PERTH (miningweekly.com) – Diversified miner South32 has reported a 4% increase in revenue, while its loss after tax has widened during the 2021 financial year ended June.

Revenue for the 12 months under review reached $6.3-billion, compared with the $6-billion reported in the 2020 financial year, while underlying earnings before interest, taxes, depreciation and amortisation increased by 32%, from $1.18-billion to $1.56-billion.

South32 noted that the higher revenue was driven by sales volume increases and the company’s realised prices for aluminium, silver, zinc and nickel all improving. Higher base metals prices were partially offset by lower realised prices for bulk commodities, with metallurgical coal and manganese ore prices declining.

Underlying earnings in the same period were up 153%, from $193-million to $489-million, while loss after taxes increased from $65-million to $195-million.

The company told shareholders that the group’s statutory profit after taxes declined by $130-million in 2021 following the recognition of impairment charges totalling $728-million in relation to Illawarra metallurgical coal and a loss on sale of $159-million following the divestment of South Africa energy coal.

Excluding these one-off charges, strong operating performance and higher prices for most commodities translated into a 153% increase in underlying earnings to $489-million.

“We delivered a strong operating result, despite the ongoing challenges of Covid-19, achieving record production at Worsley alumina, Brazil alumina and Australia manganese. We also exceeded our initial production guidance at South Africa manganese, Cerro Matoso and Cannington,” said CEO Graham Kerr on Thursday.

South32 reported record production at Worsley alumina and Brazil alumina with both refineries benefiting from higher plant availability, as well as record production at Australia manganese and a 21% year-on-year increase at South Africa manganese with both operations exceeding guidance. The miner also reported a 14% increase in zinc equivalent production at Cannington with strong underground performance enabling the acceleration of a higher-grade mining sequence during the year, and a 9% increase in production at Illawarra metallurgical coal with the return to a three longwall configuration delivering greater efficiencies.

Furthermore, first ore from the higher-grade Q&P project and successful refurbishment of a furnace at Cerro Matoso was also reported, laying the foundation for 28% nickel production growth in 2022.

“During the year, we made substantial progress reshaping our portfolio, completing the divestments of South Africa energy coal, the TEMCO manganese alloy smelter, and a portfolio of non-core precious metals royalties. This simplifies our business, reduces capital intensity and will improve our underlying operating margin,” said Kerr.

“At Hermosa we continue to progress studies for the Taylor and Clark deposits. We have also commenced the summer field season drilling programme at the Ambler Metals joint venture (JV) in Alaska.

“Reflecting our strong financial position and disciplined approach to capital management, the board has resolved to pay a $164-million fully franked final ordinary dividend in respect of the second half of 2021 and a $93-million fully franked special dividend. The board has also resolved to further expand our capital management programme by $120-million to $2-billion, leaving $252-million to be returned to shareholders by September 2, 2022.

“Looking ahead, we expect to see strong volumes at our base metals operations - Mozal aluminium, Cerro Matoso and Cannington, following investment in improvement projects that are designed to increase production into favourable markets. At the same time, we continue to pursue cost and volume efficiencies to offset stronger producer currencies and cyclical inflation.”

In May, South32 announced a medium-term target to halve its operational carbon emissions by 2035 from its 2021 baseline.

“To achieve this we are investing in efficiency projects, shifting to low-carbon energy, applying low-carbon design principles and adopting new technologies. At the same time, we are increasing our exposure to the base metals required for a low-carbon future,” Kerr said.