Wrap Text
Quarterly Report December 2023
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
December 2023
• FY24 Group copper equivalent production guidance reduced by 3%[1], reflecting revised guidance for
Brazil Alumina, Mozal Aluminium and molybdenum output from Sierra Gorda.
• H1 FY24 Operating unit costs expected to be in line or below FY24 guidance for the majority of our operations.
• We are well positioned to capture the benefit of improved market conditions through expected production growth
of 7%[2] in H2 FY24 and our ongoing focus on cost efficiencies.
• Achieved record half year aluminium production, as Hillside Aluminium maintained its strong performance and
Brazil Aluminium delivered an 8% increase in quarterly production.
• Cannington payable zinc equivalent production[3] increased by 13% in the December 2023 half year, as we mined
a higher-grade sequence of stopes during the quarter.
• Cerro Matoso payable nickel production improved by 20% in the quarter, following the completion
of planned maintenance and a temporary reduction in third-party gas supply in the prior quarter.
• Sierra Gorda payable copper equivalent[4] production decreased by 14% in the December 2023 half year, due to
lower planned copper grades, and a temporary outage of the molybdenum plant.
• Illawarra Metallurgical Coal production decreased by 39% in the December 2023 half year, as we completed
two planned longwall moves. FY24 guidance is unchanged with volumes remaining weighted to the second half.
• Manganese production decreased by 5% in the December 2023 half year, as lower yields impacted secondary production
at Australia Manganese, and South Africa Manganese completed planned maintenance.
• Alumina production was largely unchanged as Worsley Alumina completed planned calciner maintenance, while we
have lowered FY24 production guidance for Brazil Alumina by 7% due to third-party power outages and maintenance.
• FY24 production guidance for Mozal Aluminium lowered by 12%, as we reduced pots in operation to enable the
smelter's recovery plan to be safely executed and deliver a sustained improvement in process stability.
• We continued our investment in critical path infrastructure for the Hermosa project and remain on track to make
a final investment decision for the Taylor zinc-lead-silver deposit in the March 2024 quarter.
South32 Chief Executive Officer, Graham Kerr: "In the December 2023 quarter, our production results were mixed.
Highlights for the quarter included a 20 per cent increase in zinc and nickel and a 7 per cent increase in silver.
We also delivered record aluminium production for the half, as Hillside Aluminium maintained its strong performance and
Brazil Aluminium continued to ramp up. However, production from Brazil Alumina, Mozal Aluminium and molybdenum output from
Sierra Gorda was below plan, with flow on impacts to annual production guidance.
"With some of our commodities facing headwinds in the half, we continued to focus on delivering cost efficiencies and
expect first half Operating unit costs to be below or in line with guidance for the majority of our operations.
"As we enter the second half, strengthening market conditions for many of our commodities, our planned 7 per cent
production growth and ongoing cost management focus, position us well to capture higher margins.
"We continued to invest to increase our exposure to commodities critical to a low-carbon future. At our Hermosa project,
we progressed critical path infrastructure and remain on track to make a final investment decision for the Taylor
zinc-lead-silver deposit in the March 2024 quarter. Sierra Gorda also continued work on the fourth grinding line expansion
project, which has the potential to sustainably increase copper production."
Production summary
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 QoQ
Alumina production (kt) 2,613 2,574 (1%) 1,356 1,290 1,284 (0)%
Aluminium production (kt) 568 575 1% 289 288 287 (0%)
Payable copper production (kt) 37.9 31.6 (17%) 18.9 16.0 15.6 (3%)
Payable silver production (koz) 5,812 6,999 20% 3,064 3,375 3,624 7%
Payable lead production (kt) 52.4 58.8 12% 27.8 28.5 30.3 6%
Payable zinc production (kt) 30.4 29.0 (5%) 16.4 13.2 15.8 20%
Payable nickel production (kt) 20.4 18.3 (10%) 10.8 8.3 10.0 20%
Metallurgical coal production (kt) 2,753 1,787 (35%) 1,483 1,043 744 (29%)
Manganese ore production (kwmt) 2,937 2,790 (5%) 1,477 1,518 1,272 (16%)
Unless otherwise noted: percentage variance relates to performance during the half year ended December 2023 compared with the half year ended December 2022 (HoH), or
the December 2023 quarter compared with the September 2023 quarter (QoQ); production and sales volumes are reported on an attributable basis.
CORPORATE UPDATE
• Supporting our commitment to deliver improved safety performance, we continued to implement our multi-year
Safety Improvement Program. This program includes significant investment in safety leadership through our
'Lead Safely Every Day' training, which continued to be deployed across our frontline leadership during the quarter.
