Wrap Text
Quarterly Report December 2020
South32 Limited
(Incorporated in Australia under the Corporations Act 2001 (Cth))
(ACN 093 732 597)
ASX, LSE, JSE Share Code: S32 ADR: SOUHY
ISIN: AU000000S320
Quarterly Report December 2020
- Achieved record year to date production at Worsley Alumina with output above nameplate capacity as the
refinery benefitted from on-going improvement initiatives.
- Set a year to date production record at Brazil Alumina as the refinery continued to achieve high levels of plant
availability, despite planned maintenance.
- Delivered another record for year to date ore production at Australia Manganese as the performance of our
high-grade circuit improved.
- Increased production at Illawarra Metallurgical Coal by 11% in the December 2020 half year as the operation
continued to benefit from the return to a three longwall configuration.
- Increased FY21 production guidance at Cannington by 5% with underground performance supporting the
accelerated extraction of a higher-grade mining sequence.
- Approved an early development timetable for the low capital, higher-grade Q&P project at Cerro Matoso,
increasing FY21 and FY22 production guidance by 3% and 13% respectively.
- Determined not to proceed with development of the Eagle Downs Metallurgical Coal project, with the project
placed on hold while we assess options for our joint venture interest.
- Entered into a binding agreement to sell a portfolio of non-core minerals royalties to Elemental Royalties
Corp.
- Progressed the sale of South Africa Energy Coal during the quarter, receiving approval from the Competition
Tribunal of South Africa and advancing discussions with Eskom to meet the material outstanding conditions.
- Following the end of the quarter, completed the sale of GEMCO’s shareholding in the TEMCO manganese
alloy smelter.
“During the quarter, we adjusted to the different phases of the COVID-19 pandemic in the regions where we
operate, focussing on keeping our people safe and well, maintaining safe and reliable operations and supporting
our communities.
“This was another period of strong operating performance across our business, with three of our operations
setting production records for the half year. I’m pleased that the efforts of our people during this challenging
period have enabled us to achieve a strong result, and increase our full year production guidance for Cannington
and Cerro Matoso.
“We’re in a strong financial position, resuming our on-market share buy-back program in October. 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.”
Graham Kerr, South32 CEO
1
Production summary
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 QoQ
Alumina production (kt) 2,635 2,716 3% 1,327 1,315 1,401 7%
Aluminium production (kt) 496 496 0% 248 248 248 0%
Energy coal production (kt) 12,621 12,077 (4%) 5,898 6,771 5,306 (22%)
Metallurgical coal production (kt) 2,859 3,262 14% 1,208 1,863 1,399 (25%)
Manganese ore production(kwmt) 2,813 2,920 4% 1,398 1,461 1,459 (0%)
Manganese alloy production (kt) 91 51 (44%) 47 27 24 (11%)
Payable nickel production (kt) 20.6 16.1 (22%) 10.0 10.0 6.1 (39%)
Payable silver production (koz) 6,164 5,993 (3%) 3,192 2,863 3,130 9%
Payable lead production (kt) 55.3 57.6 4% 28.8 26.4 31.2 18%
Payable zinc production (kt) 32.5 30.4 (6%) 14.1 12.4 18.0 45%
Unless otherwise noted: percentage variance relates to performance during the half year ended December 2020 compared
with the half year ended December 2019 (HoH) or the December 2020 quarter compared with the September 2020 quarter (QoQ);
production and sales volumes are reported on an attributable basis.
2
Corporate Update
- We continue to respond to COVID-19, adjusting to the different phases of the pandemic across the jurisdictions
where we operate, focussing on keeping our people well, maintaining safe and reliable operations and
supporting our communities. Additional COVID-19 protocols implemented at many shipping ports globally have
resulted in congestion and delays, which combined with adverse weather, are expected to contribute to a
temporary build in working capital during the December 2020 half year.
- Industry cost curves continue to steepen as a result of US dollar weakness, which provides further support for
markets. While our Operating unit costs are tracking to plan on the basis of previously disclosed exchange rate
and commodity price assumptions(Note 1), we will experience cost inflation should these external pressures
persist across the remainder of the year. Updated unit cost guidance for FY21 will be provided with our
December 2020 half year results.
