South32 meets annual cost guidance across most operations, despite inflationary pressure
South32 shares rose on Monday, after bucking the industry trend and delivering annual operational costs within its guidance.
South32 says it expects annual production costs to sit within guidance at the majority of its global operations, bucking the 2022 mining sector trend of cost blowouts.
The global mining giant reports its financial results in US dollars, and said on Monday the strength of the greenback against currencies in the countries in which it operated had played a major part in a pleasant surprise for shareholders on the cost front.
Still, average production costs at South32’s Australian operations rose in the second half of the financial year – up by 7 per cent to $US256 a tonne at its Worsley Alumina operations in Western Australia, 4.9 per cent at its coking coal mines in the Illawarra, 4.7 per cent at its Cannington base metals mine in Queensland, and more than 10 per cent at its Northern Territory manganese operations.
But the company said annual average costs would fall within guidance for all of those operations, and for its South African manganese mines and its Cerro Matoso nickel mine in Colombia.
It said the only major cost blowouts would come from its Brazilian alumina and African aluminium operations, where the price of energy and raw materials were expected to push up operating costs by at least 15 per cent compared to the first half of the financial year.
South32 delivered its June quarter production report on Monday, saying its operations had performed well despite the impact of Covid-19 and global supply chain issues, with record production at its Worsley Alumina operations underpinning the company’s performance.
South32 said it achieved 99 per cent of its revised guidance on a copper-equivalent basis, despite a broader fall in production across most of its operations.
The company’s total alumina production fell 1 per cent to 5.29 million tonnes, but aluminium output was up slightly at 992,000 tonnes, from 982,000 tonnes in the previous financial year.
South32’s nickel production was up 22 per cent at 41,700 tonnes, but lead, silver and zinc output were all down.
The Worsley Alumina operations underpinned the performance of its alumina and aluminium assets, with output up 1 per cent to a record 3.99 million tonnes through the year.
Ord Minnett analysts said South32 had met cost and production guidance across most of its operations.
South32 closed up 3c at $3.56.