South32 boosts aluminium & manganese production in South Africa despite market challenges

South32 increased its manganese and aluminium production in South Africa for the fiscal year ending June 2024 despite facing lower prices and higher truck-related costs. The company is actively exploring low-carbon energy solutions.

South32 anticipates a 12 per cent increase in unit operating costs for its South African manganese operations, driven by higher price-linked royalties and inland logistics expenses. Meanwhile, the company's Hillside operation in South Africa boosted its saleable aluminium production by 1,000 tonnes to 720,000 tonnes during the year under review, despite challenges from load shedding, particularly earlier in the year. South32 expects to maintain production levels at Hillside, the largest aluminium smelter in the Southern Hemisphere, throughout 2025 and 2026.

"I do believe there's an opportunity for us to get more volume on the actual rail, but until they sort out the congestion at Port Elizabeth, we're not banking that into our base numbers," said Graham Kerr, CEO of South32.

Operating unit costs for Hillside Aluminium decreased by 3 per cent to $2,115 per tonnes. This reduction reflects the smelter's continued strong performance and the advantage of lower prices for raw material inputs. South32 is exploring pathways to secure a lower-carbon electricity supply. Despite a decrease in net debt by $329 million to $762 million for the year ending in June, the company's revenues fell by 3 per cent to $5.4 billion. Overall underlying EBITDA dropped by 29 per cent to $1.8 billion, leading to a net post-tax loss of $203 million.

This loss was primarily due to impairment charges of $388 million for Worsley Alumina in Western Australia and $248 million for the Cerro Matoso operation in Colombia. However, these losses were partially offset by a $139 million impairment reversal related to the recently disposed Illawarra Coal business.

“The cost profile of the smelter will continue to be heavily influenced by the price of smelter raw material inputs, including alumina supplied by our Worsley Alumina refinery, and other external factors including the South African rand and inflation-linked energy costs,” said the company.