First quarter output slides due to safety closure in SA

SOUTH32, the world’s largest manganese supplier, said first quarter output dropped 4 percent after halting some mine work in South Africa. Production fell to 1.18 million tons in the three months to September 30, from 1.23 million in the previous quarter, the Perth-based company said yesterday. That’s below a 1.22 million median estimate among three analysts surveyed by Bloomberg. Manganese ore output from South African operations dropped 15 percent. South32 said its mines in the region were now operating at an optimised rate after a decision to stop work at Wessels following a fatality in June. It boosted net cash by almost 80 percent to $551 million (R8 billion) during the quarter and kept production and unit cost guidance unchanged for most of its operations, with the exception of a cut to coal. The net cash increase might appeal to shareholders as the lack of identifiable growth options, including asset purchases, suggested the company could pay a higher dividend, RBC Capital Markets analyst Paul Hissey said in a note. “We remain constructive on South32 given the relatively quick read-through of higher commodity prices to the company’s financial results, as evidenced by the increase in cash in the first quarter.” South32’s shares have more than doubled in Sydney this year as commodities gained. South32 shares fell by 1.56 percent to close at R27.22 on the JSE yesterday. – Bloomberg

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