UNDERGROUND

IMC a star performer for South32

SOUTH32 subsidiary Illawarra Metallurgical Coal’s US$458 million in half-yearly earnings before interest and tax was the company’s biggest contributor to total EBIT of $1.5 billion. This was after IMC reported a loss of $41 million in the previous corresponding period and with less production.

Illawarra has been a standout for South32 this half.

Illawarra has been a standout for South32 this half.

IMC was also the second biggest contributor to the company's half-yearly revenue at $912 billion after Hillside Aluminium's $992 million.

IMC saleable production decreased 23% to 3.1 million tonnes in H1 FY22 as it completed an extended longwall move at the Dendrobium mine in Q2 FY22.

Operating unit costs at IMC increased 60% to US$123/t due to the lower volumes, increased contractor and maintenance activity, and higher price-linked royalties.

The average realised prices for metallurgical coal and energy coal increased 183% to US$303/t, and 248% to US$108/t, respectively.

IMC's operating margin increased to 56% as the significant increase in its average realised prices more than offset higher costs.

South32 CEO Graham Kerr said the parent company achieved an overall record operating margin of 44%.

"A significant improvement in our underlying earnings to US$1 billion in the half [was made], following a broad recovery in commodity prices, while also making substantial progress reshaping our portfolio," he said.

"Looking ahead, we are well positioned to capitalise on current market conditions as countries continue their economic recovery from COVID-19, and into the future as they invest in new infrastructure that is expected to see continued growth in demand for the metals critical for a low carbon future."

IMC increased its FY22 operating unit cost guidance to US$115/t - previously US$101/t - with H2 FY22 costs expected to decline from H1 FY22 as volumes increase volumes and it assumes a weaker Australian dollar.

Kerr said production guidance at the Cannington base metals operation in Queensland was revised up 5% as the operation prepared to transition to 100% truck haulage in the June quarter, which was expected to bring forward access to higher grade material.

Cannington's half yearly revenue came to $378 million while EBIT was $162 million.

Worsely Aluminium's half-yearly EBIT of $168 million was struck off revenues of $757 million.

Meanwhile, Australia Manganese reported half-yearly EBIT of $162 million and revenues of $385 million. 

 

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