South32’s South African manganese and aluminium mines reported increased production in the quarter ending June 2024, despite facing logistical constraints and electricity supply issues. The company highlighted that its cost profile in South Africa is highly dependent on rand fluctuations, affecting raw material pricing and electricity supply dynamics.
Over the past three months, electricity supply improvements have been noted, but South African companies, especially bulk miners, continue to face logistical challenges. Nevertheless, South32’s South African manganese and aluminium mines responded to stronger manganese prices by achieving record annual production.
The Hillside Aluminium operation also achieved record production levels. However, South32’s stock on the Johannesburg Stock Exchange (JSE) fell by 12.26% to R36.50 per share in afternoon trade yesterday and was down 6.18% over the past 30 days.
South32’s saleable production of manganese from South Africa increased by 67,000 wet metric tons, or 3%, reaching a record high of 2.1 million tons for the year ending June 2024. This exceeded the company’s production guidance for the year by 9%, driven by improved mining performance and higher output of secondary products in response to stronger commodity prices. In the fourth quarter, manganese production rose by 9% to 534,000 tons. Aluminium production from the Hillside operation met annual guidance, rising by 1% from the previous year to 720,000 tons, despite the impact of load-shedding under Eskom.
South32 expects its 2025 guidance for Hillside Aluminium to remain at 720,000 tons. The cost profile of its South African aluminium smelters is heavily influenced by the rand and the price of raw materials and energy. For the full year ending June 2024, operating unit costs for Hillside Aluminium are expected to remain consistent with the half-year period at around $2,135 (R39,010) per ton.
Graham Kerr, CEO of South32, stated, “We delivered another quarter of improved operating performance, achieving higher volumes across most of our operations, and remained on track to achieve FY24 operating unit cost guidance. Our performance enabled us to capitalize on stronger commodity prices, lift sales volumes, and release working capital, boosting cash generation in the quarter.”
South32 anticipates completing the sale of Illawarra Metallurgical Coal in New South Wales, Australia, before September. This disposal is expected to strengthen the company’s balance sheet, simplify its business, reduce capital intensity, and unlock capital for investment in high-quality zinc and copper development projects.
In contrast, South32’s saleable manganese production in Australia decreased by 34% to 2.3 million wet metric tons for the year, following a temporary suspension of operations in March 2024 due to the impacts of Tropical Cyclone Megan.
Regarding the Worsley Alumina project, South32 has faced significant challenges after the Western Australian Environmental Protection Authority (WA EPA) recommended conditions for development. The company believes that some of these conditions exceed reasonable measures for managing environmental risks and could impact the project’s long-term viability. Consequently, South32 has provisioned an impairment expense of $389 million post-tax for Worsley Alumina in its 2024 financials. 
