed 2,100kdmt, silver
11,300koz, lead 100.0kt, zinc 50.0kt). Production is then expected
to increase by 6% in FY26 to 282.2kt payable zinc equivalent (ore
processed 2,200kdmt, silver 12,000koz, lead 110.0kt, zinc 50.0kt)
with improved plant throughput.
Operating costs
Operating unit costs were largely
unchanged at US$154/t in FY24, as higher plant throughput and
a weaker Australian dollar were offset by additional contractor
costs to support the planned increase in underground
activity.
We expect
FY25 Operating unit costs to increase by 10%, to US$170/t,
reflecting the volume impact of lower ore processed. Exchange rate
and price assumptions for FY25 Operating unit cost guidance are
detailed on page 33, footnote 47.
Financial performance
Underlying EBIT increased by 45% (or US$64M), to US$206M in FY24, as higher
average metal prices (+US$56M) and sales volumes (+US$33M), more
than offset additional contractor costs to deliver planned
underground activity (-US$8M) and higher local gas prices
(-US$5M).
Capital expenditure
Capital expenditure
decreased by US$23M to US$38M in FY24, following the transition to
100% truck haulage in the prior period. We expect to invest
US$45M in FY25 as we continue to invest in
underground development.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
5.6
|
4.8
|
|
Total Recordable Injury Frequency
(TRIF)
|
15.8
|
11.0
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Ore mined (kwmt)
|
2,252
|
2,223
|
|
Ore processed (kdmt)
|
2,221
|
2,156
|
|
Ore grade processed (g/t,
Ag)
|
205
|
187
|
|
Ore grade processed (%,
Pb)
|
5.9
|
5.6
|
|
Ore grade processed (%,
Zn)
|
3.7
|
3.8
|
|
Payable zinc equivalent production
(kt)(25)
|
285.2
|
259.6
|
|
Payable silver production
(koz)
|
12,666
|
11,183
|
|
Payable lead production
(kt)
|
112.4
|
101.7
|
|
Payable zinc production
(kt)
|
60.7
|
59.2
|
|
Payable silver sales
(koz)
|
11,793
|
10,739
|
|
Payable lead sales (kt)
|
102.4
|
99.0
|
|
Payable zinc sales (kt)
|
60.1
|
58.1
|
|
Realised silver sales price
(US$/oz)
|
24.8
|
21.1
|
|
Realised lead sales price
(US$/t)
|
2,002
|
1,919
|
|
Realised zinc sales price
(US$/t)
|
2,230
|
2,151
|
|
Operating unit cost
(US$/t ore processed)(53)
|
154
|
153
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
631
|
542
|
|
Underlying EBITDA
|
289
|
213
|
|
Underlying EBIT
|
206
|
142
|
|
Net operating assets
|
150
|
172
|
|
Capital expenditure
|
38
|
61
|
|
Safe and reliable
|
37
|
60
|
|
Improvement and life extension
|
1
|
1
|
|
Exploration expenditure
|
9
|
8
|
|
Exploration expensed
|
6
|
6
|
|
Social Investment
|
0.4
|
0.5
|
CERRO MATOSO
(99.9% SHARE)
Cerro Matoso is an integrated nickel
laterite mine and smelter located in northern Colombia that
produces ferronickel used to make stainless steel.
We continue to progress our
strategic review of Cerro Matoso in response to structural changes
in the nickel market. We expect to provide information on the
outcome of this review in H2 FY25.
Volumes
Cerro Matoso payable nickel
production was largely unchanged at 40.6kt in FY24, supported by
improved plant throughput and nickel grades to finish the year.
Production is expected to be 35.0kt in FY25, reflecting lower
planned nickel grades. FY26 production guidance is not provided as
it is subject to the outcomes of the strategic review.
Operating costs
Operating unit costs were largely
unchanged at US$5.10/lb in FY24, beating
our already lowered guidance by 2%, as we realised further cost
efficiencies and benefitted from lower price-linked royalties,
offsetting a stronger Colombian peso.
We expect FY25 Operating unit costs
to increase by 11% to US$5.65/lb, reflecting the volume impact of
lower planned nickel grades, partially offset by a weaker Colombian
peso and lower price-linked royalties. Exchange rate and price
assumptions for FY25 Operating unit cost guidance are detailed on
page 33, footnote
47.