• We progressed a Group-wide review focused on delivering a reduction in expenditure in FY24 and FY25 through cost
efficiencies and capital prioritisation. We expect to provide further detail on this as part of our updated
Operating unit cost and capital expenditure guidance with our H1 FY24 financial results announcement.
• We expect to record a build in working capital of ~US$275M in H1 FY24. Trade receivables increased due to the
timing of sales, and our high value aluminium inventory remained temporarily elevated as port congestion at
Richards Bay impacted the timing of shipments from Hillside Aluminium. We expect to complete additional shipments
from Hillside Aluminium and drawdown our aluminium inventory to normalised levels during the March 2024 quarter.
• We received net distributions[5] of US$60M (South32 share) from our equity accounted investments (EAI) in H1 FY24
(US$42M from our manganese business and US$18M from Sierra Gorda), which reflected lower commodity prices
and investment in projects to improve productivity and grow future production volumes.
• We allocated US$375M to safe and reliable, and improvement and life extension, capital expenditure[6]
(excluding EAIs) in H1 FY24. This included our planned investment to support Illawarra Metallurgical Coal's transition
to a more efficient single longwall configuration at the Appin mine from FY25 and additional ventilation capacity to
enable mining in Appin's Area 7 until at least 2039[7].
• We returned US$145M in fully-franked ordinary dividends in respect of H2 FY23 during the December 2023 quarter.
• We also returned US$35M via our on-market share buy-back in H1 FY24, purchasing a further 16M shares at an
average price of A$3.37. To 31 December 2023, our US$2.4B capital management program was 96% complete with
US$98M remaining to be returned ahead of its extension or expiry on 1 March 2024[8].
• We made Group tax payments of US$96M (excluding EAIs) in H1 FY24 as cash tax normalised following one-off
portfolio related tax payments in the prior period.
• During the December 2023 quarter, we received an indemnity payment of US$48M from the vendors of our
Sierra Gorda acquisition, following Chilean Mining Tax reforms that were enacted in August 2023. This amount was
recognised as a receivable in our FY23 financial accounts.
• Our Underlying effective tax rate (ETR) largely reflects the corporate tax rates and royalty related taxes of the
jurisdictions in which we operate operate[9] and our geographical earnings mix, including our manganese and
Sierra Gorda EAIs on a proportional consolidated basis (including royalty related taxes for Australia Manganese[10] and
Sierra Gorda[11]). The impact of permanent differences can have a disproportionate effect on our Underlying ETR when
profit margins are compressed, or losses are incurred in specific jurisdictions. For this reason, an Underlying ETR of
approximately 60% to 65% is now expected for H1 FY24.
• We expect to report H1 FY24 Group Underlying net finance costs of ~US$120M, reflecting the Group's balance sheet
position during the period.
DEVELOPMENT AND EXPLORATION UPDATE
Hermosa project
• We invested US$188M of growth capital expenditure in H1 FY24 as we progressed construction of key infrastructure
for our Taylor zinc-lead-silver and Clark battery-grade manganese deposits.
• The second water treatment plant was commissioned and made operational and a further two dewatering wells were
completed. Dewatering is a critical path item that will enable access to both the Taylor and Clark deposits.
• We progressed the feasibility study and independent peer review for the Taylor deposit which remain on track to
support a final investment decision in the March 2024 quarter.
• The FAST-41[12] federal permitting process progressed to the next stage, with the US Forest Service issuing a
completeness determination for our mine plan of operations for both the Taylor and Clark deposits.
• We directed US$14M to capitalised exploration in H1 FY24, commencing a first time exploration drilling program
at the Flux prospect[13], a priority target in our highly prospective regional land package.
Greenfield exploration
• We invested US$19M in our greenfield exploration opportunities in H1 FY24 with multiple exploration programs
targeting base metals currently underway in Australia, USA, Canada, Argentina, and Ireland.
• We also invested US$8M to increase our interest in Aldebaran Resources Inc. (Aldebaran Resources) to 14.8%.
Aldebaran Resources has an earn-in to acquire an 80% interest in the Altar copper project in San Juan, Argentina.
Other exploration
• We invested US$34M (US$27M capitalised) in exploration programs at our existing operations and development
options in H1 FY24, including US$14M at the Hermosa project (noted above, all capitalised), and US$6M for our
Sierra Gorda EAI (all capitalised).
