FINANCIAL RESULTS AND
OUTLOOK
HALF YEAR ENDED 31 DECEMBER
2023
|
|
ASX / LSE / JSE Share Code:
S32; ADR: SOUHY
15
February 2024
South32 announces investment in Hermosa and is well positioned
for second half
"We delivered Underlying EBITDA of
US$708M, as record Group aluminium production was offset by
commodity price headwinds, and lower metallurgical coal volumes as
we completed planned longwall moves at Illawarra Metallurgical
Coal.
"We
continued our rigorous focus on costs identifying further
opportunities to drive efficiencies. This supported FY24 Operating
unit cost guidance being lowered or held unchanged across the
majority of our operations, along with lower FY24 capital
expenditure guidance at our operations through capital efficiencies
and the deferral of certain non-critical projects.
"Today we have taken the next step
in our portfolio transformation by announcing a US$2.16 billion
investment in the Taylor zinc-lead-silver deposit at our Hermosa
project in Arizona, with first production expected in H2
FY27.
"This investment is a major
milestone for our business, that further reshapes our portfolio
towards commodities critical to a low-carbon future. Taylor is
expected to deliver value for shareholders for decades to come and
underpin further growth phases at our regional scale Hermosa
project, establishing it as a globally significant producer of
commodities critical for a low-carbon future.
"In addition, we continue to invest
to unlock value across our business. We remain on track for a final
investment decision for the fourth grinding line expansion at
Sierra Gorda during the fourth quarter of FY24 and continue to
progress more than 25 greenfield exploration options in base
metals.
"Looking
forward, we remain focused on driving operating performance and
cost efficiencies across our business. This focus, combined with
our expected 7 per cent production uplift in the second half,
places us in a strong position to capture higher margins as market
conditions improve."
Graham Kerr, South32 CEO
Financial Highlights
|
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
% Change
|
Revenue
|
3,133
|
3,696
|
(15%)
|
Profit before tax and net finance
income/(costs)
|
75
|
871
|
(91%)
|
Profit after tax
|
53
|
685
|
(92%)
|
Basic earnings per share (US
cents)(2)
|
1.2
|
14.9
|
(92%)
|
Ordinary dividends per share (US
cents)(3)
|
0.4
|
4.9
|
(92%)
|
Other financial measures
|
|
|
|
Underlying
revenue(4)
|
3,881
|
4,524
|
(14%)
|
Underlying
EBITDA(5)
|
708
|
1,364
|
(48%)
|
Underlying EBITDA
margin(6)
|
19.0 %
|
31.5 %
|
(12.5%)
|
Underlying
EBIT(5)
|
236
|
922
|
(74%)
|
Underlying EBIT
margin(7)
|
6.1 %
|
21.3 %
|
(15.2%)
|
Underlying
earnings(5)
|
40
|
560
|
(93%)
|
Basic Underlying earnings per share
(US cents)(2)
|
0.9
|
12.2
|
(93%)
|
ROIC(8)
|
1.3 %
|
12.0 %
|
(10.7%)
|
Ordinary shares on issue
(million)
|
4,529
|
4,572
|
(1%)
|
SAFETY
Nothing is more important than the
health, safety and well-being of our people. We continue to
implement our Safety Improvement Program, a multi-year global
program of work launched in FY22, designed to enhance our safety
culture and achieve a step change in our safety performance. Our
Safety Improvement Program includes a significant investment in
safety leadership through our 'Lead Safely Every Day' program,
which supports our leaders to engage their teams on our 'safety
guarantee', creating a sense of chronic unease aiding a risk
reduction mindset to be applied to daily activities. Our Lead
Safely Every Day program continued to be deployed across our
leadership teams during H1 FY24, and will be extended to our
frontline workforce from H2 FY24.
We use a range of leading and
lagging indicators to assess our safety performance. Our leading
indicator, significant hazard frequency(9), increased to
118.0 for H1 FY24 (FY23: 91.6), indicating improved hazard
awareness and a positive reporting culture. We expect the lagging
indicators of total recordable injury frequency
(TRIF)(10)(11) and lost time injury frequency
(LTIF)(10)(12) to follow this positive trend over time.
TRIF for H1 FY24 reduced to 5.2 (FY23: 5.9), while LTIF increased
to 2.0 in H1 FY24 (FY23: 1.4).
PERFORMANCE SUMMARY
The Group's statutory profit after
tax decreased by US$632M to US$53M in H1 FY24, as record Group
aluminium production and lower raw material input prices, were more
than offset by lower commodity prices and metallurgical coal
volumes as we completed two planned longwall moves at Illawarra
Metallurgical Coal. Underlying earnings decreased by US$520M to
US$40M in H1 FY24. A reconciliation of statutory profit to
Underlying earnings is set out on page 6.
Underlying EBITDA decreased by
US$656M to US$708M, for a Group operating margin(6) of
19.0%, due to the aforementioned commodity price and volume
impacts. We maintained our focus on cost management, holding
increases in controllable costs to approximately 4% of the Group's
cost base(13), despite broad inflationary pressures. We
also realised the benefit of our portfolio improvements in copper
and low-carbon aluminium(14), with Sierra Gorda
contributing Underlying EBITDA of US$117M at an operating margin of
36%, and production from Brazil Aluminium more than
doubled.
In H1 FY24, we completed a
Group-wide review of expenditure that identified further
efficiencies and options to defer non-critical projects. This has
supported FY24 Operating unit cost guidance being lowered or
maintained across the majority of our operations, and a 6%
reduction in FY24 Group safe and reliable and improvement capital
expenditure.
Looking forward, our expected
production uplift of 7%(15) in H2 FY24 and continued
focus on driving cost efficiencies, places us in a strong position
to capture higher margins as market conditions
improve.
Free cash flow from operations,
including distributions from our manganese and Sierra Gorda equity
accounted investments (EAIs), decreased by US$544M to an outflow of
US$417M. This reflected our continued investment in productivity,
improvement and growth projects, and a temporary build in our high
value aluminium inventory as third-party port congestion impacted
the timing of shipments. Looking forward, we expect to reduce our
aluminium inventory position in H2 FY24, adding to the Group's cash
generation.
We returned US$180M to shareholders
during H1 FY24, paying a US$145M fully-franked ordinary dividend in
respect of H2 FY23 and returning US$35M via our on-market share
buy-back. We have today announced a fully-franked ordinary dividend
of US$18M (US 0.4 cents per share) in respect of H1 FY24,
consistent with our policy to distribute a minimum 40% of
Underlying earnings as ordinary dividends in each six month
period.
We continue to prioritise a strong
balance sheet and investment grade credit rating through all
cycles, finishing the period with net debt of US$1.1B. Our current
investment grade credit ratings were re-affirmed in H1 FY24 and we
retain access to significant liquidity, having successfully
extended our undrawn sustainability-linked revolving credit
facility.
To manage our financial position
and ensure we retain the right balance of flexibility, efficiency
and prudence, we have taken the decision to cancel our on-market
share buy-back, which was due to expire on 1 March
2024(16). Consistent with our unchanged capital
management framework and in the context of our financial position,
we will continue to assess opportunities to return excess cash to
shareholders in the most efficient and value accretive
manner.
We have today
announced(17) the next step in our portfolio
transformation, approving a final investment decision to develop
the Taylor zinc-lead-silver deposit at our Hermosa project in
Arizona, USA. With first production expected in H2
FY27, Taylor has the potential to be one of the world's largest,
lowest cost zinc producers and deliver value for our shareholders
for decades to come.
Specific highlights for H1 FY24 included:
•
|
Delivered record half-year Group
aluminium production, and increased zinc and nickel production by
20% in Q2 FY24;
|
•
|
Finalised new industrial agreements
at Illawarra Metallurgical Coal and Cannington;
|
•
|
Completed a Group-wide review of
costs to deliver further efficiencies and reduce
expenditure;
|
•
|
FY24 production guidance is
unchanged and we expect to deliver a 7%(15) increase in
production volumes in H2 FY24;
|
•
|
FY24 Operating unit cost guidance
has been lowered or maintained across the majority of our
operations;
|
•
|
Invested US$188M at Hermosa as we
installed critical path infrastructure and progressed study work
and federal permitting for our Taylor and Clark
deposits;
|
•
|
Progressed the feasibility study
for the fourth grinding line expansion at Sierra Gorda, ahead of a
planned final investment decision in Q4
FY24;
|
•
|
Continued our investment in
greenfield exploration to discover our next generation of base
metal mines, spending US$19M in targeted prospective regions;
and
|
•
|
Progressed decarbonisation programs
to support our target(18) to reduce operational
greenhouse gas (GHG) emissions by 50% by 2035, completing the
conversion of Worsley Alumina's first coal-fired boiler to natural
gas.
|
Subsequent to the end of the period:
•
|
Announced final investment approval
for the Taylor deposit at our Hermosa project, a major milestone
aligned with our strategy to reshape our portfolio toward
commodities that are critical for a low-carbon future;
and
|
•
|
Entered into a binding agreement to
divest our 50% interest in the Eagle Downs metallurgical coal
project to a subsidiary of Stanmore Resources Limited, for upfront
consideration of US$15 million, a contingent payment of US$20
million, subject to the Eagle Downs project reaching metallurgical
coal production of 100,000 tonnes, and a price-linked royalty of up
to US$100 million. The transaction is expected to be completed in
the 2024 calendar year subject to the satisfaction of conditions
precedent including approval from Australia's Foreign Investment
Review Board and certain joint venture consents.
|
EARNINGS RECONCILIATION
The Group's statutory profit after
tax decreased by US$632M to US$53M in H1 FY24, while Underlying
earnings decreased by US$520M to US$40M.
Consistent with our accounting
policies, various items are excluded from the Group's statutory
profit/(loss) to derive Underlying earnings. Total adjustments to
derive Underlying EBIT (US$161M), shown in the table below,
include:
•
|
Sierra Gorda (+US$47M)
and manganese (+US$71M) joint venture
adjustments: adjustments to reconcile the statutory equity
accounting position to a proportional consolidation basis;
and
|
•
|
Net impairment loss of financial
assets (+US$48M): periodic revaluation of the shareholder loan
receivable from Sierra Gorda reflecting copper prices and other
macroeconomic assumptions. An offsetting amount is recorded in the
Sierra Gorda joint venture adjustments noted above.
|
Further information on these
earnings adjustments is included on page 42.
Group Underlying revenue declined
by 14% (or US$643M) as lower realised prices (-US$396M), together
with lower sales volumes at Illawarra Metallurgical Coal (-US$267M)
due to planned longwall moves, more than offset higher volumes from
Brazil Aluminium, Cannington, Australia Manganese and Worsley
Alumina (+US$148M). Group Underlying EBITDA decreased by US$656M
(or 48%) to US$708M for an operating margin(6) of 19%.
The Group's costs remained well controlled, with controllable cost
increases held to approximately 4% of the Group's cost
base(13) (-US$131M) despite broad
inflationary pressures, and we benefited from a reduction in raw
material input prices and other price-linked costs
(+US$231M).
The Group's Underlying EBIT
decreased by US$686M (or 74%) to US$236M, as Underlying
depreciation and amortisation increased by US$30M (or 7%) to
US$472M, reflecting our continued investment in projects to improve
productivity and grow future volumes.
Profit to Underlying EBITDA reconciliation
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Profit before tax and net finance
income/(costs)
|
75
|
871
|
Adjustments to derive Underlying
EBIT:
|
|
|
Significant items
|
-
|
(138)
|
Sierra Gorda joint venture
adjustments
|
47
|
(57)
|
Manganese joint venture
adjustments
|
71
|
101
|
Exchange rate (gains)/losses on the
restatement of monetary items
|
13
|
(48)
|
Net impairment loss/(reversal) of
financial assets
|
48
|
214
|
Net impairment loss/(reversal) of
non-financial assets
|
-
|
(4)
|
Gains on non-trading derivative
instruments, contingent consideration and other investments
measured at fair value through profit and loss
|
(18)
|
(17)
|
Total adjustments to derive Underlying EBIT
|
161
|
51
|
Underlying EBIT
|
236
|
922
|
Underlying depreciation and
amortisation
|
472
|
442
|
Underlying EBITDA
|
708
|
1,364
|
Profit/(loss) to Underlying earnings
reconciliation
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Profit after tax
|
53
|
685
|
Total adjustments to derive
Underlying EBIT
|
161
|
51
|
Total adjustments to derive
Underlying net finance costs
|
(109)
|
(102)
|
Total adjustments to derive
Underlying income and royalty related tax expense
|
(65)
|
(74)
|
Underlying earnings
|
40
|
560
|
EARNINGS ANALYSIS
The following key factors influenced
Underlying EBIT in H1 FY24, relative to H1 FY23.
Reconciliation of movements in Underlying EBIT
(US$M)(5)(19)(20)(21)
|
Earnings Analysis
|
US$M
|
Commentary
|
H1
FY23 Underlying EBIT
|
922
|
|
Change in sales price
|
(396)
|
Lower average realised prices for
our commodities, including:
Aluminium (-US$136M) and alumina
(-US$33M)
Nickel (-US$121M)
Manganese (-US$102M)
Energy coal (-US$22M)
Partially offset by higher average
realised prices for silver (+US$15M) and copper
(+US$8M)
|
Net impact of price-linked
costs
|
231
|
Lower caustic soda prices at
Worsley Alumina (+US$54M) and Brazil Alumina (+US$11M)
Lower aluminium smelter raw
material input prices (+US$60M), including pitch and
coke
Lower price-linked royalties
(+US$30M)
Lower coal, fuel oil and diesel
prices (+US$28M)
Lower freight and distribution
costs (+US$25M)
Lower electricity prices at
Illawarra Metallurgical and Brazil Aluminium, partially offset by
higher gas prices at Cannington (+US$13M)
|
Change in exchange rates
|
33
|
Weaker South African rand (+US$42M)
and Australian dollar (+US$28M)
Partially offset by a stronger
Colombian peso (-US$16M), Brazilian real (-US$12M) and Chilean peso
(-US$9M)
|
Change in inflation
|
(116)
|
Inflation-linked indexation of our
Southern African aluminium smelter electricity prices
(-US$27M)
General inflation across Australia
(-US$43M), South America (-US$29M) and Southern Africa
(-US$17M)
|
Change in sales volume
|
(260)
|
Lower volumes, mostly at Illawarra
Metallurgical Coal (-US$267M) as well as Sierra Gorda (-US$44M),
Cerro Matoso (-US$36M) and Mozal Aluminium (-US$32M)
Partially offset by higher volumes
at Brazil Aluminium (+US$50M), Cannington (+US$44M), Australia
Manganese (+US$34M) and Worsley Alumina (+US$20M)
|
Controllable costs
|
(131)
|
Inventory and volume related
movements (-US$102M) including a planned drawdown of finished goods
at Australia Manganese to support higher sales volumes
Higher contractor and maintenance
costs (-US$39M) including at Illawarra
Metallurgical Coal to support the two completed longwall moves and
at Australia Manganese to deliver planned mining
activity
A planned workforce payment at
Sierra Gorda (-US$20M), following the finalisation of a new,
three-year industrial agreement
Partially offset by lower energy
costs at Sierra Gorda (+US$20M), following the transition to cost
efficient, 100% renewable energy supply
|
Other
|
(47)
|
Higher Group depreciation and
amortisation, and our share of the loss from Mineração Rio do Norte
(MRN) due to lower bauxite prices
|
H1
FY24 Underlying EBIT
|
236
|
|
Net finance income/(costs)
The Group's H1 FY24 Underlying net
finance costs of US$118M primarily comprise the unwinding of the
discount applied to our closure and rehabilitation provisions
(US$76M), interest on lease liabilities (US$28M) largely for our
multi-fuel co-generation facility at Worsley Alumina, and interest
on our US$700M of senior unsecured notes (US$16M) issued in
H2 FY22 to partly fund the Sierra Gorda
acquisition.
Underlying net finance costs reconciliation
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Unwind of discount applied to
closure and rehabilitation provisions
|
(76)
|
(51)
|
Interest on lease
liabilities
|
(28)
|
(28)
|
Interest on senior unsecured
notes
|
(16)
|
(15)
|
Other
|
2
|
6
|
Underlying net finance costs
|
(118)
|
(88)
|
Add back earnings adjustment for
exchange rate variations on net debt
|
(1)
|
4
|
Sierra Gorda joint venture
adjustments(22)
|
91
|
85
|
Manganese joint venture
adjustments(22)
|
19
|
13
|
Total adjustments to derive Underlying net finance
costs
|
109
|
102
|
Net
finance income/(costs)
|
(9)
|
14
|
Tax
expense
The Group's Underlying income tax
expense, which includes our material EAIs, decreased by US$196M to
US$78M in H1 FY24, for an Underlying effective tax rate
(ETR)(23) of 60.5% (FY23: 36.1%). While this largely
reflected the corporate taxes of the jurisdictions in which we
operate(24) and our geographical earnings mix, the
Underlying ETR was elevated as permanent differences, together with
losses incurred at Mozal Aluminium(25), had a
disproportionate effect when combined with compressed profit
margins.
