21st Jul 2016 07:19
LONDON (Alliance News) - South32 Ltd Thursday said it has laid a "strong foundation" in its first full year of operation since being spun-out from BHP Billiton PLC after production of most commodities met or exceeded guidance figures despite being considerably lower than the previous year.
South32 took on BHP's less profitable assets when it was spun-off in early 2015, with the majority of assets lying in the southern hemisphere, but has been battling the tough market conditions like the wider market and is prioritising "value over volume" as it looks to improve profitability.
The miner broadly delivered its production guidance for the financial year that ended last month, with some slightly beating targets whilst some narrowly missed them, but the miner only managed to report a year-on-year rise in production of two out of its ten commodities.
"We have built a strong foundation in our first full year of operation, despite the challenging market," said Chief Executive Graham Kerr. "We prioritised value over volume and took decisive action to restructure our operations, reduce controllable costs and improve efficiencies, whilst delivering two major projects on or ahead of schedule, and under budget."
Alumina production was on target during the year and was up 3% to 5.3 million tonnes from 5.1 million tonnes. Zinc was the only other commodity to experience a lift in production, rising 9.0% to 79,000 tonnes from 72,300 tonnes, but that was 1.0% below guidance.
Aluminium production was down 4.0% year-on-year but beat its target by 1.0%, totalling 963,000 tonnes from 1.0 million tonnes.
Thermal coal production was the furtherest away from its target, missing guidance by 3.0%, totalling 33.0 million tonnes compared to 35.7 million tonnes, an 8.0% decline. Metallurgical coal production was 2.0% higher than planned but down 5.0% compared to the previous year, amounting to 7.1 million tonnes compared to 7.5 million tonnes.
Manganese ore production was down 8.0% to 4.8 million tonnes from 5.2 million tonnes, beating guidance by 1.0%, and manganese alloy production was 46% lower at 224,000 tonnes from 413,000 tonnes.
Nickel production in the year was down 9% to 36,800 tonnes from 40,400 tonnes, silver production was down 5.0% to 21.4 million ounces from 22.6 million ounces and lead production fell 5.0% to 173,200 tonnes from 183,000 tonnes.
All three of those commodities missed their guidance for the year by 1.0%.
South32 shares were trading 1.0% higher at 103.75 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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