South32 hits guidance

After being heavily sold-off in June, South32 (ASX: S32) opened 1.98% higher this morning after the diversified mining and metals company advised the market it had all but reached its revised annual output guidance target, despite the impact of covid on staffing and global supply chain issues.

Overall, South32 expects to report underlying depreciation and amortisation of US$790m for the 12-month period including US$110m at its manganese business.

The company also spent US$128m buying back 46m shares at an average price of $3.89.

Worsley & South Africa manganese

Despite production falls across the bulk of the operations, record annual production at its Worsley Alumina operations in WA and all-time high quarterly production at its South Africa manganese business saw the company deliver a result 1% shy of its revised guidance on a copper equivalent basis.

South32 also benefited from depreciating currency movements in its producer countries allowing it to report FY22 operating costs in line with previously updated guidance.

Highlights of the June quarter production report:

• Total alumina production down -1% to 5.29m tonnes.

• Aluminium output was up to 992,000 tonnes, from 982,000 tonnes the previous financial year.

• Nickel production was up 22% to 41,700 tonnes.

• Lead, silver and zinc were all down.

• Alumina and aluminium up 1% to a record 3.99m tonnes through the year

• South Africa Manganese delivered record output in the June 2022 quarter after increasing manganese production by 22%.

Pivot towards low carbon metals

Commenting on today’s announcement, CEO Graham Kerr notes the company had achieved further significant milestones as its reshaped its portfolio towards the metals critical for a low carbon future.

Kerr also noted that stable operating performance had allowed the company to capitalise on record conditions for a number of its commodities, with strong sales in the June 2022 quarter capturing the benefit of high prices.

“Our strong financial position and capital management framework, which is designed to reward our shareholders as our financial performance improves, supported further returns across the year via our on-market share buy-back, bringing total returns under our capital management program to $US1.9 billion since its inception,” he noted.

South32 share price over 12 months.