24/01/2022 - 16:05

South32 down as pandemic takes toll

24/01/2022 - 16:05

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South32's quarterly results give some guidance of how an Omicron outbreak in WA might impact the resources sector, with marginally lower output at two east coast units.

South32 down as pandemic takes toll
South32 chief executive Graham Kerr. Photo: Matt Jelonek

The Omicron wave on Australia’s east coast has brought workforce pressure at South32, with its manganese and metallurgical coal businesses revising down production.

At its Illawarra metallurgical coal operation, Perth-headquartered South32 produced a little less than 2.8 million tonnes in the six months to December, the company’s quarterly report said today.

That compares to 6.2mt in the 2021 financial year.

South32 said its ability to hit guidance would depend on COVID-19 and related labour availability impacts.

The company said it would update that guidance with its upcoming half yearly results announcement.

At its Australian manganese business, it revised output to an estimated 3.2mtfor the year, down from 3.5mt in the year to June 2021.

That was down to COVID-19 and weather disruption. 

The Western Australian segment of the ASX-listed resources business fared better.

Production at South32’s main WA unit, Worlsey Alumina, was down 2 per cent compared to the same half in 2021, with just shy of 2 million tonnes produced.

The company said it expected to hit guidance for the year nonetheless, with December quarter production flowing above nameplate capacity.

South32 owns 86 per cent of Worlsey.

It’s a good time for production to be hitting target, with an alumina price of $US389 per tonne in the first half of this financial year representing a 40 per cent increase on the same time last year.

But across the company’s portfolio, there were pressures.

“Port congestion and tight global freight conditions continue to impact our supply chains, slowing the movement of inventory, most notably for our aluminium smelters in Southern Africa,” the business said. 

Shares were down 3.7 per cent to be $3.94 each at the close of trade.

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