Financial performance
Underlying EBIT decreased by US$154M, to US$35M in FY24, as a significant
decline in the average realised nickel price (-US$143M) and a
stronger Colombian peso (-US$39M), more than offset lower
price-linked royalties (+US$36M).
Underlying EBIT improved by US$63M
to US$49M in H2 FY24 (H1 FY24: EBIT loss of US$14M) as we took
action to protect margins, and price realisations for our
ferronickel product improved (H2 FY24: ~21%, H1 FY24: ~29% discount
to the LME Nickel Index).
Capital expenditure
Capital expenditure
was US$34M in FY24 and is expected to reduce by US$14M to US$20M in FY25 as we prioritise our capital
program.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
2.3
|
1.3
|
|
Total Recordable Injury Frequency
(TRIF)
|
2.7
|
1.6
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Ore mined (kwmt)
|
5,195
|
5,560
|
|
Ore processed (kdmt)
|
2,774
|
2,807
|
|
Ore grade processed (%,
Ni)
|
1.60
|
1.62
|
|
Payable nickel production
(kt)
|
40.6
|
40.8
|
|
Payable nickel sales (kt)
|
40.9
|
40.8
|
|
Realised nickel sales price
(US$/lb)(54)
|
6.17
|
7.76
|
|
Operating unit cost
(US$/lb)
|
5.10
|
5.03
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
556
|
698
|
|
Underlying EBITDA
|
96
|
246
|
|
Underlying EBIT
|
35
|
189
|
|
Net operating assets
|
91
|
363
|
|
Capital expenditure
|
34
|
38
|
|
Safe and reliable
|
34
|
33
|
|
Improvement and life extension
|
-
|
5
|
|
Exploration expenditure
|
3
|
2
|
|
Exploration expensed
|
3
|
2
|
|
Social Investment
|
2.6
|
4.8
|
AUSTRALIA MANGANESE
(60% SHARE)
Australia Manganese consists of
Groote Eylandt Mining Company (GEMCO) in the Northern Territory,
Australia. GEMCO is an open-cut mining operation that produces
high-grade manganese ore.
On 16 to 17 March 2024, Tropical
Cyclone Megan severely impacted operations at GEMCO, with record
rainfall and the second strongest wind gusts in the past 20 years.
The intense weather system resulted in widespread flooding and
significant damage to critical infrastructure.
Following Tropical Cyclone Megan, we
continue to implement the operational recovery plan, dewatering
targeted mining pits and commencing a phased mining restart. Mining
activity is expected to increase to support a planned build in
stockpiles ahead of the wet season. Wharf operations are scheduled
to recommence in Q3 FY25, subject to maintaining construction
productivity during the wet season, with sales volumes expected to
progressively increase over Q4 FY25.
Volumes
Australia Manganese saleable
production decreased by 34% (or 1,221kwmt) to
2,324kwmt in FY24, as we temporarily suspended operations in
March 2024.
Production is expected to be
1,000kwmt in FY25 and 3,200kwmt in FY26 as we complete the
operational recovery plan.
Operating costs
Operating unit costs increased by 23%, to US$2.32/dmtu in FY24, due to
lower volumes as a result of Tropical Cyclone Megan.
FY25 Operating unit cost guidance is
not currently provided and is subject to the operational recovery
plan and volumes in H2 FY25.
We expect to incur additional idle
capacity and remediation related costs in FY25 as we implement the
operational recovery plan, which will be excluded from FY25
Underlying earnings as an earnings adjustment.
Financial performance
Underlying EBIT decreased by 77% (or US$205M) to US$61M in FY24.
Separately we incurred idle capacity and other remediation costs of
US$93M that were excluded from Underlying
EBIT as an earnings adjustment.
Capital expenditure
Capital expenditure for mine repairs
and infrastructure, including the wharf and a critical bridge, is
expected to be approximately US$125M in FY25.
