South32 Ltd on Thursday slashed its interim dividend as profit tumbled due to weaker commodity prices and lower coal volumes.

For the six months that ended December 31, the Perth-based diversified mining group said pretax profit fell to $66 million from $885 million a year earlier.

The mining group blamed a slump in commodity prices and poor metallurgical coal volumes as it completed two planned longwall moves at Illawarra metallurgical coal in Australia.

Illawarra metallurgical coal saleable production in the first half plunged 39% to 1.29 million tonnes from 2.05 million tonnes. More positively, South32 said achieved record aluminium production and lower raw material input prices.

For the first six months, revenue declined 15% to $3.13 billion from $3.69 billion, dragging underlying earnings before interest, tax, depreciation and amortisation to $708 million, nearly halved from $1.36 billion.

South32 cut its interim dividend to 0.4 US cent from 4.9 cents. It said it had decided to cancel its share buyback, which was due to expire on March 1. During the financial first half, the group repurchased shares worth $35 million.

Earnings per share for the six months to December 31 plummeted to 1.2 cents from 14.9 cents, while headline EPS fell to 1.2 cents from 12.7 cents.

South32 also said it has approved a $2.16 billion investment in Hermosa project in US. The Hermosa project, which is located in Arizona, is made up of the Taylor zinc-lead-silver deposit, the Clark zinc-lead-silver deposit, and a regional exploration land package.

It expects first production at Taylor zinc-lead-silver deposit in the second half of its financial year in 2027.

‘This investment is a major milestone for our business, that further reshapes our portfolio towards commodities critical to a low-carbon future,’ South32 said.

South32 said it expects 7% production uplift in second half of its current financial year.

For 2024 annual guidance, production at Worsley alumina is expected to rise 4.2% to 4.00 million tonnes from 3.84 million tonnes in 2023, while Brazil alumina output is likely to improve by 3.2% to 1.30 million tonnes from 1.26 million tonnes.

Brazil aluminium production is estimated at 100,000 tonnes from 69,000 tonnes, and Hillside aluminium output is projected at 720,000 tonnes from 719,000 tonnes. But Mozal aluminium is seen falling to 320,000 tonnes from 345,000 tonnes.

Illawarra metallurgical coal is predicted at 5.00 million tonnes from 6.52 million tonnes, due to the timing and duration of planned longwall moves.

Australia manganese production looks set to slip to 3.40 million wet tonnes from 3.55 million wet tonnes, while South Africa manganese output is seen lower at 2.00 million wet tonnes, compared to 2.11 million wet tonnes.

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