Wrap Text
Quarterly report September 2022
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
south32.net
Quarterly Report September 2022
• Our share of aluminium production increased by 9% in the September 2022 quarter, as our Southern African smelters continued to test
their maximum technical capacity and the Brazil Aluminium smelter was successfully restarted
• We completed planned calciner maintenance at Worsley Alumina and Brazil Alumina
• We achieved an 11% increase in copper equivalent production[1] at Sierra Gorda, benefitting from higher copper grades
• We progressed productivity projects at our other base metals operations, with the transition to 100% truck haulage at Cannington and
the Ore Sorting and Mechanical Ore Concentration project at Cerro Matoso expected to deliver increased volumes in H2 FY23
• We had a strong start to the year in manganese, tracking ahead of our production guidance, as GEMCO achieved higher primary
production and our low-cost PC02 circuit continued to operate above design capacity
• We have revised production guidance down by 5% at Illawarra Metallurgical Coal to 7.0Mt, following an extended longwall move and
the impact of industrial action at our Appin mine during the September 2022 quarter
• All other production guidance is unchanged, with 13% copper equivalent production[2] growth now expected in FY23
• We finalised new industrial agreements at our Appin mine at Illawarra Metallurgical Coal and Hillside Aluminium, subsequent to the
end of the quarter
• We completed the sale of four non-core royalties for up to US$200M, unlocking latent value in our portfolio[3]
• We returned US$784M in fully-franked ordinary and special dividends subsequent to the end of the quarter,
with a further US$200M remaining to be returned via our capital management program
South32 Chief Executive Officer, Graham Kerr: “Highlights during the September 2022 quarter included an
11 per cent increase in copper equivalent production at the Sierra Gorda copper mine in Chile, a nine per cent increase in aluminium
production and a six per cent increase in manganese ore production at GEMCO.
We maintain a strong outlook with 13 per cent production growth expected in FY23.
“During the quarter, we announced that we would not proceed with an investment in the Dendrobium Next Domain project at Illawarra
Metallurgical Coal, increasing our capacity to direct capital towards other opportunities,
including our world class development options in North America.
“We advanced development studies and critical path infrastructure at our Hermosa project in Arizona. We expect to complete the selection
phase of the pre-feasibility study for the battery-grade manganese Clark deposit by the end of CY22 and make a final investment decision
for the zinc-lead-silver Taylor deposit in mid CY23.
“We returned US$50M to shareholders via our on-market share buy-back and finished the quarter with a net cash position of US$446M,
with a further US$784M returned in October 2022 via fully-franked ordinary and special dividends.
“Our strong balance sheet and disciplined approach to capital management enables us to continue to make returns to shareholders while
investing in our portfolio of growth options focused on metals critical to a low-carbon future.”
Production summary
South32 share YTD FY22 YTD FY23 YoY 1Q22 4Q22 1Q23 QoQ
Alumina production (kt) 1,278 1,257 (2%) 1,278 1,361 1,257 (8%)
Aluminium production (kt) 248 279 13% 248 255 279 9%
Payable copper production (kt) – 19.0 N/A – 16.9 19.0 12%
Payable silver production (koz) 3,493 2,748 (21%) 3,493 2,836 2,748 (3%)
Payable lead production (kt) 31.9 24.6 (23%) 31.9 25.8 24.6 (5%)
Payable zinc production (kt) 15.4 14.0 (9%) 15.4 15.4 14.0 (9%)
Payable nickel production (kt) 9.6 9.6 0% 9.6 10.8 9.6 (11%)
Metallurgical coal production (kt) 1,575 1,270 (19%) 1,575 1,380 1,270 (8%)
Manganese ore production (kwmt) 1,505 1,460 (3%) 1,505 1,469 1,460 (1%)
Unless otherwise noted: percentage variance relates to performance during the September 2022 quarter compared with the September 2021 quarter (YoY), or the September 2022 quarter compared with
the June 2022 quarter (QoQ); production and sales volumes are reported on an attributable basis.
CORPORATE UPDATE
• In September 2022, we published our Annual Reporting Suite, which this year included our Climate Change
Action Plan (CCAP). Our CCAP includes a new goal[4] of net zero Scope 3 greenhouse gas emissions by 2050 and a commitment not to
develop or invest in greenfield metallurgical coal projects. Our CCAP will be the subject of a non-binding advisory resolution at our
2022 Annual General Meeting.
• Net cash[5] declined by US$92M to US$446M during the September 2022 quarter following the allocation of a further US$50M to our
on-market share buy-back and tax payments of US$243M, including US$111M in relation to our acquisition of Sierra Gorda. We also
experienced a modest build in working capital as the collection of receivables was more than offset by an increase in finished goods
inventory and we made one-off payments that were accrued in the prior period.
