South32 CEO Graham Kerr. Picture: PUXLEY MAKGATHO
South32 CEO Graham Kerr. Picture: PUXLEY MAKGATHO

Diversified miner South32 said on Thursday it lowered its 2020 production guidance at its soon-to-be-sold SA coal business, citing wet weather and subdued local demand.

South32 said that combined with it’s near-term outlook for domestic demand, and the demobilisation of contractors operating the unprofitable pits, production was expected to be at the bottom end its recent guidance range, or 26-million tonnes.

The company had previously expected production of up to 28-million tonnes.

South32 CEO Graham Kerr said in a statement on Thursday the group had taken a “disciplined approach to capital”, adding that the company's financial position remained strong.

In November, South32 announced it had reached a deal to sell its SA coal asset to Mike Teke's Seriti Resources.

The deal will see Seriti make an upfront payment of R100m, while South32 will receive 49% of the free cash flow from the assets, capped at maximum of R1.5bn per annum. This would run from the completion date of the deal, until March 2024.

South32 said in a quarterly update to end-December 2019, the company's second, that the transaction was expected to close in its December 2020 half year.

South32's share price was up 4.36% to R40.93 in morning trade on Thursday.

gernetzkyk@businesslive.co.za

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