PRODUCTION SUMMARY
Production guidance
(South32 share) FY23 1H24 FY24e(a) Comments
Worsley Alumina
Alumina production (kt) 3,839 1,934 4,000 Guidance unchanged
Brazil Alumina (non-operated)
Guidance reduced by 7% (from
Alumina production (kt) 1,262 640 (down)1,300 1,400kt) due to third-party power
outages and maintenance
Brazil Aluminium (non-operated)
Aluminium production (kt) 69 50 100 Guidance unchanged
Hillside Aluminium[14]
Aluminium production (kt) 719 359 720 Guidance unchanged
Mozal Aluminium[14]
Guidance reduced by 12% (from
365kt) as we reduced pots in
Aluminium production (kt) 345 166 (down)320 operation to enable a sustained
improvement in process stability
Sierra Gorda (non-operated)
Payable copper equivalent production[4] (kt) 86.5 38.6(down)78.7
Payable copper production (kt) 70.7 31.6 67.0 Molybdenum guidance reduced
Payable molybdenum production (kt) 1.2 0.5 (down)0.8 to 0.8kt (from 2.5kt) due to an
Payable gold production (koz) 28.8 13.4 22.5 unplanned molybdenum plant
Payable silver production (koz) 630 295 550 outage and low recoveries
Cannington
Payable zinc equivalent production[3] (kt) 259.6 147.2 287.2
Payable silver production (koz) 11,183 6,704 12,500 Guidance unchanged
Payable lead production (kt) 101.7 58.8 115.0
Payable zinc production (kt) 59.2 29.0 62.0
Cerro Matoso
Guidance unchanged with higher
Payable nickel production (kt) 40.8 18.3 40.5 nickel grades expected H2 FY24
Illawarra Metallurgical Coal
Total coal production (kt) 6,520 2,045 5,000 Guidance unchanged with
Metallurgical coal production (kt) 5,497 1,787 4,400 volumes weighted to H2 FY24
Energy coal production (kt) 1,023 258 600 due to planned longwall moves
Australia Manganese Guidance unchanged, subject to
Manganese ore production (kwmt) 3,545 1,679 3,400 potential wet season impacts
South Africa Manganese
Guidance unchanged, subject to
Manganese ore production (kwmt) 2,108 1,111 2,000 demand and our continued use of
higher cost trucking
a. The denotation (e) refers to an estimate or forecast year.
MARKETING UPDATE
Commodity prices were broadly lower in the December 2023 half year reflecting a moderation in demand and sentiment.
The average realised prices achieved for our commodities are summarised below. Outstanding concentrate sales were
revalued at 31 December 2023 with the final price of these to be determined in the June 2024 half year.
1H24 1H24
Realised prices[15] 1H23 2H23 1H24 vs vs
1H23 2H23
Worsley Alumina
Alumina (US$/t) 354 360 344 (3%) (4%)
Brazil Alumina (non-operated)(a)
Alumina (US$/t) 364 374 362 (1%) (3%)
Brazil Aluminium (non-operated)(a)
Aluminium (US$/t) 2,423 2,464 2,275 (6%) (8%)
Hillside Aluminium
Aluminium (US$/t) 2,555 2,518 2,318 (9%) (8%)
Mozal Aluminium
Aluminium (US$/t) 2,723 2,573 2,377 (13%) (8%)
Sierra Gorda (non-operated)[16](a)
Payable copper (US$/lb) 3.41 3.63 3.56 4% (2%)
Payable molybdenum (US$/lb) 20.78 22.11 20.82 0% (6%)
Payable gold (US$/oz) 1,688 1,971 1,957 16% (1%)
Payable silver (US$/oz) 17.4 27.2 23.3 34% (14%)
Cannington[16]
Payable silver (US$/oz) 20.1 22.1 22.5 12% 2%
Payable lead (US$/t) 2,008 1,824 1,979 (1%) 8%
Payable zinc (US$/t) 2,436 1,895 2,085 (14%) 10%
Cerro Matoso[17]
Payable nickel (US$/lb) 9.05 6.54 6.00 (34%) (8%)
Illawarra Metallurgical Coal
Metallurgical coal (US$/t) 268 289 276 3% (4%)
Energy coal (US$/t) 164 122 101 (38%) (17%)
Australia Manganese[18]
Manganese ore (US$/dmtu, FOB) 4.57 4.62 3.79 (17%) (18%)
South Africa Manganese[18]
Manganese ore (US$/dmtu, FOB) 3.57 3.59 3.03 (15%) (16%)
a. While Brazil Alumina and Brazil Aluminium are non-operated, South32 owns the marketing rights for our share of production. While Sierra Gorda is
also non-operated, the Joint Venture is responsible for marketing our share of production.
OPERATING UNIT COST UPDATE
We expect to report H1 FY24 Operating unit costs in line or below current FY24 guidance for the majority of our
operations, with the benefit of cost efficiencies and lower raw material input prices. Looking forward, we remain focused
on driving operating performance and further efficiencies to mitigate cost pressures. Further, Operating unit costs in
H2 FY24 are expected to benefit from a planned 7% increase in Group production volumes[2].