- We also expect to see an increase in our US dollar denominated lease balance as at 31 December 2020, with
the majority of the Group’s lease liabilities financed in Australian dollars.
- We received net distributions(Note 2) of US$52M (South32 share) from our manganese equity accounted
investments (EAI) in the December 2020 half year as timing differences, that are expected to unwind in the June
2021 half year, resulted in excess cash being retained in our EAI.
- Our strong financial position and operating performance enabled us to lift the suspension of our on-market share
buy-back and we spent US$112M purchasing a further 66M shares at an average price of A$2.34 per share
during the December 2020 half year. To 31 December 2020 our US$1.43B capital management program was
99% complete with US$9M remaining to be returned to shareholders by way of our on-market share buy-back,
ahead of its extension or expiry on 3 September 2021(Note 3). We also paid our US$48M final dividend in
respect of FY20 in October 2020.
- We entered into a binding agreement to sell a portfolio of non-core minerals royalties to Elemental Royalties
Corp. (Elemental, TSX-V:ELE) for US$40M in cash and US$15M in Elemental shares. The sale is expected to
complete in the March 2021 quarter, following the satisfaction of outstanding conditions.
- Following the end of the quarter we completed the sale of GEMCO’s shareholding in the TEMCO manganese
alloy smelter to an entity within GFG Alliance. The effective completion date of the sale for accounting purposes
was 31 December 2020.
- We received approval from the Competition Tribunal of South Africa for the sale of our shareholding in South
Africa Energy Coal to Seriti Resources Holdings Proprietary Limited (Seriti)(Note 4) on 23 December 2020.
While the transaction remains subject to material conditions including approvals from Eskom SOC Limited(Note
5), we continue to make progress towards achieving these and are currently targeting completion during the
March 2021 quarter.
- We continue to pursue cost reductions through our exit of lower returning businesses and ongoing simplification
of the Group’s functional structures and office footprint, to deliver a further US$50M in annualised savings
beyond FY22. In support of these changes, one-off, pre-tax restructuring costs (including redundancies and
lease break fees) of approximately US$17M (post tax ~US$13M, South32 share) are anticipated. We also
expect to a book pre-tax, non-cash impairment charge of approximately US$36M (post-tax ~US$25M) to reflect
the deferral of an update to our information technology systems as a result of travel restrictions caused by
COVID-19. These unaudited charges will be excluded from Underlying earnings in our December 2020 half year
financial results.
- Our geographical earnings mix will continue to have a significant bearing on our effective tax rate (ETR) given
differing country tax rates(Note 6), while the impact of intragroup agreements, exploration expenditure in foreign
entities and other permanent differences will be magnified when margins are compressed or losses are incurred
in specific jurisdictions. Until it is sold, South Africa Energy Coal is expected to have an ETR of 0%, with all tax
assets de-recognised and no benefit to be recorded for losses made prior to its planned divestment timing.
Accordingly, our Group Underlying ETR for the December 2020 half year is expected to be in a range between
45% and 55% (excluding EAI). Separately, we expect the underlying ETR of our manganese EAI to be in a
range between 55% and 65% in the December 2020 half year following the de-recognition of certain deferred tax
assets in the period.
Development and Exploration Update
- Following completion of the Eagle Downs Metallurgical Coal feasibility study in the December 2020 quarter, we
have determined not to proceed with the project at this time. While the study indicated the potential for a long-life
operation, the expected returns do not currently support the allocation of capital in accordance with our capital
management framework. The project has been placed on hold while the partners assess options that may
include the divestment of our 50% interest.
- We directed US$7M to exploration programs at Hermosa in the December 2020 half year despite drilling activity
being impacted by COVID-19 restrictions in the state of Arizona. We continue to progress our pre-feasibility
study for the Taylor Deposit and scoping study for the Clark Deposit with the Taylor pre-feasibility study expected
to be concluded in the June 2021 quarter.
