QUARTERLY REPORT
September 2023

South32 Chief Executive Officer, Graham Kerr: "We have maintained annual production guidance for all of our operations with a strong start to the year at our manganese operations, a 34 per cent increase in production at Brazil Alumina and continued growth in low-carbon aluminium volumes.    

"With macroeconomic conditions creating headwinds for many of our commodities, we remain focused on driving operating performance and cost efficiencies. This focus, along with our production growth in commodities critical for a low-carbon future, positions us well to capture higher margins as market conditions improve.

"Our disciplined approach to capital management allowed us to return a further US$22 million with the continuation of our US$2.4 billion capital management program, and following the end of the period, pay our US$145 million fully-franked ordinary dividend in respect of the prior six months.

"During the quarter, we continued to advance our portfolio of high-quality growth options in critical commodities. At our Hermosa project, we commenced federal permitting for the Taylor and Clark deposits under FAST-41 and remain on-track to complete Taylor's feasibility study in the December 2023 quarter."

Corporate Update

Development and Exploration Update

Hermosa project

Greenfield exploration

Other exploration

Production Summary

a.         The denotation (e) refers to an estimate or forecast year.

Worsley Alumina (86% share)

Worsley Alumina saleable production decreased by 4% (or 40kt) to 972kt in the September 2023 quarter as we completed planned calciner maintenance. FY24 production guidance remains unchanged at 4,000kt with the refinery expected to deliver production at nameplate capacity of 4.6Mt (100% basis) over the year. Further planned calciner maintenance is scheduled for the March 2024 quarter.

Sales decreased by 18% in the September 2023 quarter as a shipment slipped to the December 2023 quarter.

During the September 2023 quarter, we converted the first coal fired boiler to natural gas, which will improve energy security and reduce the refinery's operational greenhouse gas emissions¹³. The second boiler conversion is on-track to be completed in the June 2024 half year.

Brazil Alumina (36% share, NON-OPERATED)

Brazil Alumina saleable production increased by 34% (or 81kt) to 318kt in the September 2023 quarter as the refinery continued its recovery from the temporary port infrastructure outages in the prior quarter. FY24 production guidance remains unchanged at 1,400kt.

Brazil AluminIUM (40% share, NON-OPERATED)

Brazil Aluminium saleable production was largely unchanged at 24kt in the September 2023 quarter as the smelter continued to ramp-up all three potlines. FY24 production guidance remains unchanged at 100kt.        

During the September 2023 quarter, we progressed activity to commence export sales of our share of the smelter's aluminium production, having established initial sales volumes with domestic customers. We expect to commence export sales and drawdown our inventory position to normalised levels during the December 2023 quarter.

Hillside Aluminium (100% SHARE)

Hillside Aluminium saleable production was unchanged at 180kt in the September 2023 quarter as the smelter continued to test its maximum technical capacity despite the impact of elevated load-shedding. FY24 production guidance remains unchanged at 720kt¹⁰. 

Sales decreased by 8% in the September 2023 quarter as a shipment slipped to the December 2023 quarter.

Mozal Aluminium (63.7% share)

Mozal Aluminium saleable production increased by 2% (or 2kt) to 84kt in the September 2023 quarter as the smelter continued to implement initiatives to achieve planned equipment utilisation and pot stability, while managing the impact of elevated load-shedding. FY24 production guidance remains unchanged at 365kt¹⁰, with higher volumes expected across the remainder of the year as nameplate production rates are achieved.

Sales decreased by 32% in the September 2023 quarter as we built inventory following a significant planned drawdown in the prior quarter. We expect to lower our inventory position to normalised levels during the December 2023 quarter.

SIERRA GORDA (45% share)

Sierra Gorda payable copper equivalent production¹¹ decreased by 10% or (2.2kt) to 20.3kt in the September 2023 quarter as higher plant throughput delivered by the de-bottlenecking project, was more than offset by lower planned copper grades. FY24 production guidance remains unchanged at 89.0kt payable copper equivalent (copper 67.0kt, molybdenum 2.5kt, gold 22.5koz and silver 550koz).

Sierra Gorda progressed the feasibility study for the fourth grinding line expansion, which has the potential to sustainably lift plant throughput by ~18% to ~57 to 58Mtpa (100% basis). The feasibility study remains on-track to be completed in the June 2024 half year.