The below commentary reflects our current expectations for H1 FY24 Operating unit costs. We will report H1 FY24
Operating unit costs and provide updated FY24 guidance with our H1 FY24 financial results announcement.
Operating unit cost(a)
Current Guidane H1 FY24 Operating unit costs commentary
FY24e(b)(c)
Worsley Alumina Expected to be ~10% below current FY24 guidance, due to lower
(US$/t) 290 caustic soda prices and labour costs.
Brazil Alumina (non-operated) Not Expected to be ~12.5% below H2 FY23 Operating unit costs (US$372/t),
provided due to higher volumes, and lower caustic soda and energy prices.
Brazil Aluminium (non-operated) Not Expected to be ~7.5% above H2 FY23 Operating unit costs (US$3,747/t),
provided due to lower sales volumes, ahead of further export sales in H2 FY24.
Hillside Aluminium The cost profile of our South African aluminium smelters is heavily
influenced by the South African rand, and the price of raw materials
and energy.
Not H1 FY24 Operating unit costs for Hillside Aluminium are expected to be
provided largely in line with H2 FY23 (US$2,092/t).
Mozal Aluminium H1 FY24 Operating unit costs for Mozal Aluminium are expected to be
~2.5% lower than H2 FY23 (US$2,433/t). Operating unit costs are
expected to remain elevanted in H2 FY24 due to higher pots out of service.
Sierra Gorda (non-operated) Expected to be ~17.5% above current FY24 guidance, due to higher
(US$/t)(d) 16.0 maintenance costs and a planned one-off workforce payment.
Cannington
(US$/t)(d) 155 Expected to be ~2.5% below current FY24 guidance.
Cerro Matoso Expected to be ~5% above current FY24 guidance, due to lower
(US$/lb) 5.30 volumes, more than offsetting lower price-linked royalties.
Illawarra Metallurgical Coal Expected to be ~20% above current FY24 guidance, due to the volume
(US$/t) 140 impact of planned longwall moves completed in H1 FY24. Annual
production volumes remain weighted to H2 FY24.
Australia Manganese (FOB)
(US$/dmtu) 2.15 Expected to be in line with current FY24 guidance.
South Africa Manganese (FOB)
(US$/dmtu) 2.60 Expected to be in line with current FY24 guidance.
a. Operating unit cost is Revenue less Underlying EBITDA, excluding third party sales, divided by sales volumes.
b. FY24e Operating unit cost guidance includes royalties (where appropriate) and commodity price and foreign exchange rate forward curves or our
internal expectations (refer to footnote [19]).
c. The denotation (e) refers to an estimate or forecast year.
d. US dollar per tonne of ore processed. Periodic movements in finished product inventory may impact Operating unit costs.
WORSLEY ALUMINA (86% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Alumina production (kt) 1,922 1,934 1% 1,002 972 962 (4%) (1%)
Alumina sales (kt) 1,861 1,898 2% 976 913 985 1% 8%
Worsley Alumina saleable production increased by 1% (or 12kt) to 1,934kt in the December 2023 half year.
FY24 production guidance remains unchanged at 4,000kt with the refinery expected to deliver at nameplate production
rates (4.6Mt, 100% basis) following planned calciner maintenance in the March 2024 quarter.
BRAZIL ALUMINA (36% SHARE, NON-OPERATED)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Alumina production (kt) 691 640 (7%) 354 318 322 (9%) 1%
Alumina sales (kt) 678 647 (5%) 365 272 375 3% 38%
Brazil Alumina saleable production decreased by 7% (or 51kt) to 640kt in the December 2023 half year. Following the
recovery from the prior period's port infrastructure outages, the refinery was impacted by third-party power outages
and unplanned maintenance. Due to these impacts and additional required maintenance, we have reduced
FY24 production guidance by 7% to 1,300kt and FY25 production guidance by 5% to 1,350kt.
Sales increased by 38% in the December 2023 quarter with a carry-over shipment from the prior quarter supporting a
drawdown in inventory.
BRAZIL ALUMINIUM (40% SHARE, NON-OPERATED)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Aluminium production (kt) 24 50 108% 15 24 26 73% 8%
Aluminium sales (kt) 19 40 111% 16 8 32 100% 300%
Brazil Aluminium saleable production increased by 26kt to 50kt in the December 2023 half year as the smelter continued
to ramp up all three potlines. FY24 production guidance remains unchanged at 100kt.