The Underlying ETR for our manganese
business was 81.3% in H1 FY24, reflecting royalty related tax at
Australia Manganese(26) and the derecognition of certain
deferred tax assets. The Underlying ETR for our Sierra Gorda EAI
was 33.0% in H1 FY24, including royalty related
tax(27), and a one-off benefit due to the
recognition of deferred tax assets.
During the period, the Colombian
Constitutional Court annulled a recent tax law amendment that made
royalty payments non-deductible for tax purposes from 1 January
2023. As a result of the Court's ruling, we have recognised a
receivable of US$39M in relation to the expected refund of prior
tax paid, also reducing our H1 FY24 income tax expense.
The Group's cash tax paid in H1
FY24, excluding EAIs, decreased by US$251M to US$96M as cash tax
normalised following one-off portfolio related payments in the
prior period.
Underlying income tax expense reconciliation and Underlying
ETR
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Underlying EBIT
|
236
|
922
|
Include: Underlying net finance
costs
|
(118)
|
(88)
|
Remove: Share of (profit)/loss of
EAIs
|
11
|
(7)
|
Underlying profit before tax
|
129
|
827
|
|
|
|
Income tax expense
|
13
|
200
|
Tax effect of earnings adjustments
to Underlying EBIT
|
4
|
1
|
Tax effect of earnings adjustments
to Underlying net finance costs
|
1
|
(1)
|
Exchange rate variations on tax
balances
|
20
|
(5)
|
Significant items
|
-
|
(23)
|
Sierra Gorda joint venture
adjustment relating to income tax(22)
|
(6)
|
6
|
Sierra Gorda joint venture
adjustment relating to royalty related
tax(22)
|
1
|
4
|
Manganese joint venture adjustment
relating to income tax(22)
|
24
|
56
|
Manganese joint venture adjustment
relating to royalty related tax(22)
|
21
|
36
|
Total adjustments to derive Underlying income tax
expense
|
65
|
74
|
Underlying income tax expense
|
78
|
274
|
Underlying effective tax rate
|
60.5 %
|
33.1 %
|
CASH FLOW
Group free cash flow from operations
declined by US$544M to an outflow of US$477M, due to lower
profitability, an increase in capital expenditure for productivity,
improvement and growth projects (-US$168M), and a build in working
capital in the period (-US$276M).
Separately, we received net
distributions(28) of US$42M from our manganese EAI in H1 FY24 (H1 FY23: US$60M),
following the payment of income tax (US$34M, 100% basis), and
royalties at Australia Manganese (US$45M, 100% basis). We also
received US$18M from our Sierra Gorda EAI (H1 FY23: nil), as the
operation invested in the plant de-bottlenecking project and the
feasibility study for the fourth grinding line expansion project,
designed to unlock future copper volumes.
The increase in working capital in
the period reflected an increase in receivables due to the timing
of sales, and a further increase in our high value aluminium
inventory position as Brazil Aluminium continued to ramp up and
three aluminium shipments slipped to January 2024 due to port
congestion at Richards Bay. We expect to drawdown our aluminium
inventory during H2 FY24 as port congestion eases.
Free cash flow from operations excluding
EAIs
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Profit from operations
|
75
|
871
|
Non-cash or non-operating
items
|
421
|
377
|
Share of (profit)/loss from
EAIs
|
9
|
(241)
|
Change in working capital
|
(276)
|
(152)
|
Cash generated from operations
|
229
|
855
|
Total capital expenditure, excluding
EAIs, including intangibles and capitalised exploration
|
(584)
|
(416)
|
Operating cash flows generated from operations after capital
expenditure
|
(355)
|
439
|
Net interest
paid(29)
|
(26)
|
(25)
|
Income tax paid
|
(96)
|
(347)
|
Free cash flow from operations
|
(477)
|
67
|
Working capital movement
|
|
|
US$M
|
H1 FY24
|
Commentary
|
Trade and other
receivables
|
(88)
|
Timing of shipments weighted toward
the end of the period
|
Inventories
|
(84)
|
Continued ramp up of Brazil
Aluminium, and temporary shipping delays at Hillside Aluminium due
to port congestion at Richards Bay
|
Trade and other payables
|
(84)
|
Timing of raw material
purchases
|
Provisions and other
liabilities
|
(20)
|
|
Total working capital movement
|
(276)
|
|
Capital expenditure
The Group's capital
expenditure(30), excluding EAIs, increased by US$168M to
US$584M in H1 FY24 as we continued our investment in productivity,
improvement and growth projects:
•
|
Safe and reliable capital
expenditure increased by US$103M to US$335M, reflecting elevated
capital expenditure at Illawarra Metallurgical Coal as we
transition Appin to a more efficient single longwall configuration
from FY25(31), and install additional ventilation
capacity to enable mining in Appin's Area 7 until at least
2039(31);
|
•
|
Improvement and life extension
capital expenditure increased by US$16M to US$40M as we advanced decarbonisation projects at Worsley Alumina and
the De-bottlenecking Phase Two project at Brazil
Alumina;
|
•
|
Growth capital expenditure
increased by US$92M to US$188M at Hermosa, as we constructed
critical path infrastructure and advanced studies for the Taylor
zinc-lead-silver and Clark battery-grade manganese deposits;
and
|
•
|
Intangibles and capitalised
exploration expenditure was US$21M, as we completed multiple
exploration programs across our portfolio focused on base
metals.
|
Our share of capital expenditure
for our material EAIs increased by US$39M to US$170M in H1
FY24:
•
|
Capital expenditure for our
manganese EAIs increased by US$22M to US$66M, as Australia
Manganese progressed construction of the Eastern Lease South life
extension project, and South Africa Manganese continued work to
access new mining areas and improve rail efficiencies; and
|
|
•
|
Capital expenditure for our Sierra
Gorda EAI increased by US$17M to US$104M, as the operation
continued its investment in deferred stripping, additional tailings
storage infrastructure and the plant de-bottlenecking project,
together with the feasibility study for the fourth grinding line
expansion project.
|
|
Capital expenditure (South32
share)(21)(30)
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Safe and reliable capital
expenditure
|
(335)
|
(232)
|
Improvement and life extension
capital expenditure
|
(40)
|
(24)
|
Growth capital
expenditure
|
(188)
|
(96)
|
Intangibles and the capitalisation
of exploration expenditure
|
(21)
|
(64)(a)
|
Total capital expenditure (excluding EAIs)
|
(584)
|
(416)
|
EAIs capital expenditure
|
(170)
|
(131)
|
Total capital expenditure (including EAIs)
|
(754)
|
(547)
|
|
|
|
|
|
(a) Included a US$43M
payment to the National Mining Agency of Colombia as part of the
15-year extension of Cerro Matoso's mining contract to
2044.
BALANCE SHEET, DIVIDENDS AND CAPITAL
MANAGEMENT
The Group finished the period with
net debt of US$1,091M, due to lower profitability, higher
investment in our business to improve productivity and grow future
volumes, and a temporary build in working capital. We also returned
US$180M to shareholders during H1 FY24, paying a US$145M
fully-franked ordinary dividend in respect of H2 FY23, and a
further US$35M via our on-market share buy-back.
We continue to prioritise a strong
balance sheet and investment grade credit rating through all
cycles. Our current BBB+/Baa1 credit ratings were re-affirmed by
S&P Global Ratings and Moody's, respectively, during H1 FY24.
We also retain access to significant liquidity, having successfully
extended our undrawn sustainability-linked revolving credit
facility of US$1.4B to December 2027 and US$1.3B to December
2028.
To manage our financial position and
ensure we retain the right balance of flexibility, efficiency and
prudence, we have taken the decision to cancel our
on-market share buy-back, which was due to expire on 1 March
2024(16). Consistent with our
unchanged capital management framework and in the context of our
financial position, we will continue to assess opportunities to
return excess cash to shareholders in the most efficient and value
accretive manner.
Net
debt
|
|
|
US$M
|
H1 FY24
|
FY23
|
Cash and cash equivalents
|
702
|
1,258
|
Lease liabilities
|
(682)
|
(674)
|
Other interest bearing
liabilities
|
(1,111)
|
(1,067)
|
Net
debt
|
(1,091)
|
(483)
|
Our unchanged capital management
framework supports investment in our business and is designed to
reward shareholders as our financial performance improves.
Consistent with our policy to distribute a minimum 40% of
Underlying earnings as ordinary dividends, the Board has resolved
to pay a fully-franked interim ordinary dividend of US 0.4 cents per share (US$18M) in respect of H1 FY24,
representing 45% of Underlying earnings.
Dividends announced
|
|
|
|
|
Period
|
Dividend per share
(US cents)
|
US$M
|
Franking
|
Pay-out ratio
|
H1 FY22
|
8.7
|
405
|
100%
|
40%
|
H2 FY22
|
14.0
|
648
|
100%
|
41%
|
August 2022 special
dividend
|
3.0
|
139
|
100%
|
N/A
|
H1 FY23
|
4.9
|
224
|
100%
|
40%
|
H2 FY23
|
3.2
|
145
|
100%
|
41%
|
H1 FY24
|
0.4
|
18
|
100%
|
45%
|
South32 shareholders registered on
the South African branch register will not be able to dematerialise
or rematerialise their shareholdings between 6 and 8 March 2024
(both dates inclusive), nor will transfers to/from the South
African branch register be permitted between 29 February and 8
March 2024 (both dates inclusive).
Details of the currency exchange
rates applicable for the dividend will be announced to the relevant
stock exchanges. Further dividend information is available on our
website (www.south32.net).
South32 American Depositary Receipts
(ADRs) each represent five fully paid ordinary shares in South32
and ADR holders will receive dividends accordingly, subject to the
terms of the Depositary Agreement.
Dividend timetable
|
Date
|
Announce currency conversion into
rand
|
1 March 2024
|
Last day to trade cum dividend on
the Johannesburg Stock Exchange (JSE)
|
5 March 2024
|
Ex-dividend date on the
JSE
|
6 March 2024
|
Ex-dividend date on the ASX and
London Stock Exchange (LSE)
|
7 March 2024
|
Record date (including currency
election date for ASX)
|
8 March 2024
|
Payment date
|
4 April 2024
|
OUTLOOK
PRODUCTION
We expect to
deliver a 7%(15) increase in
Group payable copper equivalent production in H2 FY24 following the
completion of planned longwall moves at Illawarra Metallurgical
Coal in H1 FY24, the continued ramp up of the Brazil Aluminium
smelter, and sequentially higher base metals volumes from Sierra
Gorda and Cerro Matoso.
Looking forward, we expect Group
payable copper equivalent production growth of 3%(32) in
FY25, as we continue to realise the benefit of our portfolio
improvements in copper and low-carbon
aluminium(14).
Production guidance (South32
share)(21)
|
|
FY23
|
H1 FY24
|
FY24e(a)
|
FY25e(a)
|
Key
guidance assumptions
|
Worsley Alumina
|
|
|
|
|
Guidance unchanged
Planned calciner maintenance
completed in Q1 FY24 and scheduled for Q3 FY24
|
Alumina production (kt)
|
3,839
|
1,934
|
4,000
|
4,000
|
Brazil Alumina (non-operated)
|
|
|
|
|
Guidance unchanged
Additional maintenance reflected in
guidance, following third-party power outages in H1 FY24
|
Alumina production (kt)
|
1,262
|
640
|
1,300
|
1,350
|
Brazil Aluminium (non-operated)
|
|
|
|
|
Guidance unchanged
Expected to increase by 45% in FY24
and 30% in FY25, as the smelter ramps up toward nameplate capacity
(179ktpa, 40% basis) in H2 FY26
|
Aluminium production (kt)
|
69
|
50
|
100
|
130
|
Hillside Aluminium(33)
|
|
|
|
|
Guidance unchanged (subject to
load-shedding)
Expected to test its maximum
technical capacity
|
Aluminium production (kt)
|
719
|
359
|
720
|
720
|
Mozal Aluminium(33)
|
|
|
|
|
Guidance unchanged (subject to
load-shedding)
Expected to progressively increase
the number of pots in operation across CY24
|
Aluminium production (kt)
|
345
|
166
|
320
|
372
|
Sierra Gorda (non-operated)
|
|
|
|
|
Guidance unchanged
Expected to continue to benefit
from the plant de-bottlenecking project, together with higher
planned copper grades in H2 FY24 and FY25
Molybdenum plant performance and
recoveries expected to improve from Q4 FY24
|
Ore processed (Mt)
|
21.2
|
10.9
|
21.8
|
21.8
|
Payable copper equivalent
production (kt)(34)
|
86.5
|
38.6
|
78.7
|
91.8
|
Payable copper production
(kt)
|
70.7
|
31.6
|
67.0
|
71.0
|
Payable molybdenum production
(kt)
|
1.2
|
0.5
|
0.8
|
2.2
|
Payable gold production
(koz)
|
28.8
|
13.4
|
22.5
|
25.0
|
Payable silver production
(koz)
|
630
|
295
|
550
|
550
|
Cannington
|
|
|
|
|
Guidance unchanged
Improved plant throughput and
higher planned silver and lead grades expected in FY24
Further increase in plant
throughput in FY25, offset by lower planned metal grades
|
Ore processed (kdmt)
|
2,156
|
1,139
|
2,300
|
2,400
|
Payable zinc equivalent production
(kt)(35)
|
259.6
|
147.2
|
287.2
|
275.8
|
Payable silver production
(koz)
|
11,183
|
6,704
|
12,500
|
12,000
|
Payable lead production
(kt)
|
101.7
|
58.8
|
115.0
|
110.0
|
Payable zinc production
(kt)
|
59.2
|
29.0
|
62.0
|
60.0
|
Cerro Matoso
|
|
|
|
|
Guidance unchanged
Ore Sorting and Mechanical Ore
Concentration (OSMOC) project expected to partially offset natural
grade decline
|
Ore processed (kdmt)
|
2,807
|
1,317
|
2,700
|
2,750
|
Payable nickel production
(kt)
|
40.8
|
18.3
|
40.5
|
35.0
|
Illawarra Metallurgical Coal
|
|
|
|
|
Guidance unchanged
Volumes remain weighted to H2 FY24
due to the timing and duration of planned longwall moves
|
Total coal production
(kt)
|
6,520
|
2,045
|
5,000
|
5,500
|
Metallurgical coal production
(kt)
|
5,497
|
1,787
|
4,400
|
4,700
|
Energy coal production
(kt)
|
1,023
|
258
|
600
|
800
|
Australia Manganese
|
|
|
|
|
Guidance unchanged (subject to wet season)
Expected to continue strong primary
output and return the PC02 circuit to nameplate in Q4
FY24
|
Manganese ore production
(kwmt)
|
3,545
|
1,679
|
3,400
|
3,400
|
South Africa Manganese
|
|
|
|
|
Guidance unchanged (subject to demand)
We expect to continue to use higher
cost trucking to optimise sales volumes
FY25 guidance is subject to market
demand
|
Manganese ore production
(kwmt)
|
2,108
|
1,111
|
2,000
|
Subject
to demand
|
(a) The denotation (e)
refers to an estimate or forecast year.
COSTS AND CAPITAL EXPENDITURE
Operating unit costs guidance
H1 FY24 Operating unit costs were in
line with or below prior guidance for the majority of our
operations, as we continued our focus on delivering cost
efficiencies and realised the benefit of lower raw material input
prices.
In H1 FY24, we completed a
Group-wide review focused on reducing our expenditure in FY24 and
FY25. The review identified further cost efficiencies with respect
to labour, contractors and consumables, that are expected to
support a reduction in Operating unit costs and
mitigate inflationary
pressures.
FY24 Operating unit cost guidance
has been lowered or maintained across the majority of our
operations, reflecting these cost efficiencies, and lower raw
material input prices in our aluminium value chain.
While Operating unit cost guidance
is not provided for our aluminium smelters, their cost profile will
continue to be influenced by producer currencies, and the price of
raw material inputs and energy.