Our insurers have confirmed that the
damage caused by Tropical Cyclone Megan is covered under our
property damage and business interruption insurance. We are
continuing to work with our insurers to assess the timing and value
of recoveries under these policies.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
4.0
|
1.5
|
|
Total Recordable Injury Frequency
(TRIF)
|
8.4
|
6.3
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Manganese ore production
(kwmt)
|
2,324
|
3,545
|
|
Manganese ore sales
(kwmt)
|
2,573
|
3,261
|
|
Realised external manganese ore
sales price (US$/dmtu, FOB)(55)(56)
|
3.77
|
4.59
|
|
Ore operating unit cost (US$/dmtu,
FOB)(56)(57)
|
2.32
|
1.88
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
436
|
688
|
|
Underlying EBITDA
|
182
|
369
|
|
Underlying EBIT
|
61
|
266
|
|
Net operating assets
|
166
|
239
|
|
Capital expenditure
|
65
|
58
|
|
Safe and reliable
|
39
|
41
|
|
Improvement and life extension
|
26
|
17
|
|
Exploration expenditure
|
1
|
1
|
|
Exploration expensed
|
-
|
-
|
|
Social Investment
|
1.0
|
0.8
|
SOUTH AFRICA MANGANESE
(ORE 54.6% SHARE, ALLOY 60%
SHARE)
South Africa Manganese consists of
two manganese mines in the Kalahari Basin, and the Metalloys
manganese alloy smelter which was placed on care and maintenance in
FY20.
In June 2024, South Africa Manganese
entered into a binding agreement to divest Metalloys, subject to
the satisfaction of conditions(58).
Volumes
South Africa Manganese saleable
production increased by 3% (or 67kwmt) to a record
2,175kwmt in FY24, as we lifted output of secondary products
to capitalise on stronger manganese prices in Q4 FY24.
Production is expected to be
2,000kwmt across FY25 and FY26 as we continue to use higher cost
trucking to optimise sales volumes and margins.
Operating costs
Operating unit costs were largely unchanged at US$2.67/dmtu in FY24, as
higher volumes and a weaker South African rand partially offset
higher in-land logistics costs and local inflationary cost
pressures.
We expect FY25 Operating unit costs
to increase by 12% to US$3.00/dmtu, due to higher price-linked royalties and in-land
logistics costs. Exchange rate and price assumptions for
FY25 Operating unit cost guidance are detailed on page
33, footnote
47.
Financial performance
Ore Underlying EBIT decreased
by 6% (or US$3M), to US$48M in FY24, as higher
sales volumes (+US$8M) and a weaker South African rand (+US$11M)
were more than offset by lower average realised manganese prices
(-US$9M), higher in-land logistics costs (-US$12M) and local
inflationary pressures (-US$11M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$15M to US$31M in FY24
and is expected to be US$35M in FY25 as we continue our
investment in rail infrastructure to improve safety and
efficiencies, and new mobile fleet.
Improvement and life extension
capital expenditure was US$12M in FY24 and
is expected to be US$15M in FY25 as we advance
work to access new mining areas and increase future production
capacity at our high-grade underground Wessels
mine.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
1.6
|
0.7
|
|
Total Recordable Injury Frequency
(TRIF)
|
2.5
|
0.7
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Manganese ore production
(kwmt)
|
2,175
|
2,108
|
|
Manganese ore sales
(kwmt)
|
2,116
|
2,065
|
|
Realised external manganese ore
sales price (US$/dmtu, FOB)(55)(59)
|
3.53
|
3.58
|
|
Ore operating unit cost (US$/dmtu,
FOB)(57)(59)
|
2.67
|
2.64
|
|
|
|
|
|
South32 share (US$M)
|
FY24
|
FY23
|
|
Underlying revenue
|
343
|
344
|
|
Manganese ore
|
343
|
344
|
|
Manganese alloy
|
-
|
-
|
|
Underlying EBITDA
|
65
|
66
|
|
Manganese ore
|
68
|
72
|
|
Manganese alloy
|
(3)
|
(6)
|
|
Underlying EBIT
|
45
|
45
|
|
Manganese ore
|
48
|
51
|
|
Manganese alloy
|
(3)
|
(6)
|
|
Net operating
assets/(liabilities)
|
200
|
143
|
|
Manganese ore
|
271
|
214
|
|
Manganese alloy
|
(71)
|
(71)
|
|
Capital expenditure
|
43
|
25
|
|
Safe and reliable
|
31
|
16
|
|
Improvement and life extension
|
12
|
9
|
|
Exploration expenditure
|
-
|
1
|
|
Exploration expensed
|
-
|
1
|
|
Social Investment
|
2.3
|
3.2
|
ILLAWARRA METALLURGICAL
COAL
(100% SHARE)
Illawarra Metallurgical Coal
operates two underground metallurgical coal mines in the southern
coalfields of New South Wales, Australia.
We expect to complete the sale of
Illawarra Metallurgical Coal for total cash consideration of up to
US$1.65B(3), on 29 August 2024.
