South32 Slashes Net dDebt and Cost

• Thursday, April 21, 2016
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[Ferro-Alloys.com]Australia's third biggest miner, South32, has eliminated its debt and now has a positive cash position of $US18 million ($23.1 million), but it revealed production fell across most of its key commodities in the March quarter.

South32, which mines coal, alumina and manganese across Australia, South Africa, said on Thursday that production for the nine months ended March 31 fell in aluminium (down 5 per cent), energy coal (down 7per cent), metallurgical coal (down 10 per cent) and manganese ore (down 10 per cent).

There were also small falls in silver, lead and nickel production. Production rose slightly in alumina and zinc. 

 

However, chief executive Graham Kerr stressed the company was focused on "value, not volume". 

 

The company has been aided by increases in the prices of manganese and alumina in the last few months, as producers - including South32 itself - have cut production. 

 

On track to meet guidance 

 

He also said South32 would deliver on its promised $US300 million of cost cuts for the 2015-16 financial year. 

 

"We are making great progress on our cost-out program across all operations and have continued to generate cash despite volatile commodity markets." 

 

With output down across most of the business, Mr Kerr's best weapon to drive growth may be his pristine balance sheet. 

 

When South32 was spun out by BHP in May last year and listed with $US675 million in net debt, but management cut that to just $US36 million at the end of January and now have a net cash position of $US18 million, with $US134 million paid down during the March quarter. 

 

"We continue to strengthen our balance sheet by focusing on value, not volume," Mr Kerr said. 

 

The company, which is in the midst of cutting its headcount, including contractors, by 17 per cent, or 4500 workers by the end of the 2017 financial year, paid out $US23 millon in one-off redundancy and restructuring payments during the period. 

 

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