Operating unit cost(36)
|
|
|
|
|
|
H1 FY23
|
H1 FY24
|
FY24 prior
guidance(a)
|
FY24 new
guidance(b)
|
H1
FY24 to H1 FY23 commentary
FY24e(c) new guidance to FY24 prior guidance
commentary
|
Worsley Alumina
|
|
|
|
|
|
(US$/t)
|
288
|
258
|
290
|
270
|
H1
FY24: decreased by 10%, with lower
caustic soda prices
FY24e guidance lowered by 7%,
with lower caustic prices
|
Brazil Alumina (non-operated)
|
|
|
|
|
|
(US$/t)
|
364
|
325
|
Not
provided
|
Not
provided
|
H1
FY24: decreased by 11%, with lower
caustic soda, energy and bauxite prices
H2
FY24e: Expected to benefit from a
further reduction in raw material input prices
|
Brazil Aluminium (non-operated)
|
|
|
|
|
|
(US$/t)
|
5,876
|
4,025
|
Not
provided
|
Not
provided
|
H1
FY24: decreased by 32%, with higher
volumes, and lower raw material input and energy prices
H2
FY24e: Expected to benefit from
higher volumes in H2 FY24 as the smelter continues to ramp
up
|
Hillside Aluminium
|
|
|
|
|
|
(US$/t)
|
2,276
|
2,135
|
Not
provided
|
Not
provided
|
H1
FY24: decreased by 6%, with lower
raw material input prices and a weaker South African rand,
partially offset by higher energy prices
H2
FY24e: Will continue to be
influenced by the price of raw material inputs, the South African
rand and inflation-linked energy costs
|
Mozal Aluminium
|
|
|
|
|
|
(US$/t)
|
2,237
|
2,461
|
Not
provided
|
Not
provided
|
H1
FY24: increased by 10%, due to lower
volumes and higher maintenance costs
H2
FY24e: Expected to remain elevated,
with the number of pots in operation to progressively increase
across CY24
|
Sierra Gorda (non-operated)
|
|
|
|
|
|
(US$/t)(d)
|
16.6
|
18.8
|
16.0
|
17.0
|
H1
FY24: increased by 13%, with the
benefit of cost efficient, 100% renewable electricity, more than
offset by a planned workforce payment following a new three-year
industrial agreement
FY24e guidance increased by
6%, with sequentially lower
costs in H2 FY24
|
Cannington
|
|
|
|
|
|
(US$/t)(d)
|
136
|
150
|
155
|
155
|
H1
FY24: increased by 10%, with higher
planned contractor and energy costs
FY24e guidance is unchanged
|
Cerro Matoso
|
|
|
|
|
|
(US$/lb)
|
4.93
|
5.57
|
5.30
|
5.20
|
H1
FY24: increased by 13%, with a
stronger Colombian peso and lower H1 FY24 volumes
FY24e guidance lowered by 2%, with further cost efficiencies and higher volumes expected in
H2 FY24
|
Illawarra Metallurgical Coal
|
|
|
|
|
|
(US$/t)
|
124
|
167
|
140
|
150
|
H1
FY24: increased by 35%, due to the
volume impact of the two planned longwall moves
FY24e guidance increased by 7%,
due to higher price-linked royalties
|
Australia Manganese
|
|
|
|
|
|
(US$/dmtu, FOB)
|
1.76
|
2.15
|
2.15
|
2.15
|
H1
FY24: increased by 22%, due to
increased mining activity and contractor costs to deliver planned
volumes
FY24e guidance is unchanged
|
South Africa Manganese
|
|
|
|
|
|
(US$/dmtu, FOB)
|
2.67
|
2.59
|
2.60
|
2.60
|
H1
FY24: decreased by 3%, with higher
volumes, a weaker South African rand and lower price-linked
royalties
FY24e guidance is unchanged
|
(a) FY24 prior guidance
Operating unit cost guidance includes royalties (where appropriate)
and commodity price and foreign exchange rate forward curves or our
internal expectations (refer to page 30 footnote 37).
(b)
FY24 new guidance Operating unit cost guidance includes royalties
(where appropriate) and commodity price and foreign exchange rate
forward curves or our internal expectations (refer to page
30 footnote 38.
(c) The denotation (e)
refers to an estimate or forecast year.
(d)
US dollar per tonne of ore processed. Periodic movements in
finished product inventory may impact Operating unit
costs.
Capital expenditure guidance (excluding exploration and
intangibles)
FY24 Group safe and reliable and
improvement and life extension capital expenditure guidance
(including EAIs) has been revised down by US$60M (or 6%) to
US$970M, following the Group-wide review, which identified further
capital efficiencies and resulted in the deferral of certain
non-critical projects.
FY24 guidance for growth capital
expenditure at our Hermosa project has been set at
US$390M, following final
investment approval to develop the Taylor zinc-lead-silver deposit.
We expect to invest ~US$200M in H2 FY24 as we construct critical
path infrastructure for Taylor, advance the Clark battery-grade
manganese deposit, and continue work across the broader project.
Capitalised exploration at Hermosa is expected to be ~US$25M in
FY24, as we continue exploration programs at our Peake
copper-lead-zinc-silver prospect and our Flux zinc-lead-silver
prospect(39).
Capital expenditure excluding exploration and intangibles
(South32 share)(21)
|
US$M
|
H1 FY24
|
FY24e(a)
|
Worsley Alumina
|
34
|
70
|
Brazil Alumina
|
38
|
60
|
Brazil Aluminium
|
4
|
10
|
Hillside Aluminium
|
24
|
40
|
Mozal Aluminium
|
11
|
20
|
Cannington
|
23
|
40
|
Cerro Matoso
|
21
|
35
|
Illawarra Metallurgical
Coal
|
180
|
310
|
Safe and reliable capital expenditure (excluding
EAIs)
|
335
|
585
|
Worsley Alumina
|
24
|
45
|
Brazil Alumina
|
13
|
20
|
Other operations
|
3
|
5
|
Improvement and life extension capital expenditure (excluding
EAIs)
|
40
|
70
|
Hermosa
|
188
|
390
|
Growth capital expenditure
|
188
|
390
|
Total capital expenditure (excluding EAIs)
|
563
|
1,045
|
Total capital expenditure (including EAIs)
|
727
|
1,360
|
Capital expenditure for EAIs excluding exploration and
intangibles (South32 share)(21)
|
US$M
|
H1 FY24
|
FY24e(a)
|
Sierra Gorda
|
83
|
160
|
Australia Manganese
|
24
|
55
|
South Africa Manganese
|
20
|
30
|
Safe and reliable capital expenditure (EAIs)
|
127
|
245
|
Sierra Gorda
|
15
|
30
|
Australia Manganese
|
16
|
30
|
South Africa Manganese
|
6
|
10
|
Improvement and life extension capital expenditure
(EAIs)
|
37
|
70
|
Total capital expenditure (EAIs)
|
164
|
315
|
(a) The denotation (e)
refers to an estimate or forecast year.
Exploration and intangibles guidance
FY24 Group capitalised exploration
(including EAIs) has been revised to US$45M (previously US$40M), as
we continue base metals exploration programs across our portfolio,
including an expanded drilling program at Sierra Gorda's
Catabela Northeast copper porphyry exploration
prospect.
Capitalised exploration (South32
share)(21)
|
US$M
|
H1 FY24
|
FY24e(a)
|
Capitalised exploration (excluding
EAIs)
|
21
|
35
|
EAIs capitalised
exploration
|
6
|
10
|
Capitalised exploration (including EAIs)
|
27
|
45
|
(a) The denotation (e)
refers to an estimate or forecast year.
Other expenditure guidance
Other expenditure items presented
below are on a proportional consolidation basis including our
manganese and Sierra Gorda EAIs.
Other expenditure guidance
|
|
H1 FY24
|
FY24e(a)
|
Commentary
|
Group and unallocated expense in Underlying EBIT (excluding
greenfield exploration and third party products and services
EBIT)
|
(US$M)
|
39
|
100
|
Guidance unchanged
H1 FY24 included non-core royalty
receipts of US$5M
|
Underlying depreciation and amortisation
|
(US$M)
|
472
|
930
|
Guidance unchanged
|
Underlying net finance costs
|
(US$M)
|
118
|
á
220
|
Guidance revised to US$220M (from US$200M)
Reflects balance sheet position as
at H1 FY24
|
Greenfield exploration
|
|
|
|
(US$M)
|
19
|
30
|
Guidance unchanged
Greenfield exploration activity
targeting base metals in the Americas, Australia and Europe,
subject to the timing of programs
|
(a) The denotation (e)
refers to an estimate or forecast year.
OPERATIONS ANALYSIS
A summary of the underlying
performance of the Group's operations is presented below and a more
detailed analysis is presented on pages 18 to 28. Unless otherwise stated: all
metrics reflect South32's share; Operating unit cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services divided by sales volumes; Operating cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services; and Realised sales price is calculated as Underlying
revenue excluding third party products and services divided by
sales volume.
Operations table (South32
share)(21)
|
|
|
|
|
|
Underlying revenue
|
Underlying EBIT
|
US$M
|
H1 FY24
|
H1 FY23
|
H1 FY24
|
H1 FY23
|
Worsley Alumina
|
653
|
659
|
68
|
33
|
Brazil Alumina
|
234
|
247
|
(9)
|
(19)
|
Brazil Aluminium
|
91
|
47
|
(74)
|
(70)
|
Hillside Aluminium
|
758
|
861
|
27
|
62
|
Mozal Aluminium
|
397
|
482
|
(48)
|
65
|
Sierra Gorda
|
322
|
357
|
49
|
107
|
Cannington
|
318
|
272
|
109
|
82
|
Hermosa
|
-
|
-
|
(9)
|
(9)
|
Cerro Matoso
|
238
|
395
|
(14)
|
154
|
Illawarra Metallurgical
Coal
|
520
|
801
|
111
|
340
|
Australia Manganese
|
318
|
355
|
67
|
149
|
South Africa Manganese
|
152
|
175
|
3
|
25
|
Third party products and
services(40)
|
262
|
249
|
14
|
12
|
Inter-segment / Group and
unallocated
|
(382)
|
(376)
|
(58)
|
(9)
|
South32 Group
|
3,881
|
4,524
|
236
|
922
|
WORSLEY ALUMINA
(86% SHARE)
Volumes
Worsley Alumina saleable production
increased by 1% (or 12kt) to 1,934kt in H1 FY24. FY24 production
guidance remains unchanged at 4,000kt, with the refinery expected
to operate at nameplate production rates (4.6Mtpa, 100% basis)
following planned calciner maintenance in Q3 FY24.
We continue to progress regulatory
approvals for new mining areas, with primary
environmental approvals for our Worsley Mine Development
project expected in H1 FY25. While not currently
expected to impact production guidance, we continue to manage the
delays experienced with respect to new mining
approvals.
Operating costs
Operating unit costs decreased by
10%, to US$258/t in H1 FY24, as the refinery benefited from
lower caustic soda prices (H1 FY24: US$460/t, H1
FY23: US$714/t) and a weaker Australian dollar.
We have revised FY24 Operating unit
cost guidance to US$270/t (previously US$290/t), reflecting lower
caustic soda prices. Exchange rate and price assumptions for FY24
Operating unit cost guidance are detailed
on page 30,
footnote 38.
Financial performance
Underlying EBIT increased by 106%
(or US$35M), to US$68M in H1 FY24, as higher sales volumes
(+US$13M), lower caustic soda prices (+US$54M) and a weaker
Australian dollar (+US$9M), more than offset a 3% decrease in the average realised price of alumina
(-US$19M) and a drawdown of inventory (-US$22M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$10M to US$34M in H1 FY24 as we invested
in infrastructure to enable access to new mining areas, and
additional bauxite residue disposal capacity. FY24 safe and
reliable expenditure guidance has been revised to US$70M (previously US$85M) as we target further capital
efficiencies.
Improvement and life extension
capital expenditure increased by US$14M to US$24M in H1 FY24 and is
expected to be US$45M in FY24 as we advance decarbonisation
projects at the refinery. We completed the conversion of the first
coal-fired boiler to natural gas in H1 FY24 and expect to complete
the second in H2 FY24, improving the refinery's energy security and
supporting the transition to lower carbon(41)
energy.
South32 share
|
H1 FY24
|
H1 FY23
|
Alumina production (kt)
|
1,934
|
1,922
|
Alumina sales (kt)
|
1,898
|
1,861
|
Realised alumina sales price
(US$/t)
|
344
|
354
|
Operating unit cost
(US$/t)
|
258
|
288
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
653
|
659
|
Underlying EBITDA
|
164
|
123
|
Underlying EBIT
|
68
|
33
|
Net operating
assets(a)
|
2,485
|
2,457
|
Capital expenditure
|
58
|
34
|
Safe and reliable
|
34
|
24
|
Improvement and life extension
|
24
|
10
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
BRAZIL ALUMINA
(36% SHARE)
Volumes
Brazil Alumina saleable production
decreased by 7% (or 51kt) to 640kt in H1 FY24, as the refinery
was impacted by third-party power outages and unplanned
maintenance. FY24 and FY25 production guidance is set at 1,300kt
and 1,350kt, respectively, reflecting these impacts and additional
maintenance in FY25.
Operating costs
Operating unit costs decreased by
11%, to US$325/t in H1 FY24, as lower caustic soda prices (H1 FY24:
US$541/t, H1 FY23: US$728/t), coal-linked
energy prices, and bauxite costs from MRN linked to alumina and
aluminium prices on a trailing basis, more than offset lower
volumes due to the third-party power outages.
While Operating unit cost guidance
is not provided for this non-operated facility, we expect Operating
unit costs in H2 FY24 to benefit from a further reduction in raw
material input prices.
Financial performance
Underlying EBIT increased by US$10M,
to a loss of US$9M in H1 FY24, as lower prices for caustic soda
(+US$11M), energy (+US$20M) and bauxite (+US$10M), more than offset
lower sales volumes (-US$11M).
Our share of earnings from MRN was a
loss of US$9M in H1 FY24 (H1 FY23: +US7M),
due to lower bauxite prices.
Capital expenditure
Safe and reliable capital
expenditure increased by US$9M to US$38M in H1 FY24 and is expected
to be US$60M in FY24 as we continue our investment in additional
bauxite residue disposal capacity.
Improvement and life extension
capital expenditure increased by US$7M to US$13M in H1 FY24 and is
expected to be US$20M in FY24 as the refinery progresses work on
the De-bottlenecking Phase Two project. The project is on track to
be completed in H1 FY26, and is expected to increase nameplate
capacity by ~4% to ~4.0Mt (100% basis).
South32 share
|
H1 FY24
|
H1 FY23
|
Alumina production (kt)
|
640
|
691
|
Alumina sales (kt)
|
647
|
678
|
Realised sales price
(US$/t)
|
362
|
364
|
Operating unit cost
(US$/t)(a)
|
325
|
364
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
234
|
247
|
Underlying EBITDA
|
15
|
7
|
Underlying EBIT
|
(9)
|
(19)
|
Net operating
assets(b)
|
788
|
738
|
Capital expenditure
|
51
|
35
|
Safe and reliable
|
38
|
29
|
Improvement and life extension
|
13
|
6
|
(a) Excludes the
profit/(loss) from our equity interest in MRN.
(b)
H1 FY23 reflects the balance as at 30 June 2023.
BRAZIL ALUMINIUM
(40% SHARE)
Volumes
Brazil Aluminium saleable production
increased by 26kt to 50kt in H1 FY24 as the smelter continued to
ramp up all three potlines. Production is expected to be 100kt in
FY24 and increase a further 30% to 130kt in FY25. Nameplate
capacity (179ktpa, 40% basis) remains on track to be achieved
during H2 FY26.
Operating costs
Operating unit costs decreased by
32%, to US$4,025/t in H1 FY24, with the benefit of higher volumes
as the smelter continued to ramp up, lower alumina and smelter raw
material input (including coke and pitch) and energy
prices.
While Operating unit cost guidance
is not provided for this non-operated facility, we expect Operating
unit costs in H2 FY24 to benefit from a further increase in volumes
as the smelter continues to ramp up.
Financial performance
Underlying EBIT was largely
unchanged at a loss of US$74M in H1 FY24, as higher sales
volumes (+US$50M), combined with lower smelter raw material input
prices (+US$12M) and energy costs (+US$6M), was more than offset by
a 6% decline in the average realised price of aluminium (-US$6M)
and production and inventory related costs (-US$68M) ahead of the
smelter's ramp up to nameplate capacity.
Capital expenditure
Safe and reliable capital
expenditure was US$4M in H1 FY24 and is expected to be US$10M in
FY24.
South32 share
|
H1 FY24
|
H1 FY23
|
Aluminium production (kt)
|
50
|
24
|
Aluminium sales (kt)
|
40
|
19
|
Realised sales price
(US$/t)
|
2,275
|
2,423
|
Operating unit cost
(US$/t)
|
4,025
|
5,876
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
91
|
47
|
Underlying EBITDA
|
(70)
|
(67)
|
Underlying EBIT
|
(74)
|
(70)
|
Net operating
assets(a)
|
70
|
28
|
Capital expenditure
|
4
|
6
|
Safe and reliable
|
4
|
6
|
Improvement and life extension
|
-
|
-
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
HILLSIDE ALUMINIUM
(100% SHARE)
Volumes
Hillside Aluminium saleable
production decreased by 1% (or 3kt) to 359kt in H1 FY24 as the
smelter continued to test its maximum technical capacity, despite
the impact of elevated load-shedding. FY24 production guidance
remains unchanged at 720kt(33).