Volumes
Illawarra Metallurgical Coal
saleable production decreased by 24% (or 1,582kt),
to 4,938kt in FY24, in line with guidance, as the operation
completed planned longwall moves.
FY25 production guidance is not
provided, with the sale expected to complete on 29 August
2024.
Operating costs
Operating unit costs increased by 18%, to US$150/t in FY24, as we completed
planned longwall moves.
Financial performance
Underlying EBIT decreased by 38% (or US$273M), to US$441M in FY24, as
lower sales volumes (-US$373M) due to planned longwall moves, and
lower average realised prices (-US$47M), more than offset lower
price-linked royalties (+US$30M) and local electricity prices
(+US$20M).
Depreciation and amortisation
decreased by US$60M to US$81M, as Illawarra Metallurgical Coal
ceased depreciating upon classification as
a discontinued operation and held for sale since February
2024(3).
Capital expenditure
Capital expenditure
increased by US$92M to US$340M in FY24 as we continued a
significant investment in additional ventilation capacity at
Appin.
|
Safety
|
FY24
|
FY23
|
|
Lost Time Injury Frequency
(LTIF)
|
3.4
|
4.3
|
|
Total Recordable Injury Frequency
(TRIF)
|
11.2
|
21.3
|
|
|
|
|
|
South32 share
|
FY24
|
FY23
|
|
Metallurgical coal production
(kt)
|
4,305
|
5,497
|
|
Energy coal production
(kt)
|
633
|
1,023
|
|
Metallurgical coal sales
(kt)
|
4,172
|
5,402
|
|
Energy coal sales (kt)
|
699
|
957
|
|
Realised metallurgical coal sales
price (US$/t)
|
275
|
279
|
|
Realised energy coal sales price
(US$/t)
|
107
|
144
|
|
Operating unit cost
(US$/t)
|
150
|
127
|
|
|
|
|
|
South32 share
(US$M)(a)
|
FY24
|
FY23
|
|
Underlying
revenue(60)
|
1,461
|
1,783
|
|
Underlying EBITDA
|
522
|
855
|
|
Underlying EBIT
|
441
|
714
|
|
Net operating assets
|
1,236
|
901
|
|
Capital expenditure
|
340
|
248
|
|
Safe and reliable
|
337
|
242
|
|
Improvement and life extension
|
3
|
6
|
|
Exploration expenditure
|
10
|
17
|
|
Exploration expensed
|
5
|
9
|
|
Social Investment
|
1.2
|
0.9
|
(a) Illawarra
Metallurgical Coal has been classified as a discontinued operation
and held for sale since February 2024(3). As a result,
the FY24 and restated FY23 underlying results reflect those of the
discontinued operation, including third party products and
services. Net operating assets represent the assets and directly
associated liabilities classified as held for sale for FY24 and the
restated equivalent amounts for FY23.
NOTES
|
(1)
|
Members are equity holders of
South32 Limited. Amounts reported as attributable to members are
stated net of amounts attributable to non-controlling
interests.
|
|
(2)
|
Refers to Underlying earnings
attributable to members.
|
|
(3)
|
Refer to market release "Sale of
Illawarra Metallurgical Coal" dated 29 February 2024. The
consideration comprises; upfront cash consideration of US$1,050M,
payable at completion; deferred cash consideration of US$250M,
payable in 2030; and contingent price-linked cash consideration of
up to US$350M, applicable for five years from the date of
completion with no annual cap. The first two years will be
calculated and paid on the second anniversary of completion and
annually thereafter. The contingent price-linked
consideration will be calculated as 50% of incremental
metallurgical coal revenue from equity production, net of
royalties, based on the following metallurgical coal price
thresholds: Year 1: US$200/t, Year 2: US$200/t, Year 3: US$190/t,
Year 4: US$180/t, Year 5: US$180/t.
|
|
(4)
|
Net tangible assets as at
30 June 2024 includes all right-of-use assets and lease
liabilities, in accordance with AASB 16 Leases.
|
|
(5)
|
FY24 basic earnings per share is
calculated as Profit/(loss) after tax attributable to members
divided by the weighted average number of shares for FY24
(4,519 million). FY24 basic
Underlying earnings per share is calculated as Underlying earnings
attributable to members divided by the weighted average number of
shares for FY24. FY23 basic earnings per share is calculated as
Profit/(loss) after tax attributable to members divided by the
weighted average number of shares for FY23 (4,572 million). FY23
basic Underlying earnings per share is calculated as Underlying
earnings attributable to members divided by the weighted average
number of shares for FY23.