- Consistent with our strategy to partner with companies to fund early stage greenfield exploration opportunities,
we invested US$8M during the December 2020 half year. 3
- We directed US$19M towards exploration programs at our existing operations and development options in the
December 2020 half year (US$15M capitalised), including US$2M for our EAI (US$1M capitalised) and US$7M
at Hermosa as noted above (all capitalised).
4
Production Summary
Production guidance
FY20 1H21 FY21e(Note a) Comments
(South32 share)
Worsley Alumina
Alumina production (kt) 3,886 2,010 3,965
Brazil Alumina
Alumina production (kt) 1,383 706 1,370
Hillside Aluminium(Note 7)
Aluminium production (kt) 718 361 720
Mozal Aluminium(Note 7)
Aluminium production (kt) 268 135 273
South Africa Energy Coal
Energy coal production (kt) 22,672 11,243 15,800 –16,400
Updated to reflect expected
Domestic coal production (kt) 12,552 6,561 9,300 – 9,700 production for the March 2021
quarter
Export coal production (kt) 10,120 4,682 6,500 – 6,700
Illawarra Metallurgical Coal
Total coal production (kt) 7,006 4,096 7,700
Metallurgical coal production (kt) 5,549 3,262 6,400
Energy coal production (kt) 1,457 834 1,300
Australia Manganese
Manganese ore production(kwmt)
3,470 1,834 3,500 Subject to market demand
South Africa Manganese
Manganese ore production (Note 8) (kwmt) 1,878 1,086 2,000 Subject to market demand
Cerro Matoso Approval of an early
Payable nickel production (kt) 40.6 16.1 Up 34.6 development timetable for the
Q&P project
Cannington
Payable zinc equivalent production(Note 9)(kt) 332.6 167.3 Up 347.2 Underground performance
Payable silver production (koz) 11,792 5,993 Up 12,600 supporting the acceleration of a
Payable lead production (kt) 110.4 57.6 Up 119.2 higher-grade mining sequence
Payable zinc production (kt) 66.7 30.4 Up 61.6
a. The denotation (e) refers to an estimate or forecast year. All guidance is subject to further potential impacts from COVID-19.
South Africa Energy Coal guidance is provided for 9M YTD21.
5
Marketing Update
Realised prices (Note 10) 1H21 1H21
1H20 2H20 1H21 vs vs
1H20 2H20
Worsley Alumina
Alumina (US$/t) 322 269 278 (14%) 3%
Brazil Alumina
Alumina (US$/t) 301 274 277 (8%) 1%
Hillside Aluminium
Aluminium (US$/t) 1,859 1,678 1,882 1% 12%
Mozal Aluminium
Aluminium (US$/t) 1,914 1,723 1,943 2% 13%
South Africa Energy
Coal
Domestic coal (US$/t) 23 26 28 22% 8%
Export coal (US$/t) 55 50 43 (22%) (14%)
Illawarra Metallurgical
Coal
Metallurgical coal (US$/t) 154 138 107 (31%) (22%)
Energy coal (US$/t) 53 49 31 (42%) (37%)
Australia Manganese(Note 11)
Manganese ore(US$/dmtu, FOB) 4.49 4.27 3.93 (12%) (8%)
South Africa
Manganese (Note 12)
Manganese ore (US$/dmtu, FOB) 3.81 3.68 3.49 (8%) (5%)
Cerro Matoso (Note 13)
Payable nickel (US$/lb) 6.77 4.81 6.29 (7%) 31%
Cannington (Note 14)
Payable silver (US$/oz) 17.5 15.6 26.0 49% 67%
Payable lead (US$/t) 1,869 1,445 1,744 (7%) 21%
Payable zinc (US$/t) 1,591 1,231 2,228 40% 81%
6
Worsley Alumina
(86% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Alumina production (kt) 1,933 2,010 4% 981 963 1,047 7% 9%
Alumina sales (kt) 1,891 2,078 10% 973 1,001 1,077 11% 8%
Worsley Alumina saleable alumina production increased by 4% (or 77kt) to a record 2,010kt in the December 2020
half year, with the refinery benefitting from improvement initiatives that supported output above nameplate capacity of
4.6Mt (100% basis).
FY21 production guidance remains unchanged at 3,965kt with calciner maintenance scheduled in the March 2021 quarter.
