South32 rides high commodity prices to record profits

South32 Sierra Gorda

South32 posted record profits of $US2.6 billion ($3.76 billion) in the 2021–22 financial year.

The windfall profits represent a 432 per cent jump from FY21 ($US489 million), along with a 156 per cent increase in underlying EBITDA (earnings before interest, taxes, depreciation, and amortisation) to $US4.76 billion ($6.87 billion).

South32 shareholders received a record $US1.3 billion ($1.88 billion) of returns in FY22, which is 10 per cent of the miner’s market capitalisation.

The Perth-based miner’s profits were driven largely by surging prices for metallurgical coal and aluminium, with South32 recording realised prices of $US1.54 billion from coal used for steel making and $US1.03 billion from aluminium.

South32 said its strong financial position was influential in boosting its internal investment and increasing its exposure to metals critical for a low-carbon future. Chief executive officer Graham Kerr said the company was aware of the need to move towards more future-facing minerals.

“We have repositioned our portfolio toward metals critical for a low-carbon future,” he said on Thursday.

“We added copper to our portfolio through the acquisition of a 45 per cent interest in Sierra Gorda and doubled our low-carbon aluminium capacity with an additional shareholding in the hydro-powered Mozal Aluminium smelter and the restart of our 100 per cent renewable powered Brazil Aluminium smelter.”

News of the record profits comes days after South32 announced it had decided not to progress the $US700 million Dendrobium Next Domain expansion project at its Illawarra Metallurgical Coal (IMC) operations in New South Wales.

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