South32 lowers production guidance across five sites

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South32 lowers production guidance across five sites

7:58 CAT | 24 Apr 2023

FILE - For illustration purposes only. File photo: South32

South32 shares lost 10 per cent of their value after the miner downgraded full-year production guidance for five mine sites after suffering a double-digit collapse in silver, lead and zinc production in the March quarter.

It posted a decline in output for most of the commodities it produces including coal, alumina, and nickel.

South32 blamed the lower output on bad weather and other ‘temporary impacts’. Bloomberg

“While we remain on-track to meet FY23 production guidance at the majority of our operations, group production was below plan in the March 2023 quarter due to adverse weather and other temporary impacts,” the company told the ASX.

Glyn Lawcock, an analyst at broker Barrenjoey, said the March quarter was below expectations, “with every commodity missing consensus”.

Chief executive Graham Kerr blamed the lower output on bad weather and other “temporary impacts”. The stock dropped sharply in morning trade by 10 per cent to $3.98 from $4.47, before clawing back some losses in the afternoon. At 3.30pm, the shares were trading at $4.12, down 7.3 per cent.

Mr Kerr said: “Several operations faced challenging conditions during the quarter, with production guidance revised down as a result.”

South32 cut full-year guidance at Mozal Aluminum in Mozambique by 8 per cent, the Cannington silver and lead mine in Queensland by 6 per cent, and the Cerro Matoso nickel mine in Columbia and the Appin metallurgical coal mine in NSW by 7 per cent.

‘Safe recovery plan’

At Mozal Aluminium, South32 reduced output and downgraded guidance to 340 kilotons after flooding waylaid a “safe recovery plan” following worker fatalities in November.

ALSO READ: Post-flood recovery in Mozambique: Mozal’s biggest shareholder donates US$700,000

The Queensland Cannington mine was hit by severe wet weather during the quarter causing a temporary suspension of mining. The weather also prevented a rebuild in mining stocks.

“We also temporarily suspended mining activity at Cannington during the quarter to enable the safe return to operations following heavy rainfall,” Mr Kerr said.

While year-to-date production at the Cerro Matoso nickel mine in Columbia was largely on track, it reduced production guidance because of a temporary reduction in access to higher-grade ore in the quarter.

The Appin mine in the NSW Illawarra encountered “challenging strata conditions”.

Finally, Brazil Alumina, which is not operated by South32, had its outlook lowered by 4 per cent.

By Elouise Fowler

Today we released our March 2023 Quarterly Report. We achieved a 7% increase in Group copper equivalent production year to date, with record production at Australia Manganese and strong growth from our recent investments in copper and low-carbon aluminium. https://t.co/GXRb5LPkyW pic.twitter.com/y8e9q9SqlO

— South32 (@South_32) April 24, 2023