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The share price of South32 Limited (ASX: S32) has been high by around 6% this morning, trading at AU$3.370 (Mon 22 Apr, 12:02 PM AEST). The uptick in share price was spurred by the release of its quarterly report (March 2024). South32's performance for the three (and nine) months ended on 31 March 2023 has mostly met expectations.
As per the update, aluminum production saw a 1% increase year-to-date, driven by record production at Hillside Aluminium and continued progress towards full capacity at Brazil Aluminium. However, alumina production experienced a 1% decrease due to planned maintenance at Worsley Alumina. Despite this, Brazil Alumina remains on track to meet production targets, highlighted the company update.
Despite facing difficulties due to heavy rainfall in the aftermath of Tropical Cyclone Kirrily, the company experienced a notable 15% year-to-date increase in production at Cannington, payable zinc equivalent. The surge in production was attributed to higher metal grades. Conversely, Sierra Gorda's payable copper equivalent production dipped by 13% due to lower copper grades and molybdenum recoveries.
At Cerro Matoso, payable nickel production saw a 5% decrease year-to-date but spiked by 8% in the quarter, owing to planned increases in nickel grades. Meanwhile, Illawarra Metallurgical Coal recorded a remarkable 60% surge in saleable coal production in the quarter, propelled by enhanced longwall performance.
Due to Tropical Cyclone Megan, operations at Australia Manganese were provisionally halted in March. However, recovery efforts underway to resume operations and ore exports safely. Conversely, South Africa Manganese celebrated record production, boasting an 8% increase year-to-date.
Despite these fluctuations, South32's CEO, Graham Kerr, emphasised the company's achievement of significant milestones during the quarter. Notably, he highlighted the approval for developing the Taylor zinc-lead-silver deposit at the Hermosa project. Projections anticipate that the project will generate appealing profits spanning multiple decades and enhance overall value.
Furthermore, the company underscored the decision to sell Illawarra Metallurgical Coal for up to US$1.65 billion as a strategic move. The strategy is to streamline the portfolio, unlock capital, and invest in high-quality base metals projects.
Except for Australia Manganese, the company's FY24 production and operating unit cost guidance remains unchanged, positioning it favourably to leverage improving market conditions for key commodities, added Kerr.
