South32 sets output records
South32 has reported a strong operational performance for the three months to end-December 2020, with production records achieved at three operations. The diversified global miner credited its ability to adjust to different phases of the Covid-19 pandemic in the regions in which it operates.
South32, the 18th-largest company on the JSE in terms of market capitalisation, has reported a strong operational performance for the three months to endDecember 2020, with production records achieved at three operations.
The diversified global miner with operations in SA said the strong operational performance was credited to its ability to adjust to different phases of the Covid-19 pandemic in the regions in which it operates.
South32 achieved record year-to-date production at its Brazil Alumina, Worsley Alumina and Australia manganese operations.
In SA, South 32’s Hillside Aluminium smelter is on track to meet production guidance for the full year to end-June 2021.
Eskom has submitted a new, 10-year energy supply agreement for the smelter to the National Energy Regulator of SA (Nersa) for review that is expected to be concluded before June. The new agreement will be rand based, unlike the previous agreement, which, controversially, was linked to the metal price and often resulted in large losses for Eskom.
SA Energy Coal (SAEC) production decreased by 5% in the December 2020 half-year with domestic sales declining due to reduced demand from Eskom. Export sales tracked lower after the suspension of activity from loss-making pits in response to market conditions.
South32 noted it has progressed the sale of SAEC to Seriti Resources and received approval for it from the Competition Tribunal. It said it is advancing discussions with Eskom to meet the material outstanding conditions, including the renegotiation of a loss-making coal supply agreement to the Duvha power station. South32 is targeting completion of the divestment by March 31 2021.
The group, meanwhile, has decided not to proceed with development of the Eagle Downs metallurgical coal project in Australia, placing it on hold while the partners in the project assess options. It also entered into a binding agreement to sell a portfolio of noncore minerals royalties to Elemental Royalties, a precious metals royalty company with a portfolio of producing and exploration assets spanning Burkina Faso, Chile, Mexico, Kenya and Western Australia.
South32 recently completed the sale of its shareholding in a manganese alloy smelter in Tasmania, an island state of Australia.
“I’m pleased the efforts of our people during this challenging period have enabled us to achieve a strong result,” South32 CEO Graham Kerr said.
“Our unchanged capital management framework and disciplined approach to capital allocation is designed to reward shareholders as supportive market conditions translate to financial performance. The ongoing transformation of our portfolio continues to gain momentum as we focus on exiting lower-returning businesses and work towards increasing our base metals exposure.”
South32 noted that its strong financial position and operating performance enabled it to lift the suspension of a share buyback scheme in October and it spent $112m to purchase a further 66million shares.