Quarterly Report - September 2021

Production guidance (South32 share)	FY21	3M YTD FY22	FY22e^(a)
Worsley Alumina
Alumina production (kt)	3,963	1,006	3,965
Brazil Alumina
Alumina production (kt)	1,398	272	1,300
Hillside Aluminium⁷
Aluminium production (kt)	717	180	720
Mozal Aluminium⁷
Aluminium production (kt)	265	68	273
Illawarra Metallurgical Coal
Total coal production (kt)	7,645	1,888	7,300
Metallurgical coal production (kt)	6,170	1,575	6,300
Energy coal production (kt)	1,475	313	1,000
Australia Manganese
Manganese ore production (kwmt)	3,529	897	3,500
South Africa Manganese
Manganese ore production⁸ (kwmt)	2,264	668	2,200
Cerro Matoso
Payable nickel production (kt)	34.1	9.6	43.8
Cannington
Payable zinc equivalent production⁹ (kt)	319.0	78.2	278.3
Payable silver production (koz)	13,655	3,493	11,647
Payable lead production (kt)	131.8	31.9	112.6
Payable zinc production (kt)	67.7	15.4	63.9

South32 share	YTD FY21	YTD FY22	1Q21	2Q21	3Q21	4Q21	1Q22
Worsley Alumina (86% share)
Alumina hydrate production (kt)	1,010	997	1,010	1,002	977	992	997
Alumina production (kt)	963	1,006	963	1,047	875	1,078	1,006
Alumina sales (kt)	1,001	924	1,001	1,077	840	1,086	924
Brazil Alumina (36% share)
Alumina production (kt)	352	272	352	354	343	349	272
Alumina sales (kt)	340	247	340	334	384	333	247
Hillside Aluminium (100%)
Aluminium production (kt)	180	180	180	181	176	180	180
Aluminium sales (kt)	175	160	175	172	191	169	160
Mozal Aluminium (47.1% share)
Aluminium production (kt)	68	68	68	67	64	66	68
Aluminium sales (kt)	64	55	64	66	64	68	55
South Africa Energy Coal (100% share divested)
Energy coal production (kt)	6,263	-	6,263	4,980	3,764	3,079	-
Domestic sales (kt)	3,607	-	3,607	2,920	2,025	1,823	-
Export sales (kt)	2,487	-	2,487	2,210	1,879	1,449	-
Illawarra Metallurgical Coal (100%)
Total coal production (kt)	2,371	1,888	2,371	1,725	1,824	1,725	1,888
Total coal sales¹¹ (kt)	1,940	1,708	1,940	2,087	1,823	1,766	1,708
Metallurgical coal production (kt)	1,863	1,575	1,863	1,399	1,568	1,340	1,575
Metallurgical coal sales (kt)	1,468	1,490	1,468	1,697	1,542	1,367	1,490
Energy coal production (kt)	508	313	508	326	256	385	313
Energy coal sales (kt)	472	218	472	390	281	399	218
Australia Manganese (ore 60% share, alloy 60% share divested)
Manganese ore production (kwmt)	880	897	880	954	829	866	897
Manganese ore sales (kwmt)	994	906	994	871	865	891	906
Ore grade sold (%, Mn)	44.3	44.2	44.3	44.5	44.4	44.5	44.2
Manganese alloy production (kt)	27	-	27	24	-	-	-
Manganese alloy sales (kt)	26	-	26	33	-	-	-
South Africa Manganese (60% share)
Manganese ore production⁸ (kwmt)	581	668	581	505	580	598	668
Manganese ore sales⁸ (kwmt)	517	566	517	586	497	636	566
Ore grade sold (%, Mn)	39.7	40.3	39.7	40.0	40.6	39.5	40.3
Manganese alloy production (kt)	-	-	-	-	-	-	-
Manganese alloy sales (kt)	8	-	8	3	-	-	-
Cerro Matoso (99.9% share)
Ore mined (kwmt)	645	1,058	645	825	594	1,174	1,058
Ore processed (kdmt)	698	620	698	457	528	702	620
Ore grade processed (%, Ni)	1.58	1.76	1.58	1.55	1.60	1.76	1.76
Payable nickel production (kt)	10.0	9.6	10.0	6.1	7.1	10.9	9.6
Payable nickel sales (kt)	10.4	10.4	10.4	6.1	6.7	10.3	10.4
Cannington (100%)
Ore mined (kwmt)	700	750	700	709	714	696	750
Ore processed (kdmt)	630	687	630	672	724	720	687
Silver ore grade processed (g/t, Ag)	169	185	169	179	177	213	185
Lead ore grade processed (%, Pb)	5.0	5.5	5.0	5.2	5.8	6.6	5.5
Zinc ore grade processed (%, Zn)	2.9	3.2	2.9	3.7	3.5	3.9	3.2
Payable Zinc equivalent production⁹ (kt)	64.1	78.2	64.1	76.4	81.4	97.1	78.2
Payable silver production (koz)	2,863	3,493	2,863	3,130	3,484	4,178	3,493
Payable silver sales (koz)	2,967	2,718	2,967	3,359	2,950	4,460	2,718
Payable lead production (kt)	26.4	31.9	26.4	31.2	33.0	41.2	31.9
Payable lead sales (kt)	29.5	25.3	29.5	31.9	28.4	41.9	25.3
Payable zinc production (kt)	12.4	15.4	12.4	18.0	17.8	19.5	15.4
Payable zinc sales (kt)	11.8	14.3	11.8	20.0	15.9	21.3	14.3

