South32 Annual Loss Deepens on Writedowns; to Buy Back Shares

By Rhiannon Hoyle

Mining and metals company South32 on Thursday said its annual net loss widened because of writedowns against some alumina and nickel operations, while weaker commodity prices and lower sales volumes weighed on its underlying earnings.

The Australia-based company said it made a net loss of $203 million for the year through June, compared to a loss of $173 million a year earlier. Underlying earnings fell by 59% to $380 million.

Directors declared a final dividend of 3.1 cents a share, taking its total payout for fiscal 2024 to 3.5 cents. It paid shareholders 8.1 cents for the year prior.

The board approved an expansion of the miner's capital management program by $200 million, which will be spent on an on-market share buy-back following the sale of the Illawarra Metallurgical Coal operation in Australia, said Chief Executive Graham Kerr.

South32 recorded a $388 million post-tax impairment charge against the Worsley Alumina bauxite-mining and alumina-refining operation in western Australia as well as a $248 million charge against the Cerro Matoso nickel mine in northern Colombia. The expenses, which were flagged to the market last month, were partly offset by an impairment reversal of $139 million on the Illawarra coal business.

Prices for a number of key commodities were materially lower year over year. The price for nickel from the Cerro Matoso mine was 20% lower than the year-prior period, while energy coal from the Illawarra coal operation sold for 26% less.

"The sale of Illawarra Metallurgical Coal simplifies our portfolio, strengthens our balance sheet and unlocks capital to invest in our development projects and growth options in base metals," said Kerr. "In the near term, these investments include the development of the Taylor deposit and projects to grow our copper production at Sierra Gorda."

South32 will progress construction of the $2.16 billion Taylor development at its Hermosa project in southern Arizona in fiscal 2025. It says the deposit could become one of the world's largest and lowest cost sources of zinc, a metal used to protect steel from corrosion.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

August 28, 2024 19:04 ET (23:04 GMT)

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