PERTH (miningweekly.com) – Diversified miner South32 has reported a 46% decline in profits after tax for the first half of 2021, compared with the previous corresponding period, as revenues fell by 8%.

Revenue for the six months to December reached $2.9-billion, compared with the $3.2-billion reported in the previous corresponding period, while profits after tax fell from $99-million to $53-million.

South32 told shareholders on Thursday that a reduction in the company’s cost base and higher sales volumes during the six months under review had been more than offset by weaker prices in key commodities.

Underlying earnings before interest, taxes, depreciation and amortization (Ebitda) also fell by 7% in the same period, from $678-million to $633-million, while Ebitda margins declined from 24% to 23.3%.

“As we continue to navigate the uncertainties created by the Covid-19 pandemic, our focus remains on keeping our people safe and well, maintaining safe and reliable operations and supporting our communities,” said CEO Graham Kerr.

“During this period of volatility, we have focused on what we can control, delivering a strong operating result, including record production at Worsley Alumina, Brazil Alumina and Australia Manganese, supporting lower operating unit costs at the majority of our operations during the half.”

Kerr told shareholders that South32 had increased the production guidance at Cannington, Illawarra Metallurgical Coal and Cerro Matoso. Additional volumes and other cost efficiencies across the company’s operations would help offset weaker US dollar headwinds, he added.

Worsley Alumina is expected to deliver 3.9-million tonnes during the full 2021, while Brazil Alumina would contribute 1.3-million tonnes and Hillside Aluminium would contribute 720 000 t. Production at Mozal Aluminium is targeted at 273 000 t.

For the full 2021, production at the Illawarra metallurgical coal project would reach more than 8-million tonnes.

The Australian manganese operations would produce 3.5-million tonnes in the full year, the South Africa manganese project would produce two-million tonnes, Cerro Matoso would contribute 2.4-million tonnes of ore containing some 34 600 t of nickel, while Cannington would deliver 2.7-million tonnes of ore containing 347 200 t of zinc, 12.6-million ounces of silver, 119 200 t of lead and 61 600 t of zinc.

“Reflecting the strong position of our business, we recommenced our on-market share buy-back in October and today the board has expanded the capital management programme by $250-million, leaving $259-million to be returned. The board has also resolved to pay an ordinary dividend for the period of $0.014 a share, compared to $0.011 a year earlier,” Kerr said.

“We continue to transform our portfolio with our South Africa Energy Coal divestment progressing towards completion. Subsequent to the end of the period, we also completed the sale of the TEMCO alloy smelter and a portfolio of noncore precious metals royalties. As we exit these lower returning businesses we continue to transform our portfolio, moving towards a base metals bias.

“At our Hermosa project in Arizona, we plan to deliver a prefeasibility study for the Taylor Deposit in the June quarter, while also advancing a scoping study for the Clark Deposit to test its potential to supply the manganese chemical battery market. Work at the Ambler Metals joint venture in Alaska is also progressing with a prefeasibility study underway. Each of these projects has the potential to increase our exposure to metals which are essential for the transition to a low-carbon world.

“We continue to focus on costs and remain on track to embed $50-million in annualised savings beyond 2022 as we change the way we work. In order to achieve this goal, we are reducing our office footprint and continue to simplify our corporate and marketing structures,” said Kerr.

“We are off to a strong start in 2021, as we continue to build on our recent operating performance. Our net cash has increased from $275-million on December 31 to $452-million at the end of January, and we are now seeing a rebound in demand from markets outside of China for some of our key commodities, that is underpinning a recovery in prices. With this, our business is well placed to benefit as the global economy recovers, enabling us to deliver value for all our stakeholders.”