Companies

South32 Limited (DI) (S32)

UK 100

Latest directors dealings

19 minutes ago Rotork
32 minutes ago Sabre Insurance Group
42 minutes ago Aurrigo International
1 hour ago Savills
1 hour ago Everyman Media Group

All directors dealings today

•	Maintained FY22 production guidance with our operations continuing to deliver to plan, taking advantage of rising commodity prices
•	Delivered a US$254M increase in our net cash position to US$660M¹, with higher commodity prices and third party logistics disruptions resulting in a build in working capital
•	Achieved a 7% increase in manganese production, with a quarterly record at South Africa Manganese and a strong start to the year at Australia Manganese
•	Maintained production above nameplate capacity at Worsley Alumina, with the operation continuing to benefit from improvement initiatives
•	Restored production to normalised rates at Brazil Alumina in October, following an incident that damaged one of the bauxite unloaders at the refinery in July 2021
•	Increased production at Mozal Aluminium, with smelter productivity benefitting from our investment in the AP3XLE energy efficiency technology
•	Recorded sequentially lower base metals production, with Cerro Matoso impacted by a temporary equipment outage, while Cannington extracted a planned series of lower grade stopes
•	Entered into binding conditional agreements to acquire a 45% interest in Sierra Gorda, an operating copper mine in Chile which is expected to deliver copper equivalent production of 214kt in CY21e (100% basis)²
•	Exercised our pre-emptive rights to acquire an additional interest in our hydro powered aluminium smelter, Mozal Aluminium³

•	Our net cash balance¹ increased by US$254M to US$660M during the quarter. Notwithstanding our strong cash generation, which included net distributions⁴ of US$45M (South32 share) from our manganese equity accounted investments (EAI), we have experienced a build in working capital as a result of higher commodity prices and third party logistics disruptions at many ports across our geographic footprint.
•	We exercised our pre-emptive rights to acquire an additional shareholding in Mozal Aluminium from MCA Metals Holding GmbH (Mitsubishi) during the quarter³. Subsequent to the end of the period, the Industrial Development Corporation of South Africa (IDC) also notified Mitsubishi of its intention to trigger their pre-emptive rights. Accordingly our shareholding is expected to increase by a minimum of 16.6% to 63.7% for a headline purchase price of US$166M. Completion of the transaction is subject to the satisfaction of customary conditions.
•	Subsequent to the end of the period, we entered into two binding conditional agreements with Sumitomo Metal Mining and Sumitomo Corporation (collectively Sumitomo) to acquire a 45% interest in the Sierra Gorda copper mine in Chile for an upfront cash consideration of US$1.55B and a contingent price-linked consideration of up to US$500M². The upfront consideration is expected to be funded from cash on hand and a US$1B acquisition debt facility. Completion of the transaction is expected around the end of calendar year 2021, subject to the waiver or non-exercise of pre-emption rights held by 55% joint venture partner KGHM Polska Miedz, and competition and regulatory approvals.
•	Our strong financial position also supported the purchase of a further 10M shares via our on-market share buy-back at an average price of A$2.95 per share in the September 2021 quarter. Subsequent to the end of the period, we also paid a fully franked ordinary dividend of US$163M and a fully franked special dividend of US$93M in respect of the June 2021 half year. Our US$2B capital management program is 88% complete with US$231M remaining to be returned to shareholders ahead of its extension or expiry on 2 September 2022⁵.
•	Subsequent to the end of the quarter and consistent with our commitment to maintain an investment grade credit rating, S&P and Moody's reaffirmed their respective BBB+ and Baa1 credit ratings for the Group.
•	During the quarter the Colombian government passed legislation to increase the country's corporate tax rate to 35% from 1 January 2022 (it was previously scheduled to reduce from 31% to 30% on this date). Notwithstanding this increase, our FY22 Group Underlying effective tax rate is expected to return to normalised levels that reflect the corporate tax rates of the geographies where the Group operates which include: Australia 30%, South Africa 28%, Colombia 31%⁶, Mozambique 0%⁶ and Brazil 34%.
•	We have commenced a process to investigate the potential divestment of our interest in the Eagle Downs Metallurgical Coal development option.