Operating costs
Operating unit costs decreased by
6%, to US$2,135/t in H1 FY24, as lower alumina and smelter raw
material input prices (including coke, pitch and aluminium
tri-fluoride) and a weaker South African rand, more than offset
inflation-linked indexation of energy costs.
While Operating unit cost guidance
is not provided, the cost profile of the smelter will continue to
be heavily influenced by the price of raw material inputs,
including alumina supplied by our Worsley Alumina refinery, and
other external factors including the South African rand and
inflation-linked indexation of energy costs.
The smelter's electricity is
supplied by Eskom under a contract to 2031, with a tariff that is
South African rand based and a rate of escalation linked to the
South Africa Producer Price Index. We continue to work with Eskom
and other stakeholders in the South African energy sector on
pathways to secure lower carbon(41) electricity
supply.
Financial performance
Underlying EBIT decreased by 56% (or
US$35M), to US$27M in H1 FY24, as lower smelter raw material input
prices (+US$54M) and a weaker South African rand (+US$24M), was
more than offset by a 9% reduction in the average realised price of
aluminium (-US$77M), higher energy prices (-US$14M), and lower
sales volumes (-US$26M) as port congestion at Richards Bay impacted
the timing of shipments.
Capital expenditure
Capital expenditure increased by
US$15M to US$25M in H1 FY24 as the smelter invested in upgrades to
its pot tending assemblies. FY24 capital expenditure guidance has
been revised to US$43M (previously US$38M) to reflect this
activity.
South32 share
|
H1 FY24
|
H1 FY23
|
Aluminium production (kt)
|
359
|
362
|
Aluminium sales (kt)
|
327
|
337
|
Realised sales price
(US$/t)
|
2,318
|
2,555
|
Operating unit cost
(US$/t)
|
2,135
|
2,276
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
758
|
861
|
Underlying EBITDA
|
60
|
94
|
Underlying EBIT
|
27
|
62
|
Net operating
assets(a)
|
854
|
845
|
Capital expenditure
|
25
|
10
|
Safe and reliable
|
24
|
9
|
Improvement and life extension
|
1
|
1
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
MOZAL ALUMINIUM
(63.7% SHARE)
Volumes
Mozal Aluminium saleable production
decreased by 9% (or 16kt) to 166kt in H1 FY24, as the smelter
continued to implement its recovery plan following the fatal safety
incident in H1 FY23, while managing the impact of elevated
load-shedding.
FY24 production guidance is set at
320kt(33), reflecting the lower number of pots currently
in operation, as we complete additional work to deliver improved
process stability and complete upgrades to the girder
infrastructure. The number of pots in operation is expected to
progressively increase over CY24, with FY25 production guidance
currently set at 372kt(33).
Operating costs
Operating unit costs increased by
10%, to US$2,461/t in H1 FY24, as lower prices for alumina and
smelter raw material inputs prices (including, coke, pitch and
aluminium tri-fluoride) and a weaker South African rand, was more
than offset by lower volumes, higher maintenance costs and the
inflation-linked indexation of energy costs.
The cost profile of the smelter will
continue to be heavily influenced by the price of raw material
inputs, including alumina supplied by our Worsley Alumina refinery,
and other external factors including the South African rand and
inflation-linked indexation of energy costs. While guidance is not
provided, we expect Operating unit costs to remain elevated in H2
FY24 as the number of pots in operation is progressively
increased.
Electricity supplied to Mozal is
generated by Hidroeléctrica de Cahora Bassa (HCB), a hydro-electric
power generator situated in the north-west of Mozambique. The
electricity is supplied via Eskom's South African grid under an
agreement with MOTRACO, a transmission joint venture between Eskom
and the national electricity utilities of Mozambique and
Eswatini.
The current power supply agreement
for Mozal expires in 2026. We continue to work
with Eskom and the Government of the Republic of Mozambique to
extend the smelter's hydro-electric power supply beyond 2026, as
there are currently no viable alternative suppliers of renewable
energy at the required scale.
Financial performance
Underlying EBIT decreased by
US$113M, to a loss of US$48M in H1 FY24, as lower alumina and
smelter raw material input prices (+US$30M) and a weaker South
African rand (+US$9M), was more than offset by a 13% decrease in
the average realised aluminium price (-US$53M), lower sales volumes
(-US$32M) and higher energy prices (-US$18M). Maintenance costs
also increased with the girder refurbishment program (-US$7M), and
we recorded an inventory adjustment due to higher production costs
in the period (-US$16M).
Capital expenditure
Capital expenditure was US$11M in H1
FY24 and is expected to be US$21M in FY24 as we continue our
investment in plant upgrades.
South32 share
|
H1 FY24
|
H1 FY23
|
Aluminium production (kt)
|
166
|
182
|
Aluminium sales (kt)
|
167
|
177
|
Realised sales price
(US$/t)
|
2,377
|
2,723
|
Operating unit cost
(US$/t)
|
2,461
|
2,237
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
397
|
482
|
Underlying EBITDA
|
(14)
|
86
|
Underlying EBIT
|
(48)
|
65
|
Net operating
assets(a)
|
540
|
578
|
Capital expenditure
|
11
|
9
|
Safe and reliable
|
11
|
9
|
Improvement and life extension
|
-
|
-
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
SIERRA GORDA
(45% SHARE)
Volumes
Sierra Gorda payable copper
equivalent production(34) decreased by 14% (or 6.2kt) to
38.6kt in H1 FY24, as higher plant throughput delivered by the
plant de-bottlenecking project, was more than offset by lower
planned copper grades, and a temporary outage of the molybdenum
plant.
FY24 production guidance has been
set at 78.7kt payable copper equivalent production(34)
(copper 67.0kt, molybdenum 0.8kt, gold 22.5koz and silver 550koz),
with molybdenum output expected to improve from Q4 FY24.
Production is expected to increase
by 17% to 91.8kt in FY25 (copper 71.0kt, molybdenum 2.2kt, gold
25.0koz and silver 550koz), with higher planned copper grades in
accordance with the mine plan, and higher molybdenum
production.
Operating costs
Operating unit costs increased by
13%, to US$18.8/t ore processed in H1 FY24, as the benefit of the
transition to cost efficient, 100% renewable energy, was more than
offset by a planned workforce payment following the finalisation of
a new three-year industrial agreement, and higher maintenance
costs.
FY24 Operating unit costs have been
revised to US$17.0/t ore processed (previously US$16.0/t), reflecting sequentially lower Operating unit
costs following the workforce payment in H1 FY24. Exchange
rate and price assumptions for FY24 Operating unit cost guidance
are detailed on page 30, footnote 38.
Financial performance
Underlying EBIT decreased by 54%,
(or US$58M) to US$49M in H1 FY24, as higher average realised metal
prices (+US$9M) and the transition to lower cost,
100% renewable electricity (+US$20M), was more than offset
by lower sales volumes (-US$44M), the one-off workforce payment
(-US$20M), a stronger Chilean peso (-US$9M)
and higher maintenance costs (-US$6M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$18M to US$83M in H1 FY24. We have revised FY24 guidance to US$160M (previously
US$180M) to reflect expected deferred stripping activity and the
timing of investment in additional tailings storage
capacity.
Improvement and life extension
capital expenditure was US$15M in H1 FY24 and is expected to be
US$30M in FY24 as the operation continues the de-bottlenecking
project and completes the feasibility study for the fourth grinding
line expansion. The fourth grinding line has the potential to
deliver a ~18% increase in plant throughput to ~57Mtpa to 58Mtpa
(100% basis), with a final investment decision expected in Q4
FY24.
South32 share
|
H1 FY24
|
H1 FY23
|
Ore mined (Mt)
|
11.9
|
15.4
|
Ore processed (Mt)
|
10.9
|
10.7
|
Ore grade processed (%,
Cu)
|
0.37
|
0.45
|
Payable copper
equivalent
production
(kt)(34)
|
38.6
|
44.8
|
Payable copper production
(kt)
|
31.6
|
37.9
|
Payable molybdenum production
(kt)
|
0.5
|
0.4
|
Payable gold production
(koz)
|
13.4
|
15.3
|
Payable silver production
(koz)
|
295
|
338
|
Payable copper sales (kt)
|
32.5
|
38.4
|
Payable molybdenum sales
(kt)
|
0.7
|
0.8
|
Payable gold sales (koz)
|
13.8
|
15.4
|
Payable silver sales
(koz)
|
300
|
345
|
Realised copper sales price
(US$/lb)
|
3.56
|
3.41
|
Realised molybdenum sales
price
(US$/lb)
|
20.82
|
20.78
|
Realised gold sales price
(US$/oz)
|
1,957
|
1,688
|
Realised silver sales price
(US$/oz)
|
23.3
|
17.4
|
Operating unit cost
(US$/t ore processed)(42)
|
18.8
|
16.6
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
322
|
357
|
Underlying EBITDA
|
117
|
179
|
Underlying EBIT
|
49
|
107
|
Net operating
assets(a)
|
1,591
|
1,588
|
Capital expenditure
|
98
|
86
|
Safe and reliable
|
83
|
65
|
Improvement and life extension
|
15
|
21
|
Exploration expenditure
|
6
|
3
|
Exploration expensed
|
-
|
2
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
CANNINGTON
(100% SHARE)
Volumes
Cannington payable zinc equivalent
production(35) increased by 13% to 147.2kt in H1 FY24,
as we mined a sequence of higher-grade stopes in Q2
FY24.
In January 2024, the operation
experienced severe wet weather following Tropical Cyclone Kirrily.
While we continue to monitor the impact on the operation, and
regional logistics chains due to widespread flooding, FY24
production guidance is currently unchanged at 287.2kt payable zinc
equivalent production(35) (silver 12,500koz, lead
115.0kt and zinc 62.0kt).
Operating costs
Operating unit costs increased by
10%, to US$150/t in H1 FY24, as the benefit of a weaker
Australian dollar was more than offset by higher local gas
prices and additional contractor costs to support
a planned increase in underground mining
activity.
FY24 Operating unit cost guidance
remains unchanged at US$155/t ore processed. Exchange rate and price assumptions for FY24 Operating unit
cost guidance are detailed on page 30, footnote 38.
Financial performance
Underlying EBIT increased by 33% (or
US$27M), to US$109M in H1 FY24, with higher sales volumes (+US$44M)
as a result of higher average metal grades, partially offset by
higher local gas prices (-US$7M) and contractor
costs (-US$4M).
Capital expenditure
Capital expenditure decreased by
US$10M to US$23M in H1 FY24, following the
transition to 100% truck haulage in the prior period, and is
expected to be US$40M in FY24.
South32 share
|
H1 FY24
|
H1 FY23
|
Ore mined (kwmt)
|
1,150
|
1,123
|
Ore processed (kdmt)
|
1,139
|
1,142
|
Ore grade processed (g/t,
Ag)
|
211
|
175
|
Ore grade processed (%,
Pb)
|
6.0
|
5.5
|
Ore grade processed (%,
Zn)
|
3.4
|
3.6
|
Payable zinc equivalent production
(kt)(35)
|
147.2
|
130.8
|
Payable silver production
(koz)
|
6,704
|
5,474
|
Payable lead production
(kt)
|
58.8
|
52.4
|
Payable zinc production
(kt)
|
29.0
|
30.4
|
Payable silver sales
(koz)
|
6,529
|
5,083
|
Payable lead sales (kt)
|
56.6
|
51.3
|
Payable zinc sales (kt)
|
28.3
|
27.5
|
Realised silver sales price
(US$/oz)
|
22.5
|
20.1
|
Realised lead sales price
(US$/t)
|
1,979
|
2,008
|
Realised zinc sales price
(US$/t)
|
2,085
|
2,436
|
Operating unit cost
(US$/t ore processed)(42)
|
150
|
136
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
318
|
272
|
Underlying EBITDA
|
147
|
117
|
Underlying EBIT
|
109
|
82
|
Net operating
assets(a)
|
183
|
172
|
Capital expenditure
|
23
|
33
|
Safe and reliable
|
23
|
32
|
Improvement and life extension
|
-
|
1
|
Exploration expenditure
|
5
|
3
|
Exploration expensed
|
3
|
3
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
CERRO MATOSO
(99.9% SHARE)
Volumes
Cerro Matoso payable nickel
production decreased by 10% to 18.3kt in H1 FY24, while production
improved by 20% (or 1.7kt) in Q2 FY24 following planned maintenance
and a temporary reduction in third-party gas supply.
FY24 production guidance remains
unchanged at 40.5kt, with the OSMOC project expected to support
higher nickel grades in H2 FY24.
Operating costs
Operating unit costs increased by
13%, to US$5.57/lb in H1 FY24, due to a stronger Colombian peso and
lower first half volumes.
We have revised FY24 Operating unit
cost guidance to US$5.20/lb (previously US$5.30/lb), reflecting
lower contractor and consumables costs as we target further cost
efficiencies. Exchange rate and price
assumptions for FY24 Operating unit cost guidance are detailed on
page 30, footnote
38.
Financial performance
Underlying EBIT decreased by
US$168M, to a loss of US$14M in H1 FY24, due to a 34% decline
in the average realised nickel price (-US$121M) as structural
challenges in the nickel market placed pressure on nickel prices
and discounts for our ferronickel product. This significant price
impact together with lower sales volumes (-US$36M) and a stronger
Colombian peso (-US$16M), more than offset maintenance efficiencies
(+US$6M) and lower price-linked royalties (+US$6M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$4M to US$21M in H1 FY24. FY24
guidance has been revised to US$35M (previously
US$45M) as we defer certain non-critical projects, in
response to the current challenging nickel market
conditions.
As previously announced, we have
commenced a strategic review of Cerro Matoso to evaluate options to
enhance the operation's competitive position.
South32 share
|
H1 FY24
|
H1 FY23
|
Ore mined (kwmt)
|
2,183
|
2,752
|
Ore processed (kdmt)
|
1,317
|
1,392
|
Ore grade processed (%,
Ni)
|
1.55
|
1.64
|
Payable nickel production
(kt)
|
18.3
|
20.4
|
Payable nickel sales (kt)
|
18.0
|
19.8
|
Realised nickel sales price
(US$/lb)(43)
|
6.00
|
9.05
|
Operating unit cost
(US$/lb)
|
5.57
|
4.93
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
238
|
395
|
Underlying EBITDA
|
17
|
180
|
Underlying EBIT
|
(14)
|
154
|
Net operating
assets(a)
|
368
|
363
|
Capital expenditure
|
21
|
20
|
Safe and reliable
|
21
|
17
|
Improvement and life extension
|
-
|
3
|
Exploration expenditure
|
1
|
-
|
Exploration expensed
|
1
|
-
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
ILLAWARRA METALLURGICAL
COAL
(100% SHARE)
Volumes
Illawarra Metallurgical Coal
saleable production decreased by 39% (or 1,286kt) to 2,045kt in H1
FY24, as the operation completed two longwall moves, including
a planned extended outage at the Dendrobium mine. A new four-year
industrial agreement covering deputies at the Appin mine was
finalised in Q2 FY24.
FY24 production guidance is
unchanged at 5.0Mt with volumes remaining weighted to H2 FY24,
reflecting the shorter duration of the two remaining longwall moves
to be completed during Q4 FY24.
Operating costs
Operating unit costs increased by
35%, to US$167/t in H1 FY24, as the volume impact of the two
planned longwall moves completed in Q2 FY24, more than offset the
benefit of a weaker Australian dollar, lower price-linked royalties
and local electricity prices.
We have revised our FY24 Operating
unit cost guidance to US$150/t (previously
US$140/t), due to higher price-linked royalties, with Operating
unit costs to be sequentially lower in H2 FY24, benefitting from
higher planned production volumes. Exchange rate and price
assumptions for FY24 Operating unit cost guidance are detailed on
page 30, footnote
38.
Financial performance
Underlying EBIT decreased by 67% (or
US$229M), to US$111M in H1 FY24, as the volume impact of the two
planned longwall moves (-US$267M) more than offset lower
price-linked royalties (+US$21M), lower electricity prices
(+US$13M), and a weaker Australian dollar (+US$9M).
Capital expenditure
Capital expenditure increased by
US$73M to US$181M in H1 FY24 as we continued to invest in Appin's
transition to a more efficient single longwall configuration from
H2 FY25, and additional ventilation capacity to enable mining in
the current Area 7 until at least 2039(31). We
expect to invest US$311M in FY24 (previously US$323M) as we
progress these significant investments.
Our ~US$260M investment in
additional ventilation capacity is expected to be completed in
FY26, with ~US$90M expected to be spent in both FY24 and
FY25.