• We received net distributions[6] of US$54M (South32 share) from our manganese equity accounted investments (EAI) during the
September 2022 quarter following the payment of income tax (US$58M, 100% basis), and royalties at Australia Manganese (US$84M,
100% basis) in respect of the June 2022 half year.
• In relation to the aforementioned tax payment for Sierra Gorda, ~€92M (~US$94M at the payment date) relates to pre-closing tax
liabilities which we intend to seek to recover from the vendors.
• Our FY23 Underlying effective tax rate (ETR) is expected to reflect the corporate tax rates and earnings of the jurisdictions in which we
operate[7], as well as the inclusion of our manganese business and Sierra Gorda in
Underlying earnings on a proportional consolidation basis (including royalty related taxes for Australia Manganese and Sierra Gorda).
• We spent US$50M purchasing a further 19M shares at an average price of A$3.98 per share via our on-market share buy-back.
Subsequent to the end of the period, we also paid a fully-franked ordinary dividend of US$646M and a
fully-franked special dividend of US$138M in respect of the June 2022 half year. Our US$2.3B capital management program is 91%
complete with US$200M remaining to be returned ahead of its extension or expiry on
1 September 2023[8].
• On 23 August 2022, we announced that we would not proceed with an investment in the Dendrobium Next Domain (DND) project at
Illawarra Metallurgical Coal following our consideration of recently completed study work and extensive analysis of alternatives
considered for the complex[9]. We will focus on continuing to optimise the Dendrobium mine within approved mining areas (Areas
3A, 3B and 3C). As a result of our decision not to invest in the DND project, we expect to record a non-cash asset write-off
of approximately US$50M (post-tax ~US$35M) in relation to study and other project related costs. This charge will be excluded from
Underlying earnings in our financial results for the December 2022 half year.
• On 19 July 2022, we completed the sale of four non-core base metal royalties to Anglo Pacific Group PLC (now known as Ecora
Resources PLC [Ecora Resources]) for up to US$200M, including US$103M in cash (US$48M received at completion and US$55M to be
paid in six quarterly instalments), US$82M of Ecora Resources shares, and contingent payments of up to US$15M[3]. Following
completion, we hold a 16.9% equity interest in Ecora Resources. We expect to make tax payments associated with the transaction of
~US$58M across FY23.
• Consistent with our focus on adding prospective base metals options, we acquired a 9.9% equity interest in Aldebaran Resources Inc.
(Aldebaran Resources) for US$8M. Aldebaran Resources’ key asset is an option to acquire a controlling interest in the Altar copper
project in Suan Juan, Argentina. This investment increases our exposure to a highly prospective region, where we have existing
greenfield exploration partnerships with Minsud Resources Corp. and Sable Resources Ltd.
Page 2 of 13
DEVELOPMENT AND EXPLORATION UPDATE
Hermosa project
• The feasibility study for the Taylor Deposit remains on-track to support a planned final investment decision in mid CY23.
• The selection phase of the Clark pre-feasibility study is on-track for completion in late CY22. Subsequent to the end of the quarter, we
commenced phase two metallurgical test work and bulk sample collection to support pilot plant production from mid CY23. We
continue to evaluate options to accelerate the development pathway for Clark, supported by the decision of the United States
Government to invoke the Defense Production Act for the production of critical minerals including manganese, and ongoing
discussions with potential customers and end-users of battery-grade manganese.
• Dewatering is a critical path item which will enable access to both the Taylor and Clark orebodies. During the quarter, we progressed
drilling of the first two dewatering wells and construction of the second water treatment plant, which remains on-track for
commissioning in the June 2023 quarter.
• Growth capital expenditure at the Hermosa project was US$46M during the September 2022 quarter, with US$290M expected in
FY23.
• We directed US$3M to capitalised exploration during the September 2022 quarter, as we drilled two holes at our copper-lead-zinc-
silver Peake prospect[10], with exploration results expected in the June 2023 half year as we complete planned exploration programs.
We expect to commence drilling at the Flux prospect[11] in early CY23, following the receipt of approvals. Capitalised exploration of
US$28M is expected in FY23 as we execute planned programs across Taylor, Clark and our highly prospective regional land package.
