South32 weighs up future of manganese alloy business

Groote Eylandt Mining Company operation (GEMCO) in the Gulf of Carpentaria, Queensland. Image: South32

South32 is reviewing the continuity of the Australian manganese alloy smelter, which could see their divestment, closure or suspension.

The Australia Manganese ore business retained its top earner position at South32 based on the underlying earnings in the six months ended December last year.

Saleable ore production at Australia Manganese decreased by 2 per cent to 1.77 million wet metric tonnes as heavy rainfall slowed primary circuit throughput.

South32 achieved an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $US212 million ($315.6 million) at Australia Manganese during the half year period.

This is a drop from an EBITDA of $US382 million in the prior corresponding period, in line with a company-wide profit drop.

Unfavourable commodity prices have more than offset South32’s initiatives to deliver lower operating costs for its operations.

The “volatile macro-economic conditions” have led to a drop of 80 per cent in underlying earnings to $US131 million during the period.

“Against a challenging backdrop for our key commodities we delivered another strong operating result with production for the majority of our operations tracking on or ahead of schedule,” South32 chief executive Graham Kerr said.

“We delivered record production at Brazil Alumina and maintained higher output rates at Worsley Alumina.”

South32 produced 1 per cent more saleable production at Worsley Alumina, totalling 1.93 million tonnes despite an extended calciner shut.

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