Sales increased by 24kt to 32kt in the December 2023 quarter as we completed our first export shipment of low-carbon
aluminium from the smelter, supporting a significant drawdown in inventory at the end of the period.
HILLSIDE ALUMINIUM (100% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Aluminium production (kt) 362 359 (1%) 183 180 179 (2%) (1%)
Aluminium sales (kt) 337 327 (3%) 175 170 157 (10%) (8%)
Hillside Aluminium saleable production decreased by 1% (or 3kt) to 359kt in the December 2023 half year as the smelter
continued to test its maximum technical capacity, despite the impact of elevated load-shedding. FY24 production
guidance remains unchanged at 720kt[14].
Sales decreased by 8% in the December 2023 quarter as three shipments totalling approximately 40kt were delayed to
January 2024 due to port congestion at Richards Bay. We expect to drawdown inventory to normalised levels during the
March 2024 quarter.
MOZAL ALUMINIUM (63.7% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Aluminium production (kt) 182 166 (9%) 90 84 82 (9%) (2%)
Aluminium sales (kt) 177 167 (6%) 90 77 90 0% 17%
Mozal Aluminium saleable production decreased by 9% (or 16kt) to 166kt in the December 2023 half year, as the smelter
continued to implement its recovery plan following the fatal safety incident in the prior period, while managing the
impact of elevated load-shedding.
The smelter progressed upgrades to the girder infrastructure during the December 2023 quarter, which resulted in an
unplanned reduction in crane availability. We took the decision to reduce the number of pots in operation to enable the
recovery plan to be safely executed and complete work designed to deliver a sustained improvement in process
stability. As a result, approximately 73 pots (~13% of the total) were out of operation at the end of quarter, with these
pots expected to be progressively returned to operation during the 2024 calendar year. FY24 production guidance has
been reduced by 12% to 320kt[14] to reflect the lower number of pots in operation. FY25 production guidance is currently
unchanged at 372kt[14].
During the December 2023 quarter, approximately 60% of production was below specification material, which attracts
product discounts compared to our other LME-linked aluminium sales. Metal quality is expected to progressively
improve to LME-grade quality during the June 2024 half year.
SIERRA GORDA (45% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Payable copper equivalent production[4] (kt) 44.8 38.6 (14%) 22.3 20.3 18.3 (18%) (10%)
Payable copper production (kt) 37.9 31.6 (17%) 18.9 16.0 15.6 (17%) (3%)
Payable copper sales (kt) 38.4 32.5 (15%) 19.2 15.3 17.2 (10%) 12%
Sierra Gorda payable copper production decreased by 17% (or 6.3kt) to 31.6kt in the December 2023 half year as higher
throughput delivered by the plant de-bottlenecking project, was more than offset by lower planned grades.
Payable molybdenum production decreased by 0.3kt to 0.1kt in the December 2023 quarter due to an unplanned outage
of the molybdenum plant and low recoveries. The operation has commenced work to restore production, with higher
output expected in the June 2024 quarter. As a result, FY24 molybdenum production guidance has been reduced to
0.8kt (from 2.5kt).
Sierra Gorda progressed the feasibility study for the fourth grinding line expansion during the December 2023 quarter.
The feasibility study remains on track to support a planned final investment decision in the June 2024 half year.
CANNINGTON (100% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Payable zinc equivalent production[3] (kt) 130.8 147.2 13% 69.7 70.3 76.9 10% 9%
Payable silver production (koz) 5,474 6,704 22% 2,906 3,230 3,474 20% 8%
Payable silver sales (koz) 5,083 6,529 28% 3,379 2,873 3,656 8% 27%
Payable lead production (kt) 52.4 58.8 12% 27.8 28.5 30.3 9% 6%
Payable lead sales (kt) 51.3 56.6 10% 32.6 25.6 31.0 (5%) 21%
Payable zinc production (kt) 30.4 29.0 (5%) 16.4 13.2 15.8 (4%) 20%
Payable zinc sales (kt) 27.5 28.3 3% 12.6 13.9 14.4 14% 4%
Cannington payable zinc equivalent production[3] increased by 13% (or 16.4kt) to 147.2kt in the December 2023 half year
as the mine plan moved through a sequence of higher-grade stopes in the quarter. FY24 production guidance remains
unchanged at 287.2kt payable zinc equivalent production (silver 12,500koz, lead 115.0kt and zinc 62.0kt).
CERRO MATOSO (99.9% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Payable nickel production (kt) 20.4 18.3 (10%) 10.8 8.3 10.0 (7%) 20%
Payable nickel sales (kt) 19.8 18.0 (9%) 10.8 8.5 9.5 (12%) 12%
Cerro Matoso payable nickel production decreased by 10% (or 2.1kt) to 18.3kt in the December 2023 half year.
