South32 is investing $15 million (R275m) into new mining areas for its South African manganese operations, CEO Graham Kerr said this week, as the company studies an expansion programme for its Wessels mine project.
Speaking at the Bank of America (BofA) Securities Global Metals, Mining and Steel Conference yesterday, Kerr said South32 was transforming its portfolio of operations “towards commodities critical for the transition to a low-carbon” future.
This will see it focus on aluminium, zinc, manganese and copper production more among other metals.
South Africa has been identified by South32 for further investments as the company uplifts its manganese production.
South32 also produces manganese from Hermosa in the Patagonia mountains of southern Arizona in the US.
In South Africa, South32 is currently “studying options to unlock logistics capacity and expand Wessels” manganese operations, Kerr said.
The company is also making progress with “options to improve logistics and increase volumes” for its South Africa manganese operations.
To this end, South32 is sinking capital expenditure of $15m for “new mining areas” at its South Africa operations.
South32 accounts for a 54.6% interest in the South Africa manganese ore operations after placing its Metalloys manganese alloy smelter, in which it had a 60% interest, on care and maintenance.
The company also has an interest in South Africa’s Hotazel manganese mines.
South32’s South African manganese production swung up by 8% in the nine-month period to the end of March as the company delivered improved mining performance despite port, rail and electricity constraints afflicting the country’s economic productivity.
The stronger South African manganese production covered up for low output in Australia, where operations were impacted by Cyclone Megan.
South32 is now working on “recovery plans to enable safe return to operations” and exports of ore.
Saleable production from the South Africa manganese operations for South32 grew by 119 000 wet metric tons to a new high of 1.6 million wet metric tons over the nine months to the end of March.
This has been attributed to the South Africa operation delivering “improved mining performance” while “planned maintenance was deferred to the June 2024 quarter”, the company said.
South32 is, however, maintaining its full-year 2024 manganese production from South Africa at 2 million wet metric tons.
In the quarter to end March, the company raised sales of manganese from South Africa by 14% “due to the timing” of shipments.
The year-to-date realised price for manganese ore sales from South Africa yielded a premium of approximately 6% to the medium grade 37% manganese lump ore.
This was after South32 strengthened volumes of premium material from its Wessels mine in South Africa.
“This quarter, we delivered improved operating results, highlighted by record year to date production at Hillside Aluminium and South Africa Manganese,” the company reported last month.
In line with its focus on metals critical for global decarbonisation efforts, Kerr said at this week’s conference that the sale of the company’s Illawarra Metallurgical Coal unit would unlock significant value and further streamline its portfolio toward base metals
“Our investments in high-quality zinc and copper development projects have the potential to underpin 45% growth in base metals volumes. Our liquidity position remains strong, with $0.9 billion cash and an undrawn $1.4bn sustainability-linked revolving credit facility,” he said.
This had left South32’s debt position long dated, including $700m in senior secured notes due in 2032, and a $554m Worsley Alumina co-generation lease expiring in 2039.
The company’s net debt had fallen by $154m in the March 2024 quarter as it benefited from improved operating performance and a partial unwind in working capital.
BUSINESS REPORT