South32’s operating costs for the South African manganese business are expected to shoot above guidance even as the miner exceeds production targets.
The operating costs are expected to be 5% above guidance for the 2026 financial year. While improved access to lower-cost rail logistics helped reduce some of the pressure, the stronger rand offset much of those gains.
Despite higher costs, quarterly manganese production increased 6% to 528 000 wet metric tonnes, lifting annual output to 2.09 wet metric tonnes (kwmt), exceeding the company’s guidance by 4%.
At Hillside Aluminium in Richards Bay, production totalled 717 000 tonnes for the year, meeting guidance.
Transformation into base metals producer
As it managed the operational challenges, South32 is accelerating its transformation into a base metals producer, betting that growing demand for metals used in electrification and renewable energy will drive its next phase of growth.
This comes after confirming a $5.6-billion (approximately R92.3-billion) sale of its aluminium business, excluding Mozal Aluminium, to Alcoa. The transaction, which includes $1.2-billion in rehabilitation provisions, is expected to be completed in the second half of the 2027 financial year.
This sale is expected to reshape the company into a business where about 85% of pro-forma earnings will come from base and precious metals.
Future around high-margin, long-life mining assets
Matt Daley, South32 chief executive, said the company would build its future around high-margin, long-life mining assets and expects approved projects to deliver about 55% production growth.
The strategy is already backed by significant investment, as the company has spent $710-million on its Hermosa project in the United States during the 2026 financial year as construction continued on the Taylor zinc-lead-silver mine.
The project has an expected operating life of about 33 years and requires $3.3-billion in development capital as it is forecast to generate $650-million in annual EBITDA once fully operational.
“We achieved a significant milestone for our copper and zinc development projects during the period. At Sierra Gorda, the fourth grinding line project was approved for execution, which is expected to increase our share of copper equivalent production by approximately 30%,” said Daley.
Operationally, South32 exceeded its group production guidance for the 2026 financial year, while fourth-quarter sales volumes increased by 15%. This was supported by stronger commodity markets and lower inventory levels.
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- South32’s South African manganese business expects operating costs to exceed guidance by 5% in FY2026, despite production surpassing targets by 4%.
- Quarterly manganese production rose 6% to 528,000 wet metric tonnes, contributing to annual output of 2.09 million wet metric tonnes, while Hillside Aluminium met production guidance at 717,000 tonnes.
- The company is accelerating its shift to base metals, driven by demand for electrification and renewables, highlighted by a $5.6 billion sale of its aluminium business to Alcoa, slated to close in H2 FY2027.
- South32 aims to focus on high-margin, long-life mining assets, including a $710 million investment in the Hermosa project, expected to yield $650 million annual EBITDA with a 33-year operating life.
- Group production for FY2026 exceeded guidance, with Q4 sales volumes up 15%, supported by strong commodity markets and reduced inventories; Sierra Gorda copper-zinc project expansion approved to boost output by ~30%.
Despite higher costs, quarterly manganese production increased 6% to 528 000 wet metric tonnes, lifting annual output to 2.09 wet metric tonnes (kwmt), exceeding the company’s guidance by 4%.
At Hillside Aluminium in Richards Bay, production totalled 717 000 tonnes for the year, meeting guidance.
As it managed the operational challenges,
Matt Daley,
“We achieved a significant milestone for our copper and zinc development projects during the period. At Sierra Gorda, the fourth grinding line project was approved for execution, which is expected to increase our share of copper equivalent production by approximately 30%,” said Daley.
Operationally,
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