Despite receiving record high prices for aluminium at its Hillside smelter, South32 continues to experience difficulties in clearing inventory at both Hillside smelter in South Africa and Mozal aluminium smelter in Mozambique.
In comments made during a second-quarter production update on Monday, the firm said it is exploring options to move more aluminium product and ease the capital build generated as a result.
“Third party port performance at Richards Bay and ongoing congestion in global shipping conditions,” noted South32 in the report. The firm went on to say that supply chain problems caused by the global coronavirus pandemic also hampered sales throughout its operations.
“We expect the current working capital build to unwind once we realise the full benefit of our initiatives, and port congestion and general freight tightness is alleviated,” said South32, referring to the alternative shipping and sales options the firm is exploring.
Though South32 averaged a sales price of US$2,952 per ton for aluminium produced at the Hillside smelter, electricity costs rose sufficiently to lead to an increase in operating costs of 10 percent.
Overall, South32’s aluminium production fell by 1 percent in the second quarter, but it still expects to hit the projected full-year target of 720 thousand tons. Production at the Mozambique smelter was still on pace to hit the anticipated yearly total of 273 thousand tons.
Meanwhile, South32’s manganese production for the year is 2.2 million tons with a 12-percent bump in sales thanks to a reduction in inventory. The firm continued to avoid problems with limited available rail transport by utilizing over-the-road methods instead.