South32 reports production record at Hillside Aluminium

South32 Limited has achieved record production at Brazil   Alumina, Hillside Aluminium and Australia Manganese ore in FY20. South32 is a globally diversified mining and metals company producing bauxite, alumina, aluminium, energy and metallurgical coal, manganese, nickel, silver, lead and zinc in Southern Africa, Australia and South America.              

Worsley Alumina saleable production increased by 2% (or 91kt) to 3,886kt in FY20, as the refinery finished the year on a strong note with an increase in calciner availability underpinning a 9% increase in production during the June 2020 quarter.

The refinery continues to benefit from improvement initiatives that are expected to support a sustainable increase in production to nameplate capacity of 4.6Mt (100% basis).

Sales increased by 20% during the June 2020 quarter as a result of higher production and a slipped shipment from the prior quarter.

BrazilAlumina saleable production increased by 10% (or 128kt) to a record 1,383kt in FY20 as the refinery achieved improved performance in steam generation, enabling the benefits of the De-bottlenecking Phase One project to be realised.

South Africa’s Hillside Aluminium saleable production increased by 3kt to a record 718kt in FY20 as the smelter continued to test its maximum technical capacity, despite the impact to production from increased load-shedding.

The smelter sources alumina from our Worsley Alumina refinery with prices linked to the PAX on an M-1 basis, while its power is sourced from Eskom under separate contracts for its three potlines.

South32 has been engaging with Eskom on a new pricing arrangement that would cover power supplied to the smelter, agreeing an interim arrangement ahead of a new 10 year pricing agreement being considered for approval by the National Energy Regulator of South Africa (NERSA).

The interim arrangement and the new long term agreement are important milestones to secure the future of the smelter beyond CY20, with the tariff being South African Rand based with a rate of escalation linked to the South Africa Producer Price Index (PPI).

Mozal Aluminium saleable production increased by 1kt to 268kt in FY20 as the smelter continued to test its maximum technical capacity, despite the impact to production from increased load-shedding. In order to further improve the smelter’s cost competitiveness we continue to execute the AP3XLE energy efficiency project during FY20. The project is expected to deliver a circa 5% (or 10kt pa) increase in annual production by FY24 with no associated increase in power consumption.

South Africa Energy Coal saleable production decreased by 9% (or 2.3Mt) to 22.7Mt in FY20 as contractors were demobilised in the December 2019 half year to maximise margins, before COVID-19 restrictions impacted operations during the June 2020 quarter.

Export sales declined by 19% during the June 2020 quarter as a result of lower production volumes and the diversion of coal to domestic customers, as export shipments were affected by COVID-19 lockdown impacts to our logistics chain and end market demand.

Illawarra Metallurgical Coal saleable production increased by 5% (or 359kt) to 7.0Mt in FY20 as the Dendrobium and Appin longwalls continued to perform strongly across the year, with Dendrobium achieving record run of mine performance.

South Africa Manganese saleable ore production decreased by 14% (or 309kwmt) to 1,878kwmt in FY20 as we responded to weaker market conditions in the December 2019 half year, reducing the use of higher cost trucking and undertaking an extended maintenance shut at South32’s underground Wessels mine.

Further, both the open pit Mamatwan and underground Wessels mines were placed on temporary care and maintenance during the nationwide COVID-19 lockdown in the June 2020 quarter, subsequently returning to full capacity with lockdown restrictions lifted.

Manganese alloy saleable production decreased by 23% (or 16kt) to 53kt in FY20. After consideration of the future economic viability of Metalloys, South32 made the decision with its joint venture partner to place the smelter on temporary care and maintenance.

Australia Manganese saleable ore production increased by 4% (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 ore sales increased by 20% during the June 2020 quarter as we took advantage of favourable market conditions and a shipment slipped from the prior quarter.

Manganese alloy saleable production decreased by 29% (or 44kt) to 110kt in FY20 as one of the four furnaces at TEMCO remained offline.

Cerro Matoso payable nickel production decreased by 1% (or 0.5kt) to 40.6kt in FY20 as the operation achieved a higher rate of plant utilisation and throughput, partially offsetting planned lower ore feed grades.

While the rate of production has been unaffected by the Colombian national lockdown in response to COVID-19, South32 continue to monitor the impact of restrictions on the movement of people and equipment, which has resulted in the deferral of Cerro Matoso’s planned major furnace refurbishment.

This work has been rescheduled to the December 2020 half year (previously the June 2020 quarter) and consequently FY21 production guidance is now expected to be 33.5kt (previously 37.4kt).

Cannington payable zinc equivalent production increased by 9% (or 19.8kt) to 238.0kt in FY20 as planned higher zinc grades more than offset lower silver and lead grades, and the operation drew down run of mine stocks to a normalised level following the Queensland flood event in FY19.

The draw down and further improvement in underground mine performance supported the realisation of efficiencies in mill throughput, resulting in a 14% lift in ore processed during FY20.

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