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South32's 'value over volume' mantra sees lower output across most commodities in FY'16

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South32's 'value over volume' mantra sees lower output across most commodities in FY'16

Reporting its first full financial year of operation, may have met or beatenits guidance for the majorityof the company's operations, but production was also down across most commodities.

The most noticeable decline was in the production of manganesealloy, which fell by 46% to 224,000 tonnes for the 2016 financial year from 413,000tonnes in the prior year.

South32 said July 21 that the lower output was largely due topower shortages in Tasmania, Australia, that led to the suspension of two of fourfurnaces and the suspension of three of the four high-carbon ferromanganese furnacesat Metalloys in May 2015.

Manganese ore production slipped 8% year over year to 4.8 milliontonnes, payable nickel output fell 9% to 36,800 tonnes, energy coal production shifteddown 8% to 33.0 million tonnes and metallurgical coal production tumbled 5% to 7.1million tonnes.

Full-year payable silver and lead output both slumped 5% to 21.4million ounces and 173,200 tonnes, respectively, compared to the 2015 financialyear, while aluminum production fell 4% to 963,000 tonnes.

The exceptions to the decreases were alumina and payable zincproduction, which rose 3% to 5.3 million tonnes and 9% to 79,000 tonnes, respectively.

On a quarterly basis, the most notable changes were in metallurgicalcoal production, which climbed 29% during the last quarter of the financial yearto 2.1 million tonnes compared to a year earlier, and payable silver production,which shifted up 12% to 5.0 million ounces.

South32 said a significant increase in longwall utilization andcutting rates at the Illawarrametallurgical coal operation supported record annualized production of 10.1 milliontonnes in the June quarter.

CEO Graham Kerr said South32 prioritized "value over volume"in its first full year of operation and took decisive action to restructure itsoperations, reduce controllable costs and improve efficiencies.  

According to South32, it is on track to meet its unit cost guidancefor the 2017 financial year with the completion of the restructuring of the Worsley alumina, Illawarra metallurgical coal, Australianmanganese, South African manganese and Cerro Matoso nickel operations.