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Graham Kerr says South32 is well positioned to navigate the uncertain period around the coronavirus pandemic.

South32 suspends South African operations

South32 has temporarily suspended its manganese and coal production in South Africa, while also withdrawing full-year guidance for its international operations, in response to coronavirus-related government restrictions.

The Perth-based miner has also introduced a number of cost reduction initiatives aimed at delivering around $US160 million ($A261.3 million) in lower expenditure over the next 15 months.

These include reducing capital expenditure by 10 per cent in the 2020 financial year and by 18 per cent in FY21.

South32 has also suspended the remaining $US121 million ($A197.6 million) of its current on-market share buy-back, but said it may review the extension of the program ahead of its expiry on September 4.

Chief executive Graham Kerr said the company was taking action to maintain financial strength of the business during the COVID-19 crisis.

“Our business is well positioned to successfully navigate this period of uncertainty,” he said.

South32 reported a strong balance sheet as at December 31 of $US277 million ($A452.3 million) in cash and no term debt as well as an undrawn $US1.5 billion ($A2.4 billion) revolving credit facility.

It withdrew its FY20 earnings guidance for its South African operations after the government announcement a 21-day nationwide lockdown that began yesterday.

South32 has placed its manganese operations and coal production on care-and-maintenance for a minimum of three weeks.

Meanwhile, the company continues to operate its Cerro Matoso nickel mine in South America, despite the Colombian president also announcing a nationwide lockdown for duration of 19 days, which began on Tuesday.

South32 has, however, withdrawn its full-year guidance for the operation, citing an uncertain impact of the restrictions to production volumes.

The miner said it had not experienced production interruptions from COVID-19 at any other operations.

Shares in the company were down 6 per cent to $1.77 per share at 2:20pm AEDT.

South32 (S32)

Share Price

Closing price for the last 90 trading days
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Top 10 Shareholders

Substantial shareholders as published in the annual report.
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Total Shareholder Return as at 28/02/20

1 year TSR5 year TSR
78thFortescue Metals Group84%42%
120thNorthern Star Resources48%44%
242ndMineral Resources15%21%
263rdIGO11%-0%
614thSouth32-41%
671 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
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Share Transactions

06/12/19
$0 Issued
28/08/19
$494k Bought
27/08/19
$48k Bought
Total value as at the date of the transaction
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Revenue

1st-Fortescue Metals Group$14,366.2m
2nd-South32$10,711.5m
4th-Mineral Resources$1,520.1m
6th-Northern Star Resources$1,401.2m
8th↑IGO$787.0m
479 listed resources companies ranked by revenue.
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