Brazil Alumina
(36% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Alumina production (kt) 702 706 1% 346 352 354 2% 1%
Alumina sales (kt) 678 674 (1%) 374 340 334 (11%) (2%)
Brazil Alumina saleable production increased by 1% (or 4kt) to a record 706kt in the December 2020 half year as the
refinery continued to benefit from increased plant availability. Having successfully completed planned maintenance
during the quarter.
FY21 production guidance remains unchanged at 1,370kt.
Hillside Aluminium
(100%)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Aluminium production (kt) 362 361 (0%) 181 180 181 0% 1%
Aluminium sales (kt) 350 347 (1%) 176 175 172 (2%) (2%)
Hillside Aluminium saleable production decreased 1kt to 361kt in the December 2020 half year as the smelter
continued to test its maximum technical capacity, despite the impact from load-shedding. FY21 production guidance
(note 7) remains unchanged at 720kt.
During the December 2020 quarter Eskom submitted a new energy supply agreement for the smelter to the National
Energy Regulator of South Africa (NERSA). The new agreement is to cover power supplied for a 10-year period with
a tariff that is South African rand based. The NERSA review process is expected to conclude during the June 2021
half year.
7
Mozal Aluminium
(47.1% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Aluminium production (kt) 134 135 1% 67 68 67 0% (1%)
Aluminium sales (kt) 136 130 (4%) 72 64 66 (8%) 3%
Mozal Aluminium saleable production increased by 1% (or 1kt) to 135kt in the December 2020 half year as the
smelter continued to test its maximum technical capacity, despite the impact from load-shedding. FY21 production
guidance (Note 7) remains unchanged at 273kt.
South Africa Energy Coal
(100%)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Energy coal production (kt) 11,785 11,243 (5%) 5,493 6,263 4,980 (9%) (20%)
Domestic sales (kt) 6,688 6,527 (2%) 2,962 3,607 2,920 (1%) (19%)
Export sales (kt) 4,854 4,697 (3%) 2,877 2,487 2,210 (23%) (11%)
South Africa Energy Coal saleable production decreased by 5% (or 0.5Mt) to 11.2Mt in the December 2020 half year
with domestic sales declining in the December 2020 quarter following reduced demand from Eskom. Export sales
were also lower following the suspension of activity from loss-making pits in response to market conditions. Operating
unit costs are expected to be approximately 10% above the top end of our guidance range of US$39/t in the
December 2020 half year following a strengthening of the South African rand.
Subject to the satisfaction of material conditions (Note 5), we are currently targeting to complete the divestment of
South Africa Energy Coal by 31 March 2021 with saleable production of 4.6 to 5.2Mt expected for the March 2021
quarter.
Illawarra Metallurgical Coal
(100%)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Total coal production (kt) 3,695 4,096 11% 1,613 2,371 1,725 7% (27%)
Total coal sales (Note 15) (kt) 3,619 4,027 11% 1,771 1,940 2,087 18% 8%
Metallurgical coal production (kt) 2,859 3,262 14% 1,208 1,863 1,399 16% (25%)
Metallurgical coal sales (kt) 2,800 3,165 13% 1,318 1,468 1,697 29% 16%
Energy coal production (kt) 836 834 (0%) 405 508 326 (20%) (36%)
Energy coal sales (kt) 819 862 5% 453 472 390 (14%) (17%)
Illawarra Metallurgical Coal saleable production increased by 11% (or 401kt) to 4.1Mt in the December 2020 half year
with the operation’s successful return to a three longwall configuration in April 2020 supporting higher volumes of
metallurgical coal.
Energy coal production volumes were flat in the December 2020 half year, despite the completion of a longwall move
at the Dendrobium mine in the December 2020 quarter, as we monetised low-margin coal wash material for sale to
industrial customers. This material attracts grade and product-type discounts to the API5 (5,500Kcal) index (Note 16)
for our energy coal sales. While the coal wash material is expected to generate a small margin, the incremental
volumes are expected to result in our Operating unit costs for the December 2020 half year being approximately 5% 8
lower than FY21 guidance (US$84/t).
