Update on Worsley Alumina approvals

South32 Limited (ASX: $S32) has provided an update on the regulatory approvals for new mining areas at Worsley Alumina. The Western Australian Environmental Protection Authority (WA EPA) recently published its recommendation for the Worsley Mine Development Project, subject to conditions that South32 believes may pose significant operating challenges and impact its long-term viability.

Executive commentary on Worsley Alumina approvals

Following the WA EPA's recommendation, Worsley Alumina intends to lodge an appeal and collaborate with the Western Australian Government to ensure compliance with environmental standards. The company aims to secure environmental approvals for the proposal by the end of CY2024. However, due to the increased uncertainty, an impairment expense of approximately US$554M (~US$389M post-tax) will be recognized for Worsley Alumina in the FY24 financial results, reducing its carrying value to ~US$2,027M. This impairment expense will be excluded from FY24 Underlying earnings, in accordance with South32's accounting policies.

Summary of Worsley Alumina approvals update

South32 has provided an update on the regulatory approvals for new mining areas at Worsley Alumina, expressing concerns about the recommended conditions by the WA EPA. The company intends to lodge an appeal and work with the Western Australian Government to secure environmental approvals by the end of CY2024. However, an impairment expense of approximately US$554M will be recognized for Worsley Alumina in the FY24 financial results, impacting its carrying value. Worsley Alumina is a significant contributor to the local economy and plays a vital role in the production of aluminium, essential for a low-carbon future.