Production improved by 20% (or 1.7kt) in the December 2023 quarter following the completion of planned maintenance
and a temporary reduction in third-party gas supply in the prior quarter. FY24 production guidance remains unchanged
at 40.5kt, with higher nickel grades expected in the June 2024 half year.
Price realisations for our ferronickel product reflected a discount of ~29% to the LME Nickel Index19, as structural changes in the nickel market
continued to place pressure on both nickel prices and discounts for our ferronickel product. Along with our Group-wide cost review, we have commenced
a strategic review of Cerro Matoso to evaluate options to enhance the operation's competitive position.
ILLAWARRA METALLURGICAL COAL (100% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Total coal production (kt) 3,331 2,045 (39%) 1,736 1,168 877 (49%) (25%)
Total coal sales[21] (kt) 3,185 2,096 (34%) 1,795 1,196 900 (50%) (25%)
Metallurgical coal production (kt) 2,753 1,787 (35%) 1,483 1,043 744 (50%) (29%)
Metallurgical coal sales (kt) 2,678 1,759 (34%) 1,485 996 763 (49%) (23%)
Energy coal production (kt) 578 258 (55%) 253 125 133 (47%) 6%
Energy coal sales (kt) 507 337 (34%) 310 200 137 (56%) (32%)
Illawarra Metallurgical Coal saleable production decreased by 39% (or 1,286kt) to 2,045kt in the December 2023 half year
as the operation completed two planned longwall moves, including a planned extended outage at the Dendrobium mine.
A new four year industrial agreement covering deputies at the Appin mine was finalised in the December 2023 quarter.
FY24 production guidance remains unchanged at 5.0Mt with volumes remaining weighted to the June 2024 half year,
reflecting the shorter duration of the two remaining longwall moves to be completed during the June 2024 quarter.
AUSTRALIA MANGANESE (60% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Manganese ore production (kwmt) 1,844 1,679 (9%) 946 890 789 (17%) (11%)
Manganese ore sales (kwmt) 1,652 1,864 13% 873 940 924 6% (2%)
Australia Manganese saleable production decreased by 9% (or 165kwmt) to 1,679kwmt in the December 2023 half year,
as PC02 output declined due to lower yields, contributing 7% of total production (H1 FY23: 10%).
FY24 production guidance remains unchanged at 3,400kwmt with the operation expected to continue to achieve
strong primary output and return the PC02 circuit to nameplate production rates during the June 2024 quarter.
Sales increased by 13% in the December 2023 half year as improved road haulage capacity and alternative shipping
solutions supported a planned drawdown in inventory. Our average realised price for manganese ore sales was a
discount of approximately 5% to the high grade 44% manganese lump ore index[22] on a M-1 basis (FY23: 6% discount),
reflecting lower planned ore grades, as well as price realisations for our PC02 product.
SOUTH AFRICA MANGANESE (ORE 54.6% SHARE)
2Q24 2Q24
South32 share 1H23 1H24 HoH 2Q23 1Q24 2Q24 vs vs
2Q23 1Q24
Manganese ore production (kwmt) 1,093 1,111 2% 531 628 483 (9%) (23%)
Manganese ore sales (kwmt) 1,032 1,082 5% 559 518 564 1% 9%
South Africa Manganese saleable production increased by 2% (or 18kwmt) to 1,111kwmt in the December 2023 half year,
while production decreased by 23% (or 145kwmt) in the December 2023 quarter as we completed a planned
maintenance shut at our Mamatwan mine. FY24 production guidance remains unchanged at 2,000kwmt.
Sales increased by 9% in the December 2023 quarter with a carry-over shipment from the prior quarter. Our realised
price for manganese ore sales was a premium of approximately 5% to the medium grade 37% manganese lump ore
index[23] on a M-1 basis (FY23: 6% premium) as we continued to optimise our sales mix.
NOTES
1. Group payable copper equivalent production based on revised FY24 production guidance, calculated by applying FY23 realised prices for all operations.
2. Group payable copper equivalent production in H2 FY24e, compared to H1 FY24, calculated by applying FY23 realised prices for all operations.
3. 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. FY23
realised prices for zinc (US$2,151/t), lead (US$1,919/t) and silver (US$21.1/oz) have been used for FY23, H1 FY24 and FY24e.
4. Payable copper equivalent production (kt) was calculated by aggregating revenues from copper, molybdenum, gold and silver, and dividing the total Revenue by the price of
copper. FY23 realised prices for copper (US$3.51/lb), molybdenum (US$21.28/lb), gold (US$1,821/oz) and silver (US$21.9/oz) have been used for FY23, H1 FY24 and FY24e.
