South32 Reports Strong Growth in Commodities in Quarterly Report

South32 Limited (ASX: S32), a global resources company, has released its quarterly report for June 2023, showcasing significant year-on-year growth in key commodities like aluminum, copper, and manganese. The report highlights several milestones achieved during the financial year 2023, reflecting the company's commitment to a low-carbon future. CEO Graham Kerr emphasizes the firm's disciplined capital allocation and growth strategies, ensuring a long-term supply of critical minerals.

Source: Kapitales Research

Production Highlights

• Group copper equivalent production increased by 9% in the June 2023 quarter, following stable operations after previous adverse weather impacts.
• Aluminum production rose by 14%, benefiting from record production at Hillside Aluminium and investments in low-carbon aluminum capacity at Mozal Aluminium and Brazil Aluminium.
• Base metals production grew by 17% due to the inclusion of the Sierra Gorda copper operation in the portfolio.
• Australia Manganese and South Africa Manganese achieved annual production records, delivering a 4% increase in manganese production.

Development and Exploration

South32 actively reshapes its portfolio, focusing on commodities critical to a low-carbon future. The company progressed its Taylor zinc-lead-silver and Clark battery-grade manganese development options at the Hermosa project. The Hermosa project, being the first in the US to be covered by the FAST-41 process, highlights its potential to strengthen domestic critical mineral supply. Greenfield exploration efforts are also playing a crucial role in expanding base metals options.

Financial Outlook

• South32 expects FY23 operating unit costs to be in-line with previous guidance.
• The company will record a non-cash impairment expense for the Taylor deposit due to delays from COVID-19, dewatering requirements, and inflationary market conditions.
• The FY23 Group Underlying effective tax rate is projected to be ~36%.

Sustainability Initiatives

South32 continues to implement a multi-year Safety Improvement Program and decarbonization efforts. The company's commitment to halve operational greenhouse gas emissions by 2035 remains on track. Notably, Worsley Alumina's coal-to-natural gas conversion is set to reduce operational GHG emissions by ~6% from FY22 levels.

Conclusion

The June 2023 Quarterly Report from South32 showcases robust growth in key commodities, strengthening its position in the low-carbon future landscape. The company's focus on disciplined capital allocation, sustainability, and exploration efforts positions it well to capitalize on the global energy transition and deliver further production growth in key commodities in the upcoming fiscal year.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com