FY21 production guidance remains unchanged at 7.7Mt with a further longwall move scheduled for the June 2021
quarter.
Australia Manganese
(60% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Manganese ore production (kwmt) 1,775 1,834 3% 907 880 954 5% 8%
Manganese ore sales (kwmt) 1,737 1,865 7% 885 994 871 (2%) (12%)
Manganese alloy production (kt) 57 51 (11%) 29 27 24 (17%) (11%)
Manganese alloy sales (kt) 58 59 2% 26 26 33 27% 27%
Australia Manganese saleable ore production increased by 3% (or 59kwmt) to a record 1,834kwmt in the December
2020 half year as favourable ore characteristics supported continued strong output from the primary concentrator. We
also achieved a production record in the December 2020 quarter with an increase in volumes from the Premium
Concentrate Ore (PC02) circuit adding to the strong primary concentrator performance. PC02 fines contributed 10%
of total production in the December 2020 half year (H1 FY20: 11%).
The PC02 fines product has a manganese content of approximately 40%, which leads to both grade and
product-type discounts when referenced to the high grade 44% manganese lump ore index. With the lower relative
price for PC02 fines we realised a 5% discount for our manganese ore sales to the high grade 44% index (Note 17)
during the December 2020 half year. While we continue to monitor market conditions and the potential impact from
the wet season across the remainder of the financial year, FY21 production guidance remains unchanged at
3,500kwmt.
Manganese alloy saleable production decreased by 11% (or 6kt) to 51kt in the December 2020 half year ahead of the
divestment of the TEMCO manganese alloy smelter, which was completed subsequent to the end of the period.
South Africa Manganese
(60% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Manganese ore production (Note 8) 5% 3% (13%)
1,038 1,086 491 581 505
(kwmt)
Manganese ore sales (Note 8) (kwmt) 1,073 1,103 3% 529 517 586 11% 13%
Manganese alloy production (kt) 34 - (100%) 18 - - (100%) 0%
Manganese alloy sales (kt) 28 11 (61%) 15 8 3 (80%) (63%)
South Africa Manganese saleable ore production increased by 5% (or 48kwmt) to 1,086kwmt in the December 2020
half year following an extended shut in response to market conditions in the prior period. Production was 13% lower
in the December 2020 quarter as we completed a planned maintenance shut at our Mamatwan mine.
Sales increased by 13% during the December 2020 quarter as we continued to utilise higher cost trucking and South
African rail logistics normalised following a ramp-up period after a nationwide COVID-19 lockdown in the June 2020
quarter. While we continue to monitor market conditions and the attractiveness of higher cost trucking, FY21
production guidance remains unchanged at 2,000kwmt.
We did not produce any manganese alloy in the December 2020 half year as our Metalloys manganese alloy smelter
remained on care and maintenance.
9
Cerro Matoso
(99.9% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Payable nickel production (kt) 20.6 16.1 (22%) 10.0 10.0 6.1 (39%) (39%)
Payable nickel sales (kt) 20.4 16.5 (19%) 10.4 10.4 6.1 (41%) (41%)
Cerro Matoso payable nickel production decreased by 22% (or 4.5kt) to 16.1kt in the December 2020 half year as we
commenced a major refurbishment of one of the furnaces in the December 2020 quarter. The refurbishment is on-
track to be completed, ahead of schedule, by the end of January 2021.
During the period we approved development of the Queresas and Porvenir project (Q&P project). The Q&P project
comprises the development of 17Mt of Mineral Resources (46% Measured, 45% Indicated and 9% Inferred) of the
total Mineral Resource estimate reported for Cerro Matoso in FY20 (Note 18). The project is a high returning, low
capital option that is expected to contribute to higher average ore feed grades over the next 6 years. Following its
approval and the accelerated delivery timetable we have increased our FY21 and FY22 production guidance by 3%
(to 34.6kt) and 13% (to 43.8kt) respectively.
