South32 overcomes challenges to keep production targets in reach

Image: South32

Despite performance challenges South32 believes it remains on track to achieve the 2017 financial year production guidance set at most of its operations.

In its December 2016 quarterly update, the BHP Billiton spin-off reported that record production was posted at its Brazilian alumina operations, while manganese output was six per cent higher than the previous quarter.

However, South32’s output in other areas, such as thermal coal, coking coal, silver and lead, declined for a variety of operational-related reasons.

The challenges confronted by South32 included a temporary shutdown of the Illawarra metallurgical coal operations in Australia and planned maintenance at its South African coal assets.

South32 chief executive officer Graham Kerr said commodity prices and significant operating leverage had strengthened the company’s financial position during the quarter.

“At Illawarra Metallurgical Coal we have addressed a number of operational challenges during the quarter and our remediation activities are tracking to plan,” Kerr said.

“We have demonstrated the flexibility of our manganese business to respond to favourable market conditions by opportunistically increasing ore production.”

South32 also agreed to acquire Peabody Energy’s Metropolitan Colliery and an associated 16.67 per cent interest in the Port Kembla coal terminal for $US200 million during the quarter.