5. Net distributions from our material equity accounted investments (EAI) (manganese and Sierra Gorda) includes dividends and net repayments/drawdowns of shareholder
loans, which are unaudited and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity.
6. Group safe and reliable capital expenditure and improvement and life extension capital expenditure (excluding EAIs). FY24 guidance is US$690M.
7. The information in this announcement that relates to the Production Target for Appin (up to 2039) of Illawarra Metallurgical Coal is based on
21% Proved and 79% Probable Coal Reserves from Bulli (Appin). Production Target cautionary statement – The Coal Reserves estimates underpinning the Production Target
have been prepared by Competent Persons and reported in accordance with the JORC Code. The Coal Resources and
Coal Reserves estimates are available to view in South32's FY23 Annual Report (http://www.south32.net) published on 8 September 2023. The stated Production Target is
based on South32's current expectations of future results or events and should not be solely relied upon by investors when making investment decisions. Further evaluation
work and appropriate studies are required to establish sufficient confidence that this target will be met.
8. Since inception, US$1.7B has been allocated to the on-market share buy-back (795M shares at an average price of A$3.05 per share)
and US$525M returned in the form of special dividends.
9. 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 Mozambique operations are subject to a royalty on revenues instead of income tax.
10. Australia Manganese is subject to a royalty related tax equal to 20% of adjusted EBIT which is included in Underlying tax expense.
11. 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. This royalty is included in Underlying tax expense.
12. Refer to market release "Hermosa Project Update" dated 8 May 2023. In May 2023, our Hermosa project was confirmed by the US Federal Permitting Improvement Steering
Council, an independent federal agency, as the first mining project added to the FAST-41 process.
13. Flux Exploration Target: The information in this announcement that relates to the Exploration Target for Flux is extracted from the announcement entitled (South32 Strategy
and Business Update) published on 18 May 2021 and is available to view on www.south32.net. The information was prepared by D Bertuch, 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 changed
from the original market announcement.
14. Production guidance for Hillside Aluminium and Mozal Aluminium does not assume any load-shedding impact on production.
15. 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.
16. Realised prices for Sierra Gorda and Cannington are net of treatment and refining charges.
17. Realised nickel sales prices are inclusive of by-products.
18. Realised ore prices are calculated as external sales Revenue less freight and marketing costs, divided by external sales volume.
19. FY24 Operating unit cost guidance includes royalties (where appropriate) and the influence of exchange rates, and includes various assumptions for FY24, including: an
alumina price of US$349/t; an average blended coal price of US$210/t for Illawarra Metallurgical Coal; a manganese ore price of US$4.85/dmtu for 44% manganese product;
a nickel price of US$8.90/lb; a silver price of US$24.5/troy oz; a lead price of US$2,131/t (gross of treatment and refining charges); a zinc price of US$2,446/t (gross of
treatment and refining charges); a copper price of US$3.87/lb (gross of treatment and refining charges); a molybdenum price of US$22.5/lb (gross of treatment and refining
charges); a gold price of US$1,984/troy oz; an AUD:USD exchange rate of 0.65; a USD:ZAR exchange rate of 18.98; a USD:COP exchange rate of 4,033; USD:CLP exchange rate
of 876; and a reference price for caustic soda; which reflect forward markets as at July 2023 or our internal expectations.
20. Our realised price for nickel sales during the December 2023 half year was US$6.00/lb, which represented a ~29% discount to the average
LME Nickel index price of US$8.49/lb.
21. Illawarra Metallurgical Coal sales are adjusted for moisture and will not reconcile directly to Illawarra Metallurgical Coal production.
22. The 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$4.40/dmtu in the December 2023 half year.
23. The sales volume weighted average of the Metal Bulletin 37% manganese lump ore index (FOB Port Elizabeth, South Africa) on the basis of
a M-1 basis was US$2.89/dmtu in the December 2023 half year.
The following abbreviations have been used throughout this report: US$ 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); 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.