Cannington
(100% share)
2Q21 2Q21
South32 share 1H20 1H21 HoH 2Q20 1Q21 2Q21 vs vs
2Q20 1Q21
Payable zinc equivalent production
(Note 9) (kt) 168.7 167.3 (1%) 84.8 76.6 90.7 7% 18%
Payable silver production (koz) 6,164 5,993 (3%) 3,192 2,863 3,130 (2%) 9%
Payable silver sales (koz) 5,912 6,326 7% 3,549 2,967 3,359 (5%) 13%
Payable lead production (kt) 55.3 57.6 4% 28.8 26.4 31.2 8% 18%
Payable lead sales (kt) 51.8 61.4 19% 31.2 29.5 31.9 2% 8%
Payable zinc production (kt) 32.5 30.4 (6%) 14.1 12.4 18.0 28% 45%
Payable zinc sales (kt) 35.3 31.8 (10%) 16.4 11.8 20.0 22% 69%
Cannington payable zinc equivalent production decreased by 1% (or 1.4kt) to 167.3kt in the December 2020 half
year following the completion of planned surface maintenance in the September 2020 quarter. Ore mined volumes
increased by 4% during the same period with underground mine performance supporting the re-establishment of run
of mine inventory. We expect to accelerate the extraction of a higher-grade mining sequence during the June 2021
quarter and as a result FY21 zinc equivalent production guidance has been increased by 5% in FY21 (12,600koz for
silver, 119.2kt for lead and 61.6kt for zinc). FY22 production guidance remains unchanged.
Payable silver and lead sales increased by 7% and 19% respectively during the December 2020 half year as the
operation drew down finished product inventory. In combination with the impact of a stronger Australian dollar, the
movement in finished product inventory is expected to result in Operating unit costs for the December 2020 half year
being approximately 10% higher than our FY21 guidance (US$111/t (Note 19)).
10
Notes:
1. FY21 Operating unit cost guidance includes royalties (where appropriate) and the influence of exchange rates,
and includes various assumptions for FY21, including: an alumina price of US$250/t; an average blended coal
price of US$103/t for Illawarra Metallurgical Coal; a manganese ore price of US$4.83/dmtu for 44% manganese
product; a nickel price of US$5.78/lb; a thermal coal price of US$56/t (API4) for South Africa Energy
Coal; a silver price of US$18.20/troy oz; a lead price of US$1,788/t (gross of treatment and refining charges);
a zinc price of US$2,102/t (gross of treatment and refining charges); an AUD:USD exchange rate of 0.69; a USD:ZAR
exchange rate of 17.68; a USD:COP exchange rate of 3,665; and a reference price for caustic soda; all of which
reflected forward markets as at June 2020 or our internal expectations.
2. Net distributions from equity accounted investments includes net debt movements and dividends, which are unaudited
and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial
performance or liquidity.
3. Since inception, US$1.1B has been allocated to the on-market share buy-back (543M shares at an average price of
A$2.87 per share) and US$292M returned in the form of special dividends.
4. Purchaser includes Thabong Coal Proprietary Limited, a wholly-owned subsidiary of Seriti and two trusts for the
benefit of employees and communities.
5. Refer to the market announcement “Agreement to Divest South Africa Energy Coal” dated 6 November 2019.
6. The primary corporate tax rates applicable to the Group for FY21 include: Australia 30%, South Africa 28%,
Colombia 32%, Mozambique 0% and Brazil 34%. The Colombian corporate tax rate is 31% in CY21 and will decrease
to 30% from 1 January 2022. The Mozambique operations are subject to a royalty on revenues instead of income tax.
7. Production guidance for Hillside Aluminium and Mozal Aluminium does not assume any load-shedding impact on
production.
8. Consistent with the presentation of South32’s segment information, South Africa Manganese ore production and sales
have been reported at 60%. The Group’s financial statements will continue to reflect a 54.6% interest in South
Africa Manganese ore.
9. Payable zinc equivalent production (kt) was calculated by aggregating revenues from payable silver, lead and zinc,
and dividing the total Revenue by the price of zinc. FY20 realised prices for zinc (US$1,416/t), lead (US$1,648/t)
and silver (US$16.5/oz) have been used for FY20, H1 FY21 and FY21e.
