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Strong Q4 performance helps South32 lift FY 2017-18 South African manganese target by 8%

https://www.chemnet.com   Jan 18,2018 platts
South32 announced on Wednesday an upward revision of manganese ore production projection of its South African operations in fiscal year 2017-2018 (July-June) by 8% to 2.04 million wet mt on the back of record quarterly performance in the last three months of 2017 and supportive market dynamics.

The Perth-based commodities group received 633,000 wmt of manganese ore from its 60%-owned South African Samancor Manganese mining joint venture between October and December last year, a 27.6% spike from 496,000 wmt in the previous quarter and 22.4% higher than 517,000 wmt a year ago, South32 said in its operational review for the December 2017 quarter released Wednesday.

South32's share of manganese ore from the Samancor JV also posted a yearly 20.9% surge to 1.13 million wmt between July and December 2017.

The amount is equivalent to around two-fifths of the group's total 2.83 million wmt attributable manganese ore output over the six-month period, which only rose 16.3% during the comparison periods.

"A continuation of higher cost trucking and the sale of lower quality fines products enabled us to take advantage of favorable market conditions ... [T]he Wessels central block, which was successfully commissioned in the March 2017 quarter, also operated at maximum capacity ahead of planned maintenance in the June 2018 quarter," the report said.

Subject to continued strong market demand, the BHP-spinoff has estimated its attributable Samancor manganese ore output to increase to 2.04 million wmt in the current fiscal year ending June 30, 2018, versus the 1.89 million wmt target it first set last October.

The increase in ore inventory in the December 2017 quarter is also expected to unwind the second half of FY 2017-2018, it cautioned.

Helped by lower-than-expected rainfall in Australia's Northern Territory, South32's 60%-controlled GEMCO mining joint venture also achieved record performance in the December quarter and the first half of FY 2017-2018.

The commodities group received 893,000 wmt of manganese ore from the JV, increasing 10.5% from the September quarter and 21.3% higher than a year earlier.

GEMCO lifted its July-December 2017 manganese ore supply to South32 by 13.5% year on year to 1.7 million wmt, some 54% of the group's 3.13 million wmt target from its Australian operations in FY 2017-2018.

South32 also recorded 62,000 mt of attributable manganese alloy output from its South African and Australian joint ventures in the December quarter, up 10.7% from the September quarter and 10.7% higher than the same 2016 period.

Meanwhile, attributable nickel output from South32's 99.9%-owned Cerro Matoso mine in Columbia shrank 13.7% quarterly to 10,100 mt in the last three months of 2017 as a result of a planned furnace maintenance.

Despite the works at the furnace, Cerro Matoso still generated a 23.2% yearly jump in July-December 2017 nickel output for the group at 21,800 mt as ore grades improved following the ramp-up of production at the La Esmeralda deposit.

South32 remains confident of Cerro Matoso producing 41,600 mt of nickel in FY2017-2018 despite additional maintenance planned for the furnace in the current March quarter.

Lower ore grades and a reduction in mill throughput dragged down October-December zinc production of the group's wholly owned Cannington operation in Australia's Queensland to 9,200 mt, 16.4% less than the September quarter and a 62.3% slump on the year.

Mining rates at Cannington remained constrained in the December quarter as additional underground development took priority in the aftermath of an underground fire in April 2017 which damaged the load-out and shaft haulage infrastructure of the operation.

South32 expects Cannington's throughput to improve with the ramp-up of the replacement underground crusher which is on schedule to be commissioned in March this year.

It keeps FY 2017-2018 zinc production guidance unchanged at 45,000 mt.
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