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South32 has, however, withdrawn its full-year guidance for the operation, citing an uncertain impact of the restrictions to production volumes.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