South32 share
|
H1 FY24
|
H1 FY23
|
Metallurgical coal production
(kt)
|
1,787
|
2,753
|
Energy coal production
(kt)
|
258
|
578
|
Metallurgical coal sales
(kt)
|
1,759
|
2,678
|
Energy coal sales (kt)
|
337
|
507
|
Realised metallurgical coal sales
price (US$/t)
|
276
|
268
|
Realised energy coal sales price
(US$/t)
|
101
|
164
|
Operating unit cost
(US$/t)
|
167
|
124
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying
revenue(44)
|
520
|
801
|
Underlying EBITDA
|
171
|
407
|
Underlying EBIT
|
111
|
340
|
Net operating
assets(a)
|
896
|
769
|
Capital expenditure
|
181
|
108
|
Safe and reliable
|
180
|
106
|
Improvement and life extension
|
1
|
2
|
Exploration expenditure
|
7
|
8
|
Exploration expensed
|
3
|
4
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
AUSTRALIA MANGANESE
(60% SHARE)
Volumes
Australia Manganese saleable
production decreased by 9% (or 165kwmt) to 1,679kwmt in H1 FY24,
as PC02 production declined due to lower yields, contributing
7% of total production (H1 FY23: 10%).
FY24 production guidance remains
unchanged at 3,400kwmt as the operation continues its strong
primary output and is expected to return the PC02 circuit to
nameplate production rates during Q4 FY24.
Operating costs
Operating unit costs increased by
22%, to US$2.15/dmtu in H1 FY24, in line with prior FY24 guidance,
as a weaker Australian dollar was offset by additional planned
mining activity and contractor costs to deliver planned
volumes.
FY24 Operating unit cost guidance
remains unchanged at US$2.15/dmtu. Exchange
rate and price assumptions for FY24 Operating unit cost guidance
are detailed on page 30, footnote 38.
Financial performance
Underlying EBIT decreased by 55% (or
US$82M), to US$67M in H1 FY24, as a 17% decline in average realised
ore prices (-US$71M) and additional contractor and labour costs
(-US$11M), more than offset higher sales volumes (+US$34M) following a planned drawdown of finished goods
(-US$28M), lower diesel prices (+US$5M) and a weaker Australian
dollar (+US$4M).
Capital expenditure
Safe and reliable capital
expenditure was US$24M in H1 FY24 and is expected to be US$55M in
FY24 as we continue our investment in additional mobile fleet and
mining equipment.
Improvement and life extension
capital expenditure increased by US$9M to US$16M in H1 FY24 and is
expected to be US$30M in FY24 as we invest in the Eastern Lease
South life extension project, which remains on track to deliver
first production in FY25.
The Eastern Lease South Project is
expected to sustain production to at least
FY28(45), with further work underway across our existing operating
footprint and in the Southern Areas to potentially extend the
operation's life into the next decade.
South32 share
|
H1 FY24
|
H1 FY23
|
Manganese ore production
(kwmt)
|
1,679
|
1,844
|
Manganese ore sales
(kwmt)
|
1,864
|
1,652
|
Realised external manganese ore
sales price (US$/dmtu, FOB)(46)(47)
|
3.79
|
4.57
|
Ore operating unit cost (US$/dmtu,
FOB)(47)(48)
|
2.15
|
1.76
|
|
|
|
South32 share (US$M)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
318
|
355
|
Underlying EBITDA
|
125
|
197
|
Underlying EBIT
|
67
|
149
|
Net operating
assets(a)
|
212
|
239
|
Capital expenditure
|
40
|
32
|
Safe and reliable
|
24
|
25
|
Improvement and life extension
|
16
|
7
|
Exploration expenditure
|
-
|
1
|
Exploration expensed
|
-
|
-
|
(a) H1 FY23 reflects the
balance as at 30 June 2023.
SOUTH AFRICA MANGANESE
(ORE 54.6% SHARE, ALLOY 60%
SHARE)
Volumes
South Africa Manganese saleable
production increased by 2% (or 18kwmt) to 1,111kwmt in H1 FY24 as
the operation achieved record production in Q1 FY24 and completed a
planned maintenance shut at the Mamatwan mine in Q2
FY24.
FY24 production guidance remains
unchanged at 2,000kwmt, subject to our continued use of higher cost
trucking to optimise sales volumes of our premium
products.
Operating costs
Operating unit costs decreased by 3%
to US$2.59/dmtu in H1 FY24, in line with prior guidance, as the
benefit of higher volumes, a weaker South African rand and lower
price-linked royalties, more than offset higher
in-land logistics costs.
FY24 Operating unit costs remain
unchanged at US$2.60/dmtu. Exchange rate
and price assumptions for FY24 Operating unit cost guidance are
detailed on page 30, footnote 38.
Financial performance
Ore Underlying EBIT decreased
by 77% (or US$20M), to US$6M in H1 FY24, as the benefit of
higher sales volumes (+US$8M), a weaker South African rand (+US$8M)
and lower price-linked royalties (+US$4M), was more than offset by
a 15% decline in average realised manganese ore prices (-US$31M)
and higher in-land logistics costs (-US$6M).
Capital expenditure
Safe and reliable capital
expenditure increased by US$13M to US$20M in H1 FY24 and is
expected to be US$30M in FY24 as we upgrade our rail infrastructure
to improve efficiencies.
Improvement and life extension
capital expenditure was US$6M in H1 FY24 and is expected to be
US$10M in FY24 as we advance work to access new mining areas at our
high-grade underground Wessels mine.
South32 share(a)
|
H1 FY24
|
H1 FY23
|
Manganese ore production
(kwmt)
|
1,111
|
1,093
|
Manganese ore sales
(kwmt)
|
1,082
|
1,032
|
Realised external manganese ore
sales price (US$/dmtu, FOB)(46)(49)
|
3.03
|
3.57
|
Ore operating unit cost (US$/dmtu,
FOB)(48)(49)
|
2.59
|
2.67
|
|
|
|
South32 share (US$M)(a)
|
H1 FY24
|
H1 FY23
|
Underlying revenue
|
152
|
175
|
Manganese ore
|
152
|
175
|
Manganese alloy
|
-
|
-
|
Underlying EBITDA
|
14
|
35
|
Manganese ore
|
17
|
36
|
Manganese alloy
|
(3)
|
(1)
|
Underlying EBIT
|
3
|
25
|
Manganese ore
|
6
|
26
|
Manganese alloy
|
(3)
|
(1)
|
Net operating
assets/(liabilities)(b)
|
159
|
143
|
Manganese ore
|
224
|
195
|
Manganese alloy
|
(65)
|
(52)
|
Capital expenditure
|
26
|
11
|
Safe and reliable
|
20
|
7
|
Improvement and life extension
|
6
|
4
|
Exploration expenditure
|
-
|
1
|
Exploration expensed
|
-
|
1
|
(a) The Metalloys
manganese alloy smelter remains on care and maintenance.
(b)
H1 FY23 reflects the balance as at 30 June 2023.
NOTES
(1)
|
Net tangible assets as at
31 December 2023 includes all right-of-use assets and lease
liabilities, in accordance with AASB 16 Leases.
|
(2)
|
H1 FY24 basic earnings per share is
calculated as Profit after tax divided by the weighted average
number of shares for H1 FY24 (4,523 million). H1 FY24 basic
Underlying earnings per share is calculated as Underlying earnings
divided by the weighted average number of shares for H1 FY24. H1
FY23 basic earnings per share is calculated as Profit after tax
divided by the weighted average number of shares for H1 FY23 (4,596
million). H1 FY23 basic Underlying earnings per share is calculated
as Underlying earnings divided by the weighted average number of
shares for H1 FY23.
|
(3)
|
H1 FY24 ordinary dividends per
share is calculated as H1 FY24 ordinary dividend
announced (US$18M) divided by the number of
shares on issue at 31 December 2023 (4,529 million).
|
(4)
|
Underlying revenue includes revenue
from third party products and services.
|
(5)
|
The underlying information reflects
the Group's interest in material equity accounted joint ventures
and is presented on a proportional consolidation basis.
Underlying EBIT is profit before net finance income/(costs),
tax and any earnings adjustments, including impairments. Underlying
EBITDA is Underlying EBIT before Underlying depreciation and
amortisation. Underlying earnings is Profit after tax and earnings
adjustment items. Underlying earnings is the key measure that
South32 uses to assess the performance of the South32 Group, make
decisions on the allocation of resources and assess senior
management's performance. In addition, the performance of each of
the South32 operations and operational management is assessed based
on Underlying EBIT. In order to calculate Underlying earnings,
Underlying EBIT and Underlying EBITDA, the following items are
adjusted as applicable each period, irrespective of
materiality:
•
Exchange rate (gains)/losses on restatement of monetary
items;
•
Impairment losses/(reversals);
• Net
(gains)/losses on disposal and consolidation of interests in
operations;
•
(Gains)/losses on non-trading derivative instruments, contingent
consideration and other investments measured at fair value through
profit or loss;
• Major
corporate restructures;
• Joint
venture adjustments;
•
Exchange rate variations on net cash/(debt);
• Tax
effect of earnings adjustments; and
•
Exchange rate variations on tax balances
In addition, items that do not
reflect the underlying operations of South32, and are individually,
or in combination with other related earnings adjustments,
significant to the financial statements, are excluded to determine
Underlying earnings. When applicable, significant items are
detailed in the Financial Information.
|
(6)
|
Comprises Underlying EBITDA
excluding third party products and services EBITDA, divided by
Underlying revenue excluding third party products and services
revenue. Also referred to as operating margin.
|
(7)
|
Comprises Underlying EBIT excluding
third party products and services EBIT, divided by Underlying
revenue excluding third party products and services
revenue.
|
(8)
|
Return on invested capital (ROIC)
is a key measure that South32 uses to assess performance. ROIC is
calculated as Underlying EBIT less the discount on rehabilitation
provisions included in Underlying net finance costs, tax effected
by the Group's Underlying effective tax rate (ETR) including our
material equity accounted investments on a proportional
consolidation basis, divided by the sum of fixed assets (excluding
any rehabilitation assets, the impact of any impairments or
impairment reversals, and unproductive capital) and
inventories.
|
(9)
|
Significant hazards frequency: (The
sum of significant hazards x 1,000,000) ÷ exposure hours. This is
stated in units of per million hours worked for employees and
contractors. A significant hazard is something that has the
potential to cause harm, ill health or injury, or damage to
property, plant or the environment.
|
(10)
|
To ensure that incident
classification definitions are applied uniformly across our
workforce, we have adopted the United States Government
Occupational Safety and Health Administration (OSHA) and the
International Council on Mining and Metals (ICMM) guidelines for
the recording and reporting of occupational injuries and
illnesses.
|
(11)
|
Total Recordable Injury Frequency
(TRIF): (The sum of recordable injuries x 1,000,000) ÷ exposure
hours. This is stated in units of per million hours worked for
employees and contractors.
|
(12)
|
Lost Time Injury Frequency (LTIF):
(The sum of lost time injuries x 1,000,000) ÷ exposure hours. This
is stated in units of per million hours worked for employees and
contractors.
|
(13)
|
Calculated by taking the increase
in controllable costs from H1 FY23 to H1 FY24 divided by the
Group's underlying H1 FY23 cost base excluding third party product
costs.
|
(14)
|
Refers to aluminium produced using
renewable power.
|
(15)
|
Group payable copper equivalent
production in H2 FY24e, compared to H1 FY24, calculated by applying
FY23 realised prices for all operations.
|
(16)
|
US$98M was remaining to be returned
under our current capital management program. Since inception,
US$1.7B has been returned via the on-market share buy-back (795M
shares at an average price of A$3.05 per share) and US$525M
returned in the form of special dividends.
|
(17)
|
Refer to market release "Final
Investment Approval to Develop Hermosa's Taylor Deposit" dated 15
February 2024.
|
(18)
|
Target is defined as an intended
outcome in relation to which we have identified one or more
pathways for delivery of that outcome, subject to certain
assumptions or conditions. Our medium-term target is to halve our
operational greenhouse gas (GHG) emissions by 2035 compared to our
FY21 baseline. FY21 baseline adjusted to exclude GHG emissions from
South Africa Energy Coal and TEMCO, which were divested in
FY21.
|
(19)
|
Sales price variance reflects the
revenue impact of changes in commodity prices, based on the current
period's sales volume. Price-linked costs variance reflects the
change in royalties together with the change in input costs driven
by changes in commodity prices or market traded consumables.
Foreign exchange reflects the impact of exchange rate movements on
local currency denominated costs and sales. Sales volume variance
reflects the revenue impact of sales volume changes, based on the
comparative period's sales prices. Controllable costs variance
represents the impact from changes in the Group's controllable
local currency cost base, including the variable cost impact of
production volume changes on expenditure, and period-on-period
movements in inventories. The controllable cost variance excludes
earnings adjustments including significant items.
|
(20)
|
Underlying net finance costs and
Underlying income tax expense are actual H1 FY24 results, not
half-on-half variances.
|
(21)
|
South32's ownership shares of
operations are presented as follows: Worsley Alumina (86% share),
Brazil Alumina (36% share), Brazil Aluminium (40% share),
Hillside Aluminium (100%), Mozal Aluminium (63.7% share),
Sierra Gorda (45% share), Cannington (100%), Hermosa (100%), Cerro
Matoso (99.9% share), Illawarra Metallurgical Coal (100%),
Australia Manganese (60% share), South Africa Manganese ore (54.6%
share) and South Africa Manganese alloy (60%
share).
|
(22)
|
The underlying information reflects
the Group's interest in material equity accounted joint ventures
and is presented on a proportional consolidation basis, which is
the measure used by the Group's management to assess their
performance. The joint venture adjustments reconcile the
proportional consolidation to the equity accounting position
included in the Group's consolidated financial
statements.
|
(23)
|
Underlying ETR is Underlying income
tax expense, including royalty related tax, divided by Underlying
profit subject to tax.
|
(24)
|
The corporate tax rates of the
geographies where the Group operates include: Australia 30%, South
Africa 27%, Colombia 35%, Mozambique 0%, Brazil 34% and
Chile 27%.
|
(25)
|
Mozal Aluminium is subject to a
royalty on revenues instead of income tax which is included in
Operating costs.
|
(26)
|
Australia Manganese is subject to a
royalty related tax equal to 20% of adjusted EBIT which is included
in Underlying tax expense.
|
(27)
|
Sierra Gorda is subject to a
royalty related tax based on the amount of copper sold and the
mining operating margin, the rate is between 5% and 14% for annual
sales over 50kt of refined copper. This royalty is included in
Underlying tax expense.
|
(28)
|
H1 FY24 net distributions
from our material equity accounted joint ventures
comprises of dividends (US$76M), a net drawdown of shareholder
loans (US$34M) from manganese and a distribution (US$18M) from
Sierra Gorda. The distribution from Sierra Gorda comprised a
repayment of US$18M of accrued interest.
|
(29)
|
Net interest paid excludes
distributions from material equity accounted
investments.
|
(30)
|
Total capital expenditure comprises
Capital expenditure, capitalised exploration and evaluation
expenditure and the purchase of intangibles. Capital expenditure
comprises safe and reliable capital expenditure, improvement and
life extension capital expenditure (including decarbonisation), and
growth capital expenditure.
|
(31)
|
The information in this
announcement that relates to the Production Target for Illawarra
Metallurgical Coal is based on 21% Proved and 79% Probable Coal
Reserves from Bulli (Appin) and was originally disclosed in
"September 2023 Quarterly Report" dated 23 October 2023. The Coal
Reserves estimates underpinning the Production Target have been
prepared by Competent Persons and reported in accordance with the
JORC Code. The Coal Resources and Coal Reserves estimates are
available to view in South32's FY23 Annual Report published on 8
September 2023 and is available to view on www.south32.net. South32
confirms that all the material assumptions underpinning the
Production Target in the initial public report continue to apply
and have not materially changed. The stated Production Target is
based on South32's current expectations of future results or events
and should not be solely relied upon by investors when making
investment decisions. Further evaluation work and appropriate
studies are required to establish sufficient confidence that this
target will be met.
|
(32)
|
Group payable copper equivalent
production in FY25e, compared to FY24e, calculated by applying FY23
realised prices for all operations. FY25e assumes South Africa
Manganese production of 2,000kwmt, which is subject to market
conditions and our continued use of higher cost
trucking.
|
(33)
|
Production guidance for Hillside
Aluminium and Mozal Aluminium does not assume any load-shedding
impact on production.
|
(34)
|
Payable copper equivalent
production (kt) was calculated by aggregating revenues from copper,
molybdenum, gold and silver, and dividing the total Revenue by the
price of copper. FY23 realised prices for copper (US$3.51/lb),
molybdenum (US$21.28/lb), gold (US$1,821/oz) and silver
(US$21.9/oz) have been used for FY23, H1 FY24, FY24e and
FY25e.
|
(35)
|
Payable zinc equivalent (kt) was
calculated by aggregating revenues from payable silver, lead and
zinc, and dividing the total Revenue by the price of zinc.