Ambler Metals project
• We invested US$6M at our Ambler Metals joint venture in the September 2022 quarter, as we completed the CY22 summer
exploration program and progressed work on the pre-feasibility study for the Arctic Deposit.
• The CY22 summer exploration program comprised further infill drilling at the Arctic Deposit and drill testing of regional exploration
targets in the Ambler Belt.
• Further to the temporary suspension of the right-of-way permits for the Ambler Access Road issued to the Alaska Industrial
Development and Export Authority, we expect the United States Bureau of Land Management to publish the draft Final Environmental
Impact Statement in mid CY23.
Greenfield exploration
• We invested US$13M in greenfield exploration programs across our partnerships and own properties in the September 2022 quarter.
We expect to invest US$44M in FY23 as we complete multiple drilling and field programs targeting base metals across Australia, USA,
Canada, Argentina, Peru and Ireland.
Other exploration
• We directed US$15M (US$11M capitalised) towards exploration programs at our existing operations and development options during
the September 2022 quarter, including US$3M at the Hermosa project (noted above, all capitalised), US$6M at Ambler Metals (noted
above, all capitalised), US$1M for our manganese EAI (nil capitalised) and US$1M for our Sierra Gorda EAI (US$1M capitalised).
Page 3 of 13
PRODUCTION SUMMARY
Production guidance
FY22 3M YTD FY23 FY23e(a) Comments
(South32 share)
Worsley Alumina
Calciner maintenance completed
in Q1 FY23
Alumina production (kt) 3,991 920 4,000
Further calciner maintenance
scheduled in Q3 FY23
Brazil Alumina (non-operated)
Alumina production (kt) 1,297 337 1,395
Brazil Aluminium (non-operated)
Expect ~25kt in H1 FY23 and ~75kt
Aluminium production (kt) 0.3 8.3 100 in H2 FY23, as the smelter ramps-
up
Hillside Aluminium[12]
Aluminium production (kt) 714 179 720
Mozal Aluminium[12,13]
Aluminium production (kt) 278 92 370
Sierra Gorda (non-operated)
Payable copper equivalent production[1] (kt) 30.6 22.6 89.0
Payable copper production (kt) 25.3 19.0 71.8
Payable molybdenum production (kt) 0.4 0.2 1.5
Payable gold production (koz) 9.6 7.8 29.9
Payable silver production (koz) 253 180 582
Cannington
Payable zinc equivalent production[14] (kt) 224.2 46.1 236.1 Lower planned volumes in
H1 FY23 as we relocate crushing
Payable silver production (koz) 12,946 2,568 13,500 infrastructure to surface, as part of
our transition to 100% truck
haulage
Payable lead production (kt) 120.6 24.6 122.0
FY23 guidance remains skewed to
Payable zinc production (kt) 64.5 14.0 72.0 H2 FY23
Cerro Matoso
Lower planned volumes in
H1 FY23 as we commission the
Payable nickel production (kt) 41.7 9.6 43.5 OSMOC project, which is
on-track for completion in
Q2 FY23
Illawarra Metallurgical Coal
Total coal production (kt) 6,509 1,595 Down 7,000 Guidance reduced by 5% (from
Metallurgical coal production (kt) 5,712 1,270 Down 6,000 7.4Mt) with lower Appin volumes
Energy coal production (kt) 797 325 Up 1,000 in Q1 FY23
Australia Manganese
Manganese ore production (kwmt) 3,363 898 3,400
South Africa Manganese
Manganese ore production (kwmt) 2,069 562 2,000
a. The denotation (e) refers to an estimate or forecast year. All guidance is subject to further potential impacts from COVID-19.
Page 4 of 13
WORSLEY ALUMINA (86% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Alumina production (kt) 1,006 920 (9%) 1,006 1,030 920 (9%) (11%)
Alumina sales (kt) 924 885 (4%) 924 1,118 885 (4%) (21%)
Worsley Alumina saleable production decreased by 11% (or 110kt) to 920kt in the September 2022 quarter as we completed planned
calciner maintenance. FY23 production guidance remains unchanged at 4,000kt with the refinery expected to deliver production above
nameplate capacity of 4.6Mt (100% basis), benefitting from embedded improvement initiatives.
Sales decreased by 21% in the September 2022 quarter, which reflected lower product availability and the timing of shipments. We realised
a circa 8% premium to the Platts Alumina Index[15] on a volume-weighted M-1 basis for alumina sales in the September 2022 quarter as
our realised prices continued to reflect elevated global freight rates (which are also reflected in Operating unit costs).
