By Rhiannon Hoyle
South32 on Monday said it expects full-year group output to be 3% lower than previously forecast, citing plant setbacks and power outages. The company also said it expects first-half operating costs in-line or below its annual estimates for most operations amid a companywide cost-cutting push.
The Australia-based miner said the reduction in annual copper-equivalent production guidance for the 12 months through June 2024 reflects revised guidance for the Brazil Alumina and Mozal Aluminium operations, and weaker-than-expected molybdenum output from the Sierra Gorda mine.
Its full-year production forecast for the Brazil Alumina business was cut by 7% due to third-party power disruptions and maintenance. It downgraded its molybdenum production estimate at the Sierra Gorda operation in Chile to roughly 800 tons, from 2,500 tons previously, citing an unplanned plant outage and low recoveries.
At Mozal Aluminium in Mozambique, its output estimate was cut by 12% as South32 pared production to work on improving process stability.
Yet the miner sounded a positive tone on the outlook for costs and market prices. “We are well positioned to capture the benefit of improved market conditions through expected production growth of 7% in H2 FY24 and our ongoing focus on cost efficiencies,” South32 said.
The company estimated first-half operating unit costs, for the six months ended Dec. 31, will be in line or below guidance for the majority of its operations. The miner is already benefiting from cost efficiencies and lower raw-material input prices, it said.
“As we enter the second half, strengthening market conditions for many of our commodities, our planned 7% production growth and ongoing cost management focus, position us well to capture higher margins,” said Chief Executive Graham Kerr.
South32 said it has advanced a review aimed at reducing spending this fiscal year and next, and expects to provide further details alongside its upcoming first-half earnings result.
Kerr said the company also remains focused on increasing its exposure to commodities it expects will be in high demand in the energy transition and that it expects to make a final investment decision for the Taylor zinc, lead and silver deposit in its third fiscal quarter.
Write to Rhiannon Hoyle at [email protected]
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