South32 reports record production at Worsley and Brazil Alumina

South32 has reported record annual production at Worsley Alumina and Brazil Alumina with both refineries benefitting from high plant availability. The company has had a steady year-on-year production and a 21% lift in average realised prices at its aluminium smelters.

saleable production increased by 2% (or 77kt) to a record of 3,963kt in FY21, with the refinery finishing the year strongly, setting a quarterly record and operating above nameplate capacity of  4.6Mtpa (100% basis). The refinery’s record performance in FY21 was enabled by improvement initiatives in the calcination circuit and record alumina hydrate production. Notwithstanding the refinery’s strong operating performance, H2 FY21 Operating unit cost guidance of US$217/t was premised on planned higher consumables and raw material input costs. These impacts, combined with local labour cost pressure, are expected to further increase unit costs in FY22.

South32 realised a modest premium to the Platts Alumina Index on a volume weighted M-1 basis for alumina sales in FY21 due to the structure of legacy supply contracts with its Mozal Aluminium  smelter.

Contracts with the smelter are linked to the LME aluminium price and alumina indices on an M-1  basis, with caps and floors embedded within specific contracts that reset every calendar year. All other alumina sales were at market based prices.

Brazil Alumina saleable production increased by 1% (or 15kt) to a record 1,398kt in FY21 as the refinery continued to benefit from strong plant availability, realising the benefits of the De-bottlenecking Phase One project. Sales decreased by 13% in the June 2021 quarter due to the timing of shipments.

Subsequent to the end of the period, one of the two bauxite unloaders at the refinery sustained damage and is currently undergoing assessments for repair. As a result, the refinery is expected to reduce production rates in the September 2021 quarter, until repair work is complete and full bauxite loading capacity is restored. South32 expects to provide an update on the impact to its FY22 production guidance with its FY21 financial results.

Mozal Aluminium saleable production decreased by 1% (or 3kt) to 265kt in FY21, with the smelter performing strongly in the June 2021 quarter, despite the impact of increased load-shedding. This followed COVID-19 workforce restrictions that impacted operations during the prior quarter.

H2 FY21 Operating unit costs are expected to increase half-on-half (H1 FY21: US$1,585/t) for the smelter reflecting a stronger South African rand, and higher raw material input and freight costs.

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