‘Major milestone’ as South32 signs off on zinc mine
The South32 board has given the green light for the development of a new zinc mine at its Hermosa project in Arizona, the US.
The board approved capital expenditure of $2.16bn to develop the Taylor zinc-lead-silver deposit, which is expected to reach first production in the second half of its 2027 financial year and deliver nameplate production in 2030.
“Once in production, Taylor is expected to add 8% to group volumes relative to 2023 financial year levels, increasing our supply of critical commodities,” South32 CEO Graham Kerr said in a statement.
“This investment is a major milestone for our business that further reshapes our portfolio towards commodities critical to a low-carbon future,” Kerr said.
SLUMP
The group published its financial results for the six months to end-December on Thursday. Its after-tax profit slumped by 92% to $53m from a year earlier. It posted record aluminium production and lower raw material input prices but this was “more than offset” by lower commodity prices and a sharp drop in metallurgical coal volumes due to two planned longwall moves at Illawarra Metallurgical Coal operations in Australia.
Underlying earnings (a measure that strips out exceptional and non-recurring expenses or income) decreased by 92% to $520m.
In January the company lowered its full-year production guidance for alumina, aluminium and molybdenum, and indicated that while expected volumes from its manganese mines in SA remained unchanged for now, this was subject to demand and the continued use of higher-cost trucking because of persistent problems with Transnet’s rail network.
Revised guidance for Brazil Alumina, Mozal Aluminium in Mozambique and the Sierra Gorda open pit copper and molybdenum mine in Chile contributed to an overall 3% reduction in production guidance for the year. The company did, however, expect overall production to grow by 7% for the 2024 financial year.
Sales prices for aluminium at its operations in Brazil, Mozambique and SA decreased by 6%, 12% and 10%, respectively.
At Hillside Aluminium in SA, the largest of the three operations, production decreased slightly by 1%, but production at Brazil Aluminium doubled to 50,000 tonnes.
The largest drop in prices was for energy coal — the realised price for energy coal from its Illawarra Metallurgical Coal was down 38% to $101/tonne — and nickel from Cerro Matoso in Colombia, which was down 34%.
Manganese ore prices, for its operations in SA and Australia, were down about 16%.
The group said it paid a 0.4 US cents per share dividend for the six months to end-December, amounting to a total payout of $18m. For the corresponding period in the 2023 financial year the dividend was 4.9c per share, or a total payout of $224m.
The company’s share price on the JSE, where it has a secondary listing, ended 4.51% weaker at R36.70. The share has lost more than 35% of its value over the past 12 months.
South32 has a primary listing on Australia’s ASX.