|
|
(6)
|
FY24 ordinary dividends per share is
calculated as H1 FY24 ordinary dividend announced (US$18M) divided
by the number of shares on issue at 31 December 2023 (4,529
million) plus H2 FY24 ordinary dividend announced (US$140M) divided
by the number of shares on issue at 30 June 2024 (4,529
million).
|
|
(7)
|
FY23 and FY24 includes discontinued
operation Illawarra Metallurgical Coal.
|
|
(8)
|
Underlying revenue includes revenue
from third party products and services.
|
|
(9)
|
The underlying information reflects
the Group's interest in material equity accounted joint ventures
and is presented on a proportional consolidation basis.
Underlying EBIT is profit/(loss) before net finance
income/(costs), tax and any earnings adjustments, including
impairments. Underlying EBITDA is Underlying EBIT before Underlying
depreciation and amortisation. Underlying earnings attributable to
members is Profit/(loss) after tax attributable to members and
earnings adjustment items. Underlying earnings attributable to
members is the key measure that South32 uses to assess the
performance of the South32 Group, make decisions on the allocation
of resources and assess senior management's performance. In
addition, the performance of each of the South32 operations and
operational management is assessed based on Underlying EBIT. In
order to calculate Underlying earnings attributable to members,
Underlying EBIT and Underlying EBITDA, the following items are
adjusted as applicable each period, irrespective of
materiality:
•
Exchange rate (gains)/losses on restatement of monetary
items;
•
Impairment losses/(reversals);
• Net
(gains)/losses on disposal and consolidation of interests in
operations;
•
(Gains)/losses on non-trading derivative instruments, contingent
consideration and other investments measured at fair value through
profit or loss;
• Major
corporate restructures;
• Joint
venture adjustments;
•
Exchange rate variations on net cash/(debt);
• Tax
effect of earnings adjustments; and
•
Exchange rate variations on tax balances
In addition, items that do not
reflect the underlying operations of South32, and are individually,
or in combination with other related earnings adjustments,
significant to the financial statements, are excluded to determine
Underlying earnings. When applicable, significant items are
detailed in the Financial Information.
|
|
(10)
|
Comprises Underlying EBITDA
excluding third party products and services EBITDA, divided by
Underlying revenue excluding third party products and services
revenue. Also referred to as operating margin.
|
|
(11)
|
Comprises Underlying EBIT excluding
third party products and services EBIT, divided by Underlying
revenue excluding third party products and services
revenue.
|
|
(12)
|
Return on invested capital (ROIC) is
a key measure that South32 uses to assess performance. ROIC is
calculated as Underlying EBIT less the discount on rehabilitation
provisions included in Underlying net finance costs, tax effected
by the Group's Underlying effective tax rate (ETR) including our
material equity accounted investments on a proportional
consolidation basis, divided by the sum of fixed assets (excluding
any rehabilitation assets, the impact of any impairments or
impairment reversals, and unproductive capital) and
inventories.
|
|
(13)
|
Total Recordable Injury Frequency
(TRIF): The sum of recordable injuries x 1,000,000) ÷ exposure
hours, for employees and contractors. This is stated in units of
per million hours worked for employees and contractors. We adopt
the United States Government Occupational Safety and Health
Administration (OSHA) guidelines for the recording and reporting of
occupational injuries and illnesses.
|
|
(14)
|
Lost Time Injury Frequency (LTIF):
The sum of (Lost Time injuries x 1,000,000) ÷ exposure hours, for
employees and contractors. This is stated in units of per million
hours worked for employees and contractors. We adopt the United
States Government Occupational Safety and Health Administration
(OSHA) guidelines for the recording and reporting of occupational
injuries and illnesses.
|
|
(15)
|
Seven injuries which occurred in
FY23 have been reclassified from restricted work cases to lost time
cases, resulting in an increase in LTIF from 1.4 to 1.6
|
|
(16)
|
Significant hazard frequency: (The
sum of significant hazards x 1,000,000) ÷ exposure hours. This is
stated in units of per million hours worked for employees and
contractors. A significant hazard is something that has the
potential to cause harm, ill health or injury, or damage to
property, plant or the environment.
