South32’s decision to invest in copper is bearing fruit, with its Sierra Gorda copper mine in Chile delivering a strong performance in the June quarter.
Sierra Gorda – which South32 (45 per cent stake) shares with Polish company KGHM Polska Miedz – increased its copper equivalent production by 17 per cent quarter-on-quarter, with 22,300 tonnes of copper produced in the three months to June 30.
This enabled the mine to produce 86,200 tonnes of copper in the 2022–23 financial year (FY23), just shy of South32’s guidance of at least 89,000 tonnes.
A plant debottlenecking project will look to further unlock Sierra Gorda’s potential, boosting plant throughput to between 48,000–49,000 million tonnes per annum (Mtpa). South32 is undergoing a feasibility study to further expand the plant’s capacity to 57,000–58,000Mtpa of throughput.
The company is targeting 87,500 tonnes of copper production from Sierra Gorda in FY24.
Full-year production records were achieved at South32’s Hillside Aluminium operation in South Africa, its Australia Manganese operations in Northern Territory, and South Africa Manganese.
Hillside produced 719,000 tonnes of aluminium in FY23, while Australia Manganese and South Africa Manganese produced 3.5 million tonnes and 2.1 million tonnes of manganese across the 12 months, respectively.
Group aluminium production increased 14 per cent for South32 year-on-year in FY23, while overall base metals production increased 17 per cent, benefited by Sierra Gorda’s production uplift.
While South32 enjoyed performance improvements across several of its mines, the company announced it will report a $US1.3 billion (1.93 million) impairment for its Hermosa project in its FY23 financial results.
The project, which is made up of the Taylor zinc-lead-silver and Clark battery-grade manganese deposits in the US, has been impacted by several factors, including COVID-related restrictions curtailing development in 2020 and 2021, significant dewatering requirements, and higher capital expenditure forecasts.
As a result of the impairment, the carrying value of the Hermosa project as at June 30 this year is $US1 billion, with $US482 million for the Taylor deposit. The carrying value of the Clark deposit and regional exploration tenure remains unchanged at $US519 million.
“The Hermosa project has the potential to sustainably produce commodities critical for a low-carbon future, from multiple development options, for decades to come,” South32 chief executive officer Graham Kerr said.
“We are disappointed by the delays resulting from the impact of COVID, the significant dewatering requirements and current inflationary market conditions.
“We continue to see substantial opportunity to unlock additional value across Taylor, Clark and our highly prospective regional exploration package and that optionality is not included in today’s impairment assessment.”
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