While we have not experienced any production impacts to date, we continue to monitor the performance of our domestic third-party coal
suppliers following production disruptions during the winter. As part of this work, we are reviewing options to import low-calorific coal to
supplement our domestic supply and rebuild our available stockpiles, with first shipments expected to be received during the December
2022 quarter. We do not currently expect a material impact on our FY23 Operating unit cost guidance of US$296/t[16], with the
incremental cost of imported coal expected to be offset by the benefit of a weaker Australian dollar.
BRAZIL ALUMINA (36% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Alumina production (kt) 272 337 24% 272 331 337 24% 2%
Alumina sales (kt) 247 313 27% 247 367 313 27% (15%)
Brazil Alumina saleable production increased by 2% (or 6kt) to 337kt in the September 2022 quarter as the refinery recovered from
weather-related disruptions in the prior quarter, partially offset by planned calciner maintenance. FY23 production guidance remains
unchanged at 1,395kt.
We realised a circa 9% premium to the Platts Alumina Index[15] on a volume-weighted M-1 basis for alumina sales in the September 2022
quarter as our realised prices continued to reflect elevated global freight rates (which are also reflected in Operating unit costs).
We commenced work on the refinery’s De-bottlenecking Phase Two project during the September 2022 quarter. The project is expected to
increase nameplate production rates by approximately 4% to 1.45Mt (South32 share) from H1 FY26, with anticipated capital expenditure
of ~US$40M (South32 share) between FY23 and FY25.
Page 5 of 13
BRAZIL ALUMINIUM (40% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Aluminium production (kt) – 8.3 N/A – 0.3 8.3 N/A 2,667%
Aluminium sales (kt) – 3.3 N/A – – 3.3 N/A N/A
Brazil Aluminium saleable production was 8.3kt in the September 2022 quarter following the successful restart of the first two potlines at
the smelter. FY23 production guidance remains unchanged at 100kt, with ~25kt expected in H1 FY23 and ~75kt in H2 FY23 as the first two
potlines continue to ramp-up and potline three is expected to restart in late CY22. First sales of aluminium metal were achieved during the
September 2022 quarter.
HILLSIDE ALUMINIUM (100% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Aluminium production (kt) 180 179 (1%) 180 179 179 (1%) 0%
Aluminium sales (kt) 160 162 1% 160 198 162 1% (18%)
Hillside Aluminium saleable production was unchanged at 179kt in the September 2022 quarter as the smelter continued to test its
maximum technical capacity despite the impact of elevated load-shedding. FY23 production guidance remains unchanged at 720kt[12].
Following the end of the quarter, we finalised a new collective employment agreement at Hillside Aluminium, with a term of three years to
2025.
Sales decreased by 18% in the September 2022 quarter as port congestion impacted the timing of shipments. Subsequent to the end of the
quarter, the Transnet workforce undertook industrial action, temporarily impacting our access to third-party logistics. We continue to
closely monitor the situation and will seek to mitigate the potential impact on our aluminium sales during the December 2022 quarter.
We continued our deployment of the AP3XLE energy efficiency technology during the quarter. At Hillside Aluminium, the technology is
expected to reduce energy consumption and in turn, lower greenhouse gas emissions by approximately 150,000 to 200,000 tonnes per
annum once fully deployed.
MOZAL ALUMINIUM (63.7%[13] SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Aluminium production (kt) 68 92 35% 68 76 92 35% 21%
Aluminium sales (kt) 55 87 58% 55 88 87 58% (1%)
Mozal Aluminium saleable production increased by 21% (or 16kt) to 92kt in the September 2022 quarter, reflecting our increased equity
share[13], and the smelter continued to test its maximum technical capacity despite the impact of elevated load-shedding. FY23
production guidance remains unchanged at 370kt[12].
We continued our deployment of the AP3XLE energy efficiency technology during the quarter. At Mozal Aluminium, the technology is
expected to deliver a circa 5% increase in annual production from FY24 with no associated increase in power consumption.
Page 6 of 13
SIERRA GORDA (45% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Payable copper equivalent production[1] (kt) – 22.6 N/A – 20.3 22.6 N/A 11%
Payable copper production (kt) – 19.0 N/A – 16.9 19.0 N/A 12%
Payable copper sales (kt) – 19.2 N/A – 16.6 19.2 N/A 16%
Sierra Gorda payable copper equivalent production[1] increased by 11% (or 2.3kt) to 22.6kt in the September 2022 quarter. Plant
throughput was ~48Mt on an annualised basis (100% basis) and we continued work on the plant de-bottlenecking project, designed to
sustainably lift throughput capacity to ~50Mtpa (100% basis) from the December 2022 quarter.