Cannington (100% share)

Cannington payable zinc equivalent production¹² decreased by 6% (or 4.2kt) to 70.3kt in the September 2023 quarter as average zinc grades declined due to the sequencing of lower grade stopes. FY24 guidance remains unchanged at 287.2kt payable zinc equivalent production (silver 12,500koz, lead 115.0kt and zinc 62.0kt).     

Cerro Matoso (99.9% share)

Cerro Matoso payable nickel production decreased by 19% (or 1.9kt) to 8.3kt in the September 2023 quarter as
plant availability was impacted by planned maintenance and a temporary reduction in third-party gas supply, while nickel grades were sequentially lower in accordance with the mine plan. FY24 production guidance remains unchanged at 40.5kt, with improved plant throughput and nickel grades expected across the remainder of the year. 

Sales decreased by 18% in the September 2023 quarter, reflecting lower product availability. Price realisations for our ferronickel product reflected a discount of ~33% to the LME Nickel Index¹⁴, as market dynamics remained largely unchanged from the prior year (FY23: ~29% discount).

Illawarra Metallurgical Coal (100% sHARE)

Illawarra Metallurgical Coal saleable production decreased by 33% (or 585kt) to 1,168kt in the September 2023 quarter as the operation commenced an extended planned longwall move at the Dendrobium mine. A new four-year industrial agreement covering deputies at the Appin mine was finalised subsequent to the end of the quarter.

FY24 production guidance remains unchanged at 5.0Mt with production volumes expected to be weighted to H2 FY24, reflecting the expected duration of planned longwall moves across the year (two in Q2 FY24, two in Q4 FY24).

Australia Manganese       (60% share)

Australia Manganese saleable production increased by 2% (or 21kwmt) to 890kwmt in the September 2023 quarter
as the operation achieved strong primary output, and continued to operate the low-cost PC02 circuit above its design capacity, delivering ~11% of production (FY23: 11%). FY24 production guidance remains unchanged at 3,400kwmt, subject to the impacts from the wet season.

Sales increased by 9% in the September 2023 quarter, as improved road haulage capacity and alternative shipping solutions supported a planned drawdown in inventories. Our average realised price for manganese ore sales was a discount of approximately 6% to the high grade 44% manganese lump ore index¹⁶ on a M-1 basis (FY23: 6% discount), reflecting lower planned ore grades, as well as price realisations for our PC02 product.   

South Africa Manganese (ore 54.6% share)

South Africa Manganese continued its strong performance, increasing saleable production by 7% (or 42kwmt) to a record 628kwmt in the September 2023 quarter. FY24 production guidance remains unchanged at 2,000kwmt, with planned maintenance scheduled for the December 2023 and March 2024 quarters.

Sales decreased by 4% in the September 2023 quarter, as third-party port congestion impacted the timing of shipments. We expect to complete additional shipments and drawdown inventories during the December 2023 quarter.

Our realised price for manganese ore sales was a premium of approximately 6% to the medium grade 37% manganese lump ore index¹⁷ on a M-1 basis (FY23: 6% premium), as we continued to optimise our sales mix.

Notes

The following abbreviations have been used throughout this report: US$ million (US$M); US$ billion (US$B); grams per tonne (g/t); tonnes (t); thousand tonnes (kt); thousand tonnes per annum (ktpa); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz); thousand ounces (koz); million ounces (Moz); thousand wet metric tonnes (kwmt); million wet metric tonnes (Mwmt); million wet metric tonnes per annum (Mwmt pa); dry metric tonne unit (dmtu); thousand dry metric tonnes (kdmt).

Figures in Italics indicate that an adjustment has been made since the figures were previously reported. The denotation (e) refers to an estimate or forecast year.

Operating Performance

Forward-looking statements

This release contains forward-looking statements, including statements about trends in commodity prices and currency exchange rates; demand for commodities; production forecasts; plans, strategies and objectives of management; capital costs and scheduling; operating costs; anticipated productive lives of projects, mines and facilities; and provisions and contingent liabilities. These forward-looking statements reflect expectations at the date of this release, however they are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, the South32 Group does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance. South32 cautions against reliance on any forward-looking statements or guidance.

Further information

Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited

23 October 2023

South32 Limited

(Incorporated in Australia under the Corporations Act 2001 (Cth))

(ACN 093 732 597)

ASX / LSE / JSE Share Code: S32; ADR: SOUHY

ISIN: AU000000S320