FY23 realised prices for zinc (US$2,151/t), lead (US$1,919/t)
and silver (US$21.1/oz) have been used for FY23, H1 FY24, FY24e and
FY25e.
|
(36)
|
Operating unit cost is Underlying
revenue less Underlying EBITDA, excluding third party products and
services, divided by sales volumes. Operating cost is Underlying
revenue less Underlying EBITDA excluding third party products and
services. Additional manganese disclosures are included in
footnotes 47 and 49.
|
(37)
|
FY24 prior Operating unit cost
guidance includes royalties (where appropriate) and the influence
of exchange rates, and includes various assumptions for FY24,
including: an alumina price of US$349/t; an average blended coal
price of US$210/t for Illawarra Metallurgical Coal; a manganese ore
price of US$4.85/dmtu for 44% manganese product; a nickel price of
US$8.90/lb; a silver price of US$24.5/troy oz; a lead price of
US$2,131/t (gross of treatment and refining charges); a zinc price
of US$2,446/t (gross of treatment and refining charges); a copper
price of US$3.87/lb (gross of treatment and refining charges); a
molybdenum price of US$22.5/lb (gross of treatment and refining
charges); a gold price of US$1,984/troy oz; an AUD:USD exchange
rate of 0.65; a USD:ZAR exchange rate of 18.98; a USD:COP exchange
rate of 4,033; USD:CLP exchange rate of 876; and a reference price
for caustic soda; which reflect forward markets as at July 2023 or
our internal expectations.
|
(38)
|
FY24 new Operating unit cost
guidance includes royalties (where appropriate) and the influence
of exchange rates, and includes various assumptions for FY24,
including: an alumina price of US$340/t; an average blended coal
price of US$296/t for Illawarra Metallurgical Coal; a manganese ore
price of US$4.58/dmtu for 44% manganese product; a nickel price of
US$8.67/lb; a silver price of US$22.7/troy oz; a lead price of
US$2,105/t (gross of treatment and refining charges); a zinc price
of US$2,446/t (gross of treatment and refining charges); a copper
price of US$3.67/lb (gross of treatment and refining charges); a
molybdenum price of US$19.22/lb (gross of treatment and refining
charges); a gold price of US$1,892/troy oz; an AUD:USD exchange
rate of 0.64; a USD:ZAR exchange rate of 19.12; a USD:COP exchange
rate of 4,050; USD:CLP exchange rate of 924; and a reference price
for caustic soda; which reflect forward markets as at January 2024
or our internal expectations.
|
(39)
|
Exploration Results and Exploration
Targets: The information in this announcement that relates to the
Exploration Results and Targets for Taylor, Clark, Peake and Flux
is extracted from the announcement entitled (Final
Investment Approval to Develop Hermosa's Taylor Deposit) published
on 15 February 2024 and is available to view on www.south32.net.
The information was prepared by D Bertuch, Competent Person in
accordance with the requirements of the JORC Code. South32 confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement. South32 confirms that the form and context in which
the Competent Person's findings are presented have not been
materially changed from the original market
announcement.
|
(40)
|
H1 FY24 Third party products and
services sold comprise US$42M for aluminium, US$3M for alumina,
US$106M for coal, US$43M for freight services,
US$53M for raw materials and US$15M for manganese.
Underlying EBIT on third party products and services comprise nil
for aluminium, US$2M for alumina, US$14M for coal, US$(2)M for
freight services, nil for raw materials and nil for manganese. H1 FY23 Third party products and
services sold comprise US$30M for aluminium, US$2M for alumina,
US$60M for coal, US$63M for freight services, US$78M for raw
materials and US$16M for manganese. Underlying EBIT on third party
products and services comprise US$(1)M for aluminium, US$8M for
alumina, US$6M for coal, US$(1)M for freight services, nil for raw
materials and nil for manganese.
|
(41)
|
Refers to lower levels of GHG
emissions when compared to the current state. Where used in
relation to South32's products or portfolio, it refers to
enhancement of existing methods, practices and technologies to
substantially lower the level of embodied GHG emissions as compared
to the current state.
|
(42)
|
Sierra Gorda and Cannington
Operating unit cost is Underlying revenue less Underlying EBITDA
divided by ore processed. Periodic movements in finished product
inventory may impact Operating unit costs.
|
(43)
|
Cerro Matoso realised nickel sales
price is inclusive of by-products.
|
(44)
|
Illawarra Metallurgical Coal
revenue includes metallurgical coal and energy coal sales
revenue.
|
(45)
|
Australia Manganese: The
information in this announcement that refers to Production Target
and forecast financial information is based on Proved (62%) and
Probable (38%) Ore Reserves. Production Target cautionary statement
- The Mineral Resources and Ore Reserves underpinning the
Production Target have been prepared by Competent Persons and
reported in accordance with the JORC Code. The Resources and
Reserves estimates are available to view in South32's FY23 Annual
Report (http://www.south32.net) published on 8 September 2023. The
stated Production Target is based on South32's current expectations
of future results or events and should not be solely relied upon by
investors when making investment decisions. Further evaluation work
and appropriate studies are required to establish sufficient
confidence that this target will be met.
|
(46)
|
Volumes and prices do not include
any third party trading that may be undertaken independently of
equity production. Realised ore prices are calculated as external
sales Underlying revenue less freight and marketing costs, divided
by external sales volume.
|
(47)
|
Manganese Australia H1 FY24 average
manganese content of external ore sales was 42.5% on a dry basis
(H1 FY23: 44.2%). 97% of H1 FY24 external manganese ore sales (H1
FY23: 95%) were completed on a CIF basis. H1 FY24 realised FOB ore
prices and Operating unit costs have been adjusted for freight and
marketing costs of US$30M (H1 FY23: US$36M), consistent with our
FOB cost guidance.
|
(48)
|
FOB Ore Operating unit cost is
Underlying revenue less Underlying EBITDA, freight and marketing
costs, divided by ore sales volume.
|
(49)
|
Manganese South Africa H1 FY24
average manganese content of external ore sales was 38.7% on a dry
basis (H1 FY23: 39.2%). 90% of H1 FY24 external manganese ore sales
(H1 FY23: 86%) were completed on a CIF basis. H1 FY24 realised FOB
ore prices and Operating unit costs have been adjusted for freight
and marketing costs of US$28M (H1 FY23: US$32M), consistent with
our FOB cost guidance.
|
Figures in Italics indicate that an
adjustment has been made since the figures were previously
reported. The denotation (e) refers to an estimate or forecast
year.
The following abbreviations may be
used throughout this report: US$ million (US$M); US$ billion
(US$B); December half year (H1 FY24); financial year 2024 (FY24);
financial year (FY); calendar year (CY); copper equivalent (CuEq);
grams per tonne (g/t); tonnes (t); thousand tonnes (kt); thousand
tonnes per annum (ktpa); million tonnes (Mt); million tonnes per
annum (Mtpa); ounces (oz); thousand ounces (koz); million ounces
(Moz); thousand wet metric tonnes (kwmt); million wet metric tonnes
(Mwmt); thousand dry metric tonnes (kdmt); dry metric tonne
unit (dmtu); pound (lb); megawatt (MW); Australian Securities
Exchange (ASX); London Stock Exchange (LSE); Johannesburg Stock
Exchange (JSE); equity accounted investment (EAI); and
American Depositary Receipts (ADR).
SOUTH32 FINANCIAL
INFORMATION
For the half year ended
31 December 2023
CONTENTS
CONSOLIDATED INCOME STATEMENT
|
33
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
34
|
CONSOLIDATED BALANCE SHEET
|
35
|
CONSOLIDATED CASH FLOW STATEMENT
|
36
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
37
|
NOTES TO FINANCIAL STATEMENTS
|
|
1.
|
Reporting entity
|
38
|
2.
|
Basis of preparation
|
38
|
3.
|
Segment information
|
39
|
4.
|
Dividends
|
45
|
5.
|
Earnings per share
|
45
|
6.
|
Interest bearing
liabilities
|
46
|
7.
|
Net finance
income/(costs)
|
46
|
8.
|
Financial assets and financial
liabilities
|
47
|
9.
|
Equity accounted
investments
|
50
|
10.
|
Subsequent events
|
50
|
DIRECTORS' DECLARATION
|
51
|
DIRECTORS' REPORT
|
52
|
LEAD AUDITOR'S INDEPENDENCE DECLARATION
|
54
|
INDEPENDENT AUDITOR'S REVIEW REPORT
|
55
|
CONSOLIDATED INCOME STATEMENT
for the half year ended 31 December
2023
US$M
|
Note
|
H1 FY24
|
H1 FY23
|
Revenue:
|
|
|
|
Group production
|
|
2,827
|
3,388
|
Third party products and
services
|
|
306
|
308
|
|
3
|
3,133
|
3,696
|
Other income
|
|
61
|
242
|
Expenses excluding finance
costs
|
|
(3,110)
|
(3,308)
|
Share of profit/(loss) of equity
accounted investments
|
9
|
(9)
|
241
|
Profit from operations
|
|
75
|
871
|
Comprising:
|
|
|
|
Group production
|
|
61
|
859
|
Third party products and
services
|
|
14
|
12
|
Profit from operations
|
|
75
|
871
|
Finance income
|
|
116
|
111
|
Finance costs
|
|
(125)
|
(97)
|
Net
finance income/(costs)
|
7
|
(9)
|
14
|
Profit before tax
|
|
66
|
885
|
Income tax expense
|
|
(13)
|
(200)
|
Profit for the period
|
|
53
|
685
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of South32
Limited
|
|
53
|
685
|
|
|
|
|
Profit for the period attributable to equity holders of
South32 Limited:
|
|
|
|
Basic earnings per share
(cents)
|
5
|
1.2
|
14.9
|
Diluted earnings per share
(cents)
|
5
|
1.2
|
14.8
|
The accompanying notes form part of
the half year consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the half year ended 31 December
2023
US$M
|
|
H1 FY24
|
H1 FY23
|
Profit for the period
|
|
53
|
685
|
Other comprehensive income
|
|
|
|
Items that will not be reclassified to the Consolidated Income
Statement:
|
|
|
|
Investments in equity instruments
designated as fair value through other comprehensive income
(FVOCI):
|
Net fair value
gains/(losses)
|
|
(19)
|
(3)
|
Income tax
(expense)/benefit
|
|
(1)
|
1
|
Share of other comprehensive
income/(loss) of equity accounted investments
|
|
-
|
1
|
Gains/(losses) on pension and
medical schemes
|
|
-
|
2
|
Income tax (expense)/benefit
recognised within other comprehensive income
|
|
-
|
(1)
|
Total items that will not be reclassified to the Consolidated
Income Statement
|
|
(20)
|
-
|
Total other comprehensive income/(loss)
|
|
(20)
|
-
|
Total comprehensive income
|
|
33
|
685
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of South32
Limited
|
|
33
|
685
|
The accompanying notes form part of
the half year consolidated financial statements.
CONSOLIDATED BALANCE SHEET
as
at 31 December 2023
US$M
|
Note
|
H1 FY24
|
FY23
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
702
|
1,258
|
Trade and other
receivables
|
|
656
|
778
|
Other financial assets
|
8
|
1
|
1
|
Inventories
|
|
1,196
|
1,102
|
Current tax assets
|
|
118
|
54
|
Other assets
|
|
33
|
46
|
Total current assets
|
|
2,706
|
3,239
|
Non-current assets
|
|
|
|
Trade and other
receivables
|
|
2,134
|
1,923
|
Other financial assets
|
8
|
107
|
118
|
Inventories
|
|
72
|
82
|
Property, plant and
equipment
|
|
8,352
|
8,050
|
Intangible assets
|
|
237
|
242
|
Equity accounted
investments
|
|
414
|
499
|
Deferred tax assets
|
|
355
|
390
|
Other assets
|
|
21
|
21
|
Total non-current assets
|
|
11,692
|
11,325
|
Total assets
|
|
14,398
|
14,564
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
840
|
985
|
Interest bearing
liabilities
|
6
|
435
|
365
|
Current tax payables
|
|
9
|
10
|
Provisions
|
|
182
|
194
|
Deferred income
|
|
6
|
6
|
Total current liabilities
|
|
1,472
|
1,560
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
|
20
|
19
|
Interest bearing
liabilities
|
6
|
1,358
|
1,376
|
Other financial
liabilities
|
8
|
18
|
37
|
Deferred tax liabilities
|
|
162
|
210
|
Provisions
|
|
2,141
|
1,986
|
Deferred income
|
|
1
|
1
|
Total non-current liabilities
|
|
3,700
|
3,629
|
Total liabilities
|
|
5,172
|
5,189
|
Net
assets
|
|
9,226
|
9,375
|
EQUITY
|
|
|
|
Share capital
|
|
13,216
|
13,251
|
Treasury shares
|
|
(40)
|
(51)
|
Reserves
|
|
(3,579)
|
(3,553)
|
Accumulated losses
|
|
(370)
|
(271)
|
Total equity attributable to equity
holders of South32 Limited
|
|
9,227
|
9,376
|
Non-controlling interests
|
|
(1)
|
(1)
|
Total equity
|
|
9,226
|
9,375
|
The accompanying notes form part of
the half year consolidated financial statements.
CONSOLIDATED CASH FLOW STATEMENT
for the half year ended 31 December
2023
US$M
|
Note
|
H1 FY24
|
H1 FY23
|
Operating activities
|
|
|
|
Profit before tax
|
|
66
|
885
|
Adjustments for:
|
|
|
|
Non-cash or non-operating
significant items
|
|
48
|
(138)
|
Depreciation and amortisation
expense
|
|
335
|
312
|
Net impairment loss/(reversal) of
financial assets
|
3
|
48
|
214
|
Net impairment loss/(reversal) of
non-financial assets
|
|
-
|
(4)
|
Employee share awards
expense
|
|
12
|
13
|
Net finance
(income)/costs
|
|
9
|
(14)
|
Share of (profit)/loss of equity
accounted investments
|
|
9
|
(241)
|
(Gains)/losses on derivative
instruments, contingent consideration and other investments
measured at fair value through profit or loss (FVTPL)
|
|
(17)
|
(19)
|
Other non-cash or non-operating
items
|
|
(5)
|
(1)
|
Changes in assets and
liabilities:
|
|
|
|
Trade and other
receivables
|
|
(88)
|
88
|
Inventories
|
|
(84)
|
(134)
|
Trade and other payables
|
|
(84)
|
(81)
|
Provisions and other
liabilities
|
|
(20)
|
(25)
|
Cash generated from
operations
|
|
229
|
855
|
Interest received
|
|
49
|
29
|
Interest paid
|
|
(57)
|
(54)
|
Income tax paid
|
|
(96)
|
(347)
|
Dividends received
|
|
2
|
1
|
Dividends received from equity
accounted investments
|
|
76
|
108
|
Net
cash flows from operating activities
|
|
203
|
592
|
Investing activities
|
|
|
|
Purchases of property, plant and
equipment
|
|
(563)
|
(352)
|
Exploration expenditure
|
|
(47)
|
(44)
|
Exploration expenditure expensed and
included in operating cash flows
|
|
26
|
26
|
Purchase of intangibles
|
|
-
|
(46)
|
Investment in financial
assets
|
|
(84)
|
(116)
|
Proceeds from financial
assets
|
|
42
|
61
|
Payments related to the acquisition
of subsidiaries and joint operations, net of their cash
|
|
(3)
|
(25)
|
Proceeds from sale of
intangibles
|
|
18
|
55
|
Net
cash flows from investing activities
|
|
(611)
|
(441)
|
Financing activities
|
|
|
|
Proceeds from interest bearing
liabilities
|
|
149
|
28
|
Repayment of interest bearing
liabilities
|
|
(110)
|
(42)
|
Purchase of shares by Employee Share
Ownership Plan (ESOP) Trusts
|
|
(8)
|
(13)
|
Share buy-back
|
|
(35)
|
(143)
|
Dividends paid
|
4
|
(145)
|
(784)
|
Net
cash flows from financing activities
|
|
(149)
|
(954)
|
Net decrease in cash and cash
equivalents
|
|
(557)
|
(803)
|
Cash and cash equivalents, net of
overdrafts, at the beginning of the period
|
|
1,258
|
2,365
|
Effect of foreign exchange rate
changes on cash and cash equivalents
|
|
1
|
(2)
|
Cash and cash equivalents, net of overdrafts, at the end of
the period
|
|
702
|
1,560
|
The accompanying notes form part of
the half year consolidated financial statements.
