By Rhiannon Hoyle

South32 said Monday it raised output of almost all the metals it produces quarter over quarter, but that it also experienced pressure from rising raw material costs.

The Australia-based miner said it produced 3% more aluminum and 9% more copper in the three months through December versus the quarter immediately prior. Its output of manganese ore and silver jumped by 88% and 86%, respectively.

South32 said it continued to test its maximum technical capacity at the Hillside Aluminium smelter in South Africa. At the Sierra Gorda copper mine in Chile, the miner benefited from improved ore quality.

The company reiterated annual production guidance for all operations, except its Mozal Aluminium business, for which guidance was withdrawn in December because of civil unrest in Mozambique.

The only metal it produced less of quarter-over-quarter was zinc, output of which fell by 11% as South32 grappled with some complexity underground at the Cannington mine in Australia.

Strong production and improved commodity prices during the first half of its fiscal year should result in widened operating margins, South32 said.

"We achieved strong results in the December 2024 quarter, delivering higher base metals production and increasing alumina production by 14%, capturing the benefit of strong alumina prices," said Graham Kerr, the miner's chief executive.

Still, first-half operating costs are tracking higher than either annual guidance or the half immediately prior, South32 said. The company said raw-material costs have increased in its aluminum value chain.

South32 estimated first-half unit costs at its Worsley Alumina operation were roughly 5% above annual guidance for fiscal 2025 because of higher caustic soda costs.

Costs at its South African aluminum smelters are expected to be roughly 10% above the second half of fiscal 2024 due in part to higher alumina prices, the company said. It estimated costs at the Brazil Aluminium operation were roughly 5% higher over the same period, also due to higher alumina prices.

South32 said it expects first-half costs at the Sierra Gorda and Cannington mines to be about 10% and 15% higher than fiscal 2025 guidance.

The company said it expects to benefit in the second half of fiscal 2025 from weaker currencies forecast in the countries where it operates.

At the Mozal Aluminium operation, where the company has faced disruptions from road blockages amid unrest in Mozambique, it has rebuilt alumina stocks in recent weeks. The company continues to operate and export aluminum to customers, although any escalation in unrest has the potential to impact critical trucking activity and operations, South32 said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

January 19, 2025 17:30 ET (22:30 GMT)

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