|
|
(17)
|
Black People is a term defined in
the Broad-Based Black Economic Empowerment Amendment Act 2013
(South Africa), a generic term meaning Africans, Coloureds and
Indians who are citizens of the Republic of South Africa by birth
or descent; or who become citizens of the Republic of South Africa
by naturalisation before 27 April 1994 or on or after 27 April 1994
and who would have been entitled to acquire citizenship by
naturalisation prior to that date.
|
|
(18)
|
The Senior Leadership Team includes
Presidents and Vice Presidents reporting to members of the South32
Lead Team and the Company Secretary.
|
|
(19)
|
Includes all General Managers and
Managers reporting to Vice President Operations including
Functional Managers such as Human Resources, Finance and Supply,
etc. (limited to one per function).
|
|
(20)
|
Management roles are leaders with an
identified job grading of 13 or higher based on the requirements of
their role.
|
|
(21)
|
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 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.
|
|
(22)
|
Goal is defined as an aspiration to
deliver an outcome for which we have not identified a pathway for
delivery, but for which efforts will be pursued towards achieving
that outcome, subject to certain assumptions or
conditions.
|
|
(23)
|
FY23 downstream transportation and
distribution has been restated from 0.9Mt CO2e to 0.4Mt CO2e
following a review of the methodology used in this
category.
|
|
(24)
|
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. FY24 realised prices for copper (US$3.86/lb),
molybdenum (US$20.60/lb), gold (US$2,129/oz) and silver
(US$24.8/oz) have been used for FY24, FY25e and FY26e. 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 and FY24 on page 5 and 25.
|
|
(25)
|
Payable zinc equivalent (kt) was
calculated by aggregating revenues from payable silver, lead and
zinc, and dividing the total Revenue by the price of zinc.
FY24 realised prices for zinc (US$2,230/t), lead (US$2,002/t)
and silver (US$24.8/oz) have been used for FY24, FY25e and FY26e.
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 and
FY24 on page 5 and 26.
|
|
(26)
|
Refer to market release "Final
Investment Approval to Develop Hermosa's Taylor Deposit" dated 15
February 2024.
|
|
(27)
|
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
|
|
(28)
|
Subject to the Eagle Downs project
reaching metallurgical coal production of 100,000
tonnes.
|
|
(29)
|
Price-linked royalty calculated
based on potential future metallurgical coal production and a
metallurgical coal index price of at least US$170/t.
|
|
(30)
|
Refer to market release "Worsley
Alumina Approvals Update" dated 22 July 2024
|
|
(31)
|
The Group's total adjusted cost base
of US$6,018M for FY24 (FY23: US$6,142M) which excludes third party
product costs.
|
|
(32)
|
FY24 net distributions from our
material equity accounted joint ventures comprises of dividends
(+US$90M), initial funding (-US$30M) to Australia Manganese to
support recovery plans, a net drawdown of shareholder loans
(-US$34M) from manganese and a distribution (+US$27M) from Sierra
Gorda. The distribution from Sierra Gorda comprised a repayment of
US$27M of accrued interest.
|
|
(33)
|
Refer to media release "Agreement to
divest interest in Eagle Downs" dated 12 February 2024.
|
|
(34)
|
Sales price variance reflects the
revenue impact of changes in commodity prices, based on the current
period's sales volume. Price-linked costs variance reflects the
change in royalties together with the change in input costs driven
by changes in commodity prices or market traded consumables.
Foreign exchange reflects the impact of exchange rate movements on
local currency denominated costs and sales. Sales volume variance
reflects the revenue impact of sales volume changes, based on the
comparative period's sales prices. Controllable costs variance
represents the impact from changes in the Group's controllable
local currency cost base, including the variable cost impact of
production volume changes on expenditure, and period-on-period
movements in inventories. The controllable cost variance excludes
earnings adjustments including significant items.
|
|
(35)
|
Underlying net finance costs and
Underlying income tax expense are actual FY24 results, not
year-on-year variances.
|
|
(36)
|
South32's ownership shares of
operations are presented as follows: Worsley Alumina (86% share),
Brazil Alumina (36% share), Brazil Aluminium (40% share),
Hillside Aluminium (100%), Mozal Aluminium (63.7% share),
Sierra Gorda (45% share), Cannington (100%), Hermosa (100%), Cerro
Matoso (99.9% share), Illawarra Metallurgical Coal (100%),
Australia Manganese (60% share), South Africa Manganese ore (54.6%
share) and South Africa Manganese alloy (60%
share).
