PERTH (miningweekly.com) – Diversified miner South32 on Thursday reported a record quarter at its Australian manganese operations, while metallurgical coal production was up 39% on the previous quarter.

“Annual production guidance is maintained for all our operations, with Australia manganese achieving another quarterly record and total manganese ore production increasing by 8%,” said South32 CEO Graham Kerr.

Manganese production in the three months to September reached 1.4-million tonnes, which was up from the 1.3-million tonnes produced in the last quarter of the 2018 financial year.

Manganese alloy production in the same period was down by 19%, to 52 000 t, compared with the 64 000 t delivered in the previous quarter.

“Metallurgical coal enjoyed a strong start to the year as an improvement in longwall productivity underpinned an annualised production rate of 7.6-million tonnes in the quarter,” Kerr said on Thursday.

Metallurgical coal production for the three months to September reached 1.5-million tonnes, up from the 1-million tonnes produced in the previous three months.

Saleable coal production from the South African Energy operation declined by 13% in the quarter, to 6.2-million tonnes, with South32 telling shareholders that export production was impacted by an incident that caused damage to the dragline at the Klipspruit operation, in August.

Domestic production of energy declined in response to lower demand, despite the start of a new contract to sell additional lower quality stockpiled product in the June quarter.

Meanwhile, alumina production for the quarter ended September was down 11% on the June quarter, to 1.1-million tonnes, while aluminium production was up 1%, to 248 000 t.

Alumina production during the quarter was affected by maintenance work at the Worsley alumina refinery, while production at the Brazil alumina operations also declined due to unplanned maintenance and power outages.

Nickel production for the quarter also declined by 5%, to 10 700 t, while silver production was down 25% to 3.1-million ounces, lead production declined by 18%, to 25 800 t, and zinc production increased by 6%, to 13 200 t.

“We finished the period with a net cash balance of $679-million and additional funds in our manganese joint venture as our key commodity markets benefitted from robust demand and pricing. This strong financial position enabled us to acquire Arizona Mining and Eagle Downs, and to continue our $1-billion capital management programme,” said Kerr.

“We continue to make excellent progress in reshaping our portfolio. In addition to the two acquisitions, we continued to advance our 18 greenfield exploration projects and commenced the process to broaden and transform the ownership of South Africa energy coal.”

The formal process to transform the ownership of South African Energy Coal (SAEC) started in the quarter under review and South32 has received “several expressions of interest”.

The process is continuing and the miner said that, given the likely timeline for the process, SAEC would continue to be consolidated in its financial results for the December 2018 half-year.

South32 in 2017, announced its intention to manage SAEC, which includes the Khutala, Klipspruit, Middelburg and Wolwekrans collieries and processing plants in Mpumalanga, as a standalone business, allowing it to simplify the company.