We realised a higher average copper grade of 0.45% in the September 2022 quarter (Q4 FY22: 0.40%) in-line with plan, with an average
copper grade of approximately 0.41% expected across FY23. FY23 payable copper equivalent production[1] guidance of 89.0kt remains
unchanged (copper 71.8kt, molybdenum 1.5kt, gold 29.9koz and silver 582koz).
We realised a payable copper price of US$2.92/lb during the September 2022 quarter, net of treatment and refining charges and
provisional pricing adjustments.
CANNINGTON (100% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Payable zinc equivalent production[14] (kt) 58.1 46.1 (21%) 58.1 48.9 46.1 (21%) (6%)
Payable silver production (koz) 3,493 2,568 (26%) 3,493 2,668 2,568 (26%) (4%)
Payable silver sales (koz) 2,718 1,704 (37%) 2,718 3,362 1,704 (37%) (49%)
Payable lead production (kt) 31.9 24.6 (23%) 31.9 25.8 24.6 (23%) (5%)
Payable lead sales (kt) 25.3 18.7 (26%) 25.3 31.0 18.7 (26%) (40%)
Payable zinc production (kt) 15.4 14.0 (9%) 15.4 15.4 14.0 (9%) (9%)
Payable zinc sales (kt) 14.3 14.9 4% 14.3 16.1 14.9 4% (7%)
Cannington payable zinc equivalent production[14] decreased by 6% (or 2.8kt) to 46.1kt in the September 2022 quarter due to a planned
reduction in crushing capacity. We deployed temporary mobile crushers to enable the relocation of underground crushing infrastructure
to surface, as part of the operation’s transition to 100% truck haulage.
The new configuration is expected to bring higher-grade material forward in the mine plan.
FY23 production guidance (silver 13,500koz, lead 122.0kt and zinc 72.0kt, or 236.1kt payable zinc equivalent production[14]) is unchanged,
with volumes remaining skewed toward H2 FY23 as we complete the relocation of crushing infrastructure to surface in the December 2022
quarter.
Payable silver and lead sales decreased by 49% and 40% respectively in the September 2022 quarter, which reflected lower product
availability and the timing of shipments.
Page 7 of 13
CERRO MATOSO (99.9% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Payable nickel production (kt) 9.6 9.6 0% 9.6 10.8 9.6 0% (11%)
Payable nickel sales (kt) 10.4 9.0 (13%) 10.4 11.9 9.0 (13%) (24%)
Cerro Matoso payable nickel production decreased by 11% (or 1.2kt) to 9.6kt in the September 2022 quarter due to a planned reduction in
average nickel grade (Q1 FY23: 1.63%, Q4 FY22: 1.71%), ahead of execution of the Ore Sorting and Mechanical Ore Concentration (OSMOC)
project. The OSMOC project is on-track to be completed during the December 2022 quarter, delivering additional volumes to mitigate
natural grade decline through expanded processing capacity and improvements to the upgrading circuit[17]. FY23 production guidance
remains unchanged at 43.5kt. Separately, the OSMOC project is expected to support the extension of the mining contract by 15 years, to
2044, subject to certification and a payment of approximately US$44 million to the National Mining Agency.
Sales decreased by 24% in the September 2022 quarter which reflected lower product availability. Our ferronickel product typically attracts
a discount to the LME Nickel price index on a volume weighted M or M+1 basis, with this discount further widening in the September 2022
quarter. We expect elevated discounts to persist in the near-term due to additional global supply of class two nickel.
ILLAWARRA METALLURGICAL COAL (100% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Total coal production (kt) 1,888 1,595 (16%) 1,888 1,583 1,595 (16%) 1%
Total coal sales[18] (kt) 1,708 1,390 (19%) 1,708 1,886 1,390 (19%) (26%)
Metallurgical coal production (kt) 1,575 1,270 (19%) 1,575 1,380 1,270 (19%) (8%)
Metallurgical coal sales (kt) 1,490 1,193 (20%) 1,490 1,588 1,193 (20%) (25%)
Energy coal production (kt) 313 325 4% 313 203 325 4% 60%
Energy coal sales (kt) 218 197 (10%) 218 298 197 (10%) (34%)
Illawarra Metallurgical Coal saleable production increased by 1% (or 12kt) to 1,595kt in the September 2022 quarter. Higher output
from the Dendrobium mine during the September 2022 quarter was mostly offset by lower production at the Appin mine as difficult strata conditions resulted in an extended
longwall move. Separately, workforce disruptions ahead of the successful negotiation of the new Enterprise Agreement at Appin resulted
in reduced labour productivity during the September 2022 quarter. Following the end of the quarter, we finalised the new Enterprise
Agreement at Appin, with a term of four years to 2026.
