FY16 saleable production guidance remains unchanged at 32.0 million tonnes, according to the company.

Operating unit costs declined by 29% to $US25/t as the rand weakened significantly against the US dollar and labour productivity continued to rise.

The insourcing of activity has underpinned a 31% reduction in contractors when compared with the average headcount in FY15, while employee numbers have also been reduced by 10%.

“Labour productivity remains a major focus, while several procurement initiatives are expected to deliver additional savings,” South32 said.

“South African inflation, however, remains a significant challenge and is expected to more than offset the savings associated with these initiatives.”

Underlying EBIT increased by $US45 million in H1 FY16 to $46 million.

A reduction in contractor and labour costs increased Underlying EBIT by $53 million while a stronger US dollar delivered a further $47 million benefit.

Non-cash charges declined by $52 million as depreciation and amortization reflected the recognition of an impairment in the prior period and restoration and rehabilitation provisions were reduced.

In contrast, lower realised prices reduced Underlying EBIT by $86 million, net of price linked costs.

A $16 million decrease in capital expenditure to $42 million reflected the purchase of mobile equipment in the prior period.