South32 lifts coal, alumina production

South32 has delivered modest lifts in first-quarter alumina and coal production, and says it’s progressing well with plans to strip further costs out of its business as the resources sector continues to grapple with downbeat operating conditions.

The mining group (S32), which was spun off from BHP Billiton this year, produced 1.364 million tonnes of alumina, a 10 per cent increase on the previous corresponding period.

Aluminium production fell 7 per cent, year-on-year, to 244,000 tonnes. Energy coal production came to 8.698 million tonnes, a 2 per cent increase on the 8.523 million tonnes produced in the September quarter a year earlier. Metallurgical coal production rose 13 per cent year-on-year to 2.079 million tonnes, while lead and zinc production was largely flat.

The miner said production guidance remained unchanged for all of its all upstream operations, with the exception of South Africa Manganese which is under review. The review was announced in August and is expected to be completed by the end of December.

Chief executive Graham Kerr said South32 was making “excellent progress” as its seeks to optimise its operations, reduce costs and sustainably de-capitalise the business.

“We continue to take decisive action to maximise financial performance, rather than volume.

“The actions we have initiated at South Africa Manganese and South Africa Aluminium reflect this philosophy and will further strengthen the cash generating capacity of the group.”

Mr Kerr said South32’s high-quality and low-cost assets, motivated workforce and strong balance sheet remain a key point of differentiation. The group’s net debt declined by $US206 million in the first quarter to $US196m.

South32 is targeting a reduction in controllable costs by at least $US350m by the end of fiscal 2018 and expects to deliver a 25 per cent reduction in group and unallocated costs in fiscal 2016.