OPERATING PERFORMANCE
South32 share 1H23 1H24 2 2Q23 3Q23 4Q23 1Q24 2Q24
Worsley Alumina (86% share)
Alumina hydrate production (kt) 1,955 1,934 998 921 957 973 961
Alumina production (kt) 1,922 1,934 1,002 905 1,012 972 962
Alumina sales (kt) 1,861 1,898 976 845 1,111 913 985
Brazil Alumina (36% share)
Alumina production (kt) 691 640 354 334 237 318 322
Alumina sales (kt) 678 647 365 317 242 272 375
Brazil Aluminium (40% share)
Aluminium production (kt) 24 50 15 22 24 24 26
Aluminium sales (kt) 19 40 16 23 26 8 32
Hillside Aluminium (100% share)
Aluminium production (kt) 362 359 183 177 180 180 179
Aluminium sales (kt) 337 327 175 197 185 170 157
Mozal Aluminium (63.7% share)
Aluminium production (kt) 182 166 90 81 82 84 82
Aluminium sales (kt) 177 167 90 43 114 77 90
Sierra Gorda (45% share)
Ore mined (Mt) 15.4 11.9 6.6 5.1 5.5 5.9 6.0
Ore processed (Mt) 10.7 10.9 5.3 5.1 5.4 5.5 5.4
Copper ore grade processed (%, Cu) 0.45 0.37 0.44 0.40 0.40 0.37 0.38
Payable copper equivalent production[4] (kt) 44.8 38.6 22.3 19.2 22.5 20.3 18.3
Payable copper production (kt) 37.9 31.6 18.9 15.5 17.3 16.0 15.6
Payable copper sales (kt) 38.4 32.5 19.2 15.4 18.0 15.3 17.2
Payable molybdenum production (kt) 0.4 0.5 0.2 0.3 0.5 0.4 0.1
Payable molybdenum sales (kt) 0.8 0.7 0.5 0.2 0.3 0.4 0.3
Payable gold production (koz) 15.3 13.4 7.5 6.2 7.3 6.3 7.1
Payable gold sales (koz) 15.4 13.8 7.7 6.4 7.3 6.3 7.5
Payable silver production (koz) 338 295 158 138 154 145 150
Payable silver sales (koz) 345 300 166 137 157 140 160
Cannington (100% share)
Ore mined (kwmt) 1,123 1,150 484 469 631 551 599
Ore processed (kdmt) 1,142 1,139 624 452 562 562 577
Silver ore grade processed (g/t, Ag) 175 211 171 191 210 206 216
Lead ore grade processed (%, Pb) 5.5 6.0 5.4 5.5 5.8 5.8 6.2
Zinc ore grade processed (%, Zn) 3.6 3.4 3.6 3.8 4.0 3.2 3.6
Payable zinc equivalent production[3] (kt) 130.8 147.2 69.7 54.3 74.5 70.3 76.9
Payable silver production (koz) 5,474 6,704 2,906 2,341 3,368 3,230 3,474
Payable silver sales (koz) 5,083 6,529 3,379 2,412 3,244 2,873 3,656
Payable lead production (kt) 52.4 58.8 27.8 21.0 28.3 28.5 30.3
Payable lead sales (kt) 51.3 56.6 32.6 21.7 26.0 25.6 31.0
Payable zinc production (kt) 30.4 29.0 16.4 12.6 16.2 13.2 15.8
Payable zinc sales (kt) 27.5 28.3 12.6 8.8 21.8 13.9 14.4
Cerro Matoso (99.9% share)
Ore mined (kwmt) 2,752 2,183 1,420 1,189 1,619 940 1,243
Ore processed (kdmt) 1,392 1,317 726 713 702 594 723
Ore grade processed (%, Ni) 1.64 1.55 1.65 1.58 1.62 1.57 1.53
Payable nickel production (kt) 20.4 18.3 10.8 10.2 10.2 8.3 10.0
Payable nickel sales (kt) 19.8 18.0 10.8 10.6 10.4 8.5 9.5
Illawarra Metallurgical Coal (100% share)
Total coal production (kt) 3,331 2,045 1,736 1,436 1,753 1,168 877
Total coal sales[21] (kt) 3,185 2,096 1,795 1,477 1,697 1,196 900
Metallurgical coal production (kt) 2,753 1,787 1,483 1,240 1,504 1,043 744
Metallurgical coal sales (kt) 2,678 1,759 1,485 1,195 1,529 996 763
Energy coal production (kt) 578 258 253 196 249 125 133
Energy coal sales (kt) 507 337 310 282 168 200 137
Australia Manganese (60% share)
Manganese ore production (kwmt) 1,844 1,679 946 832 869 890 789
Manganese ore sales (kwmt) 1,652 1,864 873 743 866 940 924
Ore grade sold (%, Mn) 44.2 42.6 44.1 44.0 43.1 42.9 42.2
South Africa Manganese (54.6% share)
Manganese ore production (kwmt) 1,093 1,111 531 429 586 628 483
Manganese ore sales (kwmt) 1,032 1,082 559 492 541 518 564
Ore grade sold (%, Mn) 39.2 38.7 39.8 38.8 39.4 39.0 38.4
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.
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.Godfrey@south32.net
Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
22 January 2024
Date: 22-01-2024 08:30:00
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