3. SEGMENT INFORMATION
(CONTINUED)
(b) Segment results (continued)
(i) Underlying results
reconciliation
The following tables reconcile the
underlying segment information to the statutory information
included in the Group's half year consolidated financial
statements:
US$M
|
H1 FY24
|
H1 FY23
|
Underlying EBIT
|
236
|
922
|
Significant
items(1)
|
-
|
138
|
Sierra Gorda joint venture
adjustments(2)(3)
|
(47)
|
57
|
Manganese joint venture
adjustments(2)(4)
|
(71)
|
(101)
|
Exchange rate gains/(losses) on
restatement of monetary items(5)
|
(13)
|
48
|
Net impairment (loss)/reversal of
financial assets(5)(6)
|
(48)
|
(214)
|
Net impairment (loss)/reversal of
non-financial assets(5)
|
-
|
4
|
Gains/(losses) on non-trading
derivative instruments, contingent consideration and other
investments measured at FVTPL(5)
|
18
|
17
|
Profit from operations
|
75
|
871
|
|
|
|
Underlying net finance costs
|
(118)
|
(88)
|
Sierra Gorda joint venture
adjustments(2)
|
91
|
85
|
Manganese joint venture
adjustments(2)
|
19
|
13
|
Exchange rate variations on net
debt
|
(1)
|
4
|
Net
finance income/(costs)
|
(9)
|
14
|
|
|
|
Underlying income tax expense
|
(56)
|
(234)
|
Underlying royalty related tax expense
|
(22)
|
(40)
|
Tax effect of significant
items(1)
|
-
|
(23)
|
Sierra Gorda joint venture
adjustments relating to income tax expense(2)
|
(6)
|
6
|
Sierra Gorda joint venture
adjustments relating to royalty related tax
expense(2)
|
1
|
4
|
Manganese joint venture adjustments
relating to income tax expense(2)
|
24
|
56
|
Manganese joint venture adjustments
relating to royalty related tax expense(2)
|
21
|
36
|
Tax effect of other adjustments to
Underlying EBIT
|
4
|
1
|
Tax effect of other adjustments to
Underlying net finance costs
|
1
|
(1)
|
Exchange rate variations on tax
balances
|
20
|
(5)
|
Income tax expense
|
(13)
|
(200)
|
|
|
|
Underlying earnings
|
40
|
560
|
Total adjustments to
profit
|
13
|
125
|
Profit for the period
|
53
|
685
|
(1) Refer to 3(b)(ii)
Significant items.
(2) The segment
information reflects the Group's interest in material equity
accounted joint ventures and is presented on a proportional
consolidation basis, which is the measure used by the Group's
management to assess their performance. Joint venture adjustments
reconcile the proportional consolidation to the statutory equity
accounting positions, recognised in share of profit/(loss) of
equity accounted investments in the Consolidated Income
Statement.
(3) The Group's investment
in the Sierra Gorda operation is represented by the carrying value
of an equity accounted investment of US$103 million (FY23: US$161
million), and the carrying value of a purchased credit-impaired
receivable of US$1,725 million (FY23: US$1,711 million) classified
as a loan to an equity accounted investment within trade and other
receivables on the Consolidated Balance Sheet. The earnings
adjustments include a revaluation gain of US$48 million (H1 FY23:
gain of US$214 million) relating to the shareholder loan payable
that was eliminated from the Group's Underlying EBIT upon
proportional consolidation.
(4) Includes earnings
adjustments of nil (H1 FY23: nil) included in the Australia
Manganese segment and US$(7) million (H1 FY23: US$4 million)
included in the South Africa Manganese segment.
(5) Recognised in expenses
excluding finance costs in the Consolidated Income
Statement.
(6) Refer to 3(b)(iii)
Impairment of financial assets.
3. SEGMENT INFORMATION
(CONTINUED)
(b) Segment results (continued)
(i) Underlying results reconciliation
(continued)
H1
FY24
|
|
|
|
|
US$M
|
Group underlying
results
|
Sierra Gorda joint venture
adjustments
|
Manganese joint venture
adjustments
|
Group statutory
results
|
Total revenue
|
3,881
|
(322)
|
(426)
|
3,133
|
Depreciation and amortisation
|
472
|
(68)
|
(69)
|
335
|
Share of profit/(loss) of equity accounted
investments
|
(11)
|
3
|
(1)
|
(9)
|
Exploration expenditure
|
53
|
(6)
|
-
|
47
|
Capital expenditure
|
727
|
(98)
|
(66)
|
563
|
Equity accounted investments
|
47
|
103
|
264
|
414
|
Total assets
|
15,390
|
(453)
|
(539)
|
14,398
|
Total liabilities
|
6,164
|
(453)
|
(539)
|
5,172
|
H1
FY23
|
|
|
|
|
US$M
|
Group underlying
results
|
Sierra Gorda joint venture
adjustments
|
Manganese joint venture
adjustments
|
Group statutory
results
|
Total revenue
|
4,524
|
(357)
|
(471)
|
3,696
|
Depreciation and
amortisation
|
442
|
(72)
|
(58)
|
312
|
Share of profit/(loss) of equity
accounted investments
|
7
|
161
|
73
|
241
|
Exploration expenditure
|
49
|
(3)
|
(2)
|
44
|
Capital expenditure
|
481
|
(86)
|
(43)
|
352
|
Equity accounted
investments(1)
|
58
|
101
|
340
|
499
|
Total
assets(1)
|
15,515
|
(450)
|
(501)
|
14,564
|
Total
liabilities(1)
|
6,140
|
(450)
|
(501)
|
5,189
|
(1) Equity accounted
investments, total assets and total liabilities are as at 30 June
2023.
(ii) Significant items
Significant items are those items,
not separately identified in note 3(b)(i) Underlying results
reconciliation, whose nature and amount are considered material to
the Group's consolidated half year financial statements. There were
no such items included within the Group's consolidated financial
statements for the half year ended 31 December 2023 (H1 FY23:
US$115M after tax).
H1
FY23
|
US$M
|
Gross
|
Tax
|
Net
|
Disposal of royalties
|
189
|
(56)
|
133
|
Assets write-off
|
(51)
|
16
|
(35)
|
Tax adjustments relating to the
Sierra Gorda acquisition
|
-
|
17
|
17
|
Total significant items
|
138
|
(23)
|
115
|
Disposal of
royalties
On 19 July 2022, the Group divested
four royalties to Ecora Resources PLC (formerly known as Anglo
Pacific Group PLC) in exchange for consideration comprising an
upfront cash payment of US$48 million, deferred cash consideration
of US$55 million, US$78 million in equity and a variable
consideration receivable valued at US$10 million. The equity in
Ecora Resources PLC has been recognised as an investment in equity
instruments designated at FVOCI. The variable consideration is
payable if certain production and price-linked conditions are met
prior to 2032, up to a maximum of US$15 million.
The royalties were recognised as
intangible assets with a nominal carrying value. On completion the
Group recognised other income, net of transaction costs, of US$189
million (US$133 million post-tax) in the Consolidated Income
Statement and was included in Group and unallocated
items.
3. SEGMENT INFORMATION
(CONTINUED)
(b) Segment results (continued)
(ii) Significant items (continued)
Assets
write-off
On 23 August 2022, the Group
announced that it would not proceed with an investment in the
Dendrobium Next Domain project at Illawarra Metallurgical Coal
following its consideration of recently completed study work and
extensive analysis of alternatives considered for the complex. As a
result of the decision in August 2022, the Group wrote off US$51
million (US$35 million post-tax) of costs previously capitalised in
relation to the project which were recognised within expenses
excluding finance costs in the Consolidated Income Statement. The
write-off related to capitalised exploration and evaluation assets
previously included in property, plant and equipment on the
Consolidated Balance Sheet.
Tax adjustments relating to
the Sierra Gorda acquisition
During H1 FY23, the Group recognised
an income tax benefit of US$31 million relating to tax liabilities
recognised on the acquisition of Sierra Gorda during H1 FY23. The
US$31 million benefit comprised a reassessment of US$17 million and
foreign exchange gain of US$14 million which was separately
reported as part of exchange variations of tax balances. The tax
adjustments relating to the Sierra Gorda acquisition have been
excluded from the Group's Underlying income tax expense on the
basis that they do not relate to assessable income earned during
its ownership.
(iii) Impairment of financial assets
The Group recognised the following
net impairment of financial assets:
US$M
|
H1 FY24
|
H1 FY23
|
Trade and other
receivables
|
48
|
214
|
Net impairment of financial
assets(1)
|
48
|
214
|
(1) Relates to the
purchased credit impaired receivable from Sierra Gorda.
Shareholder loan receivable
from Sierra Gorda
The loan has a contractual interest
rate of 8 per cent and the repayment of the loan by Sierra Gorda is
dependent on its financial performance. At 31 December 2023,
the Group updated its estimated timing of the loan repayments and
as a result recognised an impairment of US$48 million (H1 FY23:
impairment of US$214 million) which is included in expenses
excluding finance costs in the Consolidated Income Statement. The
net present value of the expected future cash flows of the loan is
most sensitive to the Group's copper price assumption, with a range
of US$3.28/lb to US$4.59/lb used, in real terms. The future loan
repayments were informed by a production profile and costs based on
management's planning processes. An effective interest rate of 9
per cent, as determined on the date of acquisition, was applied to
discount the future loan repayments.
4.
DIVIDENDS
US$M
|
H1 FY24
|
H1 FY23
|
Prior year final dividend
|
145
|
646
|
Prior year special
dividend
|
-
|
138
|
Total dividends declared and paid during the
period(1)
|
145
|
784
|
(1) On 24 August 2023, the
Directors resolved to pay a fully franked final dividend of US 3.2
cents per share (US$145 million) in respect of the 2023 financial
year. The dividends were paid on 12 October 2023
5.
EARNINGS PER SHARE
Basic earnings per share (EPS)
amounts are calculated based on profit attributable to equity
holders of South32 Limited and the weighted average number of
shares outstanding during the year.
Diluted EPS amounts are calculated
based on profit attributable to equity holders of South32 Limited
and the weighted average number of shares outstanding after
adjustment for the effects of all dilutive potential
shares.
The following reflects the profit
and share data used in the basic and diluted EPS
computations:
Profit attributable to equity holders
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Profit attributable to equity
holders of South32 Limited (basic)
|
53
|
685
|
Profit attributable to equity
holders of South32 Limited (diluted)
|
53
|
685
|
Weighted average number of shares
|
|
|
Million
|
H1 FY24
|
H1 FY23
|
Basic EPS
denominator(1)
|
4,523
|
4,596
|
Shares contingently issuable under
employee share ownership plans
|
14
|
30
|
Diluted EPS denominator
|
4,537
|
4,626
|
(1) The basic EPS
denominator is the aggregate of the weighted average number of
shares after deduction of the weighted average number of treasury
shares outstanding and shares permanently cancelled through the
on-market share buy-back program.
Earnings per share
|
|
|
US
cents
|
H1 FY24
|
H1 FY23
|
Basic EPS
|
1.2
|
14.9
|
Diluted EPS
|
1.2
|
14.8
|
6.
INTEREST BEARING LIABILITIES
US$M
|
H1 FY24
|
FY23
|
Current
|
|
|
Lease liabilities
|
51
|
51
|
Unsecured loans from equity
accounted investments
|
208
|
287
|
Unsecured
other(1)
|
176
|
27
|
Total current interest bearing liabilities
|
435
|
365
|
Non-current
|
|
|
Lease liabilities
|
631
|
623
|
Senior unsecured notes
|
691
|
690
|
Unsecured other
|
36
|
63
|
Total non-current interest bearing
liabilities
|
1,358
|
1,376
|
Unsecured other interest bearing
liabilities includes US$149 million of short-term commercial paper
issued in December 2023 via the Group's US commercial paper
program.
7. NET FINANCE INCOME/(COSTS)
US$M
|
H1 FY24
|
H1 FY23
|
Finance income
|
|
|
Interest on loans to equity
accounted investments
|
91
|
83
|
Other interest income
|
25
|
28
|
Total finance income
|
116
|
111
|
Finance costs
|
|
|
Interest on borrowings
|
(35)
|
(31)
|
Interest on lease
liabilities
|
(26)
|
(26)
|
Discounting on provisions and other
liabilities
|
(62)
|
(42)
|
Net interest expense on
post-retirement employee benefits
|
(1)
|
(2)
|
Exchange rate variations on net
debt
|
(1)
|
4
|
Total finance costs
|
(125)
|
(97)
|
Net
finance income/(costs)
|
(9)
|
14
|
8. FINANCIAL ASSETS AND FINANCIAL
LIABILITIES
The following table presents the
financial assets and liabilities by class at their carrying
amounts:
H1
FY24
|
Held at
FVTPL
|
Designated as
FVOCI
|
Amortised
cost
|
Total
|
US$M
|
Financial assets
|
|
|
|
|
Cash and cash
equivalents
|
-
|
-
|
702
|
702
|
Trade and other
receivables(1)(2)
|
108
|
-
|
446
|
554
|
Other financial assets:
|
|
|
|
|
Derivative contracts
|
1
|
-
|
-
|
1
|
Total current financial assets
|
109
|
-
|
1,148
|
1,257
|
Trade and other
receivables(1)(2)
|
-
|
-
|
1,954
|
1,954
|
Other financial assets:
|
|
|
|
|
Investments in equity instruments
designated as FVOCI
|
-
|
97
|
-
|
97
|
Contingent consideration
receivable
|
10
|
-
|
-
|
10
|
Total non-current financial assets
|
10
|
97
|
1,954
|
2,061
|
Total financial assets
|
119
|
97
|
3,102
|
3,318
|
Financial liabilities
|
|
|
|
|
Trade and other
payables(3)
|
3
|
-
|
822
|
825
|
Interest bearing
liabilities
|
-
|
-
|
435
|
435
|
Total current financial liabilities
|
3
|
-
|
1,257
|
1,260
|
Trade and other
payables(3)
|
-
|
-
|
19
|
19
|
Interest bearing
liabilities
|
-
|
-
|
1,358
|
1,358
|
Other financial
liabilities:
|
|
|
|
|
Contingent consideration
payable
|
18
|
-
|
-
|
18
|
Total non-current financial liabilities
|
18
|
-
|
1,377
|
1,395
|
Total financial liabilities
|
21
|
-
|
2,634
|
2,655
|
(1) Includes current loans
to equity accounted investments of US$6 million and
non-current loans to equity accounted investments of
US$1,944 million.
(2) Excludes current input
taxes of US$102 million and non-current input and other taxes of
US$180 million included in other receivables.
(3) Excludes current input
taxes of US$15 million and non-current input and other taxes of
US$1 million included in other payables.
8. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
(CONTINUED)
FY23
|
Held at
FVTPL
|
Designated as
FVOCI
|
Amortised
cost
|
Total
|
US$M
|
Financial assets
|
|
|
|
|
Cash and cash
equivalents
|
-
|
-
|
1,258
|
1,258
|
Trade and other
receivables(1)(2)
|
105
|
-
|
532
|
637
|
Other financial assets:
|
|
|
|
|
Derivative contracts
|
1
|
-
|
-
|
1
|
Total current financial assets
|
106
|
-
|
1,790
|
1,896
|
Trade and other
receivables(1)(2)
|
-
|
-
|
1,802
|
1,802
|
Other financial assets:
|
|
|
|
|
Investments in equity instruments
designated as FVOCI
|
-
|
108
|
-
|
108
|
Contingent consideration
receivable
|
10
|
-
|
-
|
10
|
Total non-current financial assets
|
10
|
108
|
1,802
|
1,920
|
Total financial assets
|
116
|
108
|
3,592
|
3,816
|
Financial liabilities
|
|
|
|
|
Trade and other
payables(3)
|
6
|
-
|
962
|
968
|
Interest bearing
liabilities
|
-
|
-
|
365
|
365
|
Total current financial liabilities
|
6
|
-
|
1,327
|
1,333
|
Trade and other
payables(3)
|
-
|
-
|
18
|
18
|
Interest bearing
liabilities
|
-
|
-
|
1,376
|
1,376
|
Other financial
liabilities:
|
|
|
|
|
Contingent consideration
payable
|
37
|
-
|
-
|
37
|
Total non-current financial liabilities
|
37
|
-
|
1,394
|
1,431
|
Total financial liabilities
|
43
|
-
|
2,721
|
2,764
|
(1) Includes current loans
to equity accounted investments of US$114 million and
non-current loans to equity accounted investments of
US$1,790 million.
(2) Excludes current input
taxes of US$141 million and non-current input and other taxes of
US$121 million included in other receivables.
(3) Excludes current input
taxes of US$17 million and non-current input and other taxes of
US$1 million included in other payables.
(i) Measurement of fair value
The carrying values of the Group's
financial assets and liabilities measured at amortised cost are
equal to or approximate their respective fair values, except for
senior unsecured notes, which have a fair value of US$633 million
(FY23: US$617 million), and lease liabilities, for which a fair
value has not been determined. The fair value of the Group's senior
unsecured notes is estimated based on quoted market prices at the
reporting date and are classified as Level 1 on the fair value
hierarchy as shown below. Refer to note 6 Interest bearing
liabilities for the carrying values of senior unsecured notes and
lease liabilities.