10. Realised prices are unaudited. Volumes and prices do not include any third party trading that may be undertaken
independently of equity production. Realised sales price is calculated as sales Revenue divided by sales volume
unless otherwise stated.
11. Realised ore prices are unaudited and calculated as external sales Revenue less freight and marketing costs, divided
by external sales volume. Ore converted to sinter and alloy, and sold externally, is eliminated as an intracompany
transaction.
12. Realised ore prices are unaudited and calculated as external sales Revenue less freight and marketing costs, divided
by external sales volume. Ore converted to sinter and alloy, and sold externally, is eliminated as an intracompany
transaction. Manganese ore sales are grossed-up to reflect a 60% accounting effective interest.
13. Realised nickel sales prices are unaudited and inclusive of by-products.
14. Realised prices for Cannington are unaudited and net of treatment and refining charges.
15. Illawarra Metallurgical Coal sales are adjusted for moisture and will not reconcile directly to Illawarra Metallurgical
Coal production.
16. The quarterly sales volume weighted average of the Argus McCloskey API5 Coal index 5,500Kcal NAR (FOB Newcastle, Australia)
on the basis of a one month lag to published pricing (Month minus one or “M-1”) was US$38/t in the December 2020
half year.
17. The quarterly sales volume weighted average of the Metal Bulletin 44% manganese lump ore index (CIF Tianjin, China) on
the basis of a one month lag to published pricing (Month minus one or “M-1”) was US$4.41/dmtu in the December 2020
half year.
18. Cerro Matoso total Mineral Resource estimate declared in the South32 Annual Report 2020 (www.south32.net).
19. US dollar per tonne of ore processed. Periodic movements in finished product inventory may impact Operating unit costs.
The following abbreviations have been used throughout this report: US$ million (US$M); US$ billion (US$B); grams per tonne (g/t);
tonnes (t); thousand tonnes (kt); thousand tonnes per annum (ktpa); million tonnes (Mt); million tonnes per annum (Mtpa); ounces
(oz); thousand ounces (koz); million ounces (Moz); thousand wet metric tonnes (kwmt); million wet metric tonnes (Mwmt); million
wet metric tonnes per annum (Mwmt pa); thousand
dry metric tonnes (kdmt).
Figures in Italics indicate that an adjustment has been made since the figures were previously reported. The denotation (e)
refers to an estimate or forecast year.
11
Operating Performance
South32 share 1H20 1H21 2Q20 3Q20 4Q20 1Q21 2Q21
Worsley Alumina (86% share)
Alumina hydrate production (kt) 1,910 2,012 943 963 967 1,010 1,002
Alumina production (kt) 1,933 2,010 981 936 1,017 963 1,047
Alumina sales (kt) 1,891 2,078 973 860 1,031 1,001 1,077
Brazil Alumina (36% share)
Alumina production (kt) 702 706 346 340 341 352 354
Alumina sales (kt) 678 674 374 336 378 340 334
Hillside Aluminium (100%)
Aluminium production (kt) 362 361 181 178 178 180 181
Aluminium sales (kt) 350 347 176 174 199 175 172
Mozal Aluminium (47.1% share)
Aluminium production (kt) 134 135 67 67 67 68 67
Aluminium sales (kt) 136 130 72 65 78 64 66
South Africa Energy Coal (100%)
Energy coal production (kt) 11,785 11,243 5,493 5,659 5,228 6,263 4,980
Domestic sales (kt) 6,688 6,527 2,962 2,944 3,006 3,607 2,920
Export sales (kt) 4,854 4,697 2,877 2,681 2,180 2,487 2,210
Illawarra Metallurgical Coal (100%)
Total coal production (kt) 3,695 4,096 1,613 1,359 1,952 2,371 1,725
Total coal sales (kt) 3,619 4,027 1,771 1,594 2,071 1,940 2,087
Metallurgical coal production (kt) 2,859 3,262 1,208 1,167 1,523 1,863 1,399
