South32 Signals US$109 Million Impairment Charge

   By David Winning 
 

SYDNEY--South32 Ltd. reported a mixed quarter of production for commodities that it digs up at operations around the world and signaled US$109 million in impairment charges tied to a review of its manganese allow smelters.

South32 said its Cannington silver-lead mine was a standout performer, exceeding guidance for the year through June by 8%. Management also reported record production at the Brazil Alumina, Hillside Aluminium and Australia Manganese ore divisions in fiscal 2020.

However, the latest operational snapshot showed output of energy coal dropped by 3% in the three months through June, while nickel production and manganese ore output each fell by 6%.

South32 has responded to the coronavirus pandemic by suspending its share buyback program with US$121 million remaining and drawing up plans to cut around US$160 million in spending over 15 months.

The company also mothballed its Metalloys manganese alloy smelter in South Africa amid concern that it may not be economic viable in future, while it is reviewing the TEMCO smelter in Australia. Management said completion of the TEMCO review had been delayed by the coronavirus pandemic.

South32 said it expected to book pretax impairment charges of approximately US$109 million in its results for the year through June. That charge is estimated at US$90 million after tax. The company said it also expected around US$7 million in pretax restructuring costs, including redundancies, at Metalloys.

Write to David Winning at [e-mail]

(END) Dow Jones Newswires

July 19, 2020 19:16 ET (23:16 GMT)

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