South32 extends share buy-back programme by $200m, targets 50% emissions cut by 2035

Graham Kerr, CEO, South32

SOUTH32 will extend its capital management program $200m – so far conducted through repurchases of its own shares – taking the total return since it was initiated to $1.88bn.

Graham Kerr, CEO of South32, also announced the company planned to reduce its carbon emissions as defined by Scope 1 and Scope 2 measures 50% by 2035. Consideration was also being given to linking these targets to executive pay.

The performance of the carbon emissions strategy would be “independently reviewed and reported,” he said.

“We have set a new medium-term target to halve our operational emissions by 2035 and are investing in efficiency projects, applying low carbon design principles and evaluating carbon reduction technologies to achieve this goal,” said Kerr in an announcement.

Commenting on the capital management programme, Kerr said its extension was by dint of the firm’s “strong balance sheet”. It means some $316m would be returned to shareholders by September 3 “initially by continuing our on market share buy-back,” he said.

South32 announced yesterday that it hoped to conclude the sale of its 91% stake in South African Energy Coal (SAEC) to Seriti Resources by June 1. This followed the approval of a coal sales agreement between SAEC’s Ifalethu mine in Mpumalanga province and Eskom’s Duvha power station – a matter of controversy in the past.

South32 also expected to book a loss on sale of the stake in SAEC of between $125m and $175m, it said. The group’s net cash balance was also expected to reduce by approximately $180m following an adjustment to the sale agreement in which South32 would supply a minimum of $250m in cash and finance to Seriti Resources.

South32 announced earlier this year it would pay $200m to Seriti in 10 installments, the first to be made in July, for the rehabilitation of coal assets. The coal mines supply about 28Mt a year of which about half is exported.

South32 has also entered into a $50m facility with Seriti Resources that will primarily fund the costs of restructuring certain loss-making mining areas.

1 COMMENT

  1. I guess the 50% targeted emissions reduction means that we will never see South32 bring the Metalloys manganese alloy plant in Meyerton back into production? Alternatively will the smelters be sold to a local private company, dressed up as a BEE deal, after a favourable electricity offtake has been signed with Eskom? A total of 80MW of furnaces – and yet of course we will see South32 continue to export raw and sintered manganese from South Africa for other people to smelt in other countries – mostly by private companies with no disclosure obligations and no first world pension fund investors. The emissions will still happen, just not on South32’s virtue signalling emissions “balance sheet” and not on the consciences of first world pension fund trustees and probably not in a way that supports South African industry and jobs.

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