South32 details its manganese businesses for investors

South32 gave an analyst presentation detailing its various business units including manganese. The company’s Australian manganese operating cost was $1.52 per dmtu in fiscal 2017 and is expected to be $1.50 in fiscal 2018, while its South African operating cost was $2.09 in fiscal 2017 and is expected to be $2.06 in fiscal 2018.

South32’s South African manganese ore production was 2,018,000 tons in fiscal 2017 and it is expected to be 1,885,000 mt in fiscal 2018. Australian production was 2,942,000 mt in fiscal 2017 and expected to be 3,125,000 mt in fiscal 2018. Production in both locations in fiscal 2019 will be subject to demand.

In Australia, South 32 will accelerate capex for tailings in the second half of 2018. The company also plans to improve its mobile fleet utilization and broader productivity to address increasing strip ratio and haulage distances over the life of the mine. It also plans to optimize concentrator throughput and yield with a focus on value over volume.

While in South Africa, capex will be spent on equipment purchases (sustaining capital for fleet replacement at Mamatwan and Tshipi barrier pillar boxcut, also in the second half of fiscal 2018).

In fiscal 2017, South Africa exported about 80% export of its ore while 13% sold domestically and the remainder converted to ferromanganese at Metalloys. Sales evenly divided between index and fixed, and month of and month -1 for pricing.

The company is negotiating with Transnet for a MECA 2 rail allocation until 2023 and the deal is expected to be concluded in the second half of fiscal 2018.

In South Africa, costs breakdown, 80% fixed and 20% variable. Its costs were 78% in ZAR, 4% in US$ and 9% royalties and manganese price linked costs.

The Australia costs breakdown were 60% fixed and 40% variable, of which 83% A$, and 9% US$, and 8% royalties and manganese price linked costs. About 75% of Australian sales were fixed and the remainder index while month-1 constituted about 75% of sales and 25% month of.

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