While the complex has returned to optimised rates, we have reduced FY23 production guidance by 5% to 7.0Mt (metallurgical coal 6.0Mt
and energy coal 1.0Mt) due to the production impacts at Appin, during the September 2022 quarter. We do not currently expect a material
impact on our FY23 Operating unit cost guidance of US$116/t[16], with the benefit of a weaker Australian dollar expected to offset the
impact of lower volumes.
Coal sales decreased by 26% in the September 2022 quarter which reflected lower product availability for our coal blend.
Page 8 of 13
AUSTRALIA MANGANESE (60% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Manganese ore production (kwmt) 897 898 0% 897 844 898 0% 6%
Manganese ore sales (kwmt) 906 779 (14%) 906 860 779 (14%) (9%)
Australia Manganese saleable production increased by 6% (or 54kwmt) to 898kwmt in the September 2022 quarter as improved yields
supported higher primary concentrator output, while our low-cost PC02 circuit continued to operate above its design capacity, delivering
approximately 10% of production (Q4 FY22: 11%). FY23 production guidance remains unchanged at 3,400kwmt, subject to the impacts
from the wet season.
Sales decreased by 9% in the September 2022 quarter due to the timing of shipments.
SOUTH AFRICA MANGANESE (ORE 54.6% SHARE)
1Q23 1Q23
YTD YTD
South32 share YoY 1Q22 4Q22 1Q23 vs vs
FY22 FY23
1Q22 4Q22
Manganese ore production (kwmt) 608 562 (8%) 608 625 562 (8%) (10%)
Manganese ore sales (kwmt) 515 473 (8%) 515 581 473 (8%) (19%)
South Africa Manganese saleable production decreased by 10% (or 63kwmt), from record levels in the June 2022 quarter, to 562kwmt in
the September 2022 quarter. Despite the impact of reduced third-party rail and port availability,
with Transnet declaring force majeure following industrial action subsequent to the end of the quarter, production volumes are currently
tracking in-line with our FY23 production guidance of 2,000kwmt. While we continue to monitor and respond to the situation, we expect
third-party rail capacity to progressively improve over the December 2022 quarter after Transnet reached a new wage agreement with its
majority union on 17 October 2022.
Page 9 of 13
NOTES
1. Payable copper equivalent production (kt) was calculated by aggregating revenues from payable copper, molybdenum, gold and silver, and dividing the total Revenue by the
price of copper. FY22 realised prices for copper (US$3.50/lb), molybdenum (US$18.48/lb), gold (US$1,934/oz) and silver (US$23.5/oz) have been used for FY22, Q1 FY23 and
FY23e.
2. Expected Group payable copper equivalent production in FY23, compared to FY22, calculated by applying FY22 realised prices for all operations (except for Brazil Aluminium
which is based on FY22 average index prices for aluminium) to our FY23 production guidance and FY22 actual volumes, respectively.
3. Refer to market release “South32 unlocks up to US$200M in value from non-core royalty sale” dated 12 July 2022. Includes US$103M in cash payments, US$82M of Ecora
Resources PLC shares issued on completion and contingent payments of up to US$15M. The US$103M cash payment comprises US$48M paid on completion, and US$55M
payable in six equal quarterly instalments over the 18 months from completion. The contingent payment is triggered if the West Musgrave project achieves commercial
production, and throughput and commodity price-related conditions are met prior to an agreed expiry date.
4. Goal is defined as an ambition to seek an outcome for which there is no current pathway(s), but for which efforts will be pursued towards addressing that challenge, subject
to certain assumptions or conditions. Target is defined as an intended outcome in relation to which we have identified one or more pathways for delivery of that outcome,
subject to certain assumptions or conditions.
5. Net cash number is unaudited and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity.
6. Net distributions from our material equity accounted investments (manganese and Sierra Gorda) 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.
7. The corporate tax rates of the geographies where the Group operates include: Australia 30%, South Africa 27%, Colombia 35%, Mozambique 0%,
Brazil 34% and Chile 27%. The South African corporate tax rate reduced to 27% from 1 July 2022. The Mozambique operations are subject to a royalty on revenues instead of
income tax. Sierra Gorda is subject to a royalty related tax based on the amount of copper sold and the mining operating margin, the rate is between 5% and 14% for annual
sales over 50kt of refined copper.