|
|
(37)
|
The underlying information reflects
the Group's interest in material equity accounted joint ventures
and is presented on a proportional consolidation basis, which is
the measure used by the Group's management to assess their
performance. The joint venture adjustments reconcile the
proportional consolidation to the equity accounting position
included in the Group's consolidated financial
statements.
|
|
(38)
|
Underlying ETR is Underlying income
tax expense, including royalty related tax, divided by Underlying
profit subject to tax.
|
|
(39)
|
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%.
|
|
(40)
|
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.
|
|
(41)
|
Net interest paid excludes
distributions from material equity accounted
investments.
|
|
(42)
|
Total capital expenditure comprises
Capital expenditure, capitalised exploration and evaluation
expenditure and the purchase of intangibles. Capital expenditure
comprises safe and reliable capital expenditure, improvement and
life extension capital expenditure (including decarbonisation), and
growth capital expenditure.
|
|
(43)
|
Group payable copper equivalent
production based on FY24 production guidance, calculated by
applying FY23 realised prices for all operations.
|
|
(44)
|
Refers to aluminium produced in a
process that results in less than 4t CO2-e Scope 1 and
Scope 2 GHG emissions per tonne of aluminium.
|
|
(45)
|
Production guidance for Hillside
Aluminium and Mozal Aluminium does not assume any load-shedding
impact on production.
|
|
(46)
|
Operating unit cost is Underlying
revenue less Underlying EBITDA, excluding third party products and
services, divided by sales volumes. Operating cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services. Additional manganese disclosures are included in
footnotes 56 and 59.
|
|
(47)
|
FY25 Operating unit cost guidance
includes royalties (where appropriate) and the influence of
exchange rates, and includes various assumptions for FY25,
including: an alumina price of US$480/t; a manganese ore price of
US$7.80/dmtu for 44% manganese product; a nickel price of
US$7.50/lb; a silver price of US$27.8/oz; a lead price of
US$2,070/t (gross of treatment and refining charges); a zinc price
of US$2,750/t (gross of treatment and refining charges); a copper
price of US$4.40/lb (gross of treatment and refining charges); a
molybdenum price of US$17.50/lb (gross of treatment and refining
charges); a gold price of US$2,300/oz; an AUD:USD exchange rate of
0.65; a USD:ZAR exchange rate of 18.50; a USD:COP exchange rate of
4,100; USD:CLP exchange rate of 900; and a reference price for
caustic soda; which reflect forward markets as at August 2024 or
our internal expectations.
|
|
(48)
|
FY24 Third party products and
services sold comprise US$170M for aluminium, US$3M for alumina,
US$79M for freight services,
US$102M for raw materials and US$34M for manganese.
Underlying EBIT on third party products and services comprise nil
for aluminium, US$10M for alumina, US$(2)M for freight services,
US$(1)M for raw materials and nil for manganese. FY23 Third party
products and services sold comprise US$86M for aluminium, US$25M
for alumina, US$106M for freight services, US$149M for raw
materials and US$33M for manganese. Underlying EBIT on third party
products and services comprise US$(1)M for aluminium, US$13M for
alumina, US$(1)M for freight services, US$1M for raw materials and
nil for manganese.
|
|
(49)
|
Illawarra Metallurgical Coal's FY24
and restated FY23 underlying results include third party product
and services. FY24 Third party products and services sold was
US$237M and Underlying EBIT was US$28M. FY23 Third party products
and services sold was US$140M and Underlying EBIT was
US$11M.
|
|
(50)
|
The information in this announcement
that refers to production target and forecast financial information
for MRN is based on Proved (8%) and Probable (1%) Ore Reserves and
Measured (91%) Mineral Resources. The Mineral Resources and Ore
Reserves underpinning the Production Target have been prepared by
Competent Persons in accordance with the requirement of the JORC
Code and is available to view in South32's FY24 annual report
(www.south32.net) published on 29 August
2024. South32 confirms that all material assumptions
underpinning the production target and forecast financial
information derived from production target continues to apply and
have not materially changed.
|
|
(51)
|
Refers to lower levels of GHG
emissions when compared to the current state. Where used in
relation to South32's products or portfolio, it refers to
enhancement of existing methods, practices and technologies to
substantially lower the level of embodied GHG emissions as compared
to the current state.
|
|
(52)
|
Presented on a 100%
basis.
