Australian miners are continuing to bear the brunt of a pandemic-induced labour shortage, with copper producer Oz Minerals reporting a production fall and diversified miner South32 missing its guidance despite record output at its Western Australian alumina mine.
On Monday, Oz Minerals announced copper production had fallen from 30,322 tonnes in the March quarter to 27,423 tonnes; a drop of 9.6 per cent.
Record production at South32’s Worsley Alumina refinery offset output falls in other parts of the company.
The Australian copper company previously downgraded its predicted output last month, blaming COVID-19 absenteeism, supply chain disruptions and damage to a now-repaired conveyor belt at its South Australian Carrapateena mine for the drop. Higher inflation, of about 8 per cent, in the mining industry has also increased costs for the company.
Oz Minerals chief executive Andrew Cole told investors that the company was starting to see operational performance improvements, which he expected to continue over the year.
“However, new COVID variants and increasing infection rates across the community more broadly continue to pose a risk to operational productivity and guidance,” Cole said.
RBC Capital Markets analyst Kaan Peker said the bank viewed Oz Minerals’ results as a negative, with costs slightly higher than expected while other production figures were broadly in-line with expectations.
“While the company had already flagged an increase in costs and production downgrade as part of its June update, operating costs at Carrapateena and Carajas [mines] were notably weaker than the June guidance,” Peker said in a research note.
Oz Minerals’ shares dropped after it released its results, falling 3.5 per cent to $17.09 a share in afternoon trade.
Meanwhile, former BHP spin-off South32 was only 1 per cent short of its overall guidance target across its various commodity arms, which include alumina, aluminium, coal, copper and its world-leading production of steel-making ingredient manganese.
The Australian mining company – which was created with its demerger from BHP in 2015 – reported its Worsley Alumina operations in Western Australia achieved record annual output of 3.99 million tonnes, up 1 per cent from last year.
“Our teams delivered another strong operating performance in the June quarter, despite challenges that included extreme weather, supply chain disruptions and reduced labour availability caused by the COVID-19 pandemic,” chief executive Graham Kerr said.
South32 CEO Graham Kerr.Credit:Trevor Collens
“Record annual production at Worsley Alumina, along with record quarterly production at South Africa Manganese and a strong sales result in June, capturing the benefit of high prices, capped another year of substantial progress for South32.”
RBC analysts said the South32 quarterly result was mixed, with overall production 3 per cent lower than the bank expected, but prices higher than anticipated across key commodities.
COVID-19 and wet weather in NSW also hurt the company’s coal production at its Illawarra mine, with output 10 per cent lower than consensus estimates. However, its South African manganese production jumped 22 per cent from the previous quarter to break a quarterly record for the company.
South32’s share price moved 1.6 per cent higher to $3.58 in early afternoon trade.
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