8. Since inception, US$1.5B has been allocated to the on-market share buy-back (714M shares at an average price of A$2.96 per share)
and US$525M returned in the form of special dividends.
9. Refer to market release “Dendrobium Next Domain Update” dated 23 August 2022.
10. Peake Prospect Exploration Target: The information in this announcement that relates to the Exploration Target for Peake Prospect is extracted from “Hermosa Project
Update” published on 17 January 2022 and is available to view on www.south32.net. The information was prepared by a Competent Person in accordance with the
requirements of the JORC Code. South32 confirms that it is not aware of any new information or data that materially affects the information included in the original market
announcement. South32 confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original
market announcement.
11. Flux Exploration Target: The information in this announcement that relates to the Exploration Target for Flux is extracted from “South32 Strategy and Business Update”
published on 18 May 2021 and is available to view on www.south32.net. The information was prepared by a Competent Person in accordance with the requirements of the
JORC Code. South32 confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement.
South32 confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market
announcement.
12. Production guidance for Hillside Aluminium and Mozal Aluminium does not assume any load-shedding impact on production.
13. Refer to market release “South32 completes acquisition of additional shareholding in Mozal Aluminium” dated 31 May 2022. Historical production and sales figures have not
been restated for our increased ownership (presented on a 47.1% basis to 31 May 2022).
14. 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. FY22
realised prices for zinc (US$3,248/t), lead (US$2,046/t) and silver (US$21.0/oz) have been used for FY22, Q1 FY23 and FY23e.
15. The sales volume weighted average of the Platts Alumina Index (FOB Australia) on the basis of a one month lag to published pricing (Month minus one or “M-1”) was
US$344/t in the September 2022 quarter.
16. FY23 Operating unit cost guidance includes royalties (where appropriate) and the influence of exchange rates, and includes various assumptions for FY23, including: an
alumina price of US$364/t; an average blended coal price of US$265/t for Illawarra Metallurgical Coal; an AUD:USD exchange rate of 0.69; and a reference price for caustic
soda; which reflect forward markets as at June 2022 or our internal expectations.
17. The information in this report that relates to the production target is based on Proved (75%) and Probable (25%) Ore Reserves for Cerro Matoso. Mineral Resources and
Ore Reserve estimates for Cerro Matoso was declared as part of South32's Annual Resource and Reserve declaration in the Annual Report 2022 (www.south32.net) issued
on 9 September 2022 and prepared by I Espitia (MAusIMM) and N Monterroza (MAusIMM) in accordance with the requirements of the JORC Code. South32 confirms that it is not aware
of any new information or data that materially affects the information included in the original announcement. All material assumptions and technical parameters
underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. South32 confirms that the form and context in which the
Competent Person’s findings are presented have not been materially modified from the original market announcement. Payable nickel is calculated using long-term consensus
metal prices and relative metallurgical recoveries.
18. Illawarra Metallurgical Coal sales are adjusted for moisture and will not reconcile directly to Illawarra Metallurgical Coal production.
The following abbreviations have been used throughout this report: US$ million (US$M); US$ billion (US$B); € (Euro); (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); th ousand ounces (koz); million ounces (Moz);
thousand wet metric tonnes (kwmt); million wet metric tonnes (Mwmt); million wet metric tonnes per annum (Mwmt pa); dry metric tonne unit (dmtu); 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.
