20th Jul 2020 11:37
(Alliance News) - South32 Ltd on Monday reported mixed results in terms of annual production, and said it expects to book impairment charges on two of its smelters.
The company and its joint venture partner have decided to place Metalloys, its South African manganese alloy smelter, on temporary care and maintenance. Its review of TEMO, an Australia manganese alloy smelter, progressed in the year but this process has been delayed by Covid-19.
South32 explained that "in consideration of the future economic viability and continuing review" of the Metalloys and TEMCO smelters, it is forecasting pretax non-cash impairment charges amounting to USD109 million for financial 2020 along with one-off pretax restructuring costs for Metalloys of about USD7 million.
The miner's share of alumina production in its financial year ended June rose 4% to 5.3 million tonnes while alumina production was flat at 986,000 tonnes.
South32's share of energy coal production fell 8% to 24.1 million tonnes while metallurgical coal production was 4% higher at 5.5 million tonnes.
Manganese ore production share was down 3% at 5.3 million wet metric tonnes while manganese alloy production was 27% lower at 163,000 tonnes.
The company's share of payable nickel production fell 1% to 40,600 tonnes, payable silver production dropped 3% to 11.8 million ounces, payable lead production was up 9% at 110,400 tonnes and payable zinc production was 29% higher at 66,700 tonnes.
For the fourth quarter alone, South32's share of alumina production was 6% higher quarter-on-quarter at 1.4 million tonnes and aluminium production was flat at 245,000 tonnes. Energy coal production in the three months ended June was 3% lower at 5.7 million tonnes and metallurgical coal production was up 31% at 1.5 million tonnes.
South32's manganese ore production share for the fourth quarter was 1.2 million tonnes, down 6% quarter-on-quarter, with manganese allow production down 11% at 34,000 tonnes.
Chief Executive Graham Kerr said noted the company's "strong operating result" and noted that demand for the company's products has been "good" as sales exceeded production for the majority of South32's operations.
Kerr said: "With uncertainty remaining in global markets we continue to manage our financial position to ensure we retain the right balance of flexibility, efficiency and prudence. We acted to protect our strong balance sheet by adjusting our capital expenditure priorities, suspending our on-market share buy-back and extending the tenor of our USD1.45 billion revolving credit facility. Our strong balance sheet and simple capital management framework are designed to reward shareholders as our financial performance improves.
"Looking forward we remain focused on reducing controllable costs, managing counterparty and supply chain risk and optimising working capital to ensure the business remains resilient during a potentially extended period of volatility and lower commodity prices."
Shares in South32 were down 0.6% in London at 120.98 pence and were down 0.6% in Johannesburg at ZAR25.40.
By Anna Farley; [email protected]
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