South32 share price higher on quarterly update

The South32 Ltd (ASX: S32) share price is on the rise on Monday.

In morning trade, the mining giant’s shares are up 0.5% to $4.60.

This follows the release of its second quarter and first half update.

South32 share price rises on update

For the three months ended 31 December, South32 reported quarter on quarter production growth across most commodities.

Among the highlights were a 17% increase in metallurgical coal production to 1,483kt, a 13% increase in nickel production to 10.8kt, and a 17% lift in zinc production to 16.4kt.

And while South32’s copper production fell 1% quarter on quarter, this couldn’t stop the miner from recording a first half copper equivalent production increase of 12%. This reflects recent investments in copper and capacity.

Aluminium production increased by 15% during the first half, with a 50% uplift in low-carbon aluminium, following the acquisition of an additional shareholding in Mozal Aluminium and restart of the Brazil Aluminium smelter.

Finally, South32’s Illawarra Metallurgical Coal operation finished the half strongly thanks to improved volumes and labour productivity. This almost offset a very poor first quarter, with first half production ultimately falling 1% over the same period last year to 2,753kt.

Management commentary

South32’s CEO, Graham Kerr, was pleased with the quarter. He said:

Group copper equivalent production increased by 12 per cent in the December half year, as we benefitted from transactions that have repositioned our portfolio toward metals critical for a low-carbon future. Australia Manganese also achieved record half year production, while Cerro Matoso successfully commissioned the Ore Sorting and Mechanical Ore Concentration project, underpinning a 15 year extension to the mining contract.

Mr Kerr also revealed that the miner has managed to deliver on its operating cost guidance despite inflationary pressures. He added:

Despite industry wide inflationary pressures, we expect Operating unit costs for the first half to be in-line with or below guidance for the 2023 financial year at the majority of our operations. We remain focused on delivering safe and stable operational performance, and efficiencies to mitigate cost pressures and capture higher margins as markets improve.

Outlook

Management revealed that it is well positioned to capture the benefit of improved market conditions, with further expected production growth in the second half and its ongoing focus on cost management to mitigate inflationary pressures.

One slight negative, though, is that FY 2023 production guidance at Cannington has been revised lower by 11% and at Brazil Aluminium by 25kt or 25%. This is due to lower mill throughput and labour availability impacting mining rates at Cannington, and a slower ramp-up to nameplate capacity at Brazil Aluminium.

The South32 share price is now up over 16% since this time last year.

The post South32 share price higher on quarterly update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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