Page 10 of 13
OPERATING PERFORMANCE
YTD YTD
South32 share 1Q22 2Q22 3Q22 4Q22 1Q23
FY22 FY23
Worsley Alumina (86% share)
Alumina hydrate production (kt) 997 957 997 997 972 1,014 957
Alumina production (kt) 1,006 920 1,006 973 982 1,030 920
Alumina sales (kt) 924 885 924 1,022 910 1,118 885
Brazil Alumina (36% share)
Alumina production (kt) 272 337 272 359 335 331 337
Alumina sales (kt) 247 313 247 379 306 367 313
Brazil Aluminium (40% share)
Aluminium production (kt) – 8.3 – – – 0.3 8.3
Aluminium sales (kt) – 3.3 – – – – 3.3
Hillside Aluminium (100% share)
Aluminium production (kt) 180 179 180 178 177 179 179
Aluminium sales (kt) 160 162 160 176 179 198 162
Mozal Aluminium (63.7%[13] share)
Aluminium production (kt) 68 92 68 68 66 76 92
Aluminium sales (kt) 55 87 55 67 66 88 87
Sierra Gorda (45% share)
Ore mined (Mt) – 8.8 – – 4.7 9.0 8.8
Ore processed (Mt) – 5.4 – – 2.3 5.2 5.4
Copper ore grade processed (%, Cu) – 0.45 – – 0.45 0.40 0.45
Payable copper equivalent production[1] (kt) – 22.6 – – 10.3 20.3 22.6
Payable copper production (kt) – 19.0 – – 8.4 16.9 19.0
Payable copper sales (kt) – 19.2 – – 11.1 16.6 19.2
Payable molybdenum production (kt) – 0.2 – – 0.2 0.2 0.2
Payable molybdenum sales (kt) – 0.3 – – 0.1 0.5 0.3
Payable gold production (koz) – 7.8 – – 2.3 7.3 7.8
Payable gold sales (koz) – 7.7 – – 3.0 6.9 7.7
Payable silver production (koz) – 180 – – 85 168 180
Payable silver sales (koz) – 179 – – 111 171 179
Page 11 of 13
YTD YTD
South32 share 1Q22 2Q22 3Q22 4Q22 1Q23
FY22 FY23
Cannington (100%)
Ore mined (kwmt) 750 639 750 725 637 641 639
Ore processed (kdmt) 687 518 687 698 681 552 518
Silver ore grade processed (g/t, Ag) 185 179 185 169 188 177 179
Lead ore grade processed (%, Pb) 5.5 5.6 5.5 4.9 5.9 5.5 5.6
Zinc ore grade processed (%, Zn) 3.2 3.7 3.2 3.6 3.4 3.8 3.7
Payable zinc equivalent production14 (kt) 58.1 46.1 58.1 55.9 61.3 48.9 46.1
Payable silver production (koz) 3,493 2,568 3,493 3,217 3,568 2,668 2,568
Payable silver sales (koz) 2,718 1,704 2,718 4,000 2,818 3,362 1,704
Payable lead production (kt) 31.9 24.6 31.9 28.3 34.6 25.8 24.6
Payable lead sales (kt) 25.3 18.7 25.3 38.0 27.9 31.0 18.7
Payable zinc production (kt) 15.4 14.0 15.4 17.3 16.4 15.4 14.0
Payable zinc sales (kt) 14.3 14.9 14.3 18.5 17.3 16.1 14.9
Cerro Matoso (99.9% share)
Ore mined (kwmt) 1,058 1,332 1,058 1,358 1,310 1,141 1,332
Ore processed (kdmt) 620 666 620 715 690 678 666
Ore grade processed (%, Ni) 1.76 1.63 1.76 1.71 1.73 1.71 1.63
Payable nickel production (kt) 9.6 9.6 9.6 10.7 10.6 10.8 9.6
Payable nickel sales (kt) 10.4 9.0 10.4 9.7 9.8 11.9 9.0
Illawarra Metallurgical Coal (100%)
Total coal production (kt) 1,888 1,595 1,888 1,257 1,781 1,583 1,595
Total coal sales[18] (kt) 1,708 1,390 1,708 1,547 1,465 1,886 1,390
Metallurgical coal production (kt) 1,575 1,270 1,575 1,192 1,565 1,380 1,270
Metallurgical coal sales (kt) 1,490 1,193 1,490 1,387 1,358 1,588 1,193
Energy coal production (kt) 313 325 313 65 216 203 325
Energy coal sales (kt) 218 197 218 160 107 298 197
Australia Manganese (60% share)
Manganese ore production (kwmt) 897 898 897 807 815 844 898
Manganese ore sales (kwmt) 906 779 906 831 775 860 779
Ore grade sold (%, Mn) 44.2 44.3 44.2 44.2 44.1 44.2 44.3
South Africa Manganese (54.6% share)
Manganese ore production (kwmt) 608 562 608 445 391 625 562
Manganese ore sales (kwmt) 515 473 515 579 495 581 473
Ore grade sold (%, Mn) 40.3 38.5 40.3 38.7 40.5 39.4 38.5
Page 12 of 13
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 connection with COVID-19.
FURTHER INFORMATION
INVESTOR RELATIONS MEDIA RELATIONS
Ben Baker Jamie Macdonald Miles Godfrey
M +61 403 763 086 M +61 408 925 140 M +61 415 325 906
E Ben.Baker@south32.net E Jamie.Macdonald@south32.net E Miles.Godrey@south32.net
Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
24 October 2022
Date: 24-10-2022 08:15:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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