South32 braces for lower commodity prices

The company resisted major impacts from the ongoing COVID-19 pandemic, and introduced cost savings across its operations.

It also registered record annual production results at three of its mines, including the Australia Manganese operations of which it holds a 60 per cent interest.

“…We delivered a strong operating result, with annual production records at Australia Manganese ore, Hillside Aluminium and Brazil Alumina,” South32 chief executive Graham Kerr said in an ASX release.

The Australia Manganese operations, which include the Groote Eylandt Mining Company operation (GEMCO) in the Gulf of Carpentaria, Queensland and Tasmanian Electro Metallurgical Company (TEMCO) operation in Tasmania saw a 4 per cent increase to its production rate in the 2020 financial year, achieving a record 3.47 million wet metric tonnes.

South32 attributed lower operating unit costs at Australia Manganese to its equipment productivity and volume optimisation from its low cost PC02 circuit preventing a rise in strip ratio.

A 2 per cent production increase was recorded at its Worsley Alumina operation in Western Australia to 3.9 million tonnes, with the company expecting lower operating unit costs in the 2021 financial year.

“We finished the year in a strong financial position, with lower costs and a balance sheet that provides flexibility. Against this backdrop we continue to invest in the exploration and growth options we have embedded in our portfolio to create shareholder value,” Kerr said.

The chief executive added that the company was expecting “further simplification of our group” during the 2021 financial year in which market and commodity price volatility are anticipated.

“Looking to next financial year we are taking further action as we continue to navigate a period of potentially extended market volatility and lower commodity prices,” Kerr said.

“We expect cost efficiencies and further simplification of our group, combined with higher volumes to result in lower operating unit costs across the majority of our operations.”