•	We continued work on our Taylor Deposit pre-feasibility study (PFS) at our Hermosa project, while making progress with our scoping study for the Clark Deposit. We expect to report the outcomes for the Taylor PFS around the end of the calendar year.
•	Subsequent to the end of the period, we completed the summer exploration season at our Ambler Metals Joint Venture. Although total drilling metres and productivity were impacted by adverse weather and challenges in fully staffing the program, sufficient material was recovered to complete planned metallurgical work and geotechnical drilling at the Arctic Deposit.
•	We invested US$7M during the September 2021 quarter in our early stage greenfield exploration opportunities. With COVID-19 restrictions generally diminishing across jurisdictions, activity continues to ramp-up with multiple programs targeting base and precious metals underway in Australia, USA, Canada, Argentina, Peru and Ireland.
•	We directed US$15M towards exploration programs at our existing operations and development options during the September 2021 quarter (US$11M capitalised), including US$0.5M for our EAI (US$0.1M capitalised), US$4M at the Hermosa project (all capitalised) and US$6M at Ambler Metals (all capitalised).

1	Net cash number is unaudited and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity.
2	Refer to market release "South32 to acquire a 45% interest in the Sierra Gorda copper mine" dated 14 October 2021. Upfront consideration subject to customary working capital and net debt adjustments. Contingent price-linked consideration payable at threshold copper production rates and prices in the years 2022-25.
3	Refer to market release "South32 to acquire up to an additional 25% of Mozal Aluminium" dated 30 September 2021.
4	Net distributions from equity accounted investments includes net debt movements and dividends, which are unaudited and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity.
5	Since inception, US$1.4B has been allocated to the on-market share buy-back (659M shares at an average price of A$2.87 per share) and US$385M returned in the form of special dividends.
6	The Colombian corporate tax rate is 31% in CY21 and will increase to 35% from 1 January 2022 in accordance with recently passed legislation. The Mozambique operations are subject to a royalty on revenues instead of income tax.
7	Production guidance for Hillside Aluminium and Mozal Aluminium does not assume any load-shedding impact on production.
8	Consistent with the presentation of South32's segment information, South Africa Manganese ore production and sales have been reported at 60%. The Group's financial statements will continue to reflect a 54.6% interest in South Africa Manganese ore.
9	Payable zinc equivalent production (kt) was calculated by aggregating revenues from payable silver, lead and zinc, and dividing the total Revenue by the price of zinc. FY21 realised prices for zinc (US$2,357/t), lead (US$1,862/t) and silver (US$25.4/oz) have been used for FY21, Q1 FY22 and FY22e.
10	The quarterly sales volume weighted average of the Platts Alumina Index (FOB Australia) on the basis of a one month lag to published pricing (Month minus one or "M-1") was US$293/t in the September 2021 quarter.
11	Illawarra Metallurgical Coal sales are adjusted for moisture and will not reconcile directly to Illawarra Metallurgical Coal production.
12	Information in this report that relates to Mineral Resource estimates for GEMCO was declared as part of South32's annual Resource and Reserve declaration in the FY21 Annual Report ( www.south32.net ) issued on 3 September 2021 and prepared by Competent Person in accordance with the requirements of the JORC Code. South32 confirms that it is not aware of any new information or data that materially affects the information included in the original announcements. All material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. South32 confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
13	The quarterly sales volume weighted average of the Metal Bulletin 37% manganese lump ore index (FOB Port Elizabeth, South Africa) on the basis of a one month lag to published pricing (Month minus one or "M-1") was US$3.11/dmtu in the September 2021 quarter.

Production summary
South32 share	YTD FY21	YTD FY22	YoY	1Q21	4Q21	1Q22	QoQ
Alumina production (kt)	1,315	1,278	(3%)	1,315	1,427	1,278	(10%)
Aluminium production (kt)	248	248	0%	248	246	248	1%
Metallurgical coal production (kt)	1,863	1,575	(15%)	1,863	1,340	1,575	18%
Energy coal production (kt)	508	313	(38%)	508	385	313	(19%)
Manganese ore production (kwmt)	1,461	1,565	7%	1,461	1,464	1,565	7%
Payable nickel production (kt)	10.0	9.6	(4%)	10.0	10.9	9.6	(12%)
Payable silver production (koz)	2,863	3,493	22%	2,863	4,178	3,493	(16%)
Payable lead production (kt)	26.4	31.9	21%	26.4	41.2	31.9	(23%)
Payable zinc production (kt)	12.4	15.4	24%	12.4	19.5	15.4	(21%)
Unless otherwise noted: percentage variance relates to performance during September 2021 quarter compared with the June 2021 (QoQ); production and sales volumes are reported on an attributable basis.