South32’s net cash balance rose by US$645m during the March quarter to hit $1.5bn at the end of March and the group has been running an on-market share buy-back scheme since April 19 as part of the $500m capital management scheme announced in March.
In its March quarterly report published today the group announced that coal production from its South African energy operations had been hit by heavy rainfall during the quarter and dropped its production guidance for its financial year to end-June as well as for financial 2018.
Coal production dropped 11% to 21.5mt (previous comparable period – 24.mt) in the nine months to end March with domestic sales dipping by 1% but export sales 25% down at 8.8mt (11.6mt).
South32 has revised its coal production guidance from South Africa to 30mt for the year to end-June and predicted a further drop to 27.5mt for the year to end-June 2018. According to South32 CEO Graham Kerr the 2018 drop in output is became of the depletion of existing pits and the delayed development of new mining areas at the WMC (Wolvekrans Middelburg Complex).
Kerr commented, “while our budgeting process for FY18 is currently underway, we do anticipate a significant increase in operating unit cost – including sustaining capital expenditure – as a result of the temporary reduction in production and rise in sustaining capital expenditure at the WMC.”
Turning to manganese Kerr said saleable production from South Africa Manganese rose 23% to 1.5mt in the nine months to end-March “as we responded to favourable market conditions by opportunistically increasing ore production.”
Kerr added that manganese ore production had been increased to an annualized rate of 3.8mt because of the more favourable market conditions but that manganese alloy saleable production dropped 18% during the period and Metalloys continues to operate only one of its four furnaces.
