Triple-listed diversified spin-off South32 has reported a strong September quarter, with production increases achieved at its alumina, metallurgical coal, manganese, silver and base metals operations. 

“Our business is performing well and we are making excellent progress to optimise our operations, reduce costs and sustainably decapitalise the business,” said South32 CEO Graham Kerr. Investec, however, commented that South32 had, since its spin-off from BHP Billiton, underperformed its parent by 10% in the London market. Meanwhile, alumina production increased by 8% quarter-on-quarter to 1.3-million tonnes, while aluminium production remained steady at 244 000 t for the quarter under review. 

Production from South32’s Australian alumina and African aluminium operations increased during the quarter under review. Energy coal production declined by 2% to 8.6-million tonnes, while metallurgical coal production was up 5% on the previous quarter to just over two-million tonnes. 

The decline in production from the South African energy coal operations reflected the impact of planned maintenance and the sequencing of activity at the Wolvekrans Middelburg complex, while the Australian metallurgical coal operations indicated broad-based improvements in productivity, which more than offset the impact of industrial action at the Dendrobium mine. 

 

Manganese production for the first quarter of the 2016 financial year was up 15% on the previous quarter to 1.4-million tonnes, as the Australian manganese operations delivered record output, as plant availability and feed rates improved at Gemco. Manganese production from the South African operations also increased during the quarter, as the previous quarter was affected by industrial action and planned maintenance. 

Meanwhile, silver production for the quarter was up by 20%, to 6.2-million ounces, while lead production was up by 11% to 49 000 t and zinc production was up by 5% to 20 000 t. “We continue to take decisive action to maximise financial performance rather than volumes. The actions we have initiated at South African manganese and South Africa aluminium reflect this philosophy and will further strengthen the cash generating capacity of the group,” Kerr said on Thursday. A review of the South African manganese division would likely be completed before the end of the year, while the delay in the restart of three high-carbon ferromanganese furnaces at the Metalloys operation would continue indefinitely. A decision on the future of the fourth furnace would also be made at the conclusion of the review. As part of the review process, Samancor Manganese would also determine the optimal configuration and production profile of the South African manganese mines, to improve their competitiveness and sustainability through the commodity cycle.