South32 warns of labour issues from pandemic as quarterly coking coal output falls

The logo of Australian miner South32 can be seen at the venue of a media conference in Perth, Western Australia, November 18, 2015. REUTERS/David Gray

Jan 24 (Reuters) – Australia’s South32 Ltd (S32.AX) on Monday warned of potential impact from workforce restrictions due to the coronavirus pandemic at its flagship Illawarra project in the second half, as it reported about a 15% drop in second-quarter coking coal output.

The diversified miner follows heavyweights BHP Group(BHP.AX)andRio Tinto(RIO.AX) in warning of disruptions from coronavirus-induced labour shortages as Australia faces a surge of Omicron cases.

“The COVID-19 pandemic continues to impact our operations and supply chains in different ways, across our global portfolio,” the miner said.

“The implementation of additional COVID-19 workforce restrictions in New South Wales has the potential to further impact labour availability across the June 2022 half year.”

While it maintained its fiscal 2022 metallurgical coal output guidance of 6.3 million tonnes (Mt) on Monday, it said it will provide an update to its FY22 and FY23 forecast with its half-year results next month.

It however cut its annual manganese ore output guidance from Australia by 9% to 3.2 million wet metric tonnes (wmt), citing adverse weather conditions and workforce constraints.

The miner also flagged impact to its supply chain from port congestion and “tight global freight” conditions, hurting the movement of its inventory, specifically for its aluminium smelters in Southern Africa.

Production of metallurgical coal, used to make steel, fell to 1.2 Mt in the three months to Dec. 31 from 1.4 Mt a year earlier, while manganese ore output fell 11% to 1.3 million wmt.

Reporting by Sameer Manekar and Riya Sharma in Bengaluru; Editing by Chris Reese

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