For financial assets and liabilities
measured at fair value, the Group uses quoted marked prices in
active markets for identical assets where available. Where no price
information is available from a quoted market source, alternative
market mechanisms or recent comparable transactions, the fair value
is estimated based on the Group's views on relevant future prices,
net of valuation allowances to accommodate liquidity, modelling,
credit and other risks implicit in such estimates.
The following table shows the
Group's financial assets and liabilities carried at fair value with
reference to the nature of valuation inputs
used:
Level 1
|
Valuation is based on unadjusted
quoted prices in active markets for identical financial assets and
liabilities.
|
Level 2
|
Valuation is based on inputs (other
than quoted prices included in Level 1) that are observable for the
financial asset or liability, either directly (i.e. as unquoted
prices) or indirectly (i.e. derived from prices).
|
Level 3
|
Valuation includes inputs that are
not based on observable market data.
|
8. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
(CONTINUED)
(i) Measurement of fair value
(continued)
H1
FY24
|
|
|
|
|
US$M
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Financial assets and liabilities
|
|
|
|
|
Trade and other
receivables
|
-
|
108
|
-
|
108
|
Trade and other payables
|
-
|
(3)
|
-
|
(3)
|
Derivative contract
assets
|
1
|
-
|
-
|
1
|
Investments in equity instruments
designated as FVOCI
|
90
|
-
|
7
|
97
|
Contingent consideration
receivable
|
-
|
-
|
10
|
10
|
Contingent consideration
payable
|
-
|
-
|
(18)
|
(18)
|
Total
|
91
|
105
|
(1)
|
195
|
FY23
|
|
|
|
|
US$M
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Financial assets and liabilities
|
|
|
|
|
Trade and other
receivables
|
-
|
105
|
-
|
105
|
Trade and other payables
|
-
|
(6)
|
-
|
(6)
|
Derivative contract
assets
|
1
|
-
|
-
|
1
|
Investments in equity instruments
designated as FVOCI
|
101
|
-
|
7
|
108
|
Contingent consideration
receivable
|
-
|
-
|
10
|
10
|
Contingent consideration
payable
|
-
|
-
|
(37)
|
(37)
|
Total
|
102
|
99
|
(20)
|
181
|
(ii) Level 3 financial assets and
liabilities
The following table shows the
movements in the Group's Level 3 financial assets and
liabilities:
US$M
|
H1 FY24
|
H1 FY23
|
At the beginning of the
period
|
(20)
|
(45)
|
Addition of financial
assets
|
-
|
10
|
Reclassification of financial asset
from level 3 to level 2(1)
|
-
|
(39)
|
Unrealised gains recognised in the
Consolidated Income Statement(2)
|
19
|
68
|
At
the end of the period
|
(1)
|
(6)
|
(1) The valuation of the
vendor loan facility provided to Seriti as part of the Group's
divestment of South Africa Energy Coal no longer included inputs
that were based on unobservable market data. This financial asset
was settled in H2 FY23 through agreement with the vendor to offset
this facility against the related rehabilitation fund liability,
recognised within unsecured other interest bearing
liabilities.
(2) Recognised in expenses
excluding finance costs in the Consolidated Income
Statement.
(iii) Standby arrangements and credit
facilities
The entities in the Group are funded
by a combination of cash generated by the Group's operations,
working capital facilities and intercompany loans provided by the
Group. Intercompany loans may be funded by a combination of cash,
short-term and long-term debt. Details of the Group's major standby
arrangement are as follows:
H1
FY24
|
|
|
|
US$M
|
Available
|
Used
|
Unused
|
Revolving credit
facility(1)
|
1,400
|
-
|
1,400
|
(1) The Group has an
undrawn revolving credit facility which expires in December 2028,
with the size of the facility in the final year reducing to
US$1,300 million.
9. EQUITY ACCOUNTED INVESTMENTS
The Group's interests in equity
accounted investments with the most significant contribution to the
Group's net profit after tax or net assets are as
follows:
|
Country of incorporation
|
|
|
Ownership interest
%
|
Significant joint ventures
|
Principal activity
|
Acquisition date
|
H1 FY24
|
FY23
|
Australia
Manganese(1)(2)
|
Australia
|
Manganese ore mine
|
8 May 2015
|
60
|
60
|
South Africa
Manganese(1)(3)
|
South Africa
|
Manganese ore mines
|
3 February 2015
|
60
|
60
|
Sierra
Gorda(4)
|
Chile
|
Copper mine
|
22 February 2022
|
45
|
45
|
(1) Joint control is
contractually achieved as joint venture parties unanimously consent
on decisions over the joint venture's relevant
activities.
(2) Australia Manganese
consists of an investment in Groote Eylandt Mining Company Pty Ltd
(GEMCO).
(3) The Group holds a 60
per cent interest in Samancor Holdings (Pty) Ltd (Samancor).
Samancor indirectly owns 74 per cent of Hotazel Manganese Mines
(Pty) Ltd (HMM), which gives the Group its indirect legal ownership
interest of 44.4 per cent. The remaining 26 per cent of HMM is
owned by B-BBEE entities, of which 17 per cent of the interests
were acquired using vendor finance, with the loans repayable via
distributions attributable to these parties, pro rata to their
share in HMM. Until these loans are repaid, the Group's interest in
HMM is accounted for at 54.6 per cent.
(4) Sierra Gorda consists
of an investment in Sierra Gorda Sociedad Contractual
Minera.
The Group's share of profit/(loss)
of equity accounted investments, are as follows:
Share of profit/(loss) of equity accounted
investments
|
|
|
US$M
|
H1 FY24
|
H1 FY23
|
Australia Manganese
|
7
|
52
|
South Africa Manganese
|
(12)
|
16
|
Sierra Gorda
|
3
|
161
|
Individually
immaterial(1)
|
(7)
|
12
|
Total
|
(9)
|
241
|
(1) Individually
immaterial consists of investments in Samancor Marketing Pte Ltd
(60 per cent), Mineração Rio do Norte (33 per cent) and Port Kembla
Coal Terminal Ltd (16.7 per cent).
10. SUBSEQUENT EVENTS
Agreement to divest interest in Eagle Downs
On 10 February 2024, the Group
entered into a binding agreement to divest its 50 percent interest
in the Eagle Downs metallurgical coal project to Boomerang QLD Coal
Pty Ltd, a subsidiary of Stanmore Resources Limited. The
consideration comprises US$15 million payable at completion; a
contingent payment of US$20 million, subject to the Eagle Downs
project reaching metallurgical coal production of 100,000 tonnes;
and a royalty of up to US$100 million based on certain
metallurgical coal price-linked conditions. The transaction is
expected to complete in the 2024 calendar year, subject to
satisfaction of conditions precedent, which include approval from
Australia's Foreign Investment Review Board and certain consents
required under the Eagle Downs joint venture agreement.
Capital management
On 15 February 2024, the Directors
resolved to pay a fully-franked interim dividend of US 0.4 cents
per share (US$18 million) in respect of the 2024 financial half
year. The dividend will be paid on 4 April 2024. The dividend
has not been provided for in the half year consolidated financial
statements and will be recognised in the second half of the 2024
financial year.
To manage the Group's financial
position and ensure it retains the right balance of flexibility,
efficiency and prudence, the Directors have taken
the decision to cancel the on-market share buy-back program, which
was due to expire on 1 March 2024. Consistent with its unchanged
capital management framework, the Group will continue to assess
options to return excess cash to shareholders in the most efficient
and value accretive manner.
Final investment approval to develop the Taylor
deposit
On 15 February 2024, the Directors
approved a final investment decision for the development of the
Group's Taylor zinc-lead silver deposit within the Hermosa project
in Arizona, United States. The Directors have approved direct and
indirect capital expenditure of US$2,160 million, in real terms,
with construction expected to be funded primarily from the Group's
operating cash flows.
No other matters or circumstances
have arisen since the end of the period that have significantly
affected, or may significantly affect, the operations, results of
operations or state of affairs of the Group in subsequent
accounting periods.
DIRECTORS' DECLARATION
In accordance with a resolution of
the Directors of the Company, we state that:
In the opinion of the
Directors:
(a) The consolidated
financial statements and notes that are set out on pages
33 to 50 for the half year ended
31 December 2023 are in accordance with the Corporations Act,
including:
(i) Giving a true
and fair view of the Group's financial position as at
31 December 2023 and of its performance for the half year
ended on that date; and
(ii) Complying with
Australian Accounting Standard AASB 134 Interim Financial Reporting and
Corporations Regulations 2001.
(b) There are
reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable.
Signed in accordance with a
resolution of the Board of Directors.
Karen Wood
Chair
Graham Kerr
Chief Executive Officer and Managing
Director
Dated 15 February
2024
DIRECTORS' REPORT
The Directors of the Group present
the consolidated financial statements for the half year ended
31 December 2023 and the auditor's review report
thereon.
Directors
The Directors of the Company, both
during and since the end of the period, are:
Ms Karen Wood
Mr Graham Kerr
Mr Frank Cooper AO
Dr Xiaoling Liu
Mr Carlos Mesquita
Dr Ntombifuthi (Futhi)
Mtoba
Ms Jane Nelson
Mr Wayne Osborn
Mr Keith Rumble
Ms Sharon Warburton
The company secretary of the
Company, both during and since the end of the period, is Claire
Tolcon.
Review and results of operations
A review of the operations of the
consolidated entity during the period and of the results of those
operations is contained on pages 3
to 30.
Strategic risks and uncertainties
Due to the international scope of
the Group's operations and the industries in which it is engaged,
there are a number of risk factors and uncertainties which could
have an effect on the Group's results and operations over the next
six months.
The following information outlines
the most significant strategic exposures identified across the
Group. The risks are not listed in any particular order:
•
Keeping our people safe and well
•
Portfolio reshaping
•
Predictable operational performance
•
Climate change and environment
•
Maintaining, realising or enhancing the value of our Mineral
Resources and Ore Reserves
•
Major external events or natural catastrophes
•
Maintaining competitiveness through innovation and
technology
•
Delivering our project portfolio
•
Security of supply of logistics chains, and critical goods and
services
•
Shaping our culture and managing diverse talent
•
Evolving societal expectations
•
Political risks, actions by government and/or
authorities
•
Global economic uncertainty and liquidity
Further information on these risks
and how they are managed can be found on pages 28 to 37 of the
Annual Report for the year ended 30 June 2023, a copy of which
is available on the Group's website at
www.south32.net.
DIRECTORS' REPORT (CONTINUED)
Events subsequent to the balance sheet date
Agreement to divest interest in Eagle Downs
On 10 February 2024, the Group
entered into a binding agreement to divest its 50 percent interest
in the Eagle Downs metallurgical coal project to Boomerang QLD Coal
Pty Ltd, a subsidiary of Stanmore Resources Limited. The
consideration comprises US$15 million payable at completion; a
contingent payment of US$20 million, subject to the Eagle Downs
project reaching metallurgical coal production of 100,000 tonnes;
and a royalty of up to US$100 million based on certain
metallurgical coal price-linked conditions. The transaction is
expected to complete in the 2024 calendar year, subject to
satisfaction of conditions precedent, which include approval from
Australia's Foreign Investment Review Board and certain consents
required under the Eagle Downs joint venture agreement.
Capital management
On 15 February 2024, the Directors
resolved to pay a fully-franked interim dividend of
US 0.4 cents per share (US$18 million) in respect
of the 2024 financial half year. The dividend will be paid on
4 April 2024. The dividend has not been provided for in the
half year consolidated financial statements and will be recognised
in the second half of the 2024 financial year.
To manage the Group's financial
position and ensure it retains the right balance of flexibility,
efficiency and prudence, the Directors have taken
the decision to cancel the on-market share buy-back program, which
was due to expire on 1 March 2024. Consistent with its unchanged
capital management framework, the Group will continue to assess
options to return excess cash to shareholders in the most efficient
and value accretive manner.
Final investment approval to develop the Taylor
deposit
On 15 February 2024, the Directors
approved a final investment decision for the development of the
Group's Taylor zinc-lead silver deposit within the Hermosa project
in Arizona, United States. The Directors have approved direct and
indirect capital expenditure of US$2,160 million, in real terms,
with construction expected to be funded primarily from the Group's
operating cash flows.
No other matters or circumstances
have arisen since the end of the period
that have significantly affected, or may
significantly affect, the operations, results of operations or
state of affairs of the Group in subsequent accounting
periods.
UK
responsibility statements
The Directors state that to the best
of their knowledge the Financial Results and Outlook on
pages 3 to
30 is compliant with DTR
4.2.7R and DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules in the United Kingdom, namely:
(a) includes an
indication of important events that have occurred during the first
six months of the financial year, and their impact on the condensed
set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
(b) disclosure has been
made for related party transactions that have taken place in the
first six months of the current financial year and that have
materially affected the financial position or performance of the
enterprise during that period, and any changes in the related party
transactions described in the last annual report that could have a
material effect on the financial position or performance of the
enterprise in the first six months of the current financial
year.
Lead Auditor's Independence Declaration
A copy of the lead auditor's
independence declaration as required under Section 307C of the
Corporations Act is set out on page 54.
Rounding of amounts
The Australian Securities and
Investments Commission (ASIC) Corporations (Rounding in
Financial/Directors' Reports) Instrument 2016/191 applies to the
Group and amounts in the half year consolidated financial
statements and this Directors' Report have been rounded in
accordance with this instrument to the nearest million US dollars,
unless stated otherwise.
This Directors' Report is made in
accordance with a resolution of the Board.
Karen
Wood
Graham Kerr
Chair
Chief Executive Officer and Managing Director
Date: 15 February
2024
Lead Auditor's Independence
Declaration under
Section 307C of the Corporations
Act 2001
To
the Directors of South32 Limited
I declare that, to the best of my
knowledge and belief, in relation to the review of South32 Limited
for the half year ended 31 December 2023 there have
been:
(a) no contraventions
of the auditor independence requirements as set out in the
Corporations Act 2001 in
relation to the review; and
(b) no contraventions
of any applicable code of professional conduct in relation to the
review.
KPMG
|
Graham Hogg
|
|
Partner
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Perth
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15 February 2024
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Independent Auditor's Review
Report
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To the shareholders of South32
Limited
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Conclusion
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We have reviewed the accompanying
Half-year Consolidated Financial Statements of
South32 Limited.
Based on our review, which is not
an audit, we have not become aware of any matter that makes us
believe that the Half-year Consolidated Financial Statements of
South32 Limited does not comply with the Corporations Act 2001,
including:
(a) giving a true and
fair view of the Group's financial position as at 31 December 2023 and of its performance for
the Half-year ended on that date; and
(b) complying with
Australian Accounting Standard
AASB 134 Interim Financial Reporting and the Corporations Regulations
2001
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The Half-year Consolidated
Financial Statements comprises:
(a) Consolidated
balance sheet as at 31 December
2023;
(b) Consolidated income
statement, Consolidated statement of comprehensive income,
Consolidated statement of changes in equity and Consolidated cash
flow statement for the Half-year ended on that date;
(c) Notes 1 to
10 comprising a summary of material
accounting policies and other explanatory information;
and
(d) The Directors'
Declaration.
The Group comprises
South32 Limited (the Company) and the entities it controlled at the
Half year's end or from time to time during the
Half-year.
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Basis for Conclusion
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We conducted our review in
accordance with ASRE 2410 Review
of a Financial Report Performed by the Independent Auditor of the
Entity and ISRE 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. Our
responsibilities are further described in the Auditor's Responsibilities for the Review of
the Financial Report section of our report.
We are independent of the Group in
accordance with the auditor independence requirements of the
Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are
relevant to our audit of the annual financial report in Australia.
We have also fulfilled our other ethical responsibilities in
accordance with these requirements.
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Responsibilities of the Directors for the Half-year
Consolidated Financial Statements
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The Directors of the Company are
responsible for:
(a) the preparation of
the Half-year Consolidated Financial Statements that gives a true
and fair view in accordance with Australian Accounting Standards
and the Corporations Act 2001; and
(b) such internal
control as the Directors determine is necessary to enable the
preparation of the Half-year Consolidated Financial Statements that
gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
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Auditor's Responsibilities for the Review of the Half-year
Consolidated Financial Statements
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Our responsibility is to express a
conclusion on the Half-year Consolidated Financial Statements based
on our review. ASRE 2410 and ISRE 2410 require us to conclude
whether we have become aware of any matter that makes us believe
that the Half-year Consolidated Financial Statements does not
comply with the Corporations Act 2001 including giving a true and
fair view of the Group's financial position as at
31 December 2023 and
its performance for the Half-Year ended on that date, and complying
with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
A review of Half-year Consolidated
Financial Statements consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with Australian Auditing Standards and consequently does not enable
us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
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KPMG
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Graham Hogg
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Partner
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Perth
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15 February 2024
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