South32 Reduced Coal Inventories Amid High Prices – Commodity Commentary

South32 Ltd. on Monday reported mixed output from the commodities it produces for its fiscal fourth quarter as it grappled with disruptions from inclement weather and labor availability, but benefited from high prices. Here are some remarks taken from its quarterly operational report.


On alumina output:

“Worsley Alumina salable production increased 1% to a record 3,991 [million metric tons] in FY22, as the refinery delivered above nameplate capacity (4.6 million tonnes per annum, 100% basis), realizing the benefits of integrated improvement initiatives and exceeding forecast expectations. Sellable alumina production in Brazil decreased 7% to 1.297 million tonnes in FY22 as the refinery returned to nameplate capacity (3.86 million tonnes per annum, on a 100 %) from October 2021, following an incident in July 2021 that damaged one of the two bauxite vessels. unloaders in operation. Despite the impact of local weather-related disruptions during 2H FY22, the refinery achieved 100% of production forecast for FY22. »


On aluminum output:

“First [Brazil Aluminium] sales to domestic customers were completed in July 2022. With a slower-than-expected ramp-up coupled with the need to stabilize the electrolytic bath, we expect to provide updated FY23 production guidance with our earnings announcement of FY22, including a revised schedule to achieve nameplate production (179,000 tons per year, our 40% share). Hillside Aluminum’s salable production was largely unchanged at 714,000 tonnes in FY22 as the smelter met 99% of forecast, despite the impact of increased shedding. Mozal Aluminum’s salable production increased 5% to 278,000 tonnes in FY22.”


On the production of metallurgical coal:

“Illawarra’s marketable metallurgical coal production fell 15% to 6.509 million tonnes in FY22 as we made three longwall moves through Appin and Dendrobium during the year. We also discontinued our opportunistic low-margin coal washing material energy coal sales Production volumes declined 11% in the June 2022 quarter following adverse weather conditions and related labor restrictions to Covid-19 which also impacted the operation’s ability to maintain budgeted development rates.Despite these disruptions and the volatility seen in the marine coal markets, our geographically diverse customer base sustained growth of 29% increased sales volumes in the quarter as we reduced inventory, taking advantage of very high index prices.”


On manganese ore production:

“Salable manganese production in Australia fell 5% to 3.363 million wet tonnes in FY22 as weather disruptions and Covid-19 workplace restrictions prevented inventory rebuilding. before the rainy season and contributed to unfavorable ore processing characteristics that resulted in lower throughput in Despite these challenges in the first half of FY22, marketable production increased 4% in the quarter June 2022 and we exceeded our revised FY22 guidance by 5% as operations benefited from better weather South Africa Marketable manganese production was largely unchanged at 2.069 million wet tonnes in during FY22, as we produced higher volumes of higher grade materials from our Mamatwan mine during the year, which i more than offset the impact of scheduled maintenance in the March 2022 quarter. The operation helped end the year strong, with salable production increasing 60% to a record 625,000 wet tons in in the June 2022 quarter following the previous closed maintenance window, beating our FY22 guidance by 3%. »


On marketing:

“Innovative logistics solutions have been implemented across multiple operations to mitigate the impact of continued port congestion, tight freight markets and wider disruption to global supply chains, contributing to our strong sales performance in during the June 2022 quarter. This allowed the group to capitalize on strong markets lowering our inventory position by the end of the fiscal year, with the working capital benefit of this work to be realized in the first quarter of fiscal year 23.”


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com