South32’s South African manganese production for the interim period to December 2024 decreased by 3% to slightly above 1 million wet metric tons. Picture: Supplied
South32 has disclosed plans to curtail capital expenditure across its South African aluminium operations while preparing for an uptick over the upcoming year.
This announcement follows the company’s successful receipt of approvals from the South African Competition Commission to divest its Metalloys manganese alloy smelter, which was previously placed on care and maintenance since 2020.
“In Q4 FY24, South Africa Manganese entered into a binding agreement to divest the Metalloys manganese alloy smelter. South African competition approval of the transaction was received in Q2 FY25,” South32 said on Thursday.
The company expects this transaction to complete before June.
South32’s South African manganese production for the interim period to December 2024 decreased by 3% to slightly above 1 million wet metric tons. During the period, South32 reduced use of higher cost trucking and undertook a temporary shutdown of the Wessels mine “in response” to tight market conditions.
However, its production guidance for manganese production from South Africa for the full year to June has remained unchanged at 2 million tons although it will “continue to monitor and respond” to market conditions.
Operating unit costs for the period under review increased by 21% to $3.13 (R58) per dry metric ton unit due to a stronger South African rand and local inflationary pressures.
The company’s safe and reliable capital expenditure for its South African manganese operations amounted to $16 million and is expected to to be $30m in the full year, a downgrade from the previously guided $35m.
The company invested in “rail infrastructure to improve safety and efficiencies, and new mobile fleet. Improvement and life extension capital expenditure thus amounted to $9m and over the full year is expected to top $15m.
Interim underlying earnings before interest, tax, depreciation and amortisation for South32’s manganese operations in South Africa, however increased by $14m to $28m.
This has been attributed to “higher average realised manganese prices” that helped to offset “a stronger South African rand and local inflationary” pressures.
Hillside Aluminium operated by South32 at Richards Bay in South Africa saw capital expenditures for the half year decrease by $6m to $19m.
The company’s projected capex for Hillside over the full year at $55m will go into “fleet replacements and progress work to replace the smelter’s pot tending” assemblies.
“Capital expenditure is expected to be elevated over FY25 and FY26 as we continue work to replace the pot tending assemblies,” said the company.
Hillside Aluminium’s costs at $2 135 per ton are expected to to rise to $2 351 over the full year. During the half year, the operation had higher higher sales volumes of 362 000 tons, with lower raw material input prices for coke and pitch offset by higher alumina and energy prices, and a stronger South African rand.
Over the full year, South32 expects Hillside Aluminium costs to be influenced by the price of raw material inputs, the rand and inflation-linked indexation energy costs.
Across its global operations, South32 reported an 838% profit surge for the interim period to December 2024, with CEO Graham Kerr describing US tariffs as a bargaining tool.
Earnings for South32 surged to $375m, driven by higher commodity prices as well as cost management.
Revenues for the interim period surged 25% to $3.12 billion while firmer production for aluminium and copper drove up underlying earnings before interest, tax, depreciation and armotisation by 44% to about $1bn.
“We achieved strong operating results across our portfolio in H1 FY25, including increasing aluminium production by 5% and copper production by 16%,” said Kerr.
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