South32 aims to increase base metals exposure to tap into battery market

PERTH (miningweekly.com) – Diversified mining company South32 is considering opportunities to expand its foray into the lithium-ion battery market, CEO Graham Kerr said on Thursday.

The group, which swung back to the black in the 2017 financial year, is particularly keen on adding more base metals exposure to tap into the rapidly expanding global battery market.

“Battery technology is certainly something that we have discussed at the leadership team and board level, and if you look at some of the commodities that we produce today, they are either used in renewables or battery technology. We think we have some exposure today to the commodities that will be needed in battery technology.

“We are looking to add more base metals exposure to the group, and that is lead, zinc, nickel and cobalt, probably less of lead,” Kerr said in a conference call, discussing the group’s financial results for the financial year-ended June 30.

The miner on Thursday reported a profit of $1.2-billion for the full year, compared with a loss of $1.6-billion in the previous financial year, while underlying earnings for the same period surged by 730% to $1.1-billion.

“The combination of our high operating leverage and stronger commodity prices delivered a substantial increase in financial performance. Free cash flow more than tripled to $1.9-billion and we finished the year with a net cash balance of $1.6-billion,” said Kerr.

Underlying earnings before interest, taxes, depreciation and amortisation increased by 113%, from $1.3-billion to $2.4-billion.

The miner announced its first fully franked dividend of $334-million, representing 50% of the underlying earnings in the second half of the year, while also increasing its capital management plan from $500-million to $750-million.

Meanwhile, South32 reported that revenue for the full year increased by 20%, from $5.8-billion to $6.9-billion, on the back of strong commodity prices and solid performances across the aluminium supply chain, including record production from the Mozal aluminium operations, in Southern Africa.

The South African manganese operations also reported a 19% increase in production.

The Mozal aluminium operations produced 271 000 t of aluminium during the full year, up from the 266 000 t produced in the previous financial year, while the South African manganese operations produced two-million tonnes.

The Australian manganese operation produced three-million tonnes during the 2017 financial year, while the Brazilian alumina operation produced 1.3-million tonnes in the same period.

At its South African energy coal operations, South32 reported a production of 28.9-million tonnes, which was 9% lower than the previous financial year, while the Illawarra metallurgical coal operation, in Australia, saw a 15% decline in production to 7.1-million tonnes.

The Cannington base metals project produced 15.6-million ounces of silver, 132 100 t of lead and 70 400 t of zinc, while Cerro Matoso produced 36 500 t of nickel.