Mining giant South32 recently released its quarterly report for June 2023, showcasing remarkable achievements in its production records and investments in commodities critical to a low-carbon future. The company reported a strong year-on-year growth in aluminium, copper, and manganese, setting three annual production records and solidifying its commitment to sustainability and greenfield exploration programs.
Solid Performance in Key Commodities
In the June 2023 quarter, South32 achieved an impressive 9% increase in Group copper equivalent production, successfully overcoming adverse weather and temporary impacts from the previous quarter. The positive growth trend was maintained throughout FY23, with aluminium production soaring by 14%. This substantial increase was mainly attributed to record production at Hillside Aluminium and strategic investments in low-carbon aluminium capacity at Mozal Aluminium and Brazil Aluminium.
However, the company experienced a minor setback with a 4% decline in alumina production in FY23 due to temporary outages during the June 2023 quarter. Despite this, both refineries have returned to nameplate production rates, and the FY24 guidance remains unchanged.
Strong Growth in Base Metals and Manganese
South32’s base metals production recorded a remarkable surge of 17% in FY23. This growth was driven by the inclusion of the Sierra Gorda copper operation in the company’s portfolio. Additionally, South32’s Cannington zinc-lead-silver and Cerro Matoso nickel operations achieved revised guidance, contributing significantly to the overall positive performance.
The company’s manganese production also saw a notable increase of 4% in FY23, largely attributed to the impressive annual production records achieved by Australia Manganese and South Africa Manganese.
Progress on the Hermosa Project
South32’s Hermosa project continued to make significant progress during FY23, with a total growth capital expenditure of US$256 million. The company achieved several critical milestones, including the advancement of study work for the Taylor zinc-lead-silver and Clark battery-grade manganese development options. Notably, the Taylor deposit, part of the Hermosa project, has undergone a feasibility study on track for H1 FY24. This underground mine and conventional processing plant have the potential to produce up to 4.3 million tonnes per annum.
The company’s exploration efforts also yielded positive results. South32 exercised its earn-in right to acquire a 50.1% interest in the Chita Valley copper exploration project, located in Argentina’s highly prospective San Juan mineral belt. Additionally, South32 acquired a 9.9% interest in Aldebaran Resources Inc., further strengthening its position in the market.
Sustainability and Green Initiatives
South32 remains committed to its sustainability efforts, implementing a multi-year Safety Improvement Program to enhance safety measures and reduce risks for its employees. Furthermore, the company is focused on advancing decarbonization programs, aiming to halve its operational greenhouse gas emissions by 2035. One significant step in this direction is the conversion of Worsley Alumina’s first coal-fired boiler to natural gas, which is expected to reduce operational GHG emissions by up to 6% from FY22 levels.
Implications and Outlook
Despite the non-cash impairment expense for the Taylor deposit, South32 is confident in its long-term growth prospects and the potential to capitalize on the global energy transition. The company expects further production growth in aluminium and base metals in FY24, while its high-quality development options are set to strengthen the long-term supply of critical minerals. South32’s strong performance and commitment to sustainability position it well to navigate the challenges of a low-carbon future while contributing to the global energy transition.
Table A: Production Summary
|Commodity||FY22 Production (kt)||FY23 Production (kt)||Year-on-Year Growth|