|
|
(53)
|
Sierra Gorda and Cannington
Operating unit cost is Underlying revenue less Underlying EBITDA
divided by ore processed. Periodic movements in finished product
inventory may impact Operating unit costs.
|
|
(54)
|
Cerro Matoso realised nickel sales
price is inclusive of by-products.
|
|
(55)
|
Volumes and prices do not include
any third party trading that may be undertaken independently of
equity production. Realised ore prices are calculated as external
sales Underlying revenue less freight and marketing costs, divided
by external sales volume.
|
|
(56)
|
Manganese Australia FY24 average
manganese content of external ore sales was 42.4% on a dry basis
(FY23: 43.8%). 98% of FY24 external manganese ore sales (FY23: 96%)
were completed on a CIF basis. FY24 realised FOB ore prices and
Operating unit costs have been adjusted for freight and marketing
costs of US$42M (FY23: US$62M), consistent with our FOB cost
guidance.
|
|
(57)
|
FOB Ore Operating unit cost is
Underlying revenue less Underlying EBITDA, freight and marketing
costs, divided by ore sales volume.
|
|
(58)
|
Refer to media release "Agreement to
divest Metalloys manganese alloy smelter" dated 13 June
2024.
|
|
(59)
|
Manganese South Africa FY24 average
manganese content of external ore sales was 38.8% on a dry basis
(FY23: 39.1%). 89% of FY24 external manganese ore sales (FY23: 88%)
were completed on a CIF basis. FY24 realised FOB ore prices and
Operating unit costs have been adjusted for freight and marketing
costs of US$58M (FY23: US$61M), consistent with our FOB cost
guidance.
|
|
(60)
|
Illawarra Metallurgical Coal revenue
includes metallurgical coal and energy coal sales
revenue.
|
Figures in Italics indicate that an
adjustment has been made since the figures were previously
reported. The denotation (e) refers to an estimate or forecast
year.
The following abbreviations may be
used throughout this report: US$ million (US$M); US$ billion
(US$B); financial year (FY); calendar year (CY); 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);
thousand dry metric tonnes (kdmt); dry metric tonne unit
(dmtu); pound (lb); megawatt (MW); Australian Securities Exchange
(ASX); London Stock Exchange (LSE); Johannesburg Stock Exchange
(JSE); equity accounted investment (EAI); and American
Depositary Receipts (ADR).
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 operations; 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.
Non-IFRS financial information
This release includes certain
non-IFRS financial measures, including Underlying earnings,
Underlying EBIT and Underlying EBITDA, Underlying revenue,
Underlying net finance costs, Underlying depreciation and
amortisation, Underlying operating costs, Underlying income tax
expense, Underlying royalty related tax expense, Basic Underlying
earnings per share, Underlying effective tax rate, Underlying EBIT
margin, Underlying EBITDA margin, Underlying return on capital,
Free cash flow, net debt, net operating assets and ROIC. These
measures are used internally by management to assess the
performance of our business, make decisions on the allocation of
our resources and assess operational management. Non-IFRS measures
have not been subject to audit or review and should not be
considered as an indication of or alternative to an IFRS measure of
profitability, financial performance or liquidity.
No
offer of securities
Nothing in this release should be
read or understood as an offer or recommendation to buy or sell
South32 securities, or be treated or relied upon as a
recommendation or advice by South32.
No
financial or investment advice - South
Africa
South32 does not provide any
financial or investment 'advice' as that term is defined in the
South African Financial Advisory and Intermediary Services Act, 37
of 2002, and we strongly recommend that you seek professional
advice.
FURTHER INFORMATION
|
INVESTOR RELATIONS
Ben Baker
M +61 403 763 086
E
Ben.Baker@south32.net
|
MEDIA RELATIONS
Jamie Macdonald
M +61 408 925 140
E
Jamie.Macdonald@south32.net
|
Miles Godfrey
M +61 415 325 906
E
Miles.Godfrey@south32.net
|
Further information on South32 can be
found at www.south32.net.
South32 Limited (ABN 84 093 732
597)
Registered in Australia
(Incorporated in Australia under the
Corporations Act 2001)
Registered Office: Level 35, 108 St
Georges Terrace
Perth Western Australia 6000
Australia
ISIN: AU000000S320
Approved for release by Graham Kerr,
Chief Executive Officer
JSE Sponsor: The Standard Bank of
South Africa Limited
29 August 2024
