South32 marks US$100 million capital build for clogged ports halting aluminium shipments

South32 has been facing an accumulation of inventory and working capital at the firm’s South African operations due to the prevailing shipment problems laid by the country’s port, which is controlled by the state-owned corporation Transnet.

The Perth and Johannesburg enlisted mining company posted its second quarter and half-yearly production rate on January 23, wherein it declared a US$100 million build in working capital because of the augmented inventories primarily at the firm’s South African activities.

South32, in a statement, tried to dissect the occurring: “This impact is most acute in our aluminium value chain in southern Africa due to ongoing shipping delays.”

South32’s Hillside aluminium smelter residing in KwaZulu-Natal has announced an 8% surge in aluminium sales during the December quarter, but inventory “remained above target levels as two shipments were delayed to January 2023 due to shipping delays at Richards Bay,” South32 notified.

The Hillside facility has experienced a 1% hike in aluminium production on a quarter-on-quarter basis neglecting “elevated load-shedding” in the area. South32 is quite positive about the annual aluminium production rate of the Hillside unit, which it claims to be 720,000 tonnes in the financial year 2023, ending on June 30.

Transnet has been facing impeding scrutiny after the sudden loss in volumes. In December, the Minerals Council demanded the resignations of the company’s CEO, Portia Derby and the head of Transnet Freight Rail, Sizekela Mzimela.

Transnet, in justification, has claimed that the company has been dealing with vehement attacks from random criminals who vandalise the logistic trail. Moreover, it is evident from the supplier dispute that Transnet is not being able to provide its clients with a healthy locomotive option or any other delivery scope. Transnet and the Minerals Council have eventually agreed to collaborate in solving these transportation issues.

South32 marked a 12% influx in group copper equivalent production during the first half of the last year after it successfully purchased the Sierra Gorda mine and increased its stake in Mozal Aluminium, its Mozambique operations.

The CEO of South32, Graham Kerr, elaborated his views on the production report: “We continue to reshape our portfolio toward metals critical for a low carbon future, advancing construction work, studies and exploration at our high-quality development options.”