London 25/08/2016 - South32 is expecting lower nickel, zinc and lead production in its fiscal year ending June 2018, according to its annual report published Thursday.
Its payable nickel production from Cerro Matoso in Colombia is expected at 35,000 tonnes in fiscal 2018, down from the targeted 36,000 tonnes in fiscal 2017. Production was at 36,800 tonnes in fiscal 2016, down 8.9 percent from a year ago due to lower average ore grade.
But nickel output is expected to rise temporarily to more than 40,000 tonnes per year in fiscal 2019 and 2020 as it accesses higher grade ore at the La Esmeralda Mineral Resource, the company said.
South32 sees zinc and lead production at Cannington in Australia at 72,000 tonnes and 147,000 tonnes respectively in fiscal 2018, down targetted output of 80,000 tonnes and 163,000 tonnes respectively in fiscal 2017.
Its fiscal 2017 guidance for zinc was raised by three percent while that for lead was lowered by three percent.
Production was at 79,000 tonnes for zinc and 173,000 tonnes for lead in fiscal 2016, up 9.2 percent and down 5.4 percent respectively year-on-year. The zinc production was an annual record due to higher zinc ore grade, though lead was down due to a temporary reduction in mill throughput.
Its South Africa Aluminium and Mozal Aluminium production was at 697,000 tonnes and 266,000 tonnes respectively in fiscal 2016, close to outputs a year ago.
The impact of electricity load-shedding events at its African aluminium smelters was lower than anticipated in fiscal 2016, though production will continue to be influenced by the duration and regularity of these outages, South 32 said.
It has yet to restart production in the 22 pots that were taken offline at South Africa Aluminium in September 2015 in response to challenging market conditions
South32 posted a post-taxation loss of $1.62 billion in the fiscal year ended 2016 amid lower commodity prices. This compared to a $28-million-profit achieved in the previous year.
Its underlying EBIDTA fell 39 percent year-on-year to $1.13 billion in fiscal 2016.
“By optimising our operations and maintaining a core focus on value, South32 has generated free cash flow of $597 million and finished the year with net cash of $312 million, Graham Kerr, CEO of South32, said in the annual report.
“We will continue to unlock the potential of our portfolio, identify opportunities and pursue investments where we see value, but will not compromise our strong balance sheet and investment grade credit rating.”
Against a backdrop of significantly lower costs and flexible balance sheet, the company’s board is paying an inaugural dividend of one cent per share, Kerr noted.
South 32 had slashed more than 1,000 jobs across its global operations since February this year as part of plans to reduce costs.