Ozzies’ Mn production drops as furnace remains offline
South32 Australia’s manganese saleable ore production increased by four percent (or 121kwmt) to a record 3,470kwmt in FY20, with the operation returning to full production following the removal of temporary roster changes in response to COVID-19 restrictions during the June 2020 quarter. Manganese alloy saleable production decreased by 29 percent (or 44kt) to 110kt in FY20 as one of the four furnaces at TEMCO remained offline.
Australia Manganese consists of GEMCO in the Northern Territory and TEMCO in Tasmania. South32 owns 60 per cent of GEMCO and Anglo American Plc holds the remaining 40 per cent. TEMCO is wholly owned by GEMCO.
GEMCO is an open-cut strip mining operation, producing high-grade manganese ore and is located in close proximity to Asian export markets. Using mainly ore shipped from GEMCO, TEMCO produces high-carbon ferromanganese, silicomanganese and sinter, primarily using hydroelectric Australia power.
OPERATING COSTS
FOB manganese ore operating unit costs decreased by three per cent in FY20 to US$1.55/dmtu as equipment productivity and the optimisation of volumes from our low-cost PC02 circuit mitigated a further increase in strip ratio (FY20: 5.4, FY19: 4.5).
Manganese alloy operating unit costs decreased by four percent to US$905/t in FY20 as the operation benefitted from lower raw material input costs.
FINANCIAL PERFORMANCE
Underlying EBIT decreased by 49 per cent (or US$310 million) in FY20 to US$328 million as lower realised prices (-US$297 million), lower alloy sales volumes (-US$40 million) and one-off costs incurred to respond to temporary COVID-19 restrictions (-US$7 million) were partially offset by lower energy, coke and freight costs (+US$22 million).
South32’s average realised price for external sales of Australian ore was a seven per cent discount to the high-grade 44 per cent manganese lump ore index in FY20 as the company responded to market demand with an increased contribution of PC02 fines (FY20: 12 per cent, FY19: 10 per cent) and other secondary products.
CAPITAL EXPENDITURE
Sustaining capital expenditure increased by US$2 million in FY20 to US$67 million as South32 continued to invest in additional tailings storage capacity and complete site infrastructure upgrades at GEMCO.