Metallurgical coal sales (kt) 2,800 3,165 1,318 1,398 1,644 1,468 1,697
Energy coal production (kt) 836 834 405 192 429 508 326
Energy coal sales (kt) 819 862 453 196 427 472 390
Australia Manganese (60% share)
Manganese ore production (kwmt) 1,775 1,834 907 841 854 880 954
Manganese ore sales (kwmt) 1,737 1,865 885 775 928 994 871
Ore grade sold (%, Mn) 45.0 44.4 44.4 44.4 43.9 44.3 44.5
Manganese alloy production (kt) 57 51 29 24 29 27 24
Manganese alloy sales (kt) 58 59 26 31 27 26 33
South Africa Manganese (60% share)
Manganese ore production (Note 8)(kwmt) 1,038 1,086 491 466 374 581 505
Manganese ore sales (Note 8)(kwmt) 1,073 1,103 529 476 316 517 586
Ore grade sold (%, Mn) 40.0 39.9 39.6 39.8 40.8 39.7 40.0
Manganese alloy production (kt) 34 - 18 14 5 - -
Manganese alloy sales (kt) 28 11 15 20 7 8 3
Cerro Matoso (99.9% share)
12
South32 share 1H20 1H21 2Q20 3Q20 4Q20 1Q21 2Q21
Cerro Matoso (99.9% share)
Ore mined (kwmt) 1,400 1,470 732 641 798 645 825
Ore processed (kdmt) 1,389 1,155 677 693 679 698 457
Ore grade processed (%, Ni) 1.66 1.57 1.67 1.67 1.59 1.58 1.55
Payable nickel production (kt) 20.6 16.1 10.0 10.3 9.7 10.0 6.1
Payable nickel sales (kt) 20.4 16.5 10.4 10.2 10.0 10.4 6.1
Cannington (100%)
Ore mined (kwmt) 1,360 1,409 666 706 726 700 709
Ore processed (kdmt) 1,394 1,302 738 701 744 630 672
Silver ore grade processed (g/t, Ag) 165 174 162 134 161 169 179
Lead ore grade processed (%, Pb) 4.8 5.1 4.8 4.5 4.8 5.0 5.2
Zinc ore grade processed (%, Zn) 3.3 3.3 2.8 3.6 3.2 2.9 3.7
Payable zinc equivalent production
(note 9) (kt) 168.7 167.3 84.8 74.7 89.2 76.6 90.7
Payable silver production (koz) 6,164 5,993 3,192 2,433 3,195 2,863 3,130
Payable silver sales (koz) 5,912 6,326 3,549 2,626 3,571 2,967 3,359
Payable lead production (kt) 55.3 57.6 28.8 25.0 30.1 26.4 31.2
Payable lead sales (kt) 51.8 61.4 31.2 22.8 33.5 29.5 31.9
Payable zinc production (kt) 32.5 30.4 14.1 17.3 16.9 12.4 18.0
Payable zinc sales (kt) 35.3 31.8 16.4 14.4 19.0 11.8 20.0
Forward-looking statements
This release contains forward-looking statements, including statements about trends in commodity prices and currency exchange rates;
demand for commodities; production forecasts; plans, strategies and objectives of management; capital costs and scheduling;
operating costs; anticipated productive lives of projects, mines and facilities; and provisions and contingent liabilities.
These forward-looking statements reflect expectations at the date of this release, however they are not guarantees or predictions
of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control,
and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers
are cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, the
South32 Group does not undertake to publicly update or review any forward-looking statements, whether as a result of new information
or future events. Past performance cannot be relied on as a guide to future performance. South32 cautions against reliance on any
forward-looking statements or guidance, particularly in light of the current economic climate and the significant volatility,
uncertainty and disruption arising in connect with COVID-19.
Further information
Investor Relations Media Relations
Alex Volante Rebecca Keenan Jenny White
T +61 8 9324 9029 T +61 8 9324 9364 T +44 20 7798 1773
M +61 403 328 408 M +61 402 087 055 M +44 7900 046 758
E Alex.Volante@south32.net E Rebecca.Keenan@south32.net E Jenny.White@south32.net
Approved for release by Nicole Duncan, Company Secretary, South32 Limited
21 January 2021
JSE Sponsor: UBS South Africa (Pty) Ltd
13
Date: 21-01-2021 08:00:00
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