Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

South32 raised production guidance by 5pc for the current fiscal (June 2020 -July 2021) at Cannington, where lead and zinc is produced and at Illawarra Metallurgical Coal by 11pc. Production at Cerro Matoso, where nickel is mined, guidance is increased by 3pc for FY21 and up 13pc for the next fiscal, according to the company’s December quarter and H1 results statement.


South32 has decided to not proceed with the Eagle Downs Metallurgical Coal project after the completion of the feasibility study in the December quarter. The project has been placed on hold while the company looks to divest 50pc interest. 



Brazil Alumina saleable production rose by 1pc to a record 706,000mt in H1 as the refinery continued to profit from increased plant availability. Brazil Alumina successfully completed planned maintenance in the December quarter, however, FY21 production guidance at this operation remains unchanged at 1.37mn mt.


Worsley Alumina saleable alumina production also rose by 4pc to 2.01mn mt in H1. The refinery gained from the significant improvement that supported production to exceed nameplate capacity of 4.6mn mt at 100pc basis, stated the company. Production guidance remains unchanged at 3.96mn mt with calciner maintenance scheduled in the March quarter.



Production increased by 1pc at Mozal Aluminium to 135,000mt in H1. Despite the impact from load-shedding, the smelter continued to test its maximum technical capacity. FY21 production guidance for the unit remains unchanged at 273,000mt.


Hillside Aluminium saleable production decreased to 361,000mt in H1 as the smelter too continued to test its maximum technical capacity, amid the consequences of load-shedding. FY21 production guidance was kept unchanged for the unit at 720,000mt.

In December quarter, Eskom submitted a new energy supply agreement for the smelter to the National Energy Regulator of South Africa (NERSA). The new agreement would cover power supplied for a 10-year period with a tariff that is South African rand based. The company stated that NERSA review process would be expected to conclude in June 2021.



Cerro Matoso payable nickel production dipped by 22pc to 16.1kt in the December 2020 half year. Production was hampered as South32 commenced a major refurbishment at one of the furnaces in the unit in the December quarter. The refurbishment is now on-track to be completed, ahead of schedule, by the end of January 2021.


During the period South32 approved development of the Queresas and Porvenir project (Q&P project). The Q&P project comprises the development of 17mn mt of Mineral of the total Mineral Resource estimate reported for Cerro Matoso in FY2018. The project is termed to be a high returning and low capital option that is projected to contribute to higher average ore feed grades over the next 6 years. This led to the company raising production guidance for FY21 and FY22 production guidance by 3pc (to 34.6kt) and 13pc (to 43.8kt) respectively.


Lead and zinc 

Cannington payable zinc equivalent production decreased by 1pc to 167,300mt in H1 on the back of completion of planned surface maintenance in September 2020 quarter. Ore mined volumes increased by 4pc during the same period. The company is expecting to accelerate the extraction of a higher-grade mining sequence in June quarter consequently the company raised guidance for FY21 zinc equivalent production by 5pc in FY21 (12,600koz for silver, 119,000mt for lead and 616,000mt for zinc). FY22 production guidance remains unchanged for the unit.


COVID-19 still affected businesses, the company has had to adjust to different phases of pandemic across countries where South32 operated. COVID-19 protocols have resulted in congestions in shipping ports globally, leading to delays, stated the company.


South32 Production (Kt)Q2 (Dec Qtr) 2002Q2 (Dec Qtr)2019Pc ChangeH1 2020H1 2019Pc Change
Payable lead31.228.88%57.655.34%
Payable zinc1814.128%30.432.5-6%
Payable nickel6.110-39%16.120.6-22%
Metallurgical coal 1,3991,20816%3,2622,85914%

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