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South32 Reports Lower Manganese Output After Cyclone, Says Exports Will Resume in 2025
Apr. 25, 2024 09:25AM PST
The company reported a 13 percent decline in saleable manganese production at its Australian manganese operations in Groote Eylandt.
Image courtesy of South32.
South32's (ASX:S32,OTC Pink:SHTLF) latest quarterly report reveals how Tropical Cyclone Megan has impacted its Australian manganese operations in Groote Eylandt, located in the country's Northern Territory.
The company reported a 13 percent decline in saleable production of the metal at the location, amounting to a reduction of 352,000 wet metric tonnes over the nine month period ended in March of this year.
The cyclone, which wreaked havoc on March 16 and 17, unleashed rainfall of 681 millimetres accompanied by powerful wind gusts, marking it as the second strongest cyclone to hit the area in the past two decades.
The extreme weather inflicted damage on critical infrastructure at South32's manganese site, notably the wharf responsible for shipping manganese ore and a haulage bridge connecting mining areas to processing facilities.
Despite the setback, the company witnessed progress elsewhere, with aluminum production seeing a 1 percent increase year-to-date, with record production achieved at Hillside Aluminium and Brazil Aluminium ramping up.
For its part, the Cannington operation in Australia recorded a 15 percent uptick in payable zinc equivalent production, attributed to higher metal grades and effective mitigation strategies following adverse weather.
Illawarra Metallurgical Coal, which South32 has agreed to sell to Golden Energy and Resources and M Resources, saw a significant 60 percent increase in saleable coal production, driven by improved longwall performance. Conversely, Sierra Gorda experienced a 13 percent decrease in payable copper equivalent production due to lower planned copper grades.
Regarding the resumption of operations in Groote Eylandt, the company expects a delay due to the extensive damage.
Engineering studies are currently underway to assess the extent of the damage to the wharf and haulage road bridge, with the aim of informing the final schedule and capital costs for restoration. Preliminary estimates suggest that wharf operations and export sales are anticipated to resume in the third quarter of the firm's 2025 fiscal year.
Development and exploration updates
On the development side, South32 announced plans in Q1 to move forward at its Taylor deposit.
"We approved development of the Taylor zinc-lead-silver deposit at our Hermosa project, which is expected to deliver attractive returns over multiple decades and unlock further value as the first phase of our regional scale opportunity,” said CEO Graham Kerr. Taylor is located at the company's Hermosa project in Arizona.
This decision from South32 came after a comprehensive feasibility study confirming the project's potential to be a long-term, low-cost and low-carbon operation. The company expects to invest approximately US$2.16 billion in capital expenditure, and anticipates first production from Taylor in the second half of its 2027 fiscal year.
The company remains committed to other exploration and development activities at Hermosa as well. Future areas of growth include the Clark manganese deposit and polymetallic prospects like Peake and Flux.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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