South32 manganese off to strong start but shipping backlogs loom

SOUTH32 said manganese ore production from its South African mines…

South32 manganese

SOUTH32 said manganese ore production from its South African mines had a strong start to the 2024 financial year, but the Perth-based company reported an increase in working capital, partly due to higher aluminum inventories.

Manganese ore production at the Northern Cape plant totaled 628,000 tonnes in the first quarter, up 12% from South32’s first quarter of FY23. Sales volume in the quarter totaled 528,000 tons, a year-on-year increase of 10%.

South32 did not mention the South African rail logistics issues that had plagued the company during the previous reporting period, but said revenue fell 3% quarter-on-quarter. This is due to port congestion. South Africa has recently been hit by severe storms that paralyzed shipping.

Businesslive quoted Denys Hobson, logistics director at banking group Investec, as saying the bad weather was exacerbating problems for state-owned ports and rail operator Transnet. “Shipping lines are struggling to balance capacity needs due to delays to ships to and from South Africa, with many return ships delayed for more than three weeks,” he said.

“These delays are caused by adverse weather conditions, low port productivity and equipment issues along our coast. Far East trade with South Africa has been most disrupted and the outlook for the coming weeks does not look any better,” he added.

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South32 said full-year manganese ore production guidance for its South African operations was 2 million tonnes.

South32 reported raising $250 million in capital during the quarter after building aluminum inventories by $100 million. According to South32, inventories will return to normal in the current quarter with initial sales of the Brazilian business and the continued reduction of the group’s assets in southern Africa.

Rising inventory levels caused net debt to increase to $782 million from $299 million at the end of the previous quarter. South32 paid a fully franked dividend of $145 million, matching the payout announced at the end of its 2023 financial year in June.

South32 said in August it was looking to reduce emissions from its Hillside aluminum plant, which if not addressed would result in lower sales of the metal compared with so-called “green aluminum” produced elsewhere.

South32 chief executive Graham Kerr said at the time that the company had signed an agreement with Eskom to explore purchasing nuclear energy from the utility’s Koeberg facility in the Western Cape. “In addition, South32 will continue to explore other low-carbon energy solutions such as wind and solar as well as battery storage,” Kerr said.

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