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Alliance News

South32 Trims Coal, Alumina Guidance But Hikes Manganese

Thu, 18th Apr 2019 08:55

LONDON (Alliance News) - South32 Ltd on Thursday issued a number of production guidance changes, boosting some commodities but reducing others.

For the three months ended March, alumina production fell 2.4% to 1.20 million tonnes from 1.23 million tonnes the year prior and down 1% over the nine months. Aluminium production held firm at 242,000 tonnes in the third quarter, also flat over nine months.

Energy coal production fell 11% in the quarter to 6.3 million tonnes from 7.1 million tonnes the year prior, down 9% over nine months. Metallurgical coal rose in the quarter 25% to 990,000 tonnes from 794,000 the year prior and nearly double over the nine months.

Manganese ore production for the quarter was stable at 1.4 million wet metric tonnes, up 1% over nine months. Payable nickel production fell 12% to 9,400 tonnes from 10,700 tonnes in the third quarter from the year prior - down 6% over the nine months.

South32 has upped manganese ore production guidance for the full year subject to market demand. At its Australian ore business, guidance has been increased by 4% to 3.5 million wet metric tonnes.

In financial 2018, South32 produced 3.4 million wet metric tonnes within this business.

Its South African manganese ore production guidance was boosted by 4% to 2.1 million tonnes after it produced 2.1 million tonnes in financial 2018.

Total energy coal production guidance, however, has been reduced to 26.2 million tonnes. This was after "community protests and a delay in the implementation of a new shift pattern at Khutala" reduced domestic output in South Africa and "slower than expected ramp-up of activity at Klipspruit after an insurable dragline outage" sank export production.

South32 also reduced production guidance for alumina production both at Worsley and in Brazil. Forecasts at Worsley were trimmed 4% to 3.8 million tonnes and in Brazil by 5% to 2.3 million tonnes.

This was as the firm looked to push forward initiatives to increase future production.

In 2018, Worsley produced 3.8 million tonnes of alumina and Brazil 1.3 million tonnes.

"We achieved record year to date ore production at Australia Manganese and increased production guidance at both our manganese ore operations for financial 2019 as we respond to favourable market conditions," Chief Executive Graham Kerr said.

"At Worsley Alumina we have lowered production guidance for 2019 as we focus on improving calciner performance to sustainably achieve nameplate capacity," Kerr added.

"We remain focused on mitigating inflationary pressure and have maintained 2019 unit cost guidance for all our operations," Kerr added.

"We continue to reshape our portfolio having committed to the final year of our Trilogy Metals option, retaining the right to earn a 50% interest in the Upper Kobuk Mineral projects," Kerr continued.

"The divestment of South Africa Energy Coal is on track with binding bids expected in the June 2019 quarter. Once an acceptable bid is received and evaluated, we expect to reclassify the operation as held for sale."

Net cash also increased to USD726 million from USD678 million the year prior. This was despite paying out USD37 million in share buybacks.

By Ahren Lester; ahrenlester@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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