Stronger rand, higher energy costs squeeze South32’s aluminium operations

A stronger rand is translating to mixed fortunes to the cost profile of South32’s aluminium production in South Africa and Mozambique while higher energy costs and other raw materials are also weighing

In South Africa, South32 produces aluminium from Hillside Aluminium, which is located in KwaZulu- Natal while it also mines for manganese at the Wessels mine in the Northern Cape. The company also operated Mozal Aluminium, which it was planning to mothball due to a failure to secure a power supply agreement for the operation.

Over the quarterly period to December, South32 completed planned maintenance works at the South Africa mine. This helped to bring up South32’s total manganese production for the period by 58% “as Australia Manganese returned to normalised production rates, while South Africa Manganese completed planned maintenance” works.

In terms of volumes, saleable South Africa manganese production was however lower by 2% or by 25 000 wet metric tonnes at just above 1 million wet metric tonnes for the half year to December 2025.

South32 is however maintaining its 2026 full year manganese production from SA at 2 million wet metric tonnes despite “further planned maintenance scheduled” for the March 2026 quarter.

Although the Hillside Aluminium operation in South Africa “continued to test its maximum technical capacity” during the period to end December, Mozal Aluminium “ceased pot relining ahead of its transition to care and maintenance” scheduled for the beginning of March this year.

Hillside Aluminium saleable production for the December 2025 half year was unchanged at 362 000 tonnes. This came as the South African smelter continued shook off the the impact of load-shedding. “FY26 production guidance remains unchanged at 720 000 tonnes (while) sales increased by 11% in the December 2025 quarter due to a carry-over shipment from the prior quarter,” said the company.

Nonetheless, the cost profiles of Hillside Aluminium and Mozal Aluminium are heavily influenced by the South African rand as well as the price of raw materials and energy, South32 said. Although Eskom insists that any new agreement should be sustainable for it as the power supplier, it is expected to throw South32 a lifeline following its failure to reach an agreement with HCB.

In South Africa, costs for the Hillside Aluminium operation for the half year period under review are expected to be 14% below the 2025 second half year mark of $2 663 per tone, which were elevated due to lower alumina prices, partially offset by a stronger South African rand.

Mozal Aluminium is expected to be 5% higher than the $2 441 per tonne for the second half od 2025 in operating unit costs also due to a stronger South African rand and higher priced alumina from Worsley Alumina under a legacy supply contract.

Graham Kerr, South32's CEO, said, “Our consistent operating performance, combined with strengthening market conditions, enabled the Group to maintain a strong financial position while investing in our high-returning growth options and delivering returns to shareholders.”

The company invested $338 million at Hermosa in the December 2025 half year, progressing construction of the shafts and surface infrastructure for the Taylor zinc-lead-silver project, and completing the decline for the Clark battery-grade manganese deposit.

South32 also returned $152 million to shareholders during the same period, with $117m in fully-franked ordinary dividends and US$35m through an on-market share buy-back scheme.

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