BHP Billiton spin-off South32 will record a $US1.9 billion writedown on manganese and coal assets, and said curtailing production of manganese and aluminium was designed to maximise shareholder value, rather than volume.

 

South32 today said the $US1.3bn reduction in book value of the manganese assets largely offsets the previous "fair value uplift" of $US2.1bn described in its listing documents. The company also flagged a $US539 million writedown on its Wolvekrans Middelburg complex at its South Africa energy coal unit.

"The associated reduction in book value will result in a lower depreciation charge for the manganese assets than previously indicated," South32 added.

 

BHP Billiton spun off its non-core assets into South32, in May, as the parent miner focusses on commodities including iron ore.

 

South32 said it was assessing the fair value of its assets as part of its end of year processes, and would keep the market informed should there be a material difference to the figures that BHP Billiton provides to the market.

 

South32's total fiscal year alumina output slipped 1 per cent over the year, while aluminium output fell 14 per cent.

 

"The curtailment of aluminium production at Alumar and manganese production at Metalloys demonstrates our commitment to maximise financial performance per share, rather than volume," South32 chief executive Graham Kerr said.

 

Mr Kerr said South32 had "the right balance sheet for the times" and intends to distribute a minimum of 40 per cent of underlying earnings to shareholders from next year.

 

The miner's total energy coal output lifted 12 per cent across the whole group for the full year, while metallurgical coal production rose 25 per cent.

 

South32's total manganese ore output lifted 4 per cent over the year,  while total silver output across the miner dipped 10 per cent over the twelve months.

 

The miner posted four annual production records at different projects, with record-high output of saleable alumina from Brazil Aluminium, coal from Illawarra Metalurgical Coal, alloy from its Australia Manganese business and ore from its South African Manganese business.

 

At South32's Brazil Aluminium refinery saleable alumina  output rose 5 per cent to 1.3 million tonnes in the 2015 financial year as production exceeded nameplate capacity.

 

However, Brazil Aluminium's saleable aluminium output declined 62 per cent to 40 thousand tonnes following the decision to suspend production in the last of three potlines from April 2015. The potlines will continue to be subject to ongoing review, depended on market conditions and shareholder outcomes, South32 said.

 

South32's Illawarra saleable coal production rose 19 per cent to 8.9 million tonnes in the full-year. The miner said the Appin Area 9 project was now 86 per cent complete and was expected to be commissioned ahead of schedule in the second half of fiscal 2016. The project sustains the Illawarra mine's production capacity and is also expected to come in 20 per cent below the original $US845m budget.

 

Australia Manganese saleable ore output lifted 3 per cent to 2.9 million tonnes for the 12 months to June 30, after plant throughput and concentrator yields improved. Meanwhile, the company's South African Manganese saleable ore production increased by 7 per cent to 1.7 million tonnes.